Thursday, April 14, 2011
9:49 AM Blogger
WASHINGTON: The world's banks face a $3.6 trillion "wall of maturing debt" in the next two years and must compete with debt-laden governments to secure financing, the IMF warned on Wednesday. Many European banks need bigger capital cushions to restore market confidence and assure they can borrow, and some weak players will need to be closed, the International Monetary Fund said in its Global Financial Stability Report.
The debt rollover requirements are most acute for Irish and German banks, with as much as half of their outstanding debt coming due over the next two years, the fund said. "These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources," the IMF said.
Overall, the IMF said global financial stability has improved over the past six months. The most pressing challenges in the coming months will be funding of banks and sovereigns, particularly in vulnerable euro area countries, it said. The IMF and European Union bailed out Greece and Ireland, and are in talks with Portugal on a lending program as sovereign borrowing costs surge. Many investors have questioned whether Spain can avoid a similar fate, but the IMF said Spanish authorities were taking the right steps to address the country's debt problems.
"The actions that have been taken in Spain recently have managed to decouple, in the views of markets, the fortunes of Spain relative to those of Portugal" and Ireland, said Jose Vinals, director of the IMF's Monetary and Capital Markets Department . European banks hold large amounts of euro zone sovereign debt, making them vulnerable to losses if countries are forced to restructure.
9:47 AM Blogger
WASHINGTON: A client of HSBC Holdings Plc's India unit pleaded guilty to tax evasion on Wednesday, the latest case to potentially enmesh the UK bank in the expanding U.S. probe of banks that lure tax dodgers.
The plea by Josephine Bhasin before a magistrate judge in New York comes days after another HSBC client pleaded guilty, and a week after prosectors demanded potentially thousands more U.S. account names from HSBC.
Bhasin's account was worth as much as $8.3 million, the government said.
The Justice Department last week said HSBC in India helped U.S. taxpayers stash funds abroad through their India unit, and served a so-called John Doe summons on the bank to hand over U.S. client names.
The government used the same strategy when it went after UBS AG, which ultimately paid $780 million and agreed to hand over about 5,000 account holder names to settle. UBS also admitted it actively lured U.S. taxpayers with the promise of secrecy.
A HSBC spokeswoman said the company does not condone tax evasion and that it cooperates with government investigations.
9:44 AM Blogger
Deutsche Bank will change the legal status of its main US subsidiary to avoid having to endow it with up to $20 billion in fresh capital, the Wall Street Journal (WSJ) reported on Wednesday.
Citing an internal document at the bank, WSJ said that Deutsche Bank executives last year were concerned that US unit Taunus Corp would need that amount to comply with the Dodd-Frank financial reform law that Congress passed last year in the wake of the financial crisis.
The restructuring would see Taunus give up its bank-holding company status, the paper cited unnamed sources as saying.
Under the plan, presented to the Federal Reserve last year, its banking unit Deutsche Bank Trust Corp would be moved out of Taunus and become a direct subsidiary of the German lender, the paper said.
Deutsche Bank's investment-banking business and several other nonbanking entities would continue to reside in Taunus, the paper said.
In its April 5 invitation to its annual general meeting on May 26, Deutsche Bank had said it would change the legal status of its US branch offices to meet stricter capital requirements and reporting duties.
A spokesman for the bank declined to comment when called by Reuters, referring only the AGM invitation.
The group's shares were up 0.6% at 0902 GMT, in line with Germany's benchmark DAX.
The bank's Chief Executive Josef Ackerman said in early April that there was no need to raise the bank's capital, after it had carried out Germany's biggest capital hike in a decade in October.
At the time, the lender raised its equity by 10.2 billion euros ($14.76 billion) earmarked for buying the rest of Deutsche Postbank and meeting new bank capital rules.
As part of the US reorganisation, Deutsche Bank is asking its shareholders to approve a partial profit and loss transfer agreement between Deutsche Bank AG and Deutsche Bank Financial LLC, Wilmington, according to the AGM invitation.
The German lender's New York branch is to be recognised as an independent business entity and to be taxable as a "corporation" for US federal income tax purposes, according to the invitation.
In March, the Bank prepared to bolster the equity buffer of its Spanish branch office after Spain demanded that Deutsche Bank inject more capital into the business.
