Home loans up to Rs 10 lakh get 1% interest rate subsidy

Affordable housing, especially in non-metros, could get a much-needed boost with the Government on Thursday approving the one per cent interest subvention scheme for housing loans up to Rs 10 lakh. The Centre has allocated Rs 1,000 crore for the scheme.Under the new scheme approved by the Cabinet, the interest subsidy will be made available through commercial banks and housing finance companies for construction/purchase of a new house or extension of an existing one. This will be allowed so long as the cost per housing unit does not exceed Rs 20 lakh. The move augurs well for the sector as it comes at a time when there has been a notable slide in the flow of credit to the sector. This was largely...

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RBI not for single market regulator

The Reserve Bank of India has reservations about the unified market regulator approach recommended by the Raghuram Rajan Committee report on Financial Sector Reforms. It wants the current silo approach to the regulation of financial markets to continue for preserving financial stability.Exercise oversight “Unlike equity prices, interest rates and exchange rates are key macroeconomic variables with implications for monetary policy and overall macroeconomic stability. In addition, banks dominate the interest and exchange rate markets. By also being the regulator of these markets, the RBI is in a position to exercise oversight of institutions, markets and products, to monitor market developments……...

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'RBI to exit expansionary stance before others

The easy monetary stance, which has been adopted by the Reserve Bank of India (RBI) since October last year, might be reversed before other economies due to inflationary pressures, Reserve Bank Governor D Subbarao indicated today.“We may have to take the call (to exit) sooner than most other countries. Because as we know inflationary pressures are showing up and we need to be sensitive to them,” Subbarao said at a banking seminar organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) and Indian Banks’ Association.He, however, was candid in admitting that RBI had no clear idea on when to exit the current accommodative policy stance.“The current state of expansionary monetary...

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Uniform retirement age for tribunal chairpersons favoured

The Law Commission has recommended that the Centre fix a uniform retirement age of 70 years for chairpersons of tribunals and 65 years for members against the present limit of 68 for chairpersons and 62 years for members.In its 232nd report, the Commission, headed by Chairman Justice A.R. Lakshmanan, has said: “It needs no mention that an enhanced age of retirement is prescribed in the higher echelons of the administrative and judicial services because the professional experience gained by those working in them needs to be fully tapped for the good of society.”“In the present liberalised economic era, the experience gained by government employees is being fruitfully tapped after their retirement...

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Norms soon to make banks UID-ready

The Unique Identification Authority of India (UIDAI) would draw up standards for banks in the next six months to make them UID-ready. Based on the standards, the banks should put their systems in place by the time the first UID numbers are rolled out in the next 12-18 months, Mr Nandan Nilekani, Chairman, UIDAI, said.“UID and financial inclusion go hand-in hand. It will help banks reduce financial costs while reaching out to the poor,” he said in his address at the FICCI-IBA seminar.Banks will be the enrolling partners and the users of the authentication service, he said.The UIDAI has initiated talks with the Indian Banks’ Association, the RBI, SEBI, IRDA, LIC, TRAI and PFRDA to get their feedback.DatabaseUIDAI...

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RBI Deputy Governor’s term extended by two years

The RBI Deputy Governor, Ms Shyamala Gopinath, has been given a two-year extension till June 20, 2011. She was appointed as Deputy Governor in 2004 for five years, and her term was to expire this year.Ms Gopinath handles, among others, the Internal Debt Management Department, the Foreign Exchange Department, the Department of Non-Banking Supervision, the Department of External Investments and the Operations and Financial Markets Departme...

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RBI to introduce 100 crore Rs 10 plastic note

Soiled notes may soon be a thing of past with the Reserve Bank planning to introduce Rs 10 polymer banknotes whose life span would be 4times the normal currency notes and would be difficult to imitate.The apex bank has initially decided to introduce 100 crore pieces of Rs 10 polymer notes, for which it has floated a global tender, a senior central bank official said.Explaining the rationale for introduction of polymer notes, the official said, these notes would have an average life span of 5 years compared to one year for the currency notes.Besides, the official said, these notes are cleaner than paper notes and it would be difficult to counterfeit the currency.The polymer notes were first introduced...

