Avenues to invest in demat form of gold

Uncertainty in the global markets, slow recovery of developed nations, volatility in the stock market and sub-optimal economic policies across the countries has forced people to find safer havens for investment. This is where gold scores over other options. Not only people, nations are also reposing their faith in gold.

Gold has been making waves ever since S&P downgraded credit rating of USA from AAA to AA+. It crossed the 26,000 mark in three trading sessions. We are not going to predict the price of gold here, but we will provide some avenues for investing in gold for people who do not want to own physical gold. Gold can be bought by many other ways. Some of these ways include:

Gold ETF

Gold ETFs are exchange-traded funds which are equivalent to mutual fund units. Each unit is equivalent to 1 gm of gold, but some fund houses have 0.5 gm of gold as one unit. The price is almost half per unit for these fund houses’ gold ETFs. Gold ETF can be bought and sold just like mutual funds using your regular demat account. The NAV is displayed periodically for gold ETF just like mutual funds. The gold behind the ETF has a quality of 99.9%. This means you do not have to worry about the quality aspect. Buying gold from outside is fraught with risk as you have to rely on the goodwill of the seller.

The advantage of gold ETF is that you do not need to worry about the safety and storage. This is also liquid when compared with physical gold. The other advantage is that you do not need a lot of money to invest in a gold ETF. It is also more tax efficient compared with physical gold. You need to keep physical gold for three years to claim long term benefit s while the tenure is just one year in case of gold ETFs.

E-Gold

National Spot Exchange (NSEL) allows investors to buy gold, silver and copper in electronic form, also known as e-Gold, e-Silver, and e-Copper. This facility allows investors to buy gold in a dematerialised form. The trading session is from 10 am to 11:30 pm, and hence, investors can trade at their convenience. Investors can buy in the lot in 1 unit of e-Gold which is equivalent to 1 gm of gold. The purity is 995.

You have to open a separate demat account from a list of depositories. The list of depositories can be taken from the NSEL website.

Investors may choose to sell the e-Gold any time and get cash or take delivery in physical form from a NSEL designated centre. At present, dematerialisation centres are there in Mumbai, Delhi, and Ahmedabad and will soon be opened in major cities across India.

Gold funds

Gold funds are just like mutual funds run by a fund house. The advantage of a gold fund is that investors do not need a demat account to invest. The NAV of the fund will be benchmarked against the price of gold. Since there is low penetration of demat account in India, gold fund is a good option. This gives you all the benefit of virtual gold such as no storage cost and safety concern. However, keep it mind costs and advantages before you decide which is best way to invest for your needs.

There is another option called gold fund-of-funds (FoF). These funds invest in various gold ETFs. The NAV is determined by the weighted average of the NAV values of various ETF that the fund of funds consists of.

While the world is bullish on gold, you have to consider your own situation before you invest in gold. Remember that the returns from gold don’t come by dividends and bonuses, but purely by price appreciation. Price appreciation is a function of market sentiments in the case of gold as there is no fundamental income projection in future unlike that of a company. Treat gold as a great way to store value.

Source: Financial Express

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Corporation Bank aims at zero net NPA this fiscal

NEW DELHI, AUG. 20: Corporation Bank, a public sector lender, aims to turn itself into a bank with zero net non-performing assets (NPA) during this financial year, its Chairman and Managing Director, Mr Ramnath Pradeep, has said.

Currently, the net NPA as a percentage of advances stood at about 0.47 per cent.

Mr Pradeep sees increased trend of NPAs on the education loans front, stating that this segment had turned “vulnerable” in the recent years.

Refutes charges

Meanwhile, Mr Pradeep denied the charges made against him by the Central Vigilance Commission over alleged violation of lending norms at Corporation Bank.

“I am ready with the response which I can give it to the Finance Ministry today itself. These are all professional hazards that one faces everyday as a banker,” he said here on the sidelines of a meeting jointly organised by Corporation Bank and PHD Chamber of Commerce & Industry (PHDCCI).

He had assumed charge as Corporation Bank’s Chairman and Managing Director in September 2010 and is due to superannuate on September 30 this year. The charges levelled against him mainly relate to irregularities in extending advances, sources said.

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SBI Mutual Fund launches new SBI Gold Fund

SBI Mutual Fund has launched a new fund offer, SBI Gold Fund, an open-ended fund of fund scheme to enable investors to invest systematically in gold and gain advantage of the recent rally in the metal's prices.

