State Bank of Mysore yearly net up 12.3 % at Rs 500.62 cr

Bangalore: State Bank of Mysore reported 12.3 per cent rise in net profit for the year ending March 31, 2011 at Rs 500.62 crore compared to the previous fiscal.

The lower year-on-year growth is caused by the necessity to make higher provisions towards non-performing assets (NPA), SBM's Managing Director Dilip Mavinkurve told reporters.

The percentage of gross NPA to gross advances rose to 2.51 per cent as of last month-end as against two per cent a year ago, he said, adding, about Rs 280 crore in regard to agriculture debt waiver and relief scheme and coffee relief package turned NPA during the course of last fiscal.

Net interest income for the year rose 32.3 per cent from Rs 1,236 crore to Rs 1,636 crore, while net interest margin went up to 3.71 per cent from 3.19 per cent a year ago. Cost of deposits declined to 5.56 per cent from 6.01 per cent, mainly owning to increase in CASA (current account, savings account) share from 31.06 per cent to 33.97 per cent.

"The bank proposes to reach a business level of over Rs 96,000 crore in the year 2011-12 aiming a growth rate of 23 per cent, from the present level of Rs 77,667 crore", Mavinkurve said.

The bank has drawn up plans to open 90 new branches and install 156 additional ATMs in the current fiscal, and it's also in the process of adding more than 1,000 personnel to support its expansion plans.

Source: Financial Express

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Punjab & Sind Bank Q4 net down 13%

New Delhi: State-owned Punjab & Sind Bank today reported 12.75 per cent decline in net profit at Rs 130.2 crore for the fourth quarter ended March 2011 on account of increase in provisioning for bad debts and pension. The bank had a net profit of Rs 149.1 crore in the corresponding quarter of the .

Total income of the bank rose by 20.8 per cent to Rs 1,485.5 crore for the fourth quarter ended March 31, from Rs 1,229.6 crore in the same period previous fiscal.

At the same time net interest income of the bank has improved to Rs 393 crore during the quarter against Rs 328 crore in the same period a year ago.

"The board of the bank for the first time after a gap of six years has recommended a dividend of 20 per cent," PSB Executive Director P K Anand told reporters here.

Giving details of the provisioning made during the quarter, he said the bank made a provision of Rs 160 crore against the second pension option and gratuity and against NPA and others was Rs 70 crore.

However, the net interest margin (NIM) of the bank improved to 2.66 per cent at the end of fourth quarter compared to 2.45 per cent at the end of March 2010.

Asked about NIM outlook, Anand said the bank would aim to further improve it to 3 per cent in 2011-12.

For the entire fiscal ended March 31, 2011, the net profit of the bank rose marginally by 3.5 per cent to Rs 526.1 crore from Rs 508.8 crore recorded in the previous fiscal.

Total income improved to Rs 5,369.5 crore from from Rs 4,345.9 crore in 2009-10.

During the year the bank made provision of 162 crore for bad assets against Rs 91 crore in the previous fiscal.

Total business of the bank as on March 31, crossed Rs 1,02,555 crore from Rs 81,894 crore at end of 2009-10, registering a growth of 25.23 per cent.

As far as asset quality of the bank is concerned, the gross NPAs as a percentage to total advances rose to 0.99 per cent for the entire fiscal, while net NPAs was 0.56 per cent at the end of fourth quarter.

Deposits rose 21.5 per cent to Rs 59,723 crore by end March, while advances jumped 30.8 per cent to Rs 42,833 crore.

Anand said the bank expects to clock 28 per cent increase in advances while deposits likely to grow at 30 per cent in 2011-12.

Source: Financial Express

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State Bank of Patiala net profit up by 18.53 %

Patiala: State Bank of Patiala (SBOP) on Saturday reported a growth rate of 18.53 per cent in net profit to Rs 652.96 crore for the year 2010-11.

Bank's net profit in 2009-10 was Rs 550.89 crore, said an official release said on Saturday.

The total business of the bank also crossed Rs 1,20,000 crore comprising deposits of Rs 68,066.05 crore and advances of Rs 51,433.20 crore in 2010-11.

