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Friday, May 22, 2015

LIC’s higher stakes in banks a concern: Mundra

Country’s largest financial institution Life Insurance Corporation’s (LIC) higher stakes in a clutch of state—run and private banks could potentially create a contagion effect on the system, Reserve Bank deputy governor S S Mundra said today.

LIC’s stake is more than 9 per cent for the banking system as a whole. So, from the point of inter-connectedness and contagion, as a probability, it is something that affects financial stability. It’s not that it’s affecting today or it’s going to affect tomorrow, but these are probabilities,” he said when asked about why he is worried about LIC raising holding in banks.

But Mundra, talking to reporters on the sidelines of an event organised by the National Payments Corporation of India (NPCI), was quick to add that he did not name any entity in his previous media interaction this week wherein also he had warned about such risks.

When asked what the central bank is doing on this, he said, “There are inter—regulatory frameworks. And what we do in our financial stability report, we flag these issues.”

According to Mundra, with 9.21 per cent stake in banks, including private lenders, LIC is the largest shareholder in the banking sector after the government.

Some of the large holding that LIC has include a whopping 22.5 per cent in Corporation Bank, 21.4 per cent in Allahabad Bank, 13.9 per cent in the nation’s largest lender SBI, 16 per cent in IDBI Bank, 12.7 per cent in Punjab National Bank and 11.33 per cent in Syndicate Bank.

It also holds 13.6 per cent in the private sector lender Axis Bank, in which the government also holds almost same stake and 9.7 per cent in ICICI Bank apart from some stakes in banks like HDFC, Kotak Bank and Yes Bank among others.

Source : Thehindubusinessline
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Karnataka Bank Q4 net jumps 65.5%; to pay Rs. 5/share dividend

Karnataka Bank Ltd has recorded a net profit of Rs.134.42 crore in the fourth quarter of 2014-15 against a net profit of Rs.81.21 crore in the corresponding period of the previous fiscal, recording a growth of 65.52 per cent.

Net interest income of the bank during the period under review stood at Rs.291.32 crore (Rs.249.93 crore) and the other income stood at Rs.111.69 crore (Rs.113.98 crore).

Net profit for 2014-15 stood at Rs.451.45 crore against Rs.311.03 crore in 2013-14.

The board of the directors of the bank has recommended a dividend of Rs.5 per equity share of Rs.10 each for 2014-15.

Source : Thehindubusinessline
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SBI Q4 net profit surges 23% to Rs. Rs.3,742 cr; to pay dividend of Rs.3.50 per share

State Bank of India has reported an approximate 23 per cent increase in net profit to the tune of Rs.3,742 crore, for the quarter ended March 31, 2015. Standalone net profit for the corresponding period last year stood at Rs.3,040 crore.

Total income (net interest income and other income) increased by nearly 15 per cent to Rs.48,616 crore from Rs.42,443 crore.

Segment Results

In terms of segment results for the fourth quarter (January-March 2015), losses were contained in the wholesale or corporate banking operations to the tune of Rs.1,210 crore against Rs.2,071 crore.

However, treasury operations, reported a 118 per cent increase in profit to Rs.2,739 crore against the Rs.1,257 crore in the year-ago period.

Profits in retail banking operations for the January to March period have gone down by a little over 32 per cent to Rs.4,208 crore (Rs.6,234 crore).

Full Year Operations

For the full year ended March 31, 2015, standalone net profit grew over 20 per cent to Rs.13,102 crore (Rs.10,891 crore).

Total income for the full year increased to Rs.1,74,973 crore (or by approximately 13 per cent) from Rs.1,54,904 crore it reported in the year-ago period.

For 2014-15, the bank’s board has declared a dividend of Rs.3.50 a share of face value of Rs.1 each.

Loan quality

Gross non-performing assets per cent (gross NPA to advances) in the quarter improved to 4.25 per cent (4.95 per cent).

Gross NPAs stood at Rs.56,725 crore (Rs.61,605 crore), while net NPAs came down to Rs.27,591 crore (Rs.31,096 crore).

Net NPA per cent also improved by 45 basis points to 2.12 per cent against 2.57 per cent in the year-ago period.

"This has been a year of consolidation. Consolidation has been done not just in regular line of businesses; but we have also explored new digital business opportunities," Arundhati Bhattacharya, Chairman, SBI, said.

Initially, after the results were announced, the stock witnessed a surge in its price and touched a high of Rs.305 on the NSE. But profit booking subsequently pared much of the gains and SBI shares are trading at Rs.291, a gain of 75 paise on the exchange.

But the trading interest in the stock was phenomenal with the trading volume crossing 5 crore shares by 2.15 pm on the NSE.

Source : Thehindubusinessline
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Thursday, May 21, 2015

SBI ties up with Snapdeal to offer seller finance

State of Bank of India (SBI) on Thursday entered into a seller financing scheme with e-com major Snapdeal.

Under the scheme, SBI will provide loans to small and medium enterprises at easier interest rates. Data regarding the sellers will be provided by Snapdeal.

"Rates of interest will be determined by the credit worthiness of the seller," Arundhati Bhattacharya, Chairman, SBI, said after signing the MoU with Snapdeal.

The country's biggest lender (SBI) had an MSME loan book of approximately Rs. 170,000 crore as on December 31, 2014.

The seller financing scheme will help MSMEs — traders, sellers and manufacturers — scale up their operations by catering to their working capital requirements, Bhattacharya said.

According to Kunal Bahl, CEO, Snapdeal, there are at least 150,000 sellers associated with Snapdeal. E-com major Snapdeal operates in a marketplace model.


Source : Thehindubusinessline
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RBI discussion paper on cashless transactions soon

To promote more cashless transactions, the Reserve Bank of India is in discussions with the Government on ways to reduce cash usage in the system and will soon be coming out with a paper on the same, RBI's Executive Director G Padmanabhan said.

"We are looking at various ways to incentivise cashless transactions, and various aspects are being considered like looking at charges for card payments," Padmanabhan told reporters on the sidelines of a National Payments Corporation of India (NPCI) event.

As black money has been a burning debate in the country, the central bank and the Government are looking at solutions which will take into consideration the local conditions and make cashless transactions as easy as the cash ones.

Both the government as well as the RBI are doing many things to promote cashless transactions as much as possible, Padmanabhan said, adding that a discussion paper on the topic has been cleared and will be made public soon.

Infrastructure and Cost

Highlighting the tax incentives given for cashless transactions in South Korea, Padmanabhan said methods have to be devised as infrastructure penetration is low.

According to him, the focus on moving to a cashless economy should not hurt the infrastructure roll-out and industry will be incentivised.

"Initially, we can't have a solution which will take away the incentives to put up the infrastructure. That is why we are having a prolonged discussion," he said.

At present, a commission of up to 2 per cent is charged for card transactions, which many feel is a deterrent for the agenda of cashless society.

Padmanabhan said he has also cleared the guidelines for mobility cards and they will be published in a fortnight.

Mobility cards will be multipurpose and interoperable cards.

Padmanabhan asked the banking system to devote sufficient attention to safety and security, saying there have been instances of data compromises in electronic transactions.

Industry players should also work towards minimising the cost of transaction, he said, hinting that a regulator-prescribed pricing may not be desirable.

The USSD-based framework, which will enable a user of low cost feature phones to use mobile banking services, has overcome the initial hiccups and is now ready for a take-off, Padmanabhan added.


Source : Thehindubusinessline
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