Banking
Personal Finance Exclusive
RBI asks urban coop banks to stop levying pre-payment penalty

RBI said urban co-operative banks will not be permitted to charge foreclosure charges or pre-payment penalties on home loans on floating interest rate basis

 

Mumbai: The Reserve Bank of India has asked urban co-operative banks (UCBs) to stop levying penalty on pre- payment of home loans on floating interest rates with immediate effect, reports PTI.

"Though some banks have in the recent past voluntarily abolished pre-payment penalties on floating rate home loans, there is a need to ensure uniformity across the banking system.

"It has, therefore, been decided that UCBs will not be permitted to charge foreclosure charges / pre-payment penalties on home loans on floating interest rate basis, with immediate effect" RBI said in a notification.

Earlier this month, RBI had also asked the commercial banks to stop charging such penalties.

RBI said the removal of foreclosure charges or pre- payment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans.

RBI in its monetary policy for 2012-13 had proposed that banks should not be permitted to levy such charges with a view to bring uniformity across the banking system in the home loan segment.

The committee on Customer Services in Banks under M Damodaran had expressed that foreclosure of charges levied by banks on prepayment of home loans was resented upon by home loan borrowers and the banks were hesitant in passing on the benefit of lower interest rates to existing borrowers in a falling interest rate scenario.

"As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source".

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Bank deposits grew 17.3% in December 2011 quarter

The top hundred centres, arranged according to the size of deposits accounted for 69.4% of the total deposits

 

Mumbai: Bank deposits grew 17.3% to Rs5.81 lakh crore in the quarter ended December 2011 from a year ago, data from RBI showed, reports PTI.

While, credit over the same period increased by 16.1% on the year to Rs4.4 lakh crore, the central bank said in its 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks, December 2011'.

The number of banked centres stood at 35,582, of which 27,964 were single office centres while 70 centres had 100 or more bank offices, RBI said.

The top hundred centres, arranged according to the size of deposits accounted for 69.4% of the total deposits and the top hundred centres arranged according to the size of bank credit accounted for 78.1% of total bank credit.

In December 2010, the corresponding shares of top hundred centres in aggregate deposits and gross bank credit were 68.9% and 78.4%, respectively.

The deposits of the State Bank of India (SBI) and its associates for the quarter were Rs1.68 lakh crore, while credit was Rs1.1 lakh crore. SBI and its associates accounted for 21.9% of the aggregate deposits.

At an all-India level, the credit-deposit (C-D) ratio of the banks as on 30 December 2011 stood at 75.5%.

At the bank group level, the C-D ratio was above the all -India ratio in respect of foreign banks (88.6%), and SBI and its associates (77.5%).

The offices with deposits of Rs10 crore or more accounted for 70.2% of the bank offices, 97.5% in terms of aggregate deposits and 95.2% in total bank credit.

The offices, which extended credit of Rs10 crore or more, accounted for 46.3% in terms of total number of offices.

These offices together accounted for 95.2% of total bank credit whereas their share in aggregate deposits was 79.5%, the data showed.

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SEBI tweaks norms for OFS, IPP

SEBI decided to relax the mandatory 12-week time gap requirement between two consecutive OFS or IPP that would help companies to offload shares in more than one tranches depending on market conditions

 

Mumbai: To smoothen the process of disinvestment, capital market regulator Securities and Exchange Board of India (SEBI) has tweaked norms governing offer for sale (OFS) and institutional placement programme (IPP).

IPP and OFS are the two new share sale tools introduced by the regulator in January this year, especially to help corporates increase their public float.

The regulator has decided to relax the mandatory 12-week time gap requirement between two consecutive Offer for Sale (OFS) or Institutional Placement Programme (IPP).

However, a gap of two weeks between two successive OFS or IPP should be maintained, it said, adding, this would also be applicable on promoters who have already offloaded their shares through OFS or IPP.

The reduction in the time gap will help companies to offload shares in more than one tranches depending on market conditions.

The board also decided that indicative price should be displayed during the last 60 minutes of the close of bidding session irrespective of the book being built.

However, as per the existing provision, bids were invited without disclosing indicative price during the trading hour.

The display of indicative price could also lead to bidding happening at the last one hour of trade.

"These changes have theoretical significance as market conditions are not very conducive for public offers," SMC Global equity head Jagannadham Thunuguntla said.

The decision will also help the government to expeditiously offload its stake in public sector companies and raise funds for achieving the disinvestment target of Rs30,000 crore for the current fiscal.

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