|
BS REPORTER
Mumbai/Kolkata,
20 July
Foreign
banks in India and having more than 20 branches are to be treated on a par
with domestic banks in priority sector lending.
According
to the latest norms, issued today by the Reserve Bank of India (RBI), these
banks must extend 40 per cent of their net credit to the priority sector, a
norm hitherto applicable only for domestic banks. Only four foreign banks
have more than 20 branches — Standard Chartered, HSBC, Citibank and Royal
Bank of Scotland (RBS).
These
foreign banks have been given five years, starting April 2013, to meet the
new norms. They have been asked to file an action plan by December 31 for
achieving the targets over a specific time frame, needing RBI approval.
When
asked, these four banks were not willing to comment. “We are going through
the details and it will be premature to comment now,” said the spokesperson
of one of these.
Incidentally,
RBS, with 31 Indian branches, had applied to the regulator to sell its retail
and commercial banking businesses to HSBC, along with a sizeable number of
branches. The application is still pending with RBI.
Another
foreign lender, Deutsche Bank, has 16 branches and one unused licence,
bringing it close to that 20-mark. Foreign banks with less than 20 branches
will have no sub-targets within the overall priority sector lending target,
retained at 32 per cent.
The
norms issued today were broadly in line with the recommendations of the Nair
committee on priority sector lending classification.
The
targets under both direct and indirect agriculture are retained at 13.5 per
cent and 4.5 per cent, respectively.
In
addition, bank loans to micro finance institutions for onward lending to
individuals would continue to have the priority sector status.
The
new norms have also aimed to discourage loans by informal channels such as
local money lenders.
Bank
loans to distressed farmers indebted to noninstitutional lenders, and loans
to individuals other than farmers up to ~50,000 to prepay their debt to
non-institutional lenders, are to be classified under priority sector
lending.
And,
loans up to ~25 lakh for housing in metropolitan centres (population over a
million) and loans up to ~15 lakh for other centres will be classified under
priority sector lending.
RBI
provided some relief by removing the five per cent cap on bank loans to
nonbanking financial institutions for on-lending to specified segments.
In
the draft norms, the banking regulator had said these loans would be
classified under the priority sector up to amaximum of five per cent of
adjusted net bank credit or credit equivalent of off-balance sheet exposure,
whichever was higher.
In
today’s revised guidelines, RBI removed this cap and said “investments by
banks in securitised assets, outright purchases of loans and assignments to
be eligible for classification under priority sector, provided the underlying
assets qualify for priority sector treatment and the interest rate charged to
the ultimate borrower by the originating entity does not exceed the base rate
of such bank plus eight per cent per annum.”
Five-year
schedule called for; other Nair panel recommendations on lending rules for
domestic entities broadly accepted LOAN BOOK
Some
loans thatwould be classified as prioritysector
|Loans
up to ~1 crore to micro and small service enterprises |Loans to food and agro
processing units |Loans to distressed farmers indebted to non-institutional
lenders |Overdrafts up to ~50,000 in no-frills accounts |Loans to individuals
other than farmers up to ~50,000 to prepay their debt to non-institutional
lenders |Loans up to ~25 lakh for housing in metros having population above 1
million |Loans up to ~15 lakh for housing in cities having population less
than 1 million |Education loans up to ~ 10 lakh for studying in India and ~20
lakh for studying abroad FOOTPRINT
Four
foreign banks in India have more than 20 branches
|Standard
Chartered Bank:
94
branches
|Hongkong
& Shanghai Banking Corporation:
50
branches
|Citibank:
42
branches
|Royal
Bank of Scotland:
31
branches
NEWRESERVE
BANKOFINDIA NORMS
These
foreign banks have been asked to file an action plan byDecember31 for
achieving the targets overa specific time frame
|
|
When Facebook founder and billionaire Mark Zuckerberg surprise-wed girlfriend
Priscilla Chan, celebrity-watchers were agog to know whether the two had
signed a prenuptial agreement, or pre-nup. A few days before the wedding,
much-married fellow-billionaire Donald Trump had advised him to do so on
CNBC, while a celebrity divorce lawyer was quoted as saying that if
Zuckerberg hadn’t, he should consult a psychiatrist. More recently, the Tom
Cruise-Katie Holmes split sparked similar talk about what the terms of their
prenuptial agreement would have been and what Holmes would walk away with
(not much, as it turns out).
A
prenuptial agreement, as it is understood in the West, defines how assets
will be divided in the event of a divorce, and helps limit the claims spouses
can make on each other. It could also lay down the terms of custody of
children, or even, as is rumoured in the case of actors Catherine Zeta Jones
and Michael Douglas, contain clauses on infidelity. With celebrity prenups
abroad stoking so much interest, it is hardly surprising that ordinary people
consider signing similar agreements. After all, the desire to protect one’s
assets is natural, more so with divorce rates rising. “Our office receives
30-35 enquiries about prenuptial agreements in a year,” says Shiv Kumar,
senior advocate and founder-partner of Bangalore law firm Law & Options.
