According to the RBI deputy governor, debt-laden Kingfisher Airlines, which owes 17 banks about Rs7,000 crore, does not pose any systemic risk to the banking system
Mumbai: The debt-laden Kingfisher Airlines, which owes 17 banks about Rs7,000 crore, does not pose any systemic risk, reports PTI quoting Dr KC Chakrabarty, deputy governor of the Reserve Bank of India (RBI).
When asked about the troubles at Kingfisher Airlines, Chakrabarty said that "it does not pose any systemic risk to the banking system".
He was talking to reporters on the sidelines on an SME event organised by the Bombay Chamber of Commerce and Industry.
The aviation regulator DGCA had recently served a show-cause notice to the company asking why its licence should not be revoked.
Within the lenders consortium, SBI has the single largest exposure with Rs1,580 crore, followed by IDBI Bank (Rs720 crore), Punjab National Bank (Rs435 crore), Bank of India (Rs575 crore), Bank of Baroda (Rs530 crore), Central Bank of India (Rs420 crore), UBI (Rs350 crore), Corporation Bank (Rs150 crore), and Federal Bank (Rs80 crore which is not a loan but an en-cashed bank guarantee to BPCL).
The central bank is trying to redefine sick units and would soon come up with the new definition, says Dr Chakrabarty
Mumbai: The Reserve Bank of India (RBI) will come out with a new definition of sick units shortly, reports PTI quoting RBI Deputy Governor KC Chakrabarty.
"We are trying to redefine sick units... very soon we will come up with a new definition," Chakrabarty said while addressing a conference on SMEs organised by the Bombay Chamber of Commerce and Industry.
Talking about bank financing to SMEs, the senior most deputy governor said entrepreneurs have to be trustworthy and units have to be credit-worthy for getting bank finances. The SMEs have to maintain utmost transparency in their transaction with banks.
"Availability of timely credit is more important for SMEs than the cost of credit," he said, adding businesses can't only run on borrowed money and promoters have to bring in capital for growth.
He also said that SMEs should foresee their cash flow for at least the next 18 months to arrange for timely availability of bank credit.
FDI in pension funds is a welcome step for pensioners and the New Pension Scheme would benefit all subscribers, many of whom may have also opted for such schemes in operation in the private sector. How it will benefit a person who has subscribed to both remains to be seen
Last week, finance minister P Chidambaram announced sweeping reforms in terms of Foreign Direct Investment (FDI) in insurance up to 49% (from the existing level of 26%) and set a similar limit in the case of the pension funds.
The stock market reached favourably to both the proposals and the Sensex breached the 19,000 mark to close the day at 19,058. These moves, however welcome they may be to the stock market, are likely to draw both favourable and unfavourable reactions from the public once full data is made public. In fact, both issues are highly debateable.
The finance minister stated that all the five recommendations of the Standing Committee on Finance, which examined the Pension Fund Regulatory & Development Authority (PFRDA) Bill, 2011, have been accepted, without any reservations. Prima facie, the market reacted favourably but is awaiting full details.
Read here about what the PFRDA says about NPS.
In order to implement the New Pension Scheme (NPS) effectively, at the very outset, this has been made mandatory for all employees, except the Armed Forces, who have entered into service on or after 1 January 2004. However, with effect from 1 May 2009, the NPS has been opened to all citizens of the country, which, again, has been welcomed by all.
In due course, it is believed, a statutory PFRDA will be put in place so as to benefit NPA subscribers.
Read more about what ails the New Pension Scheme.
This is a welcome step for pensioners and the scheme would benefit all subscribers, many of whom may have also opted for such schemes in operation in the private sector. How it will benefit a person who has subscribed to both remains to be seen.
While full details of the scheme are expected shortly, the Cabinet-cleared scheme permits the NPS, which seeks minimum assured return, to opt for investing his/her funds in various schemes that may be notified by PFRDA from time to time.
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(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)