The document summarizes several news stories from the 1st to 7th of November: 1) Microfinance institutions in India agreed to reduce interest rates charged to borrowers to 24% following meetings with financial regulators. This comes amid suicides of borrowers due to coercive debt collection practices. 2) Bank loan growth in India is slowing as borrowers access other funding sources and window dressing of loan numbers ends. If the slow pace continues, the central bank may lower its forecast of 20% loan growth for the year. 3) The Reserve Bank of India lifted some restrictions on urban cooperative banks, removing barriers to expand operations and allowing new branches and use of agents. This provides more operating freedom after restrictions

1. WEEKLY NEWS(1ST NOV. TO 7TH
NOV.)

2. MFIS AGREES TO REDUCE INTEREST RATES TO 24
PC
 Micro finance companies agreed to reduce interest rates they
charged from borrowers to 24 per cent after a meeting with
financial services.
 A cut in rates in the backdrop of an unsavoury situation in
Andhra Pradesh, where many borrowers have committed
suicides apparently due to coercive methods adopted by
micro finance institutions (MFIs) to recover money.
 MFIs are in the business of extending loans in rural areas,
mainly unbanked areas. About 85 per cent of the loans given
by the MFIs come from banks. As of September quarter, the
MFIs have lent over Rs 30,000 crore ($6 billion) to over 3
crore customers.
 While the banks charge interest rates in the range of 9-14 per
cent on loans given to MFIs, some MFIs in turn charge as
much as 34 per cent from their clients.

3. WITH TARGET PRESSURE GONE, BANKS REPORT
LESS LOAN NUMBERS
 Loan growth in the banking system is faltering as borrowers
shift to market funding and due to tapering-off of window
dressing that boosted numbers at the end of the quarter last
month.
 The rise in bank credit to the commercial sector was also
supplemented by the higher flow of funds from other sources.
 Rough estimates showed that the total flow of financial
resources from banks, non-banks and external sources to the
commercial sector during the first half of 2010-11 was higher
at Rs 4,85,000 crore, up from Rs 3,29,000 crore during the
same period of the previous year.
 If the slow pace of loan growth continues, the central bank’s
estimates of 20% this year may have to be cut for the second
straight year.

4. URBAN CO-OPERATIVE BANKS ON A HIGH AS RBI
LIFTS CURBS
 The Reserve Bank of India has offered urban co-operative
banks or UCBs more freedom to operate by removing some of
the restrictions, which were put in place five years ago to
clean up the system.
 The banking regulator has not only removed barriers to widen
their catchment area beyond their states of origin, but it has
also liberalised the branch licensing policy for UCBs and
allowed them to engage business correspondents and
business facilitators for deeper penetration.
 It has replaced the existing limit of 15% of deposits for
housing, real estate and commercial real estate loans by a
limit of 10% total assets.
 An additional limit of 5% of total assets will be available for
housing loans granted to individuals by UCBs for purchase of
dwelling units up to Rs 10 lakh.

5. RBI DOUBLES ONLINE MONEY TRANSFER LIMIT VIA
RTGS TO RS 2 LAKH
 The Reserve Bank has doubled the threshold limit for
electronic fund transfers using the Real Time Gross
Settlement (RTGS) system to Rs 2 lakh with effect from
November 15.
 The RTGS system facilitates high-value transfers of money
from one bank to another on a real-time and gross basis.
 With the increased number of electronic payment
transactions, it has become expedient to position the Indian
RTGS system primarily for processing and settling large value
payment orders.

6. OBAMA TO EASE US-INDIA EXPORT CONTROLS,
BOOST TRADE
 Obama will announce the easing of US controls on
exports to India, in a move to boost trade between the
two countries .
 will address a business summit to showcase US goods
as US businesses finalize deals worth around $10 billion
with India.
 Deals include previously announced transactions
involving General Electric for aircraft engines and gas
turbines, and Boeing for 737 passenger planes.
 But details on a key $4.5 billion sale by Boeing of C-17
military transport planes were still being ironed out.