RBI announces further measures to boost liquidity, credit flow.
Our Bureau
Mumbai, Nov. 15 In yet another set of measures to further boost liquidity and
enhance credit flow, the Reserve Bank of India on Saturday eased prudential
norms for banks' exposure to sensitive sectors such as the capital market and
commercial real estate.
The provisioning requirement for banks on standard advances in the commercial
real estate sector, personal loans, and capital market exposure and NBFCs (ND)
has been reduced to 0.40 per cent from 2 per cent. (RBI had earlier
progressively increased this from 0.25 per cent to 2 per cent.)
The provisioning for home loans beyond Rs 20 lakh has also been reduced to 0.40
per cent, from 1 per cent.
RBI has also allowed banks to pay more interest on NRI deposits, to avail
themselves of additional liquidity support to the tune of Rs 22,000 crore under
the export credit refinance facility, and park funds with SIDBI and NHB to meet
the shortfall in priority sector lending.
Further, Indian corporates are permitted to buy-back or pre-pay FCCBs, and
exporters are allowed pre-shipment rupee credit for 90 more days.
In order to help mutual funds and non-banking finance companies, which are
still facing funds shortage, the RBI has decided to extend the special term
repo facility till end-March 2009. Banks can avail themselves of this facility
either on incremental or rollover basis within their entitlement of up to 1.5
per cent of Net Demand Time Liabilities.
Housing finance companies, which are also facing a shortage of resources, have
been allowed to raise short-term foreign currency borrowings under the approval
route, provided they are registered with National Housing Bank and comply with
the prudential norms.
In a move to attract more foreign funds, RBI increased the interest rate
ceiling on foreign currency non-resident (banks) and non-resident (external)
rupee term deposits by 75 basis points each with immediate effect. The interest
rate ceiling on FCNR deposits is now Libor/Swap rate plus 100 basis points
while that on NRE term deposits is Libor/Swap rates plus 175 basis points.
Since FCCBs issued by Indian corporates are currently trading at a discount,
the central bank said there would be benefit to the company concerned as well
as to the economy if corporates buy back the FCCBs at the prevailing discounted
rates. In view of these potential benefits, RBI would consider proposals from
Indian companies under the approval route to prematurely buy back their FCCBs.
The buy-back should be financed from the company's foreign currency resources
held in India or abroad and/or out of fresh external commercial borrowings.
Extension of FCCBs would also be permitted at the current all-in cost for the
relative maturity.
Risk weights on banks' exposures to certain sectors have also been revised
downwards. All unrated claims on corporates will attract a uniform risk weight
of 100 per cent as against the risk weight of 150 per cent for such exposures
prescribed earlier.
Claims secured by commercial real estate will attract a risk weight of 100 per
cent as against the earlier risk weight of 150 per cent. Claims on rated as
well as unrated non-deposit taking systemically important non-banking financial
companies will be uniformly risk weighted at 100 per cent.
http://www.thehindubusinessline.com/2008/11/16/stories/2008111651270100.htm
The only use of an obstacle is to be overcome. All that an obstacle does with
brave men is, not to frighten them, but to challenge them.
--~--~---------~--~----~------------~-------~--~----~
You received this message because you are subscribed to the Google Groups
"Kences1" group.
To post to this group, send email to [email protected]
To unsubscribe from this group, send email to [EMAIL PROTECTED]
For more options, visit this group at
http://groups.google.com/group/kences1?hl=en
-~----------~----~----~----~------~----~------~--~---
<<inline: 2008111651270101.jpg>>
