Saturday, April 2, 2011
8:52 PM Blogger
Chennai: The government's stake in public sector Indian Overseas Bank has increased from 61.23 per cent to 65.87 per cent as a result of capital infusion of Rs 1,054 crore into the Bank.
At a recent meeting, IOB allotted 7,39,49,343 equity shares of Rs 10 each at an issue price of Rs 142.53 per equity share totalling Rs 1,054 crore to Government of India on preferential basis, the Bank said in a statement.
With this development, the Government's holding in IOB has increased from 61.23 per cent to 65.87 per cent, it said.
On March 22, 2011, bank shareholders at their Extraordinary General Meeting, had given their approval for allotment of equity shares to Government of India, the statement added.
Source: Financial Express
8:31 PM Blogger
HYDERABAD: Godrej Group chairman Adi Godrej was Saturday elected the chairman of the city-based Indian School of Business (ISB). He succeeded Rajat Gupta, who resigned March 21 after the US Securities and Exchange Commission (SEC) slapped insider trading charges on him.
Adi was unanimously elected the chairman by the executive board at its meeting, attended by 14 of its 30 members.
The board accepted the resignation of Indian-American businessman Rajat Gupta, who founded ISB a decade ago.
Addressing a press conference here, Adi said Gupta was no longer on the board. He said the board paid tributes to Gupta for his tremendous passion in developing the ISB.
Gupta had requested the board that he be relieved of his responsibilities.
A former chief of global consulting business McKinsey & Co, Gupta has been accused of having passed on confidential information on Goldman Sachs Group Inc. and Procter & Gamble Co. (P&G) to hedge fund manager Raj Rajaratnam, founder of Galleon Group LLC.
Gupta, an alumnus of the Indian Institute of Technology-Delhi and Harvard Business School, allegedly disclosed information to Rajaratnam about a $5 billion investment in Goldman by Warren Buffet's Berkshire Hathaway Inc.
Gupta, however, has denied the allegations.
8:29 PM Blogger
MUMBAI: China's policy to keep its currency, the renminbi or yuan , artificially undervalued gives it a huge economic advantage and impacts India's trade, says a research paper released by the Reserve Bank.
In the paper, 'The Implications of Renminbi Revaluation on India's Trade', S Arunachalaramanan and Ramesh Golait of the RBI have said that an artificially undervalued currency gives China a distinct advantage in the export market.
"By keeping renminbi (RMB) undervalued against the US dollar (USD) and depreciating it in line with the USD in the international market without taking into account the economic fundamentals of China, it invariably and distinctly provides competitive advantage over its trade competitors and trade partners including India," the paper said.
It added that any revaluation of the RMB, also known as yuan, will have an impact on India's trade, particularly its imports.
"In this context, one of the factors favouring China is the cost advantage of its exports (imports for India) influenced by various domestic factors. Factor like production-oriented firms/industries subsidies does support China Model. The cost of production as well as productivity of labour also becomes an added advantage in its export promotion," the paper said.
Western countries, particularly the US, have been urging China for years to allow more free flow of its currency. In fact, during the G20 Finance Ministers meet held earlier this week it was suggested that the RMB could have a bigger role in the global system in case China shows more flexibility.
India had a trade deficit of USD 19.2 billion with China in 2009-10 and the RBI said the country should diversify its imports, particularly electronic and machinery goods, and start securing them from other countries.
"In India, the share of the imports from China has significantly risen to 10.7 per cent during 2009-10 from 7.3 per cent five years ago... To avoid the implications in terms of imports, there is a strong need to diversify imports of these items," the RBI paper said.
It said that while the unit cost of labour in China has declined by 20 to 80 per cent, in India increases in labour compensation outpaced increase in productivity which has led to an increase in the unit cost by 10 to 100 per cent.
The apex bank said there is a need to address the issue of labour improvement in productivity.
It further said that China's current currency policy gives its exporters a distinct advantage over other countries that have to deal with currency volatility .
"Given the fact that the policies of China are export-oriented, pro-FDI and keeping the exchange rate undervalued etc., the emerging market economies which have allowed their currencies to float will have to face distinct issues in their management of balance of payments," RBI said.
9:06 AM Blogger
The formal appointment of the State Bank of India (SBI) chairman has been delayed due to procedural irregularities in selection of the candidate proposed by the finance ministry.
The irregularities have been highlighted by Cabinet Secretary K M Chandrasekhar. He has written to the finance ministry, questioning Pratip Chaudhury’s selection for the top job at the country’s largest lender.
