Reserve Bank of India has stepped up checks on the use of funds borrowed from its liquidity window. The Central bank is keen to see that such funds are not diverted for lending purposes. Net borrowing by banks rose to a record Rs 1,48,490 crore (Rs 1484.90 billion) on Tuesday.
The plan of action ranges from drawdown of loans to seeking additional guarantees, to even recalling some of the loans, if the situation so warrants.
Banks have been told by the Reserve Bank of India (RBI) to be more transparent and levy reasonable penal charges.
Banks are starting to fall in line with the Reserve Bank of India's position on so-called teaser home loans. Even as the country's largest lender State Bank of India stood its ground, several other banks have said they could go slow on teaser loans -- home loans bearing an introductory lower interest rate for a stipulated period of time.
The ensuing liquidity crisis has prompted many MFIs to seek a moratorium on loan repayment to banks.MFIs raise 75-80 per cent of their funds via bank borrowings, 15 per cent from equity and another 10 per cent from other sources like cash securities.
Stung by the controversy over the sudden sacking of the Managing Director at India's largest microfinance institution, SKS Microfinance, lenders have decided to raise corporate governance issues at board meetings of other MFIs.
Mapping of spreads means effective rates in the base rate system are lower.
At a meeting with the central bank, bankers opposed the entry of new banks, as there were enough players already. Newer entrants would only increase "unnecessary" competition and deplete their margins, top bankers told central bank officials.
In an effort to grab a share of the hefty Diwali bonus to employees in government and corporate sector, country's largest lender State Bank of India may raise the interest rate on term deposit rates in next few days.
Banks are putting up stiff resistance to Reserve Bank of India's move to deregulate the interest rate on savings bank accounts -- the last bastion of administered rates. Banks benefit from low-cost savings deposits.
Customers can meet in the Sapphire conference room, put away their valuables in the Topaz locker room and freshen up in the Opal dressing room.
The appointment of a deputy governor to the country's central bank has always been surrounded by controversy. And this time is no exception. One of the Reserve Bank of India executive directors, C Krishnan, who was called to an interview for the post, has declined to appear before the search committee. The interview was scheduled for September 9.
According to RBI sources, the government -- which appoints deputy governors -- is of the view that it will do away with the practice of reappointment to important posts like chairman of the Securities and Exchange Board of India, RBI, National Bank for Agriculture and Rural Development.
With a rising proportion of Non-Performing Assets in education loans, banks have approached the government, seeking protection in the form of a credit guarantee fund of at least Rs 2,500 crore.
The ministry has told the government banks to put the system in place by March 2011.
The government has proposed a new regulatory architecture for large financial institutions, by establishing "a college of supervisors" comprising representatives from various regulatory agencies.
As the first quarter review of the credit policy approaches, voices from the market are getting louder by the day that 'baby steps' may not be sufficient to fight rising prices.
Insurers say there is not enough time for them to adopt the guidelines and enforce them within the stipulated time.
The raising of key rates by the Reserve Bank of India is expected to ease the transition to the base rate mechanism, which came into effect from July 1.
A senior bank official said the preliminary report would come in three months.
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