Govt asks public sector banks to save money and grow at same time

MUMBAI: A cash-starved government is wielding a stick on public sector banks by asking them to conserve capital through cost-cutting while sticking to loan growth targets, throwing bank executives into a tizzy. The government, which has admitted that it will fail in borrowing and fiscal deficit targets, has told banks to strengthen their tax departments to ensure there are no slippages in revenue to the exchequer. State-run banks, which control three-fourths of bank lending, should take insurance cover on loans to exporters and small & medium...

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Citigroup's Samir Mathur puts in his papers

NEW YORK: Citigroup, the third-biggest US bank, is shrinking a team of traders who deal in "hybrid" products as Chief Executive Officer Vikram Pandit cuts Wall Street jobs, two people familiar with the matter said. Samir Mathur, former head of hybrid trading, is leaving the New York-based firm and is in talks to join a hedge fund, according to one of the people, who asked to remain anonymous because the move hasn't been announced. Other members of the desk who reported to him, including Yontcho Valtchev, Vivek Kapoor, Eric Kim, Sean Corrigan and...

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KFC bonds fully subscribed in five days

Kerala Financial Corporation’s (KFC) bond issue of Rs 100 crore has been fully subscribed within five working days from the date of opening of the issue. The bonds were floated in the first week of December, said Mr Premnath Ravindranath, General Manager, KFC. The corporation has since decided to exercise the green shoe option of retaining another Rs 100 crore to give an opportunity for even more investors to be a part of the State’s growth story. The bonds are in the nature of debentures with unconditional, irrevocable guarantee of the State Government. They...

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KVG Bank prepares roadmap to reduce bad loans

Karnataka Vikas Grameena Bank (KVG Bank) has prepared a roadmap to reduce non performing assets (NPAs) and has set a target of achieving a level of 1 per cent (NPAs) to total advances by the end of this financial year. According to Mr C. Sambasiva Reddy, Chairman, KVG Bank, “We plan to focus on bad debt management for reducing the NPAs.” The bank has taken the initiative based on recommendations relating to reforms in banking sector made by the Boston Consulting Group (BCG), in a report ‘Being Five Star in Productivity: Roadmap to Excellence in...

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Kotak Life Insurance Launches Kotak Invest Maxima

Kotak Life Insurance has launched an investment oriented Unit Linked Insurance Plan (ULIP)- Kotak Invest Maxima. The plan offers a zero premium allocation charge feature maximizes the investible component the choice of three different portfolio management strategies. Customers can choose from a self managed strategy which offers a choice of 5 attractive funds options or systematic switching strategy which enables the customer to invest in the equity market in a systematic manner over a period of time or a customized combination of the two. In the...

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LIC Housing Finance to launch fixed rate loans next month

LIC Housing Finance Ltd will roll out a completely fixed interest rate home loan product next month, according to Mr V. K. Sharma, the company's Director and Chief Executive. “The product is ready. There is a possibility of interest rates going down. We plan to fix interest rate after the Reserve Bank of India's policy review on December 16,” Mr Sharma told newspersons after inaugurating a three-day property show here on Friday. The product would be first of its kind in the home-loan market as all existing products are combination products with...

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No second round of debt restructuring for Kingfisher by banks

Banks have no plans to carry out a second round of debt restructuring of the ailing Kingfisher Airlines which has an outstanding loan of around Rs 6,419 crore, Parliament was informed on Friday. “State Bank of India, leader of the consortium (of 11 lenders to Kingfisher), has stated that at present, there is no plan,” Minister of State for Finance, Mr Namo Narain Meena, said in a written reply in Lok Sabha. He was replying to a question on whether lenders are planning to carry out a second round of restructuring of loans to help Kingfisher. The...

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Credit growth will start picking up next year, says Axis Bank MD

Credit growth, which has been moderating over the last two years, will start picking up next year, said Ms Shikha Sharma, Managing Director and Chief Executive Officer, Axis Bank. “Credit growth is directly linked to what is happening in the economy. Our belief is in the long term growth of the economy so we expect credit to pick up,” Ms Sharma told newspersons on the sidelines of a CII leadership summit here on Friday. The slowdown in credit offtake was primarily on account of a dip in demand from large corporates. “The industry was on a tightening...

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Will take necessary steps to ensure liquidity: Subbarao

The Reserve Bank of India (RBI) on Thursday said it would take all the necessary steps to ease liquidity constraints in the money market. RBI has been buying back government securities to ease the liquidity situation, after having raised key policy rates 13 times since March 2010. So far, RBI has bought back securities worth about Rs 25,000 through open market operations (OMOs). Also, upcoming advance tax payments by companies are likely to add to the liquidity constraint in the market, given companies have to pay advance taxes for the third quarter...