A senior government official told Business Standard that Hemant Contractor’s name was on the top of the list during the selection of managing directors (MDs). However, for the chairman’s post, Chaudhury’s name was sent to the Cabinet Secretariat, he said. He added the cabinet secretary had asked the ministry to explain the reason for this change.
The official said usually the names proposed by the finance ministry for top posts at public sector banks were cleared. But this was an unusual situation, he said. “A final decision is likely to be taken after the finance ministry’s explanation,” he said.
The panel to select the SBI chairman interviewed four deputy MDs – Hemant Contractor, Pratip Chaudhury, Diwakar Gupta and A Krishna Kumar.
The government has handed over the interim charge of the bank to Managing Director R Sridharan. O P Bhatt retired from the post yesterday after a five-year tenure.
Sridharan, whose is to retire four months from now, is likely to continue on the post till his term ends.
Sridharan was appointed as an MD in December 2008 and was looking after SBI’s associate banks and subsidiaries.
There have earlier instances of SBI being headed by an acting chairman. In 2006, when A K Purwar retired, one of the MDs, T S Bhattacharya, was given the interim charge.
Source: Business Standard
9:04 AM Blogger
State-owned Union Bank of India today said the government approved re-appointment of its Chairman and Managing Director MV Nair for a period of three months.
"Appointment Committee of the Cabinet of Government of India has approved re-appointment of Chairman and Managing Director MV Nair, for an initial tenure of three months wef April 1, 2011, or until further orders, whichever is earlier," Union Bank of India informed the Bombay Stock Exchange.
Nair completed his five-year tenure in the bank on March 31, 2011. He was appointed Chairman and Managing Director of the city-based bank in April, 2006.
As per the existing government rule, Chairman and Managing Director or Director are appointed in the public sector entity for a period of five years or up to age of 60, whichever is earlier.
Appointment Committee of the Cabinet (ACC) headed by the Prime Minister Manmohan Singh.
Source: Business Standard
9:03 AM Blogger
State-owned Bank of Baroda (BoB) today said it has allotted 2.7 crore shares to the government of India on a preferential basis, resulting in capital infusion of Rs 2,460.9 crore.
As a result, the government of India's holding has increased to 57.03% from 53.81%, BoB said in a statement.
Earlier, shareholders of the bank approved a Special Resolution at an Extraordinary General Meeting for the issue and allotment of 2,72,79,579 equity shares of Rs 10 each to the government at a premium of Rs 892.14 per share, it said.
Finance Minister Pranab Mukherjee had announced a capital infusion of Rs 20,157 crore into public sector banks during the current fiscal to ensure that these entities were able to attain a minimum of 8% Tier-I capital by March 31, 2011.
The proposed capital infusion is to enhance the lending capacity of the state-owned banks to meet the credit needs of the economy in order to maintain and accelerate the economic growth momentum.
Source: Business Standard
9:01 AM Blogger
MUMBAI: Former IMF chief economist Raghuram Rajan is not in favour of the government giving banking licence to corporate houses. "I think the old RBI policy of not allowing corporates banking licence was good one. I still stand by that. Whether it will continue with this or not is a different question," Rajan, who is also an honorary advisor to Prime Minister Manmohan Singh , said on the sidelines of an event in Mumbai.
He suggested that existing peers, like NBFCs and MFIs, should be given preference over corporates owing to their experience in this business. "If corporates are given licence, the regulator needs to ensure there is no inter-company lending, proper risk management processes are followed and there is enough transparency," he said.
Earlier delivering a lecture, he blamed business houses for an inefficient government which is often blamed for the ills in the economy. "... the government is a product of the society that surrounds it. Many of the business people in this room have a special responsibility, because it is you who fund the electoral process. Yet, repeatedly, some of you have put your private interest, I don't care if he is a crook so long as he is my crook, above the public interest," said Rajan who is now professor of finance at the Booth School, University of Chicago, addressing a gathering of senior leaders of industry and the financial sector, at the centenary birth celebrations of founder chairman of HDFC HT Parekh in Mumbai on Friday.
"Indeed, the public doesn't want to vote for, or support, a reformer, for fear that she/he will be ineffective, brave middle class reformers who wanted to make a difference typically lost their deposit in Mumbai in the past Lok Sabha election." Rajan concluded his address themed around, 'The Proper Role of the Government in India', saying that we need to get the government out of businesses the private sector can provide effectively.
