SBI hints at hike in interest rate next week

New Delhi: Country's largest lender State Bank of India (SBI) indicated it could hike interest rates by up to 50 basis point next week.

"It (interest rates review) is happening next week because asset liability committee has to meet next week. So you can expect some transmission next week or the week after ...25-50 basis points perhaps," SBI Chairman, Pratip Chaudhary said on the sidelines of board meeting.

Banks have been raising interest rates following a hefty 50 basis points increase in key policy rates undertaken by RBI in its first quarterly review of monetary policy last month to tame inflation.

Since then about two dozen banks have already raised interest rates following July 26 policy rate hike by the apex bank.

Many banks including HSBC, United Bank and Dena Bank --had hiked their lending and base rates by up to 50 basis points, following the recent tightening by the Reserve Bank to tame inflation which is hovering at 9.44 per cent.

On the other hand, state-run Indian Overseas Bank (IOB) upped its term-deposit rates by up to 75 basis points.

Hongkong and Shanghai Banking Corporation India (HSBC) had revised upwards its base rate, the minimum lending rate, by 50 basis points to 9.75 per cent.

Further, depositors with HSBC, one of the country's oldest foreign banks , will now get better returns on their savings as rates have been hiked by 50 basis points.

With this, HSBC India will now offer an interest of 9 per cent per annum to its customers for a term of 365 days and 9.5 per cent to senior citizens.

Besides, PSU lender United Bank of India increased its lending rate from today.

From now, the bank's base rate would stand at 10.60 per cent and benchmark prime lending rate(BPLR) at 14.85 per cent.

State-run lender Dena Bank had hiked its minimum lending rate or the base rate by 50 basis points to 10.70 per cent.

It had also increased interest rates on loans given under Benchmark Prime Lending Rate (BPLR) by a similar 50 basis points to 15.75 per cent.

Dena Bank had said it has raised interest rates on deposits by 50-150 basis points depending on their maturity level.

The hike in interest rates come after the Reserve Bank raised its key policy rates last week by a hefty 50 basis points to check high inflation.

The short-term lending (repo) rate of RBI now stands at 8 per cent and the short-term borrowing (reverse repo) rate at 7 per cent.

Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9 per cent from the earlier level of 8.5 per cent.

Source: Financial Express

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State Bank of Travancore, Union Bank raise lending rates by 50 bps

NEW DELHI: State-owned lenders Union Bank and the State Bank of Travancore (SBT) on Friday raised their lending rates by 50 basis points, following the hike in key policy rates by the Reserve Bank last month.

After the rate increase, Union Bank's base rate, or the minimum lending rate, would be 10.75 per cent per annum, while SBT's rate would stand at 9.75 per cent, the banks said in two separate statements.

Besides, SBT raised its benchmark prime lending rate (BPLR) from 14.50 per cent to 15 per cent. The new rates would be effective from Monday, August 8, 2011.

SBT and Union Bank have joined a host of private sector and PSU lenders, including State Bank of Mysore, HSBC, United Bank and Dena Bank, who followed the monetary action by the RBI on July 26 and many more are likely to do so in the coming days as cost of funds has gone up.

Earlier during the day, country's largest lender State Bank of India indicated it could raise interest rates by up to 50 basis point next week.

The interest rate hike comes after the RBI raised its key policy rates last week by a hefty 50 basis points to check high inflation in its July 26 monetary policy review.

The short-term lending (repo) rate of RBI now stands at 8 per cent and the short-term borrowing (reverse repo) rate at 7 per cent.

Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9 per cent from the earlier level of 8.5 per cent.

Source: EconomicTimes

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SBI to take a view on merger of associates in mid-2012

NEW DELHI: Country's largest lender State Bank of India (SBI) on Saturday said it will take a view on consolidation of its remaining five associates in the next fiscal.

"We will take a view (on merger of associate banks) in mid-2012," SBI Chairman Pratip Chaudhuri said after a board meeting addressed by Finance Minister Pranab Mukherjee here.

