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Monday, January 26, 2015

RBI raises concerns over State Bank of Sikkim's functioning

The Reserve Bank of India has raised concerns over the State Bank of Sikkim, which does not come under any regulation or jurisdiction since the Banking Regulation Act 1949 and the Companies Act do not extend to it.

In a letter to the central government, RBI has expressed serious reservations about the regulatory vacuum that the State Bank of Sikkim is allowed to function in, said a government official, who did not wish to be named.

"RBI has pointed out that since the bank does not come under any jurisdiction, financial and operational issues have arisen," the official said, adding that the banking regulator is concerned about protecting the interest of depositors. The State Bank of Sikkim's balance sheet has not been audited for the past five years and the RBI has pointed out in the letter that the bank's name could mislead depositors since it sounds as if it is an affiliate of forming loans (NPAs) or bad loans are high," said another official aware of the issue.

State Bank of Sikkim's managing director and chief executive HK Chhetri refused to comment on the bank's financial status although he confirmed that talks are on between the state and the central government to resolve the issue.

"It is because of the legacy issues. State government is the majority shareholder and they are in talks with all parties concerned," he said. Set up in 1968, State Bank of Sikkim has 35 branches. A bank official explained that since Sikkim joined the Indian Union in 1975, it has been granted special status under Article 371 F of the constitution. the State Bank of India (SBI), the country's largest bank. "If tomorrow there is a bank run, we will not be able to do anything. Since no rules apply, there is no DIGC (Deposit insurance and Credit Guarantee Corporation) cover," added the official.

Source : Economic Times
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Union Bank to open branch in Sydney

The Union Bank of India (UBI) will open its branch in Sydney by the end of this month, a top official has said.

"We are going to open a branch of the bank at Sydney on January 30. The bank also plans to open branches in Africa for further strengthening its global footprint," UBI Chairman and Managing Director Arun Tiwari told PTI.

Presently, the bank has a representative office in Sydney.

UBI recently opened a branch at Antwerp in Belgium. Apart from that, the bank has branches in Dubai, Hong Kong and London and representative offices in Beijing, Shanghai (both in China) and Abu Dhabi, he said.

Tiwari was speaking on the sidelines of a function to inaugurate a cash depositing kiosk here today.

"We will put up 500 more such machines across India which will be very useful to the customers," he said.

"The Union Bank of India has come up with a plan to strengthen its loan portfolio in retail, agriculture and MSME (micro, small and medium enterprises) sectors in 2014-15, thanks to the initiative taken by the Government of India and Reserve Bank," Tiwari said.

"Our focus for this year is on the RAM (retail, agriculture and MSME) sectors and we hope that the execution of our plans during the year will boost demand for industrial credit," he said.

Union Bank has the vision of becoming the top choice of customers by building beneficial and lasting relationship with them through a process of continuous improvement. The bank aspires to be the no. 1 retail bank in customer service excellence by 2020, Tiwari said.

The global business of the bank as on December 31, 2014 stood at Rs 5,34,051 crore, with deposit of Rs 3,02,782 crore and advances of Rs 2,31,269 crores. UBI had capital adequacy ratio of 10.30 per cent at the end of December 2014.

As part of pursuing the goal of financial inclusion in Gujarat for 2014-15, the bank has adopted 155 girl children in Vadodara region and paid Rs 4,000 per girl child, he said.

Under the Pradhan Mantri Jan Dhan Yojna, the bank has opened 2,43,393 accounts till January 21 in the state with a balance of Rs 5.85 crore and issued 1,79,624 rupay debit cards, he said.

"We have made provision for extra burden that is to be borne by the bank following the proposed hike in salaries of employees after finalisation of wage revision settlement, for which negotiations are taking place between the Indian Banks Association and the United Forum of Bank Unions," he said.

Source : Economic Times
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HDFC Bank launches 11 toll-free numbers to cater to 32 nations

HDFC Bank has launched 11 international toll-free numbers to cater to 32 countries for phone-banking assistance for its pre-loaded forex card users as part of customer convenience initiative.

The private sector lender on an average issues 12,000 pre-loaded forex card every month. The card can be issued in 18 different currencies including Euro, Yen, Pound, Dollar, South African Rand and Oman Riyal.

"The toll-free numbers are intended to provide enhanced convenience and accessibility for customer travelling overseas with our pre-loaded forex card," HDFC Bank senior executive vice president Parag Rao said.

The business of issuance of such cards are growing at 25 per cent year on year, he said, adding that the bank offers following services such as balance enquiry, statement request, activating back-up card etc.

One toll-free number would cover 22 nations while remaining numbers are for 10 different nations including the USA, UAE and Singapore.

Customers can also get their recharge done through phone-banking, he added.

Source : Economic Times
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IRDA mulls no fee for change in nomination

Observing policyholders’ right to effect changes in nomination, sectoral regulator IRDA is proposing to do away with the practice of charging fee for such alterations by life insurance companies.

The Insurance Regulatory and Development Authority of India in a draft on ‘Fee for Registering Cancellation or Change of Nomination by the Holder of a Policy of Life Insurance’, has invited comments from stakeholders by February 2, 2015.

“On a comprehensive may be observed that the holder of a policy of life insurance has a right for effecting a nomination and for registering such nomination for the first time be it at the time of effecting the policy of life insurance or at a later time, no fee shall be charged by the life insurers,” said the exposure draft.

Presently, life insurance companies have to give a written acknowledgement about registering a nomination or a cancellation or change thereof and are allowed to charge fee for registering such cancellation or change.

The exposure draft also proposes for no registration fee for a nomination and furnishing a written acknowledgement.

Further, it said registration changes or cancellation of nomination may vary for policies kept in electronic format and there is need to treat these kind of policies differently in terms of levy of fee.

”...registering the nomination or cancellation or change of nomination shall be regarded as important policy holder services.

“As such nomination helps even the life insurers to seamlessly discharge their liability in the event of happening of the contingent event covered under a policy of life insurance,” it said.

The exposure draft has also proposed to fix the upper limit of fee allowed to be collected by life insurers subject to which life insurers will have the flexibility to decide in levying any lower amount.

On the cost-benefit front, it said that there are no significant financial implications on insurers for effecting such changes.

” is expected that the number of policies where a cancellation or the change of nomination is effected would be significantly less, therefore the financial implications of charging the fee for change or cancellation of nomination to the policyholder are also not significant,” it added.

Source : Thehindubusinessline
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City Union Bank Q3 net profit up 15%

City Union Bank reported an over 15 per cent increase in its net profit at Rs 102.70 crore for the quarter ended December 31, 2014.

The bank’s net profit stood at Rs 89.09 crore in the corresponding quarter a year ago, its MD & CEO N Kamakoti told reporters.

A 25 per cent growth in operating profit and 44 per cent growth in total provisions besides restructuring of assets have spurred this growth.

Total business grew 9 per cent to Rs 40,171 crore even as deposits increased by 10 per cent to Rs 23,203 crore as on December 31, 2014 from Rs 21,116 crore a year ago, he said.

Gross and net NPAs stood at 2.12 per cent and 1.31 per cent, respectively, he said.

Responding to a query regarding lending to SpiceJet, Kamakoti said that the net exposure of Rs 100 crore has been “collateralised by immoveable collaterals’’, and that there was no overdue.

Source : Thehindubusinessline
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