Source: Business Standard
9:32 AM Blogger
The country's second-largest public sector lender Punjab National Bank (PNB) today said there is an upward pressure on interest rates and it would take a call revising them after RBI's annual policy review next month.
"Right now there is an upward bias on our interest rates," PNB Chairman and Managing Director KR Kamath said on the sidelines of 117th foundation day of the bank.
On the possibility of interest rate hike in the near future, Kamath said, "These are very dynamic rates. There will always be a response to what happens in the economy. We are waiting for announcements in monetary policy to take a view on this."
The RBI is scheduled to announce annual credit policy for 2011-12 on May 3. Increase in lending rates would depend on credit offtake and RBI's monetary tightening measures.
"It depends on credit growth. If there is a credit demand coming in, there is need for us to accumulate deposits an if there is a need for us to give higher interest rates and deposits, probably we will have to pass it on to the borrowers," he said.
On credit growth, Kamath said, "Our lending was around 30% in 2010-11. We are quite hopeful that our lending will be more than system this year as well."
At the same time, the bank has been targeting the net interest margin of around 3.5% in 2011-12, he said.
"We have always been targeting a NIM of around 3.5% and CASA (current account and savings account) of around 40%," Kamath said.
To mark 117th foundation day PNB opened 117 branches and ATMs across the country, and adopted 117 villages under its CSR initiative PNB Vikas.
Source: Business Standard
9:30 AM Blogger
IDBI Home Finance (IHFL) today said it has got approval from the Corporate Affairs Ministry for merging with its parent IDBI Bank.
The ministry has sanctioned the scheme of amalgamation vide its order dated April 8, 2011, IDBI Home Finance said in a filing to the Bombay Stock Exchange.
The merger would help IDBI to consolidate its home loan business and gain more market share.
"The company, on April 13, 2011, has filed a copy of the said order with the Registrar of Companies (ROC), NCT of Delhi and Haryana and hence all the conditions. Of the Scheme of Amalgamation have now been complied with," it added.
Pune-based IHFL is a wholly owned home loan subsidiary of state-run IDBI Bank. In July last year the bank's board had approved the said merger.
IDBI Bank took over the erstwhile Tata Home Finance in September 2003 and renamed it as IHFL as a pure-play home loan player. As of end March 2010, IHFL had an outstanding home loan portfolio of Rs 3,537 crore as against Rs 3,089 crore in FY09.
Source: Business Standard
9:27 AM Blogger
MUMBAI: Public sector lender, Corporation Bank, is expecting a credit growth of 25 per cent and deposits to expand by 22 per cent in 2011-12, a top bank official said.
"According to my estimates, our deposit growth will be around 22 per cent and credit growth 25 per cent (in FY 12)," the Managlore-headquartered bank's Chairman and Managing Director, Ramnath Pradeep, told reporters on the sidelines of an event here today.
The bank will be focusing on the retail, micro small and medium enterprises, and agriculture to achieve the growth, Pradeep said, stressing that an economy projected to grow at 8.5 per cent requires a ramp-up in lending. The bank's zonal heads would be meeting here over the next two-days for arriving at an exact target on the two critical parameters, he said.
When asked if the bank will emulate its peers like Oriental Bank of Commerce and cut its deposit rates, Pradeep said, "any revision in either deposit or lending rate will happen only after the RBI's policy (on May 3)...right now we don't find any need to."
On his expectations from the RBI in its annual policy statement, Pradeep said the runaway inflation number is showing some signs of cooling-off which is a comforting factor but did not comment on a specific direction the central bank will be taking.
Corporation Bank is not looking at any fund-raising in the near future as a recent infusion of Rs 300-crore has resulted in a comfortable capital adequacy ratio of 15 per cent, Pradeep said. To a query on the bank's exposure to the micro-finance institutions (MFIs), Pradeep said it currently stands at Rs 700-crore and all the loans are performing well.
However, in wake of lenders going for a restructuring through the CDR route, Pradeep said before the bankers restructure their loans, the MFIs should also restructure the beneficiary accounts and also insisted on personal guarantees to be given by the promoters.
9:24 AM Blogger
Washington: Unhealthy European banks are the biggest threat to global financial stability, and they need to find fresh capital, the International Monetary Fund said today.
