ALL INDIA INSTITUTIONS 
 
 
 
Reserve Bank to promote credit-information bureau   

The Reserve Bank of India (RBI) has decided to maintain a systematic database on loans extended by banks to corporate clients. The information will be made available through a `Credit Information Bureau' to be set up by the apex bank.   

However, the Reserve Bank has yet to decide on the pricing of this information and with whom the information could be shared.   

A press release issued by the Bank in Mumbai on June 8 said that it had already constituted a committee with representatives from RBI, banking industry and the Indian Banks' Association (IBA) to decide on these issues.   

RBI removes ceiling on bank credit to NBFCs   

The Reserve Bank of India has removed the ceiling on bank credit in respect of all registered non-banking finance companies (NBFCs) engaged in principle business of equipment leasing, hire purchase and investment activities. An RBI release issued on May 28 permitted banks to assess and provide need based finance to NBFCs as per the loan policy laid down by the boards of the banks.   

There will, however, be no change in the instructions prohibiting grant of bridge loans to NBFCs and RNBCs (residuary non-banking companies) or loans of a bridging nature in any form to these companies including those against capital/debenture issues.   

Ceiling on interest rate charged on advances against deposits   

The Reserve Bank of India has eased the ceiling on interest rates charged on advances against deposits by directing banks to charge a suitable rate of interest on loans against deposits without reference to the ceiling of the prime lending rate.   

RBI directs banks to check Y2K readiness of clients, customers   

The RBI has directed commercial banks to check Y2K readiness of all their clients, corporate borrowers and customers. "Every bank and financial institution (Fl) would be responsible for conducting its own due-diligence review in respect of all its external dependencies, an RBI circular to the heads of all commercial banks has said.   

"The interconnectedness of financial organisations and their external dependencies makes it essential for every bank and financial institution to understand the likely impact of year 2000 readiness of their customers, correspondents, counterparties and other third parties," the RBI circular said and added that the complexities of the issues involved even with the remediated system makes the task of ensuring Y2K readiness daunting.   

RBI eases funding norms for infrastructure projects   

The Reserve Bank of India, has, in its new operational guidelines for financing infrastructure projects, raised the group exposure limit for financial institutions from 50 per cent to 60 per cent of the capital funds and relaxed the debt: equity norms up to 4:1 in exceptional cases giving a fillip to infrastructure sector. The following are the guidelines issued by the RBI :   

*    The group exposure limit for financial institutions has been raised from 50 per cent to 60 per cent of the capital funds.   

*    The debt : equity norms have been relaxed up to 4:1   

*    These norms apply only to projects pertaining to roads, ports, power and telecom.   

*     Loans sanctioned should be within the prudential exposure norms prescribed by the RBI.   

*    The forms of financing include funds raised through subordinated debt and-take-out financing with Infrastructure Development Finance Corporation (IDFC) and other FIs.   

*     The credit risk on such projects would be borne by the bank and not IDFC.   

*    The amount refinanced would depend upon the IDFC's risk perception.   

Revision in interest rates under IDBI Refinance Scheme   

Industrial Development Bank of India (IDBI) in its circular dated 27th May '99 to all SFCs and SIDCs has advised that the interest rate under its Refinance Scheme for medium (non-SSI) sector would be reduced from 14% to 13.5% with effect from 27' May, 1999. It has further advised that there will be no ceiling on the interest rate to be charged by SFCs/SIDCs to the industrial concerns and they would (as before) be free to charge any rate depending upon their perception of the risk involved in each project.   

IDBI to underwrite 30 per cent of equity issues   

The IDBI has decided to underwrite up to 30 per cent of equity issues to help corporates enter the capital market. The institution is also ready to offer bridge finance to corporates.   

"This is not part of a strategy to prop up the capital market. We want to help our corporate borrowers to raise money through equity issues so that institutions are in a position to disburse funds. A sizeable number of projects have not been able to take off as the promoters are not able to access the equity market" IDBI chairman Shri G.P. Gupta told news persons in Mumbai on June II.   

The IDBI underwriting offer, according to him, will give comfort to other institutions to come forward with underwriting commitments. "There have been distinct signs of revival. At this time we need to help the corporates to access the capital market." Shri Gupta said.   

IDBI to form working group on Fl governance   

IDBI Chairman, Shri G. P. Gupta said on May 10, 1999 that the bank is planning to form a working group on corporate governance of financial institutions in the country.   

IDBI to fund VRS of companies   

The IDBI would fund voluntary retirement schemes (VRS) for manpower rationalisation of companies.   

Announcing this in Calcutta on May 10, 1999 the Chairman of IDBI, Shri G. P. Gupta, said that the funding would be made only if this was a part of an overall restructuring of a company arid not for VRS per se.   

To help companies tide over the industrial recession, the IDBI Chairman said that the financial institution would look into the aspect of rescheduling of loans, a demand which had been put forward by a large number of corporates. However, he said that rescheduling of loans would be done only for companies which had been a victim of the recession and not due to financial mismanagement.   

