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Saturday, November 5, 2011

RBI may consider easisng rates in Dec

Chennai: Reserve Bank of India may consider reversing its tight monetary stance as inflationary woes begin to ebb next month, a top policy adviser said on Saturday.

The Reserve Bank of India (RBI) has raised interest rates 13 times since March 2010 in a bid to control inflation, which has topped 9 percent for nearly a year.

However, C. Rangarajan, the Prime Minister's chief economic adviser, said headline inflation may remain high for next one-two months after which it is expected to slowdown to around 7 percent by end-March.

It is expected that by December, January we should see decline in inflation, that may be the time when perhaps reversal of policy (monetary policy) will become possible, he told reporters on the sidelines of a banking conference.

As the inflation rate shows definite signs of decline, the policy regime also have to change.

A cumulative rate tightening of 375 basis points is seen slowing down India's domestic consumption driven growth story. But the RBI has refused to lower its guard against inflation and remains the only central bank that continues to tighten monetary policy amid global slowdown.

Early this week, the Reserve Bank of Australia (RBA) became the latest central bank to cut rate in response to threats to the global economy from Europe's debt emergency.

India's slowing economic growth has slowed down tax revenues, squeezing federal finances and putting a question mark on the government's ability to restrict the fiscal gap for the 2011/12 financial year at the budgeted level of 4.6 percent of gross domestic product.

Any slippage on the fiscal gap target has the potential of worsening India's inflationary problem and choking private investment.

India's central bank, which last week signalled a pause in its tightening cycle, has warned of inflationary risks if the government's deficit for the current fiscal year ending in March exceeds the budget target.

Rangarajan, a former RBI chief, said the government should make all possible efforts to keep the fiscal deficit at the budgeted level and consider deregulate petroleum prices once inflation starts slowing down.

India's government is under fire for allowing a hike in gasoline prices on Friday and is expected to delay a planned diesel price hike for fear the move could cause further damage ahead of key state elections beginning early next year.

He also flagged risks to the asset quality of Indian banks from a slowing economy and rising interest rates.


Source: Financial Express
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RBI clamps down on Gujarat's Khedbrahma Nagarik Sahakari Bank

KOLKATA: The Reserve Bank of India has barred Gujarat's Khedbrahma Nagarik Sahakari Bank Ltd from accepting fresh deposits and giving loans as its financial position deteriorated.

RBI said the bank shall not, without prior approval in writing from it, grant or renew any loans and advances, make any investment, incur any liability including borrowing of funds etc. It is also temporarily barred from making payments to any one and enter into any arrangement, sell, transfer or dispose of any of its properties without RBI's prior permission.

The direction came into effect from November 1. The banking regulator announced it on Friday

RBI has also clarified that the directions should not be construed as cancellation of banking licence. The bank will continue to undertake banking business with the restrictions till its financial position improves.


Source: EconomicTimes
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RBI asks banks not to honor cheques beyond 3 mths

MUMBAI: Banks should not make payment of cheques, drafts, pay orders or banker's cheques presented beyond a period of three months from the date of issue, compared with six months currently, the central bank said on Friday.

The rule is effective from April 1, 2012. "Some persons are taking undue advantage of the said practice...as these instruments are being circulated in the market like cash for six months," said the Reserve Bank of India in a notification on its website.


Source: EconomicTimes
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Friday, November 4, 2011

RBI asks banks not to honor cheques beyond 3 mths

MUMBAI: Banks should not make payment of cheques, drafts, pay orders or banker's cheques presented beyond a period of three months from the date of issue, compared with six months currently, the central bank said on Friday.

The rule is effective from April 1, 2012. "Some persons are taking undue advantage of the said practice...as these instruments are being circulated in the market like cash for six months," said the Reserve Bank of India in a notification on its website.


Source: EconomicTimes
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LIC Housing Finance to float Rs 500 crore VC fund in 2-3 months

NEW DELHI: LIC Housing Finance, subsidiary of life insurance giant LIC, today said it will float Rs 500 crore real estate venture capital fund within 2-3 months.

"We have plan for Rs 500 crore (real estate venture capital fund). It is in final stage. It should happen in 2-3 months," LIC Housing Finance Chief Executive V K Sharma said here.

"We have got all regulatory approvals for floating the fund," Sharma added.

The company has held road shows for raising money from domestic institutions and high networth individuals, he said.


Source: EconomicTimes
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Bank of Maharashtra not to raise savings bank rate

KOLKATA: Bank of Maharashtra said it is not going to raise savings bank rate immediately as it feels savings deposits are not interest sensitive.

Its chairman and managing director Anup Sankar Bhattacharya told ET: "I don't feel the urge to raise interest rate on savings deposit."

Reserve Bank of India has deregulated the savings bank rate last week which has prompted small private banks like IndusInd Bank, Kotak Mahindra Bank and Yes Bank to raise the rates. Earlier, the rate was fixed at 4%.

IndusInd Bank said it will offer 5.5% rate for balance up to Rs 1 lakh and 6% for over Rs lakh. Kotak Mahindra Bank and Yes Bank raised the rate 200 basis points to 6% for deposits over Rs 1 lakh.

Bhattacharya said the competition for savings deposit mobilisation will largely be limited in urban centres and his bank mobilises a bulk of its deposit from rural and semi-urban centres without much competition.

The Pune-based state-run bank has 1.20 lakh crore savings bank customers of whcih 1.14 lakh core have below Rs 1 lakh deposits.