"Many institutions -- particularly weaker European banks -- are caught in a maelstrom of interlinked pressures that are intensifying risks for the system as a whole," the IMF said in its Global Financial Stability Report.
With the financial crisis, "banks have sought to raise both the quantity and quality of capital, but progress has been uneven, with European banks generally lagging US banks," the Washington-based institution said.
"Remaining structural weaknesses and vulnerabilities in the euro area still pose significant downside risks if not addressed comprehensively," it said.
Source: Financial Express
Wednesday, April 13, 2011
8:29 AM Blogger
Mumbai: The Reserve Bank has imposed penalty of Rs 1 lakh each on two Gujarat-based cooperative sector lenders for violation of various rules, including anti-money laundering guidelines.
The two banks are -- the Surat-headquartered Rander People's Co-operative Bank and Vadodara-based Shree MahalaxmiMercantile Co-operative Bank, the apex bank said on Monday.
"The RBI has imposed a monetary penalty of Rs 1 lakh on the Rander People's Co-operative Bank... for certain violation of RBI instructions by non-adherence to Anti-Money Laundering guidelines in regard to submission of reports of cash transactions above Rs 10.00 lakh to Financial Intelligence Unit-India...," it said.
The central bank added that in case of Shree Mahalaxmi Mercantile Co-operative Bank, the penalty has been imposed for violation of operational instructions by sanctioning fresh loans and advances.
The decision to penalise the two banks was reached following issuing of show cause notices to them and consideration of the written replies submitted by the lenders.
RBI's latest announcement comes within days of similar penalties imposed by it on five other cooperative sector banks based in the western state.
Source: Financial Express
8:28 AM Blogger
New Delhi: The Employees’ Provident Fund Organisation (EPFO) may soon turn into a pathbreaker of sorts. The pension fund manager is planning to claim carbon credits after initiatives like electronic transfer of funds and accounts have resulted in hefty savings on paper.
The move comes after the EPFO’s Delhi (North) office reported savings of over Rs 17 lakh in an eight month period after switching to the National Electronic Fund Transfer (NEFT) system for refunds and withdrawals. The regional office dealt with 1,13,801 between May 2010 and January 2011.
It saved Rs 15.39 in every case where e-payment was made as it did not have to spend on items like cheques, paper, envelopes, gum and postage. Though it did shell out Rs 6.12 for every electronic settlement case for NEFT charges and SMS alerts, the North Delhi office saved a total of Rs 17,51,121 during the period.
The EPFO has now asked all regional offices to calculate their cost savings from electronic settlement of cases. “This would enable us to compile the total savings made by our Organisation in saving of paper, postage, etc as a result of introduction of NEFT and the e-challan system, which is gradually being introduced in all the offices. This would enable us to apply for carbon credit for the Organisation,” Central PF Office has written in a recent missive. Based on the calculations by its regional offices, the EPFO plans to formulate a proposal for claiming carbon credits from such eco- friendly measures.
“We will then approach the ministry of environment and forests with our proposal,” an official said. In all, the EPFO has 120 regional and sub regional offices which together settled over 46 lakh claims in 2009-10. The EPFO is hopeful that switching over the NEFT would generate into annual savings of crores of rupees.
The only hitch is its plan to provide an annual account statement to its subscribers that would provide information on a month-wise basis. The initiative, which is expected to start from 2012-13 is expected to result in additional usage of paper. While at present, the EPFO uses one sheet of paper to print account statements of five subscribers, with a monthly breakup of accounts, every member’s statement will require a separate sheet of paper.
Source: Financial Express
8:26 AM Blogger
New Delhi: The Finance Ministry will soon unveil the simpler income tax return form 'Sugam', which is aimed at reducing compliance burden on small businessmen and professionals.
"Sugam is currently being examined by the Law Ministry and will be notified soon," a Revenue Department official said.
Finance Minister Pranab Mukherjee in his budget speech for 2011-12 had announced the new simplified return form 'Sugam' to reduce the compliance burden of small taxpayers who fall within the scope of presumptive taxation.
The official said the new form is in line with the government's effort to make filing of returns simpler and user friendly.
The filing of return for individual salaried people has already been simplified significantly with introduction of SARAL-II form. This has enabled individuals to enter relevant details in a simple format in only two pages.
