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Banks roundly ignore Sebi bait

BS Banking Bureau

Bankers are not willing to take the bait on the new Securities and Exchange Board of India (Sebi) proposal to provide a collateral funding in automated lending and borrowing mechanism (ALBM) and borrowing and lending securities system (BLESS) facilities. Bankers have adopted a wait and watch policy for the stock markets to stabilise.

Banks across the spectrum are waiting for the Reserve Bank of India (RBI) guidelines following measures taken by the Sebi that banks will be temporarily allowed to provide collateralised funding in the ALBM on the National Stock Exchange and BLESS on the Bombay Stock Exchange.

Bhaskar Ghosh, IndusInd Bank deputy managing director, said: "Once the crisis is over we may raise our stock market exposure. Our funded exposure in the stock market stands at Rs 1.10 billion compared with the prudential norms set up by the bank at Rs 1.50 billion. Our non-funded exposure is to the tune of Rs 1.65 billion against our internal limit of Rs 2.50 billion."

HDFC Bank's funded exposure in the stock market which includes individuals, retails and brokers is around Rs 5 billion. Of this, around Rs 3.30 billion is in the retail segment. A chunk of the exposure is in terms of overdraft facility to brokers. This is well below the 10 per cent exposure limit of total advances.

UTI Bank senior vice-president M M Aggarwal said: "We are waiting for the RBI guidelines before taking a decision. If the lending is safe and if we get a reasonable rate in return, we will certainly consider the proposal."

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