Source: EconomicTimes
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All banks must issue savings account pass book: RBI

MUMBAI: The Reserve Bank today directed all banks to offer the pass book facility, without any charges, to all customers with savings account.

"It has come to our notice that some banks are not issuing pass books to their savings banks account holders (individuals) and only issue a computer generated account statement even when the customer desires pass book facility.

"Banks are, therefore, advised to strictly adhere to the instructions...," the Reserve Bank of India (RBI) said in a notification.

Under the existing rules, banks are expected to offer pass book facility to all individual savings banks account holders.

In case banks offer the facility of sending statement of account and the customer chooses it, banks must issue that on monthly basis.

At present, some of the private sector banks do not provide the pass book facility.

Meanwhile, in another notification, RBI has asked banks to ensure that demand drafts of Rs 20,000 and above are issued with account payee crossing.

"Instruments with account payee crossing are required to be credited to the payee's account and not paid in cash over the counter. However, some unscrupulous elements use demand drafts without any crossing for transfer of money as an alternative to settlement through cash," RBI said.

In view of concerns raised, it said, RBI reiterates that banks shall strictly adhere to the instructions and not collect account payee cheques for any person other than the payee constituent.

Banks may note that the above prohibition and relaxation shall also extend to drafts, pay orders and bankers' cheques, RBI notification said.


Source: EconomicTimes
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SBI says may see service disruption on staff strike next week

Mumbai: A bank officers' union has served a notice to India's largest bank, the State Bank of India (SBI) for a two-day nationwide strike, which could hit customer service at its branches on Tuesday and Wednesday, the bank said.

SBI, India's dominant lender, did not specify the reason for the strike called by the All India State Bank Officers Federation, but said conciliatory efforts were being made to avert it.

Although the management of the bank is making efforts to extend skeleton services at the branches/offices, in the event it is not possible to do so, our valuable customers may face inconvenience, it added.

A nationwide bank strike had hit India in August as unions rebelled against proposals to allow more private ownership of state banking behemoths that could threaten jobs and benefits.


Source: Financial Express
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Banks can't have more than 10 general managers for business up to Rs 1.5 lakh crore

KOLKATA: In a move that is going to freeze promotions in public sector banks at senior levels for at least the next one year, the government has proposed to limit the number of senior executives in these banks, according to the size of their business, two bank executives familiar with the development said.

The finance ministry has said that banks should not have more than 10 general managers for business up to Rs 1.50 lakh crore, against the previous rule of 20 GMs for Rs 1 lakh crore.

It has also suggested a 1:3:9 ratio of GM, DGM and AGM in government banks. "This is the first time that the ministry has stepped into such micro manpower management of public sector banks," a bank chairman told ET, requesting anonymity.

This will create a battery of surplus manpower in senior categories and top bankers said that they may have to put a halt in promotions at senior levels. For example, Allahabad Bank will have four surplus GMs, while Punjab National Bank and UCO Bank will have eight and nine excess GMs, respectively. State Bank of India will not have to follow the proposed norm as it is guided by a separate act.

However, existing officials will be allowed to continue till retirement. According to the ministry's proposed rules, Punjab National Bank can have a maximum of 37 GMs till March 2012, while Bank of Baroda and Bank of India can have 35 and 34, respectively.

These banks will be allowed to add one GM each for every Rs 15,000 crore of incremental business. The ministry shot off a letter to all public sector bank chairmen on Wednesday and said that there is "mismatch in the number of posts in senior positions and an immediate feeder channel has taken place which is creating difficulty in proper manpower management." The ministry has directed banks to submit their views on the proposed changes in a week's time.

PSBs have been facing a severe mid-level crisis for the past threefour years, following mass retirement and the move is seen as an effort to rationalise the human resources available in these banks. "A change in regulation for PSB manpower management was long required. The guidelines were last revised in 2007 and the business environment has dramatically changed since then," a general manager in a Kolkatabased bank said.


Source: EconomicTimes
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ICICI Bank may restructure some debt: Chanda Kochhar


MUMBAI: ICICI Bank, the country's largest private sector bank, could restructure some corporate debts in the coming quarters, Chanda Kochhar, managing director and chief executive officer of the bank, said in an interview to ET NOW.

"Yes, one, of course, cannot rule out the possibility of one or two large projects or corporates needing restructuring for that matter. "But I do not expect these restructurings or NPAs to come as a huge shock and the percentage that you have seen this quarter is a high percentage. I do not expect this kind of percentage to repeat quarter on quarter,'' she added.

She didn't elaborate on the sectors that could be hit by the restructuring, though other banks such as Punjab National Bank have admitted to restructuring loans to the power sector in the past quarter.

ICICI Bank's net profit grew 22% to Rs 1,503.2 crore in the second quarter ended September 2011 while its net non-performing loans dipped to 0.93%. Its provision cover decreased 50% to Rs 319 crore while net restructured assets were Rs 2,501 crore. The bank restructured loans worth Rs 743 crore in the second quarter, given to MFIs.

"This was mainly because the entire microfinance portfolio got restructured in one go in the same quarter. This is not really an indicative rate of accretion for the quarters going forward, but yes one or two projects or companies would definitely get added to the restructured portfolio,'' Kochhar told the television channel.

ICICI Bank shares ended down 0.98% at Rs 878.20 on Thursday. About 7% of the total loans had exposure to the power sector, and there has been no slippages, said the ICICI Bank MD & CEO. "We have very minimal direct exposure to state electricity boards. It is so minimal that it is not going to make any impact even if that exposure was to go through restructuring,'' she added.