8:59 AM Blogger
MUMBAI: Banks will now be exempted from paying service tax on foreign exchange transactions entered into with other lenders. The transactions with customers will be charged a nominal sum of 0.1-0.5% of the transaction amount or a maximum of Rs 5,000 on foreign exchange transactions.
In a notification issued by the finance ministry on March 31, the ministry indicated the amount to be collected by banks as service tax on foreign exchange transactions, the eligibility and the amount to be collected by banks. These issues were taken up by the Foreign Exchange Derivatives' Association of India or FEDAI with the finance ministry about three days ago.
Banks, as service providers, have been given a choice between levying charges based on RBI's reference rate, which is based on the market spot rates, though may differ marginally from the real market rates at a given point of time, or calculating it on an ad-valorem basis, where in the customer would be charged 0.1% on a transaction up to Rs 1 lakh, 0.5% for a transaction between Rs 1 lakh to Rs 10 lakh and a maximum of Rs 5,000 for transactions above Rs 10 lakh.
Earlier, only scheduled banks were exempted from service tax on forex transactions, but the tax was levied on cross currency transactions between scheduled banks and overseas banks. In the amended notification, all banks, local or overseas, have been exempted from the service tax on inter-bank foreign exchange transactions. But bankers say that it is more of an execution issue now.
"The amended notification issued on March 31 addresses the concerns expressed by banks to a great extent. However, since the provisions have been made effective from April 1, 2011, banks don't have the systems to handle the transactions seamlessly. They will have to calculate the service tax applicable for transactions, manually, till the systemic modifications are carried out," said, Unnikrishnan K, deputy chief executive, Indian Banks' Association.
8:57 AM Blogger
NEW DELHI: Global investment firm Bessemer Venture Partners (BVP) has raised a $1.6 billion venture capital fund, a quarter of which will be invested in India. This is the eighth fund to be raised by BVP and its largest so far.
The investors are largely US-based university endowments, foundations and family offices that are looking to invest in India's rapid growth besides global market opportunities. "In the wake US Federal Reserve's policy of quantitative easing and dollar devaluation, India is among the more attractive destinations for investors," said Rob Chandra, managing partner, Bessemer Venture Partners.
This is one of the biggest fund-raising for a risk capital firm, since US-based New Enterprise Associates raised $2.5 billion in 2009. During the fiscal year that just closed on March 31, about 28 private equity and venture capital funds focused on India raised $4.76 billion. This was 60% more than the $2.9 billion raised by 14 funds in the previous year according to data collated by research firm Venture Intelligence.
"There is still enough interest in emerging markets, especially India, and fund managers with good track record should see successful fund closures," said Pankaj Dhandharia, senior partner, Transaction Advisory Services , Ernst & Young .
Bessemer, one of the oldest venture capital firms in the US, began its India operations seven years ago with an office in Mumbai. It has till date invested in 31 companies, including Shriram EPC , Orient Green Power, IL&FS Transportation Networks and Applied Solar Technologies .
"We are always in the hunt for exceptional entrepreneurs," said Mr Chandra, who was in India last year as part of the business delegation that accompanied the US president Barack Obama in November 2010. "Over the past five years, we have focused on our India investment activity and will continue to do so as we see quite a lot of opportunity," he said.
Bessemer already has $500 million in dedicated assets in India and its investments range from $5 to $30 million. The firm wants to invest in early-stage companies in the country across several sectors, including in infrastructure, financial services and consumer products.
Bessemer was founded by steel magnate Henry Phipps' family holding company, Bessemer Securities . The start-up investment operation was later spun out into Bessemer Venture Partners.
8:55 AM Blogger
BANGALORE: GMR Infrastructure on Thursday said Macquarie SBI Infrastructure Investments has invested 893 crore or $200 million in its wholly-owned subsidiary GMR Airports Holding, which runs the Delhi and Hyderabad airports.
The investment was made through compulsorily convertible preference shares, GMR Infrastructure said in a statement to Bombay Stock Exchange , without divulging details. The shares could be converted into equity at a later date.
On February 11, the Foreign Investment Promotion Board (FIPB) had approved GMR's proposal to raise money from SBI-Macquarie and other funds, ET had earlier reported.
A Subba Rao, chief financial officer, GMR Group had told ET that any fund the airport arm raises may be used for acquisitions and new projects, not for existing portfolio. GMR's airport business, which includes the Hyderabad and Delhi airports, accounts for 45% of the group's revenues.