SBI undertook first ever amalgamation of its associate State Bank of Saurashtra in 2008, followed by State Bank of Indore in August last year. "We did the last subsidiary merger of State Bank of Indore and now it is still taking us time because you have to rationalise branches," he said.

His comments come a day after bank employees across the country went on a day-long strike to protest proposed mergers of public sector banks, among other things.

"From an approval perspective and a regulatory perspective, we are happy that it has been put in place. So, next time we want to make the merger happen it is going to take us much lesser time," he said.

There are five associate banks of SBI. Two of them are fully owned, State Bank of Patiala and State Bank of Hyderabad, while remaining three, State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner and Jaipur (SBBJ), are not 100 per cent owned.

These three entities are also listed at stock exchanges. Chaudhuri said, SBI's international expansion plans were discussed in the board meeting.

"Secretary Financial Services said that SBI should look for more aggressive expansion particularly in two geographies, including the CIS (Commonwealth of Independent States) countries with whom we have historic and very cordial relations from the days they were a part of the USSR and the neighbouring countries. We should think of expanding our footprint in the SAARC countries," he said.

Asked about loan growth, Chaudhuri said the bank is expecting a credit growth of 16-19 per cent during the current fiscal as against 21 per cent recorded in the previous fiscal.

Source: EconomicTimes

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Make the most of tax benefits on interest payments

The benefits towards interest payments for house loan allowed under present income tax laws is dependent on how the money borrowed is used. Here we explore the provisions of the law.

For claiming interest benefit, the first and foremost point you should remember is that the benefit is available for the house owned by you, which is ready for occupation. You cannot claim this benefit if you do not own the house, or during the period in which it is under construction.

Any interest paid during the period when construction was going on can be claimed in five equal instalments beginning from the year in which the construction has been completed. This benefit is available on accrual basis and it is not necessary for you to have actually made the payment towards interest via cheque.

There is a notion that interest benefit on home loan can only be claimed if the loan has been taken for the purpose of buying a house or for construction on a plot owned by oneself. This is not true. Interest payments on loans taken for the purpose of repair, renovation or reconstruction is also eligible for deduction. If you have taken a loan against your property for purposes not covered in what has been stated earlier, you cannot claim deduction under the head “Income from house property”. This deduction, however, can be claimed under other heads in the income tax laws if the money has been used for other investments.

Besides borrowing from banks and institutions even loans taken from friends and relatives are eligible for this benefit. You can even claim benefits on interest paid towards personal loans taken for making down payment. Therefore, it is not the source of the funds that is important, but the purpose to which the money has been put to use.

However in case the money is borrowed on or after 1st April, 1999 for the purpose of buying the house in which you are staying, you have to obtain a certificate from the person who has lent you the money specifying the amount of interest payable on this loan. So except for the loan taken from the period beginning from 1st April 1999 for the property occupied by you, the law does not require you to even obtain a certificate from the lender but you will have to conclusively establish the linkage between the amount borrowed and the end usage. Now we look at the deduction available towards interest payments, which mainly depends on the usage of the property and the timing of the loan.

For the properties that are let out, the entire amount paid as interest is allowed. In respect of properties which are occupied by you or your relatives, implying it is self-occupied, the normal amount of deduction available is Rs 30,000. You can, however, claim an enhanced deduction of Rs. 1.5 lakh if loan has been taken for purchase or construction of a house on or after April 1, 1999, and that the purchase or construction of the property is completed within a period of three years from the end of the financial year in which the loan was taken.

For loan taken for repairs, renovation or reconstruction of a self-occupied house, the limit is still Rs 30,000 but there is no limit in respect of interest on loan for repairs, renovation or reconstruction of a house that is let out.

In case of more than one property occupied by you or your relatives, the law allows you to choose one house as self-occupied and all the other houses shall be treated as let out and the deduction will be available to you accordingly. l

—Author is CFO, Apnapaisa.com

Source: Financial Express

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SBI went past RBI limit in sanctioning corporate loans

New Delhi: Exceeding RBI's limit on exposure to single borrower, State Bank of India sanctioned loans to corporates such as RIL, IOC, Tatas and HDFC in the past three financial years, the Lok Sabha was informed today.