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High capital base needed for banks with PE arm: RBI

Soon banks such as ICICI Bank, Axis Bank and State Bank of India with a private equity (PE) arms may have to keep enhanced capital base to mitigate risks arising from such exposures.The private equity business of banks involve reputational risk as people putting money (into private fund) look at credentials of those banks.“So you have to recognise that this requires some capital. So some capital need to be provided for that,” RBI Deputy Governor Usha Thorat told reporters on the sidelines of the Ficci-IBA Banking Summit here today.It meant banks would have to maintain additional capital if they were sponsoring and floating private equity funds, she added. She said that RBI would shortly be issuing...

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RBI frowns on sub-PLR loans, bankers resist

The Reserve Bank of India (RBI) is against lending by banks below their benchmark prime lending rates (BPLRs) — a stance that has met with stiff opposition from bankers.The central bank’s committee on BPLR review, which met last week, was of the view that the practice of lending below BPLR needed to be discouraged in order to make pricing of risk more transparent.According to a banker who attended the meeting of the panel, which is headed by RBI Executive Director Deepak Mohanty, the central bank was of the view that core deposits of the banks should not be used for lending below the prime lending rate.About three quarters of the bank lending happened at sub-BPL rates, while core deposits constituted...

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Banks step back as you draw out!

Banks are not geared up for such a steep rise in volumes.Confess! Haven’t you all been going to bank ATMs regularly during the past few months? The sharp rise in the number of transactions at ATMs in the country seems to prove it.You probably wanted to check out if it was really true that you could draw your money from any ATM. And barring an occasional hiccup, you got the money. And you were able to check out your bank balance on a daily basis – following up every credit that came into your account and carefully monitoring the debit of every amount from the account. Just admit it.Data from the National Payments Corporation show that the number of balance enquiries at the ATMs went up 14 fold...

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Farm growth expectation unchanged: RBI

Despite the country experiencing deficient rainfall, the Reserve Bank of India (RBI) has not changed its growth projections for the agricultural sector in the current financial year.It expects the farm sector to grow at 4 per cent in 2009-10.“It (farm growth expectation) was given in the month of July. It will be again given in October. Till October, we are not going to change the number,” KC Chakrabarty, deputy governor of RBI, told at the sidelines of a seminar on Monday.He, however, said drought would always be a concern. He highlighted the need for relocation of surplus agricultural labour to other sectors for sustaining economic growth. When asked if extension of repayment under farm loan...

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RBI to ensure regular supply of fresh bank notes

Besides examining options to enhance the life of bank notes, the Reserve Bank of India has initiated a multi pronged approach involving regular supply of fresh bank notes, speedier disposal of soiled bank notes and extended mechanisation of cash processing activity to ensure that good quality bank notes are in circulation in the system. The Bank has in its Annual Report stated that during 2008-09, the value of bank notes increased by 17.1 per cent and by 10.7 per cent in volume terms. The total supply of bank notes by the Bharatiya Reserve Bank Note Mudran (P) Ltd during 2008-09 (July-June) was 8,501 million pieces as compared with 8,488 million pieces during 2007-08.The Government-owned Security...

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Govt extends agri debt relief scheme

The government has extended the debt relief scheme for farmers with land holdings in excess of 5 acres by six months till December. It has also given banks the discretion to make payments out of provisions set aside for such loans in case the farmer is unable to repay three-fourth of the loan amount as stipulated by the scheme, according to a Reserve Bank of India circular on Monday. The remaining 25% of the loan will continue to be provided by government under the compromise package to banks. According to MV Nair, chairman, Indian Banks’ Association, and chairman, Union Bank of India, the move will enable banks to speedily settle farm loans and reduce non-performing assets from bank balance...

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