The corpus collected from the NFO would be invested in SBI Gold Exchange Traded Fund.

"It is a convenient product and will give an opportunity to an investor to invest in the purest form of gold without buying and storing physical gold, that too, without a dematerialised account unlike gold exchange traded funds," SBI MF Managing Director and Chief Executive Officer Deepak Chatterjee said.

He said there was a demand for ETFs and the assets under ETF schemes in the country crossed Rs 6,000 crore last month.

The minimum investment in the fund would be Rs 5,000. The new fund offer will open on August 22 and close on September 5, the fund house said.

The fund house will offer systematic investment plan too.

SBI MF Chief Investment Officer Navneet Munot said, "Gold could show some volatility in future and hence the SIP route makes more sense. Looking at the current global economic conditions and stock market volatility, gold is a better option".

The fund house said investors could avail gold loans from the country's largest lender State Bank of India for gold exchange traded funds.

At the end of June quarter, SBI MF managed assets worth Rs 47,874 crore. State Bank of India is the sponsor of the fund.

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SBI, HDFC unlikely to re-launch teaser loans

Leading home loan players which aggressively pursued fixed-cum-floating loans are not likely to respond to ICICI Bank’s ‘teaser loans’.

ICICI Bank, the largest private sector lender, on Thursday unveiled a dual rate product which charges a fixed rate in the initial years and adjusts to the market rate later.

State Bank of India (SBI) which pioneered teaser loan products in the country and Housing Development Finance Corp (HDFC), which followed suit, are in no mood to revisit the controversial product which drew flak from the Reserve Bank of India (RBI). RBI had prescribed standard provisioning for such loans be raised by five times.

While launching the home loan on Thursday, ICICI Bank said the product would protect customers from frequent changes in home loan interest rates. ICICI Bank's move is in line with the lender's emphasis on boosting its secured loan portfolio.

However, this time around, SBI is not likely to respond to ICICI Bank, since it is already feeling the pressure on capital and the risks of further deterioration in asset quality. In the last two quarters, the bank's capital adequacy ratio suffered on account of higher provisioning and the bank is in talks with the government for capital infusion.

According to a senior SBI official, the country's largest lender is now focusing more on sustaining profitability, a shift from its earlier stance of emphasising on increasing market share. SBI's gross non-performing assets ratio was up at 3.52 per cent in the quarter ended June, compared with 3.28 per cent as on March 31. “We have given up aggressive pricing that was undertaken to capture market share two years ago,” said a senior SBI official. The bank's focus on improving its margin was also evident from the aggressive lending rate rise, as its base rate was raised by 175 basis points since April.

After RBI expressed its discomfort, the new SBI management, which took charge in April, immediately withdrew the home loan scheme. “Our scheme worked well, the payment capability was assessed on a floating rate basis. But we do not want to have issues with the regulator,” said another senior SBI official.

HDFC, the leading home loan player in the country, is also not considering such a scheme at this point. “We are not planning to launch any dual home loan rate scheme,” said Keki Mistry, vice chairman and chief executive officer, HDFC.

Source: Business Standard

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Data reporting should be automated, RBI tells banks

Alarmed at the trend of state-run banks' profitability eroding soon after their chairmen retire, the Reserve Bank of India (RBI) has asked banks to ensure the absence of human intervention in the maintenance and submission of regulatory reports.

The move is aimed at minimising the scope of errors and manipulations in management information systems (MIS) or data warehouses of banks, sources familiar with the development said on condition of anonymity. MIS contains various data like provisioning requirement, non-performing assets, top borrowers and exposure to top clients.

“RBI has made it clear to all banks that the process of keeping records and data should be automated as far as possible. The central bank has specifically told banks to ensure there is no human intervention in the maintenance of regulatory reports submitted at periodic intervals,” a senior official with a Mumbai-based bank told Business Standard.

In public sector banks, losses and successions often go hand-in-hand. For instance, the country's largest lender, State Bank of India (SBI), reported a 99 per cent decline in net profit for the quarter ended March after Pratip Chaudhuri took charge as the bank's new chairman. It was the worst quarter for the bank in more than a decade.

SBI is not the only example, as other such cases have also been reported at Bank of Baroda, Bank of India, Canara Bank, UCO Bank and Vijaya Bank in the last six years.

In June, RBI Deputy Governor K C Chakrabarty slammed state-run banks, pointing to the trend of profits dipping when a new chairman took charge.

