Money & Banking
RBI revises criteria for declaring dividend by UCBs

Urban cooperative banks which have less than 5% of NPAs and comply with capital to risk-weighted assets ratio norms may declare dividends without prior permission from the central bank

 

Mumbai: The Reserve Bank of India (RBI) said urban cooperative banks (UCBs) which have less than 5% of non-performing assets (NPAs) and comply with capital to risk-weighted assets ratio norms may declare dividends without its prior permission, reports PTI.

"It has now been decided to revise the criteria for declaring dividend without prior permission of the Reserve Bank," RBI said in a notification.

Further, it said the UCBs should have made all required provisions for NPAs, investments and others assets as per prudential norms.

The dividend should be paid out of the net profit and after making all statutory and other provisions and adjustment for accumulated losses in full, it said.

"UCBs complying with all the above parameters except net NPA and desirous of declaring dividend may approach the respective regional office of the RBI for permission for declaring dividend provided the net NPA is less than 10%," it added further.

Earlier, there was a requirement of net NPA of less than 10% for declaring dividend.

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Corporates given one more year to pre-pay foreign loans

With rupee losing about 25% in the last one year and increasing redemption costs, several companies with FCCBs on their balance sheets are keen to retire these loans

 

Mumbai: The Reserve Bank of India (RBI) has extended the scheme for corporates to get rid of their overseas loans by pre-paying them as weak rupee increases their debt obligation, reports PTI.

The pre-payment of foreign currency convertible bonds (FCCBs) "shall come into force with immediate effect and the entire process of buyback shall be completed before 31 March 2013 after which the scheme lapses," an RBI circular said.

With rupee losing about 25% in the last one year, the redemption costs of overseas loans availed by Indian corporates has increased significantly.

Under these circumstances, several companies with FCCBs on their balance sheets are keen to retire these loans.

For example, Suzlon and Educomp are amongst the ones who are under the process of retiring their FCCB obligations.

Last month, drug firm Strides Arcolab had redeemed outstanding foreign currency bonds worth $80 million.

"On a review, it has been decided to continue the scheme of buyback of FCCBs subject to certain modifications," it said.

Indian firms can now buyback the FCCBs at a minimum discount of 5% on the book value utilising their foreign currency funds under the automatic route, as against 8% earlier, it said.

In case the Indian company is planning to raise a foreign currency borrowing for buyback of the older FCCBs, all foreign exchange regulations relating to foreign currency borrowing should be complied with, it added.

The extension of the window allows greater freedom and leeway to Indian companies. FCCBs witnessed a huge surge during 2006-07. However, the global economic meltdown on 2008-09 impacted most of the companies.

Recently, rating agency Standard & Poor's said that 56 Indian companies, which have to pay back $5 billion worth of foreign debt this calendar year, could see their interest burden going up by $700 million if they chose to reschedule these obligations.

These companies had issued these FCCBs between 2006 and 2008 (and mostly in 2007), before the Lehman fall when the stock prices where at record high, and the rupee was trading at 48 to the dollar.

Most of these bonds are denominated in the US dollar and hence the mounting worries.

The report said the recent rupee fall has added to the woes. Most of the FCCBs that mature in 2012 were issued in 2007-08, when the rupee was at about 42 to a dollar. The rupee has lost more than 30% against the American currency since then.

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Over 49 lakh debtors defaulted Rs1 lakh crore of PSU banks

There are 969 debtors who defaulted in repaying loans over Rs10 crore each, adding up to around Rs27,000 crore of the Rs1 lakh crore total defaults of nationalised banks

 

Thane: Over 49 lakh debtors have defaulted in repaying loans totalling more than Rs1 lakh crore from various nationalised banks in the country, an RTI query has revealed, reports PTI.

The information was provided by individual banks to Om Prakash Sharma, an RTI activist and a former National Council member of BJP.

The State Bank of India tops the list accounting for 32% of the total defaulted amount and 36.3% of the defaulters.

A compilation of the information received indicated that the debtors numbered 49.2 lakh and the defaulted amount was to the tune of Rs1.0 lakh crore.

The State Bank of India has a total of 17.9 lakh defaulters and the amount involved is Rs32,534 crores.

Punjab National Bank stands second with Rs9,632 crores in default, accounting for 0.1% of the total defaulted amount, followed by Union Bank of India where the debtors have not repaid Rs7,615 crore.

As regards the number of defaulters, Union Bank of India comes second with a total of 5.50 lakh defaulters followed by Bank of India which has 3.43 lakh defaulters.

There are six banks where the defaulted amount is between Rs3,000 and Rs4,000 crore, four banks where it is between Rs2,000 and Rs3,000 crore, seven where default is between Rs1,000 and Rs2,000 crore and three with less than Rs1,000 crore.

It was revealed that there were 969 debtors who defaulted in repaying loans over Rs10 crore each, adding up to around Rs27,000 crore.

The State Bank of India has 370 Non-Performing Assets, while Bank of India has 139 and Union Bank of India 93.

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COMMENTS

Gagan Sethi

5 years ago

At times when most of the public/ nationalized banks are giving quarter over quarter increasing profits, just wonder how the much more these would have been, if these defaults were kept to the minimum.

No wonder, also, if the corporates where such amounts are lost are those which have blessings from the highs of political clout.

Wish the system changes one day and let that day come soon.

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