Presumptive taxation involves the use of indirect means to ascertain tax liability, which differ from the usual rules based on the taxpayer's accounts.
Under India's presumptive taxation, person carrying on business will not be required to get his accounts audited if the annual total sales, turnover or gross receipts is less than Rs 60 lakh. The limit was increased by Mukherjee in 2010-11 budget from Rs 40 lakh.
The presumptive tax limit in case of professionals was increased to Rs 15 lakh from Rs 10 lakh.
Source: Financial Express
8:24 AM Blogger
Washington/New Delhi: Bank of America has given shares worth nearly Rs 11 lakh to Mukesh Ambani as part of annual retainer fee to the billionaire industrialist, who joined the US banking giant's board last month.
Ambani may get a total of over Rs 1 crore of annual compensation in cash and stocks, going by the bank's director compensation policy.
However, the bank has not disclosed its specific director fees for Ambani, chief of energy giant Reliance Industries.
Emailed queries sent to Bank of America and Reliance Industries remained unanswered on what would be Ambani's exact remuneration for his role as a director.
Ambani leads one of India's biggest corporate groups with presence spanning across energy, retail and telecom businesses and plans underway for financial services entry.
As Chairman and Managing Director of RIL, Ambani was paid Rs 15 crore for the financial year ended March 31, 2010.
He has decided to take a lower salary than his eligibility of Rs 39.36 crore, as per shareholders' approval, to reflect "his desire to set a personal example for moderation in managerial compensation levels." The salary figure for the fiscal ended March 31, 2011, is not yet known.
Bank of America has informed the US market regulator SEC that it has allotted 1835 Bank of America shares, worth over USD 24,500 (about Rs 11 lakh), to Ambani as a "portion of the annual retainer" payment to its directors.
Bank of America appointed Ambani as an independent director on its board on March 16.
Ambani is the first non-American to join the board of one of the world's largest financial institutions, which currently commands a market value of over USD 136 billion and had a revenue of more than USD 111 billion last year.
The bank has said that it would benefit from Ambani's expertise in "risk management and strategic planning across a diverse range of businesses, including energy, information and communications technology, and retail networks."
The Bank has sought shareholders' approval for Ambani's appointment in its upcoming AGM on May 11.
As per the document sent to the shareholders for this AGM, the bank pays a total of USD 2,40,000 (over Rs one crore) to its non-management directors in cash and stocks.
This includes a cash award of USD 80,000 and restricted stock award of USD 160,000. The stocks are allotted under the Bank of America Corporation Directors' Stock Plan, which restricts sale of these shares within one year of allotment.
The directors joining mid-year get the pro-rated amount of this annual compensation package for the first year.
Source: Financial Express
8:23 AM Blogger
Mumbai: Urban households expect inflationary pressure to sustain through 2011 and feel there may not be any softening of food prices, an RBI survey shows.
While year end 2011 household inflation is expected to be 13.1 per cent, up from the perceived 11.8 per cent in December 2010, daily-wage workers and housewives expected higher inflation rates to continue.
As per the 'Inflation Expectations Survey of Households : December 2010 (Round 22)' conducted by the apex bank, the rise will be mainly on account of movement in food prices.
"Households expect inflation to rise further by... 130 basis points during... next year (13.1 per cent) from the perceived current rate of 11.8 per cent," it said.
While the housewives surveyed said they expect year-end 2011 inflation to be 13.2 per cent, daily wage workers said it would be 13.5 per cent.
On the other hand, financial sector employees and self-employed projected inflation to be 12.4 per cent and 13 per cent, respectively, by year-end.
"Households' expectations of general price rise were mainly influenced by movements in food prices," the survey said.
Overall inflation, as per the Wholesale Price Index (WPI) has been above 8 per cent since February 2010. Food inflation also remained in double-digits for most of 2011, barring a few isolated weeks.
During the October-December period of 2010, the WPI hovered between 8.08 per cent and 9.41 per cent.
Besides, retail inflation for industrial workers, measured by the Consumer Price Index (CPI) stood at between 8.33 per cent and 9.7 per cent during the quarter.
"In the current survey round, household inflation expectations are higher than the official inflation rates. It can be seen that even though the official indicators are moving in the downward direction, expectations are showing an upward swing," the survey said.
