Livemint Jan 17, 2012
Mumbai: A finance ministry-constituted advisory group on the workings of
asset reconstruction companies (ARCs) has recommended sweeping changes
to develop the industry and help banks reduce bad assets even as the
Indian banking sector is seeing a record rise in bad loans.
ARCs are in the business of buying bad loans from banks at a discount
and recovering them. They buy loans by paying cash or offering security
receipts (SRs) that get redeemed after a few years.
Introduction
of a standard process for the sale of bad loans to ARCs and allowing
banks to write off bad loans gradually rather than taking a one-time hit
are essential to revive the industry, said the 41-page report submitted
to the ministry on 30 December.
Mint has reviewed the report.
The
advisory group has made 18 recommendations, including allowing ARCs to
trade debt among themselves, letting non-banking financial companies
sell bad loans to ARCs, increasing foreign participation and allowing
bad debts to be converted into equity.
Thursday, January 19, 2012
Thursday, January 12, 2012
0.25% cut in interest rates likely: SBI
By B Krishna Mohan Jan 11 2012 , Hyderabad
(SBI).
“With Inflation cooling down, I expect the interest rates to soften by about 25 bps. But we have to wait and see to know what is in store actually,” he said.
SBI has not seen any slippage in the net interest margin (NIM) and is expected to be in line with the guidance of 3.5 per cent, he said in Hyderabad on Wednesday.
The bank has restructured loans of several entities, but companies, particularly in the agri, automobile, ancillary and textile, are in the offing. The public sector bank will deal with each CDR (corporate debt restructuring) case on merit.
The effect of the debt restructuring will be partly visible in the third quarter result, which are to be announced in February. He also declined to comment on the non-performing assets (NPAs) during the quarter. “They (NPAs) are not as bad as we have expected,” he said without putting a number to it.
SBI had kept a watch on the NPA numbers by putting in an additional monitoring wing led by an official in the ranks of deputy general manager. It had also formed in-house recovery teams comprising officials and clerical staff to deal with the NPAs. Though the teams are not new, they are on the field with a special focus.
“SBI is making efforts to reduce the dependency on the outside agencies for recovery to the maximum extent possible. The in-house teams will track the accounts and alert the concerned clients for payments,” he said.
Kumar said SBI has been using the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act that allows banks to take possession of securities and auction them for recovery.
On credit offtake, he said it is expected to grow between 16 to 18 per cent and deposits by 18 to 20 per cent in the fourth quarter of this financial year, he said adding that the focus will be on retail deposits and not bulk deposits. It has no plans to tinker the interest rates in the short term.
He said there is no stoppage of credit from SBI and it has already sanctioned many loans buy the corporate clients are waiting for a policy decision for the rates to come down.
On a query on the need for change in the provision norms, Kumar said SBI has not asked the RBI for any changes in percentage for the provisions.
On the savings account number portability, Kumar said that is a good concept, but its implementation will be fraught with some challenges that will require the banks to invest on the technology, tweak its core banking systems and make other changes.
During the year, SBI expects to recruit about 5,000 people at the official and clerical levels.
SBI, which successfully experimented with a ‘HNIs only’ branch in Hyderabad, on Wednesday has launched Vasundhara Senorita, an exclusive branch for women on the lines of the one existing at Lucknow.
Though aimed at women entrepreneurs, the branch will look to attract women customers across all strata. Men will allowed to carry out transaction in the branch but only as secondary account holders, as women will be the primary account holders.
All the banking paraphernalia apart, the branch has a play pen to keep the accompanying children busy, while the women make their banking transactions.
(SBI).
“With Inflation cooling down, I expect the interest rates to soften by about 25 bps. But we have to wait and see to know what is in store actually,” he said.
SBI has not seen any slippage in the net interest margin (NIM) and is expected to be in line with the guidance of 3.5 per cent, he said in Hyderabad on Wednesday.
The bank has restructured loans of several entities, but companies, particularly in the agri, automobile, ancillary and textile, are in the offing. The public sector bank will deal with each CDR (corporate debt restructuring) case on merit.
The effect of the debt restructuring will be partly visible in the third quarter result, which are to be announced in February. He also declined to comment on the non-performing assets (NPAs) during the quarter. “They (NPAs) are not as bad as we have expected,” he said without putting a number to it.
SBI had kept a watch on the NPA numbers by putting in an additional monitoring wing led by an official in the ranks of deputy general manager. It had also formed in-house recovery teams comprising officials and clerical staff to deal with the NPAs. Though the teams are not new, they are on the field with a special focus.
“SBI is making efforts to reduce the dependency on the outside agencies for recovery to the maximum extent possible. The in-house teams will track the accounts and alert the concerned clients for payments,” he said.
Kumar said SBI has been using the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act that allows banks to take possession of securities and auction them for recovery.
On credit offtake, he said it is expected to grow between 16 to 18 per cent and deposits by 18 to 20 per cent in the fourth quarter of this financial year, he said adding that the focus will be on retail deposits and not bulk deposits. It has no plans to tinker the interest rates in the short term.
He said there is no stoppage of credit from SBI and it has already sanctioned many loans buy the corporate clients are waiting for a policy decision for the rates to come down.
On a query on the need for change in the provision norms, Kumar said SBI has not asked the RBI for any changes in percentage for the provisions.
On the savings account number portability, Kumar said that is a good concept, but its implementation will be fraught with some challenges that will require the banks to invest on the technology, tweak its core banking systems and make other changes.
During the year, SBI expects to recruit about 5,000 people at the official and clerical levels.
SBI, which successfully experimented with a ‘HNIs only’ branch in Hyderabad, on Wednesday has launched Vasundhara Senorita, an exclusive branch for women on the lines of the one existing at Lucknow.
Though aimed at women entrepreneurs, the branch will look to attract women customers across all strata. Men will allowed to carry out transaction in the branch but only as secondary account holders, as women will be the primary account holders.
All the banking paraphernalia apart, the branch has a play pen to keep the accompanying children busy, while the women make their banking transactions.
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