Banks, Unique Identification Authority to deploy 14 lakh micro ATMs across the country

MUMBAI: The Unique Identification Authority of India (UIDAI) is working with the Indian Banks' Association to create a network of 14 lakh micro ATMs across the country. While the banks will authorize the transaction, the authentication will be done by UIDAI by biometric association with its database.

The UIDAI is also considering giving unbanked citizens the option to receive a pre-paid payment card issued by banks which can be used for channeling payments from government schemes, including National Rural Employment Guarantee Act.

"The plan is to have at least two micro-ATMs in every village, which means that there will have to be at least 14 lakh of them," said A P Singh, deputy director-general, UIDAI, while speaking at a Prepaid International Forum event on Thursday. He said that every UIDAI registrant is presently given the option to open a bank account. "We plan to give them the additional option to receive a payment card which can be used for electronic transactions," he said.

According to Singh, the cards could be used for transactions in Aadhaar-enabled micro ATMs. The micro-ATMs will be more like point-of-sales terminals which will read cards and communicate with the bank's core banking system and the Aadhaar biometric database. According to Kusal Roy, head of cards and personal loans at ICICI Bank, the pre-paid cards could be used for micro-payment transactions and would have a different charge structure compared to regular credit and debit cards.

The micro-ATMs, which are to be deployed by banks, will be manned by business correspondents appointed by banks. These business correspondents will act as mini bank branches by accepting deposits, enabling withdrawals, fund transfer from Aadhaar-to-Aadhaar accounts and providing statement of transactions. The connectivity will be provided by the Aadhaar-enabled payment system (AEPS) - a new electronic payment network jointly promoted by the National Payment Corporation of India with the UIDAI. Over 60 banks have registered to be part of this network.

Speaking at a FICCI-IBA summit on Thursday, RBI deputy governor HR Khan had said that NPCI has been advised to introduce RuPay cards under the Aadhaar Enabled Payment System (AEPS). "Four banks have started using the RuPay card. These include: Kashi Gomati Gramin Bank, Bank of India DhanAdhar Card, The Gopinath Patil Parsik Janata Sahkari Bank Ltd, and NKGSB Urban Co Op Bank Ltd,"

UIDAI, along with NPCI, has already piloted Aadhaar-enabled Payment System in Jharkhand. Basic transactions permissible over these accounts include cash deposit, cash withdrawal, balance enquiry, and inter-bank money transfer. This system also envisages creation of an Aadhaar-enabled payment bridge which would facilitate direct disbursement of government benefits to the beneficiary by credit to their bank accounts using Aadhaar.

Source: EconomicTimes

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RBI asks old private banks to improve governance

MUMBAI: The Reserve Bank of India has asked select old generation private sector banks to improve governance standards, a person familiar with the matter told ET.

"RBI has asked banks to improve governance structure to ensure that there is minimum intervention of the board in the day-to-day operation," the person said.

Discussion on the issue of governance between the banking regulator and select bank managements took place at the central bank's quarterly business review meeting, bankers said.

The advisory comes in the wake of an ongoing conflict between shareholders of private sector Tamilnad Mercantile Bank and some new investors in the bank. Tuticorin-based TMB, which was floated in 1921 by the Nadar community, has been under the regulatory glare after a set of Indian and foreign investors acquired 24.93% in the lender.

The central bank is also concerned with the rising expense ratio in a few old generation private banks and their ability to raise capital to fund growth, said a banker who was present in the meeting.

AK Jagannathan, MD and CEO of TMB, said: "RBI wants us to list the banka¦We do not need to raise fresh capital for the next three years. Our capital adequacy ratio is at 15.51%. However, listing would resolve impending shareholding issues."

There are 15 old private banks in India, some of which have recently revamped their management teams and appointed chief executives from foreign banks. The newly-appointed leaders face challenges when it comes to recruitment of talent, expansion of business and migrating to market-related compensation structures.

Source: EconomicTimes

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Rs 10 plastic notes to be introduced on trial basis: Govt

New Delhi: The government said it has decided to introduce 100 crore polymer bank notes in denomination of Rs 10 on trial basis.

