RBI panel recommends cap on capital market exposure of NBFCs
Mumbai: The Reserve Bank of India may decide to put a cap on the capital market exposure of non-banking finance companies (NBFCs). After an internal group of RBI found that bank credit can be also be routed to stock markets through NBFCs, it has suggested that the existing Rs10-lakh limit in the case of bank credit to individuals (Rs20 lakh if the securities are dematerialised) against security of shares, be prescribed for deposit-taking NBFCs as well.

The group said all bank finance (advances and investments) to investment companies and stock broking companies should be considered as bank's capital market exposure, except where the bank finance is for financing of an SPV's participation in PSU disinvestments or its investment in the equity of infrastructure companies.

The group felt that there is a need for looking into the issue of non-deposit taking NBFCs raising unlimited amount of Commercial Papers (CPs) and playing in capital market.

The group has suggested following options: (1) Treating commercial paper as a public deposit; (2) introduce capital adequacy ratio requirements for non-deposit taking NBFCs to limit the leverage of capital funds and (3) stipulate a gearing ratio i.e. borrowing as a multiple of capital funds as in the case of DFIs.

It is also suggested that NBFCs be subjected to a norm relating to their capacity to leverage by prescribing a debt equity ratio of an acceptable level. To begin with, these norms may be made applicable to all NBFCs with asset size of Rs 100 crore and above.
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Ranbaxy rechristens fin services arm
New Delhi: Ranbaxy Laboratories has renamed its financial services company Fortis as Religare Enterprise to provide a complete range of financial services to its corporate, retail and wealth management clients.

Religare would provide integrated financial services through its proposed subsidiaries - Religare Securities, Religare Comdex, Religare Finvest and Religare Insurance Advisory Services, according to a company release.
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Royal Sundaram, BASIX to provide insurance covers for SHGs
Hyderabad: Royal Sundaram General Insurance Company and BASIX, a microfinance institution, have announced two more insurance covers for the members of the self-help groups (SHGs) in the rural sector across the country.

Royal Sundaram managing director, Antony Jacob, said `Micro Enterprise Shield' would take care of rural enterprises while `Gramin Arogya Raksha' would offer health insurance benefits to the SHG members. He said, "Royal Sundaram has realised there is a need to introduce tailor-made products to address the specific needs of the rural markets. Microfinance institutions such as BASIX have a strong network and distribution capability and hence are successful as distribution partners in rural areas for our products."

According to him, close to seven per cent of the insurance company's gross premium- approximately Rs27 crore-came from the rural sector.
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ICICI Bank offloads Fed Bank shares
ICICI Bank has sold 25.70 lakh shares (3.9 per cent stake) of Federal Bank through block trades on the Bombay Stock Exchange. The shares were sold at Rs187 per share adding to a total of Rs48 crore to International Finance Corporation (IFC). ICICI Bank's stake in Federal Bank now stands at 6.2 per cent.

ICICI Bank has been steadily reducing its stake in the bank since September last year, to adhere to the Reserve Bank of India norms which bar private banks from holding more than 5 per cent stake in another bank.

Federal Bank shares closed the day at Rs183.15, down 1.30 per cent on total traded volumes of 1.41 lakh shares on the BSE.
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ICICI Bank hikes corporate prime lending rate by 100 bps
Mumbai: ICICI Bank has increased its corporate prime lending rate by 100 basis points from 11.75 per cent to 12.75 per cent.

The corporate PLR, referred to as ICICI Bank's benchmark advance rate (IBAR), came into effect from today. One basis point is one hundredth of a percentage point. This is the third round of hike in the prime lending rate of the bank. It had raised its PLR by 50 basis points to 11.75 per cent in early February after a 25 basis point increase in early January.

This hike would only affect corporate loans sanctioned by the bank and not the retail portfolio the bank said.

The bank had raised its deposit rates across the board by 50 basis points in early March.

ICICI Bank's average cost of deposits at the end of December was around 4.7 per cent and its yield on advances was at about 8.20 per cent. Its net interest margin was nearly 2.2 per cent.
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