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Housing loans may be excluded from priority sector lending
Mumbai: Housing loans may be excluded from the category of priority sector lending by banks.
This is because a working group (set up by RBI) to review priority sector lending norms has excluded housing loans from the list of bank credit eligible under priority sector lending.

According to the draft report, which was released yesterday, a criteria for including home loans in the priority sector list was the difficulty faced by borrowers in availing bank credit. Since the situation has changed, the working group was of the view that there is now no need to keep housing loans under the ambit of priority sector lending.

To qualify for loans under priority sector lending, loans for individual borrowers up to Rs15 lakh for home construction and Rs2 lakh for repairs are eligible.

The group has recommended that advances to agriculture, small-scale industries, small business and education should continue under priority sector lending. However, it has recommended that several category of loans in these sectors be eliminated.
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Banks to work extra hours today
Mumbai: All government banks will work an extra hour today to deal with the public, under a directive issued by the Indian Banks Association.

Finance minister P Chidambaram had said that he would ask banks to remain open extra hours to following the bank strike on Thursday and yesterday's half yearly closing on Friday, which had resulted in customers being inconvenienced.
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Current account balance turns negative again
Mumbai: The modest surplus of the current account balance in the quarter ended March 2005, has turned negative again in the quarter ended June 2005. The deficit of around $6.2 billion, was caused largely by the increase in imports and payments for services.

This has offset the substantial increase in merchandise exports. During the quarter ended June 2005, exports grew at around 22 per cent YoY compared to 34 per cent recorded in the corresponding period of the previous year.

Invisibles grew at 46 per cent, largely led by ITeS exports, travel earnings and foreign remittances by Indians.

Buoyant economic activity caused the 78-per cent increase in non-oil imports, which far outstripped the oil bill that rose by 31 per cent.

Increased costs of crude oil import accounted for a 44 per cent increase over the average price for the corresponding period in 2004. In volume terms, oil imports rose 13.4 per cent.

Payments for services surged 75 per cent. Growth in outbound tourist traffic, transportation, insurance payments and consultancy accounted for the increased payments.

Despite this surge in payments, net invisibles were still positive and rose by 14 per cent over the previous year. Only the sharp expansion in imports took the current account into the deficit territory.
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Forex reserves dips $4.3 b on currency devaluation
Mumbai: According to the Reserve Bank of India, currency devaluation accounted for a decline of $4.3 billion in the foreign exchange reserves between April and June 2005, against $1 billion during the corresponding period in the previous year.

Currency devaluation reflects the depreciation of major currencies against the US dollar.
While the accretion to the forex reserves was $1.2 billion on a balance of payment basis (excluding valuation effects) during this period, the valuation loss was one of the major reasons for a decline of $3.1 billion in this period.

In the corresponding period in the previous year, forex reserves had increased by $6.6 billion.
In terms of the sources of accretion to forex reserves, foreign investment has registered an increase at $1.9 billion, up from 8 million in the previous year.

NRI deposits have also increased to $2 million, against a fall of eight million in the previous year.
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