It will be on field trial basis at five locations in the country, Minister of State for Finance Namo Narain Meena said in a written reply to the Lok Sabha.

"A final decision will be taken depending on the results of the field trial," he said.

The Reserve Bank had floated a global tender for introduction of 100 crore plastic currency in 2009.

The polymer notes were first introduced in Australia to safeguard against counterfeiting of currency.

Besides Australia, other countries which have introduced plastic notes include New Zealand, Papua New Guinea, Romania, Bermuda, Brunei and Vietnam.

Replying to another question, Meena said that on the direction of the Central Vigilance Commission (CVC), a committee was constituted to examine the complaints received against some of the officials of Life Insurance Corporation.

The report of the committee was sent to CVC, and CVC had asked Central Bureau of Investigation (CBI) to enquire into the matter, he said.

The CBI has informed that a Preliminary Enquiry (PE) has been registered against LIC officials and private persons. CBI has further informed that "PE is under enquiry", he added.

In response to a separate question, Meena said that the Finance Minister in the Budget speech for 2011-12 had announced to infuse additional capital of Rs 3,000 crore to the National Bank for Agriculture and Rural Development, increasing the present level of the paid-up capital of Rs 2,000 crore to Rs 5,000 crore in a phased manner.

Source: Financial Express

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BoI raises $200 mn to expand foreign operations

State-run lender Bank of India today said it had raised $200 million to expand its foreign operations.

The city-headquartered bank has raised the money thorough a syndicated foreign currency loan for three years at an "attractive rate of interest", a statement issued here said.

"The proceeds will be utilised for expansion at the foreign operations," it added.

However, it did not specify exact plans on the international expansion front.

The bank at present has 24 foreign branches and five representative offices spread across 18 countries across the world.

Source: Business Standard

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In crises, banks may replenish ATMs by RBI borrowings

The Reserve Bank of India on Friday said banks can now replenish their automated teller machines (ATMs) with cash by borrowing up to 100 million rupees at one go from the central bank if a banking sector strike or any natural calamity creates a situation where ATMs may run out of cash.

"Depending upon the need for cash to be replenished in the ATMs, a bank may avail of this withdrawal facility more than once during the working hours on a particular day," the central bank said in a notification posted on its website.

Source: Business Standard

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Growth prospects for 2011-12 subdued: RBI

While retaining economic growth estimates for the current financial year at eight per cent, the Reserve Bank of India (RBI) cautioned about emerging downward risks emanating from the uncertain global environment and domestic inflationary pressures. The central bank also said global commodity prices would shape its monetary policy stance in the future.

“Going ahead, global uncertainty, sticky inflation, hardening interest rates and a high base, especially for agriculture, could moderate growth in 2011-12. If global financial problems amplify and slow global growth markedly, it could impart a downward bias to the growth projections indicated in the first quarter review of the monetary policy,” the central bank said in its annual report for 2010-11 released today.

RBI had retained its growth projection at eight per cent for 2011-12 in its first quarter review in July. Overall growth in 2010-11 is estimated at 8.5 per cent, and is likely to be higher after factoring in the new index of industrial production series.

“Downside risks to growth have increased since our assessment in July. The decline in global commodity prices has not been significant, and despite all the financial market turbulence, oil prices are back to earlier levels,” RBI Deputy Governor Subir Gokarn said, while releasing the report.

On global factors, RBI said high oil and commodity prices, even after some correction, remains high and could adversely impact growth. “Persistent inflationary pressures, rising input costs, a rise in cost of capital due to monetary tightening and slow project execution are some of the factors that are weighing on growth,” RBI said.

The central bank also painted an uncertain picture of the industrial sector, where it saw downside risks outweighing upside ones. According to RBI, the downside risks arise from falling business confidence in the wake of global uncertainties, political factors and firm commodity prices amidst high inflation and a weak response of supply side factors.

“Fixed investment growth has slumped to 0.4 per cent in the last quarter of 2010-11. Private consumption may moderate if inflationary pressure persists. The core sector performance is lagging the overall economic activity, resulting in infrastructure bottlenecks,” the report said.

