Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: TDS :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: cpt :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: empanelment
 
 
News Headlines »
 Income Tax saving investments: Top 5 options available for high-income individuals
 How to use zero tax rule on long term capital gains on stocks
 GST Returns - Furnishing details of inward supplies
 5 ways to maximise you income tax return
 Income-tax (2nd Amendment) Rules, 2017
 Soon, Faster PAN, An App For Filing Tax Returns
 Changes in income tax return filing process
 New Income Tax Rates And Deductions Applicable From April 1, 2017
 Tax and transparencya
 No decision yet on imposing tax on cash transactions
  Mentioning of Minor Head Code for accounting of Refund

Banks can lend more to oil cos
May, 31st 2008

Banks have been allowed to lend more money to state-owned oil companies, which are finding themselves cash-strapped because of surging crude prices and their inability to pass on the burden to consumers.

The central bank has told banks that they can lend up to 25% of their capital funds to oil companies as against 20% earlier. This limit can be increased to 30% on board approval. Following a representation from banks, which had touched their single borrower exposure limit to oil companies, RBI has allowed banks higher exposure limits.

Though oil companies are viewed as very sound borrowers because of government ownership, they are facing a cash-crunch as the government subsidy has been in the form of oil bonds.

RBIs move to increase the limit also protects the bond markets. If banks refuse to lend more to the oil PSUs, the oil companies would be forced to undertake a distress sale of oil bonds, pushing up bond yields.

Given that the fund-requirement of oil companies run into several billion dollars every month, only the State Bank of India (SBI) is in a position to lend to them without breaching its exposure limits.

Following its rights issue this year, the bank has a net worth of Rs 50,000 crore. This does not include tier II bonds, which are also taken into account while computing exposure limits. Earlier this week, SBI borrowed Rs 13,000 crore under the repo option.

Bankers felt that the borrowing was to fund oil imports by public sector refining companies. In a circular issued here on Thursday, RBI said, On a review of the current situation in the oil sector, it has been decided to revise with immediate effect the above exposure limit to 25% of the capital funds, only in respect of oil companies who have been issued oil bonds (which do not have SLR status) by the government.

In addition to this, banks may, in exceptional circumstances, consider enhancement of the exposure to the oil companies up to a further 5% of capital funds.

Though prudential norms prescribed by RBI cap for any borrower is limited to 15% of a banks capital funds, an additional 5% (that is, up to 20%) is allowed for credit exposure to infrastructure projects. According to RBI definition, oil companies come under the ambit of the infrastructure sector.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions