Money & Banking
RBI scraps curbs on buying of Kotak Mahindra Bank shares
Chennai : India's central bank, the RBI on Wednesday said that the restrictions placed on the purchase of Kotak Mahindra Bank Ltd's shares are withdrawn immediately.
 
The Reserve Bank of India (RBI), in a statement, said the aggregate share holdings by global depository receipts (GDR)/American depository receipts (ADR)/foreign direct investment (FDI)/foreign institutional investors (FIIs)/registered foreign portfolios investors (RFPIs)/NRIs/Persons of Indian Origin (PIOs) under portfolio investment scheme in Kotak Mahindra Bank Ltd. has gone below the prescribed limit.
 
The Reserve Bank has notified this under the Foreign Exchange Management Act (FEMA).
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Bank consolidation, a positive development in the long term
Chennai : Global credit rating agency Fitch Ratings on Thursday said a consolidated Indian banking structure would be a positive development in the long term.
 
"We believe that consolidation coupled with higher capital requirements and governance reforms would position the banking system better in support of a more open and higher-growth economy," Fitch Ratings said in a statement.
 
According to the agency, more stable banking systems tend to be structured around a number of large "pillar" banking groups.
 
"These large banks in a consolidated banking system enjoy scale benefits leading to better diversification of risks and stronger overall profitability contributing to higher credit ratings," the statement added.
 
The agency said the financial systems would benefit from more banks of a similar size to State Bank of India (SBI).
 
"The system is quite fragmented at present, with around 50 domestic banks - with PSB's (public sector bank) accounting for around a 70 percent asset share," Fitch Ratings said.
 
According to Fitch Ratings, SBI has performed much better than its PSB peers through this credit cycle, thanks in part to greater scale benefits which enhance pricing power from a funding perspective and diversification.
 
SBI has stronger capital ratios and is better positioned to absorb the asset-quality issues that have plagued the sector.
 
Agreeing on implementation challenges during the consolidation process, Fitch Ratings said the long-term benefits far outweigh short-term challenges that tend to be associated with a consolidation process that is forced on the sector.
 
However, notwithstanding the talk about potential consolidation, the need to address the PSB's asset quality and potential capital shortfalls are the more immediate issues that need to be addressed.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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State-run banks' bad loans rise by Rs.1 lakh crore in 9 months
New Delhi : Non-performing assets (NPAs), or bad loans, of public sector banks (PSBs) have increased by close to Rs.1 lakh crore in the first nine months of the current fiscal, parliament was informed on Tuesday.
 
"The gross non-performing assets (NPAs) of the PSBs increased from 5.43 percent as on March 2015 to 7.30 percent as on December 2015," Finance Minister Arun Jaitley told the Rajya Sabha in a written reply.
 
Gross NPAs of state-run banks increased from Rs.2,67,065 lakh crore in March 2015 to Rs.3,61,731 lakh crore in December 2015, he said, making for an increase of Rs.94,666 crore over the nine months of the current fiscal.
 
In reply to another question, Jaitley listed specific measures to address the issue of NPAs.
 
He said the government has approved establishment of six new Debt Recovery Tribunals, to speed up recovery of bad loans of the banking sector, in addition to the existing 33.
 
The Reserve Bank of India has also taken steps, including formation of a Joint Lenders' Forum (JLF) for revitalising stressed assets in the system, flexible structuring for long term project loans to infrastructure and core industries and Strategic Debt Restructuring (SDR) scheme, Jaitley added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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