EMI in Advance vs EMI in Arrears

Read EMI in Advance vs EMI in Arrears

• Bad loan resolution plan drawn up by public sector banks

  It is expected that state-run banks will look to raise funds from sovereign wealth funds and domestic investors under a resolution plan drafted by them. Under this asset management fund, promoters can only retain less than 24% in the assets. The project has been named as ‘Project Sashakt’ and the banks are expected to approach an asset management company after consolidating their loans for a more transparent and faster resolution of loans. The lead bank will be provided the authority to consolidate the assets spread across lenders and can try to invite bids through an auction. The state-run banks will most likely be setting up the AMC for the resolution of loans above Rs.500 crore under a five-year plan proposed by the committee.

  

  4 July 2018

• RBI Hikes the Repo Rate and the Reverse Repo Rate by 25 Basis Points

  For the first time in 4 years, the Reserve Bank of India (RBI) has hiked the repo rate and the reverse repo rate by 25 basis points. While several economists predicted the increase, it came as a surprise that it was implemented in the current monetary policy.

  The repo rate and reverse repo rate has increased from 6% to 6.25% and 5.75% to 6% respectively. The last time a hike of this proportion was made was in 2014 when the repo rate was hiked to 8%. The RBI has been hinting at increasing the repo rate since the last policy meeting.  

  The RBI basis its decision on inflation and monetary policy on the performance of the Consumer Price Index (CPI). According to analysts, the RBI is expected to follow up the current hike with yet another one in order to control inflation.

  

  13 June 2018

• LoanTap to expand to Coimbatore, Chandigarh

  LoanTap is an online platform that provides various loan products which also includes EMI-free loans. The company is now expanding its services to Coimbatore and Chandigarh this year. LoanTap is now offering its services in 11 cities across the country which includes Delhi, Bengaluru, Chennai, Indore, and Mumbai. The company aims to tap the MSME sector having an average loan size of Rs.6 lakh. LoanTap in the next three years is looking to expand its market in the top 10 cities of India and reach a book size of Rs.750 crore.

  

  21 May 2018

• RBI set rupee reference rate at 65.7837 against the US dollar

  On 19 April, the Reserve Bank of India (RBI) set the reference rate of the rupee at 65.7837 from 65.6814 against the US dollar. The reference rate of rupee against the Euro is 81.3876 from 81.3004. The reference rate of rupee against the pound was 93.4194 and yen was 61.22 per 100 yens depending on the cross-currency quotes and the reference rates for the US dollar. The SDR-rupee rate will be determined based on this rate.

  

  23 April 2018

• To aid MSMEs, Indian Overseas Bank announces interest rate cut

  Indian Overseas Bank (IOB) on 6 April, announced a cut in interest rates in an effort to help micro, small and medium enterprises (MSMEs). IOB has cut interest rates by 15-90 bps across various categories for MSME borrowers. MSMEs employ more than 120 million people and serve as the country's backbone. Therefore, IOB is offering customised loan schemes to cater to the varying needs of the MSME borrowers. The interest rate has been cut by 50 basis points for loans ranging from Rs.25 lakh to Rs.2 crore. The rate cut for loan above Rs.2 crore is by 15 to 90 basis points, depending on the MSME unit rating, effective from 1 April.

  Furthermore, IOB has increased interest rates on Fixed Deposits (FDs) by 10 to 80 basis points, effective from 5 April. FDs of up to Rs.1 crore for a term of 1 week to 5 years can earn between 4.5% and 6.8% interest.

  

  11 April 2018

• Bank of Baroda raises MCLR by 10 basis points

  Private lender Bank of Baroda has hiked its Marginal Cost of funds based Lending Rate (MCLR) to 8.40% from the previous MCLR of 8.30%. The revision in the hike was done to compensate for the tightening of the liquidity in the banking system and was effective from 7 April 2018. The Reserve Bank of India (RBI) had infused Rs.6,000 crore and Rs.21,300 during the month of February and March, on a net average basis to make up for the liquidity crunch.

  The MCLR is used by banks internally to price loans and consists of marginal pricing of funds, tenor premium, operating costs and negative carry on Cash Reserve Ratio (CRR). The nation’s largest lender State Bank of India (SBI) also increased its MCLR to 8.15% in March 2018.

  

  9 April 2018

• AIBOA wants RBI’s asset classification and provisioning norms withdrawn

  According to the All India Bank Officers’ Association (AIBOA), Reserve Bank of India’s circular on provisioning and asset classification norms could lead to a banking crisis. According to the AIBOA, these norms cannot be afforded by the country at this point in time. The accounts under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) need to be classified in a different way, and with regard to home loan mortgage, the non-performing asset should include only to the extent of default, not the entire outstanding balance.

  

  28 March 2018

• IMGC collaborates with SBI to provide mortgage-backed home loans

  India Mortgage Guarantee Corporation (IMGC) recently signed a memorandum of understanding (MOU) with State Bank of India (SBI) to give home loans that are backed mortgage. The MD of Retail and Digital Banking, SBI, PK Gupta, said that this particular collaboration will enhance the condition of the bank’s housing loans in the non-salaried category. SBI intends to provide these home loans to both non-salaried applicants and self-employed loan applicants. When an individual applies for such a loan, he or she will be able to raise their loan eligibility by at least up to 15% as per the regulations.

  

  22 March 2018

• BofAML: RBI likely to reduce key policy rates in August by 25 basis points

  According to a research note by the Bank of America Merrill Lynch (BofAML), the Reserve Bank of India (RBI) will likely cut key policy rates in August by 25 basis points which can lead to cuts in lending rates. The cut in lending rates can in turn, support growth. After the decline of retail inflation to 4.44% in February, the industry is clamouring for a cut in rates by the RBI next month in order to maintain growth momentum. The next RBI MPC meeting is scheduled for 5 April 2018.

  

  16 March 2018

• SEBI announces a separate limit of Rs.5,000 crore for FPI investments in IRFs

  In an effort to get more foreign funds, the Securities and Exchange Board of India (Sebi) has decided to create a separate limit of Rs.5,000 crore for investments in Interest Rate Futures (IRFs) by Foreign Portfolio Investors (FPIs). This allocation of a separate limit for FPI investments in IRF by the market regulator, Sebi, will likely facilitate further market development while also ensuring the access to bond futures for FPIs stay constant when the FPI limits on government securities are under auction. An IRF provides market participants the chance to avoid risks incurred from fluctuating interest rates. Also, an FPI can't obtain more than Rs.1,800 crore in net long position.

  

  14 March 2018