ManagementParadise.com : Worlds Leading Management Portal. MBA | Classroom, Boardroom and Beyond


Go Back   ManagementParadise.com Forums - Your MBA Online Degree Program and Management Students Forum for MBA,BMS, MMS, BMM, BBA, students & aspirants. > Mirror View - Ebooks Links & Miscellenous Reading Material > Articles !!

Banks begin to tighten loan taps for corporates

Banks begin to tighten loan taps for corporates

Discuss Banks begin to tighten loan taps for corporates within the Articles !! forums, part of the Mirror View - Ebooks Links & Miscellenous Reading Material category; Banks begin to tighten loan taps for corporates MUMBAI/NEW DELHI: Amid an unprecedented liquidity squeeze, large banks, including the country’s ...

Reply

 

LinkBack Thread Tools Display Modes
Advertisements
Banks begin to tighten loan taps for corporates
Old
 (1 (permalink))
Rahul Parab
rahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond reputerahul_parab2006 has a reputation beyond repute
 
rahul_parab2006
Financial Analyst at CMC Ltd
 
Awards Showcase
Status: Offline
Posts: 5,198
Join Date: Apr 2006
Post Banks begin to tighten loan taps for corporates - October 4th, 2008

Banks begin to tighten loan taps for corporates


MUMBAI/NEW DELHI: Amid an unprecedented liquidity squeeze, large banks, including the country’s biggest lender State Bank of India, are holding b

ack short-term loans to corporates. Some banks are understood to have taken a decision that short-term loans, primarily working capital, will be frozen at Friday’s level.

So, if a corporate has a drawing power of Rs 150 crore and the bank’s loan outstanding to the company is Rs 100 crore, the balance Rs 50 crore will not be disbursed immediately. Under normal circumstances, the company could have automatically availed of the full drawing power limit; but now, it will have to wait a while till the liquidity situation eases a little.

According to industry circles, several banks are also pursuing this policy to tide over the liquidity crunch. SBI, sources said, will also refrain from discounting non-customer bills. This means that if a trader having opened a letter of credit with another bank, submits a bill to SBI, the latter will not discount it.

Many banks have also decided to scrap festival loan offers. With RBI asking banks to go slow on new loans, large banks have decided not to come out with festival offers on consumer durable, home and other retail loans.

Almost every year, the October-November festival season sees banks announcing special interest rates for home and consumer loans, often in association with builders or manufacturers.

RBI has also questioned banks on the measures being taken to bring down the loan growth.

The central bank is keen to reduce loan growth, because the credit-deposit ratio continues to be very high at 73.16%, despite signals from RBI to trim lending. Although the market is facing an extreme liquidity crunch with banks borrowing over Rs 90,000 crore and inter-bank rates jumping to 16%, credit growth continues to be strong.

Given this situation, the central bank has sent a strong message to banks that it is not going to be business as usual. Until early this year, banks have been supporting loan growth by borrowing from other banks. RBI has said that banks should only lend the money that they can raise as deposits, as market borrowing by banks is typically short-term and can land the banks in a liquidity squeeze.

The central bank has also cautioned some banks from using their rupee resources to purchase foreign exchange for onward lending through their foreign branches. This comes in the light of the finding that some banks have been crediting funds to overseas branches for extending loans to fund global businesses of Indian companies which are hit by the global credit crunch.

RBI has also cautioned banks that some of the liquidity availed of by banks in earlier months — bulk deposits from mutual funds and lines of credit from foreign banks — will no longer be available. RBI has sought bank-by-bank positions to see whether credit growth is on the back of sustainable resources such as deposits.

Banks have informed RBI that their loan growth is being driven by genuine demand from corporates and small and medium enterprises. Some of the larger banks are extending large loans to oil companies, who are facing a resource crunch because of rising cost of the dollar.

The credit-deposit ratio is a clear sign that banks are overleveraged. Currently, for every Rs 100 that banks raise as deposits, Rs 25 has to be set aside for investment in government securities, while another Rs 9 has to be parked with RBI to meet the cash reserve ratio guidelines. So, even if banks were to use their own capital and deposits, they would be able to achieve a credit-deposit ratio of only around 70%.
Advertisements


[B]PROJECTS LINKS :-[/B]

[B]HRM SEM 5 NOTES[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]SSM SEM 5 NOTES[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]HRM PPT NOTES[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]RM SEM 5 NOTES[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]LOGISTICS SEM 5 NOTES[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]IF SEM 6 NOTES[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]MY PROJECTS THREAD[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.