Sources said RBI has told public and private sector banks to strengthen their MIS by making it automated and reducing human interference. “It applies to all banks in public and private sectors. Most private banks have better MIS than public sector banks,” said a senior official of a Mumbai-based bank.

Bankers said regulatory reports are prepared by combining data from various systems and human intervention increases the scope for errors and misrepresentations. “In banking, unlike other industries, there are different systems for keeping data. Systems used for maintaining corporate banking data may differ from those used for storing retail banking information. Even in retail banking, different systems could be used to keep data for different retail products like auto loans, housing loans and credit cards,” said a banker. “To prepare a final report, one needs to extract these data from different systems, transform them and load them into the report. The process is commonly referred to as ETL (extraction, transformation and loading). RBI wants this process to be automated including submission of these reports,” he said.

Sources said RBI was also exploring options to create a central server, where data from different banks would be stored. The move, however, was still in the planning stage, they said.

Last year, the government had asked state-owned banks to adopt a system to identify non-performing assets. Banks were told to migrate to a system where the classification of non-performing assets (NPAs) was carried out by using technology, without human interference. Banks would have to migrate to such a system by the end of September. Some of the banks have already seen an increase in bad loans as a result of the shift to system-driven identification of NPAs.

Source: Business Standard

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ICICI teases with fixed rate home loans

Mumbai: Amidst a rising interest rate scenario, where home loan rates have gone up between 2-3 percentage points, ICICI Bank is wooing customers by offering them an option of a fixed rate for either the first one year or two years.

Subsequently, however, the borrower will have to switch to a floating rate linked to the bank’s base rate.

Although similar to the ‘teaser’ scheme that State Bank of India (SBI) had earlier launched, the difference in the ICICI Bank’s product is that the fixed coupon is linked to the base rate and in line with the current floating rate that customers would otherwise pay.

In SBI’s case, the fixed rate offered in the initial years of the loan was about 100 basis points lower than the floating rate prevalent at the time. The bank was compelled to discontinue the scheme after offering it for a couple of years, because the banking regulator frowned on it.

The bank is offering a one year fixed rate at the ongoing floating rate of 10.5 per cent for loans up to Rs 25 lakh, 11 per cent for an amount between Rs 25 lakh and Rs 75 lakh and 11.5 per cent for over Rs 75 lakh. If a customer wants a fixed rate for the first two years, the cost will be higher by 25 basis points for every slab.

The conversion to floating rate after the one or two year fixed period will be at a base rate plus margin decided by the bank at the time of sanction of the loan. “Floating rate from the second year or third year (for the respective schemes) will be linked to the ICICI Bank Base Rate (Ibase) plus margin decided at the time of sanction of the loan,” said the bank in a statement.

A bank official confirmed that the base rate plus margin will be same as applicable for a normal customer on that given day.

“Fixed interest rates will shield customers from frequent changes in home loan interest rates and protect them from any rise in interest rates over the next one year or two years,” the bank said.

Experts, too, agreed with the bank’s point and said that, it would be a good option for the prospective home buyers as it will safeguard them against a further rate hike which looks likely given the persistency of high inflation levels. Delhi-based certified financial planner, Surya Bhatia, said, “It does not look like a teaser loan and it gives the short-term benefit over any rate hike in the near future. However, the terms and conditions for conversion from fixed to floating rate needs to be seen.”

Source: Financial Express

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ICICI Bank fined Rs 25,000, ordered to compensate customer

NEW DELHI: ICICI Bank has been slapped with a fine of Rs 25,000 by a Delhi district consumer forum for wrongly deducting Rs 40,578 from the account of one of its customers.

Deprecating the bank's act of wrongly deducting the money from its customer Mahesh Kumar's salary account as a breach of trust, the consumer forum headed by its president B B Chaudhary asked the bank official to credit both the sum for the fine and the wrongly deducted money to his account.

"The official of the bank had come to know on or about July 11, 2009 that mistake had been committed by debiting Rs 40,578.74 from the salary account of the complainant. Since then, more than 2 years have passed yet the remedial measures have not been taken," the bench of district consumer forum also comprising its members M Siddiqui and S N Shukla said, deprecating the banks inaction and callousness.

A Central Delhi resident Kumar, who was having an ICICI bank account at its Gurgaon branch got the shock of his life on July 11, 2007 after discovering that a sum of Rs 40,578 out of his account, having over Rs 49,000, had suddenly vanished.

