Page 6 - BANKING FINANCE MARCH 2024

BANK UPDATE

Total Return Swap (TRW) arrange- in progress. Let the IBA hold the meet- The MEA has provided a further Rs
ments to manage risks from interest ing of the concerned sub-groups and 4,383.40 crore in 2024-25 towards
rate movements. As a part of asset li- sub-committee in order to ensure that payment to Exim Bank towards guar-
ability management, the bank has en- all banks follow the SOP in respect of antees that may be invoked against
tered into a rupee interest rate swap information disclosure mechanism to doubtful debts, indicating more such
of a notional amount of Rs 5,000 crore the law enforcement agencies," Justice loans to countries might get classified
against underlying financial instru- Prathiba M. Singh said. as NPAs in the coming years.
ments.
The court also issued notice to A Ministry of External Affairs spokes-
The interest rates, in his view, have Srinivasa rao, senior advisor, IBA, and person was not available for comment.
peaked and are likely to decline by 50- asked him to be present before it so Officials said government-supported
100 basis points over two years. While that the stand of all the banks can be LOCs to countries of Asia (excluding
Nabfid's one-year lending rate was 8.0 considered on April 6, the next date of Bangladesh, Nepal, Bhutan) Africa,
per cent, the annual coupon on 10- hearing.
Commonwealth of Independent States
year non-convertible securities is 7.43 The directions came pursuant to the region and Latin American region are
per cent. This coupon rate is fixed over
Reserve Bank of India informing the extended under the Indian Develop-
the maturity period (10 years).
court that detailed SOPs had been pre- ment and Economic Assistance
The Indian government infused a capi- pared for exchange of information be- Scheme.
tal of Rs 20,000 crore in FY22. It also tween banks and law enforcement Once guarantees are invoked by a fi-
provided a grant of Rs 5,000 crore to agencies and the deadlines for banks nancial institution or a public sector
the institution in FY22 which has been to provide information have been fixed
undertaking, the funds are paid out of
invested in the fixed deposits. The in- strictly and the same have to be man- the Guarantee Redemption Fund es-
terest earned on the grant amount is datorily complied with by all.
tablished in the Public Account of In-
utilised to reduce the lending rate.
dia since 1999-2000.
Referring to the lending and loan pipe- Govt gives Rs. 9,000 crore
line, Rai said this first full year of op- to Exim Bank as loans ex- EPFO to stop claims made
erations and disbursements stood at through Paytm Payments
over Rs 21,000 crore till December tended to foreign coun-
2023 and sanctions were close to Rs tries turn NPAs Bank
65,000 crore. In June 2023, the lender With loans to some countries extended India's state-run social security fund will
had indicated that it would be able to through Exim Bank of India being clas- halt claims made via Paytm Payments
sanction Rs 1 trillion loans for infra- Bank accounts from Feb. 23, as the
sified as "doubtful debt" in 2023-24,
structure projects this year (FY24). country's central bank-imposed restric-
the Ministry of External Affairs has pro-
vided Rs 9,013.72 crore to the finan- tions on the payments bank due to
HC asks IBA to ensure cial institution after it invoked Govern- persistent irregularities, a government
banks follow SOPs ment of India (GoI) guarantee on these order said.
loans. The Employees' Provident Fund
The Delhi High Court has asked the
Indian Banks Association (IBA) to hold The Exim Bank had to invoke the guar- Organisation (EPFO) has asked its offic-
a meeting of all its members to ensure antees after decade-plus old loans ex- ers to refrain from accepting claims
that everyone follows the standard tended to some African countries linked with accounts in Paytm Pay-
operating procedures (SOP) related to turned into non-performing assets. ments Bank, an associate of One 97
information disclosure mechanisms to "Lines of Credit (LOCs) are given to Communications, according to the or-
law enforcement agencies. other countries and some of these to der, which was reviewed by Reuters.

"It appears that the SOP (standard African countries have turned into The order was issued by the EPFO,
operating procedures) and the manner NPAs. They have been classified as which comes under India's Ministry of
in which the SOPs have to be imple- doubtful, but not written off," a senior Labour and Employment.
mented by all the banks is still a work government official said. The move comes after the Reserve

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