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General Awareness Related to Banking - July 4th, 2013

FinMin to banks: Cut lending rates, target big defaulters :
Finance Minister P. Chidambaram today ‘advised’ public sector banks to cut base lending rates. He also asked the banks to focus on the top 30 loan defaulters. Chidambaram told newspersons after meeting the heads of public sector banks and financial institutions, “In my view, reduction of the base rate will be a powerful booster, will be a powerful stimulus to credit growth.” Banks, however, argue that provisioning requirements and cost of money have gone up by 50 basis points each. Chidambaram admitted that these two issues could restrict the rate cut, but told newspersons that bank heads had assured him during the meeting that they would review their base lending rates by this month end. Talking about the overall business environment, the Finance Minister said there was good credit demand from sectors such as agriculture, small and medium enterprises, and retail. In the infrastructure sector, there were signs of higher credit demand from road and non-conventional energy sectors, he said.

BoI cuts base rate by 25 basis points :
Public sector lender Bank of India (BoI) reduced its base rate by 25 basis points to 10 per cent on Wednesday. Earlier, the base rate of the bank was 10.25 per cent per annum. The revised rate will be effective from July 8, the bank said.

RBI cannot operate from ivory tower: Subbarao :
Central banks should look beyond just monetary policy and become ‘knowledge institutions’ to manage a globalised environment, said Reserve Bank of India Governor
D. Subbarao. Delivering a special address at the golden jubilee celebrations of the RBI Staff College here on Wednesday, Subbarao said the RBI should move up the value chain to position itself as a “knowledge institution”.

RBI relaxes bonds issue norms for NBFCs :
The Reserve Bank of India has, for now, relaxed the norm that requires non-banking finance companies (NBFCs) to have a minimum gap of six months between two non-convertible debentures (NCDs) issues. A decision on the appropriate minimum time gap would be taken by RBI in due course, the notification said. The central bank also asked NBFCs to put in place a resource planning and raising schedule before September-end. One of the main objectives of the restriction between two NCD issues was to promote discipline in resource planning and raising, it said. 

Housing finance regulator to back HDFC application for $500-m ECB:
National Housing Bank (NHB), the housing finance regulator, is favorably disposed to HDFC's application for a $500-million external commercial borrowing (ECB) for affordable housing projects in India. NHB will soon recommend HDFC's application to the Reserve Bank of India for the latter's approval, R.V. Verma, Chairman & Managing Director of NHB, told Business Line.

Top 30 bad loans make for half of NPA :
The top 30 bad loans in each commercial bank are responsible for almost half of the gross non performing accounts (NPA) in the Indian banking system. In case of state-run banks, it is Bank of India where the top 30 NPAs account for 73.4% of the gross NPA for the bank at end of March 2013. For public sector banks the top 30 NPAs worth Rs. 61, 123 crore constitute for 39.7% of the gross NPAs. Besides Bank of India, the other nine state run banks where the top 30 NPAs are above 50% of gross NPAs include Andhra Bank, Punjab & Sind bank, United Bank of India, Corporation Bank, Indian Bank, Vijaya Bank, UCO Bank and State Bank of Hyderabad. In case of new private sector banks, the top 30 NPAs worth around Rs. 114 crore constitute 34.6% of gross NPAs, while for old private sector banks it is 66.4% of gross NPAs.
General Awareness Related to Banking - July 4th, 2013 Reviewed by Manohar Veera on 10:00:00 AM Rating: 5

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