“These are not idle enquiries, but queries from people who want to take the next
step of drafting an agreement.” But that next step mostly does not happen
because of one crucial factor — prenuptial agreements have no legal sanctity
in India. This is because of the differences in the definition of marriage
itself — marriages in the US are regarded as contracts entered into by equal
parties, whereas the law in India views them primarily as a sacrament,
explains Sarasu Esther Thomas, a professor at National Law School, who has
been teaching family law for 15 years. The idea of a prenuptial agreement,
which accepts the possibility of a separation, would thus strike at the very
heart of that definition. And one cannot do something by private contract
when it is prohibited by law, she adds.
Most clients, say lawyers, lose interest in
a prenuptial agreement when they are told it will not be enforceable in
acourt of law. But there are a few who persist in having some kind of a
contract drawn up. Typically, these are people who belong to the extremely
affluent class, says Geeta Luthra, a senior lawyer based in Delhi. Wealthy
clients entering into a second marriage also request her to draw up a prenup.
“In such cases, a degree of cynicism and wariness enters relationships,”
where couples may not want to jeopardise their assets. These couples request
their lawyer to draw up a prenup to provide for a smooth transition in case
of a separation, especially if children are involved. The document may not
provide for a clear division of assets, but may simply be a way to
pre-determine the maintenance provisions and custody decisions.
However,
such a prenup must have “reasonable” stipulations, cautions Luthra. For
instance, if the agreement states that the children will stay with only one
parent after the marriage, it will be struck down by the courts on the
grounds that it contradicts public policy. “Also, if a Fortune 500 business
magnate’s marriage breaks down after six months, both parties can’t walk away
with 50 per cent of the estate. At the same time, a millionaire cannot draw
up aprenup giving his wife only ~500,” says Luthra.
But
if these agreements do not hold good in court, why do people want them? “As a
lawyer, I can suggest it as a guide for future relations and an amicable way
of resolving issues,” says Delhi-based Hasan Anzar. His firm receives 10-15
requests for prenups every four months. The agreements are typically divided
into two parts: terms and conditions during the marriage as well terms and
conditions in case of a divorce.“When tempers are running high between
warring couples, it’s difficult to agree on anything. In such cases, a prenup
comes in handy, as one is equipped with a draft upon which the couple can
rely.” Anzar recalls an instance a year ago, where he had helped a couple
draw up a prenuptial agreement that involved much negotiation. When the
marriage collapsed, the husband paid his wife the ~6 crore he had agreed to,
according to the terms. But any such agreement, Anzar too emphasises, will be
valid only to the extent that it does not go against the provisions of existing
laws, such as the Hindu Marriage Act. The couples who had signed similar
agreements did not wish to comment for this article.
It is not just the very wealthy who would
like to have some kind of a prenuptial agreement in place. The enquiries Shiv
Kumar receives are mostly from the upper middleclass rather than the very
wealthy because, he surmises, “the really rich would prefer to settle
everything within the family”. Ujwala Mandgi, a senior lawyer in Bangalore,
says the prenuptial agreements she had drawn up have been for couples in the
software industry. ‘“I try to convince them that it is not legally binding
but it’s as if we want to blindly ape the West,” says Mandgi. There have also
been requests from couples where the groom is working in the US and the bride
is in India. Some of the agreements, she says, even have clauses stipulating
that the couple would not have children in the first two years and who would
be responsible for which household expenses.
Delhi-based
Luthra, who supports the inclusion of prenuptial agreements in Indian
marriage laws, finds the lack of legal sanction strange. “In divorce
proceedings, the couple might sign a memorandum of settlement which the court
recognises without much fuss. So why not a law on prenups?“ Such an agreement,
she feels, would rule out the nagging fear about assets that plagues most
affluent couples before they tie the knot. So far, there has been no instance
where the courts have been asked to enforce such acontract, says NLS’s
Thomas.
Nevertheless,
couples thinking of a prenuptial agreement should consider that they might be
signing a document that a court can dismiss as worthless piece of paper.
KNOTTYAFFAIR
Some
typical prenup demands
|Wife
pays the rental of the house from her salary; husband shall bear other
expenses: groceries, medical expenses, clothes, everyday household items
|Wife and husband shall jointly buy a house within two years of marriage.
Both parties will pay EMIs, if any, in equal proportion towards the house |In
the event of divorce, both parties will be entitled to a refund of their
respective shares along with division of appreciation in equal proportion
from the proceeds of the sale of said house |Wife will keep the jewellery received
from her parents or husband |Wife shall have the physical custody of the
child from Monday to Friday; husband from Friday evening till Sunday
afternoon every week |Husband shall bear the educational expenses of the
child(ren) and higher education in the event of divorce
Pre-nuptial
agreements have no legal sanctity in India yet a few rich and affluent insist
on signing them. Indulekha Aravind Priyanka Sharma
|
