Bankers want RBI to halt rate hike

Bankers are concerned because there is no pick up in credit and the actual disbursements happening at present are the proposals sanctioned earlier, IBA chief K Ramakrishnan said after the customary bankers’ pre-policy meeting with the RBI governor Duvvuri Subbarao and the deputy governors

Mumbai: Fearing a deterioration in asset quality and to fire up credit demand, top bankers on Tuesday appealed to the Reserve Bank of India (RBI) to pause its interest rate hike cycle that has already seen 12 hikes in the past 19 months, reports PTI.

“Bankers want a pause (to rate hikes). It goes without saying ... (and) for a longer period of time,” chief executive of Indian Banks Association, the umbrella body of banks, K Ramakrishnan, told reporters here.

The RBI is scheduled to unveil the second quarter monetary policy on 25th October.

Bankers are concerned because there is no pick up in credit and the actual disbursements happening at present are the proposals sanctioned earlier, he said after the customary bankers’ pre-policy meeting with the RBI governor Duvvuri Subbarao and the deputy governors.

“Frankly speaking, credit growth is muted. The credit growth has not been to the expectations, Capex (by companies) is virtually at a standstill, investment is not really happening,” Mr Ramakrishnan said.

However, as of 9th September, non-food credit growth logged in 20.1% or by Rs31,490 crore, according to the RBI data. But this was mostly due to the disbursals of outstanding credit orders by the petroleum, coal and nuclear sectors.

Bank of Baroda chairman and managing director MD Mallya, who also chairs the IBA, said demand for credit has been ‘muted’ and is likely to stay so for ‘some more time’.

The industry is demanding a pause and all eyes are set on what action the central bank takes on 25th October.

“There is a feeling that because of the pressure happening in the credit portfolio there is a possibility that non-performing assets can go up,” Mr Ramakrishnan said.

This will entail an increase in provisioning against doubtful assets which will eat into banks’ bottomlines over the next quarter and also affect the net interest margins (NIMs), he said.

Mr Mallya also admitted there is a pressure on asset quality, especially from the steel and textile sectors, but refrained from giving any estimate on the number.

Among those who met the RBI top echelons also included State Bank of India chairman Pratip Chaudhuri, ICICI Bank managing director and chief executive Chanda Kochhar, HDFC Bank managing director and chief executive Aditya Puri and Standard Chartered’s Neeraj Swaroop, among others. However, none of them spoke to the waiting reporters.

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RBI asks CEOs of foreign banks to oversee audit reviews

RBI said the banks should identify areas or aspects which, as per their assessment, require to be brought up for review. These areas may be incorporated in a policy and approved by the board or local management committee

Mumbai: Tightening regulatory norms, the Reserve Bank of India (RBI) on Tuesday asked chief executive officers of all the foreign banks to oversee their audit reviews, reports PTI.

“The reviews (placed before the Audit Committee) may be put up to the local management committee or chief executive officer (foreign bank),” RBI said in a notification addressed to chief executives of all foreign banks operating in India.

The notification also said that for all foreign banks operating in India, the CEOs would be responsible for effective oversight of regulatory and statutory compliance as also the audit process and the compliance thereof in respect of all operations in India.

RBI said the banks should identify areas or aspects which, as per their assessment, require to be brought up for review. These areas may be incorporated in a policy and approved by the board or local management committee, it added.

The notification comes against the backdrop of Rs460 crore fraud of at a branch of foreign lender Citibank.

As many as 34 foreign banks, including global leaders such as HSBC and Deutsche Bank, are operating in the country.

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RBI removes restriction on FIIs buying Maruti shares

The restriction has been removed as the aggregate holdings in Maruti Suzuki by FIIs under the Portfolio Investment Scheme (PIS) have gone below the prescribed trigger limit

Mumbai: The Reserve Bank of India (RBI) has removed the restriction on foreign institutional investors (FIIs) purchasing the shares of Maruti Suzuki India (MSI), following the compliance of their prescribed investment limit in the company, reports PTI.

“RBI has...notified that the aggregate share holdings in MSI by FIIs under the Portfolio Investment Scheme (PIS) have gone below the prescribed trigger limit. Hence, this company has been removed from the caution list for FII investment and the restrictions placed on the purchase of shares of this company are withdrawn with immediate effect,” the apex bank said in a statement.

It, however, did not provide details as to when the prescribed limit was crossed and by how much.

Maruti Suzuki is the country's largest carmaker.

RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis.

For effective monitoring of foreign investment ceiling limits, RBI has fixed cut-off points that are two percentage points lower than the actual ceiling.

The ceiling for overall investment for FIIs is 24% of the paid up capital of the Indian company and 10% for NRIs/PIOs.

FIIs held 18.71% stake in MSI as per the June quarter shareholding pattern.

In another statement, RBI notified that FIIs can now purchase equity shares and convertible debentures of Mahindra & Mahindra Financial Services through primary market and stock exchanges under the Portfolio Investment Scheme.

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