Bank of India also went past the Reserve Bank limit in the last two fiscals and sanctioned Rs 2,819 crore to HDFC, over the prescribed limit of Rs 2,730 crore in 2009-10.

Besides, it gave Rs 405 crore above the limit to SIDBI.

In a written reply, Minister of State of Finance Namo Narain Meena said the country's largest lender SBI inched past the limit to Reliance Industries and Indian Oil Corporation in all the years starting 2008-09; to BHEL in 2009-10 and 2010-11 and to the Tata Group in 2009-10.

However, Meena said, "As part of financial sector liberalisation, all the credit related matters of banks have been deregulated by the RBI and are governed by the bank's own lending policies."

Banks have to consider different loan proposals as per their commercial judgement and merits of each case keeping in view the loan policies approved by the Board of Directors, he added.

Meena said SBI has informed that in exceptional circumstances RBI permitted banks to consider enhancement of the exposure to a borrower/group up to a further five percent of capital funds with the approval of the Board.

Source: Financial Express

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NPAs in the banking sector on rise

NEW DELHI: Bad assets of the banking sector have increased by Rs 7,718 crore from March 2011 to June 2011, said finance minister Pranab Mukherjee. The gross non-performing assets of public sector banks stood at Rs 78,119 crore at end of June 2011.

"The increase in NPAs has been broadly on account of global economic situations, impact of business cyclicality and economic slowdown" said Mukherjee, adding that delay in implementation of projects due to various reasons which lead to restructuring of accounts was also responsible for the rise in bad loans. The ratio of gross NPAs to gross advances increased form 2.09% in March 2009 to 2.555 as one June 2011 in case of state run banks.

Earlier, Mukherjee had cautioned all state run banks and financial institutions on the downward trend of asset quality. "They (banks) should to exert themselves to devise suitable strategies for containing and rolling back non performing assets," he had said.

The banking sector regulator, Reserve Bank of India had also observed that non -performing assets are becoming stickier and is a cause of concern especially in case of new private sector banks.

Ratings agency ICRA says banks are vulnerable in sectors such as aviation, commercial real estate, microfinance and state power utilities. "Airlines and state utilities may need restructuring which could double the total re-structured accounts," a recent report from the agency said.

Source: EconomicTimes

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SIDBI to disburse Rs 1,000 cr to MFIs

Small Industries Development Bank of India (SIDBI) plans to disburse around Rs 1,000 crore in credit to microfinance institutions (MFIs) during FY12, which is 19% more than the loaned amount last fiscal.

"We are not shying away from lending to MFI sector in the recent time. Rather, we do have a target of disbursing around Rs 1,000 crore of loan in the current fiscal against Rs 840 crore of advances last fiscal," SIDBI Deputy Managing Director NK Maini told reporters on the sidelines of a seminar on ‘Microenterprise Financing’ here.

The small scale development bank, he said, would continue to lend to institutions with good track record of transparency in lending and recovery practices.

The fund flow to the MFI sector from financial institutions, especially from commercial banks, has dried up in the aftermath of ordinance passed by Andhra Pradesh government, restricting some of the lending practices followed by MFIs.

Later, the Malegam Committee set up by the Reserve Bank of India has come up with a report for regulating the micro finance sector.

"We feel that Indian MFI sector is very responsible and continues to be economically viable," Maini said.

SIDBI, which lends money to the MSME sector, is also trying to rope in foreign private equity (PE) investors to invest in Indian MFI sector, he added.

"We have recently met PE players in London and are continuously trying to rope in PE players into country’s MFI space," he added.

While referring to the overall disbursement target for this year, Maini said that the apex development bank would likely to post 18-20% growth in advances this fiscal.

SIDBI has disbursed around Rs 46,331 crore to MSME sector in Fiscal Year 2011, which is up by 22% over the same period last year. SIDBI’s refinance to banks grew by 35% to Rs 22,900 crore last fiscal.

