Give home loan up to Rs25 lakh in priority sector: RBI to UCBs

“UCBs would, henceforth, be permitted to utilise the additional limit of 5% of total assets for grant of housing loans to individuals up to Rs25 lakh, which is covered under the priority sector,” RBI said in a notification

Mumbai: In order to facilitate enhanced lending, the Reserve Bank of India (RBI) has allowed Urban Co-operative Banks (UCBs) to provide housing loans up to Rs25 lakh under the priority sector lending schemes, reports PTI.

“UCBs would, henceforth, be permitted to utilise the additional limit of 5% of total assets for grant of housing loans to individuals up to Rs25 lakh, which is covered under the priority sector,” the RBI said in a notification.

At present, it said, UCBs are permitted to assume aggregate exposure on real estate, commercial real estate and housing loans up to a maximum of 10% of their total assets with an additional limit of 5% of their total assets for housing loans up to Rs15 lakh.

On its second quarter monetary policy review in November 2010, the RBI permitted all UCBs to lend up to 10% of their total assets to housing, real estate and commercial real estate and an additional 5% for purchase and construction of dwelling units, costing up to Rs10 lakh.

“Due to the high cost of dwelling units, UCBs found it difficult to use the additional limit of 5% of total assets,” the central bank said.

In May 2011, the RBI hence allowed UCBs to utilise the additional 5% of their total assets permitted earlier, for housing loans up to Rs15 lakh.

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No leniency for inability to repay loan, says court, jails man

Metropolitan Magistrate Arun Kumar sentenced Ashok Kumar, a Delhi-based businessman, who had availed credit facility from ICICI Bank in 2009 but was unable to repay the same, to six months in jail and ordered him to pay Rs3.4 lakh to the bank

New Delhi: Inability to repay a loan cannot be a ground for leniency in cheque bounce cases, a Delhi court has ruled while sentencing a businessman to six months in jail and ordering him to pay Rs3.4 lakh to the ICICI Bank, reports PTI.

Metropolitan Magistrate Arun Kumar sentenced Ashok Kumar, a Delhi-based businessman, who had availed credit facility from ICICI Bank in 2009 but was unable to repay the same.

The court said provisions of the Negotiable Instruments (NI) Act, 1881 are to “inculcate the faith of business community in transactions through Negotiable Instruments” and no leniency could be shown.

“In view of the aforesaid object and purposes of Section 138 (Dishonour of cheque) of the NI Act, in my considered opinion, not only benefit of Probation of Offenders Act cannot be given to the convict of offence under the NI Act but also no leniency can be shown to him in awarding sentence merely because he was not able to make the payment,” the court said.

ICICI Bank had told the court that Mr Kumar had availed Rs4.54 lakh from it in June 2009 but the cheque issued by him to repay the same was dishonoured with a remark “debit account closed” in January 2010.

The bank after issuing legal notices to Mr Kumar, lodged a complaint under the NI Act before the court.

The accused had denied the allegations saying the cheque in question was taken by the bank as a “blank signed cheque as security” along with four other cheques.

He, however, after being convicted by the court sought lenient punishment on the ground that he suffered losses in the business and was not able to repay the loan.

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Lowering of interest rates to impact NIM: SBH

According to SBH managing director M Bhagavantha Rao, the Assets and Liability Committee (ALC) of the bank is expected to take a call on interest rates in a day or two

Hyderabad: Public sector State Bank of Hyderabad (SBH) said its net interest margin (NIM) will face an impact of around 20 basis points in this fiscal due to proposed lowering of interest rates, reports PTI.

According to SBH managing director M Bhagavantha Rao, the Assets and Liability Committee (ALC) of the bank is expected to take a call on interest rates in a day or two.

“We cannot go on cutting down our deposit rates. But with the Reserve Bank of India (RBI) and government indicating that the interest rates should come down, we have to maintain a very fine balance. NIM will have a problem. We would be happy to have NIM at 3.25% in FY12-13, down around 20 basis points from FY11-12,” he told reporters after announcing the Q4 results.

SBH's NIM stood at 3.47% in 2011-12.

NIM is the difference between the interest income a bank earns on its advances and the interest it pays on its deposits.

SBH's net profit rose 6.81% at Rs481.04 crore for the fourth quarter ended 31 March 2012 as against Rs450.35 crore in the corresponding quarter a year ago.

For the full year (FY11-12), net profit grew by 11.32% to Rs1,298.27 crore from Rs1,166.24 crore.

As of March 2012, net NPAs (Rs1,002 crore) stood at 1.30%. The company's infrastructure and beverages sectors contributed 15% and 13%-14% to the NPAs, respectively. Steel, textiles and sugar firms comprised the rest, Mr Rao said.

Total business of the bank grew by Rs23,146 crore to touch Rs1,80,143 crore, a rise of 14.74%, while total deposits reached a level of Rs1,01,806 crore, a year-on year growth of 11.19% over Rs91,560 crore in last fiscal.

Mr Rao said the bank aims to clock business of Rs2 lakh crore by September. The full year target will be set after ALC's meeting scheduled for next week, he said.

“We would like to grow at 21% in deposits and between 18% and 20% in advances,” he said.

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