On inflation, the central bank has maintained its earlier stance that a moderation in prices can only be expected by the end of the current financial year. “Though global commodity prices appear to have plateaued, inflation is likely to be elevated in the near term and fall only towards the later part of the year, as monetary transmission works through further,” the report said.

RBI has projected high inflation during the first half of the current financial year, and expects it to come down to seven per cent by March.

“Commodity prices may decline further, and that would have a positive impact on domestic inflation. However, until then, we should not anticipate and draw comfort from it,” Gokarn said.

According to RBI, an incomplete pass-through of high global commodity prices and the persistence of high inflation are likely to keep inflation elevated in the near term. As a result, inflation may start falling 'sometime in the third quarter of 2011-12'.

Source: Business Standard

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No higher provisioning needed for dual-rate home loan: ICICI Bank

MUMBAI: The country's largest private sector lender ICICI Bank on Thursday said its recently launched fixed-rate home loan scheme will not attract higher provisioning mandated by the central bank for teaser loans.

"Additional provisioning is not required on this product because the fixed rate offered is similar to the current floating rate on our other home loans," a bank spokesperson told PTI here on the sidelines of a Ficci-IBA banking summit.

The bank had on August 19 introduced two home loan products, with interest rates fixed for the first and second years and from the third year onwards the then applicable rate will be charged.

On the rationale for launching this product, Managing Director and Chief Executive Chanda Kochhar had said on Tuesday that this was a product that was very predictable in terms of what the EMI burden on the customer would be.

"The product that we have launched basically gives a customer the option to lock-in into a fixed interest rate for one year or two years. It is not lower than the rate applicable on the floating rate loan we are offering now," Kochhar had said.

The schemes were a reminder of the teaser loan offers that had disappeared from the market after the Reserve Bank expressed concern that these products affecting the asset quality of banks and asked them to make additional provisions for any such product.

To discourage banks from offering teaser rate schemes, RBI had increased the standard asset provisioning for all such loans from 0.4 per cent to 2 per cent.

Under the new scheme, an ICICI borrower will pay an interest of 10.50 per cent for a home loan under Rs 25 lakh for the first year and for the following year the interest rate would be 10.75 per cent, the bank had said in a statement.

Source: EconomicTimes

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PNB to recruit 9,000 employees this fiscal

Kolkata: Punjab National Bank, which is looking at strong growth in deposits as well as credit, will recruit 9,000 employees this fiscal, a top bank official said.

PNB Chairman and Managing Director K R Kamath said that out of the 9,000 staff to be hired, 3,000 would be in the officers category and the rest 6,000 would be clerks. The bank expects 22 per cent growth in deposits and 18 per cent growth in credit during 2011-12, he said.

Kamath said that there are sector specific NPA concerns at the moment and rising interest rates would hurt the Small and Medium Enterprise (SME) sector.

PNB has agreed to pick up 30 per cent stake in private life insurer Metlife and also plans to launch co-branded credit cards along with the Institute of Costs and Works Accountants of India (ICWAI).

Source: Financial Express

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UBI picks 6 banks for offshore bond: sources

State-run Union Bank of India (UBI) has picked six banks for a possible offshore bond issue, several sources with direct knowledge of the matter told Reuters.

The company has chosen Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank, Standard Chartered and HSBC for the deal, the sources said.

The bank will meet investors but will hold off on issuing a bond until market conditions improve, several sources said.

"We are planning to meet investors in the first week of next month, tentatively," Chairman and Managing Director MV Nair told Reuters.

The company would not identify which banks it had picked.

Union Bank is looking to raise funds through a Reg S bond, which means the issue will be open to overseas investors outside the United States, the sources said.

In mid-July, Reuters reported the lender was looking to raise $300 million-$500 million from international bond markets.

UBI's last visit to the international bond markets was in January when it raised 160 million Swiss francs ($201 million) from a 4.5-year bond. That borrowing was the first in the currency from an Indian borrower in 24 years.

The last time Union Bank issued a Reg S bond was in August 2010, when it raised $400 million through a 5.5-year bond issue.

