NBFCs seek different capital adequacy norms

The RBI panel headed by former deputy governor Usha Thorat had recommended that NBFCs should have tier-I capital adequacy ratio of 12% against 7.5% now

Non-banking financial companies (NBFC) have sought different capital adequacy norms for different categories of players against the present system of fixing a fixed ratio for all companies.

“We asked different regulations for different NBFCs. Those who are averse to risk, can have different CRAR (Capital to Risk Weighted Assets Ratio) while AFC(asset finance company) and IFC (infra finance company) can be put in a different category,” director general of finance Industry Development Council, Mahesh Thakkar told reporters after the pre-policy consultation with RBI.

Earlier, the RBI panel headed by former deputy governor Usha Thorat had recommended that NBFCs should have tier-I capital adequacy ratio of 12% against 7.5% now.

It had also prescribed that only NBFCs with asset book of Rs50 crore and above should be registered with the regulator. “The Rs50 crore limit should go and CRAR should be retained at 7.5%,” Thakkar said.

Meanwhile, talking about performance of NBFCs, he said most of the companies grew 15%-20% during last fiscal on the back of good performance in the last six months. “Though first six months were bad, in the last six months business picked up across NBFCs and the growth rate was positive,” he said.

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CIL gets Presidential directive to commit fuel to power cos

“The government decided to sign the FSAs with 80% commitment. That is why the directive was issued,” Coal Minister Sriprakash Jaiswal said

Cracking a whip, the government issued a Presidential directive to Coal India to sign fuel supply agreements (FSAs) with the power producers assuring them of at least 80% of the committed coal delivery. The directive has been given to the PSU, as it did not meet the deadline of 31 March 2012, set by the Prime Minister's Office for Coal India Ltd (CIL) to enter into agreements with power producers which were facing fuel crunch.

“Government has this power reserved so that whenever there is an emergency then that power can be used. As we saw an emergency, there was a commitment by Coal India. Therefore, the government decided to sign the FSAs with 80% commitment. That is why the directive was issued,” Coal Minister Sriprakash Jaiswal told reporters.

He said it would not take more than two-three days for the CIL to sign the FSAs with the power producers. However, the crucial clause of penalty on CIL in the case of its failure to meet 80% fuel supply commitment, has been left to the PSU board, the minister said.

"It is for Coal India to decide (penalty).They have full freedom (on it)," he said.

The directive comes in the wake of resistance from some of the independent directors of CIL to agree to penalties. It is perhaps only the second time that the government has resorted to this option to force the Maharatna PSU agree to its directive.

The government had issued Presidential directive to state-owned gas utility GAIL India Ltd in 2005 insisting on a particular technology for laying the Rs1,800 crore Dahej-Uran pipeline.

While the power producers welcomed the decision, analysts feel the Rs50,000 crore CIL may stand to lose heavily in case it falters on its commitment to supply fuel to the energy firms.

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Banks credit grew 23% in July-Sept: RBI

Nineteen nationalised banks taken together accounted for 52.2% of the total deposits, while SBI and its associates contributed 21.8%, according to RBI data.

Credit by banks grew by 23.5% in the quarter to September 2011, up from 19.3% over the same period a year ago, indicating greater economic activity in the country despite higher interest rate regime.

Meanwhile, aggregate deposits during the July-Sept quarter increased by 22.1% against 13.9% from a year ago, an RBI data showed. State Bank of India, country's largest public sector lender, along with its associates, showed an increase of 18.2% in credit, up from 16.4% over the same period a year ago, it said. SBI Group's total deposits more than doubled to 18.2% in the quarter, from 7.8% a year earlier.

As per the data, top hundred centres accounted for 78.5% of the bank credit. Nineteen nationalised banks taken together accounted for 52.2% of the total deposits, while SBI and its associates contributed 21.8%, it said.

The share of new private sector banks, old private sector banks, foreign banks, and regional rural banks in total deposits remained at 13.7%, 4.8%, 4.6% and 2.9% respectively. The number of banked centres stood at 35,435 as on September 2011, the RBI data said adding 27,913 were single office centres and 68 centres had 100 or more bank offices, the data said.

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