Repo rate, reverse repo rate hiked: No immediate plans by HDFC, Canara Bank & Central Bank of India to pass hike to consumers

Though the Reserve Bank of India increased its policy lending rate for the 12th time in 18 months in its ongoing fight against inflation, most large lenders do not have immediate plans to toe the lines of the central bank in hiking their lending and deposit rates. This is the first time in the past one year that top Indian lenders appear to be adopting a different stance and hold rates steady, despite the central bank's continued hawkishness. Between July 2010 and August 2011, RBI raised repo rate by 250 basis points to 8%. During the same period,...

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RBI policy: Home, auto loan EMIs to go up

All loans are set to become costlier, with the Reserve Bank today hiking the key interest rate for the 12th time since March, 2010, by 25 basis points to rein in high inflation. With today's decision, the short-term lending (or repo) rate at which banks borrow from the RBI stands increased to 8.25% and the short-term borrowing (reverse repo) rate at which banks park their funds with the RBI to 7.25%. Headline inflation rose to 9.8% in the month of August from 9.2% in July this year. Despite the RBI hiking rates several times since March, headline...

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RBI rate hike correct as inflation high: Rangarajan

New Delhi: Defending the Reserve Bank's decision to hike key rates by 25 basis points, the Prime Minister's Economic Advisory Council (PMEAC) today said the central bank had no other option, as inflation remains at elevated levels. "The RBI has taken the correct decision. In the context of rising inflation, RBI had no other option but to raise interest rates," PMEAC Chairman C Rangarajan said. Concerned over high inflation, the Reserve Bank today raised key interest rates by 25 basis points, its 12th such hike since March, 2010. Following the increase,...

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RBI raises key rates by 25 bps

Mumbai: All loans are set to become costlier, with the Reserve Bank of India (RBI) today raising key interest rate for the 12th time since March, 2010, by 25 basis points to rein in high inflation. With today's rate hike, the short-term lending (or repo) rate at which banks borrow from the RBI stands increased to 8.25 per cent and the short-term borrowing (reverse repo) rate at which banks park their funds with the RBI to 7.25 per cent. Headline inflation rose to 9.8 per cent in the month of August from 9.2 per cent in July this year. Despite the...

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UBS $2 bn rogue trade suspect held in London

Swiss bank UBS said it had lost around $2 billion due to rogue dealing by a London-based trader at the Swiss bank and police said they had arrested a man on suspicion of fraud. Sources close to the situation named the suspect as 31-year-old Kweku Adoboli, who was working as UBS director of exchange traded funds and so-called Delta 1 trading, according to his profile on LinkedIn. Adoboli was arrested during the night at UBS's London office, the sources told Reuters. UBS said it discovered the problem on Wednesday afternoon, but gave no details of...

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Axis Bank approves Enam deal; to get $57 million from unit

India's No.3 private lender Axis Bank said on Friday its board has approved the transfer of Enam Securities' investment banking and equities businesses to self, which will be eventually sold to the bank's wholly owned unit for 2.74 billion rupees ($57.6 million). Late last year, Axis Bank had said it will buy the two units for $456 million in an all-stock transaction, but regulatory hurdles prevented the acquisition to take effect. The structure, announced on Friday, broadly retains the original deal contours, but now involves a cash payout to...

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Bank of America to pay fired whistleblower $930,000

Bank of America Corp must reinstate a Countrywide whistle-blower fired shortly after the two companies merged in 2008 and pay the employee $930,000, the Labour Department said on Wednesday. The employee, whose name was not given, led internal investigations that found widespread fraud involving Countrywide employees. Reporting fraud to Countrywide's Employee Relations Department led to retaliation, the employee told the Labor Department. "It's clear from our investigation that Bank of America used illegal retaliatory tactics against this employee,"...

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Government may allow PSBs to tap equity market, may help SBI

NEW DELHI: The government may soon allow state-run banks to tap the equity market, as it may not be able to fund their expansion plans. This would pave the way for a follow-on offer from the State Bank of India (SBI). Banks, however, will not be allowed to let the government's stake fall below 51%, a finance ministry official said. The government at present holds 58% stake in six banks and less than 58% in three. It was a one-time provision (to bring government's stake to 58%) with the idea to let banks tap the markets when needed, the official...

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Bankers see RBI hiking rates by 25 bps

New Delhi: With inflation moving closer to the double-digit mark, bankers expect the Reserve Bank to increase its key policy rates by 25 basis points in the upcoming policy review on Friday. As long as inflation does not decline to a significant level, the Reserve Bank of India (RBI) would continue its tight monetary stance. The general view is that RBI would go in for another rate hike as inflation is hovering around the double-digit mark, Indian Overseas Bank Chairman and Managing Director M Narendra said. "I think there would be some rate hike...

