- RBI COULD CANCEL LICENCES OF 1,500 NBFCs : Infrastructure Financing & Leasing Services Ltd (IL&FS), a major infrastructure and financing and construction company sent shock waves through the Non-Banking Finance Company (NBFC) sector when it defaulted on some of its debt obligations in recent weeks. Because of this, many Industry experts have opined that the RBI may cancel licences of as many as 1,500 NBFCs because they do not have adequate capital, and also the RBI may make it more difficult for new entrants to get approval. The way things are moving, there is certainly cause for concern and according to a statement made by former Deputy Governor Mr. Harun Rashid Khan, this sector also could see consolidation.
- CASH MANAGEMENT COMPANIES TO FORM SELF REGULATORY ORGANISATION TO ADDRESS INDUSTRY RISKS: Cash Management Companies, providing cash transport and logistics support at ATMs as well as bank branches, have come together to form Self-Regulatory Organisation (SRO). In April this year, the Reserve Bank of India had come out with certain regulations by setting standards for engaging service providers in cash management activities. Among other things, the RBI had directed banks that the staff associated with cash handling should be adequately trained and duly certified through an accreditation method. By forming this SRO, all the above concerns will be taken care of, which will mitigate the risks to the banking industry and ultimately facilitate the regulation of this sector.
- SBI TO PURCHASE LOAN ASSETS WORTH Rs. 45,000 CRORE FROM NBFCs: State Bank of India will increase its portfolio purchase of loans from Non-Banking Finance Companies (NBFCs) Initially SBI had planned for a growth of Rs. 15,000 crore through portfolio purchase this year, which is being enhanced to around Rs. 45,000 crore. This will provide the much needed liquidity to the funds starved NBFC sector, and simultaneously fulfil SBI’s priority sector lending obligations. As per RBI rules, banks must lend 40% of their deposits to small businesses, agriculture and home loans which come under priority sector and SBI plans to buy these kind of loans from NBFCs.
- CHALLENGES GROW FOR NBFCs AS BANKS STOP LENDING TO THEM: Banks have stopped fresh lending to Non-Banking Finance Companies due to which NBFCs are facing greater challenges at a time when everyone is trying to preserve liquidity and avoid loan defaults. There are wide scale complaints from many NBFCs that some banks are even refusing to release funds against their sanctioned limits.
- SBI REPORTS 1,329 FRAUD CASES WORTH Rs.5,555 CRORE: In response to a query of RTI, State Bank of India has revealed as many as 1,329 cases of fraud, involving an amount of Rs. 5,555 crore in the first 6 months of the current fiscal year. In the first quarter (April to June), 669 cases worth Rs. 723. 06 crore were reported, whereas in the second quarter (July to September), 660 cases involving an amount of Rs 4,832 crores have been reported.
- CBDT EXTENDS DEADLINE FOR FILING ITRs WITH AUDIT REPORTS TO OCTOBER 31st: The Central Board for Direct Taxes (CBDT) has now extended the deadline till October 31st for filing Income Tax Return and Audit Report for financial year 2107-18. The deadline was earlier extended from September 30th to October 15th for tax payers whose accounts have to be audited.
- RBI TO INFUSE Rs.120 BILLION INTO THE SYSTEM TO MANAGE LIQUIDITY: Reserve Bank of India has decided to inject Rs. 12,000 crore into the system through purchase of government bonds to arrest the liquidity crunch and meet the festival season demand for funds. The government will purchase bonds with maturity ranging between 2020 to 2030. The auction to purchase government bond is a part of the Open Market Operations (OPO) to manage liquidity in the economy.
This post first appeared on IMPACT OF DEMONITIZATION OF CURRENCY IN INDIA IN 2016, please read the originial post: here
