Finance Minister P. Chidambaram held that the government was keeping a close watch on the top 30 Non-Performing Assets (NPA) accounts of big borrowers (with loans of over Rs.1 crore) in each public sector bank, and asked the lenders to set up separate verticals to recover money from written-off accounts.
As per the Minister, the current situation is not as bad as it was in 2000, when gross NPAs reached a high of 14%. As of June 2013, the gross NPA of nationalized banks was 3.89%, and that of the State Bank group at 5.50%.
Other public sector banks have been advised to set up separate verticals to recover as much as possible from the accounts that were written off.
According to the Minister, the problem of NPAs has resurfaced after a normal period of 2009-10 and 2010-11 due to slowdown in the economy. However, he hoped that once the economy starts picking up the NPAs will come down.
Capital infusion of Rs.14,000 cr
The Finance Ministry has finalized the Rs.14, 000 crore capital infusion plan for public sector banks to strengthen their capital base, and promised another share in the fourth quarter of the current fiscal. The capital infusion would ensure that banks had 8% Tier-1 capital by the end of the current fiscal year.
S&P BSE Sensex crossed 21,000 level for first time since November 2010. The benchmark is also Asia’s best performing index. Marking it highest intra-day level since November 2010, the S&P BSE Sensex rose above 1 % to 21,002.50
What are the possible reasons for this upward trend, S&P BSE Sensex crossing 21,000 mark?
- Fresh buying by funds and retailers mainly influenced the positive sentiment.
- Foreign funds have bought $1.7 billion in Indian equities till date in October 2013. Thus, making total purchases by foreign funds for the year to $15.35 billion.
The foreign exchange (forex) reserve of India rose by $1.51 billion to touch $279.24 billion for the week ended October 11, 2013.
According to the Reserve Bank of India (RBI), India’s Foreign Currency Assets (FCA), the biggest component of the forex reserves, increased by $1.52 billion to $250.85 billion in the same week.
As per the central bank the FCA expressed in US dollar terms included the effect of appreciation or depreciation of non-US currencies held in reserve, such as the pound sterling, euro and yen. The value of India’s gold reserves remained the same.
However, India’s reserve position with the International Monetary Fund (IMF) decreased by $4.7 million to $2.19 billion and the value of the Special Drawing Rights (SDRs) plunged by $9.6 to $4.43 billion.
What are Special Drawing Rights (SDR)?
SDR which are also called paper gold are international financing instrument created by the International Monetary Fund (IMF) in 1969 to coincide with the disfavor of the US dollar as the principal currency of the world trade. Although called paper gold, an SDR is neither paper nor gold but an accountingentry.
It is not backed by any currency or precious metal, and is used only among governments and IMF for balanceofpayments settlements.
SDRs are a measure of a country’s reserve assets with IMF and, whereas not ‘money’ in the strict sense, have several characteristics of money as interestbearing assets, store of value, and means of settling indebtedness. They are distributed among all member nations of IMF in proportion to each member’s quota of IMF dues based on the member’s GNP.
SDRs are used mainly to supplement gold and convertible (hard) currencies in maintaining stability of foreign exchange markets and are valued on the basis of the value of a basket of 16 major currencies with periodically adjusted weightage reflecting each currency’s importance in international trade.
The Supreme Court, in a ruling, directed the Courts not to impose a fine of more than twice the amount in bounced cheques even if they are taking a lenient view of the accused by not sentencing him imprisonment.
As per Section 138 of the Negotiable Instruments Act, 1881, a person (whose cheque has bounced) shall without prejudice to any other provision of this act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both.