The bank is also in the process of closing its proposed venture capital fund for lending to small and medium enterprises soon.

"Out of the total Rs 1,000 crore VC fund proposed initially, we will close around Rs 400-500 crore of fund in the first phase. We have already received commitments from some public sector banks in this regard. As far as rest of the corpus is concerned, we will close it as and when demand for fund arises from enterprises," he said.

Source: Business Standard

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Bank strike disrupts normal banking operations

New Delhi: Banking operations have been affected across the country today with employees of public sector and old private sector banks going on a day-long strike in protest banking sector reforms.

"About 10 lakh bank employees and officers working in public sector banks, old private banks, cooperative banks and regional rural banks are on strike," United Forum of Bank Unions (UFBU) convener C H Vekatachalam claimed.

UFBU is an umbrella organisation of five workman unions and four officer unions of public sector and private sector banks in the country.

Operations in branches of public sector banks are affected and cheque clearance would be delayed.

The other issues include outsourcing of bank jobs and attempts to impose "anti-employee" recommendations of Khandelwal Committee, he said.

In addition, there is pending issues related with pension and regulated working hours for officers. In the name of banking sector reforms, he said, the government is attempting to reduce their share of equity capital in the public sector banks, thereby, increasing the hold of private capital in these banks.

The government is also pursuing their policy of consolidation and merger of public sector banks, which are totally unwarranted and would in no way benefit in strengthening banks, he said.

The bank unions met Financial Services Secretary DK Mittal as well as the IBA (Indian Banks' Association) Chairman yesterday, but no solution could be found and the stalemate continued.

Source: Financial Express

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Axis Bank set to raise $240 mn

Private sector lender Axis Bank would raise $240 million through the sale of US commercial papers (USCPs) over a week. The debt instruments have been rated ‘A-1’ by Standard & Poor's rating agency and the fund raising programme would be supported by Citibank NA.

“The funds raised would be deployed in our overseas operations, including lending,” said Parthasarthy Mukherjee, head (treasury and international banking), Axis Bank. He said global interest rates continued to be low and the cost would be passed on to borrowers.

The USCPs would have a maximum tenor of 360 days and would be issued through Axis bank's Dubai International Financial Centre branch. Axis Bank had raised $200 million through USCPs last year. Other Indian private sector banks have also been tapping this market for funds.

Currently, the 12-month London interbank offered rate (Libor) is 0.77 per cent. “With the slowdown in the US economy, interest rates are not likely to be raised, at least in the near future. Hence, it is a good source to raise short-term debt,” said Gopal Bhattacharya, managing director and head (global markets) India, Societe Generale.

Axis Bank has not yet decided the coupon rate on the commercial papers (CPs) yet. “Even if they issue CPs at a spread of 200 basis points, it would be much cheaper than raising funds in India and converting them into foreign currency,” said a bond dealer with a domestic brokerage.

Source: Business Standard

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Government-union talks fail; Aug 5 bank strike on

Vadodara: The United Forum of Bank Unions (UFBU) Thursday said it will go ahead with the nationwide bank strike on August 5 after failure of two rounds of conciliation talks with the Central Government.

The UFBU, an umbrella body of the unions of all hues in the banking industry, has given the strike call. It held two rounds of talks (on Monday and Thursday) with N K Prasad, Chief Labour Commissioner, Union Labour Ministry, in the presence of representatives of the Indian Banks Association (IBA) in Delhi, UFBU Convener C H Venkatachalam said.

The talks did not yield any result hence UFBU has decided to go ahead with the one-day strike called in support of various demands, Venkatachalam said.

A memorandum containing 21 demands was submitted to the IBA at the time of serving the strike notice, he said. About ten lakh employees of public, private and foreign banks will take part in the stir to protest, among other things, disinvestment in public lenders, mergers and acquisitions and outsourcing of routine activities in the banking industry, Venkatachalam said.