Total bank loan outstanding to the power sector, as on September 2011, was Rs 3,00,752 crore. Punjab National Bank had kicked off the biggest loans restructuring exercise by Indian lenders to the power sector by converting Rs 2,500 crore of shortterm loans into long-term ones to avoid imminent defaults.

"It is not correct to say that each power project will face the same kind of issues that are being talked about on a general basis,'' said Kochhar. "We look at our portfolio, actually out of the outstanding loans to the power projects, almost 50% is really towards existing operating power companies,''she added.


Source: EconomicTimes
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Thursday, November 3, 2011

Fresh round of job cuts hits Asian banks

Hong Kong: Banks embarked on another round of job cuts this week in Asia, laying off hordes of staff in fixed-income, derivatives and equities businesses, hit by weak trading revenues and a slowdown in dealmaking and new issues.

The first round of Asia job cuts began in earnest at the end of September as strict capital rules and a tough third quarter for trading income took their toll, hitting investment banking in particular.

Asia's rapid growth had largely spared it from significant job cuts that affected other regions since the 2008 financial crisis. But that is not the case this time around.

Banks such as Credit Suisse and Japan's Nomura Holdings recently disclosed broad cost-cutting plans, and while Europe appears to be the focus for much of the culling, the axe is falling on Asia as well.

Australia's Macquarie Group Ltd , Bank of America and Spain's BBVA also went through a round of cuts this week in Asia.

Looking at the P&L (profit and loss) at banks right now, I'm surprised that the cuts are not deeper, a senior bank official said.

Until the middle of this year, a lot of people were building their Asia desks, said the official who declined to be identified as he is not authorised to speak to the media.

Some banks such as Morgan Stanley stopped hiring by mid-year, according to a banking source, in anticipation of a tough second half.

MORE PINK SLIPS

IPO volumes and proceeds, normally around two-thirds of the investment banking revenues in Asia, dropped in the second half, as global markets fell on worries mainly on the euro zone debt crisis.

There were no stock deals between late July and late September in Hong Kong, the world's top destination for IPOs in the past two years.

Only recently companies resumed IPOs and follow-on deals, but volumes in the third quarter in the region excluding Japan declined 49 percent from a year earlier to a two-year low.

Such a low volume not only hits staffing levels but bonuses too.

Asia pink slips are even beginning to hit the cash-equities business, sources say, a bread-and-butter unit usually the last to be impacted, underscoring the tough market conditions.

Credit Suisse, which announced another 1,500 job cuts globally earlier this week, has already cut dozens of jobs across Asia, hitting much of the credit division, sources told Reuters. It is also cutting jobs in forex trading, sources said.

Macquarie chopped jobs at its equity-trading division in Asia. Reuters reported on Thursday that its global head of equity derivatives quit.

Macquarie closed part of its equity-derivatives operations in Hong Kong, cutting seven jobs, according to Bloomberg. UBS said in an analyst note in September that Macquarie should cut up to 1,000 jobs.

Goldman Sachs has let go some research analysts over the last month, including staff in Hong Kong, Taiwan, South Korea and India, another source added.

Nomura Holdings posted its first quarterly loss in 2-1/2 years on Tuesday due to a slump in investment banking revenues and tripled its cost-cutting target to $1.2 billion to cope with market conditions a top executive said were about as tough as the 2008 financial crisis.

BBVA has laid off several fixed-income traders in Asia, sources said. .

Spokespersons at all the banks either declined to comment or could not immediately be reached.
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Dhanlaxmi Bank appoints Ramesh Krishnan as Head of Treasury

Kochi, Nov. 3: Dhanlaxmi Bank has announced the appointment of Mr Ramesh Krishnan as Head of Treasury.

Mr Krishnan joins Dhanlaxmi Bank from Bank of Maldives where he was the Chief Credit Officer. He was also the acting CEO of the Dhanlaxmi Bank in Male for a period of nine months.

Announcing the appointment, Mr Manish Kumar, President, HR said: “Mr Krishnan brings with him in-depth knowledge in diverse areas of treasury and risk management ranging from domestic markets to foreign exchanges. His appointment will help the bank in strategically allocating its resources, hedge risks, and enhance trading profits.”

Mr Krishnan is a professional banker and has about 27 years of rich experience in the banking industry. He started his career with State Bank of Travancore before moving to State Bank of Hyderabad. Over the years he has held senior positions in domestic and forex treasury and headed the integrated risk management department of State Bank of Travancore.
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IDBI Bank's Aadhaar enrolment

Chennai, Nov. 3: IDBI Bank, one of the registrars for enrolment of residents under the Aadhaar project of UIDAI, has launched its enrolment in Tamilnadu from 10 branches in Chennai for its customers, their relatives and other residents. The launch was inaugurated by Mr K.C. Jani, Executive Director, IDBI Bank Ltd, Mumbai, at the Greams Road Branch in Chennai.

Simultaneously, the enrolment has commenced from IDBI Bank's branches located at Parrys Corner, Kilpauk, T. Nagar, Velacherry, Ashok Nagar, Periyar Nagar, Anna Nagar, Mogappair, Thiruvanmiyur and Nandanam. The bank will commence enrolment from other branches in Tamil Nadu soon.
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Italian banks keen on setting up branches in India

Chennai, Nov. 3: Two large Italian banks are likely to open up their branches in India to assist financially Italian businesses set up operations here, according to Mr Pierfrancesco Gaggi, Director, Associazione Bancari Italiana or the Italian Banking Association, which represents the Italian credit and financial industry in all international forums.