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StanChart, SBI vie for Barclays' card biz

Mumbai: Standard Chartered and SBI Card are competing to buy Barclays' India credit cards business, sources with direct knowledge of the matter said, as the British bank looks to reduce its exposure to unsecured lending in the country. Barclays has about 200,000 card holders in India and the book value of the business is roughly 2 billion rupees ($42 million), the sources said on Tuesday, declining to be named as the information is not yet public. Final bids for the Barclays credit cards business in India are expected early next month and the deal...

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BNP Paribas follows SocGen with asset sales plan

France's top bank BNP Paribas announced a plan to sell 70 billion euros ($95.7 billion) of risk-weighted assets to help ease mounting investor fears about French bank leverage and funding as its main rivals were hit by ratings downgrades. BNP escaped Moody's Investors Service's review of French banks without a cut, but the ratings agency said it would extend its review for a possible downgrade of BNP's long-term debt and deposit ratings. "Surely it can only be a matter of time before BNP Paribas follows in their wake as the bank announces a restructuring...

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OBC, Allahabad Bank raise fixed deposit rates

Two public sector lenders Oriental Bank of Commerce (OBC) and Allahabad Bank today raised fixed deposits rates by up to 30 basis points (bps) on select maturities. The move come two day ahead of the mid-quarterly review of the monetary policy. Term deposit rate for maturities between 1-2 years has been raised from 9.60% to 9.75%, OBC said. At the same time, another public sector lender Allahabad Bank increased interest rate on term deposits of between 91 and 179 days by 30 basis points to 7.30%. Interest rates on other maturities would remain unchanged. The...

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SBI, others to get Rs 650cr from Harshad Mehta asset liquidation

New Delhi: State Bank of India (SBI), the Income Tax Department, SBI Caps and Standard Chartered will get Rs 650 crore from the liquidated assets Harshad Mehta entities. The Special Court, Mumbai, has ordered the Custodian, appointed by the government to deal withthe securities scam of 1992, to release Rs 650 crore. Of the total amount of Rs 650 crore, Rs 259.65 crore would be given to State Bank of India, Rs 28.34 crore would be given to the I-T department and Rs 16.25 crore to SBI Caps, a finance ministry statement said. Further, the Court has...

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Banks announce 100,000 job cuts

New York: Banks are shedding jobs worldwide as stricter regulations and a tough second quarter for trading income take their toll on investment banking units in particular. Bank of America on Monday said it would cut 30,000 jobs and slash annual expenses by $5 billion. The layoff plan brings staff cuts announced this year or reported to be in the works at US and European banks to just under 100,000, some of them to be lost over three- or four-year programmes. Many, including Royal Bank of Scotland, Lloyds Banking Group, Citigroup and Bank of America,...

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New bank licences after amending Banking Bill

New Delhi: The Reserve Bank is likely to issue the final guidelines for granting bank licences to corporates only after Parliament approves the Banking Laws (Amendment) Bill, 2011. The final guidelines on new banking licences would be released only after the necessary amendments to the Banking Laws (Amendment) Bill, which seeks to give more power to the regulatory powers of the RBI, sources said. The central bank had last month issued the draft guidelines which pegged the minimum capital needed to set up a commercial bank by a corporate house having...

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RBI should think out of the box: Basu

New Delhi: India's central bank, which reviews monetary policy on Friday, should think outside the box, the chief economic adviser to the finance ministry said on Tuesday. We live in a very unusual world where some countries have very, very low interest rates whereas other countries have high interest rates so we must think outside the box in terms of monetary policy and that is what I would stress to the Reserve Bank of India, Kaushik Basu said. Despite industrial output growth slumping to a near two-year low in July, inflation data for August...

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Banking Ombudsman Conference : Ten Action Points to improve Customer Service of Banks

1. Indian Banks’ Association (IBA) will standardise most important terms and conditions (MITC) for at least ten important banking transactions and circulate among banks for adaptation. 2. Banks would initiate the process of providing one view of all bank accounts of a customer including deposits, loans, etc., with the help of available technology, such as, core banking solution. Banks would be complete the process within one year. 3. Banks would convey to the Reserve Bank, a consensus view on the recommendations of the Damodaran Committee Report...

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No hedging support to IDFs from forex reserves: RBI

The Reserve Bank has indicated to the government that it will not provide any hedging support to the infrastructure development funds (IDFs) from the country's foreign exchange reserves. "The Reserve Bank as a policy will not provide any kind of foreign exchange hedging or support from the country's foreign exchange reserve for the forex risk of the IDFs," according to a note prepared by the central bank. India's forex reserves stood at $285 billion as on September 2, 2011.To facilitate investment in the infrastructure sector, the government had...

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