The Bank is Basel-II compliant with Capital Adequacy Ratio of 13.41 per cent against the regulatory requirement of 9 per cent. The Tier-I capital is 8.65 per cent of Risk Weighted Assets (RWA).

The business per employee of the Bank increased from Rs 8.95 crore to Rs 9.56 crore and the Profit per employee increased from Rs 4.44 lakh in 2009-10 to Rs 5.20 lakh in 2010-11.

State Bank Of Patiala has also planned sale of gold coins.

Source: Financial Express

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RBI asks banks to set up committees to protect IT data

Mumbai: To deal with problem of cyber crimes in the banking sector, the Reserve Bank asked banks to set up committees to focus exclusively on information security management.

"For banks, as purveyors of money in physical form or in bits and bytes, reliable information is even more critical and hence information security is a vital area of concern," an RBI working group said.

The recommendations are on information security, e-banking, technology risk management and cyber frauds. The data and other informations are vital assets for banking operations.

The working group report said that since information security affects all aspects of an organisation, in order to consider information security from a bank-wide perspective a steering committee of executives should be formed.

It said an official of the rank of GM/DGM/AGM should be designated as Chief Information Security Officer.

The Group, under RBI Executive Director G Gopalakrishna, examined various issues arising out of the use of IT in banks and made its recommendations in nine broad areas.

These areas are IT Governance, Information Security, IS Audit, IT Operations, IT Services Outsourcing, Cyber Fraud, Business Continuity Planning, Customer Awareness programmes and Legal aspects.

With the advances in IT, most banks in India have migrated to core banking platforms and have moved transactions to payment cards (debit and credit cards) and to electronic channels like ATMs, Internet Banking and Mobile Banking.

Fraudsters have also followed customers into cyber space.

Cyber attack mechanisms are phishing, keylogging, spyware or malware and other internet-based frauds targeted at banks and their customers.

The Group was constituted after the April 2010 monetary policy.

RBI said that the banks need to ensure implementation of basic IT organisational framework and put in place policies and procedures which do not require extensive budgetary support, infrastructural or technology changes, by October 31, 2011.

"The rest of the guidelines need to be implemented within period of one year unless a longer time-frame is indicated," it said.

The apex bank would review the progress in implementation of the guidelines.

Source: Financial Express

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State Bank of Hyderabad register 42% increase in net profit

State Bank of Hyderabad has registered an increase of 42 per cent in net profit during the year ending March 31, 2011.

Renu Challu, Managing Director, SBH told mediapersons last evening that the net profit increase was at Rs 1166 crore (42 per cent up) against Rs 823 crores the previous fiscal.

The operating profit grew by 35 per cent to Rs 2319 crore as against Rs 1721 crore for 2009-2010.

She said the increase in profit is primarly on the back of higher net interest income which grew by 53 per cent.

Challu said total business grew by impressive Rs 27,500 crore to touch Rs 1,56,935 crore as on March 31, 2011, a growth of 21 per cent. Total deposits reached a level of Rs 91,488 crore, recording a YoY growth of 20 per cent over Rs 76,186 crore.

Advances also increased by Rs 12,103 crore to Rs 65,447 crore registering a YoY growth of 23 per cent over Rs 53,344 crore as on March 2010, Challu said adding that the CD ratio improved by 154 basis points-from 71.29 per cent as on March 2010 to 72.83 per cent as on March 2011.

Advances grew well diversified across all business segments, clearly signalling a deeper penetration by the bank in the lives of the customers across the board.

Source: Financial Express

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RBI showcause notice for Citibank India

The Reserve Bank of India (RBI) today issued a showcause notice to Citibank India for the Rs 400-crore fraud by one of its employees at the bank's branch in Gurgaon. According to sources, if the bank failed to provide a satisfactory response, it may be fined as much as Rs 65 lakh.

Sources, however, said the penalty could be reduced, depending on the bank's response to the showcause notice. Citibank declined to comment on the issue.

In December, Citibank had discovered a fraud, allegedly committed by its employee, Shivraj Puri, by siphoning off Rs 400 crore by selling financial products not authorised by the bank. Puri was believed to have transferred the funds to his personal accounts. The accused had reportedly forged the bank's documents and letter heads to sell the products.