Currently, some of the Italian banks operate in India only through representatives in various cities, he said on the sidelines of a seminar.

“I cannot say when they are opening the branch. Officials of the banks are having a discussion with the Reserve Bank of India on the regulatory compliances, including the minimum capital required, to set up a branch,” Mr Gaggi said. He did not give the banks name. “I am not authorised to give the names,” he said.

The association has 1,032 members of which nearly half are banks. Representatives from ten banks are part of the 100-member business delegation currently in India. The Italian Ministerial and Business Mission participated in a business forum in Delhi on October 31, and one in Chennai today.

Italian banks are interested in setting up branches in India due to the strong business growth between the two countries, which last year touched $8.50 billion. This is likely to double in the next five-six years, he said.

Inaugurating the seminar on ‘Doing Business with Tamil Nadu' to coincide with the delegation's visit to Chennai, Tamil Nadu's Industry Minister, Mr S.P. Velumani, said Italy was ranked 12th largest investor in India with an investment of nearly $1.20 billion, which was 0.7 per cent of the total investment inflow into the country from April 2000 to August 2011.

Inviting Italian industry to invest in Tamil Nadu, the Minister said a number of new projects with a total investment of around Rs 20,000 crore are under various stages of finalisation. Future prospects for investment and trade are encouraging as India is increasingly being seen by Italy as an important economic partner in Asia. Within India, Tamil Nadu offers a better business climate, he said.
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IRDA approves insurance joint venture by Videocon, Liberty Mutual

Mumbai, Nov. 3: The Insurance Regulatory and Development Authority has given its go ahead to the Videocon Group's general insurance joint venture with the US-based Liberty Mutual Group, said a senior IRDA official.

Videocon Industries and Liberty Mutual had announced their intention to form a general insurance joint venture in November 2010.

Liberty Mutual will hold a 26 per cent stake in the JV with Videocon holding the remaining stake. The foreign insurer will have the option to increase its stake in the joint venture if regulations permit.

The two companies had said earlier that they will start the insurance JV with an initial capital of around $67 million.

Liberty operates in 17 countries worldwide with a mix of offerings in the insurance space ranging from auto, home and life, as well as personal liability insurance.

This is Liberty's second foray into the Indian non-life segment. It had earlier tied up with FMCG major Dabur to form a general insurance venture in 2008. They parted ways later on due to the economic slowdown.

Videocon is one of the largest players in the consumer electronics and home appliance space and operates in seven key sectors such as consumer electronics, home appliances, direct-to-home TV services, mobile handsets, GSM services, oil and gas services, LCD panel manufacturing and colour picture tube glass.

When contacted, the Videocon group chairman, Mr Venugopal Dhoot, declined to comment on the development.
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Dhanlaxmi Bank plans fresh capital infusion

Kochi, Nov. 3: The Thrissur-based Dhanlaxmi Bank has proposed to infuse fresh capital within the next 2-3 months. However, Mr Amitabh Chaturvedi, Managing Director and CEO, declined to give any figure on the amount to be pumped in. The infusion, he said, would be completed within the fiscal ending March 2012.

Speaking to reporters in connection with the launch of second series of Dhan Gold coins here, he said that a US-based lender had earlier evinced interest in putting money into the bank. However, Dhanlaxmi Bank had later called off negotiations as it was not comfortable with the ownership pattern of the US bank.

Despite being a late entrant in gold retail, the bank, which launched 5-gram and 10-gram ‘Dhan' gold coins in June, had sold about 200 kg of gold valued at Rs 450 crore so far. Buoyed by the success of its gold business, the bank has now launched gold coins weighing 2 grams, 8 grams, 20 grams and 50 grams, he said.

The foray into gold retail is a part of Dhanlaxmi Bank's overall strategy to be a leading provider of end-to-end investment products and services across banking verticals, he said.

Mr P.G. Jayakumar, Executive Director, said that the 24-carat gold coins are available in tamper proof packs at the Dhanlaxmi bank's branches across the country. The bank sees lot of potential in gold as an asset class. With greater disposable income and high inflation, investment in gold will allow investors to hedge and diversify their savings and investment portfolio, he said.
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RBI okays new rules for structured derivative offers by banks

The Reserve Bank of India on Wednesday said banks may offer structured derivative products to customers for hedging risk. These should not contain any underlying derivative.

Banks must seek a resolution of the customer-company board on the limit set for dealing in derivatives. (Earlier, companies had to specifylimits for particular persons allowed to enter into derivative deals). This takes effect from January 1, 2012.

While monitoring this limit, a bank would take into account the absolute notional amount of all derivative contracts entered into by the company.

The use of a structured derivative is in addition to generic derivative products like foreign exchange forward contracts and interest rate swaps which a bank can offer for risk management. RBI’s revised norms said banks will need its approval prior to offering structured derivative products.

Structured derivative products include instruments that are a combination of either cash and one or more generic derivative products. They could also be a combination of two or more generic derivatives.


Source: Business Standard
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Standard Chartered's income from Indian operations continues to fall

MUMBAI: Standard Chartered Bank's income from Indian operations has seen a further slowdown, said the bank in its interim management statement for the third quarter of 2011, released on Wednesday. Meanwhile, income for Standard Chartered Plc in the first nine months of 2011 has grown by a high single-digit percentage over the first nine months of 2010, said the bank in its statement. "Over the same period, operating profit before tax grew at a double-digit rate," it added.

The operating profit of the UK-based bank's Indian branches had plunged 39% to $378 million in the first half of 2011, for the first time in about six years.

