Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In general, there is no material impact on the sector. Indirect positives are an increase in housing
loan limit under the priority sector norms and setting up of central registry to prevent frauds.
However, there is a sharp increase in farm loan disbursement target but a higher incentive for
prompt repayment of farm loans.
The proposed capital infusion of Rs60bn in public sector banks in FY12 will likely be a
positive as this will help select banks to maintain a minimum tier-1 capital of 8%. As specific
capital infusion details are not available, the impact on stocks cannot be quantified.
The housing loan limit has been increased to Rs2.5mn (from Rs 2.0mn) for dwelling units
under priority sector lending. In general, this will be positive for banks as this aligns the
increase in property prices to the amount eligible for priority sector loans. The direct
beneficiary will likely be HDFC Limited as it can raise more funds from banks against the
loans eligible for priority sector.
Government will provide interest subvention of 1% on housing loans up to Rs1.5mn (from
Rs1.0mn) where the cost of the house does not exceed Rs2.5mn (from Rs2.0mn). In general
this will be positive for banks and housing finance companies (HFCs) in terms of loan growth,
as the marginal borrower will benefit from subsidised rates.
The gross loan disbursement target to the farmers has been increased to Rs4750bn in FY12F
(from Rs3750bn in FY11). The disbursement target for FY12 seems higher than the expected
industry loan growth of 18-20% and thus, will likely lead to an increase in proportion of
agriculture loans to total loans (about 12.4% as of December 2010).
Loans to farmers are fixed at 7% and there is an additional subvention of 3% (from 2%) to
those farmers who repay their short-term crop loans on time. Thus, the effective rate of
interest is 4% per annum. According to the government, the response to this scheme has
been good.
In order to prevent frauds involving multiple lending from different banks on the same
immovable property, a Central Electronic Registry will become operational by 31 March 2011.
In general, this is a positive development for the financial sector. In the long run this will likely
lower incidence of such cases in industry.
RBI is planning to issue the guidelines for banking licences before the close of the financial
year (ie. year ending March 2011). We believe, this is a positive development for potential
players in financial services looking to apply for a banking licence.
The government has increased the FII limit for investment in corporate bonds issued by
companies in infrastructure sector to US$25bn (from US$5bn). According to initial estimates,
the planned infrastructure investments in the 12th plan (2012-2017) is estimated to be
US$1trn. However, these bonds may have limited attraction due to the shallow corporate debt
market in India.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In general, there is no material impact on the sector. Indirect positives are an increase in housing
loan limit under the priority sector norms and setting up of central registry to prevent frauds.
However, there is a sharp increase in farm loan disbursement target but a higher incentive for
prompt repayment of farm loans.
The proposed capital infusion of Rs60bn in public sector banks in FY12 will likely be a
positive as this will help select banks to maintain a minimum tier-1 capital of 8%. As specific
capital infusion details are not available, the impact on stocks cannot be quantified.
The housing loan limit has been increased to Rs2.5mn (from Rs 2.0mn) for dwelling units
under priority sector lending. In general, this will be positive for banks as this aligns the
increase in property prices to the amount eligible for priority sector loans. The direct
beneficiary will likely be HDFC Limited as it can raise more funds from banks against the
loans eligible for priority sector.
Government will provide interest subvention of 1% on housing loans up to Rs1.5mn (from
Rs1.0mn) where the cost of the house does not exceed Rs2.5mn (from Rs2.0mn). In general
this will be positive for banks and housing finance companies (HFCs) in terms of loan growth,
as the marginal borrower will benefit from subsidised rates.
The gross loan disbursement target to the farmers has been increased to Rs4750bn in FY12F
(from Rs3750bn in FY11). The disbursement target for FY12 seems higher than the expected
industry loan growth of 18-20% and thus, will likely lead to an increase in proportion of
agriculture loans to total loans (about 12.4% as of December 2010).
Loans to farmers are fixed at 7% and there is an additional subvention of 3% (from 2%) to
those farmers who repay their short-term crop loans on time. Thus, the effective rate of
interest is 4% per annum. According to the government, the response to this scheme has
been good.
In order to prevent frauds involving multiple lending from different banks on the same
immovable property, a Central Electronic Registry will become operational by 31 March 2011.
In general, this is a positive development for the financial sector. In the long run this will likely
lower incidence of such cases in industry.
RBI is planning to issue the guidelines for banking licences before the close of the financial
year (ie. year ending March 2011). We believe, this is a positive development for potential
players in financial services looking to apply for a banking licence.
The government has increased the FII limit for investment in corporate bonds issued by
companies in infrastructure sector to US$25bn (from US$5bn). According to initial estimates,
the planned infrastructure investments in the 12th plan (2012-2017) is estimated to be
US$1trn. However, these bonds may have limited attraction due to the shallow corporate debt
market in India.
No comments:
Post a Comment