Commodity Trends

Cotton

Cotton production is likely to be more than previous year’s on the expectation of...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MSSN member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
RBI likely to announce sunset clause for base rate migration

With the implementation of base rate system, all new loans will be linked to base rates. But bankers are worried that long-maturity loans like infrastructure will continue in the BPLR regime if the customer refuses to switch

The Reserve Bank of India (RBI) is likely to soon announce a sunset clause with a deadline of 30 June, 2011 for all loans in the erstwhile benchmark prime lending rate (BPLR) system to migrate to the new base-rate model, reports PTI.

Banks had approached the RBI for such a clause for all BPLR-linked loans, which, otherwise, would force them to administer two types of benchmarks - base rate and BPLR - for many years in case a borrower refuses to switch to the base rate.

Asked whether the RBI has agreed to the sunset clause, State Bank of India (SBI) chairman, OP Bhatt told reporters in Mumbai that the central bank is currently examining the implementation of the clause with a one-year deadline and is likely to make an announcement soon.

"Yes, they are going to announce (the decision on sunset clause)...the RBI is currently examining the clause (with a deadline of) one year...that is by 30th June next year," Mr Bhatt said after the customary pre-policy meeting with top RBI officials ahead of RBI's quarterly policy review on 27th July.

Banks moved to the base rate regime starting from 1st July following the recommendations of an RBI-appointed panel to replace the erstwhile BPLR with the new model to improve transparency in lending. Earlier, banks used to cross subsidise top-rated corporate loans with those given to the common man.

With the implementation of base rate system, all new loans will be linked to base rates. Existing loans will be shifted to the base rate model if the customer opts for the change or upon reaching maturity.

But bankers are worried that long-maturity loans like infrastructure will continue in the BPLR regime if the customer refuses to switch.

Most of the state-owned banks, including the country's top two lenders SBI and ICICI Bank have fixed their base rates between 7.5%-8% while some other private and foreign sector banks have kept it even below to woo potential corporate clients.

Bankers met Reserve Bank deputy governor Subir Gokarn today ahead of the quarterly review late this month to discuss issues like credit growth, liquidity situation and base rate implementation, amongst other issues.

The RBI is widely expected to hike its overnight lending and borrowing rates (repo, reverse repo) by at least 0.25% at its policy review to check the double-digit inflation.

User

Tatas quits COAI; claims favouritism towards few players

TTSL said that COAI only pursued the interests of some older players on issues such as reduction in interconnect charges, excess spectrum charging and national numbering plans

Terming the functioning of Cellular Operators Association of India (COAI), a powerful lobby of GSM operators, as "undemocratic, biased, non-transparent and unethical", Tata Teleservices (TTSL) today resigned from the core membership of the association, reports PTI.

"We have found that COAI is not a transparent association and represents the views of only a few selected old players, as all powers/rights are vested in their hands," TTSL said in a letter to Mr Rajan Mathews, director general of COAI.

"By doing so, COAI along with these few older players, has become an obstacle in the growth of the Indian telecom industry," it added.

Mr Mathews could not be contacted despite several attempts as his mobile phone was switched off.

The COAI has older players like Bharti Airtel, Vodafone and Idea Cellular as its core members. Sanjay Kapoor, CEO of Bharti Airtel, was elected chairman of COAI last week.

Tatas alleged that the COAI was focussed only on the "myopic growth of a few telecom operators", without being representative of all the members.

"TTSL does not wish to continue associating with an association which just doesn't seem to be able to work in a just and equitable manner. We, hereby, formally tender our resignation as core member of COAI," it said.

Tatas did not rule out initiating legal action against the lobby of GSM operators.

Last week, the COAI had barred TTSL, along with two other operators — Loop Telecom and Etisalat — from exercising their franchise as the companies had not paid "disputed" dues.

The company had, however, asserted that it had paid all its dues, though there were some disputed amounts. It said that the voting power was concentrated in the hands of three big operators and the other 8-10 members were virtually insignificant.

"Voting rights have been placed in the hands of a few key older players and these privileges are often abused by these players for their own advantage," TTSL said in the letter.
 
TTSL said that COAI only pursued the interests of some older players on issues such as reduction in interconnect charges, excess spectrum charging and national numbering plans.

"Due to this undemocratic modus operandi at COAI, TTSL and some of the other newer members of COAI had to approach the regulator and licensor in many a forum... that COAI was not taking all its members' views into consideration and therefore COAI's views should be disregarded," it said.

TTSL also pointed out that while the executive committee — controlled by older operators — takes the decisions on filing cases, members are expected to pay the legal expenses even for cases that are filed against them.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)