With interest rates softening, banks are slowly re-pricing the cost of short-term credit extended to the corporate sector.
"This is for the first time that a manufacturer will charge for an application form. However, it will be refunded if an application is rejected," said a senior bank executive. Bookings are expected to start by the last week of March. The forms will be collected through various channels. "All the forms and the collected money will be transferred to SBI, where they will be processed, and loans will be given through various banks within 90 days," said a source.
To take up debt restructuring of cash-strapped retailer.
Public sector banks could see higher pressure on their net interest margins in the coming months as they have mopped up large amounts of deposits at higher rates and have also effected steep cuts in lending rates between November 2008 and January 2009.
Public sector banks are increasingly looking at promoter funding as a business opportunity when others are shying away from it.
The study conducted at select bank branches in the Cuddalore district of Tamil Nadu has found that the lack of financial literacy was the main reason behind the non-operative accounts. Other aspects like distance from branches also had their share in influencing the degree of usage.
Banks led by State Bank of India are set to lower deposit rates by over 50 basis points by the middle of the month, followed by a reduction in lending rates.
Banks and financial institutions are seeking more flexibility in dealing with commercial and industrial loan accounts, which are seeing pressure due to cash flows and repayment.
Cash-strapped real estate firms are resorting to short-term borrowings of funds to complete ongoing projects as the economic slowdown has virtually halted demand for properties, freezing cash flows.
Gone are the days when banks would treat payment delays as part of life. Instead, they are taking measures to minimise chances of any kind of payment default by doing rigorous background checks.
Asks lenders to make sure that end use of advances to commercial real estate.
The slowdown coincides with rising loan defaults by retail customers and small enterprises, which have been hit by a steep rise in lending rates. The resource scarcity has changed the priority of investors. They want to remain liquid and not commit their funds to the long term.
At this time of fear and apprehension over jobs, public sector banks are swimming against the tide to go on a hiring spree.
Kerala-based private sector lender Dhanalakshmi Bank plans to recruit close to 400 employees, almost one-third of its present strength, to build up the existing team to tap more business
Most banks are going slow on clearing such loan applications as the employment scenario has turned adverse due to the financial crisis faced by most companies.
It is mission damage control and ICICI Bank is pulling out all the stops. Weighed down by persistent rumours over its health, the bank's top management will meet senior employees on Monday to reassure them about their future.
Some banks decide not to roll over short-term loans; others will do it only at higher interest.
Bankers have suggested that the Reserve Bank of India lower the statutory liquidity ratio and the cash reserve ratio as the present liquidity crunch is affecting their business. During the mid-term resource management discussion with the RBI team led by Deputy Governor Rakesh Mohan, the country's top bankers said the tight liquidity condition was pushing up the cost of funds and putting further pressure on margins.
The regulator wants to know if banks deploy the money to meet lending needs. Sources close to the development said that the central bank was checking if banks used the liquidity adjustment facility (LAF) for raising resources to meet short-term lending needs or pay off high-cost bulk deposits. Bankers said the central bank might be worried that the steps taken by it so far had not eased the liquidity situation and that call rates remained high.
A senior SBI official said bank branches and controlling offices face a piquant situation where the top management expects prompt action, including filing of a first information report, while the local police is reluctant to register complaints often due to political pressure. Of late, investigative agencies have raised concerns over the large circulation of counterfeit notes.
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