"Income remains well spread by geography. Whilst we have seen a further slowdown in India, and Korea remains muted, we continue to see strong performances in Hong Kong and Singapore," said the bank in its statement. "Despite competition remaining strong across our markets, we are seeing a number of opportunities to reprice business and increase market share," it added.

India, which was the largest contributor to the Standard Chartered Group's profits in the first half of 2011, had slipped to the third position. Profitability from the bank's Indian operations has been under strain, following the tough macroeconomic environment, slippages of deals, increased competition and regulatory changes.

In such challenging times, the bank is expected to see a change of guard. In an internal announcement, bank employees have been informed that Sunil Kaushal, head of Standard Chartered Bank's operations in Taiwan, will head the bank's India operations, said a source in the know of the development.

However, this is subject to regulatory clearance. Neeraj Swaroop, Standard Chartered's regional chief executive officer of India and South Asia, will be relocating to Singapore as regional chief executive officer for southeast Asia.


Source: EconomicTimes
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Dena Bank aims to hit Rs 1.5 lakh cr mark by 2013

Public sector Dena Bank aims to achieve Rs 1.5 lakh crore business with a growth of 20% during this fiscal, according to a top bank official.

"We have set a target of Rs 1,50,000 crore by 2013," Dena Bank Chairperson and Managing Director Nupur Mitra, who assumed office today, said.

She said the bank reported 19.21% jump in total business at Rs 1,07,336 crore as of September 30, 2011.

On the outlook for this financial year, she said the bank would introduce gold loan and housing loans. "We plan to introduce gold loan scheme and housing loan. Already we have tied-up with 70-80 builders to sell [housing loans]," she said.

Besides, a revision of interest rates for savings bank accounts would be decided at the Asset Liability Committee meeting (ALCO), slated to be held this month.

She said the bank would lay special focus on Maharashtra and Gujarat as they have a significant presence there. "We have around 500 branches in Gujarat alone. With many auto majors, it is becoming a major hub," she said.

The bank has already opened 507 ATMs and aims to increase it to 757 by March 31, 2012, she said.


Source: Business Standard
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SKS Microfinance to raise Rs 900 cr via share sale

MUMBAI: Country's largest MFI SKS Microfinance today said it will raise up to Rs 900 crore through issue of shares to institutional investors.

The board of the country's only listed micro finance company has approved issuing equity shares through qualified institutional placement (QIP) to raise up to Rs 900 crore, SKS said in a filing to the BSE today.

The board also approved raising the authorised capital of the company to Rs 135 crore from Rs 95 crore.

SKS had raised Rs 1,654 crore by way of an initial public offering (IPO) in July last year.

The micro finance (MFI) industry is going through rough weather after the Andra Pradesh government introduced an act last year to regulate their activities.

The Andhra Pradesh Microfinance Institutions (Regulation of Moneylending) Act, 2010, requires MFIs to declare interest rates upfront and disclose all details relating to their borrowers.

The Act has hampered microfinance activity in the state and MFIs that were accused of charging very high interest rates on the loans are now finding it hard to get funds from banks.

Micro finance -- the practice of giving small loans to poor people -- have come under intense scrutiny after a string of farmer suicides in the Andhra Pradesh, leading to the creation of an act to regulate their activities.

SKS Microfinance Chairman Vikram Akula said in the annual report that the provisions in the Andhra Pradesh MFI Act were hampering the company's growth in the state, resulting in a five per cent reduction in its overall loan portfolio.



Source: EconomicTimes
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Wednesday, November 2, 2011

Vizag commercial branch of SBI doubles biz volume

The Visakhapatnam commercial branch of SBI has doubled its business volume and added seven new corporate clients during the first year of its operations, according to Mr V. Narsi Reddy, Assistant General Manager and branch head.

He told presspersons here on Wednesday on the occasion of the first anniversary that the specialised branch meant for financing mid-corporateshad made remarkable strides during the year. “We began with a modest business of Rs 635 crore a year ago and now it has swelled to Rs 1,356 crore till date and by March-end we are likely to touch the Rs 1,500-crore mark. By 2013, we wish to take it up to Rs 2,000 crore,” he said.

He said there were six such branches of SBI in the State - four in Hyderabad, one in Guntur and one here. He said currently 20 mid-corporates were in the fold of the branch engaged in manufacture of steel, construction and infrastructure, petrochemicals, marine products, and hospitality sector.

“It is a one-stop shop for all financial services the corporates need. Any corporate with credit requirement of Rs 10 crore and above can approach us. Regardless of where the unit is located, we will finance it if the promoters hail from the region, our area of operation from Vijayawada to Srikakulam. The branch is equipped with all modern amenities and facilities the corporates need,” he said and urged the industrialists, traders and businessmen to make use of it.

“A relationship manager is attached to the corporates to pay special attention and a fully-equipped international banking division takes care of the forex needs of the corporate clients,” he said.

He said the interest rates would be reduced by two per cent or so, if the balance sheet of the client was really good or the project viable. The branch also accepts deposits, but its focus is on lending to corporates. It currently has Rs 56 crore in deposits.

Mr R. Srinivasu, Assistant General Manager, and the relationship manager, also spoke about the services being offered by the branch.
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Allahabad Bank Q2 net up 21% on interest income

Riding on the back of a rise in net interest income and higher margins, Allahabad Bank posted 21 per cent growth in net profit at Rs 488 crore for the quarter ended September 30, 2011, against Rs 403 crore during the corresponding period last year.

On a sequential basis, profits rose 17 per cent from Rs 418 crore during quarter ended June 30, 2011.