Source: Financial Express

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Strike to affect banking operations tomorrow

New Delhi: Banking operations across the country are expected to be affected on Friday due to a day-long strike by banks employees protesting against the proposed banking sector reforms.

“Over ten lakh employees will be a part of the strike and you will see a direct impact on all the arms of banking across the country," Vishwas Utagi of All India Bank Employees Association said. He said crucial banking arms such as clearing houses, forex departments, call money markets and the Reserve Bank offices too would remain closed.

Utagi said bank employees were hopeful that the issue would be raised in Parliament, which is currently in session. Besides bank employees and officers of public sector banks, private banks, foreign banks, Co-operative banks and regional rural banks would also observe the strike.The conciliation talks between United Forum of Bank Unions (UFBU) and the bank management failed on Wednesday.

The issues include privatisation of banking and outsourcing of bank jobs and attempts to impose anti-employee recommendations of Khandelwal Committee, a union official said.

In addition, there is pending issues related with pension and regulated working hours for officers.The bank unions met financial services secretary as well as the IBA (Indian Banks' Association) Chairman, but no solution could be found and the stalemate continued.

UFBU is an umbrella organisation of 5 workman unions and 4 officers unions of public sector and private sector banks in the country.

Source: Financial Express

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HDFC Bank opens branch in Leh

LEH: The country's second largest private sector lender HDFC Bank on Thursday opened its first branch in Leh, one of the highest locations in the world, and plans to add about 600 branches across the country during the current fiscal.

With the opening of this branch, it has become the first new generation private sector lender to open a branch in this Himalayan region.

Besides HDFC Bank, other banks having operations in the city include State Bank of India, Punjab National Bank and Jammu and Kashmir Bank.

The bank plans to take branch network to 2,700 branches by the end of fiscal 2012, HDFC Bank Executive Vice-President Ravi Narayanan said here.

As of June 2011, the bank had 2,111 branches and 5,998 ATMs spread across 1,111 cities in the country.

Last fiscal, the bank opened 261 branches taking the branch count to 1,986 across the country.

In Jammu and Kashmir alone, the bank intends to add another 32 branches including one in Kargil, and 50 new ATMs as part of strategy to take banking to unbanked, he added.

The bank is giving due focus on North East region and Rajasthan as part of the strategy, he said.

"This is the 20th branch in the state and plans are afoot to take the network to 52 by the end of current fiscal," Narayanan said.

To begin with, the bank would offer basic banking facilities along with third party product sale, he said, adding that the branch would also provide currency exchange facility to cater to the foreign tourist.

"As a leading bank of the country, we are committed to taking modern banking to remote places where it is required the most and make a difference to the lives of people there.

"Opening a branch in Leh is the first step towards what we believe will be a long and mutually beneficial partnership," he added.

The branch was formally inaugurated by J&K State Finance Minister Abdul Rahim Rather.

Speaking on the occasion Rather said, "HDFC bank should look at ways to improve the credit to deposit (CD) ratio in the state... It is a cause of concern."

The CD ratio in the state stands at 35 per cent, much lower than the national ratio of 75 per cent.

Rather said total deposits mobilised by around 34 banks located in the state stand at around Rs 48,000 crore while the advances were at an abysmal Rs 16,500 crore.

Source: EconomicTimes

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Treat all home loan customers alike

The Damodaran committee on bank customer service has recommended that they do not discriminate between new and old home loan customers with identical risk profiles, on the basis of interest rate offers.

According to the report, which has been given to the Reserve Bank of India, banks should allow customers to switch their loans from floating rates to fixed rates and vice-versa at least once during the tenure, “at an appropriate and reasonable fee”, to enable borrowers to take advantage of favourable interest rates.

“In a floating interest rate scenario, when an entire class of borrowers has the same characteristic and risk level, the point of entry in time (old customers and new customers) should not create discrimination in the interest rate offered to customers,” the report said.

