The Reserve Bank of India (RBI) has asked banks not to treat Kingfisher Airlines' brand as collateral since it is intangible. This is because the loan has turned non-performing for most of the banks.
Seek easing of asset classification guidelines for better credit flow.
The sources said the ministry had agreed with the RBI's views that at a time when the country had a high fiscal deficit, the move might not be appropriate.
In a recent communication to the bank chiefs, the ministry has said all such loans to the corporate sector can be sanctioned only after board approval and need to be backed by securities within six months of sanctioning, failing which the loan would need to be phased out.
It had asked govt banks to reduce these and certificates of deposits to a combined 15% of total deposits
Diktat to four general insurance companies says 'avoid competition' in any corporate or group account
Regulator wants all existing products to be refiled.
Lender to acquire 30% after existing shareholders divest stake
With "profitable growth" replacing "expansion drive" as the buzzword in the sector, the country's top private life insurers have significantly reduced branches and employees over the last couple of years to cut costs and improve efficiency.
These products contribute almost 20 per cent to the total premium collection of life insurers.
Indian billionaire Shiv Nadar's foray into the insurance sector is likely to fructify soon. DLF Pramerica Life, seeking an Indian partner for its operation, is in talks with Nadar's HCL Group to sell a majority stake. According to those in the know, both parties are back on the table to iron out the nitty-gritty, after the deal got stuck a year back due to stringent guidelines.
According to sources, the central bank is keen on such a scheme to attract foreign exchange, as the country's reserves have seen a depletion in the wake of a weakening domestic currency.
The appetite for Indian assets is growing among investors from the land of the samurai. An appreciating yen, combined with slow economic growth, has persuaded many Japanese investors to explore opportunities beyond their national boundary, and India appears to be one of their preferences.
Ministry says capital infusion if loans extended only to productive sectors
High crude oil prices, which the central bank perceives as a risk to inflation, may limit the extent of rate cut to 25 basis points rather than 50 bps, economists said.
SBI keeps IDBI waiting for proposal to set up infra development fund
In January, banks had rejected SBI Caps' initial proposal on Air India's debt recast, which suggested converting a part of the carrier's debt into cumulative redeemable preference shares, with an eight per cent dividend.
UB Group Chairman Vijay Mallya has turned down suggestions from banks that he should give a personal guarantee as a precondition for additional funding to the cash-strapped Kingfisher Airlines.
The government must guarantee the entire loan and the interest rate, so that there is no additional provisioning requirement.
Air India's debt recast plan has hit a deadlock with both the national carrier and banks continuing to stick to their stand even as the regulator has disapproved providing dispensation, thus only compounding the problem.
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