Citibank said it informed RBI and investigating agencies as soon as it knew about the financial discrepancies at its Gurgaon branch. Currently, it is in the process of compensating clients hit by the scam.

Analysts say while the quantum of the penalty is unlikely to have any impact on the bank's financials, it indicates the central bank would not tolerate lapses in risk management and internal control systems.

RBI had, earlier this week, penalised 19 commercial banks, including the country's largest lender, State Bank of India, for mis-selling derivative products to clients. The regulator imposed a fine of Rs 5-15 lakh on these banks, since they did not comply with its instructions on derivative products. The list included seven private banks and 11 foreign banks.

Source: Business Standard

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Corporation Bank FY 2011 net up 20.77% at Rs 1,413 cr

Mumbai: Helped by a healthy growth in loans and a drop in non-performing assets (NPAs), public sector Corporation Bank has clocked a 20.77 per cent jump in net profit in FY 2011 at Rs 1,413.27 crore as against Rs 1,170.25 crore in the previous fiscal.

Advances grew by a healthy 37.42 per cent, while both the gross and net NPAs decreased to 0.91 per cent and 0.46 per cent, respectively.

"Our total business stood at Rs 2,03,598 crore in FY 2011. We are targeting a total business of Rs 2,65,000 crore in FY 2012," Corporation Bank Chairman and Managing Director Ramnath Pradeep told reporters here today.

Excluding the provision towards second option scheme of retired/existing employees, the Karnataka-based lender's net profit has grown 31.31 per cent.

Net interest income in FY 2011 rose 54.45 per cent to Rs 2,939 crore, while net interest margin stood at 2.52 per cent.

The bank's current account savings account (CASA) stood at a slightly over 25 per cent, lower than the previous fiscal's.

In the fourth quarter of the FY 2011, the bank's net profit rose 10.6 per cent to Rs 345.33 crore, after making provision for second option for pension for existing employees (amortised for five years) and fully in respect of retired employees.

Non-interest income from core areas increased by Rs 64.08 crore (31.1 per cent) and reached Rs 269.87 crore during the quarter, while net interest margin stood for this three- month period was at 2.5 per cent.

In FY 12, the bank will focus on building up its CASA which will be done through a number of initiatives, including opening of salary accounts, Pradeep said.

Source: Financial Express

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RBI kicks off savings bank rate debate

The interest rate on savings bank deposits, the last bastion of the administered rate of interest, is set to be deregulated, with the Reserve Bank of India (RBI) kicking off a discussion for a market-driven rate. The rate has remained at 3.5 per cent since March 2003.

While a strong argument favouring such a move is better transmission of the monetary policy, concerns like those regarding unhealthy competition among banks and asset liability mismatches remain. RBI seems to suggest the advantages of the move outnumber the concerns.

In a discussion paper released on Thursday, RBI charted the pros and cons of such a step. The regulator is considering deregulating the savings bank rate in a phased manner, subject to a minimum floor for some time. It ignited a debate on whether higher interest rate be paid on savings deposits without a cheque-book facility. However, it was also argued that for transmission of monetary policy to be effective, it was necessary that all rates move in line with policy rates and that the process was impeded if the interest rate in any segment was regulated.

Regulation of savings bank deposits, which constitutes 22 per cent of all deposits, has not only reduced its relative attractiveness, but also adversely affected transmission of monetary policy, RBI said.

An important drawback of a market-determined savings bank rate is that competition would increase the cost for banks and affect profitability. “It has also been observed that 49 banks, which have below average CASA deposits, constitute about 50 per cent of total assets of the banking sector. Therefore, given the attractiveness of savings deposits, it could be argued that deregulation may lead to unhealthy competition amongst banks,” RBI said.

So far, banks have, opposed deregulation of savings bank deposits, saying such a move would fuel instability. Another drawback in moving to a market-driven savings bank rate is that it would result in an asset-liability mismatch. Though savings bank deposits represent short-term savings which can be withdrawn on demand, a large part is treated as ‘core’ deposits, which, together with term deposits, were used by banks to raise their exposure to long-term loans, including infrastructure loans.

