Money & Banking
Proposed RBI draft guidelines positive for NBFCs:India Ratings

India Ratings and Research said there would be limited financial impact on NBFCs from the proposed revisions in asset classification, provisioning norms and higher tier-I capital ratio requirements

Mumbai: Non-banking Finance Companies (NBFCs) are likely to benefit from the proposed guidelines issued by the Reserve Bank of India (RBI) which focus on enhanced corporate governance, disclosure standards and tightened liquidity management requirements, reports PTI.


"Domestic non-banking finance companies (NBFCs) will benefit from the enhanced corporate governance and disclosures standards and tightened liquidity management requirements proposed recently by the Reserve Bank of India (RBI)," a report by India Ratings and Research said.


It also said that there would be limited financial impact on NBFCs from the proposed revisions in asset classification, provisioning norms and higher tier-I capital ratio requirements.


The RBI released the new draft guidelines for NBFCs based on the Usha Thorat Committee report recommendations on 12 December 2012.


According to the proposed guidelines, NBFCs have to recognise a loan as non-performing asset (NPA) if it is not serviced for 90 days from the present 180 days NPA norm.


The new guideline also proposes to implement 10% capital adequacy ratio (CAR) norm for most of the NBFCs.


Referring to the capital adequacy ratio, the report said, " We do not expect any significant impact on the operating performance of the requirement of a minimum Tier I capital ratio of 10% (current requirement of 7.5% for retail finance NBFCs)."


It also added that the transition of NBFCs to the 90-day NPA norm from the present 180 day from Q1 of FY16 would not have significant impact on profitability.


"The transition of NBFCs to the 90-day NPA norm from Q1FY16 (same as at banks) from a 180-day NPA norm is unlikely to have a significant impact on NBFCs' profitability in the medium term," the report said.


It, however, added that NPA ratios on a 90-day delinquent basis could nearly double as most of the major NBFCs and incremental provisioning expenses (including assuming the provision for standard assets at 0.40%, against the 0.25% mandatory) could reduce return on average assets (ROA) by around 5-40 basis points.


The rating agency also noted that the monitoring and collection systems and borrower behaviour are likely to adjust during the transition phase and the 90-day delinquencies are likely to reduce substantially by the proposed time of implementation.



Ravi Saini

4 years ago

Nbfcs should also be given greater powers same as banks I.e. sarfaesi act.

Ravi saini

UBS agrees to pay $1.5 billion for manipulating LIBOR

UBS, the biggest in Switzerland, will pay more three times the amount of the settlement reached in June with Britain's Barclays, another one of the more than dozen banks investigated for trying to rig global interest rates

Zurich: Swiss banking giant UBS said it had agreed to pay about $1.5 billion to British, US and Swiss regulators to settle allegations it manipulated LIBOR interest rates, reports PTI.


The bank said it the settlement, equivalent to 1.2 billion euros, would likely push into a net loss of between $2.2- $2.7 billion, in the fourth quarter.


The LIBOR rate is a reference point for vast ranges of financial contracts around the world, and revelations that it had been rigged have damaged the reputation of the City of London financial centre.


"UBS agrees to pay approximately CHF 1.4 billion in fines and disgorgement to US, UK and Swiss authorities to resolve LIBOR-related investigations," the statement said.


The bank, the biggest in Switzerland, will pay more three times the amount of the settlement reached in June with Britain's Barclays, another one of the more than dozen banks investigated for trying to rig global interest rates.


As part of the one of the biggest fines ever slapped on a financial institution, the Swiss bank said it had agreed to pay $260 million in fines to the UK Financial Services Authority.


It will pay $64 million as disgorgement, or compensatory penalty, of estimated profits to the Swiss Financial Market Supervisory Authority (FINMA).


It also said it had agreed to payment schedules for a total of $1.2 billion to the US Department of Justice and the Commodity Futures Trading Commission (CFTC).