The investment in the airport division comes after GMR raised money for its power division from private equity investors such as Temasek Holdings Advisors India Pvt Ltd, IDFC Private Equity Co Ltd, UTI Ventures, and Arganaut Ventures.
This is the third private equity investment in the infrastructure sector being announced this week. 3i Group Plc, made two investments this week, $111 million in KMC Infratrech Ltd and $45 million Ind-Bharath Energy Ltd.
Macquarie SBI Infrastructure Management Limited is the manager of the Macquarie SBI Infrastructure Fund (MSIF), which provides institutional and other large-scale investors located outside India access to the growing number of investment opportunities available to the private sector in India's infrastructure and infrastructure-like assets.
GMR Group is a Bangalore-headquartered global infrastructure major with interests in airports, energy, highways, and urban infrastructure. The company's stock closed up by 4.36% at 40.70 on BSE on Thursday.
Friday, April 1, 2011
9:24 AM Blogger
The home loan scheme offers a discount in the interest rate for the first three years. The interest rate structure of the scheme remains unchanged, said a top SBI official.
For the first year, the interest rate for loans up to Rs 30 lakh is 100 basis points lower than the card rate, or 8.75 per cent, since the card rate is 150 basis points plus the base rate. The bank’s base rate is 8.25 per cent, and the home loan rates will change whenever this is revised. In the second and third year, the effective interest rate is 9.5 per cent or 25 bps discount over the card rate. For the fourth year onwards, the discount is withdrawn.
The teaser rate scheme, launched by SBI in February 2009, was extended several times as it has helped the bank to increase its market share. In December last year, the scheme was tweaked with a fixed discount offered instead of a fixed rate. SBI had decided to offer the revised scheme till March 31. It had a home loan portfolio of nearly Rs 83,000 crore, as on December 31, which had registered a growth of 22.5 per cent over a year. The average home loan size is Rs 12 lakh.
“The scheme will be offered till the monetary policy review of RBI or till the bank reviews its annual accounts, whichever is earlier,” said a bank official. The RBI review is scheduled on May 3, while SBI’s review is likely only in the second week of May.
The Reserve Bank of India (RBI), however, is not comfortable with banks offering such a product. It had increased the standard provisioning requirement for such schemes by five times to two per cent. SBI had requested RBI to waive the additional requirement, but may have to make Rs 300 crore extra provisioning if RBI insists, SBI Chairman O P Bhatt had said yesterday.
Source: Business Standard
9:22 AM Blogger
State Bank of India (SBI) today opened its 25,000th ATM and the 9,000th semi-urban branch, and said it will add 10,000 ATMs annually for the next three years.
The outgoing Chairman OP Bhatt said SBI had plans to deploy 10,000 ATMs every year over the next three years.
He inaugurated both these facilities at the SBI board room here through video conferencing, which was attended by the entire board of the bank, including RBI Deputy Governor Shyamala Gopinath.
While the 25,000th ATM is located at south Mumbai's Girgaon, the 9,000th rural, semi-urban (Rusu) branch is at Sundargarh in Orissa's Bhubaneswar Circle.
Speaking at the occasion, Gopinath said though ATM was the most innovative product in the banking space, there was a need for an optimal ratio of technology and physical branches as rural customers still preferred physical branches.
Of the 13,500-plus branches, nearly 67% are located in rural and semi-urban areas, Bhatt said, adding the State Bank Group has 25,000 ATMs, out of which SBI alone has 20,087.
In the last two years alone, the SBI Group has put up as many as 13,596 ATMs. SBI's ATM network processes over 7.5 million transactions a day, disbursing nearly Rs 1,500 crore in cash. The State Bank has issued over 90 million debit cards and enjoys a market share of over 38%.
From June 2006 to March 2011, more than 3,400 branches were opened by SBI alone, Bhatt said.
The State Bank Group now has 18,181 branches. In FY11, SBI opened 1,040 branches, including the merged branches of State Bank of Indore.
Source: Business Standard
9:17 AM Blogger
As OP Bhatt hangs up his boots today after a five-year innings at the helm of affairs of country's biggest lender State Bank of India (SBI), he has reasons to feel proud -- the bank's net profit rose to its peak at Rs 11,734 crore.
Bhatt's indelible legacy would be his special home loan rates or teaser rates, which helped SBI dislodge HDFC from its No 1 position in mortgage market, but invited sharp criticism from peers as well as regulator RBI.
While SBI's net profit rose to Rs 11,734 crore in March 2010 from Rs 5,530 crore in March 2006, its market capitalisation stood at Rs 1,17,883 crore as of March 2011 against Rs 47,935 crore in January 2006.