The net interest margin during the quarter under review, improved to 3.68 per cent (3.34 per cent) on account of operational efficiency, said its Chairman and Managing Director, Mr J.P. Dua.

Slippages rose by 15 per cent at Rs 520 crore (Rs 453 crore). “The slippages were up primarily on account of some small ticket loans in the micro, small enterprises and agricultural sectors,” Mr Dua said. However, there was no concern regarding asset quality so far and the bank was able to recover Rs 443 crore during the first half of the current fiscal, Mr Dua added.

The percentage of the bank's gross non-performing assets (NPA) to advances was flat at 1.77 per cent, while the percentage of its net NPAs to advances inched up marginally at 0.69 per cent (0.56 per cent).

Allahabad Bank scrip inched up by 8.05 per cent to close at Rs 161.05 on the BSE on Wednesday.

The bank does not have any immediate plan of hiking interest rates on savings bank account, Mr Dua said. “There is adequate liquidity in the system. We will, however, watch the market before taking a call on the issue. We might look at adding some innovative products in the savings bank basket.”

The capital adequacy ratio of the bank was at 12.99 per cent as on September 30, 2011. The bank has approached the Union Government for capital infusion to the tune of Rs 1,000 crore during the current fiscal. Allahabad Bank had received capital support to the extent of Rs 670 crore from the government last year.
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Punjab and Sind Bank profit jumps 35.47%

Government-owned Punjab and Sind Bank reported a 35.47 per cent increase in net profit for the second quarter of the current fiscal. The net profit rose to Rs 147.76 crore for the second quarter ended September 30 from Rs 109.07 crore from the year ago period.

The total business of the bank stood at Rs 1,02,982.88 crore for the half year ended on September 30 against Rs 88,841.06 crore in the corresponding period last year, registering a growth of 15.92 per cent on a year on year basis.

Net NPA of the Punjab and Sind Bank stood at Rs 297.46 crore as on September 30 against Rs 155.90 crore on the year ago period. The net NPA ratio was 0.71 per cent.
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No savings bank rate hike for now, says SBI chief

The State Bank of India Chairman, Mr Pratip Chaudhuri, on Tuesday ruled out any immediate increase in its savings bank account rate, saying that the largest Indian bank is confident of the people’s continuing trust in the various facilities being provided to them by SBI.

“No major bank has increased the interest rates on deposits in SB accounts. Those who have done it are not big ones,” he told reporters after the annual conference of SBI’s Chief General Managers (CGMs) here, when asked whether SBI plans to increase the rates in the wake of deregulation of rates by the RBI in the second quarter monetary policy review last week.

Three private sector lenders — YES Bank, Kotak Mahindra Bank and IndusInd Bank — have increased the interest rates on SB deposits by up to 200 basis points over the last few days.

Replying to a question, Mr Chaudhuri said the Government is committed to infuse capital in SBI by March 2012 and take a decision on the kind of recapitalisation needed. “It is in the process in the Finance Ministry.”

The SBI chief said it was difficult to predict whether rate hikes would curb inflation. The RBI is targeting to bring it down to 7 per cent by March 2012. If that happens, the central bank could possibly halt any further hike, he added.

Asked about home loan tenures, he said since the average life of a new house is seen as 30 years, SBI is considering increasing tenure of home loans to up to 30 years.

He said there was no deceleration seen in the individual home loan accounts and, in particular, the demand was robust in the premium segment. But there is stress in some sectors of economy such as agriculture, textiles, engineering and SMEs. “Any slowdown in core industries is not good for favourable collection," he said.
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Karur Vysya Bank net up 10% to Rs 113 cr

Karur Vysya Bank's net profit rose 10.44 per cent for the quarter ended September to Rs 113.31 crore compared with Rs 102.60 crore achieved during the corresponding quarter of the earlier fiscal.

Its operating profit increased 8.7 per cent to Rs 157.67 crore (Rs 145.07 crore) consequent to a 24.27 per cent increase in its net interest income to Rs 216.47 crore (Rs 174.19 crore).

Interest income was up 49 per cent to Rs 772.05 crore (Rs 518.38 crore).

The bank's year-on-year net profit increased by 23 per cent to Rs 230.01 crore against Rs187.08 crore during the corresponding first half of the earlier fiscal

With deposits up by 28 per cent at Rs 27,121 crore and advances by 32 per cent to Rs 20,216 crore, the bank's business mix crossed the Rs 47,000-crore mark. The bank is aiming to reach a business level of Rs 55,000 crore by end March 2012.

Its gross NPA fell from 1.55 per cent in the first half of the last fiscal to 1.48 per cent.
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PNB profit grows 12% in Q2 despite higher provisioning

Punjab National Bank has reported a 12.1 per cent increase in net profit during the quarter-ended September 30.

Announcing the results on Tuesday, Mr K.R. Kamath, Chairman and Managing Director of PNB, said even after high provisioning for various loan accounts, profits rose to Rs 1,205 crore during the second quarter from Rs 1,075 crore in the same quarter last fiscal.

The bank managed to record a total business of Rs 5,90,803 crore, showing a year-on-year increase of 22.5 per cent.

The bank's net interest margin declined from 4.06 per cent to 3.95 per cent. This was mainly because of the cost of deposits going up from 4.96 per cent to 6.52 per cent.

Interestingly, the total interest amount paid on deposits and borrowings grew by 58.09 per cent, while interest earned on advances, investment, balance with Reserve Bank, inter-bank lending and others rose by 38.67 per cent.