It is also argued that such a move would adversely impact financial inclusion, as banks may be discouraged from maintaining savings deposits with small amounts, due to the high transaction costs involved.

Source: Business Standard

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Pension provisions drag Dena, Corp Bank profits

Net profits of Dena Bank and Corporation Bank took a hit in the quarter ended March, as the public sector lenders provided for pension liability. Also, increased cost of funds added pressures to the banks’ margins.

The Reserve Bank of India (RBI) had mandated banks to provide entirely for pension liabilities of retired employees in the financial year 2010-11, while provisions for existing employees who exercised a second pension option could be amortized over a period of five years.

Accordingly, Dena Bank provided for Rs 188.42 crore towards the pension provisions which dragged the bank’s net profit to Rs 157 crore, higher by 14.54 per cent as compared to the fourth quarter the previous year. The bank’s net interest income was up 44.5 per cent in the quarter ended March. It saw a growth of 25 per cent in deposits and 26.4 per cent in bank advances in the fourth quarter.

Dena bank’s net interest margins were at 3.09 per cent as on March down 18 basis points from the previous quarter on the back of a rise in cost of funds by 30 basis points in the same period. “The pressure of re-pricing will continue to impact the margins in the April-June quarter and may come down from the September quarter onwards,” said D L Rawal, chairman and managing director.

Corporation Bank posted a net profit of Rs 345.3 crore in the quarter ended March, 10.6 per cent higher as compared to the same period the previous year. “The net profits were low on account of higher provisioning for pension liability,” said Ramnath Pradeep, chairman and managing director. The bank had to provide for Rs 184 crore towards pension liability in the fourth quarter. Its net interest margins were at 2.48 per cent in the January-March quarter, up 18 basis points from the previous quarter.

Source: Business Standard

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Credit offtake up 20.6% in FY'11; services lead the way

Mumbai: Credit offtake from banks to major sectors accelerated in 2010-11, registering a growth of 20.6 % as against 16.8 per cent in the previous fiscal, suggesting an upsurge in the economic activity.However, two major sectors agriculture and industry saw lower growth in their annual credit offtake in the last fiscal vis-a-vis 2009-10, according to data released on Friday by the Reserve Bank.

The total outstanding credit stood at Rs 36.67 lakh crore at the end of March 2011, up from Rs 30.40 lakh crore in 2009-10."Non-food bank credit grew by 20.6 per cent during 2010-11 as compared with 16.8 per cent during 2009-10," RBI said in a statement.On annual basis, total credit to services and personal loans went up during the last fiscal, while agriculture and industry witnessed a decelerations."Credit growth to agriculture decelerated to 10.6 per cent during 2010-11 from 22.9 per cent in the previous year," RBI said.

Total outstanding credit to agriculture and allied activities stood at Rs 4.60 lakh crore in 2010-11 as against Rs 4.16 lakh crore in the previous year. At the end of March 2009, it had stood at Rs 3.38 lakh crore. During the last fiscal, credit to industry which includes infrastructure, metals, food processing, rubber, plastic and their products and engineering grew by 23.6 % to Rs 16.20 lakh crore in 2010-11 from Rs 13.11 lakh crore in the previous financial year. However, this is less than the 24.4 per cent growth in credit reported in 2009-10. The outstanding bank credit to industry was Rs 10.54 lakh crore in 2008-09. "Credit to the services sector, led by NBFCs,professional services, transport operators and tourism, hotels and restaurants, grew by 23.9 per cent during 2010-11 as compared with 12.5 per cent in the previous year," RBI said. The sector saw bank credit growing to Rs 9 lakh crore in 2010-11 from Rs 7.27 lakh crore in 2009-10. In 2008-09 the figure was Rs 6.49 lakh crore.

Among all sector, services had the best increase in credit offtake during the last fiscal. Credit to personal loans also went by 17 per cent during 2010-11, as compared with 4.1 per cent during the previous year.

In 2010-11, total credit offtake to the sector stood at Rs 6.85 lakh crore as against over Rs 5.85 crore in 2009-10.During 2008-09, the sector has taken credit to the extent of Rs 5.62 lakh crore.

