1. RBI is seriously considering the option of clamping down on overseas financing for real estate in a bid to contain inflation.The clampdown will be part of a package from the central bank to make end-use norms for external commercial borrowing (ECB) funds more stringent for various sectors.Real estate prices have almost doubled in the past year, which has contributed to inflation. However, rising domestic interest rates have encouraged real estate companies to opt for ECBs. The difference in the rates offered by local banks and international lenders is as high as 3 to 4 per cent excluding the forward cover cost.
2. The National Bank for Agricultural and Rural Development (Nabard) has decided to extend the moratorium period for recovering loans taken by sugar cooperatives and private mills by another three years to March 2010.
3. Lending institutions will now be in a position to make more informed decisions with respect to advances and provisions on existing advances. IBA has decided to float an independent company, which will collate credit information and help banks compute the extent of operational risk which they may be exposed to.Computing operational risk gains significance in light of the implementation of Basel II norms for large banks, which requires them to set aside additional capital for operational risk.The entity would assume the structure of a Section 25 company, which would be jointly promoted by a group of banks. The company would facilitate collection and pooling of data on corporate defaulters and events leading to such defaults. This, in turn, would help banks understand the percentage of defaults prevailing in the system and simultaneously also give them an insight into the nature of events which could lead to potential defaults. Thus, the data compiled will help banks calculate the proportion of funds which they might require to keep aside for operational risk purposes.
4. The future of ATMs and self service terminals lies in multitasking - going from dispensing only cash to selling theatre tickets, renewing driver’s licenses and offering other services. The ATM is still going strong. But it is changing. The ATM is becoming more of a customer-experience portal. Market research has shown that consumers between 18 and 35 prefer self-service to clerkassisted service. This is the internet generation.
5. Taking repeated recourse to CRR hikes to tackle inflation only skews further the asymmetric treatment of market players, putting commercial banks at a disadvantage and placing a greater burden on borrowers. Yet, the RBI has no other option. Tthe central bank will have to increasingly rely on the CRR, given the limited scope for deploying other instruments.
6. The Union Cabinet has agreed to grant greater autonomy to the boards of the seven subsidiary banks of the SBI and bring them on a par with other nationalised banks for issuance of preference shares. The decisions were taken in accordance with the suggestions of the Standing Committee of Parliament on Finance that had suggested several changes in the State Bank of
7. The Finance Minister, Mr P. Chidambaram, has once again asked public sector banks to slow down credit flow to risk-prone sectors such as `commercial real estate', capital market and `systemically important NBFCs'. This advice comes less than three months after he had asked the PSBs to rebalance their lending to provide more credit for productive sectors as against the RBI identified risk-prone sectors.
8. The aggregate credit exposure of PSBs grew 30% from Rs 11,10,014 crs as on March 2006 to Rs 14,39,582 crs as on March 2007. While credit to commercial real estate sector saw a 59% increase from Rs 25,429 crs as on March 2006 to Rs 40,427 crs as on March 2007, the PSBs exposure to capital market grew to Rs 9,067 crs as on March 2007 from Rs 5,451 crs on March 2006. PSBs exposure to systemically important NBFCs increased from Rs 20,087 crs as on March 2006 to Rs 26,286 crs as on March 2007.
9. FM Mr Chidambaram has cautioned PSBs against raising bulk deposits at high costs. The bulk deposits of PSBs surged 38% during 2006-07 from Rs 3,36,354 crs to Rs 4,36,852 crs, reflecting an increase of Rs 1,20,518 crs. The total bulk deposits mobilised at interest rates of 11% and above during 2006-07 stood at Rs 86,264 crs. The aggregate deposits of PSBs grew 23% during 2006-07.
10. Canara Bank has announced the increase in its benchmark prime lending rate by 75 bps to 13.25%. The new rate is effective April 17.
11. Urban co-operative banks' funding of medium enterprises will not form a part of priority sector lending, says the Reserve Bank of
12. The Government has urged the RBI to direct scheduled commercial banks to earmark at least 50 per cent of the export credit finance for small and medium exporters. This is expected to come as some relief for small and medium exporters, who are now faced with lower export realisation on account of strengthening of rupee against the dollar.
13. SBI, the country's largest lender, expects its advances growth to slow down to 25 % this fiscal as against the 28% growth recorded in 2006-07.