However, PNB's net non-performing assets (NPAs) increased by 46.53 per cent to Rs 2,088.77 crore during the first six months of this fiscal. But, the proportion of total advances increased to 0.84 per cent from 0.69 per cent.

On hike in interest rate on savings bank account, the bank said it would take a decision only after assessing the market's response to such moves by private banks.

Mr Kamath said that the bank's asset liability committee would take a call on increasing the interest rate. No date has yet been fixed for the meeting, he added.
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Tuesday, November 1, 2011

Canara Bank net slips 15% on rise in NPAs

A spurt in non-performing assets ( NPAs) due to 100 per cent implementation of system-based NPA identification caused a 15 per cent dent in Canara Bank's net profit for the second quarter of this fiscal. The bank's net profit stood at Rs 852.22 crore compared with Rs 1,007.88 crore recorded during the corresponding quarter of last fiscal.

“A major cleaning exercise was done comfortably and comprehensively. We are now in a position to produce much better results in the next two quarters, as we would not have the weight of hidden NPAs in smaller accounts,” said Mr S. Raman, Chairman and Managing Director, Canara Bank.

Though the bank made cash recoveries of Rs 808 crore during the quarter, it added net NPAs of Rs 187 crore too. This year so far, the bank's slippages are at Rs 2,500 crore, and “we are confident NPA slippages will not be much different from the last year despite smaller accounts coming into NPAs,” he said. The bank hopes to recover over Rs 3,000 crore this fiscal.

The net interest income of the bank was also marginally down due to reversal of income of Rs 120 crore during the quarter.

The banking system is witnessing a “silent liquidity overhang” due to which net interest margins are under pressure, Mr Raman pointed out. “The NIM scenario was a lot different over the last fiscal. In June, our NIM was 2.42 per cent, and now it is 2.64 per cent. We hope to substantially improve our NIM in the next two quarters, and our target is 2.75-2.8 per cent for the fiscal,” he said.
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IndusInd Bank hikes rates on savings a/c by 2% to 6%

Private sector lender IndusInd Bank has hiked interest rates on savings accounts by up to 200 basis points, offering clients a return of as much as 6% on their deposits.

Savings bank accounts with a balance of over Rs 1 lakh will earn interest of 6%, while others will be paid 5.5% interest, the bank said in a release.

The interest on savings bank accounts was earlier fixed at 4% before the RBI freed the rates.

IndusInd Bank has also raised its lending rates by 25 basis points. The new rates will be effective from tomorrow.

The decision to raise interest rates comes within a week of the Reserve Bank hiking key policy rates and freeing the interest rates on savings bank accounts.

Earlier, Kotak Bank and YES Bank raised interest rates on savings deposits in their banks up to 6%. The lenders have also revised their lending rates upward by 25 basis points.

IndusInd Bank has a network of 350 branches. It also has representative offices in London and Dubai.


Source: Business Standard
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Andhra Bank launches online facility

Customers of Andhra Bank now have one more facility of electronic banking. Henceforth, they can open their term deposit accounts online through the Internet banking platform.

After opening the deposit account, the customer can collect the deposit receipt bond from the branch at his/her convenience.

The facility adds to the growing list of online features already provided through Internet banking such as enquiry of balance, account statement printing/downloading, request of cheque book, fund transfers, e-rail ticketing, online tax payment, e-shoppe etc.

The customer-friendly facility was launched today by the bank's Executive Director, Mr A.A. Taj.
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Vijaya Bank conducts home loan mela in Mangalore

The regional office of Vijaya Bank in Mangalore conducted a home loan mela on October 29 and 30.

Quoting Mr Sudhakar Shetty M., Deputy General Manager of the bank, a bank release said here that through the housing loan mela, bank gave spot sanction based on income and offered a 50 per cent concession in processing charges.

Mr B. Ibrahim, Director of the bank and former Member of Parliament, inaugurated the mela, the release added.
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Jump in provisioning dents Oriental Bank Q2 net profit

Oriental Bank of Commerce (OBC) has reported a 58 per cent decline in net profit for the quarter ended September 30, 2011 at Rs 167.74 crore (Rs 397.65 crore).

The second quarter bottomline performance was weighed down by 114 per cent jump in provisioning, especially towards bad debts.

For the quarter under review, provisioning (other than taxes) stood at Rs 485.34 crore (Rs 226.31 crore).

“The bank has moved to system-driven NPA provisioning. The second quarter performance was impacted by this. You will see a different picture in the December quarter,” Mr Nagesh Pydah, Chairman and Managing Director of OBC, said here on Monday.

Total income of the bank for the second quarter ended September. 30, 2011 increased by 27 percent to Rs 4,078.78 crore (Rs 3206.04 crore).

For the six months ended September 30, 2011, OBC reported a net profit of Rs 522.44 crore, reflecting a 31 percent decline over net profit of Rs 760.96 crore recorded in same period last year.

Total income increased by 28 percent to Rs 7998.84 crore(Rs 6251.58 crore).
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Sundaram BNP Paribas Q2 net nearly doubles to Rs 21.08 cr

Sundaram BNP Paribas Home Finance has nearly doubled its net profit during the second quarter ending September 30, 2011, against that of its net profit in the corresponding quarter previously

The net profit for the quarter was Rs 21.08 crore (Rs 11.61 crore) on disbursements of Rs 452 crore (Rs 294 crore).

Supported by the performance, the company is confident of achieving its disbursement target of Rs 1,800 crore for the year, said Mr Srinivas Acharya, Managing Director, Sundaram BNP Paribas Home Finance.