[B]ONLINEGD LINKS :-[/B]

[B]Yahoo Messenger GD Proceedings -[/B]
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]Newbie Guide ffor ONLINEGD Partcipants -[/B]
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]CONCEPT BEHIND ONLINEGD[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]NEXT GD[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

[B]NEW POINTS SYSTEM IN ONLINEGD[/B] -
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.



[B]1.READ RULES CAREFULLY BEFORE POSTING. REFER FAQS.
2.USE SEARCH OPTIONS.DO NOT ASK TO MAIL PROJECTS. GIVE IN DEPTH ANALYSIS ABOUT RESEARCH DONE BY YOU BEFORE ASKING FOR REFERENCE PROJECTS.
3.DO NOT POST YOUR MAIL IDS.
4.CLICK ON THANKS BUTTON TO THANK A PERSON.
5.DO NOT POST REGARDING HOW INFORMATIVE/HELPFUL A THREAD WAS, RATE IT.
6.POST IN CORRECT SECTIONS.DO NOT SPAM.
[/B]



To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.


[B]
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
[/B]



To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.



To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
Friends: (60)
Reply With Quote

Reply

Bookmarks

Tags
banks, begin, corporates, loan, taps, tighten

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are On


» Login
Forgot Password?  New User?
  

» Ads





» Recent Threads

Happy Diwali to all...
Last post by Kartik Raichura
23 Minutes Ago 06:53 PM
0 Replies
Hard work or Smart work... ( 1 2)
Last post by Satya Sarada
5 Hours Ago 01:22 PM
15 Replies
SV TCL & Associates...
Last post by Eddard Green
13 Hours Ago 05:40 AM
0 Replies
notes on Brand Management ( 1 2 3... Last Page)
Last post by Mahi Menon
1 Day Ago 10:43 AM
33 Replies
Solution Manual on Cost... ( 1 2)
Last post by Jorge Espada
1 Day Ago 09:39 AM
18 Replies
Mutual Fund Project ( 1 2)
Last post by Palak Agarwal
1 Day Ago 09:09 PM
13 Replies
INTRODUCTION OF...
Last post by Palak Agarwal
1 Day Ago 09:06 PM
2 Replies
Epic Research Update :...
Last post by Epic Research
2 Days Ago 04:24 PM
1 Replies
Epic Research Update :...
Last post by Epic Research
2 Days Ago 04:20 PM
1 Replies
Can facebook can be used... ( 1 2 3)
Last post by Kiky Idforq
2 Days Ago 03:20 PM
29 Replies
Indians Perform Better...
Last post by Kiky Idforq
2 Days Ago 03:18 PM
3 Replies
Should tobacco companies...
Last post by Kiky Idforq
2 Days Ago 03:15 PM
4 Replies
Are english skills...
Last post by Kiky Idforq
2 Days Ago 03:14 PM
7 Replies
Wisdom does not come...
Last post by Kiky Idforq
2 Days Ago 03:12 PM
3 Replies
Download more than 300...
Last post by Abhaya Panda
2 Days Ago 01:30 PM
3 Replies

» Projects Helpline

Solution manual on...
Last post by Andrew Ken
2 Days Ago 06:35 AM
Stock Marketing TYBMS...
Last post by Rajat Audichya
1 Week Ago 05:42 PM
CRM- Hotel Industry
Last post by Matt Martin
1 Week Ago 10:32 PM
advertising in telecom...
by kpis_02
Last post by Mohit Utmani
1 Week Ago 10:45 AM
ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.


Management Paradise
About Us
Press
Jobs
Contact Us
Kartik Raichura
Legal
Terms & Conditions
Privacy Policy
Disclaimer
Copyrights
Help
Zeitgeist
Support
FAQs
Tour
Feedback
Partners
Follow
Copyright © 2004 - 2013 Management Paradise. Site Developed by Available.co.in