The Hindu Business Line : Banks get some leeway on infra loans

Mumbai, April 29 Allowing some leeway for infrastructure, loans accounts that are classified as sub-standard asset, the policy said that banks can classify as sub-standard, those infrastructure loans where the commercial production has not started after two years after the date of completion as originally mentioned, as against the earlier period of one year from date of completion.

Limit for risk weights for housing loans increased

The 50 per cent risk weights for capital adequacy purposes for housing loans has been now allowed to housing loans up to Rs 30 lakh, as against Rs 20 lakh earlier. “This has been done keeping in mind the number of people involved and the rise in prices of houses,” said Dr Y.V. Reddy.

Review of loans to commodities

The policy has asked banks to exercise caution while extending advances to traders in agricultural commodities and advances against warehouse receipts.

“They are further advised to exercise caution while extending such advances to ensure that bank finance is not used for hoarding,” the policy said.

“There was some feeling that there was some lending by banks which was helping people to hoard food grains. We have no evidence, but we have asked banks for information. As soon as we get the information we may pick up those banks for further supervisory review,” Dr Reddy said.

Q1 review

The RBI will conduct the first quarter review of its Annual Monetary Policy 2008-09 on July 29.

The apex bank would carry out a review of its annual statement on development and regulatory policies on October 24, it said

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