Banking and Financial News – 24 May 2014

IDBI Offers lower interest on MSME loans– On Friday, IDBI Bank signed an agreement with the Federation of Indian of Indian Chambers of Commerce and Industry (FICCI) to offer loans to Micro, Small and Medium enterprises (MSME) at 1% lower than the market rates and also charge low processing fee. (The Hindu)

India’s Forex reserves up $1.09 b to $314.92 b as on 16 May 2014. (The Hindu)

SBI Q4 Profit drops 8% due to the large amount of provisioning on Stresses Assets. Net non-performing assets stood at 2.57%. (The Hindu)

Gold prices, premia, down on RBI move easing gold import curbs and allowing more institutions to import it. (The Hindu)

Union Commerce Ministry has recommended levying anti-dumping duty on solar cells imported from US, Malaysia, China and Chinese Taipei, to provide relief to struggling domestic manufacturers. (The Hindu)

Important Financial Terms in the News explained.

Micro, Small & Medium Enterprises – Two types viz. Manufacturing and Services

Manufacturing Enterprises – Manufacture or Production of goods pertaining to any industry employing P & M in process of value addition to a final product having distinct name or character or use.

Service Enterprise – Engaged in providing or rendering of services. Classification based on Investment in Equipments.

Then, the Classification is based on Investment in Plant & Machinery (P&M)

Foreign exchange Reserves - Also called Forex reserves, in a strict sense are only the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions.

Stressed Assets or Non-Performing Asset (NPA): If interest and instalments and other bank dues are not paid in a loan account within a specified time limit (90 days at present), it is treated as a stressed asset or a non-performing asset of the bank.

Provisioning for Stressed Assets (NPAs) - Provisioning is made for the likely loss in the profit and loss account while finalizing accounts of banks. All banks are supposed to make assets classification. and make appropriate provisions for likely losses in their balance sheets. In conformity with the prudential norms prescribed by RBI, provisions are required to be made by banks on the nonperforming assets on the basis of classification of assets into prescribed categories. Taking into account the time lag between an account becoming doubtful of recovery, its recognition as such, the realisation of the security and the erosion over time in the value of security charged to the bank, the banks should make provision against substandard assets, doubtful assets and loss assets at rates prescribed by RBI.

Dumping - If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product.

Personalities

Chairman of SBI – Ms. Arundhati Bhattacharya (First woman to hold the post)

It is futile to expect others to do what you can do for yourself, take ownership of your life. ~ Anonymous

Courtesy : The Hindu