RBI found that 98.6 per cent of the respondents believe that prices will increase. This shows that more urban households have come to the view that inflation is on the upswing than during the previous survey when 96.5 per cent respondents had given such a view.
"In case of one-year ahead price expectations, the percentage of respondents expecting food price increase has gone up. A similar trend is observed for non-food products as well," the survey said.
While 91.7 per cent respondents said they expects food prices to rise during 2011, 83.5 per cent had a similar opinion regarding price rise of non-food items.
Source: Financial Express
8:21 AM Blogger
Private sector lender IndusInd Bank will acquire the credit card business of Deutsche Bank’s Indian operations for a little more than Rs 224 crore. As part of the deal, IndusInd Bank would also get the services of around 200 professionals from the German bank's credit card division.
“The book value of Deutsche Bank's credit card business in India is Rs 224 crore. We are paying a small premium on it,” said an IndusInd official.
The deal would mark IndusInd Bank’s foray into the credit card business. The buyout would give the bank access to close to 200,000 Deutsche Bank card holders. According to sources, IndusInd Bank would initially offer credit cards to its own customers and high net worth individuals. Deutsche Bank's credit cards were aimed at the mass affluent segment.
After the acquisition, which is subject to regulatory approval, the operating platform of the card franchise, including technology and staff, will move to IndusInd Bank. Deutsche Bank has around 200 employees in its credit card division.
In November, 2010, IndusInd Bank had appointed Anil Ramachandran as the head of its credit card business. Prior to joining IndusInd Bank, Ramachandran was heading Deutsche Bank’s credit card business in India.
“The strategic intent behind this acquisition is to offer targeted credit card products for chosen client segments. Cards are an important element in our segment offering. Deutsche Bank has a stable cards portfolio and the acquisition gives us a head start in building the cards business,” said Sumant Kathpalia, head of consumer banking, IndusInd Bank.
Along with IndusInd Bank, several other lenders, including Axis Bank, Barclays, Dhanlaxmi Bank, Karnataka Bank and Yes Bank, were interested in acquiring Deutsche Bank’s credit card business. However, most of them backed out, since they found the valuation inappropriate.
Deutsche Bank said its decision to exit the credit card business would not hurt its plan to expand retail operations in India. Credit card operations account for less than two per cent of Deutsche Bank’s total business in India. “Our agreement with IndusInd Bank is in line with our desire to build our retail banking business in India around our core strengths of deposits, wealth management and secured lending,” said Prashant Joshi, Deutsche Bank’s head of private and business clients in India. Currently, Deutsche Bank has 15 branches in India and plans to add a few more this year, Joshi said.
Source: Business Standard
8:19 AM Blogger
Finance Ministry will hold annual performance review of public sector banks here on April 26 to evaluate various aspects including non-performing assets and financial inclusion.
The meeting will chaired by Financial Services Secretary SK Sharma instead of the usual practice of Finance Minister conducting bankers meet.
Finance Minister Pranab Mukherjee is busy with ongoing assembly election in 5 states. The meeting will take stock of the financial performance of the banks during the financial year ended March 2011. However, the banks are yet to announce their annual result for FY11.
It would also dwell upon credit flow to the productive sectors, sources said.
According to sources, the Finance Ministry will deliberate on non-performing assets, agriculture loan, credit to infrastructure sector and matters related to human resources in the public sector banks.
In addition, the banks would also present their annual business target including net profit target, business mix and credit and deposit growth in the current fiscal.
Heads of public sector financial institutions like the Nabard, Sidbi, NHB, IIFCL and Exim Bank would also attend the meeting.
One of the key focus of the meeting would be on providing banking facility in unbanked areas. The Finance Ministry would seek information about the progress on financial inclusion front carried out by individual banks.
Finance Minister in the Budget speech earlier this year has already said that banks would provide banking facilities to habitations having a population of over 2000 by March, 2012.
The banks have identified about 73,000 such habitations for providing banking facilities using appropriate technologies, he had said.
"A multi-media campaign, Swabhimaan, has been launched to inform, educate and motivate people to open bank accounts. During this year, banks will cover 20,000 villages and remaining will be covered during FY12," he had said.