The report is also against “exorbitant penal rates” towards foreclosure and switching of home loans to other banks. “Banks should not impose exorbitant penal rates towards foreclosure of home loans and a policy should be devised to ensure the customer is not denied opportunity to enhance his economic welfare by making choices such as switching to other banks/ financial entities to enjoy the benefits conferred by market competition,” the report said.

Title deeds should be returned to the customers within 15 days of the closure of loans and in case of any delayed return or loss of title deed, banks should compensate adequately.

In the case of education loans, the regulator said it should be properly priced, to ensure no bright student was denied one.

“The criteria for giving such loans should be well publicised through website or advertisements to ensure transparency and non-discrimination in sanction,” the report added.

Source: Business Standard

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Banks can issue prepaid instruments only to listed cos: RBI

The Reserve Bank of India (RBI) today said prepaid payment instruments such as smart cards, magnetic stripe cards, mobile wallets could be issued by banks only to corporates listed in India.

In a circular issued to all banks, the RBI said, "Prepaid payment instruments can be issues only to corporate entities listed in any of the stock exchanges in India."

It further said the corporates would have to verify the identity of the employee to whom the card would be issued, along with copies of photograph and a proof of identity.

"The corporate is also required to make available details of bank accounts of the employee to the bank," the RBI said.

The central bank said the maximum value of an individual prepaid payment instrument should not exceed Rs 50,000.

In 2009, the Reserve bank had allowed all banks and non-banking financial institutions (NBFC), meeting the regulatory capital adequacy norms, to issue the instruments which can be used for purchase of goods and services.

Corporates usually avail this facility from the bank for onward issuance to their employees.

Prepaid payment instruments — issued as smart cards, magnetic stripe cards, mobile wallets, paper vouchers, gift cards and travel cards among others — facilitate purchase of goods and services against the value stored in it.

The value stored on the instrument represent the value paid for by the holder of the card.

The money in the prepaid instruments would be loaded by debit to the bank account after fulfilling all know your customer (KYC) requirements.

Further, the RBI has also asked banks to transfer funds from such prepaid instruments to a regular bank account of the employee if the same has been requested for.

Source: Business Standard

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SEBI starts web-based complaint system

Mumbai: In a bid to better streamline the database, market regulator SEBI has operationalised a centralised web based complaints redress system where all investor complaints would be processed.

"SEBI has commenced processing of investor complaints in a centralised web based complaints redress system 'SCORES'," it said in a circular.

The SEBI Complaints Redress System (SCORES), as the new system is called, would act as centralised database of all complaints and facilitate online movement of complaints to the concerned intermediaries.

Besides, online upload of Action Taken Reports (ATRs) by the concerned entities, investors can also find out about the status of pending complaints made by them.

"Accordingly, henceforth all complaints shall be forwarded electronically through SCORES only," it said, adding that from now onwards submission of physical ATRs will not be accepted for complaints lodged in SCORES.

The market regulator would also send a daily alert on pending complaints to concerned compliance officers.

Source: Financial Express

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Indian Overseas Bank revises interest rates

CHENNAI: Public sector Indian Overseas Bank has revised the interest rates for its domestic and NRO (Non-Resident Ordinary) term deposits with immediate effect.

According to a bank statement, rates for deposits for period 91 to 120 days has been revised from 7.25 per cent to 7.75 per cent while for those 121 to 179 days it has been revised from seven per cent to 7.75 per cent.

The rates for the deposits 180 to 269 days has been hiked from 7.25 per cent to eight per cent while for those deposits ranging between 270 to 332 days it has been increased to eight per cent from the present 7.50 per cent.

The interest rates for deposits with a period of 334 days but less than one year has been revised to eight per cent from 7.50 per cent, it added.

Source: EconomicTimes

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StanChart India profit falls 39%, IDRs up 1%

Mumbai: UK-based Standard Chartered PLC today reported a 39 per cent dip in its India operations (IDRs listed on BSE) during the first half of the current fiscal and said its business in the country was getting affected due to 'governance concerns'.

While the bank attributed fall in its profit to rising interest rates and growing competition from rivals, it also expressed concern over business sentiment in India being "impacted on the back of governance concerns."

