|
||
|
||
Channels: Astrology | Broadband | Chat | Contests | E-cards | Money | Movies | Romance | Search | Weather | Wedding Women Partner Channels: Auctions | Auto | Bill Pay | Jobs | Lifestyle | TechJobs | Technology | Travel |
||
|
||
Home >
Money > Reuters > Report March 20, 2001 |
Feedback
|
|
RBI asks cooperative banks for share market dataThe Reserve Bank of India (RBI) has directed cooperative sector banks to furnish information about their exposure to capital markets, which have been rocked by sharp volatility since the beginning of March. A central bank directive to cooperative banks, made available on Tuesday, asked the banks to provide information about their transactions in the call money market between March 1 and 17 and their overall liquidity positions as of March 17. Urban cooperative banks, which number about 2050, have come under a cloud after Madhavpura Mercantile Cooperative Bank, based in Ahmedabad, faced a liquidity crunch, apparently due to excessive lending in share markets. Weak global stock markets, fears of broker defaults on domestic bourses and allegations of insider trading have sent Indian shares tumbling, raising fears that banks which have lent to brokers or made loans against shares could face heavy losses if prices do not recover. The benchmark Bombay exchange index has lost over 16 per cent from its post budget high of 4386.98 points hit on March 1. The central bank allows banks to invest up to 5 per cent of their total outstanding loans at the end of the previous financial year in shares, convertible debentures and mutual funds. The Madhavpura Mercantile Bank has been placed under an administrator after the RBI directed it last week to stop all banking operations. Media reports from Ahmedabad said that a run on this bank had caused panic, prompting many depositors to withdraw large amounts from other cooperative banks in Gujarat. The central bank directive said it had also asked cooperative banks for details about advances granted to individuals, brokers and companies where share brokers are partners or directors. The RBI has also directed the banks to furnish details about their borrowings, other than in the call money market, between March 1 and 17.
|