‘Losses from small ticket loans, cards to rise’ (The Hindu Business Line 9th Jan 2008)Loss levels in small ticket personal loans and a portion of credit card receivables, which are currently at 7-9 per cent, could rise to 10-13 per cent in three years, said a report by Crisil Ratings.Terming this segment as ‘sub-prime’ assets in the Indian context, the report said that these are unsecured loans between Rs 5,000 and Rs 25,000-30,000. Of the total credit card receivables, about 15-20 per cent falls in the profile of low income groups. The total retail assets of the Indian banking industry are about Rs 4 lakh crore. Of this the ‘sub-prime’ segment forms about 5 per cent or Rs 20,000 crore, said Mr Tarun Bhatia, Head, Corporate and Government Ratings. More
Banks throng global markets for funds (Business Stndard 9th Jan 2008)
Lenders prefer syndicated loans over bonds to avoid provisioning.
Indian banks are flocking to the international market for raising funds, despite the sub-prime crisis squeezing out liquidity globally.
According to bankers involved in fund syndication for banks, the borrowing pattern has shifted from issuing bonds to taking loans.
ICICI Bank, which used to raise funds through bonds, has now mobilised around $1 billion by way of tranches and maturities of loans.
The five year loan of ICICI Bank fetched a spread of 59-60 bp over London interbank-offered rate (Libor), whereas the bonds of ICICI Bank are trading at a spread of 225-230 basis points over Libor, said a bank active in loan syndication for Indian banks.
Libor is the international interest rate benchmark and one basis point is one hundredth of a percentage point. More
Banks` capital needs may rise (Business Stndard 9th Jan 2008)
Lenders have to make provision for new risks to meet Basel-II norms from April.
The capital requirement of banks may go further up with the Basel-II guidelines set to come into force from April 2008. In addition to the market, operational and credit risks, the Reserve Bank of India (RBI) proposes to include residual risk.
According to bankers, the residual risk forms a part of the second pillar of Basel-II norms. The first pillar deals with the maintenance of credit, market and operational risks.
The residual risk involves management of various other risks, including systemic, pension, concentration, strategic and legal risks. More
Banks throng global markets for funds (Business Stndard 9th Jan 2008)
Lenders prefer syndicated loans over bonds to avoid provisioning.
Indian banks are flocking to the international market for raising funds, despite the sub-prime crisis squeezing out liquidity globally.
According to bankers involved in fund syndication for banks, the borrowing pattern has shifted from issuing bonds to taking loans.
ICICI Bank, which used to raise funds through bonds, has now mobilised around $1 billion by way of tranches and maturities of loans.
The five year loan of ICICI Bank fetched a spread of 59-60 bp over London interbank-offered rate (Libor), whereas the bonds of ICICI Bank are trading at a spread of 225-230 basis points over Libor, said a bank active in loan syndication for Indian banks.
Libor is the international interest rate benchmark and one basis point is one hundredth of a percentage point. More
Banks` capital needs may rise (Business Stndard 9th Jan 2008)
Lenders have to make provision for new risks to meet Basel-II norms from April.
The capital requirement of banks may go further up with the Basel-II guidelines set to come into force from April 2008. In addition to the market, operational and credit risks, the Reserve Bank of India (RBI) proposes to include residual risk.
According to bankers, the residual risk forms a part of the second pillar of Basel-II norms. The first pillar deals with the maintenance of credit, market and operational risks.
The residual risk involves management of various other risks, including systemic, pension, concentration, strategic and legal risks. More
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