UBS was the first bank to reveal problems in the rate-setting process of the LIBOR, an acronym for London Interbank Offered Rate, which estimates the rates at which banks lend money to each other and also affects huge numbers of contracts around the world.


Other banks are also reportedly in advanced talks with regulators about settling allegations that they too manipulated their LIBOR information, including Royal Bank of Scotland and Deutsche Bank.


Online shopping: What is it in for you?

A large number of online shops have sprung up. How would you distinguish the good and the bad of the new virtual world of buying

Flipkart, Jabong, Homeshop18, Myntra, Yebhi, Infibeam, Naaptol—lots of advertisements from online retailers among these, appear on television these days. Besides these online retailers which sell multi-brand products, official websites of companies also offer you the facility of shopping online from their virtual stores. Should you jump into buying stuff online or not? If your answer is yes, you are reading the right piece. Read on to find out what you need to know about shopping online.

Multi-brand online retailers: They offer a variety of similar products to choose from. They have tie-ups with a number of brands and if you are looking for a tablet computer, for example, they would display all tablet computers available in the price range that you opt for. This makes comparison very easy, which would not happen, in case you visit stores of particular companies, one at a time. Once you pick companies and products for comparison, you can actually look at all features of that particular product.

Features, comments and rating: Other than that, users and other customers leave their comments and reviews about their shopping experience on the website as well as of using the product. So, you get to know from other users, before shopping, the kind of services that the product as well as the website gives. You would rarely meet existing customers in-store. For you to look at the product design from various angles, pictures taken from different angles are uploaded. You must not forget to zoom-in and have a complete view. Users also give star ratings to products for you to make sense about the services of the company as well as the online shopping platform you are using.

Payment options: You get a number of options like

  • Billing to mobile phones
  • Cash on delivery
  • Net banking
  • Credit card full payment option
  • Credit card EMI option
  • Other card payment

Out of these, cash on delivery is the safest option. Once you get the delivery, it is good if you check the product and then pay, in case the product is defective or else a wrong product has been delivered to you. For those who use credit cards, credit card EMI option is great, which comes with varied instalment periods to choose from. Online retailers have tie-ups with banks and offer you EMIs without any interest being charged. On many occasions, processing fees are also waived as a product promotion campaign. Although there are limitations on the minimum order you place, this option is by far the best option for expensive items, in case you cannot afford one time payment.

Delivery mechanisms: Depending on what you buy, these retailers deliver at home, allow you to download, take a print out, or ask you to pick your packet from your nearest point of sale.

Replacement guarantee: Many online retailers give you a replacement guarantee within 30 days of delivery of goods.

What you should be careful about

  • Replacement guarantees have certain conditions/ limitations put on them. For example, the product should be returned with all the original packaging and accessories, including the manufacturer's packaging if any, and all other items originally included with the delivered product. Also guarantee is not applicable for damage due to mis-use, malfunctioning due to manufacturing, uninstalled consumable or damages not covered by the manufacturers.
  • Choose the mode of payment that suits you best. In case you buy through credit cards and can afford all payment at one go, it is better to buy on down payment rather than going for EMIs, if processing fees are applicable.
  • While making online payments, you should always check for payment security of the platform that the website uses. For read more about how to check whether the payment platform is secure or not, read Online Shopping: 5 Ways to know the site you are using is safe
  • It is always good to shop after creating a login ID on these websites. This way you get mails with all your shopping details, which make it easier to track your transactions.
  • You should make sure you save the “transaction successful” page and also note down your transaction ID for future use, in case goods do not get delivered. Many of these websites have 24-hour customer support centres where you can call to clarify things.

On the whole, online retailing is a convenient way of comparing similar products in the market and choosing the best for you. However, you, as a customer, need to be careful about the right products getting delivered to you as well as the safety and authentication of the payment that you make. It is best to check the items, when they are delivered to you, and also pay cash on delivery. This way, your money won’t get stuck in case there is a problem with the speed of internet when paying online, which would save you from stress.


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