Tuesday, December 30, 2008
Saturday, December 27, 2008
To meet the credit needs of large sections of the Indian poplulation who had no access to institutional finance, RBI has created an elaborate framework of Priority Sector Lending with mandated targets. Lets look at some of the Frequently Asked Question about the Priority Sector lending (taken from RBI website):
1. What are the targets under priority sector lending ?
Ans : The targets and sub-targets set under priority sector lending for domestic and foreign banks operating in India are furnished below :
2. What constitutes net bank credit ?
The net bank credit should tally with the figure reported in the fortnightly return submitted under section 42(2) of the Reserve Bank of India Act, 1934. However, outstanding deposits under the FCNR(B) and NRNR Schemes are excluded from net bank credit for computation of priority sector lending target/ sub-targets.
3. What does the priority sector comprise ?
Ans : Broadly, the priority sector comprises the following :
2. Small scale industries (including setting up of industrial estates)
3. Small road and water transport operators (owning upto 10 vehicles).
4. Small business (Original cost of equipment used for business not to exceed Rs 20 lakh)
5. Retail trade (advances to private retail traders upto Rs.10 lakh)
6. Professional and self-employed persons (borrowing limit not exceeding Rs.10 lakh of which not more than Rs.2 lakh for working capital; in the case of qualified medical practitioners setting up practice in rural areas, the limits are Rs 15 lakh and Rs 3 lakh respectively and purchase of one motor vehicle within these limits can be included under priority sector)
7. State sponsored organisations for Scheduled Castes/Scheduled Tribes
8. Education (educational loans granted to individuals by banks)
9. Housing [both direct and indirect – loans upto Rs.5 lakhs (direct loans upto Rs 10 lakh in urban/ metropolitan areas), Loans upto Rs 1 lakh and Rs 2 lakh for repairing of houses in rural/ semi-urban and urban areas respectively].
10. Consumption loans (under the consumption credit scheme for weaker sections)
11. Micro-credit provided by banks either directly or through any intermediaty; Loans to self help groups(SHGs) / Non Governmental Organisations (NGOs) for onlending to SHGs
12. Loans to the software industry (having credit limit not exceeding Rs 1 crore from the banking system)
13. Loans to specified industries in the food and agro-processing sector having investment in plant and machinery up to Rs 5 crore.
14. Investment by banks in venture capital (venture capital funds/ companies registered with SEBI)
4. What constitutes ‘Direct Finance’ for Agricultural Purposes ?
Ans : Direct Agricultural advances denote advances given by banks directly to farmers for agricultural purposes. These include short-term loans for raising crops i.e. for crop loans. In addition, advances upto Rs. 5 lakh to farmers against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months, where the farmers were given crop loans for raising the produce, provided the borrowers draw credit from one bank.
Direct finance also includes medium and long-term loans (Provided directly to farmers for financing production and development needs) such as Purchase of agricultural implements and machinery, Development of irrigation potential, Reclamation and Land Development Schemes, Construction of farm buildings and structures, etc. Other types of direct finance to farmers includes loans to plantations, development of allied activities such as fishery, poultry etc and also establishment of bio-gas plants, purchase of land for agricultural purposes by small and marginal farmers and loans to agri-clinics and agri-business centres.
Indirect finance denotes to finance provided by banks to farmers indirectly, i.e., through other agencies. Important items included under indirect finance to agriculture are as under :
(ii) Loans upto Rs. 25 lakhs granted for financing distribution of inputs for the allied activities such as, cattle feed, poultry feed, etc.
(iv) Loans to State Electricity Boards for Systems Improvement Scheme under Special Project Agriculture (SI-SPA).
(vi) Subscription to bonds issued by Rural Electrification Corporation (REC) exclusively for financing pump-set energisation programme in rural and semi-urban areas and also for financing System Improvement Programme (SI-SPA).
(vii) Subscriptions to bonds issued by NABARD with the objective of financing agriculture/allied activities.
(viii)Finance extended to dealers in drip irrigation/sprinkler irrigation system/agricultural machinery, subject to the following conditions:
(a) The dealer should be located in the rural/semi-urban areas.
(b) He should be dealing exclusively in such items or if dealing in other products, should be maintaining separate and distinct records in respect of such items.
(c) A ceiling of upto Rs. 20 lakhs per dealer should be observed.
(ix) Loans to Arthias (commission agents in rural/semi-urban areas) for meeting their working capital requirements on account of credit extended to farmers for supply of inputs.
(x) Lending to Non Banking Financial Companies (NBFCs) for on-lending to agriculture.
Small scale industrial units are those engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) does not exceed Rs. 1 crore. These would, inter alia, include units engaged in mining or quarrying, servicing and repairing of machinery. In the case of ancillary units, the investment in plant and machinery (original cost) should also not exceed Rs. 1 crore to be classified under small-scale industry.
