WEEKLY FINANCIAL SNIPPETS- 28/07/2018

  1. SEBI PROPOSES FRAMEWORK ON 25% BORROWING VIA CORPORATE BONDS FOR LARGE COMPANIES: With a view to deepen the corporate bonds market to make it more vibrant and liquid and to reduce the reliance of big corporates on banks for financing, Security Exchange Board of India (SEBI) has come out with a proposal that will require Large Corporates to raise 25% of their borrowings through corporate bond market from next fiscal. If implemented this will come in force from 1ST April 2019.

 

  1. PRIVATE BANKS SHOWING INTEREST IN FUNDING HIGHWAY PROJECTS UNDER PPP MODE: Private Banks including HDFC, have shown interest in funding highway projects in Public Private Partnership (PPP) mode. Road Transport & Highways Minister Mr. Nitin Gadkari has informed the Lok Sabha that private Banks have assured funding to the tune of 1.30 lakh crore for highway construction.

 

  1. AMENDMENT IN PREVENTION OF CORRUPTION ACT WILL ENCOURAGE BONAFIDE DECISION MAKING IN BANKS: Bankers who are presently living under the fear of investigative agencies for foisting cases even where a bonafide decisions go wrong, are a lot relieved with both the houses of Parliament passing certain amendments to the Prevention of Corruption Act that provides a shield against random arrests by the police. Now it is mandatory for the police to seek prior permission from a relevant authority before initiating prosecution against government officials, including bankers.  Further a case has to be closed within 4 years. According to Mr Rajnish Kumar, CMD SBI, this will have a very positive impact on decision making among bankers.

 

  1. GOVERNMENT ASKS RBI TO SUGGEST ON PSU BANK MERGER: The government has asked the RBI to examine the possibility of merger among public sector banks to achieve synergy and increase scale of But it has not set any timeline for merger of PSU banks. With a view to facilitate consolidation among PSU banks to create strong and competitive entities, serving as catalysts for growth with improved risk profile of the bank, the government has put in place an Alternative Mechanism (AM) comprised of three Ministers. The proposals received from banks for in-principle approval to formulate schemes of amalgamation shall be placed before the institution although there is no proposal for consideration yet.

 

  1. TOP STATE-RUN BANKS SIGN INTER-CREDITOR AGREEMENT: More than a dozen lenders led by State Bank of India have signed the Inter-creditor agreement (ICA), potentially paving the way for speedy resolution of stressed assets. No Foreign Bank or any private Bank has signed the agreement yet. An Inter-creditor agreement is an agreement signed amongst the bankers which stipulates how their competing interests are resolved and how to work in tandem in service to their mutual borrower. The objective is to use this ICA for faster facilitation of resolution of stressed assets.

 

  1. BANK OF BARODA SETS UP “WAR ROOM LAWYER TEAM” FOR BAD LOAN RECOVERY: Bank of Baroda has set up a dedicated team of lawyers which is named as ‘War Room Lawyer Team” to speed up recovery of bad loans that get embroiled in litigation. The bank has 380 high-value bad loan accounts with a total outstanding of about Rs 15,000 crore. Such recovery measures are expected to reap benefits to the bank and bring back the bank’s profits.

 

  1. 25% ATMs OF PUBLIC SECTOR BANKS MAY BE VULNERABLE TO FRAUD: The government has indicated that nearly 25% of the ATMs run by public sector banks  may be vulnerable to frauds as 74% of the cash dispensers are running on outdated software and they lack basic security features. The government however did not disclose details of such ATMs that were run by private sector banks.

 

  1. RBI TO ISSUE NEW Rs. 100 NOTES : The Reserve Bank of India will shortly issue new Rs.100 denomination notes in Mahatma Gandhi series. The base colour of the note will be lavender. The note has other designs as well aligning with the overall colour scheme on both sides.
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