.............“No one wants to take a hit by lending to companies which do not pay back,” said the official of a large state-run bank. Not wishing to be named, the official added, “But there is no blanket ban on them. When things improve, banks will resume lending.” While the pace of loan growth to micro and small companies and large firms, too, has declined in a slowing economy, that towards the infrastructure sector almost halved in the 12 months ending April, RBI data show. There are around 15 million registered medium-sized companies in India, around 20 million small companies, and about 5 million micro- and tiny enterprises, according to the SME Chamber of India, an industry lobby of small companies........
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Wednesday, June 11, 2014
New law needed
My View on "Write off of loans and offer of freebies - Dr.T.V....":
There must be a new Law against loan write-offs by anybody other than the loan provider. Parliament has more private money lenders whose interests in write-offs would help augment private money lending for farmers. If the governments write off the private money lending for farmers, then all the suicides of farmers would come to a halt. Most farmer-suicides happened in homes that did not have institutional credit. Farmers do not trust the banks as much as the banks do not trust the farmers! Who else except the banks to blame?
- Dr.Yerram Raju
Increase 80C limit, list LIC: Banks tell FM
.........Jaitley was reportedly told that the revenue department loses Rs 31,000 crore every year on Rs 1 lakh deduction, and if the limit was increased to Rs 2 lakh the loss would increase to Rs 62,000, assuming all taxpayers availed the tax benefits. “Every year the finance minister is a mere listener. It was different this year,” said an executive............
Income tax rebates: Salaried can cut their outgo drastically
........Inclusion of registration and stamp duty fees under 80C not only reduces tax liability, but also saves the property buyer from further cash outgo. Also, an individual who has taken a home loan can avail of deduction towards principal repayment in the financial year. This will be above the R1.5-lakh rebate he gets on the interest amount paid towards the housing loan under Section 24. More importantly, even principal payment towards home loans taken from HUDCO qualifies for exemption under 80C. Also, subscription to the home loan account scheme of the National Housing Bank (NHB), or contributions made by an individual to any notified pension fund set up by NHB, also meet the deduction requirements......
Aadhaar enrollment agencies protest, stop work
......The enrollment imbroglio is the latest in a series of shocks for the project in recent weeks, with RBI suspending a plan to mandate Aadhaar-based biometric ATMs and the finance ministry stating that direct benefits transfer (DBT) can work even without Aadhaar. The development is significant amidst uncertainty at the UIDAI headquarters and field offices about the Aadhaar project's future under the new government.........
Read...........
RBI relaxes cap on United Banks loan sanctioning power
United Bank of India (UBI), which scripted a turnaround by returning to profitability in January-March quarter, has been allowed by the Reserve Bank of India (RBI) to consider loan proposals up to Rs 200 crore from 'AAA'-rate companies. The banking regulator had capped the lender's loan sanctioning power to Rs 10 crore following a rise in its bad assets and dip in the capital adequacy ratio...............
RBI introduces liquidity ratios for banks
............“The LCR would be binding on banks from January 1, 2015; with a view to provide a transition time for banks, the LCR requirement would be minimum 60 per cent for the calendar year 2015, i.e. with effect from January 1, 2015 and rise in equal steps to reach 100 per cent on January 1, 2019,” RBI said in a statement on Monday. Banks, however, has been asked to achieve a higher ratio than the minimum prescribed above as an effort towards better liquidity risk management. The move from the Indian banking regulator comes after the Basel Committee on Banking Supervision proposed certain reforms to strengthen capital and liquidity regulations in the aftermath of the global financial crisis of 2008.............
Lenders pitch for co to manage bad loans
...............“The prime concern of the banking sector representatives are long-term financing requirement for the infrastructure sector. Given the scale of the infrastructure projects these days, their gestation period is long and to support such projects in the future, the banking sector has asked the government to see that such schemes are formed.”...........
More Indians see inflation stabilizing: RBI survey
................The current survey, pertaining to the March quarter, was released on Tuesday. It found that 51.2% of the respondents expected prices to “increase by more than current rate” in the next three months, that is up to June. RBI said that in comparison, in the quarter ended September 2013, 74.5% of the respondents had been expecting prices to rise at more than the current rate in the next three-month period...........
Many PSB heads welcome Nayak panel report but with caution: BS poll
...............“The Nayak panel should have taken input from RBI before finalising the report. All the board level appointments are made after RBI’s approval of fit & proper. The selection committee for appointment of CMDs and executive directors is headed by RBI governor though he delegates one of the DG for the interviews. So RBI is also responsible for top appointments. RBI cannot wash off its hands if there is lack of governance in public sector bank’s boards,” said Pratip Chaudhuri, former chairman, State Bank of India..............