During his five-year tenancy at the corner room on the 18th floor at SBI Bhavan in Mumbai, the assets of the bank more than doubled to Rs 14,51,220 crore (as of March 2010) from Rs 6,96,992 crore in March 2006.
From a non-descript Bhattgaon village in Uttarakhand to the top position in the country's biggest bank, Bhatt's humble journey proves that state-run banks too can churn outstanding leaders. Bhatt proved success is not the prerogative of those with aggression written on their temples and having B-school degrees.
During his stint, loans and deposits grew more than five-fold as he spread the blue and green branding of SBI ATM to remote locations at a time when other state-run banks had a sedate growth and private banks were crippled by the credit crisis.
Today, State Bank Group is the undisputed leader in the banking space with a 25% of the market share. Bhatt had the courage of conviction on his special home loan product to stand up to severe criticism of teaser rates.
He walked with elan on a terrain that has seen many stalwarts falling apart even as he differed time and again with regulator RBI. He even went to the extent of saying that the central bank had not understood his product at all.
Bhatt, in fact, sounded a different note from that of the regulator on a variety of issues -- from teaser loans to deregulation of interest rate on saving accounts to provisioning for bad loans, among others.
Some of the most notable trans-formative achievements of Bhatt's are the Rs 20,000-crore rights issue for which he secured all the necessary permission and which will happen in the next quarter. The employee stock purchase scheme that no other PSU bank had ventured into was another key achievement.
Another was the maiden retail bond issue from a bank, which had a whopping 19 times subscription in October 2010, and six times for the second tranche this February.
Source: Business Standard
9:14 AM Blogger
NEW DELHI: No forms, no queues. Just go to your ATM and pay your income tax. The government on Thursday launched the new facility for tax payment and said it was to begin with open only to Union Bank of India customers but will be extended to other banks.
Here's how it will work. The bank's debit cards holders will register on the lender's website. This site is in turn linked to the National Securities Depositories Ltd which will help validate the permanent account number (PAN) of individuals and the Tax Deduction Account Number (TAN) provided to taxpayers.
After the registration, a customer can go to a Union Bank ATM and can surf the income tax menu which will display his PAN number and ask for the tax amount that is to be paid along with item-wise details of any other amount the assessee may want to include in the tax payment.
On confirmation, the tax amount will be debited from the customer's account and the ATM will generate a receipt with a special number. After 24 hours, customers can log on to the bank's website, submit the special number and print a challan.
Up to eight family members of a Union Bank of India customer can pay tax through the bank's ATM even if they do not have an account with the public sector player. Union bank CMD M V Nair said the bank was looking at the possibility of extending the service to payment of other taxes as well as allowing customers of other banks to use its ATM for income tax payment.
At present, taxpayers have to go to a bank branch to pay tax after filling up a form and then collect a copy of the challan. At the end of every quarter, bank branches are overflowing with taxpayers trying to meet the deadline.
A tax department official said that other banks may be roped in but it was for the banks to come up with proposals. Increasingly, the tax department is pushing for electronic channels to collect taxes and returns. Special incentives such as early processing of returns have enticed taxpayers to avail of the electronic channels instead of queuing up at counters
9:08 AM Blogger
Los Angeles: A Saudi Arabian company is suing the former chief executive of a collapsed Mideast bank for $9.2 billion, alleging he helped stage one of the largest global fraud schemes in history.
But the American is alleging quite the opposite.
The lawsuit filed in Los Angeles federal court Monday accuses Southern California resident Glenn Stewart of fraudulently obtaining loans while he was CEO of The International Banking Corp. TIBC was the fourth-largest bank in Bahrain until it failed in 2009.
The lawsuit was filed by Ahmed Hamad Algosaibi & Bros., a firm run by a wealthy and influential Saudi family.
It contends that Stewart ran what was essentially a "sham bank" that collected more than $10 billion in loans from financial institutions.
"Mr. Stewart knew that it had no real customers, having played a central role in fabricating and documenting a portfolio of dummy borrowers to make it appear TIBC had real banking business," and also falsely claimed that the prominent Algosaibi firm controlled the bank, according to the lawsuit.
The company accuses Stewart of fraud, conspiracy, aiding and abetting fraud, aiding and abetting breach of fiduciary duty, and unjust enrichment. It seeks $9.2 billion in damages.
In a telephone interview Wednesday, Stewart denied all the allegations and said the suit was meritless.