Source: Financial Express

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OBC Q4 net profit up 5% at Rs 333.6 cr

New Delhi: Public sector lender Oriental Bank of Commerce (OBC) announced a 5 per cent increase in net profit to Rs 333.6 crore for the fourth quarter ended 31 March, 2011.

The bank had posted a net profit of Rs 317 crore for the same quarter of the previous fiscal.

Total income of the bank increased to Rs 3,532.1 crore during the quarter from Rs 2,950.9 crore in the same period a year ago.

For the fiscal ended March 31, 2011, the net profit of the bank rose by 32 per cent to Rs 1,502.8 crore from Rs 1,134.6 crore recorded in the previous fiscal.

At the same time, total income improved to Rs 13,047.8 crore from from Rs 11,457.1 crore in FY 2009-10.

Source: Financial Express

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Corp Bank's novel method to force defaulters repay loans

Mumbai: Walk into some Corporation Bank branches across the country and you are likely to see a few individuals with their photographs on the notice-boards, much like the wanted list that one sees in police stations. Those at the bank branches are, however, not criminals in the normal sense of the word, but simply wilful defaulters on loans taken from the bank.

Once their pictures and names are thus put on the notice-boards, the bank says the social stigma attached to it forces most to repay their loans. "We have made substantial recoveries through this method," the public sector lender's Chairman and Managing Director, Ramnath Pradeep, told reporters on Friday.

Apart from the stigma attached, "it also makes it difficult for the defaulters to get credit from other sources," he said.

Citing the example of a customer who called him up a number of times threatening suicide unless the photo and notice were removed, Pradeep said that he remained firm on repayment and the customer ultimately repaid the loan. "The customer did not commit suicide but instead repaid the loan," he said.

In FY 11, the bank has recovered or upgraded loans totalling Rs 627-crore. Of this, Rs 289-crore has been recovered while Rs 338-crore has been upgraded, a bank official said.

The bank's gross and net NPAs as at end-FY 11 have decreased to 0.91 per cent and 0.46 per cent, respectively. Last December, the bank took a hit as it was affected by NPAs in the coffee plantations sector of around Rs 120-crore.

"We have recovered Rs 80-crore of this," the bank official said. The bank will focus strongly on effecting recoveries and reducing its NPAs this fiscal, Pradeep said, adding several recovery camps have already been launched and "we are getting a good response."

Source: Financial Express

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ASBA to be mandatory from May 2

Mumbai: All non-retail investors will have to use the ASBA facility - where money is debited from investor's account only after share allotment - the date being from May 2 to apply for share sale offers in the capital market, Sebi said today.

Under the Application Supported By Blocked Amount (ASBA) facility, the application money of investors remains blocked in his bank account until the process of allotment of shares is completed.

"It has been decided that non-retail investors i.e., qualified institutional buyers and non-institutional investors, making application in public or rights issue shall mandatorily make use of ASBA facility," Sebi said.

The Securities and Exchange Board of India (Sebi) had introduced ASBA facility for public offers first in September 2008, when retail investors were allowed to use it.

The facility eliminates any delays related to refunds for the unallotted shares. Initially, it was offered to retail investors only and was given to other investors in 2009.

"The circular shall be applicable for Red herring Prospectus/ Letter of offer filed with registrar of Companies or stock exchanges on or after May 2, 2011," Sebi added.

Sebi, however, did not make it mandatory for retail investors to use the ASBA facility.

Source: Financial Express

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RBI brings fresh norms to help banks manage risks

The Reserve Bank of India (RBI) on Wednesday came out with fresh norms for tightening the risk management of banks, asking them to scale up to the Basel-II norms — the third stage of international banking norms.

The Advanced Management Approach (AMA) norms, released by RBI, will guide banks to measure operational risk, maintain solvency and migrate to the next stage of the capital adequacy requirements. The AMA guidelines, which deal with computation of capital charge for managing operational risks, are likely to be implemented from April 1, 2014.

To meet the Basel-II norms for risk management, RBI had already put in place the Basic Indicator Approach and the Alternative Standardised Approach. RBI had advised the banks to assess their preparedness with reference to the guidelines. The banks have also been told to approach RBI whenever they are ready to go for a preliminary assessment of their risk management system.