During January-June 2011, Standard Chartered (India)'s operating profit fell to USD 378 million, from USD 624 million in the same period last year. Besides, it reported a 12 per cent drop in its income.

In a statement, the bank said with exception of India all other regions have shown healthy growth in income. India has been giving high profits to the bank in the past.

The profit declined due to "rising interest rates and increasing competition resulting in falling net interest margins, the bank said.

"Project and deal flows has slowed as business sentiment is impacted on the back of governance concerns in the market".

A Prime Minister's Advisory Panel recently admitted that the spate of corruption related controversies has consumed the energies of government and has led to an unintended slowing down of initiatives to restore investment and economic confidence.

The bank, however, is optimistic about India's growth prospects and said "given our strength and competitive position, we are well positioned for the upturn".

However, across the group Standard Chartered PLC posted a operating profit before tax of USD 3.64 billion in H1 2011, up from USD 3.12 billion in the year ago period, a growth of 17 per cent.

This is the 9th successive time that the group posted profit in the first six months period.

"Wholesale banking and consumer banking saw increased business activity across a number of products and services, as the group captured market share from our competitors," the bank said in a statement.

Globally, income from consumer banking segment grew 15 per cent, while wholesale banking saw a rise of 9 per cent.

"Our growth is resilient and diverse. With a unique position at the heart of growing trade and investment flows between Asia, Africa and the Middle East, with their

fast-expanding middle classes, we continue to see significant opportunities for profitable growth across our network," said Peter Sands, Group Chief Executive, Standard Chartered.

The bank, which has listed its Indian Depository receipts (IDRs) on BSE, focuses mainly on emerging markets.

Standard Chartered's operating profits grew by 55 per cent in Hong Kong, 11 per cent in Singapore and 30 per cent in South Korea.

However, profits from America, UK and Europe nearly doubled during the period.

Standard Chartered PLC, listed in London, Hong Kong and Mumbai, has around 85,000 employees.

Meanwhile, media reports quoting Sands said, the bank would add about 1,000 jobs in 2011.

StanChart had axed 1,170 jobs in the first six months of the year as part of its cost cutting exercise.

Source: Financial Express

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RBI committee proposes secure and customer friendly measures to make banking sector more secure

MUMBAI: With a view to making banking sector more secure, the RBI has proposed several measures, including introduction of a system under which a person would be able to block his stolen ATM card through an SMS.

The RBI has also proposed a raise in insurance on bank deposits to Rs 5 lakh and having a single common toll free call number for all banks, besides zero liability against loss in ATM and online transactions.

These form part of the recommendations of the Committee on Customer Service in Banks, constituted under chairmanship of former SEBI chairman M Damodaran, by RBI last year.

The committee -- which was tasked to look into banking services rendered to retail and small customers, including pensioners -- had submitted its report last month and the proposals were released into the public domain today.

In its report, the Damodaran committee proposed "instant blocking of ATM card through SMS-block for lost/misused cards." It is expected to help people who currently are required to call up the bank in case of card loss.

"If an ATM card has been misused by another person, on receipt of SMS about use of the card, the customer should be able to immediately send return SMS to block the card with a single word like 'BLOCK' to prevent further withdrawals.

"...It is observed that considerable time is lost in locating the numbers of accounts, phone numbers etc., which gives the fraudsters more time to commit fraud," the report said.

The report further recommends that in case of default by banks, the Rs one lakh cover guaranteed to each account under current rules should be raised to Rs 5 lakh.

The RBI has also proposed a raise in insurance on bank deposits to Rs 5 lakh and having a single common toll free call number for all banks, besides zero liability against loss in ATM and online transactions.

These form part of the recommendations of the Committee on Customer Service in Banks, constituted under chairmanship of former SEBI chairman M Damodaran, by RBI last year.

The committee -- which was tasked to look into banking services rendered to retail and small customers, including pensioners -- had submitted its report last month and the proposals were released into the public domain today.

