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Banking related General Awareness :: August 25 2013

Govt shaves 16 basis points off borrowing costs in 2012-13 :
In 2012-13, the Centre borrowed money from the market at a weighted average yield of 8.36 per cent, the Reserve Bank of India said in its annual report. It shaved off 16 basis points from its borrowing costs of the previous year when it paid an average of 8.52 per cent. The Government’s gross and net borrowings were at Rs 5,58,000 crore and Rs 4,67,400 crore, respectively. The weighted average maturity of the borrowings last year was at 13.50 years, improving from 12.66 years previously due to a large volume of long-dated securities. The RBI, as the debt manager to the Government, is tasked with the job of minimising cost and lengthening the maturity profile of such borrowings to reduce rollover risk

Debt recast : Takru to meet top bankers next week :
With no let up in the number of companies seeking debt recast from banks, Financial Services Secretary Rajiv Takru will brainstorm with top bankers in Mumbai next week to evolve a framework to separate the wheat from the chaff. Due to concerns that corporates are taking undue advantage of the banking industry-promoted corporate debt restructuring (CDR) cell, the meeting is expected to examine whether an independent oversight committee needs to be constituted to vet debt recast proposals. Further, the possibility of having lenders’ representative on the board of the company which is undergoing debt restructuring will also be considered. This will help banks closely monitor the revival of the company. The oversight committee that has been mooted will comprise experts from the fields of finance, law, technology and industry. The committee will act as an advisory body, helping filter the CDR proposals referred by banks/companies so that only genuine cases reach the CDR cell. In the first quarter (April-June 2013), 27 corporate debt recast cases aggregating a debt exposure of about Rs 39,000 crore were referred to the CDR cell. For the banking system as a whole, the restructured standard assets to gross assets ratio rose to 5.7 per cent as at March-end 2013 from 4.7 per cent as at March-end 2012. This ratio in the case of public sector banks deteriorated to 7.1 per cent from 5.7 per cent.

V. Kannan to head Vijaya Bank:
The Centre has appointed V. Kannan as Chairman and Managing Director of Vijaya Bank. Kannan, who is currently an Executive Director at Oriental Bank of Commerce, is expected to assume charge of his new role on January 1 next year. The Centre has also appointed Suresh N. Patel as Executive Director of Oriental Bank of Commerce. Patel will assume charge as ED of Oriental Bank on January 1 when Kannan moves over to Vijaya Bank. Patel is currently General Manager at Dena Bank.

RBI penalizes 6 PSBs for violating KYC, AML norms :
The RBI on Friday penalized six banks for violation of know-your-customer (KYC) and anti-money laundering (AML) norms. The central bank also issued a cautionary letter to IndusInd Bank. The action follows scrutiny of bank books, internal control and compliance systems and processes of officers during April and May 2013, after online portal Cobrapost alleged rampant violation of KYC and AML rules in bank branches in their sting operation. Allahabad Bank was fined Rs. 50 lakh, Bank of Maharashtra Rs. 50.1 lakh, Corporation Bank Rs. 1.5 crore, IDBI Bank Rs. 1 crore, Dena Bank Rs. 2 crore and Indian Bank Rs. 1 crore. The RBI clarified that its investigation did not reveal any prima facie evidence of money laundering.

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