“If the result of this preliminary assessment is satisfactory, RBI will allow banks to make a formal application for migrating to AMA. It will then perform a detailed analysis of the bank’s risk management system and proposed model prior to according approval,” the regulator said.

Source: Business Standard

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Vijaya Bank net drops 58.5%

Public sector lender Vijaya Bank on Thurday reported a 58.5 per cent drop in its net profit at Rs 54.23 crore for the quarter ended March 31, compared to the year-ago period. The operating profit of the bank stood at Rs 109.9 crore, a drop of 65 per cent.

“The drop in net profit was mainly on account of provisions for wage revision. The bank made a one-time provision of Rs 180 crore towards second pension for retiring employees,” said H S Upendra Kamath, cmd.

The total income of the bank during the quarter rose 15.8 per cent to Rs 1,751.6 crore, compared with Rs 1,511.6 crore in the year-ago period. Interest income rose 22.08 per cent to Rs 1,609 crore, compared with Rs 1,318 crore in the year-ago period.

Source: Business Standard

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Inflation control: RBI builds case for freeing savings bank rate

MUMBAI: The Reserve Bank of India, criticised for failing to contain inflation , is building a case to do away with the last of the regulated interest rates - savings bank rate - for an effective policy transmission. But the freedom for banks to set rates could hurt the poor, for whom savings account is the lone investment product, and limit access to financial services.

The central bank may proceed gradually in letting it free by keeping a floor on the rates offered in the early stages. The freeing-up could also lead to higher rates for savers, if banks compete for funds. "Savings deposit interest rate cannot be regulated for all times to come when all other interest rates have already been deregulated as it creates distortions in the system," says a discussion paper on Deregulation of Savings Bank Deposit Interest Rate by RBI, seeking comments till May 20.

Other than innovative products, "deregulation will have another major advantage, in that it will help improve the monetary transmission . Since savings deposits constitute a significant portion of aggregate deposits, regulation of interest rate on such deposits has impeded the transmission of monetary policy impulses," notes the paper.

Savings Bank accounts is a basic banking service for an individual who opens a bank account to transact , but can also use it as a saving instrument. Although all deposit rates were de-regulated by 1997, this alone was kept to protect the neediest, who did not have any other avenue to invest.

The rate on this type of a hybrid account was last set in 2003 at 3.5% a year. Since these deposits account for about a quarter of all deposits , these fixed rates left policy rate increases by the central bank ineffective. Eight rate increases in 13 months failed to contain price rise that is at least a percentage point above the targeted 8%.

The household sector has 84% of the total savings deposits of about Rs 9 lakh crore, of which 36.2% are from the rural and semiurban population which mostly don't trade in shares, bonds and other securities. Savings bank deposits account for 12.8% of the total household financial assets. "The de-regulation has to happen in a phased manner," said Madan Sabnavis, chief economist at raging company CARE.

"When we are talking about inclusive banking, we have to see that the interests of small depositors are protected. No one is going to switch bank accounts frequently mainly due to changes in savings rates," he said. But the central bank believes that deregulation may lead to higher returns for depositors. Furthermore , banks won't compete with each other for funds and destabilise the system.

"If deregulation of term deposits did not lead to any unhealthy competition , deregulation of savings deposit rate may also not result in any unhealthy competition," said the RBI paper.

"While attractive returns may encourage low income households to open such accounts , it may also reduce accessibility of such accounts for small savers if banks impose some restrictions on the operation of such accounts. However, such issues are better addressed by regulatory prescriptions rather than by regulation of interest rates," it said.

Source: EconomicTimes

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RBI seen raising key rates by 25 bps

Mumbai: The Reserve Bank of India, battling surging price pressures, is widely expected to lift key interest rates by 25 basis points when announcing its annual monetary policy on May 3, even as some economists call for a 50 basis point rise.

A quarter-point rise would take the repo rate, at which it lends to banks, to 7 per cent and the reverse repo rate, at which banks park funds with it to 6 per cent, and would be the ninth increase in rates by the Reserve Bank of India since March 2010.