On inquiry with the bank officials, it transpired the amount was deducted against a payment made through an ICICI Bank credit card of one Mahesh Kumar, who though, was the namesake of salary account holder Mahesh Kumar, but had different details like father's name and residential address.

Kumar, in his complaint, said he told the bank officials that he did not even own a ICICI Bank credit card, yet the bank has not bothered to credit the deducted money to his account till date.

The bench said the bank deducted the amount without verifying the particulars of the card holder or its customer.

"The act of the bank caused financial losses to the complainant (Kumar). The amount of Rs 40,578.74 could have been used by him as per his wishes since June 29, 2009 till date. He could not do so because of the negligence on the part of the officials of the bank," the bench said.

It also said the bank could have deducted the amount from Kumar's account only if any amount was due from him.

"Since, the debited amount was not due from Kumar, therefore, the bank caused breach in the trust of Kumar. It amounts to negligence and deficiency in service," the bench said.

Source: EconomicTimes

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Bank licences: 4 sectors may be barred

Amid the debate over whether or not to allow corporate houses to enter into the banking sector, the finance ministry is planning to bar industrial houses conducting business in four sectors, including real estate, from seeking banking licences.

“We have prepared a negative list of four sectors that will be barred from entering the banking space. These sectors can manipulate the system because of which we don’t want them to come,” sources in the know told The Indian Express.

The corporates, however, may be allowed to apply for new licences subject to strict riders.

The draft guidelines, which are expected by the end of the week, will be released for consultations after which they would be finalised.

As far as foreign direct investment (FDI) is concerned, the ministry seems to be in agreement with the Reserve Bank of India (RBI), which, on Tuesday, said that FDI will be capped at 49 per cent for new banks.

“If it is 74 per cent then the issue of foreign bank will arise. So, it has to be 49 per cent,” the source said.

The ministry also seems to be more accommodative on the issue of reducing stakes of promoters and shareholders of the new banks. “We are planning to increase the number of years for reducing the stake in banks. The proposal is to raise it to 5 years,” the source added. The RBI has suggested that the promoter holding in the bank could be set at 40 per cent to begin with.

Under the new guidelines, a non-resident would not be allowed to hold more than 5 per cent of the paid-up capital. The minimum paid-up capital could be set at Rs 500 crore, as compared to Rs 300 crore for existing banks.

Earlier in the day, finance minister Pranab Mukherjee said that he will comment on the issue once the guidelines are released. “Let’s see how it (RBI draft guidelines) comes... and thereafter we will make comment,” the finance minister said.

A number of large corporates including the Tatas, M&M, ADAG, AV Birla Group and L&T have expressed interest to enter the banking space in the past. However, there seems to be no clarity on whether aspirants such as Indiabulls, Shriram Finance, Religare and Srei would be allowed into this space.

Source: Financial Express

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ICICI Bank launches fixed rate home loan scheme

Mumbai: India's No. 2 lender ICICI Bank on Thursday launched a fixed-interest-rate home loan scheme, where customer will get home loans at a fixed interest rate for one or two year years, post which the loan will move to floating interest rate.

These products will be available from Aug 19, the bank in a statement.

Under the one year fixed rate home loan, the customer can avail a loan at 10.5 percent for an amount less than or equal to 2.5 million rupees, 11 percent for a loan amount greater than 2.50 million rupees and less than or equal to 7.50 million rupees and 11.50 percent for a loan amount greater than 7.50 million rupees.

The floating rate from the second year will be linked to the base rate plus margin decided at the time of sanction of the loan.

ICICI Bank's base rate currently stands at 10 percent.

Source: Financial Express

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Syndicate Bank likely to buy 26% in Aviva Life

Aviva Life has emerged as the front-runner for tying up with Syndicate Bank for its proposed insurance joint venture.

According to sources, the Manipal-headquartered lender is likely to pick up 26 per cent stake. Mohit Burman, director of fast-moving consumer goods major, the Dabur Group, holds 74 per cent stake. The rest is held by UK's Aviva.

A Syndicate Bank official said the bidding process was still on and the bank was yet to decide on the insurance partner. "We have just finished receiving the financial bids and would shortlist three-four players on the basis of financial bids. Then, we would take the final call," said a senior bank official. However, according to sources involved with the deal, Avia Life is better placed, as it is willing to offer significant equity.

