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Banking related general awareness :: September 13, 2013

Union Bank of India plans to raise $500 m abroad :
With the Reserve Bank of India doubling the overseas borrowing limit of banks, Union Bank of India is planning to raise about $500 million, according to a top bank official. The overseas borrowing will be in the form of bilateral loans of one to two year duration. The public sector bank will raise the resources from one of the two international locations — Hong Kong or Dubai, where it has branches. The bank expects to tie up the funds at a mark-up of less than 2 percentage points over the benchmark Libor (London Interbank Offered Rate). “But then if you add the swap cost of about 6.5-7.0 per cent, the overall borrowing cost might come to about 8.5-9.0 per cent

RBI to create central repository on large credits :
The Reserve Bank has decided to create a central repository on large borrowers — both individuals and entities — with exposure of more than Rs 10 crore to help banks deal with credit risks. The RBI, in a notification, said it is necessary to build a repository of large credits and share with the banks for enabling them to be aware of building leverage and common exposures.

Religare Health ties up with UBI :
Religare Health Insurance inked a corporate agency agreement for distribution of health insurance products with Union Bank of India on Thursday. Union Bank currently has a tie-up with New India Assurance for distribution of general insurance products and Star Union Dai-ichi Life Insurance for life insurance products. At present, the standalone health insurer is servicing about six lakh policyholders. According to officials from Union Bank, the health insurance products of Religare will mainly target its high net worth customers.

 Call drops a tad, bond yields harden :
The inter-bank call money rates, the rates at which banks borrow from each other to meet their short term fund requirements, ended a tad lower at 10.20 percent from the previous close of 10.25 percent. Bond yields hardened slightly to 8.49 percent from the previous close of 8.46 percent. The 7.16 percent government bond, which matures in 2023, closed lower at Rs. 91.26 from Wednesday’s close of Rs. 91.48. Bond yields and prices move in opposite directions.

Tata Capital, axis Bank in talks with PFRDA for pension AMC :
Tata Capital and Axis Bank are in talks with the Pension Fund Regulatory and Development Authority (PFRDA) to set up a pension fund asset management company (AMC). While Life Insurance Corporation, UTI and State Bank of India manage the public and private sector National Pension System (NPS), HDFC, ICICI, Kotak Mahindra, Reliance Capital and DSP BlackRock manage the private sector one. DSP Blackrock, the latest entrant, started operations in November 2012. The Centre had adopted the NPS for of all entrants to central government services, excluding the armed forces, with effect from January 1, 2004. With effect from May 1 2009, PFRDA made NPS available to all citizens, on a voluntary basis. With the Pension Bill now being passed by both the Houses of Parliament, it is expected NPS would become more attractive and organised.

Allow banks to offer us fresh loans : MFIs to RBI :
Microfinance companies, which restructured their debts in 2011, have requested the Reserve Bank of India (RBI) to allow banks to offer them fresh loans. The move follows the central bank turning down their request for a special dispensation to allow banks to restructure the loans for the second time, without changing the asset classification. The crisis in the microfinance sector has left these micro-lenders with negative net worth. According to norms, banks aren’t allowed to give fresh loans to companies that have negative net worth. 

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