Same old problem for PSBs
...........The Nayak Committee addresses only the ownership issue, and the control and interference that comes with it. What about the operational issues in PSBs and the stubborn responses of its huge manpower? Poor customer service, lethargic approach to business development, the "clock-watching" approach of the staff and low productivity have all played havoc with the operational efficiency of PSBs............
DCCBs aid: State wants RBI to move first
.............RBI has rejected banking application of the DCCBs on the ground that they don't not have enough capital to cover the risks. Now, even though the state is ready to provide capital, it wants the RBI to first revive the three banks. But capital adequacy is the very condition on which RBI may grant a licence to revive the banks. An official communique from the state's information department says that the funds will be released if the RBI revives the banks' licences............
HCBL Bank reaches out to micro entrepreneurs
......However, they get a miniscule share of the price paid by consumers, as there is a long chain of middlemen involved. Majority of these artisans are poor and do not have resources to market their products directly. The Bank would allow these artisans to display their finished products in its branches for selling. Last year, HCBL had started opening savings bank (SB) accounts of beggars under financial inclusion and motivating them towards self-employment. So far, the Bank had opened accounts of 150 beggars in Lucknow under the relaxed Know Your Customer (KYC) norms of the Reserve Bank of India (RBI)...........
RBI holds the key to resolving HPL dispute
........Because the polymer producer has been defaulting on its own loan obligations for the past two years, lenders need clearance from the Reserve Bank of India (RBI) to make loans to TCG for its proposed purchase of HPL’s shares. Though TCG is likely going to mortgage other assets as well, RBI’s clearance is mandatory for banks to lend for this purpose, the government official said, adding that TCG has indicated to the state government that it has already approached banks for loans........
Canara Bank expands overseas network to New York
.............With the inauguration of New York branch, the Bank now has presence in 8 countries, namely, UK, USA, Hong Kong, China, Bahrain, South Africa, UAE and Russia. The Bank has plans to open branches/offices in Germany, Dubai, Brazil, Tanzania, Japan, Nigeria and Qatar during the current financial year. Overseas business of the Bank, which is at 5.72% of the total business as at March 2014 is projected to increase to 10% by end of FY15, the Bank said in a statement...........
Needed, a Holistic Approach to Savings
........All savings can then be exempt from tax both at the time of contribution and during the accumulation and growth phase, to be taxed only at maturity, that too if the money is used for consumption. However, if the money is re-invested in another saving instrument, the reinvested amount should, again, be exempt from tax. Moreover, there need be no limit to such tax exempt savings. It makes sense to extend the EET principle to ...........
Banking on following your money’s trail
.........Keeping a track of money spent is certainly not new. So, why are banks now offering their customers such a facility? “Personal financial tracking has become popular globally. On the basis of customer insight, we anticipated demand for such tools in India. With Internet and mobile banking usage rising, we looked at combining customers’ banking attributes with their desire to control finances and manage expenses,” .......
Directed Investment is Need of the Hour, Not Lower Rates
........However, a broad-brush tight monetary policy by itself may have limited efficacy in bringing down inflation in the current Indian context. In a paradoxical way, in fact, it might actually have unintended consequences of achieving just the opposite. India is not yet a borrow-and-spend economy . Only 18.6% of banking loans are towards retail and consumption. That means higher interest rates passes on as a higher input cost, through 81.4% of banking loans that go to producers and intermediaries. High interest rates penalise infrastructure investments that are needed to address the supply side. But, seeking lower rates across the board may be mis placed at this stage..........
Arun Jaitley for hitting ‘undo’ button to revive economy
Hitting out at the last UPA government for the labyrinth the economy has got into, finance minister Arun Jaitley on Tuesday hinted that many of the regime’s policies that stymied economic growth could be reversed. “The UPA left the economy in a bad shape. Things that have been done have to be undone,” he said in the Rajya Sabha in what was seen as an oblique reference to the UPA’s costly welfare schemes that strain government finances and investor-unfriendly policies like retroactive taxation...........
Tuesday, June 10, 2014
Will Rajan Lag Markets In Lower Interest Rates?
In two months before Duvvuri Subbarao took his first baby step of raising key rate by 25 basis points in April 2010 to fight inflationary pressures, yields on benchmark bonds had surged about a hundred basis points. A similar act may be playing out now on the Mint Street, though in the opposite direction. Market is flashing signs of lower interest rates though Reserve Bank of India Governor Raghuram Rajan is showing little signs of easing anytime soon. ........
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