Money & Banking
RBI gives infra lending status to host of sub-sectors

RBI said the credit facility extended by lenders to a borrower in about 30 odd sub-segments like roads and bridges, LNG and oil pipelines, water treatment plants, telecom towers, and three-star hotels would qualify as infrastructure lending

Mumbai: Giving a boost to key segments like roads and bridges, LNG and oil pipelines, water treatment plants, telecom towers, and three-star hotels, the Reserve Bank of India (RBI) has given them 'infrastructure status' and paved way for them to avail easier funding from banks, reports PTI.

 

In a notification, RBI said the credit facility extended by lenders (banks and select financial institutions) to a borrower in about 30 odd sub-segment of the infrastructure sector will qualify as "infrastructure lending".

 

With 'infrastructure lending status' companies can avail loans for a longer period at lower rate of interest.

 

The government had been wanting to give a boost to the infrastructure sector to revive the sagging economy

 

In the transport category, roads and bridges, ports, inland waterways, airport, railway track, tunnels, viaducts, bridges, urban public transport will qualify for infrastructure lending.

 

In the energy segment, generation, transmission, distribution, oil pipelines, oil/gas/liquefied natural gas storage facility and gas pipelines would qualify.

 

Likewise, solid waste management, water supply pipelines, water treatment plants, sewage collection, treatment and disposal system, irrigation (dams, channels, embankments), storm water drainage system projects come under infrastructure lending

 

Telecommunication, telecommunication towers, education institutions, hospitals, three-star or higher category hotels located outside cities with over one million population, common infrastructure for industrial parks, SEZ, tourism facilities, agriculture markets, fertiliser (capital investment), post harvest storage infrastructure for agriculture, terminal markets, soil-testing laboratories, cold chain etc would also be included under infrastructure lending, it said.

 

RBI said the new definition for infrastructure lending was provided to avoid confusion and difficulties that arise due to multiplicity of definitions among various regulators, as lending to the sector has grown significantly.

 

The revised definition would be effective immediately, RBI said.

 

The exposure of banks to projects under sub-sectors which were included under the previous definition of infrastructure, but not included under the revised definition, will continue to get the benefits under infrastructure lending for such exposures till the completion of the projects, it added.

 

"However, any fresh lending to those sub-sectors from the date of this circular will not qualify as infrastructure lending," RBI said.

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Banks can open administration office in large cities sans RBI permission

RBI allowed banks to open to open offices exclusively performing administrative and controlling functions in Tier-I centres without obtaining permission from the central bank

Mumbai: Banks need not seek permission of the Reserve Bank of India to open administrative offices in large cities (Tier-I), reports PTI.

 

"With a view to further increasing operational flexibility of banks, it has been decided to permit domestic scheduled commercial banks (other than RRBs) to open offices exclusively performing administrative and controlling functions in Tier-I centres without the need to obtain prior permission," it said in notification today.

 

Currently, banks (excluding RRBs) are permitted to open branches in Tier-II to Tier-VI centres (with population less than 100,000) and in rural, semi-urban and urban centres in north-eastern states and Sikkim without seeking its permission.

 

In its second quarter Monetary Policy 2012-13 in mid-October, RBI had proposed to permit banks to open offices in Tier-I centres as well.

 

RBI, however, said the permission granted would be subject to regulatory and supervisory comfort and it would have the option to withhold permissions granted on a case-to-case basis.

 

Though, the apex bank made it clear that opening of branches including Central Processing Centres (CPCs)/ Service Branches by banks in tier I centres (with population of 100,000 and above) will continue to require its prior permission.

 

In a separate notification, RBI asked the banks to strictly adhere to the policy and guidelines for hiring of premises on lease or rental basis in metropolitan, urban, semi-urban and rural areas.

 

"It has been observed in certain cases that banks have not complied with the ... instructions while acquiring premises for their branches causing avoidable inconvenience to customers and possible reputation risk to the banks," it said.

 

Banks are required to formulate guidelines for acquiring premises on lease or rental basis including delegation of power at various levels.

 

As well they are required to ensure that the location of the branch complies with the local norms, laws of Municipal Corporation, Nagar Palika, town area authority, village panchayat or any other competent authority.

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UBS trader who lost $2.3 billion jailed for seven years

In a bid to boost his bonuses and chances of promotion, Ghanaian-born trader Kweku Adoboli exceeded his trading limits, failed to hedge trades and faked records to cover his tracks during 2008 and 2011

London: UBS trader Kweku Adoboli, who gambled away $2.3 billion of the Swiss bank's money, was jailed for seven years in London for Britain's biggest-ever fraud, reports PTI.

 

The Ghanaian-born banker, 32, had been found guilty of two counts of fraud by a jury at Southwark Crown Court earlier today but cleared of four charges of false accounting.

 

"There is a strong streak of the gambler in you," judge Brian Keith told Adoboli as he sentenced him. "You were arrogant to think the bank's rules for traders did not apply to you.

 

"The tragedy for you is that you had everything going for you.

 

"Your fall from grace as a result of these convictions is spectacular."

 

The judge said Adoboli would serve half his sentence before being released on licence.

 

Adoboli wiped away tears as he was sentenced. He had admitted the losses but denied any wrongdoing.

 

During the two-month trial he claimed senior managers were fully aware of his activities and encouraged him to take risks to make profits for UBS.

 

But prosecutors said that in a bid to boost his bonuses and chances of promotion, Adoboli exceeded his trading limits, failed to hedge trades and faked records to cover his tracks between 2008 and 2011.

 

The tactics initially paid off -- prosecutors said he earned $90 million for UBS and its clients by May 2011 and the bank rewarded him with huge bonus increases, rising from $23,887 in 2008 to $3,98,125 in 2010.

 

But as the financial crisis took hold, Adoboli's deals went bad. The court heard had that at one point he was at risk of causing the bank losses of $12 billion.

 

"The amount of money involved was staggering, impacting hugely on the bank but also on their employees, shareholders and investors," said Andrew Penhale, deputy head of fraud at the Crown Prosecution Service.

 

"This was not a victimless crime."

 

A UBS spokesman said: "We are glad that the criminal proceedings have reached a conclusion and thank the police and the UK authorities for their professional handling of this case. We have no further comment."

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