Last year, Finance Minister had conducted regional meeting which were attended by PSU bankers along with the concerned Chief Ministers.
This was with the objective to better understand state- wise flow of credit to the agriculture sector, credit-deposit ratio and loan to weaker section of society among others.
Source: Business Standard
8:17 AM Blogger
An HSBC client pleaded guilty on Monday to offshore tax evasion, in a widening US government probe of banks that may help tax dodgers.
The case includes as co-conspirators five unnamed bankers whom sources close to the matter identified as employees of HSBC Holdings Plc. The indictment said the bankers worked at a large international bank headquartered in England.
Defendant Vaibhav Dahake admitted in US district court in New Jersey to conspiring to conceal accounts in India. Dahake is an India native who became a naturalised US citizen in 2006 and now lives in Somerset, New Jersey.
The plea comes days after US prosecutors said that an HSBC unit in India potentially aided thousands of Americans in dodging taxes, expanding the government's probe of offshore tax evaders and their banks.
"HSBC does not condone tax evasion and is cooperating with law enforcement in this matter," HSBC spokeswoman Juanita Gutierrez said.
Government lawyers cited Dahake in their request last week for permission to get information from the bank about American residents who may be using HSBC India accounts to evade federal taxes.
"Dahake is not an isolated incident," the government said in a court filing last week, which detailed solicitations by several HSBC bankers to clients with the promise of secrecy.
The government is requesting authority to serve a "John Doe" summons on the bank to obtain the names of an unknown number of individuals who may have engaged in tax fraud.
HSBC has been soliciting clients of Indian origin living outside India since at least 2002, through a unit called NRI Services Division, the court documents filed by the US government last week said.
Prosecutors used the same "John Doe" summons strategy in their case against UBS AG, which ultimately settled government charges against it by paying $780 million and agreeing to hand over nearly 5,000 client names to the United States.
UBS fought the government's bid to gain clients names, but ultimately relented after prolonged diplomatic wrangling and resolution of an internal debate inside Switzerland about bank secrecy.
Several lawyers said HSBC may be more willing to cooperate with the government, in part because the bank is not bound by strict Swiss secrecy laws, and to protect themselves.
"There is a long-standing set of principles that guide the Justice Department in deciding whether to bring a criminal complaint versus a company, and one is cooperation," said Scott Michel, a lawyer who counsels wealthy clients at Caplin Drysdale.
He added the bank may be willing to "throw their clients under a bus" to avoid prosecution.
The US government wrote some HSBC India clients last year, warning them that they are the target of a criminal probe. Tax authorities have been sifting through about 18,000 accounts gathered from an amnesty program that ended in 2009.
"HSBC is one of the casualties of that program," said Brent Lipschultz, a partner at accounting firm EisnerAmper's wealth management group.
Internal Revenue Service Commissioner Douglas Shulman has said the government is shifting its focus beyond Europe to emerging markets.
Shulman has also said other institutions beyond UBS are under active investigation by the government.
Source: Business Standard
Tuesday, April 12, 2011
8:46 AM Blogger
The finance ministry today said the draft guidelines on new banking licence with provisions to allow entry of corporates would be finalised by month-end.
The draft guidelines should be finalised by the end of this month, Financial Services Secretary SK Sharma told reporters on the sidelines of Ficci National Conference on Insurance.
"This was to be (released by) March 31, but we are taking some more time because there are some issues we are still considering," he said.
Asked if the draft guidelines would have any mention of industrial houses, he said, "it would be general...It will not be ruled out (corporate houses getting banking licence) also. RBI will have decision as per the guideline."
In the Union Budget for FY11, it was announced that the Reserve Bank of India would consider giving traditional banking licenses to private sector players.
Following the announcement made by the Finance Minister Pranab Mukherjee, the Reserve Bank had brought out a discussion paper in August, 2010, on giving out new banking licences to business houses and non-banking finance companies, besides regulations for the same to foster greater competition.
On new LIC Chairman issue, Sharma said, the government has taken no decision.
However, there were reports that DK Malhotra, the existing Managing Director of LIC, is going to replace Chairman TS Vijayan who will be completing his five year term in May 2011. Vijayan (58) still has 2 years of residual service.
