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| At present, priority sector lending is constrained with too many limits. Therefore, bankers feel the purview of priority sector can be widened by including contract farming, agro activities in it.
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| Moreover, the target set for priority sector lending could be removed and flexibility could be built in when deciding the target within a prescribed band.
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| In order to increase agricultural lending, an idea has been floated to convert the investments under Rural Infrastructure Development Fund (RIDF) into tradeable and negotiable security.
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| A banker said it will help in enabling efficient management of priority sector portfolios by banks.
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| Further, risk weightages assigned to farm lending should be reduced from the present level of 100 per cent to 50 per cent, said bankers.
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| Similarly, in order to help banks to lend to projects involved in setting hospitals and nursing home in the rural areas , a more liberal risk weightage should be attached to these loans.
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| Banks have requested the RBI to reduce the risk weightage to 20 per cent on gold loan, which is a popular avenue for the farmer to meet credit requirements and which is fully secured.
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| A long standing demand that has once again been made is raising the present ceiling of unsecured advances from 15 per cent of total advances to 25 per cent.
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| As far as foreign banks are concerned, greater freedom has been sought for branch expansion and permission to remit profit to their parent bank on periodic basis based on audited accounts instead of the present practice of sending it at the end of fiscal which gets reflected only after a lag.
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| In order to give a boost to the infrastructure lending, bankers are looking forward to clear cut guidelines from the RBI to raise long term bonds from the market and permission to issue ten year tax free infrastructure bonds without CRR and SLR requirements.
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| Further, banks have asked to be allowed to issue tier II bonds with floating interest rates.
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| While the banking industry is widely expecting some kind of discussion on graduating to Basel II norms even though guidelines will only arrive in 2004, some steps have been suggested for the better management of non-performing assets.
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| Besides, strengthening the legal set up, bankers have asked for a restructuring of the classification of the NPA account.
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| At present, there are divergent views of the auditors in classifying accounts as account regularised near balance sheet, restructured account, accounts where ad hoc limits have been sanctioned.
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| Therefore a better clarity in this regards is being awaited from the central bank in the forthcoming policy.
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| In terms of classifying a large project where commercial production has started beyond a period of six months after completion of the project as substandard, bankers have asked for extension of time limit from the present limit of six months. |
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