Public sector banks may decide on interest rate cut soon (The hindu Business Line 7th jan 2008)Following the Finance Minister, Mr P. Chidambaram’s appeal to banks to reduce deposit and lending rates by 0.5 percentage points, the asset liability management committees of most public sector banks are likely to meet soon to take a decision on this..
At the quarterly performance review meeting with chief executives of public sector banks on Friday, the Finance Minister asked them to reduce interest rates in order to encourage investment and consumption to boost economic growth.
But most bankers feel that there is no great scope for reducing rates immediately, given the likelihood of a hike in domestic fuel prices and with inflation still tending towards the higher side. More
Ministry, RBI differ on NPA classification(The hindu Business Line 7th jan 2008)The Finance Ministry has taken the view that advances to infrastructure projects that face completion delay exceeding a year need not be classified as non-performing assets (NPAs) by banks so long as the interest component on the loan was being serviced.
This stance is, however, in contrast to the Reserve Bank of India (RBI) guidelines that require advances to infrastructure projects delayed by more than a year to be classified as NPAs even if interest was being paid on time.
Official sources said this issue had come up for discussion at the meeting that the Finance Minister, Mr P. Chidambaram, had with chief executives of public sector banks (PSBs) here on Friday. Indications are that the RBI may again be requested to review the guidelines. More
Subprime crisis to hit 4 big banks` profits (Business Standard 7th Jan 2008)
SBI, ICICI, BoB, BoI to book losses on credit derivatives.
State Bank of India (SBI), ICICI Bank, Bank of Baroda (BoB) and Bank of India (BoI) are set to book mark-to-market losses on the exposures of their foreign offices to credit derivatives, with the spreads on these widening since international lenders turned risk-averse following the crisis in the US subprime (or high-risk home loan) market.
Credit derivatives are instruments for which the underlying asset is a loan or a bond. Marking to market means valuing a portfolio based on the prevailing market price.
The significance of this move is that the net profits of the four Indian banks would be dented for the third quarter ended December 31, 2007, to the extent of the provisions that they decide to make. More
Licence to open bank branches may go (Business Standard 7th Jan 2008)
The mandatory licensing requirement for Indian banks to open branches may be done away with. The department of financial services is taking up the matter with the Reserve Bank of India (RBI) as banks are no more shying away from opening branches in semi-urban and rural areas.
The likely relaxation, however, will not apply to foreign banks.
“There is a case made out for dispensing with the mandatory licensing requirement with certain transparent safeguards to ensure an equitable distribution of bank branches in the urban and rural areas,” an official source said.
RBI might make it mandatory for banks to open one rural or semi-urban branch for every new urban branch that is opened, added the source. More
RBI measures may squeeze liquidity (Business Standard 7th Jan 2008)
Liquidity: May tightenLiquidity may not be as comfortable as it was last week. Even if the foreign exchange inflow into the equity market has resumed, the Reserve Bank of India (RBI) will intervene to check the inflow.
The central bank has been buying dollars in the spot market and selling them in the forward market with an underlying agreement to buy them back in the future.
The sell-buy swaps by RBI is postponing the piling up of the rupee liquidity in the market. The market is also likely to witness panic selling of dollars by exporters with every appreciation in the rupee-dollar exchange rate. More
At the quarterly performance review meeting with chief executives of public sector banks on Friday, the Finance Minister asked them to reduce interest rates in order to encourage investment and consumption to boost economic growth.
But most bankers feel that there is no great scope for reducing rates immediately, given the likelihood of a hike in domestic fuel prices and with inflation still tending towards the higher side. More
Ministry, RBI differ on NPA classification(The hindu Business Line 7th jan 2008)The Finance Ministry has taken the view that advances to infrastructure projects that face completion delay exceeding a year need not be classified as non-performing assets (NPAs) by banks so long as the interest component on the loan was being serviced.
This stance is, however, in contrast to the Reserve Bank of India (RBI) guidelines that require advances to infrastructure projects delayed by more than a year to be classified as NPAs even if interest was being paid on time.
Official sources said this issue had come up for discussion at the meeting that the Finance Minister, Mr P. Chidambaram, had with chief executives of public sector banks (PSBs) here on Friday. Indications are that the RBI may again be requested to review the guidelines. More
Subprime crisis to hit 4 big banks` profits (Business Standard 7th Jan 2008)
SBI, ICICI, BoB, BoI to book losses on credit derivatives.
State Bank of India (SBI), ICICI Bank, Bank of Baroda (BoB) and Bank of India (BoI) are set to book mark-to-market losses on the exposures of their foreign offices to credit derivatives, with the spreads on these widening since international lenders turned risk-averse following the crisis in the US subprime (or high-risk home loan) market.
Credit derivatives are instruments for which the underlying asset is a loan or a bond. Marking to market means valuing a portfolio based on the prevailing market price.
The significance of this move is that the net profits of the four Indian banks would be dented for the third quarter ended December 31, 2007, to the extent of the provisions that they decide to make. More
Licence to open bank branches may go (Business Standard 7th Jan 2008)
The mandatory licensing requirement for Indian banks to open branches may be done away with. The department of financial services is taking up the matter with the Reserve Bank of India (RBI) as banks are no more shying away from opening branches in semi-urban and rural areas.
The likely relaxation, however, will not apply to foreign banks.
“There is a case made out for dispensing with the mandatory licensing requirement with certain transparent safeguards to ensure an equitable distribution of bank branches in the urban and rural areas,” an official source said.
RBI might make it mandatory for banks to open one rural or semi-urban branch for every new urban branch that is opened, added the source. More
RBI measures may squeeze liquidity (Business Standard 7th Jan 2008)
Liquidity: May tightenLiquidity may not be as comfortable as it was last week. Even if the foreign exchange inflow into the equity market has resumed, the Reserve Bank of India (RBI) will intervene to check the inflow.
The central bank has been buying dollars in the spot market and selling them in the forward market with an underlying agreement to buy them back in the future.
The sell-buy swaps by RBI is postponing the piling up of the rupee liquidity in the market. The market is also likely to witness panic selling of dollars by exporters with every appreciation in the rupee-dollar exchange rate. More
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