In April, Syndicate Bank had shortlisted a dozen insurance companies to enter the life insurance sector. Those included existing players Aviva Life, Birla Sun Life, HDFC Life, Max New York Life and Metlife India Life. The list included three new companies planning to start the life insurance business in India—Avantha Ergo and Japanese insurers Mitsui Sumitomo Insurance Company Limited and Sumitomo Life Insurance Company.

Aviva Life started operations in 2002 and till March, its promoters had infused Rs 2,004 crore. The company had declared a profit of Rs 29 crore for 2010-11. Aviva was among the final companies shortlisted by Punjab National Bank for its insurance joint venture. However, in July, the Delhi-based bank entered into an agreement with Metlife to buy 30 per cent stake in Metlife India.

Source: Business Standard

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Will maintain anti-inflationary stance, says RBI

The Reserve Bank of India (RBI) continues to focus on controlling inflation and inflationary expectations even as inflation has shown some signs of easing. RBI Deputy Governor KC Chakrabarty on Wednesday said the central bank sticks to the policy stance as stated in the quarterly review statement in July.

"Whatever the inflation guidance is given in the quarterly statement (July) that stands as of today," Chakrabarty said on the sidelines of an event here.

The wholesale price index (WPI)-based inflation was at 9.22 per cent in July, down from 9.44 per cent in the previous month. Inflation for May was revised upwards from 9.06 per cent to 9.56 per cent. However, core inflation, or price rise of non-food manufactured products, came at around 7.5 per cent in July, up from 7.3 per cent a month ago. Also, economists expect revised inflation in July will touch double digits.

"From a policy perspective, we expect the RBI to remain focused on bringing down inflation, ignoring signs of slowdown in growth, as both headline and core inflation are expected to remain elevated for the next few months. Therefore, we expect RBI to implement a final 25-basis-point repo rate hike in this cycle on September 16 and then stay on hold," said economists at Nomura Securities in a note.

In response to the RBI official's statement, the yields on the 10-year benchmark bond went up to close at 8.32 per cent after hovering around 8.29 per cent for most of the trade on Wednesday. Yields had closed at 8.29 per cent on Tuesday.

On new banking licences, Chakrabarty said the draft guidelines could be expected any time soon. RBI had submitted the draft guidelines on new banking licences to the finance ministry for approval, which is believed to have been cleared by the ministry.

Source: Business Standard

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Govt may decide on SBI rights issue in 3 months

The government is likely to decide on the rights issue proposal of country's largest lender State Bank India (SBI) in the next three months to fund its capital requirement for future business growth.

"We will be taking a call on rights issues or other options through which capital can be infused in SBI within next 2-3 months," official sources said.

The government would also examine other route of capital infusion like follow-on public offer (FPO), Qualified Institutional Placement (QIP), etc, taking into view the second quarter provisional numbers.

The bank requires as much as Rs 30,000 crore capital over the next three years to fund its business growth without bringing down its Tier-I capital below 9%.

As of June 2011, the Capital Adequacy Ratio (CAR) of the bank stood at 11.6%. Of this, Tier-I capital stood at 7.6% at the end of first quarter, against the government's desire of minimum 8%.

Last week, SBI Chairman Pratip Chaudhuri had said, "We are already in a dialogue with the government for the rights issue to bring new Tier-I...It should happen by the end of this fiscal."

The government is committed to maintaining public sector character of the bank and after the amendment of State Bank of India Act, the percentage of government holding cannot go below 51%, he had said.

"So at various scenario, what would be the requirement of the rights issue, what would be contribution required for the government. The number would be as high as 14,000 crore to Rs 9,000 crore," he had said.

"Rs 14,000 crore if it retains at 59%, Rs 9,000 crore for 51% and Rs 11,000 crore for 55%," he added.

Currently, government owns 59.4% in the bank. If the government wants to retain its holding at the current level, it should subscribe to 59.4% of total rights.

It is to be noted that the country's largest lender had raised over Rs 16,000 crore through a rights issue in 2008. In the last SBI rights issue, the government contribution was in the form of bonds to the bank instead of cash

Source: Business Standard

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Why SIPs are the way to go

Quite often, I come across investors who by their own behavior make investments more complicated than they actually are. If looked at with a clear mindset and proper understanding, investments – in both stocks and funds – are actually a simple matter. There are just a few basic rules that an investor needs to follow in order to make sure that his investments are functioning as per his requirements.