Several Indian borrowers have completed roadshows in recent months but have held back issuance amid market volatility.

Would-be issuers in wait-and-watch mode include Indian Railway Finance Corp (IRFC) and Rural Electrification Corp, top cellular carrier Bharti Airtel, and Essar Group software services firm Aegis, bankers have said.

Offshore bond issuance from India has slowed in the past few months amid volatile markets. Bankers have said they do not expect any new issues in the next couple of weeks with attention still focused on debt worries in the United States and Europe.

Source: Business Standard

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Public sector banks need Rs 8 lakh cr to meet capital norms

MUMBAI: Public sector banks will require additional Rs 8 lakh crore to meet new capital norms and growth requirements over the next eight years.

This follows a new international agreement on bank regulation known as Basel III which RBI is looking at implementing in India. Basel III is the new regulatory framework designed to correct the deficiencies in regulations that led to the global financial crisis.

"In terms of Basel III, the capital requirement, especially the equity component, is much larger. So far the capital requirement was 8% of which equity requirement was 2%. Though it remains at 8% the equity component is now 4.5%.

On top of that there is another capital conservation buffer of 2.5%, which has to be composed of equity and therefore the capital requirement is 10.5%, of which equity has to be 7%. So your equity requirement from one shot goes up from 2% to 7%," said RBI deputy governor Anand Sinha addressing bankers at a FICCIIBA banking summit here on Wednesday.

The Basel III framework seeks to address the regulatory deficiency by tightening the definition of capital, increasing capital requirements and prescribing minimum liquidity requirements among other things.

Sinha said that a quantitative analysis report in 2010 done by Basel Committee on Banking Supervision of 94 large banks, including 3 from India, showed that there was a shortfall of euro 165 billion and euro 577 billion in equity component against the measure of 4.5% of equity and 7% of equity, respectively.

Ramraj Pai, director, Crisil, said that according to a study done by the rating agency public sector banks in India will require Rs 8 lakh crore of additional capital up to 2019 to remain compliant with the new regulatory regime and meet growth requirements.

"As against this requirement of Rs 8 trillion, the headroom available to raise funds by bringing down the average government holding from 58% to 51% would be around Rs 70,000 crore," he said. "The estimate that we have done in RBI is that transition would not be much of an issue as all capital ratios is about the minimum requirement of Basel III.

The stress point however for banks would be required to adjust to the amortized portion of pension and gratuity liability in opening balance sheet on April 1 2013, on transition to IFRS," said Sinha.

Source: EconomicTimes

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Banking licence should be given discreetly: RBI

India needs to plug gaps in existing banking rules before it lets corporate houses open banks, the Reserve Bank chief said on Tuesday, signalling the need for tighter regulation to deter firms from practices like self-lending.

Duvvuri Subbarao's comments come amid expectations that the Reserve Bank of India will soon announce initial draft guidelines for the issue of new bank licenses, a move keenly awaited by a host of Indian corporates eyeing the banking space.

"As much as these prescriptions are extensive, there are still gaps," Subbarao told a banking conference, noting that if a corporate had an interest in a bank as a promoter or shareholder but had no board position, current rules did not prevent the bank from lending to the corporate.

"As we contemplate allowing corporates to promote banks, there is need for changes in statutes and regulations to address these concerns," Subbarao said.

Corporate houses such as the Tatas, the Anil Dhirubhai Ambani Group, the Bajajs and the Mahindras who are in the financial services space through non-banking financing companies, may look at the banking space as it opens up avenues to mop up low-cost deposits and raise large amounts of funds.

The government brought a bill to parliament in March to amend the banking laws to give the RBI more teeth.

The measures include giving the RBI powers to set conditions while approving the acquisition of share capital and also to call for information and returns from associate companies of banking companies engaged in financial services.

"We have sent a draft amendment to the Banking Regulations Act to the government and the government is working on it. So amendments to the Banking Regulations Act are necessary before we contemplate corporates coming into banks," Subbarao later told reporters.

The RBI had last issued licenses a decade back and has said it will only issue a few new licenses.