Following a March headline inflation reading of nearly 9 per cent, analysts now expect the RBI to raise rates a total of 75 basis points for the rest of 2011, or 25 basis points more than they anticipated in mid-March, a new Reuters poll found.

India's food price index has been rising, reaching 8.76 per cent year-on-year in the week ended April 16, from 8.74 per cent one week earlier. But this is not changing expectations for a 25 bps rise, just as the RBI made in mid-March.

Possible scenarios for May 3

RAISES RATES BY 25 BPS:

This is the most likely scenario, with the RBI expected to stick with its favoured gradual policy-tightening approach in order not to undermine economic growth. Weak growth in industrial output would support its case for limiting a rate rise to 25 bps.

Each of the eight times the central bank has raised the repo rate since March 2010, it has done so by quarter points, citing the need to balance inflation and growth.

Several investment banks including UBS and Goldman Sachs have recently lowered their growth forecasts for the current fiscal year to below 8 per cent, compared with government forecasts for 9 per cent growth.

Even if the central bank lifts rates by only 25 basis points, economists expect a hawkish tone in its policy statement.

PROBABILITY: Most Likely

MARKET REACTION: The market has priced in at least a 25 basis point rate hike, though the possibility of a 50 basis points increase has risen following the March inflation data.

If there is a 25 bps increase, bond yields may react immediately by dropping about 5 bps and overnight indexed swap rates may ease by about 10 bps. But yields would soon start hardening on expectations of a prolonged rate hike cycle in the absence of stronger measures.

RAISES RATES BY 50 BPS:

The recent surge in inflation -- plus expectations of further price pressures due to a likely rise in state-set fuel prices -- may prod the central bank to divert from its often-stated "calibrated" approach and take bolder tightening action.

Headline inflation has remained stubbornly elevated and has breached the RBI's own upwardly revised projections, stoking inflation expectations. The central bank may want to show stronger intent in its annual policy statement.

PROBABILITY: LESS LIKELY

MARKET REACTION: The market has partly priced in this probability. Bond yields may jump by about 10 basis points and swap rates rise by 10-15 basis points with a sharper rise in front-end rates, flattening the swap curve.

The spread between the 1-year and 5-year overnight indexed swaps (OIS) may narrow to 40 basis points from 46 basis points.

TAKES OTHER TIGHTENING STEPS:

A blanket increase in policy rates may not be able to address sector-specific overheating concerns and the RBI could take proactive measures such as increasing risk weights in loans to sensitive sectors like real estate, housing and capital markets.

Some analysts also expect the RBI to raise the standard provisioning norms across all assets to 0.50 per cent from 0.40 per cent.

However, the probability of further sectoral tightening is quite low, as there is little sign of excessive lending to specific sectors.

PROBABILITY: LEAST LIKELY

MARKET REACTION: There would not be any impact in the money market but bank shares could be hurt.

Source: Financial Express

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Yes Bank to foray overseas, cards biz in FY12

Mumbai: Yes Bank is in advanced stages of applying for a wholesale bank licence in Dubai International Financial Centre and has plans to foray into credit card business, a top official told reporters late on Wednesday.

The mid-sized private lender also plans to open a representative office in UAE.

It is an objective this year to have one wholesale bank overseas and one representative office in the course of this year, Managing Director Rana Kapoor said.

The bank, which also has approval to open 35 branches in India, plans to complete the roll-out by July, he said.

The bank has a headroom to raise 10-12 billion rupees in tier II capital and will look to tap it when (interest) rates start coming off, Kapoor said.

The bank has board approval to raise $500 million in equity and Kapoor said it would happen in the latter part of FY12 or the next fiscal year.

It plans to launch its credit card business in 2012/13, Kapoor added.

Source: Financial Express

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Bank of Baroda Q4 net up 43% at Rs 1,294 cr

Mumbai: Public sector Bank of Baroda recorded 43 per cent rise in net profit at Rs 1,294.3 crore for the fourth quarter ended March 31, 2011.

The bank had a net profit of Rs 906.2 crore in the same quarter in the previous fiscal, BoB informed the Bombay Stock Exchange.

Total income rose to Rs 7,168.6 crore for the quarter ended March 31, 2010, from Rs 5120.7 crore in the same period last fiscal.