"These guys are lying through their teeth," he said.
The Pacific Palisades resident faces criminal charges in Bahrain. He was under a travel ban when he escaped from the country last year and returned to the U.S., which has no extradition treaty with Bahrain.
Stewart contends that Bahrain officials maliciously prosecuted him at the behest of the Algosaibi family and that he was illegally detained. He is suing Bahrainian officials in the International Court of Human Rights in Geneva.
The Los Angeles lawsuit is part of a massive cross-border fraud dispute that rocked the Mideast's banking industry during the global financial crisis.
Bahrain's Central Bank ordered TIBC and another bank, Awal Bank, to be put under outside administration after they defaulted on billions of dollars of loans in 2009.
Awal Bank is controlled by Maan al-Sanea, who heads Saudi conglomerate Saad Group and is married to a member of the Algosaibi clan. Al-Sanea's in-laws have accused him of defrauding them of billions of dollars through a variety of means — charges he has repeatedly denied.
The dispute has snowballed into an international battle of lawsuits and countersuits tied to defaults in excess of $20 billion by the two companies to more than 100 banks worldwide.
Stewart and al-Sanea are among more than a dozen executives of the two banks that have been charged with crimes in Bahrain.
The Los Angeles lawsuit contends that Stewart was the "chief architect" of a scheme to borrow funds through the bank by using forged documents claiming it was controlled by Algosaibi.
TIBC actually was controlled by al-Sanea, but "the illusion of Algobaisi family backing was crucial to TIBC's ability to borrow in the international financial markets," the suit contends.
The money was siphoned off to al-Sanea and his Saad group of companies while Stewart collected about $100 million through various phony payments and commissions, the suit claims.
Stewart said the battle is "basically a fight within the family" and denied that he or al-Sanea committed any crime.
"All of the money went to the Algosaibis ... every single remittance," he said.
The money was then lent again to al-Sanea's businesses with the knowledge and authorization of the Algobaisi family, which eventually ran out of cash and defaulted, Stewart said.
"They got done in by the credit crisis and when the thing fell apart ... blamed Maan for everything," Stewart said. "There was no fraud."
Source: Financial Express
9:03 AM Blogger
New Delhi: Making payments through cheques may become a costlier affair from tomorrow, as RBI has allowed banks to levy higher service charges for their clearing, especially of high-value and outstation cheques.
As per a RBI circular coming into effect from April 1, 2011, banks would be free to fix service charges on speed clearing of cheques of value above Rs 1 lakh.
At present, RBI does not allow banks to charge more than Rs 150 per cheque for speed clearing of cheques worth over Rs 1 lakh, while there are no charges for value up to Rs 1 lakh.
However, speed clearing of cheques with value up to Rs 1 lakh would continue to remain exempt of any service charges.
Speed clearing refers to processing of outstation cheques electronically and without movement of cheques from the presentation centre (city where the cheque is presented) to drawee centre (city where the cheque is payable).
For normal local clearing also, drawee bank can charge up to Rs 1.50 per cheque from tomorrow, as against Re 1 at present. For local clearing through cheque truncation system, which works electronically by processing the scanned image of the cheque, drawee bank can levy a service charge of Re 1 from tomorrow, up from 50 paise at present.
Besides, RBI has also given a free hand to the banks to decide on the service charge on outstation cheques of over Rs one lakh, as against a maximum limit of Rs 150 per cheque allowed currently.
However, RBI has decided to lower the service charge for outstation cheques up to Rs 5,000, by allowing a levy of Rs 25, as against Rs 50 currently.
The outstation cheques between Rs 5,000 and Rs 10,000 would continue to attract a fee of Rs 50, while those between Rs 10,000 and Rs 1 lakh would also continue to be levied a charge of Rs 100.
While fixing service charges not mandated herein, banks have been told to get approval from their boards for service charge structure.
"Charges fixed should be reasonable and computed on a cost-plus-basis and not as an arbitrary percentage of the value of the instrument. The service charges-structure should not be open ended and should clearly specify the maximum charges that would be levied on customers including charges if any, payable to other banks," RBI has told the banks.
The service charges by banks should be inclusive of all charges (postal, courier, handling, etc.) other than service tax, RBI said
Source: Financial Express
8:59 AM Blogger
New Delhi: Capital market regulator Sebi today hiked the FIIs limit for investment in bonds, issued by infrastructure companies, to USD 25 billion from USD 5 billion.
This would increase the total limit available to foreign institutional investors (FIIs) for investment in corporate bonds to USD 40 billion.
