RBI issues draft guidelines on loan system for bank credit
Mumbai, June 11: In a move to enhance credit discipline among larger borrowers, the RBI on Monday proposed a "minimum level of loan component" of 40 per cent for borrowers having an aggregate fund-based working capital limit of Rs 150 crore and above from the banking system, a condition proposed to be effective from October 1, 2018.
Issuing the draft guidelines on the loan system for bank credit, the Reserve Bank of India (RBI) also said that the undrawn portion of cash credit and overdraft limits sanctioned to larger borrowers will attract a credit conversion factor of 20 per cent, effective from April 1, 2019.
The central bank said drawings up to 40 per cent of the total fund-based working capital limits shall only be allowed from the "loan component".
"Drawings in excess of the minimum loan component threshold may be allowed in the form of cash credit facility," it said.
According to the RBI, cash credit is by far the most popular mode of working capital financing, which also poses several regulatory challenges "such as perpetual roll overs, transmission of liquidity management from the borrowers to banks/RBI, hampering of smooth transmission of monetary policy, etc".
"Effective from April 1, 2019, the undrawn portion of cash credit/overdraft limits sanctioned to the aforesaid large borrowers, irrespective of whether unconditionally cancellable or not, shall attract a credit conversion factor of 20 per cent," the statement said.
The 40 per cent loan component will be revised to 60 per cent from April 1, 2019, it added.
The RBI has invited comments on the draft guidelines from banks and other stakeholders by June 26.
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Spain rejects White House claim of military cooperation with US in Iran war
Madrid: Spain has rejected a claim by the White House that Madrid had agreed to cooperate militarily with the United States amid the ongoing conflict with Iran, even as US President Donald Trump warned of trade consequences over Spain’s stance.
Al Jazeera reported that White House spokesperson Karoline Leavitt told reporters on Wednesday that Spain had reconsidered its earlier position of not allowing its military bases to be used in the war against Iran.
“With respect to Spain, I think they heard the president’s message yesterday loud and clear, and it’s my understanding, over the past several hours, they’ve agreed to cooperate with the US military,” Leavitt said.
Clearly denying the assertion, Foreign Minister José Manuel Albares said the claim was incorrect and insisted that Madrid’s position had not changed. “Not a single comma has changed, and I have no idea whatsoever what they might be referring to,” Albares said in an interview with the Hora25 radio programme.
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Trump had earlier criticised Spain’s opposition to the war, describing its stance as “terrible” and threatening economic retaliation. “We’re going to cut off all trade with Spain. We don’t want anything to do with Spain,” he said on Tuesday.
Spanish Prime Minister Pedro Sánchez reaffirmed his government’s opposition to the conflict, recalling past military interventions in the region. “The world, Europe, and Spain have faced this critical moment before. In 2003, a few irresponsible leaders dragged us into an illegal war in the Middle East that brought nothing but insecurity and pain,” Sánchez wrote on social media.
He added that Spain’s position remained firmly against war, violations of international law and “the illusion that we can solve the world’s problems with bombs”.
Iranian President Masoud Pezeshkian praised Spain’s stand, saying it reflected ethical responsibility.
“Spain’s responsible conduct in opposing the Zionist-American coalition’s flagrant human rights violations and military aggression against countries, including Iran, shows that ethics and awakened consciences still exist in the West,” he wrote in a post on social media.
Within Europe, Spain has been among the few countries to openly oppose the attacks on Iran. The European Union has instead called for de-escalation and protection of civilians without directly rejecting the US and Israeli military action.
EU foreign policy chief Kaja Kallas said Iran’s missile and nuclear programmes and its support for armed groups pose a serious threat to global security, adding that the bloc has imposed sanctions on Tehran while continuing to back diplomatic engagement on the nuclear issue.
