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State Bank of India may reduce lending rate in next 2-3 weeks

SBI last reduced its base rate in September, and its chairman expect the bank's asset liability committee to decide on reducing lending rates over next two-three weeks

Gurgaon: State Bank of India (SBI) has indicated it could reduce lending rates in the next two-three weeks to boost credit growth, reports PTI.


"We had an asset liability committee (ALCO) meeting and there we did not cut the rates, but I am not ruling that out (rate cut). It could happen in the next two to three weeks," SBI Chairman Pratip Chaudhuri told reporters on the sidelines of World Economic Forum on India summit.


"Our rates are the best in the industry today, particularly from consumer finance, home and auto," he added.


SBI last reduced the base rate or the minimum lending rate in September this year. The base rate of SBI is presently pegged at 9.75%.


Chaudhuri emphasised that there has been a strong co- relation between the reduction in interest rates and rise in demand for advances.


"We will see how the loan growth picks up. We are seeing a very strong co-relation as you drop the rates, the loan demand picks up very strongly," he said, adding that he would not be surprised if the home loan segment picked up by over 30% in the current fiscal.


Last month, RBI in its half yearly review of monetary policy left the key interest rate unchanged but reduced cash reserve ratio by 0.25% to infuse additional liquidity that will inject Rs17,500 crore into the financial system.


Driven by huge inflow of deposits, SBI is currently having surplus liquidity of Rs60,000-Rs70,000 crore.


Romney campaign fund gets Rs3.52 lakh from hacked account

Patna-based doctor's Axis Bank account was hacked and the money was transferred to Romney's campaign fund bank account in San Francisco

Patna: A doctor's account from a private bank in Patna was hacked and Rs3.52 lakh transferred to the account of defeated US presidential candidate Mitt Romney's campaign fund bank account, reports PTI quoting a police official.


The bank account of Dr Sushil Kumar Verma in Axis Bank, Boring Road branch, was hacked on 10th October and Rs3.52 lakh transferred to Romney's campaign fund bank account in San Francisco, Srikrishna Puri police station SHO Sanjay Pandey said.


Verma, a resident of North Krishna Puri locality, received a message on his cell phone about debit of the amount from his account, Pandey, who is the investigation officer in the case, said.


Bihar DGP Abhayanand, confirming the cyber crime, said a case has been registered and investigation was in progress.


The doctor has since blocked his account.


RBI prescribes exposure limit to deal with liquidity risk

RBI in its guidelines said that Long term resources should not fall below 70% of long term assets and long and medium term resources together should not fall below 80%

Mumbai: In order to enhance the risk management of the banking system, the Reserve Bank of India has prescribed tolerance limits for loan exposure to deal with mismatches between assets and liabilities as part of the final guidelines on liquidity risk management, reports PTI.


"Long term resources should not fall below 70% of long term assets and long and medium term resources together should not fall below 80% of the long and medium term assets," the RBI said in the guideline.


These controls should be undertaken currency-wise, and in respect of all such currencies which individually constitute 10% or more of a bank's consolidated overseas balance sheet, it said.


As per the guideline, the short term is defined as asset or liability maturing within 6 months while medium term with the timeframe between six months to three years.


Long term means assets or liability with the tenor of three years and beyond.


Enumerating broad norms in respect of liquidity management, the guidelines said the bank should not usually give loans beyond 10 years.


"Banks should not normally assume voluntary risk exposures extending beyond 10 years," it said.


"Banks should endeavour to broaden their base of long-term resources and funding capabilities consistent with their long term assets and commitments," it added.


The norms include enhanced guidance on liquidity risk governance, measurement, monitoring and the reporting to the Reserve Bank on liquidity positions, it said, adding, the enhanced liquidity risk management measures are required to be implemented by banks immediately.


The central bank also asked lenders to make public disclosures on a regular basis that will help market participants to make informed judgments about the soundness of its liquidity risk management framework and liquidity position.


The RBI also advised banks to conduct stress tests at regular intervals and across different maturities and profiles.


"Banks are encouraged to have stress tests with various survival horizons in mind, say one month or less; two or three months; and six months or more, etc," the RBI said.


The RBI has asked banks to put in place the guidelines on intra-day liquidity risk management strategy by 31st December.


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