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August 1, 2001
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Money > Business Headlines > Report August 1, 2001 |
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Banks averse to lending to UTI till RBI waives market exposure normsBS Banking Bureau Some of the public sector banks are unwilling to lend money to the beleaguered Unit Trust of India unless they get permission from the Reserve Bank of India to expand their capital market exposure. "Even if it is within the RBI stipulated norms, we would like a formal clearance from the central bank," the chairman of a large state-owned bank said. The banks have also made it clear that they will not accept any of the so-called K-10 stocks as collateral. The banks are allowed capital market exposure of up to five per cent of their total advances portfolio. Since UTI will offer stocks as collateral, they will be treated as capital market exposure. The banks are also concerned about the individual credit exposure limit while lending to UTI. The Trust is seeking funds to the tune of Rs 40 billion for meeting possible redemption pressures in the next few months in the US-64 scheme. The banks are keen on extending credit for up to six months-which can be rolled over-at an interest rate of 10 per cent per annum. Some of the banks have already extended a line of credit to UTI. The list includes the State Bank of India (Rs 15 billion), Central Bank of India (Rs 2.50 billion), Oriental Bank of Commerce (Rs 2.50 billion), Union Bank of India (Rs 5 billion), Bank of Baroda (Rs 3 billion) and Punjab National Bank (anywhere between Rs 3 billion and Rs 4 billion). Powered by YOU MAY ALSO WANT TO READ:
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