News - Finance

The Reserve Bank of India: Journey into History of Bank of the Bankers

RBI head office, Delhi

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By Sameer Pushp

New Delhi, Feb 8, 2012 (Washington Bangla Radio / PIB India) Reserve Bank of India (RBI) did not become the ‘Bank of the Bankers’ in a day. It’s been a long and tough journey of evolution, consolidation, policy changes and reforms that shaped it to be an institution with a difference. Legislation to set up the RBI was first introduced in January 1927, and after seven years in March 1934, the enactment became an accomplished fact. It is one of the oldest central banks in the developing countries. Its formative years have been eventful. Its efforts to adapt central banking functions was neither deep-rooted nor widespread, the special responsibilities including those of exchange control to shoulder with the outbreak of World War II was a great responsibility thrust upon in the very first decade of its existence. Its transformation from a privately owned institution to a nationalized undertaking and its new role in the economy with the advent of independence was formidable.  Over the years when RBI embarked upon the path of its growth there are many anecdotes that are wrapped in the footprints of time.


Thrust to Potential Entrepreneurs in India: Credit Guarantee Fund Scheme for MSME

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PIB Features
With inputs from Inputs from the Ministry of MSME, Govt. of India

New Delhi, Jan 16, 2011 (Washington Bangla Radio / PIB India) The Government launched the Credit Guarantee Fund Scheme for Micro and Small Enterprises in August, 2000 with the objective of making available credit to Micro and Small Enterprises (MSEs) for loans up to Rs. 100 lakh without collateral/third party guarantees. First generation entrepreneurs in MSE sector find it difficult to access credit from the organized banking sector.  The banks on their part are concerned about the likely defaults in small loans and hence try to collateralize their exposure to the small borrowers. Keeping this in mind, it was thought fit to create the instrument of Credit Guarantee to enhance the comfort level of the banks for financing loans, as well as a new gateway for MSE entrepreneurs to get funding without collateral security and/or third party guarantee. The scheme is being operated by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) set up jointly by the Government and SIDBI.

The scheme covers collateral free credit facility (term loan and/ or working capital) extended by eligible lending institutions to new and existing micro and small enterprises up to Rs. 100 lakh per borrowing unit. The guarantee cover provided is up to 75% of the credit facility up to Rs.50 lakh with an incremental guarantee of 50% of the credit facility above Rs.50 lakh and up to Rs.100 lakh (85% for loans up to Rs. 5 lakh provided to micro enterprises, 80% for MSEs owned/ operated by women and all loans to NER). One time guarantee fee of 1.5% of the credit facility sanctioned (0.75% for NER including Sikkim) and Annual Service Fee of 0.75% is collected from Member Lending Institutions (MLIs). The corpus of CGTMSE is contributed by the Government and SIDBI in the ratio of 4:1. At present the corpus is around Rs.3300 crore which enables substantial enhancement in the credit flow to MSEs by leveraging it many times over.

A total of 125 Member Lending Institutions comprising of 26 Public Sector banks, 18 Private Sector Banks, 68 Regional Rural Banks (RRBs), 4 foreign banks and 9 other Financial Institutions have been registered which allows a wide coverage across country.. CGTMSE has been recognised internationally and has been made a member of the Asian Credit Supplementation Institutions Confederation (ACSIC), which promotes sound development of the credit supplementation system for Micro and Small Enterprises in the countries of Asia through exchange of information, discussions and interchange of personnel among credit supplementation institutions. CGTMSE was chosen to host the 24th ACSIC Conference, a annual conference for Heads of Guarantee Organisations of Asian region for the first time in India during October-November, 2011.

The scheme has helped around 7 lakh entrepreneurs by providing guarantee & enabling them loans worth more than Rs. 31 thousand crore. Success stories abound, from a small taxi driver to steel equipment manufacturer.  Some of these stories are narrated below.

Driving Life, Collateral Free

External Debt of India: Definitions and Concepts

Map of countries by external debt based on 200...

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By Shamima Siddique
Director (Media & Communication)

New Delhi, Dec 23, 2011 (Washington Bangla Radio / PIB India)

External Debt

·         Gross external debt, at a point in time, is defined as “the outstanding amount of those actual current, and not contingent, liabilities that require payment(s) of principal and/or interest by the debtor at some point(s) in the future and that are owed to non-residents by residents of an economy” (External Debt Statistics -Guide for Compilers and Users, International Monetary Fund (IMF), 2003).

Original and Residual Maturity

The Wal-Mart Effect: Why Foreign Direct Investment in Multi Brand Retail is Good for India

By Dhiraj Singh

The author is Director (M&C), P.I.B.

New Delhi, Dec 2, 2011 (Washington Bangla Radio / PIB India) The Government has decided to allow Foreign Direct Investment  (FDI) upto 51% in multi brand retail. This means that global retailers can come to India with a local partner and set up stores in the country.  Till now FDI was not allowed in multi brand retail.  However, there were big multi brand retail outlets owned by Indian entities.

This decision is an enabling policy that will open up new windows of opportunity to modernize the retail sector particularly for agricultural products and the small-scale sector.

The benefits would be for all ...


Foreign Direct Investment Prospect for India

New Delhi, Aug 12, 2011 (Washington Bangla Radio / PIB India) India now with consistent growth performance and abundant high-skilled affordable manpower provides enormous opportunity for investment both domestic and foreign. Foreign direct investment (FDI) causes a flow of money into the economies which stimulates economic activity, increases employment and induces the long run aggregate supply and brings in best practices. The FDI policy was liberalized progressively through review of the policy on an ongoing basis and allowing FDI in more industries under the automatic route.


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