Interest Income improved to Rs 6334.10 crore against Rs 4353.8 crore in the same quarter a year ago.

The board proposed a dividend of Rs 16.50 per equity share on face value of Rs 10 per share for the financial year 2010-2011.

For the year ended March 31, 2010, the bank posted a net profit of Rs 4241.6 crore against Rs 3058.3 crore in the previous fiscal, registering an increase of 38.6 per cent.

Total income increased to Rs 24,695.10 crore during the year, compared to Rs 19423.2 crore in the previous fiscal.

Source: Financial Express

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EPFO to pay 9.5% till new rate decided

New Delhi: Subscribers of retirement fund manager EPFO, settling their final claims before the new rate is announced for the current fiscal, will get the existing 9.5 per cent interest on their deposits.

"Since the rate of interest (on deposits) for 2010-11 has been declared as 9.5 per cent per annum, settlement of claims of the EPF subscribers during 2011-12 shall be made at 9.5 per cent per annum till rate of interest is declared for 2011-12," said an order issued by the Employees' Provident Fund Organisation (EPFO).

The decision will benefit those subscribers who are either retiring or going in for full and final settlement of their accounts before the new rate is announced for 2011-12.

In September, EPFO had announced 9.5 per cent rate of return on deposits for over 4.71 crore subscribers for 2010-11, which has been ratified by the Finance Ministry.

The order is contrary to the view of the Chairman of EPFO's apex decision making body, Central Board of Trustees (CBT), who wanted to give 8.5 per cent rate for 2011-12 to all outgoing subscribers settling claims this fiscal.

CBT, which is headed by the Labour Minister, had expressed the view of providing 8.5 per cent.

EPFO had been providing 8.5 per cent rate of return to its subscribers for five years since 2005-06. It was raised to 9.5 per cent for 2010-11 after EPFO discovered a surplus of over Rs 1,700 crore.

According to the Employees' Provident Fund Scheme, EPFO has to settle claims at the rate provided for the previous fiscal, in case the rate for the subsequent financial year has not been declared.

This rule will benefit all those subscribers who would settle their claims before the announcement of the rate of return for 2011-12.

They will retain the gains even if EPFO announces interest rate lower than 9.5 per cent for this fiscal, but will be able to claim the difference if the rate happens to be higher.

Source: Financial Express

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Bank of Baroda to increase overseas branches to 100

MUMBAI: State-run lender Bank of Baroda is planning to increase the number of overseas branches to 100 in FY12 from 85 now, a top official said on Thursday.

It plans to open branches in Malaysia, Uganda, Botswana, the Gulf and Australia, Chairman and Managing Director M.D. Mallya told reporters.

The bank posted a 43 percent increase in net profit to 12.94 billion rupees for Jan-March quarter.

Source: EconomicTimes

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ICICI CEO expects credit growth of at least 20 pct in FY12

MUMBAI: ICICI Bank , India's second-largest lender, expects credit growth of at least 20 percent in fiscal 2012, its Chief Executive Chanda Kochhar said on Thursday.

The bank is focused on maintaining net interest margins going forward, she said in a conference call.

Earlier, ICICI reported a 44 percent jump in quarterly net profit on strong demand for loans and a rise in fee income in India's fast growing economy, but missed forecasts due to treasury losses and higher expenses.

Source: EconomicTimes

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Reserve Bank penalises two cooperative banks

MUMBAI: The Reserve Bank has imposed penalty of up to Rs 5 lakh on two cooperative sector lender -- Bhuj Co-operative Bank and Independence Co-operative Bank -- for violations of rules relating to various provisions.

A monetary penalty of Rs 5 lakh was imposed on the Kutch-based Bhuj Co-operative Bank for violations of RBI instructions relating to Know Yours Customer (KYC) norms, anti-money laundering guidelines, temporary overdrafts (TOD) and use of the bank's name without the word 'Co-operative', an official statement said.

In the case of Nashik-based Independence Co-operative Bank, a fine of Rs 1 lakh was imposed for violation directives related to loans for directors, it said.

The RBI had issued show-cause notices to both the lenders and the penalties were imposed after going through the submissions made by them, it added.

Source: EconomicTimes

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