The RBI issued an initial discussion paper last year on new bank licenses and subsequently sought feedback. But the issue has since been delayed as the Finance Ministry and RBI reportedly had differences on issues such as the scale of foreign ownership permitted in new banks.

There are persuasive arguments both for and against the issue of new licenses, Subbarao said.

The strongest point in favour is that corporates can bring in capital as well as business experience and managerial competence, he said.

But it was hard for regulators to prevent or detect "self-dealing" because banks can hide related party lending behind complex company structures or by lending to suppliers of the promoters and their group companies, he said.

Source: Business Standard

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No systemic risks from rising NPAs: RBI

Reserve Bank Deputy Governor Anand Sinha today said though bad loans are rising in the system, the central bank does not see it as a systemic risk yet.

Talking to reporters on the sidelines of Ficci-IBA summit here, he said, "We don't see any systemic risks from the current trend of rising non-performing assets. But, there could be some sectoral risks going forward."

The central bank has jacked up its key lending rate by a whopping 425 basis points in the past 15 months to batten down inflation and the banks have passed on the increased cost to borrowers.

"I would not say we are particularly worried about retail loan segment, but yes, the retail segment is the one that is likely to feel the pressure."

Banks have been witnessing rising risks from small and medium scale industries and unsecured portfolios, which primarily consist of personal loans and credit cards business, apart from the home loans front.

Bankers had told RBI Governor D Subbarao last month that there was no systemic risks as of now for banks, even as the interest rate got tightened.

Yesterday, the chief financial officer of SBI, the nation's largest lender, Diwakar Gupta said his bank's Rs 7,000 crore education loan has been witnessing pressure and the level of the stressed assets have reached 4% of this exposure.

The Kolkata-based United Bank Chairman and Managing Director Bhaskar Sen had also said there are rising risks to assets, especially from the SMEs and the retail sector, and that he may look at increasing in the tenor of the loan than increasing the EMIs.

On the impact of the Basel III on the domestic banks, especially on the state-run banks, which control over 70% of the banking assets in the domestic system, Sinha said the government will have to infuse funds into the banks to ensure that they are adequately capitalised.

Meanwhile, Crisil Ratings Director Ramaraj Pai said the 26 public sector banks would need a whopping Rs 8 lakh crore in core capital by 2019, when the Basel III norms will be implemented.

As of FY10, these banks had a core (Tier I) of capital of only Rs 70,000 crore, which is well above the Basel II requirement.

Source: Business Standard

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RBI favours splitting chairman, MD posts in PSU banks

Reserve Bank Governor D Subbarao today favoured bifurcation of the posts of chairman and managing director in state-run banks, saying the experience of such a split in the private sector has been satisfactory.

Stating that the central bank is in discussions with the government to split the posts of the chairmen and managing directors of state-run banks, the governor said, "Given our own positive experience, as well as the global endorsement for this position [of separation of these posts]... We will discuss this issue with the government."

"This experience proves to be positive in the private sector banks [in our country], which has also been proved to be value-adding in international banks. Not giving too much power to one person is good," he told reporters on the sidelines of a Ficci-IBA summit here this morning.

Addressing the banking summit, Subbarao, however, warned that an important criterion for deciding on splitting the post of chairmen and managing director in PSU banks "will be to what extent we will be able to lay down and enforce strict eligibility criteria for the position of the chairman of the board of a public sector bank."

The RBI had set up a committee under the chairmanship of AS Ganguly in FY05 to study the issue of bifurcation of the posts of chairman and managing director of banks, which had recommended such a bifurcation.

Following this, such a bifurcation was implemented in private sector banks in 2007. "The Reserve Bank implemented the Ganguly group recommendations in all the private sector banks in 2007. Experience shows that this arrangement has worked well," Subbarao said.

It can be noted that in the public sector banks, the top executive is designated as chairman and managing director, with the exception of the largest lender State Bank, where the top honcho is the chairman and there are four managing directors with clearly defined executive roles under him.