The investment limit of Rs.1 crore for classification as SSI has been enhanced to Rs.5 crore in respect of certain specified items under hosiery and hand tools by the Government of India.
8. What are ‘Small Scale Service & Business Enterprises’ (SSSBE’s) ?
Industry related service and business enterprises with investment upto Rs. 10 lakhs in fixed assets, excluding land and building will be given benefits of small scale sector. For computation of value of fixed assets, the original price paid by the original owner will be considered irrespective of the price paid by subsequent owners.
Indirect finance to SSI includes the following important items:
- Financing of agencies involved in assisting the decentralised sector in the supply of inputs and marketing of outputs of artisans, village and cottage industries.
- Finance extended to Government sponsored Corporation/organisations providing funds to the weaker sections in the priority sector.
- Advances to handloom co-operatives.
- Term finance/loans in the form of lines of credit made available to State Industrial Development Corporation/State Financial Corporations for financing SSIs.
- Funds provided by banks to SIDBI/SFCs by way of rediscounting of bills.
- Subscription to bonds floated by SIDBI, SFCS, SIDCS and NSIC exclusively for financing SSI units.
- Subscription to bonds issued by NABARD with the objective of financing exclusively non-farm sector.
- Financing of NBFCS or other intermediaries for on-lending to the tiny sector.
- Deposits placed with SIDBI by Foreign Banks in fulfilment of shortfall in attaining priority sector targets.
- Bank finance to HUDCO either as a line of credit or by way of investment in special bonds issued by HUDCO for on-lending to artisans, handloom weavers, etc. under tiny sector may be treated as indirect lending to SSI (Tiny) Sector.
Investments made by the banks in special bonds issued by the specified institutions could be reckoned as part of priority sector advances, subject to the following conditions:
- State Financial Corporations (SFCs)/State Industrial Development Corporations (SIDCs)
Subscription to bonds exclusively floated by SFCs & SIDCs for financing SSI units will be eligible for inclusion under priority sector as indirect finance to SSI.
- Rural Electrification Corporation (REC)
Subscription to special bonds issued by REC exclusively for financing pump-set energisation programme in rural and semi-urban areas and the System Improvement Programme under its Special Projects Agriculture (SI-SPA) will be eligible for inclusion under priority sector lending as indirect finance to agriculture.
Subscription to bonds issued by NABARD with the objective of financing exclusively agriculture/allied activities and the non-farm sector will be eligible for inclusion under the priority sector as indirect finance to agriculture/ SSI, as the case may be.
- Small Industries Development Bank of
Subscriptions to bonds exclusively floated by SIDBI for financing of SSI units will be eligible for inclusion under priority sector as indirect finance to SSIs.
- The National Small Industries Corporation Ltd. (NSIC)
Subscription to bonds issued by NSIC exclusively for financing of SSI units will be eligible for inclusion under priority sector as indirect finance to SSIs.
- National Housing Bank (NHB)
Subscription to bonds issued by NHB exclusively for financing of housing, irrespective of the loan size per dwelling unit, will be eligible for inclusion under priority sector advances as indirect housing finance.
- Housing & Urban Development Corporation (HUDCO)
Subscription to bonds issued by HUDCO exclusively for financing of housing, irrespective of the loan size per dwelling unit, will be eligible for inclusion under priority sector advances as indirect housing finance.
Investment in special bonds issued by HUDCO for on-lending to artisans, handloom weavers, etc. under tiny sector will be classified as indirect lending to SSI (Tiny) sector.
11. What are the weaker sections within the priority sector ?
The weaker sections under priority sector include the following:
- Small and marginal farmers with land holding of 5 acres and less and landless labourers, tenant farmers and share croppers.
- Artisans, village and cottage industries where individual credit limits do not exceed Rs. 50,000/-
- Beneficiaries of Swarnjayanti Gram Swarojgar Yojana (SGSY)
- Scheduled Castes and Scheduled Tribes
- Beneficiaries of Differential Rate of Interest (DRI) scheme
- Beneficiaries under Swarna Jayanti Shahari Rojgar Yojana (SJSRY)
- Beneficiaries under the Scheme for Liberation and Rehabilitation of Scavangers (SLRS)
- Self Help Groups (SHGs)
12. What action is taken in the case of non-achievement of priority sector lending target by a bank ?
- Domestic scheduled commercial banks having shortfall in lending to priority sector / agriculture are allocated amounts for contribution to the Rural Infrastructure Development Fund (RIDF) established in NABARD. Details regarding operationalisation of the RIDF such as the amounts to be deposited by banks, interest rates on deposits, period of deposits etc., are decided every year after announcement in the Union Budget about setting up of RIDF.
