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Banks ignore RBI advice on NBFC lending
Reserve Bank of India's advice to commercial banks to tender loans to non-banking finance companies (NBFCs) against second-hand assets financed by the NBFCs seems to have been ignored by commercial banks.

Firstly, banks do not want to encourage NBFCs in areas which they themselves consider worth financing and banks also see lending to NBFCs as a high-risk proposition and hence would not want to have exposure to them, according to the executive director of a large bank.

The Finance Industry Development Council (FIDC), a self-regulatory organisation of registered NBFCs, recently wrote to the RBI governor Yaga Venugopal Reddy saying that banks have not reacted positively to RBI's advice to lend to the NBFC sector, even for second hand vehicles.
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IDBI stake in IDFC to stay at or above 26 per cent
The government of India and Industrial Development Bank of India (IDBI) who are the sponsor shareholders of the Infrastructure Development Finance Corporation (IDFC) will make efforts to keep their cumulative shareholding at a minimum of 26 per cent for the next three years.

After IDFC's initial public offering (IPO), the combined shareholding of the sponsor shareholders will come down to 26.41 per cent from 39.9 per cent now. The government stake will drop to 23.29 per cent from 34.91 per cent, while that of IDBI will fall to 3.12 per cent from 4.99 per cent.
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PNB to interconnect more than 800 branches
Ludhiana: The Punjab National Bank is planning to interconnect more than 800 branches in the country using 'core banking

This will make the PNB one of the biggest networked banks in the world in respect of CBS branches according to S C Gupta, chairman & managing director of PNB. Punjab National Bank has 1127 CBS branches at 237 centres, which is the largest in Asia.

Gupta said, the PNB was aiming to improve its fiscal position, and has identified five areas such as reduction in cost of deposit, credit expansion, cut in gross NPAs, improvement in asset-liability management and creating more promotional opportunities for the staff in the coming years.

He said the bank would be able to achieve business of over Rs2,00,000 crores this year against Rs1,63,579 cores at the end of March,2005. The Bank has a deposit base of Rs103167 crore as on March 31, 2005, he said.
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Banks in the dark about Basel 11
New Delhi: Most Indian banks are still not clear about what Basel II norms entail and few are equipped to implement the advanced Basel II norms, which deal with data collection primarily on credit risk.

The banks are only preparing to implement the standardised approach of Basel II norms, which relates to their capital adequacy ratio (CAR). Banks would require to spend 6-10per cent of their total IT spends on its implementation.

Only State Bank of India and Punjab National Bank have initiated the process of data collection. Others have not done this also.

PNB officials say they initiated the data collection process, a mammoth task, in order to implement the advanced approach of the Basel II norms.

Finance ministry sources said that the Basel II norms would drive mergers and consolidation (M&As) in the sector. Banks with CAR of 11 per cent or below are likely to go in for forced mergers to improve their CAR level.

As per Basel II norms, banks are required to have a minimum CAR of 9 per cent and its implementation would bring down CAR by an average of 3 percent.

Banks like Dena Bank, Punjab and Sind Bank and Syndicate Bank have CAR between 10 per cent and 11 percent while Allahabad Bank has a CAR of 12.53 per cent also on the lower side.
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