Extension of the term can be provided by the government. Earlier this month, Union Bank of India Chairman and Managing Director MV Nair was given extension of three months by the Appointment Committee of the Cabinet (ACC) headed by Prime Minister Manmohan Singh.
As per the existing government rule, a Chairman and Managing Director or a Director is appointed in the public sector entity for a period of five years or up to age of 60, whichever is earlier.
Source: Business Standard
8:44 AM Blogger
Mumbai: Credit card transactions worth Rs 6,212.92 crore were carried out in India through credit cards in February 2011, registering a growth of 27.82 per cent compared to the same month last year.
Credit card transactions during February 2010 were at Rs 4,923.11 crore, according to RBI data.
The number of credit cards in circulation have, however, declined by almost 10 per cent to 1.81 crore as on February 28, 2011, from 2.01 crore in the same period last year.
During the April-February period of the fiscal, the total transactions carried out via credit cards increased 22.16 per cent to Rs 68,548.36 crore as against Rs 56,112.05 crore in the April-February period of 2010-11.
Meanwhile, debit card transactions in February were up by 49.44 per cent to Rs 3,304.43 crore, as against Rs 2,211.16 crore in the corresponding month last year.
There were 22.23 crore debit cards in use in the country as on February 28, 2011, up almost 25 per cent over the figure of 17.79 crore in the year-ago period.
In April-February period, the total transactions carried out by debit cards jumped by 47.28 per cent, to Rs 35,333.67 crore, from Rs 23,990.99 crore in the first 11 months of the last fiscal.
Source: Financial Express
Monday, April 11, 2011
8:35 AM Blogger
MUMBAI: Banks and automobile companies are likely to lead profit growth in the fourth quarter of the just-concluded financial year 2010-11, while telecom and real estate firms may be the primary laggards, according to consensus estimates of eight brokerages.
Most brokerages predict double-digit growth in bottom line for large-cap companies on the benchmark share indices, the Sensex and Nifty, amid a continuing tug of war between healthy top line growth, on the back of strong aggregate demand in the broad economy, and rising input cost weighing on margin. Bombay Stock Exchange's 30 Sensex companies are likely to post a year-on-year net profit growth of 17-19%, four of the eight brokerages estimated, while a conservative forecast sees profit growth at 12.5%.
"In overall terms, corporates, excluding oil marketing companies, are likely to report an 18-19% growth this quarter," said Manish Sonthalia, senior vice-president, Motilal Oswal Securities.
The financial sector, particularly banks, is seen leading the growth curve this earnings season led by strong credit growth. However, margin pressure is likely to remain due to higher cost of fund and more money moving into term deposit due to the rise in interest rate that may negatively impact low-cost current account savings account (CASA) ratio. Banks are likely to post a 30-40% growth in net profit, led by State Bank of India , ICICI Bank , and HDFC Bank , Mr Sonthalia said.
Brokerages expect auto majors like Tata Motors , Bajaj Auto , and Mahindra & Mahindra to report impressive growth due to record vehicle sales. "Y-o-Y volumes growth was strong in the quarter across all auto companies, but their EBITDA margins will see a dip due to rising input costs," said CLSA in its earnings preview.
Telecom, real estate, and construction companies are likely to be among the laggards, the brokerages said. Telecom companies will be hit by continuing tariff war for the sixth quarter in a row, and also by interest outgo towards third-generation spectrum loans. Morgan Stanley estimates an average 40% fall in net profit of telecom companies in Jan-Mar.
Real estate companies are seen weighed down by rising commodity prices and hardening interest rates. "We expect infrastructure, construction, real estate, and power companies to post negative surprises this quarter," said Tejas Doshi, vice-president (research), Sushil Financial Services.
High oil prices and rising interest rates, with headline inflation above 8%, will remain key concerns for corporate earnings in FY 2011-12, said analysts. "Higher crude prices will impact profit margins of several companies for many quarters to come," said Ambareesh Baliga, chief operating officer, Way2Wealth Securities
8:32 AM Blogger
Eleven public sector banks , which were alloted shares by Kingfisher Airlines as part of debt recast package , have seen erosion of about 165 crore in the value of the 17.5% equity held by them in the debt-ridden carrier.
These banks, including State Bank of India , Punjab National Bank , Bank of India and IDBI Bank , were alloted 8.8% Kingfisher shares on March 31, at 64.48 a piece as per the Sebi formula.