- In the case of foreign banks operating in
which fail to achieve the priority sector lending target or sub-targets, an amount equivalent to the shortfall is required to be deposited with SIDBI for one year at the interest rate of 8 percent per annum. India
All loan applications upto a credit limit of Rs. 25,000/- should be disposed of within a fortnight and those for over Rs. 25,000/- within 8 to 9 weeks.
14. What is the rate of interest for loans under priority sector ?
As per the current interest rate policy, in the case of loans upto Rs 2 lakh, the interest rate should not exceed the prime lending rate (PLR) of the bank, while in the case of loans above Rs 2 lakh, banks are free to determine the interest rate.
15. How is priority sector lending monitored by the Reserve Bank ?
Priority sector lending by commercial banks is monitored by Reserve Bank of
Friday, December 26, 2008
Wednesday, December 24, 2008
Tuesday, December 23, 2008
Record Date will be fixed soon and the stocks will be trasfered in the following ratio:
- If you have 10 JCL you will get 1 Jaiprakash Associates of Rs. 2 each.
- If you have 11 GACL you will get 1 Jaiprakash Associates of Rs. 2 each.
- If you have 1 JHL you will get 1 Jaiprakash Associates of Rs. 2 each.
- If you have 1 JEL you will get 1 Jaiprakash Associates of Rs. 2 each.
This came into effect from February and from that moment to September think it was temporary barring and now they have may be come out with the verdict after September.So today there was some rumor also that the President Ramalinga Raju is resigning and not sure if it was true the stock saw some pressure and closed at 140 , tomorrow will be more interesting to see.Already the stock got down by 13 to 15 percent today in ADR.
Friday, December 5, 2008
Mumbai has been repeatedly hit by deadly militant attacks over the past 15 years, the worst of which targeted its suburban rail network and killed more than 180 people in July 2006.
Following is a chronology of some of the major attacks in India in the past five years:
March 13, 2003 - Bomb attack on a commuter train in Mumbai kills 11 people.
Aug. 25, 2003 - Two car bombs kill about 60 in Mumbai.
Aug. 15, 2004 - A bomb explodes in the northeastern state of Assam, killing 16 people, mostly schoolchildren, and wounding dozens.
Oct. 29, 2005 - Sixty-six people are killed when three blasts rip through markets in New Delhi.
March 7, 2006 - At least 15 people are killed and 60 wounded in three blasts in the northern Hindu pilgrimage city of Varanasi.
July 11, 2006 - More than 180 people are killed in seven bomb explosions at railway stations and on trains in Mumbai that are blamed on Islamist militants.
Sept. 8, 2006 - At least 32 people are killed in a series of explosions, including one near a mosque, in Malegaon town, 260 km northeast of Mumbai.
Feb. 19, 2007 - Two bombs explode aboard a train heading from India to Pakistan; at least 66 passengers, most of them Pakistanis, burn to death.
May 18, 2007 - A bomb explodes during Friday prayers at a historic mosque in the southern city of Hyderabad, killing 11 worshippers. Police later shoot dead five people in clashes with hundreds of enraged Muslims who protest against the attack.
Aug. 25, 2007 - Three coordinated explosions at an amusement park and a street stall in Hyderabad kill at least 40 people.
May 13, 2008 - Seven bombs rip through the crowded streets of the western city of Jaipur, killing at least 63 people in markets and outside Hindu temples.
July 25 - Eight small bombs hit the IT city of Bangalore, killing at least one woman and wounding at least 15.
July 26 - At least 16 small bombs explode in Ahmedabad in the state of Gujarat, killing 45 people and wounding 161. A little-known group called the "Indian Mujahideen" claims responsibility for the attack and the May 13 attack in Jaipur.
Sept 13 - At least five bombs explode in crowded markets and streets in the heart of New Delhi, killing at least 18 people and injuring scores more. The Indian Mujahideen again claim responsibility.
Oct 30 - Eleven bomb blasts rip through Guwahati, the main city of northeastern Assam state. Detonated in quick succession, they kill at least 68 people and wound 335.
Nov 26 - At least 101 people are killed in Mumbai as an unidentified number of armed attackers shoot at and toss grenades into crowds at landmark hotels and buildings.
Nov 27 - Scores of guests and workers remain trapped by gunmen inside the Trident-Oberoi and Taj Mahal hotels.
Monday, December 1, 2008
- U.S. manufacturing contracts more-than-expected in November
- U.S. credit card industry may cut credit lines by over $2 trillion
- Black Friday sales up 3.0%, according to ShopperTrak
- NBER officially declares U.S. recession started in Dec. 2007
Dr.Manmohan Singh has forwarded the resignation to the president and also then recommended the former finance minister Chidambaram as the new home minister and the finance ministry would be directly controlled by Prime minister himself.