On providing finance to the services sector, Shri Gupta said that IDBI was also willing to do so only after estimating the cash flows of such companies   

IDBI introduces VRS for its employees   

IDBI's Voluntary Retirement Scheme (VRS) has received in-principle approval from the Union finance Ministry. Under the scheme IDBI proposes to give a golden handshake to about 1000 employees out of its total staff of 3000 over the next two years. An average of Rs. 6 lakh per employee is to be offered implying an outgo of  about Rs. 20 cr. per annum.   

The introduction of the scheme in IDBI is in line with the RBI's move to give its employees a golden handshake.   

SIDBI sanctions up 18.6%   

Sanctions by the Small Industries Development Bank of India (SIDBI) have risen 18.6 per cent to Rs. 8,880 crore during the financial year 1998-99.   

Disbursements rose by 19.9 per cent to Rs. 6,285 crore during the year.   

The institution recorded a 12 per cent increase in its total income at Rs. 1,579 crore and 11.1 per cent in its net profit.   

The compounded annual growth rate of sanctions and disbursements over the last nine year period stood at 17.7 per cent and 16.6 per cent, respectively.   

SIDBI's refinance assistance increased by 49.6 per cent during the period under review, while disbursements under resource support to institutions engaged in development of small scale industries   

(SSIs) increased by 41.5 per cent.   

The bank achieved a 97 per cent share in total assistance to tiny projects in terms of number of units and 49 per cent by way of amount sanctioned. The bank's assistance in backward areas constituted 31 per cent of its total sanctions.   

The direct and indirect assistance under technology development and modernisation fund scheme (TDMF) registered nearly four fold increase from Rs. 52 crore to Rs. 242 crore over a two year period.   

SIDBI to set up a subsidiary for Rs. 100 cr. Infotec venture capital fund   

SIDBI will set up an asset management company in association with the department of electronics (DoE) for the Rs. 100 crore venture capital fund for information technology companies.   

The DoE would contribute Rs. 30 crore to the fund, while SIDBI's share would be Rs. 40 crore. The asset management company would be responsible for the disbursal of funds to 1.T. companies.   

The remaining Rs. 30 crore would be made up by contributions from organisations like IDBI, IFCI and National Association of Software companies whose shares are still being finalised.   

"The I.T. venture capital fund of the government would greatly help startysm small and medium sized companies as these are the companies of the future," president of NASSCOM one of the partners in the venture capital fund, said on May 5, 1999.   

Refinance Scheme for Acquisition of ISO 9000 series certification by SSI units (RISO 9000)   

SIDBI vide its circular dated May, 5 1999 has decided to enlarge the scope of the Refinance Scheme for acquisition of ISO 9000 series certification by SSI units (RISO 9000) introduced on July 25, 1996. As per clause 3(d) of Annexure II of the scheme only those borrowers who have been exporting their products, directly or indirectly or have plans to manufacture products for exports were eligible to borrow under the scheme. This clause has now been withdrawn and the scheme now covers non-exporting SSI units also. As per clause   

3 (a) of the same annexure the concern which had been in operation for alleast   

4 years was eligible to borrow under the scheme. This period has now been reduced to 2 years.   

The modified scheme is effective from May 5, 1999. Other terms and conditions remain unchanged.   

NIFT, SIDBI to collaborate for loans under tech upgradation fund   

The National Institute of Fashion Technology (NIFT) will collaborate with SIDBI in the processing of application forms from the garment industry for grant of loans under the Technology Upgradation Fund (TUF) scheme launched by the government recently.   

The garment manufacturing technology department of NIFT has completed a study on the technological-requirements of Indian apparel industry and this would act as a backdrop for financing the small scale apparel lector under the TUF scheme.   

"In the next two years an investment of about Rs. 2000 crore is expected to be made by garment manufactures for upgradation of their plants" the study says.   

IPCI planning to become a bank   

Industrial Finance Corporation of India (IFCI) is planning to convert into a bank, chairman and managing director Shri P.V. Narasimhan, said.   

"We would like to move into banking operations. It is in the interest of IFCI to become a bank," he said. However the corporation would need to seek the approval of its board as well as the shareholders before undertaking the move.   

IFCI's move to venture into banking follows Reserve Bank of India (RBIs) guidelines for development financial institutions (DFIs) which recommends either a shift to universal banking or conversion into a non-banking finance company (NBFC) within a period of five years.   

IDFC focus on IT, telecom, transport logistics   

The Infrastructure Development finance corporation (IDFC) is changing its profile from power, roads and ports sectors to energy, telecommunications and information technology, integrated transport logistics and urban infrastructure. According to deputy managing director Shri Naseer Munjee, the change has been driven by a need to bring about a more cost effective solution to infrastructure problems in the country.   

However, IDFC currently has under evaluation 17 projects of which 10 are in power, four in roads and one in water supply. These would not be affected by the new focus, according to Shri Munjee.   

UTI operations to conic under SEBI   

The Unit trust of India has decided to bring its operations under SEBI regulation on a voluntary basis. "The Trust is discussing with SEBI on an agreed framework for voluntarily coming fully under the jurisdiction of SEBI," an UTI release issued in Mumbai on 18th May said.