Competitive Exams: Current Affairs 2011: Banking

Banking and Finance

ICICI Bank to be treated as foreign company for computing FDI

Besides ICICI Bank, the other lenders which have more than 50 per cent foreign equity holding are: HDFC Bank, Yes

Bank, IndusInd Bank, Federal Bank, ING Vysya and Development Credit Bank.

RBI working group under Thorat to study NBFC issues

  • The Reserve Bank of India (RBI) has formed a working group to examine issues pertaining to the regulation of non-banking financial companies (NBFCs). The group will be headed by former Reserve Bank deputy governor, Director, Centre for Advanced Financial Research and Learning (CAFRAL), Usha Thorat.

  • The group would deal with emerging issues concerning the definition and classification of NBFCs, regulatory gaps and arbitrage, maintaining governance standards and appropriate approach to NBFC supervision.

  • The central bank has been emphasising on tighter regulations and monitoring of NBFCs.

  • Last month, RBI raised the minimum capital adequacy rati-of deposit-taking NBFCs to 15 per cent, to align it with the systemically important non-deposit taking NBFCs.

  • Similarly, late last year, RBI introduced a new regulatory framework for NBFCs which were core investment companies, primarily focusing on investments in group companies.

Non-Banking Financial Companies (NBFCs)

  • Non-banking financial companies, or NBFCs, are financial institutions that provide banking services (such as loans and advances, acquisition of shares/stock/bonds/debentures/securities), but d-not hold a banking license.

  • These institutions are not allowed to take demand deposits from the public. It is not a part of the payment and settlement system and as such cannot issue cheques to its customers.

  • Nonetheless, all operations of these institutions are still covered under banking regulations Move to prevent fraud in loan cases

  • The Central Registry has become operational with effect from 31st March, 2011.

  • The objective of setting-up the Central Registry is to prevent frauds in loan cases involving multiple lending from different banks on the same immovable property.

  • The Central Registry Of Securitisation Asset Reconstruction And Security Interest Of India, a Government Company, licensed under Section 25 of the Companies Act, 1956 has been incorporated for the purpose of operating and maintaining the Central Registry under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act 2002).

  • The Central Registry shall be under the superintendence and direction of the Central Registrar.

  • For a period of three months, National Housing Bank Chairman R. V. Verma, shall hold additional charge as the Registrar of the Central Registry and he shall also be the Managing Director and CE-of the government company incorporated for the purpose of operating the registration system.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI)

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) empowers Banks/Financial Institutions to recover their non-performing assets without the intervention of the Court.

The Act provides three alternative methods for recovery of non-performing assets.

  1. Securitisation

  2. Asset Reconstruction

  3. Enforcement of Security without the intervention of the Court

Courtesy: The Hindu and Times of India