Page 9 - Banking Finance March 2019

RBI CORNER

Union Cabinet approves Rs 1,450 cr for share capital Non-food credit demand

of RBI in National Housing Bank grew 13.1% in January19,
The Cabinet approved Rs 1,450 crore for the share capital of Reserve Bank of
India in the National Housing Bank. After the payment - RBI data
of this amount to RBl, the subscribed capital of NHB Non-food credit demand rose by 13.1
shall stand transferred to and vested in the central gov- per cent in
ernment. The National Housing Bank (NHB) has been January, as
set up to operate as the principal agency to promote against a
housing finance institutions in India. "The Union Cabi- 9.5 per
net approved payment of the face value of the subscribed share capital of Rs cent in-
1,450 crore in National Housing Bank (NHB) to Reserve Bank of India (RBl) con- crease dur-
sequent to amendments made to the NHB Act, 1987 in 2018," said an official ing the same period last year. Non-
release. The wholesale financing role of NHB will get strengthened with the food credit for January stood at 82
transfer of ownership to government, thereby making possible augmented fund- trillion, according to data released
ing support to housing finance companies, it said. by RBI.
Credit to non-financial banking com-
More banks will exit RBI's PCA framework with Govt panies (NBFCs) remains the fastest

support growing sector for deployment of
bank credit, despite the liquidity cri-
Finance minister assured government funding support to public sector banks and
hoped that the 6 lenders which remain under the RBI's sis. Credit to NBFCs saw a 48.3 per
prompt corrective action framework will soon come out of cent rise in January, against a growth
it. He said that the Insolvency and Bankruptcy Code (IBC) has of 16.1 per cent in the same month
been a success story and the government has maintained in 2018.
arm's length distance from the processes being followed. Credit growth for the industry in-
"The government has lived up to its word of continuing to creased by 5.1 per cent in January
fund you in terms of capital. I am glad that several banks have 2019 as compared with 1.1 per cent
recently come out of the PCA norms and I'm sure the others who remain within during the same period last year.
will also try and improve their measures with the government commitment of Credit to medium enterprises grew
support to them so that we can see much healthier banking in years to come," the most by 10.9 per cent over the
Jaitley said. Of the total 21 state-owned banks, 11 were put under the PCA previous year. Credit growth for ser-
framework by the RBI last year. Five banks -- Allahabad Bank, Corporation Bank, vices remained strong at 23.9 per
Bank of India, Bank of Maharashtra and Oriental Bank of Commerce - have been cent in January 2019. This was
removed from the framework this month. The 6 PSBs which remain in the PCA
against an increase of 13.2 per cent
list are United Bank of India, IDBI Bank, UCO Bank, Central Bank of India, In- in January 2018.
dian Overseas Bank and Dena Bank.
Personal loans grew at 16.9 per cent
RBI guidelines on risk-weightage of NBFCs in January 2019, lower than a
growth of 20 per cent in January
RBI has eased the risk-weightage norms for the banks for the rated loan expo-
sure they have in non-banking financial companies 2018, with housing loans and credit
(NBFCs). The move will not only free up more capital cards showing the strongest growth.
for the banks for lending, but also make it easier and Credit to consumer durables saw a
cheaper for select NBFCs to receive funds from the drop of 75.2 per cent over January
banks. last year. Credit to agriculture and
allied activities increased by 7.6 per
Non-transparency is a big challenge among mush-
cent in January, against 9.4 per cent
rooming NBFCs. By these guidelines, RBI has put in a systemic incentive for NBFCs
to be transparent and vie for good rating from the credit rating agencies. in the year-ago period.

BANKING FINANCE | MARCH | 2019 | 9