The minimum tenor of the investment in listed corporate bonds would be 5 years. "These investments are now permissible in unlisted instruments," Sebi said in a statement.
Finance Minister Pranab Mukherjee in his Budget speech for 2011-12 had proposed raising the FII investment limit for investment in corporate bonds of infra companies, taking the total limit available to FIIs for investment in corporate bonds to USD 40 billion.
But the FII investment in unlisted bonds shall locked for three years, the statement added.
"During the lock-in period, FIIs will be allowed to trade among themselves. During the lock-in period, the investments cannot, however, be sold to domestic investors," Sebi added.
"Since most infrastructure companies are organised as Special Purpose Vehicles (SPVs), FIIs would also be permitted to invest in unlisted bonds with a minimum lock-in period of three years," a finance ministry statement said.
"In order to enhance the flow of funds to infrastructure sector, it was announced in the budget that the FII limit for investment in the corporate bonds would be increased...," the statement added.
Today's Securities and Exchange Board of India (SEBI) circular would pave way for implementation of the Budget announcement.
"To facilitate trading by FIIs, a special trading window shall be provided by Exchanges on the same lines as is available for equities in companies where the overall FII investment reaches the maximum limit," the statement added.
India is planning to invest about USD 1 trillion during the 12th five year plan, beginning March 2012, to fund a huge infrastructure development programme.
Source: Financial Express
8:55 AM Blogger
NEW DELHI: The government today said that ICICI Bank and other lenders whose more than 50 per cent equity is owned by overseas entities will be treated as foreign companies for the purpose of computing FDI.
"ICICI is an Indian bank, but it is over 50 per cent (equity) foreign owned, it is owned by foreigners in that sense...for downstream investment it is a foreign company...," Department of Industrial Policy and Promotion (DIPP) Secretary R P Singh told reporters here.
Besides ICICI Bank, the other lenders which have more than 50 per cent foreign equity holding are HDFC Bank , Yes Bank , IndusInd Bank , Federal Bank , ING Vysya, and Development Credit Bank .
As these banks are classified as foreign entities, they will have to follow Foreign Direct Investment (FDI) guidelines before making investments in any sectors.
"If ICICI makes any downstream investment, that will be considered as FDI", he added.
As per the guidelines issued by the DIPP earlier in the day, "companies have now been classified into only two categories - 'companies owned or controlled by foreign investors' and 'companies owned and controlled by Indian residents'.
The new circular has done away with the earlier categorisation of 'investing companies', 'operating companies' and 'investing-cum-operating companies'.
However, Singh said the ICICI bank has the same footing like any other bank as they are a company incorporated in India.
He said Industry ministry permits up to 74 per cent equity in a bank to be owned by outsiders and ICICI have the right to have equity up to 74 per cent
"...that does not really affect their functioning as a bank. The obligations which they have to take as a bank, they have taken those obligations," Singh said, adding, "for downstream investment, we wanted to be sure that the parent company is controlled and owned by Indians."
In calculating indirect foreign investment in an Indian entity, the government takes into account the sum total of FDI, stake from non-resident Indians, American and global depository receipts, foreign currency convertible bonds and convertible preference shares.
The government today released the third edition of the Consolidated FDI Policy Circular, a ready reckoner on foreign investment related regulations.
Thursday, March 31, 2011
8:57 AM Blogger
The Employees Provident Fund Organisation (EPFO) on Wednesday said its corpus of about Rs 3.5 lakh crore will now be managed only by State Bank of India for a three-month period ending June 30, in an interim arrangement.
In a meet of its trustees here, the body turned down the proposal to give a three-month extension to the other existing fund managers — ICICI Prudential, HSBC and Reliance Capital. The three private players were earlier managing the bulk of the total corpus.
“The EPFO's apex decision making body, the Central Board of Trustees (CBT), has decided SBI alone will manage the entire retirement fund for the interim period of three months beginning April 1,” said Labour Minister Mallikarjun Kharge.
Source: Business Standard
8:55 AM Blogger
Rourkela: The main branch of the State Bank of India (SBI), Sundargarh, about 110 km from here was punished by the District Consumer Redressal Forum for ignoring the claim of a customer and causing him mental harassment.
The forum, disposing a claim case filed by Debadatta Naik of Kanaktura village under sadar police station yesterday ordered payment of Rs.18,000 alongwith a fine of Rs 5000 to Naik within 30 days along with an interest rate of 12 percent.
