Banking News

Banks as insurance brokers

RBI has permitted banks to operate as insurance brokers and has invited applications. Many banks would fulfill the criteria for the banks themselves. But finding staff with the required knowledge and skills is going to be a hard task. Simply put...
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Priority sector - changes

Medium enterprises are those with investment in plant and machinery more than Rs 5 crores but does not exceed Rs 10 crores. Lending to them is encouraged but does not qualify as priority sector advances. However, the sector is currently facing l...
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Relaxations in Branch Authorisation Policy

RBI has now substantially liberalised the Branch licensing policy. Banks may now open new branches without permission from the RBI subject to opening adequate branches in rural centres. 25% of the branches opened in a financial year mu...
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Revitalising distressed assets

NPAs are all in the news these days. The old adage ‘Prevention is better than cure’ applies here, too. RBI has come out with a discussion paper on early recognition of financial distress. It includes timely restructuring of viable accounts, pr...
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Stress Testing in Banks

RBI has come out with guidelines on stress testing for banks.

It is a technical document. The actual process of stress testing is likely to be confined to a small team at the corporate offices of  banks. The underlying principle, h...
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Gold Loans

RBI has liberalised the gold loan terms for other than agricultural borrowers 

Gold loans cannot be given for more than 75% of the value of the gold
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Overnight Repo Under LAF

In the last Monetary Policy Statement, RBI did not revise the interest rates that it charges to banks for borrowing from it. Instead, it reduced the amount of borrowing available under overnight facility (where the rates are lower) and increased...
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Central Repository of Information on Large Credits

Communication gaps between different banks financing the same borrower have always existed. A common approach by all institutions in a multi-creditor situation is certainly desirable when the exposure is stressed. But the first step towards any ...
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Banking at the Post Office

RBI issued only two banking licenses recently. The application of India Post is being considered separately. The Post Office has two important advantages. An impressive physical presence already in existence and the strength of th...
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Leverage Vs Risk Weight

For about a decade now, bank regulation had hinged on two basic concepts. One is risk weighting. The other is capital adequacy. Risk weighting implies that assets on a bank's balance sheet should first be converted by a factor depending on the riskin...
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