The market price of the share had declined to 40.95 even before the actual allotment took place.
8:29 AM Blogger
New Delhi: A survey by global consultancy firm Ernst & Young has found that majority of retail customers are satisfied with the country's banking system and that trust has increased after its' astute handling of the 2008 global financial crisis.
Unlike many other countries, India was less affected by the meltdown, mainly on account of conservative banking policies followed by the Reserve Bank of India.
According to the survey, 'A New era of Customer Expectation' that is yet to be released globally, 75 per cent of the retail banking customers in India said that their trust in the banking industry grew in 2010.
"Indians have the highest level of trust and satisfaction in their banking industry...The credit crisis has had minimal impact on customer confidence in the Indian banking industry," the survey said.
It surveyed more than 20,500 global retail banking customers of which 1,000 respondents were from India. The objective of the survey was to gauge what drives customer relationships with their banks.
Indian banks have lived up to the expectations of majority of their clients as the global financial crisis of 2008 had a minimal impact on them compared to their global peers, said the survey.
In contrast, it found 44 per cent of global retail banking customers, outside India, said their confidence in the banking industry had decreased in the past 12 months.
"In order to drive customer value and reduce attrition, much-improved leverage of customer data and insight will be critical, as tailored offers and service propositions are likely to be positively received by the customers," said E&Y National Director Viren H Mehta.
Interesting, the consultancy agency found that despite generally high level of satisfaction with banks, Indian customers were leaving their main bank because of poor service offered by them.
"11 per cent of the Indian respondents surveyed are thinking of switching their banks in future as against 7 per cent of the global respondent," E&Y said.
Also, 50 per cent of customers who decided to leave their main bank did so because of general level of service quality, while 38 per cent cited product and service offerings, the Survey found.
Source: Financial Express
8:27 AM Blogger
India's insurance sector, which is witnessing a rapid growth, is likely to touch about $400 billion in premium income by 2020, making the country one of the top three life insurance and top 15 non-life insurance markets by 2020, according to a report.
"The insurance industry will continue to outpace the rapid economic growth to reach $350-400 billion in premium income by 2020 (approximately Rs 17-22 lakh crore), making India among the top three life insurance markets and top 15 non-life insurance markets by 2020," a report by Federation of Indian Chamber of Commerce and Industry (FICCI) and the Boston Consulting Group (BCG) has said.
The total penetration of insurance (premium as percentage of GDP) has increased to 5.2% in 2011 from 2.3% in 2001, said the report titled 'India Insurance - Turning 10, Going on 20'.
In addition, there has been a surge in insurance coverage due to availability of more products like better term plan, Ulips, whole life, maximum NAV guarantee, auto assistance, disease management and wellness, it said.
The number of life policies had increased nearly 12 fold over the past decade and health insurance nearly 25 fold.
Progress has been made with emergence of multiple channels like bancassurance, broking, corporate agency, direct and auto dealers to complement the existing third party agency and in?house salaried sales force, ICICI Prudential Life Insurance Managing Director and CEO Sandeep Bakhshi said.
Along with the emergence of multiple channels, the distribution reach has also gone up, nearly 6 fold for life, and 1.5 times for non?life, evolving the Indian market from a monopoly to a competitive one, he said.
This massive growth will have a major impact on India's ranking in the global insurance industry and is based on strong fundamentals, FICCI Director General Rajiv Kumar said, quoting the report.
"While the industry has come a long way over the past decade, the big challenge with the industry is profitability. Private life insurers have accumulated losses of over Rs 16,000 crore till March, 2010. Similarly, the non?life industry has cumulative underwriting losses of nearly Rs 30,000 crore," BCG India Partner and Director Alpesh Shah said.
The report suggested that for sustainable profitability, the companies need to fix the agency operating model, build strategic, long-term non-agency partnership, incubate, experiment and develop alternative channels, develop a customer-centric operating model, target customer or product white spaces and go lean.
For non-life insurers, it defined a six-point agenda like creating optimal product portfolio, innovate to target product or customer white spaces, move towards risk based pricing, develop next generation claims management processes, go direct ? build alternate channels for retail products and define and enhance agency sales force operating model.
Source: Business Standard
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