Skip to main content

Banks Want MPs, Finmin Officials to Help Convince RBI to Relax Norms

By
Banks Want MPs, Finmin Officials to Help Convince RBI to Relax Norms
Lenders seek a longer period — a minimum of 30 days — to start the resolution of a loan
Lenders led by the State Bank of India (SBI) have sought New Delhi’s intervention in convincing the banking regulator to relax the recent rules on stressed assets, arguing that the ‘harsh’ norms and zero tolerance of bad loans could affect future credit disbursements.During a two-hour meeting with Rajya Sabha members and senior finance ministry officials, bank chiefs suggested that the Reserve Bank of India (RBI) consider relaxing norms that require lenders to work on a restructuring plan a day after a company skips scheduled payments.
Bankers urged they be given a longer period — a minimum of 30 days — to start the resolution of a loan. They have also sought the government’s help to get the RBI to relax the rules regarding 100% consent from all borrowers for restructuring a loan within 180 days.According to the revised RBI rules issued on February 12, banks must work on a resolution plan from day one of a default, and relevant plans must be put in place within 180 days, failing which the loan has to be referred to the dedicated bankruptcy court.
Also, for a resolution plan to be considered valid, it has to be endorsed by all lenders in the consortium and the account can be upgraded only after the borrower repays 20% of the principal. These apart, the RBI also withdrew all debt restructuring schemes, such as converting outstanding debt into equity and giving longer tenure loans with a reset clause.Before they met the commercial bankers, Rajya Sabha members and finance ministry officials had a closed-door meeting with RBI governor Urjit Patel and deputy governor N S Vishwanathan.The second round of meeting was led by SBI’s chairman Rajneesh Kumar while the chiefs of many other public-sector banks were also present.
Banks for Relaxed Norms
“Although the government does not have a direct say on the regulation of banks, particularly those relating to accounting and recognition of bad loans, banks are hoping that they were able to convey their (concerns about their) precarious positions,” said a bank chief, who did not want to be named.The share of bad loans of banks has been rising steadily over the past three years, and has touched Rs 9 lakh crore. Many banks expect bad loans to cross Rs 10 lakh crore with the revised RBI rules kicking in.
The Economic Times, New Delhi, 11th April 2018

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more