The one simple aspect of investing that quite a few people end up floundering is Systematic Investment Plans (SIP). The problem here is that many investors expect SIPs to be miracle tools. The expectations from SIPs are too high and too misconceived. The two most common misconceptions about SIPs are that they always generate more returns than lump-sum investments and that they can never turn in negative returns. Both of these points are misconceptions and extremely wrong.

Systematic investments are advocated by fund companies, experts and the media because SIPs ensure that an investor doesn’t fall into the trap of timing the markets. Stocks prices and fund NAVs are on the whole expected to go up but when and how they will go up is something that no one can predict, and shouldn’t even try to predict. The best manner of investing for a common investor is to put in an equal amount regularly. As time goes by, the SIP route will make sure that you end up buying more unites when the NAV is low and lesser when the NAV is higher. When you redeem, all the units will be worth the same but you’ll have purchased a higher number of units, hence making your returns higher as well.

As compared to this, in case of a lump-sum investment, you would be left with a certain number of units only, without having the advantage of buying cheap when the markets would have gone down. However, there can be instances when a lump-sum investment would have done better than SIPs, but you would come to know about this only in hindsight. This would happen when the markets don’t fall below the level that they were in when the lump-sum investment were made. This, we know, is a rarity. And in the longer run, SIPs always work better than lump-sums.

Most investors, especially salaried ones, wouldn’t have large amounts to invest in lump-sums anyway. The prudent thing for them to do would be to keep aside a fixed monthly amount to invest. And that for is the real benefit of SIPs. Our psyche has been tuned in such a way that we tend to invest when the markets are on a high and altogether stop investing when the markets are low. Apart from being another example of timing markets, this is the exact opposite of what we should be doing. Common sense says that stocks and funds or any investment should be bought at lower valuations and sold at higher ones. SIPs are the best way of ensuring that you do just that.

by : DHIRENDRA KUMAR

—Author is CEO of Value Research

Source: Financial Express

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IFCI, Sycamore Ventures launch $500-mn infrastructure fund

NEW DELHI: Financial institution IFCI Ltd, in association with global investment firm Sycamore Ventures, on Tuesday announced to set up a USD 500-million (about Rs 2,250 crore) infrastructure fund.

As the principal sponsor to the fund, IFCI has committed to invest 10 per cent of the total capital of the fund with a minimum commitment of USD 50 million, the country's oldest financial institution said in a statement.

The fund will raise capital from domestic and overseas investors and will be registered, with Sebi as a venture capital fund, it said. Foreign subscribers will invest in the fund through a Mauritius fund with domestic subscribers investing directly in the fund, it said.

The fund intends to consummate investments in equity or equity related instruments of infrastructure projects or holding companies, with sustainable cash flow and potential for significant long-term capital appreciation, it said.

The fund's focus includes all forms of power generation, transmission and distribution, gas distribution, coal mines, roads, railways, ports and airports, it said.

Source: EconomicTimes

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SBI hopes to see profit grow to Rs 2,500 cr in Q2

New Delhi: Having posted a decline in profit for two successive quarters, State Bank of India (SBI) hopes to clock an increase in its bottomline to Rs 2,500 crore in the second quarter on account of lower provisioning against bad loans.

"We expect to turn in another Rs 7,200 crore of operating profit. If you leave out the one-off provisions, which had happened due to raising of prudential norms and also the investment provision, we expect a normal provisioning of Rs 2,500-3,000 crore," SBI Chairman Pratip Chaudhuri said.

"So we would possibly look at a net profit of Rs 2,500 crore. This is broad indication, but we would get a number after we see August investments," he said. During the first quarter, there was an unexpected event in the form of depreciation in bonds, which led to a loss due of Rs 1,048 crore. In addition, SBI suffered a Rs 300 crore loss on its equity investments, he said.

The bank also expects Net Interest Margins (NIM) to be robust at over 3.5 per cent during 2011-12 on the back of a recent increase in lending rates by 50 basis points. "NIM would continue upward of 3.5 per cent for the current fiscal," Chaudhuri said. Hit by higher provisioning against bad loans and increased tax outgo, the country's largest bank had posted an about 99 per cent dip in profit to Rs 20.8 crore for the fourth quarter (January-March) of the 2010-11 financial year from Rs 1,866.60 crore in January-March, 2010.

