Page 8 - Banking Finance October 2019

RBI CORNER

RESERVE BANK

NEWS
NEWS
NEWS
NEWS
NEWS

RBI directs banks to link RBI rejects Equitas’ extension request for listing deadline

retail and MSME loans Equitas Holdings’ proposal, seeking extension of the listing deadline for its sub-
sidiary Equitas Small Finance Bank, have been
to external benchmark turned down by the RBI. The RBI has also ordered
With an aim of improving transmis- freezing of the small finance bank's chief executive’s
sion of interest remuneration at the existing level.
rates, the RBI The RBI has said, “Request for extension of timeline
has recently for listing of share of ESFB cannot be acceded to.”
directed the In addition, Equitas was also not permitted to open new branches. Further re-
banks to link strictions may be imposed in case the bank fails to make satisfactory progress
their lending towards listing of its shares.
rates on floating rate loans to retail,
“Listing of small finance banks (SFBs) within three years of reaching net worth
personal and micro, small and me-
dium enterprises borrowers to an of Rs. 500 crore is mandatory as outlined in the guidelines for licensing of SFBs
and as communicated to the bank at the time of granting of ‘in-principle’ ap-
external benchmark with effect
proval and granting of license, thereafter," said the RBI letter. The company,
from October 1.
previously this yea, said that it would list the bank without an initial public offer-
The RBI also stated that the banks ing (IPO) by giving its existing shareholders a direct 47% stake in the small fi-
can link loans to other segments of nance bank. Since the announcement of this scheme, the stock has lost 8%.
borrowers.
RBI nods re-appointment of Shyam Srinivasan as MD
State Bank of India, Union Bank of
India, Central Bank of India, Punjab & CEO of Federal Bank
National Bank and Federal Bank The Reserve Bank of India has recently given the approval to
have already started linking their the re-appointment of Shyam Srinivasan as the Managing Di-
lending rates to an external bench-
rector and CEO of Federal Bank for another year, giving him a
mark. Other banks mostly price loans full decade as the head of the private sector lender. His re-ap-
under the marginal cost of funds- pointment was with effect from September 23 this year until
based lending rate (MCLR).
September 22, 2020, the bank said in a regulatory filing.
In a statement, the central bank
The board of the private sector lender had, however, proposed a three-year term
stated that transmission of policy for Srinivasan’s re-appointment. Srinivasan, 57, took charge as the Managing Di-
rate changes to the lending rate of rector and CEO of Federal Bank on September 23, 2010. Previously, he was re-
banks under the current MCLR
appointed as the MD and CEO of the bank for a three-year period from Septem-
framework has not been satisfactory.
ber 23, 2016, to September 22, 2019, on the completion of his second term.

8 | 2019 | OCTOBER | BANKING FINANCE