In its report, the Damodaran committee proposed "instant blocking of ATM card through SMS-block for lost/misused cards." It is expected to help people who currently are required to call up the bank in case of card loss.

"If an ATM card has been misused by another person, on receipt of SMS about use of the card, the customer should be able to immediately send return SMS to block the card with a single word like 'BLOCK' to prevent further withdrawals.

"...It is observed that considerable time is lost in locating the numbers of accounts, phone numbers etc., which gives the fraudsters more time to commit fraud," the report said.

The report further recommends that in case of default by banks, the Rs one lakh cover guaranteed to each account under current rules should be raised to Rs 5 lakh.

Source: EconomicTimes

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IOB to raise Rs 3,500 cr for expansion

Public sector Indian Overseas Bank (IOB) today said it would be raising around Rs 3,500 crore in core tier-I capital over the next three years to fund expansion.

Tier I capital is the core measure of a bank's financial strength from a regulator's point of view.

"We will be needing roughly Rs 1,200 crore per annum for the next three years given the expansion plans which we have drawn up," the Chennai-headquartered bank's executive director Nupur Mitra told reporters here.

IOB Chairman and Managing Director M Narendra said the bank had already written to the Centre, which owns a 66% stake, about its capital raising plan of up to Rs 1,400 crore for FY12.

"In our annual general meeting, we passed an enabling resolution to the money. We are yet to finalise the route which we would adopt like a follow-on offer, institutional placement etc," he said.

The bank's total capital adequacy as on June 30 stood at a comfortable 13.38%, and it is targeting a credit growth of up to 22% for the fiscal, Narendra added.

Source: Business Standard

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HDFC Bank to offer more credit cards to non-account holders

In a shift from its traditional practice of offering credit cards to its captive clients, HDFC Bank, India’s second-largest private sector lender, is now offering more cards to people outside its existing client base.

Currently, customers outside the bank’s existing client base account for 25 per cent of its card base, compared with 10 per cent a year ago.

According to Pralay Mondal, country head (retail assets and credit cards), the move is in line with the bank’s strategy to enter the high-end cards segment. “As we go to super-premium clients, we would look more for external customers. We have already made a shift. While the ratio earlier stood at 90:10, about 25 per cent of our business (in credit cards) now comes from our external clients,” Mondal said during an interaction with Business Standard. With a book value of close to Rs 6,000 crore, HDFC Bank accounts for nearly 30 per cent in the credit card business in India, with the number of cards at 5.5-6 million. “We are issuing close to 85,000 to 90,000 cards a month, and with some new launches, we expect the monthly issuance to cross 100,000 cards soon,” Mondal said.

Speaking about the Infinia high-end credit cards, which the bank launched last month, Mondal said the response has, so far, been good and the bank now plans to introduce a few cards a couple of notches below Infinia to cater to the demand. “We have a cap of 5,000 cards for Infinia, but the demand is for a lot more. That is why we want to come out with variants just below Infinia quickly,” he said.

The lender has seen robust demand for its retail products and has been disbursing Rs 5,000 crore every month, which, it says is the highest in the industry. “We have disbursed loans worth Rs 15,000 crore over the last three months. Each and every product in our retail segment is profit-making. If the total advances in the banking sector grows 17 per cent, retails loans for the industry would grow by around 15 per cent in the current financial year. For HDFC Bank, the growth (in retail loans) would be significantly higher than that,” he said. The bank’s retail book has grown around 30 per cent in 2010-11 and growth in cities, barring that in the top nine ones, contributes nearly half to the bank’s retail assets. Nearly 70 per cent of the bank’s retail loans comprise auto, personal, home, commercial vehicles and two wheeler loans. The bank is slowly beefing up its presence in segments like gold loans, loans against shares and education loans.

Despite seeing aggressive growth in the rising interest rate scenario, the bank is confident of maintaining the rate of growth in retail loans—which is about 50 per cent of its total loan book. The bank also dismissed worries that high rates would translate into a rise in delinquencies in its retail loan portfolio, especially in the unsecured segment.

Source: Business Standard

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