Explaining the logic behind such a separation, Subbarao said that bifurcation of leadership of the board from the day-to-day running of the business will bring about more focus and vision, as well as give the necessary thrust to the functioning of the top management of the bank.

It will also provide effective checks and balances.

When asked whether the RBI will allow corporates to enter the banking space, he said, "We have sent in a draft amendment to the Banking Regulation Act to the government and the government is working on it. So amendments to the Banking Regulation Act are necessary before we contemplate corporates coming into the banking system."

"While the guidelines for the new bank licences will be issued shortly, the amendment to the Act is uncertain," the governor told reporters on the sidelines of the banking meet.

On whether the regulator is worried about whether other banks will follow ICICI Bank in offering dual rate home loans, Subbarao tersely said, "If that is a concern, we will respond to that. I cannot answer it now."

Last week, the country's largest private lender ICICI Bank introduced two home loan products similar in some respect to teaser home loan schemes.

It gives borrowers the option of having a fixed interest rate for up to the first two years of a loan to shield customers from frequent changes in home loan interest rates and protect them from any rise in interest rates over the next one or two years.

The Reserve Bank has raised key short-term interest rates 11 times since March, 2010, in order to tame inflation. Headline inflation stood at 9.22% in July, 2011, much above the RBI's comfort zone.

Under the new schemes, a borrower will pay interest of 10.50% on a home loan under Rs 25 lakh in the case of a one-year fixed interest rate and 10.75% per annum for the two-year fixed product.

On completion of the fixed interest rate period, the loans will turn floating in nature and will be linked to the bank's base rate.

Source: Business Standard

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SBI says no plan to launch teaser loans as ICICI Bank

MUMBAI: The nation's largest lender State Bank said it has no plan to relaunch the dual/fixed rate home loan products, popularly known as teaser loans, as was done by rival ICICI Bank last week.

"Right now there is no plan for that," chairman Pratip Chaudhuri told reporters on the sidelines of a Ficci-IBA conference here.

Referring to the bank's earlier experience with the regulator when it had argued that its dual rate loan was not a risky teaser loan as was being made out by the RBI, Chaudhuri said, "the loan that we had earlier, in spite of lots of our persuasion with the Reserve Bank, they called it as a teaser loan."

"Today our home loan products are widely accepted and there is no shortage of demand for them. Our home loan portfolio is growing in the same way as was earlier. Borrowers are aware that these are the times of floating rates and that the rates will go up some time and then will go down," he said.

"Even our competitors have launched the fixed rate product only for two to three years after which the loan becomes floating. As of now, we have no plans to launch a dual rate loan," he added.

On August 19, the second largest lender ICICI Bank had launched two new home loan products with interest rates fixed for one and two years and floating from the third year onwards.

Under the new loan scheme of ICICI, a customer could avail of a housing loan at a fixed rate of interest for one or two years, after which the interest rate would become floating. In the one-year fixed rate home loan scheme, the bank is offering loans up to Rs 25 lakh at 10.50 percent, Rs 25-75 lakh at 11 percent and those above Rs 75 lakh at 11.50 percent.

Source: EconomicTimes

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‘Union Chetna' to provide financial information

With a view to achieve financial literacy and create awareness, Union Bank of India has launched ‘Union Chetna' — an information window for the customers and employees. Under this initiative, informative contents would be displayed on a digital screen. 

The service would be available during business hours and would contain information on various products and services of the bank along with other useful financial information, said the bank press statement. 

As a pilot, Union Chetna would be available in 50 branches and 10 village knowledge centres. The information would be managed through remote server contents and would be displayed in 18 regional languages.

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UCO Bank hikes term deposit rates

UCO Bank has hiked interest rates by 25-200 basis points on term deposits of various tenures effective August 22. 

The hike will be applicable on deposits up to Rs 5 crore, according to a press release issued by the bank.

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Deutsche Bank staff indicted for stock scam

Seoul: A report says four employees of Deutsche Bank AG and its South Korean brokerage unit have been indicted on charges of manipulating stock prices and unfair trading.

Yonhap news agency reported Sunday that the alleged improper trading triggered a sudden plunge in Seoul's benchmark stock index last November and resulted in illegal profits of about $41 million.

