2 august 2001

rbi not to allow banks to close branches
mumbai—the reserve bank of india (rbi) has directed public sector banks not to close down branches due to shortage of staff. the strength of most public sector banks has come down by 10 per cent and as many as 99,425 employees have opted for the voluntary retirement scheme offered by the public sector banks with the total package having cost rs 10,073 crore to the banking sector.
due to the virtual exodus of employees banks are finding it difficult to manage wide network of branches post vrs and are considering merging or closing down some of their branch offices.
the rbi also asked banks to ensure that lending under various schemes in rural areas was not adversely affected due to this scheme.
rbi is of the view that public sector banks introduced vrs with the objective to right size manpower.

31 july 2001

rbi for capital infusion in ifci
new delhi--the reserve bank of india wants an immediate infusion of rs 850 crore into ifci ltd to meet the stipulated capital adequacy ratio of 9 per cent against the 6.7 per cent level at the end of march this year.
ifci has, however, sought a rs 1,000 crore bail-out package either through convertible bonds, direct equity or long-term preference shares.
however, the stakeholders the financial institutions and state bank of india are not agreeing to a capital infusion to bolster ifci’s capital adequacy ratio. thus, a meeting convened by finance secretary ajit kumar here today proved inconclusive. rbi also attended the meeting.
ifci had been seeking an infusion of rs 400 crore since september 1998 as it is facing liquidity problems in meeting its redemption and interest payment obligations to the tune of rs 1,100 crore this month. the government so far has not agreed to it’s demand so far. while expenditure secretary cm vasudev has been opposing the move for a budgetary support, the stakeholders have repeatedly voiced their opinion against any capital infusion.
in wake of the liquidity and cash flow problems, rating agencies are closely monitoring the institution for a possible downgrade.

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