However, the situation improved slightly in the first quarter (April-June) of the current fiscal, where the decline in net profit was limited to 46 per cent on an annual basis.

SBI reported a 45.6 per cent fall in standalone net profit to Rs 1,584 crore in the first quarter of the 2011-12 financial year from Rs 2,914 crore in the April-June quarter

last fiscal. SBI's total Q1 income, however, increased to Rs 27,731.6 crore, from Rs 22,142 crore in the year-ago period. The bank's operating profits grew by 18.06 per cent to Rs 7,242 crore during Q1, FY'12, from Rs 6,134 crore in the first quarter of the previous fiscal.

Chaudhuri said net interest income from core operations of the bank witnessed significant growth during the first quarter and has reached an all-time high level. Net interest income (NII) surged by 32.8 per cent to Rs 9,700 crore in the first quarter of FY'12 from Rs 7,304 crore in the corresponding quarter a year ago.

Source: Financial Express

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Dhanlaxmi Bank hikes retail term deposit rates

South-based lender Dhanlaxmi Bank today hiked its retail term deposit rates in two baskets, taking it into double digits in one maturity.

Under the new rate slabs applicable from today, depositors will earn 10% per annum for a special 300-day term deposit, a statement issued here by the bank said.

The rate of 10% is applicable for deposits under Rs one crore, it added.

A decision to introduce the special product offering 10% has been taken keeping in mind the present high inflation environment, the bank's head of branch banking and NRI business Salil Datar was quoted as saying in the release.

The rate hike comes 20 days after Reserve Bank hiked its short term rates for a record 11th time since March 2010 by a higher-than-expected 50 basis points to cool the uncomfortable inflation number, which stood at 9.44% for June.

Almost all the major banks have hiked their lending rates after the RBI's policy announcement, while some have also hiked their deposit rates.

Dhanlaxmi Bank has also increased interest rate on its 500 day deposit by 25 bps to 9.75 per annum in the hikes announced today. This rate will be applicable for deposits of less than and equal to Rs 15 lakh, the statement said.

Source: Business Standard

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Muthoot Finance to raise up to Rs 1,000 crore through NCD issue

MUMBAI: Muthoot Finance, the largest gold financing company in terms of loan portfolio, on Tuesday said it is raising up to Rs 1,000-crore through a public issue of secured redeemable non-convertible debentures.

The company plans maiden public issue of secured, redeemable, non-convertible debentures (NCDs) of face value of Rs 1,000 each aggregating up to Rs 500 crore with an option to retain over subscription up to Rs 500 crore, aggregating to a total of up to Rs 1,000 crore, a company statement said.

The NCD issue with three investment options and effective yield of up to 12.25 per cent per annum opens on August 23 and closes on September 5, 2011.

The face value of each NCD is Rs 1,000 and the minimum application is for five NCDs (Rs 5,000) and in multiples of one NCD thereafter.

The NCDs are proposed to be listed on the National Stock Exchange and the Bombay Stock Exchange.

The funds raised through this issue will be utilised by the company for various financing activities including lending and investments, to repay existing liabilities or loans and towards business operations including for capital expenditure and working capital requirements.

The company provides personal and business loans secured by gold jewellery, or gold loans, primarily to individuals who possess gold jewellery but could not access formal credit within a reasonable time, to meet short-term liquidity requirements.

Source: EconomicTimes

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Cheque transactions value down 13.9% in June: RBI

The cumulative value of transactions carried out through cheques across the country during June 2011 amounts to Rs 7.19 lakh crore, a 13.9 per cent decline vis-a-vis the 2010 period, according to new RBI data. Banks had cleared cheques worth Rs 8.35 lakh crore in 2010

Banks had cleared cheques worth Rs 8.35 lakh crore in June, 2010, according to the latest data from the Reserve Bank of India.

The total number of cheques cleared by banks across the country during June 2010 was also 3.8 per cent less than in the same month last year.

A total of 10.62 crore cheques were cleared by banks during the month under review, compared to over 11.04 crore in the corresponding month of 2010.

During the April-June quarter, the total value of the transactions carried out using cheques stood at Rs 24.06 lakh crore as against Rs 25.17 lakh crore in the first quarter last fiscal, a fall of over 4.4 per cent

In addition, a total of 32.61 crore cheques were cleared by banks during the first quarter of the current fiscal, a decline of almost 3.8 per cent from 3390 crore in the April-June period in 2010.

