1.The credit flow to the SMEs from PSBs has recorded a significant rise as on end-September 2006. PSBs have shown a 26.44% year-on-year growth in credit to the SMEs.. This is much higher than the targeted 20%.
2. Bankers, stung by the revised draft guidelines on priority sector lending, want the RBI to change the way it sets priority sector lending targets. They feel RBI should shift to incremental disbursement targets from the current prescription of lending a certain percentage of net bank credit. It would be more practical if the RBI prescribes priority sector targets in terms of incremental disbursements, several bankers said. Foreign banks would be the worst hit if revised draft gets finalised without amendments as they would have to bear nearly half of the burden of the expected increase in flow of bank credit to priority sectors. The increase in directed lending is expected to be over Rs 50,000 crs.
3. Allahaband Bank, IOB, Karnataka Bank, Dabur Investment Corporation and Sompo Japan Insurance Inc have signed a shareholders’ agreement to form a new non-life JV insurance company to be called Universal Sompo General Insurance Company Ltd.
4. The Union Cabinet has approved the conversion of 71% of Central Bank of India’s equity capital into preference shares, a move that could hit a hurdle at RBI. Another wholly owned government bank, United Bank of India’s proposal to covert 78% of its Rs 1,532 crs equity capital has already been blocked by the RBI as the central bank is considering putting a ceiling of 40% of equity capital for issue of preference capital in its proposed guidelines. The RBI is yet to issue rules for amendments approved by Parliament to the Nationalisation Act, allowing banks to issue preference shares.
5. RBI has issued an instruction to the effect that agency banks should not make any deduction of tax at source where the depositor is filing Form 15H or Form 15G of a certificate under Sec. 197(1) of the Income Tax Act 1961.
6. The Insurance Regulatory and Development Authority has relaxed guidelines on application of KYC (know your customer) norms for purposes of the Anti-Money Laundering Guidelines in the case of general insurance companies to reduce operational difficulties in the finalisation of insurance contracts.
7. Except Federal Bank, Catholic Syrian Bank, South Indian Bank and Dhanalakshmi Bank, the private sector banks have been rather reluctant in providing education loans in Kerala in 2005-06. According to the latest report of the State Level Bankers' Committee, private sector banks altogether gave loans for Rs.61.66 crs to 3,721 students in the State in 2005-06. This comes to only around 10% of the total disbursement of Rs.617.23 crs to 33,338 students by the banks in the State that year. Federal Bank assisted 2,542 students with a sum of Rs.34.85 crs, while Catholic Syrian Bank chipped in with an aid of Rs.13.49 crs to 676 students. South Indian Bank gave loans to 235 students (Rs.6.4 crs) and Dhanalakshmi Bank 202 students (Rs.4.98 crs). New-generation banks such as CBOP, HDFC Bank, IndusInd Bank and ICICI Bank had not entertained any loan application from students.