Yonhap says prosecutors indicted three employees with the bank's Hong Kong office and a fourth with Deutsche Securities Korea.

Yonhap cited the German bank as saying its South Korean brokerage unit didn't authorize or condone any violation of market regulations.

Seoul prosecutors said they could not immediately confirm the report.

Source: Financial Express

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Corporation Bank seeks Rs 300-cr loan from govt

State-owned Corporation Bank has sought Rs 300 crore capital support from the government to fund business growth.

"We have requested capital infusion, they [the government] will consider it when they will review banking sector as a whole," said Corporation Bank Chairman and Managing Director Ramanath Pradeep.

"We have made a very small request for about Rs 300 crore...It will be by way of Tier I capital," he said on the sidelines of a PHD event. I don't need to raise capital at this point of time. My capital adequacy ratio is more than 14%," he added.

On the back of robust monitoring mechanism and system, the bank intends to become a zero net NPA bank by the end of the current fiscal.

"Because we have introduced very robust system of monitoring therefore we are confident that we should reach to that level zero net NPA level [by March 2012]," Pradeep said.

Current net Non-Performing Asset level of the bank stood at 0.47% at the end of June 2011.

Talking about the loan growth, Pradeep said, there is a possibility of moderation in credit growth on account of rising interest rate.

"Loan growth is expected to be lower than the original estimate. Our target is 25% on the loan side but probably there is need to revisit it to may be around 22%," Pradeep said.

Deposit growth would be also be lower at 20% against the original target of 22%, he said.

Source: Business Standard

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Muthoot Finance to open 50 branches in West Bengal

KOLKATA: Muthoot Group plans to open 50 branches in West Bengal by March 2012, taking its tally in the state to 100, the company managing director George Alexander Muthoot said.

The Kochi-based gold loan financing company has a good presence in the south and the north and the company is now expanding its operation in eastern India.

The company is going in for a public issue of secured, redeemable, non-convertible debentures (NCDs) to raise up to Rs 1,000 crore. The issue will open on August 23 and closes on September 5. The NCDs will offer interest rates between 11.75% and 12.25% annually.

Mr Muthoot said the company is raising the fund for diversifying its investor base. It has recently raised Rs 900 crore from its initial public offer.

Source: EconomicTimes

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Corporation Bank chief refutes allegations of irregularities

New Delhi: Corporation Bank chief Ramnath Pradeep today said he will clarify his position on allegations of irregularities in loan sanctioning before the authorities and termed the charges as professional hazards.

"We have prepared the report and we are submitting whatever questions have been asked by the Finance Ministry. See, these are professional hazards. We (all) are facing it and I am also facing it. I have nothing to hide," Corporation Bank Chairman and Managing Director said on the sidelines of a seminar organised by the PHD Chamber here.

The Finance Ministry has asked Corporation Bank to submit a detailed report and sought clarifications on allegations levelled against him.

Pradeep is facing charges of sanctioning loans in violation of prudential norms, reportedly to a few companies and he is also said to have extended a big-ticket loan to a tower construction company that had already defaulted on payments to another state-run bank.

"We have prepared (our response) and we are not accepting anything," Pradeep said when asked about his response to Central Vigilance Commission (CVC) indictment.

He also said, "In Air India we have an exposure of Rs 1,300 crore. For me it is not an issue. It is a standard asset."

On the back of robust monitoring mechanism and system, the bank intend to become a zero net NPA bank by the end of the current fiscal.

"Because we have introduced very robust system of monitoring therefore we are confident that we should reach to that level -- our zero net NPA level (by March 2012)," he said.

Current net NPA level of the bank stood at 0.47 per cent at the end of June 2011.

Talking about the loan growth, he said, there is a possibility of moderation in credit growth on account of rising interest rate.

"Loan growth is expected to be lower than the target. Our target is 25 per cent on the loan side but probably there is a need to revisit may be around 22 per cent," he said.

Deposit growth would also be lower at 20 per cent, as against the original target of 22 per cent, he said.

Source: Financial Express

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