Naik had been to SBI, ATM counter to withdraw money on November 29, 2010. But the ATM did not operate and money did not come out of the machine.
Thinking that the machine was out of order he "cancel" the operation and after two hours again he came to withdraw.
But it was found in the slip that an amount of Rs 18,000 has been withdrawn in the morning. He informed the SBI authorities and according to their suggestion filed an FIR with police.
Despite repeated request to pay his missing amount, the bank authorities did not listen to him. Naik, finding no other option, approached the forum.
Senior advocate Nimai Naik, pleaded for the customer.
Source: Financial Express
8:52 AM Blogger
HYDERABAD: In a major setback to Mahindra Satyam, the Andhra Pradesh High Court on Wednesday asked the company to issue bankers' cheques worth Rs 350 crore to the Central Board of Direct Taxes (CBDT). The company was also asked to provide an unconditional bank guarantee worth Rs 267 crore to the tax authorities.
The interim order comes after Mahindra Satyam moved the high court last week seeking a stay on the proceedings related to 617-crore claim made by tax authorities. The I-T department's claim is based on 345 crore foreign tax credit availed by the former management of Satyam Computer Services headed by Ramalinga Raju during 2002-08, which the present management believes is forged.
The court has given three weeks to the CBDT for filing the counter. The case will now come up for hearing on April 20.
However, a Division Bench comprising Justice VVS Rao and Justice Ramesh Ranganathan has allowed Mahindra Satyam to access its bank accounts worth Rs 1,300 crore. Earlier the court had prevented both Mahindra Satyam and the I-T department from accessing the company's bank accounts.
This will be a relief to the company as senior counsel for Mahindra Satyam, S Ganesh, had pleaded with the judges to release the accounts to pay salary for the company's employees. The counsel was requesting the court to pass relief orders before the banking time gets over.
Considering that the order came on March 30, the company will now be able to access its accounts on March 31. The senior counsel has also assured the judges that the company would provide the required cheques and guarantees on Thursday. As per the policy followed by the company, it will have to pay salary to its employees on the last working day of every month.
According to T Hari, chief people officer and chief marketing officer of Mahindra Satyam, the attachment of accounts would not affect the company's day-to-day operations. "We have already made arrangements for the salary of employees," he said. However, he refused to explain how this money was organised.
As per Mahindra Satyam's last quarter result, salary bills account for about 70% of its total revenues. So, every month it will have to shell out about Rs 298 crore for paying salaries.
The company's senior counsel also admitted that the company does not have any proof to show that the foreign tax credits were fictitious.
The Division Bench of the high court pointed out that the company cannot base its arguments on Ramalinga Raju's confession letter as he has not been found guilty.
8:51 AM Blogger
India's third largest private lender Axis Bank plans to open 22 new branches in Tamil Nadu, taking the total number in the state to 124 this financial year. Axis Bank deputy managing director SK Chakrabarti, said the bank is focused on taking its products and services into the all parts of the country, by opening 350 branches by the end of this fiscal.
He said the bank is well on course to achieve the target. The Chennai Circle branches will be located Teynampet, Bypass Road, Velachery; Shanthi Colony and Saligramam in Chennai city.
Source: Business Standard
8:49 AM Blogger
The government has infused Rs 1,739.99 crore into Oriental Bank of Commerce (OBC). This will increase the government’s shareholding in the Delhi-based bank from 51.09 per cent to 58 per cent.
In an extraordinary general meeting on March 29, OBC’s shareholders approved the preferential allotment of equity shares worth Rs 1,739.99 crore to the central government. The shareholders unanimously approved the special resolution for the issue and allotment of 4.12 crore equity shares of Rs 10 each at Rs.422.11 per share, the public sector lender said in a statement on Wednesday.
OBC’s scrip rose 2.07 per cent, or 7.95 points, to 392.50 on the Bombay Stock Exchange on Wednesday.
The government had announced capital infusion of Rs 20,157 crore into public sector banks in the current financial year to increase their capital base. The capital support was given to help banks attain a minimum of 8 per cent Tier-I capital by March 31, 2011.
Budget 2011-12 had proposed to provide a sum of Rs 6,000 crore in 2011-12 to enable public sector banks to maintain minimum Tier-I capital-to-risk weighted asset ratio at 8 per cent. OBC had reported 41.05 per cent rise in its net profit at Rs 408.25 crore for the quarter ending December 2010-11, compared with Rs 289.43 crore in the corresponding period of the last financial year.
Source: Business Standard
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