In June, the Mumbai region reported the highest number of cheque clearances, as well as the maximum transaction value for any zone.

Banks in the Mumbai region cleared a total of 1.95 crore cheques, with a cumulative value of over Rs 1.28 lakh crore

In the Delhi region, banks reported that 1.27 crore cheques with a total value of a little over Rs 1.06 lakh crore were cleared in June.

The Bangalore region stood third in terms of both the parameters. Banks in the region reported a total 55.4 lakh cheque clearances worth over Rs 39,700 crore, it added.

The fall in the value of transactions through cheques in June 2011.Appeal of Sahara against Sebi from Tuesday is in line with the trend of the previous fiscal. However, the numbers went up marginally in April this year.

The value of cheque transactions in the country declined by 2.6 per cent year-on-year to Rs 101.33 lakh crore in 2010-11. Delhi and Bangalore were the only major centres to report a rise in the value of clearances last fiscal.

However, the total number of cheques cleared by banks across the country grew marginally by 0.4 per cent in 2010-11. Over 138 lakh crore cheques were cleared by banks across the country last fiscal, as against 1.30 lakh crore in 2009-10.

Source: Business Standard

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Now, any bank can now join national financial switch

The National Payments Corporation of India (NPCI) has said any bank with round-the-clock core banking solution capabilities, with or without ATMs, can now join the national financial switch (NFS) through a sponsor bank.

NPCI is an umbrella institution for all the Retail Payments Systems' in the country.

The move is aimed at facilitating even non-scheduled urban cooperative banks and regional rural banks to have access to the national network of over 78,000 ATMs in the country, NPCI managing director and chief executive AP Hota said in a release.

So far, access has been limited to only scheduled banks with RTGS membership, he added.

Meanwhile, the NPCI also said the total number of banks which have opted to join the inter-bank mobile payments service (IMPS) network have crossed 27 with two more private sector lenders joining the network over the past fortnight.

With the above change, two cooperative banks which are now only sub-members -- the Pandharpur Urban Cooperative Bank and Dr Annasaheb Chowgule Bank at Kolhapur-- have already gone live on the NFS network.

While the Pandharpur Urban Cooperative Bank has three ATMs and is sponsored by ICICI Bank, Dr Annasaheb Chowgule Bank is sponsored by HDFC Bank and has only four ATMs.

But with this facility, the customers of these banks can access any ATM in the country.

"This is a step forward to inclusive growth of financial services and serving customers of the smaller banks, UCBs and RRBs," Hota said.

The sponsor bank scheme on the NFS network will improve ATM connectivity across the country, even in the remotest areas, he added.

Source: Business Standard

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Over two lakh sign up for SIPs in June & July

Mumbai, Jul 27: After dabbling in stocks with abandon, and a few burnt fingers later, the average Indian investor is now wider, and more mature. With the markets remaining volatile in the past six months, swinging with global developments, investors have taken refuge under mutual funds (MFs). More and more investors are signing up for systematic investment plans (SIPs) of MFs, rather than investing in equities directly.

Indian MFs have seen more than 2 lakh new SIP accounts being opened with different fund houses in the last two months.

This month, Birla Sun Life Mutual Fund (BSLMF) registered over 50,000 SIP investors, while UTI Mutual Fund (UTI MF) saw over 60,000 SIP investors joining it in June. Reliance Mutual Fund registered over 90,000 SIP investors last month, while ICICI Prudential Mutual Fund opened over 36,000 SIP accounts in June-July.

SIPs are plans where an investor can put in a specific amount of funds every month. This also helps him even out his costs in volatile times. Anil Kumar, CEO, BSLMF, said, “Compared to January, our SIP accounts have risen 10 times in the current month. We have registered 50,000 new investors in SIP only in July. We can attribute this growth to the uncertainty in the equity market and increasing investor awareness about mutal funds.”

The surge in SIPs is also significant since most other investment avenues are giving low to negative returns in these volatile times. Pankaj Gupta, fund manager, SBI Mutual Fund, said, “It is really difficult for an investor to foresee a bottom when he is directly investing in equities. However, a SIP route makes sense now.”

Some dealers say in the past two months, there has been a big rise in SIP accounts, due to a series of SIP-linked insurance schemes. In the last two months Reliance MF, BSLMF and UTI MF have introduced SIP +Term insurance plans, which are the flavour of the season, they say.

Source: Financial Express

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