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Banking Related General Awareness-IIBF Vision June 2011

Rs.25 lakh home loan now priority sector lending
On account of increase in prices of residential properties
in urban areas, RBI has raised the housing loan limit up to
Rs25 lakh against the existing Rs.`20 lakh to be eligible for
classification as priority sector lending.

RBI amends eligibility criteria for use of OTC forex

RBI has amended the eligibility criteria for users of Over
the Counter (OTC) foreign exchange derivatives in order
to overhaul the risk management practices. Accordingly,
listed companies and their subsidiaries / joint ventures /
associates having common treasury and consolidated
balance sheet; or unlisted companies with a minimum net
worth of Rs.200 crore would be permitted the use of OTC
derivatives. In the earlier guidelines, unlisted companies
with a minimum net worth of Rs.100 crore were allowed
to use OTC derivatives. Apparently, RBI wants only
those companies which are in a position to take part in the
OTC derivatives market, given the potential risks. This is
to ensure good risk management practices.

Banks cannot provide loans against IDRs : RBI
As per RBI's directives, banks cannot extend loans against
Indian Depository Receipts (IDRs) issued by overseas
companies. An IDR is Rupee-denominated in the form of a
depository receipt created by an Indian depository against
the underlying equity of the issuing foreign company.
It is similar to American or Global Depository Receipts
(ADRs), where Indian companies raise resources overseas.
IDRs enable foreign companies to do the same from India
and are listed on the stock exchanges in the country.

Public sector banks surpass expectations
PSBs have surpassed the target set for them by the
Government under its ambitious Financial Inclusion
Plan. In FY2011, 21 PSBs and five associate banks of
State Bank of India (SBI) collectively brought basic
banking facilities to 26,630 villages - i.e. 118% of the
target of 23,629 villages. The Government, in association
with RBI, had set these targets to reach the benefits of
banking services to the common man.
Reporting Forex Derivative deals above $1,00,000
mandatory : RBI

An RBI working group has recommended that derivative
deals - both forward and swap - worth $1,00,000 or more
should be reported to the agency working as repository.
The Clearing Corporation of India (CCIL) should be
made a reporting platform for such over-the-counter
(OTC) derivative deals in interest rates and foreignexchange for confidentiality. The group was headed by Mr. P. Krishnamurthy, Chief General Manager, RBI

M. D. Mallya elected chief of IBA
The Managing Committee of the Indian Banks'
Association (IBA) has elected Mr. M. D. Mallya, CMD,
Bank of Baroda, as the Chairman, IBA, for 2011-12.


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