The company is expanding presence while strengthening position in traditional markets in the South. Some of the new markets it expects to be present ‘very shortly' are Bhopal and Bhubaneshwar. Others on the list are Aurangabad and Kolhapur. The housing finance company has 68 offices now. By the year end the number will be 75.

Nearly 40 per cent of its business is from Tamil Nadu; 23 per cent from Andhra Pradesh; 15 per cent from Kerala and 12 from Karnataka. The company is targeting the Tier-II and III cities in its expansion plans as business is being driven by strong employment generation in these areas. Its focus will be on the South with entry into select markets elsewhere.

As a provider of home loans, the company has seen that the hike in interest rates ‘per se' does not dampen the markets, said Mr Acharya, the Managing Director. End-users keen on buying their first home are making the investments.

The quality of loans continues to grow with NPA figures shrinking to a net of 0.27 per cent (0.42 per cent); and gross to 0.57 per cent (0.71 per cent). Its weighted average cost of funds is 9.46 per cent with home loan rates starting from 10.75 per cent.
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Dena Bank Q2 profit grows 20.5% to Rs 194 cr

Dena Bank has reported a 20.51 per cent jump in net profit to Rs 194 crore for the second quarter ended September 30, 2011, from Rs 161 crore in the corresponding quarter last year.

“The bank has identified agriculture, MSME and retail as thrust areas for lending,” said Mr D.L. Rawal, Chairman and Managing Director of Dena Bank.

As on September 30, 2011, the bank's deposits grew 20 per cent to Rs 64,236 crore and advances were up 18 per cent to Rs 43,100 crore. The net interest margin fell to 3.22 per cent during this quarter from 3.52 per cent in the previous quarter.

On increasing savings bank rate, Mr Rawal said that the bank has enough liquidity, and there is no immediate plan to increase the SB rate. “It will depend on a combination of factors such as liquidity position and relationship with one's customers. But in one or two months, we will have to take a call,” he said.

The bank has recruited 564 officers in the area of credit, agriculture and forex and is in the process of recruiting about 600 clerks. The bank is planning to open 100 new branches during the current financial year.
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Corporation Bank net up 14% despite rise in NPAs

Corporation Bank's net profit increased 14 per cent to Rs 401 crore in the quarter ended September 30, 2011, from Rs 352 crore in the corresponding quarter last year.

The bank saw a huge rise in non-performing loans on account of moving to the system based recognition of NPA, said Mr Ajai Kumar, Chairman and Managing Director.

Gross NPAs increased to Rs 1,080 crore (Rs 740 crore) and provisions increased to Rs 205 crore (Rs 98 crore).

“NPAs are the biggest challenge for the bank. The number of small NPA accounts has gone up due to the system based recognition of NPAs. Even those cases that were borderline are now shown as NPAs,'' said Mr Kumar

The bank will focus on recovery from NPAs over the next six months and target a gross NPA ratio of less than 1 per cent, he added.

The high cost of deposits also impacted the bank's profitability. The bank plans to improve its share of low-cost current and savings account (CASA) from the current 21.8 per cent. There is no immediate plan to increase the savings bank rate as it will impact profitability, Mr Kumar said.

Going ahead the bank will focus on retail and SME segments. In the current financial year, the bank is targeting deposit growth of 25 per cent, advances growth of 20 per cent, NIM at 3 per cent and CASA at 30 per cent.

Shares of Corporation Bank closed at Rs 426.75, up 2.92 per cent, from Rs 414.65, on the BSE, on Monday
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ICICI Bank: Declining provisions continue to aid profit growth

A moderation in net interest income (NII) and fee income growth and high operating expenses led to an operating profit growth of 6 per cent year-on-year for ICICI Bank in the second quarter.

This growth was the highest in six quarters. This is the first comparable quarter as Bank of Rajasthan was merged with ICICI Bank in August 2010.

Even as ICICI Bank witnessed a single-digit operating profit growth, the net profit growth was 21.6 per cent, thanks to provisions, which declined (year-on-year) for the sixth quarter in a row. Provisions declined by 50 per cent year-on-year.

Advances grew by 20 per cent year-on-year, but net interest income growth was more in-line with the balance sheet growth of 13 per cent year-on-year. The reason being, the net interest margins were similar to what they were in September 2010 quarter. Net interest margins were at 2.6 per cent in the September 2011, June 2011 and September 2010 quarters.

So what led to the similar NIMs?

The yield on investments, staying flat, did not support the sequential improvement of September quarter's yield on advances by 40 basis points. This more or less offset the rise in cost of funds by 20 basis points, leading to margins being maintained at similar levels.

The CASA ratio continues to be at impressive 42 per cent, which is encouraging. ICICI Bank's last base rate hike in mid-August will aid yield in upcoming quarters. However, the cost pressures from savings rate de-regulation may partly offset the yields.

Operating expenses grew at 20 per cent driven mainly by employee costs, although the bank added only 32 branches in a year. Last year, the bank's branch network jumped by 18 per cent following the merger with Bank of Rajasthan's branches.

Asset quality, in line with other private banks, improved with gross NPA ratio falling from 5.03 per cent to 4.14 per cent year-on-year. After provisioning, the Net NPA ratio at 0.93 per cent shows that the bank's initiatives to contain asset quality pressures over the last few years have paid-off. While GNPA ratio witnessed moderation sequentially, the restructured asset portfolio spiked mainly due to MFI restructuring. The restructured asset proportion to total advances is at 1.06 per cent as against 0.9 per cent in June 2011.
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