Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : ICICI Ltd - (Nyse: IC) -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (408)	3/17/2000 8:39:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 494

Entry barriers in insurance sector for banks relaxed 17-03-2000 11:45:21 RBI has relaxed the norms for scheduled commercial banks entry into insurance sector. The earlier guidelines permitted those banks having Net NPAs 1% below the industry level as one of the eligible criteria to foray into the insurance sector. As per the new norms, the NPA level of a bank should be ?reasonable?. The reasonable level of NPAs becomes a subjective issue and will require a case-to-case clearance from RBI. RBI earlier required that banks should not invest more than 10% of their networth in a joint venture and to also ensure that the total investment in subsidiaries should be contained at 20%. As per the revised guidelines, the networth of a bank should be more than Rs5bn and the maximum stake a bank can hold in a joint venture will be 50% provided no additional stake will be taken by subsidiaries or associates. The previous guidelines with respect to Capital Adequacy Ratio (CAR) of 10%, profitability for three years, and also a good track record of subsidiaries was kept unaltered. The entry of banks into insurance will require the banks to obtain clearance from RBI on a case-to-case basis. The new guideline permits any scheduled commercial bank and also subsidiaries of banks which have been set up with RBI approval to undertake insurance business as an agent of an insurance company on a fee basis without risk participation. Banks which are unable to fulfill the joint venture criteria can make investments up to 10% of their networth or Rs0.5bn whichever is lower in the insurance company for providing infrastructure and service support. The investment by such banks will be on a one-time basis and also without any contingent liability. However the CAR of such banks should not be less than 10% and their NPA level too should be reasonable. The earlier guidelines restricted SBI to enter the insurance sector, but the new norms are likely to benefit SBI to a great extent. Source: Economic Times