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Dhanlaxmi Bank officers call truce with management

The Dhanlaxmi Bank Officer's Organisation on Thursday called off its agitation, reaching a settlement with the management over various demands, including bonus, increments, pension and trade union rights. Shares of the Kerala-based private sector bank rose sharply on the Bombay Stock Exchange, closing at Rs 59.30, 8.41 per cent over the previous close. The officers' body, affiliated to the All India Bank Officers' Confederation (AIBOC), had alleged the management's mismanagement of affairs had led to asset-liability mismatches, pressure on profits...

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Barclays India freezes retail biz

Mumbai: Barclays India, which has been rejigging its operations, today said it is freezing the retail business in the country, a move that comes a day after it sold nearly half of its credit card business to StanChart India. "As part of our decision to consolidate and build a sustained profitable Indian business based on our competitive strengths globally, we have decided to not book new retail loans here. However, we will continue to maintain our deposit business, while focusing on wealth management, large corporates and investment banking services....

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Syndicate Bank shortlists 4 for life insurance venture

Public sector lender Syndicate Bank has shortlisted four firms, three domestic insurance companies — Aviva Life, Reliance Life and Birla Sun Life - and a foreign insurer, Avantha Ergo, for its proposed venture in the life insurance space. The bank is seeking a 'brand premium' of Rs 300-350 crore and a minority stake in the life insurance company, according to three people familiar with the development. The deal is likely to be finalised in the next couple of months. According to sources, the bank would prefer buying a stake of around five per cent...

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RBI buys bonds worth Rs 9,000 cr under OMO

As part of its strategy to ease the liquidity crunch, the Reserve Bank of India (RBI) today bought bonds worth Rs 9,092.9 crore under its open market operations (OMO) against a target of Rs 10,000 crore. Four securities were offered today as part of open market operations (OMO), the central bank said in a statement. While the government security (G-Sec) maturing 2017 with a coupon rate of 8.07% garnered Rs 1,682.88 crore, 7.83% GS maturing on 2018 had garnered Rs 4,439.85 crore. Similarly, the RBI purchased 8.13% GS of Rs 1,860.3 crore maturing...

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Bank Indonesia sells SBI debt

JAKARTA: Indonesia's central bank sold its nine-month SBI debt on Thursday at a 5.03858 percent rate, lower than 5.22412 percent in last month's auction, absorbing liquidity more than expected. Bank Indonesia (BI) also sold its nine-month sharia SBI debt at the same rate. It sold 27.29 trillion rupiah ($3.02 billion) of SBIs and 382 billion rupiah of sharia SBIs. BI kept its benchmark overnight rate at a record low 6 percent on Thursday as anticipated, pausing because it expects recent rate cuts to help to stimulate the domestic economy next year...

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Bank of England holds interest rate at record-low 0.50%

LONDON: The Bank of England voted on Thursday to hold its key interest rate at a record low 0.50 percent amid turmoil for the British economy and neighbouring eurozone. "The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5 percent," the BoE said in a statement after a two-day meeting. "The Committee also voted to continue with its programme of asset purchases totalling £275 billion (323 billion euros, $432 billion) financed by the issuance of central bank reserves." Later...

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Banking in South — A story of success

South India has had a long tradition of financial institutions. The region has been the birthplace of several banks, not to speak of non-banks and informal (but solid) financial services institutions. The latter includes institutions such as chit funds, nidhis and mutual benefit funds which, due to their peculiarity to South India, have acquired the sobriquet “dhoti-clad institutions”. Some of these have been around for nearly a century-and-a-half. You wouldn't have heard of them, as they provide their services quietly, yet inclusively. A good...

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PNB special savings account scheme

Aimed at disbursement of salary of Government school teachers, the Punjab National Bank has introduced a special savings account scheme — PNB Shikhak Saving Account scheme in Kerala. The scheme will be a zero balance account with no charges. The teachers will be provided with free ATM/Debit cards and add-on-card, if required. This will enable the teachers the benefit of multiple ATM card for use of their family members. Free personalised cheque books will also be issued. For transfer of funds to other Bank accounts anywhere in the country, there...

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Oriental expects Rs 6,500 crore business this fiscal

Oriental Insurance Company (OICL) is targeting Rs 6,500 crore business this fiscal, a top official said on Thursday. In the next three years, it hopes to touch Rs 10,000 crore. “We are maintaining an annual growth rate of 16.5 per cent. Last year, we garnered business of approximately Rs 5,500 crore. Within the next 3 years we are hopeful of touching Rs 10,000 crore mark,” OICL CMD, Mr R K Kaul, told reporters here. OICL has a product mix that comprises 10 per cent from fire insurance, 6 per cent marine, 35 per cent motor insurance and remaining...

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Federal Bank on recruitment drive

Kerala-based Federal Bank Ltd will recruit close to 1,500 probationary officers over the next one-two years to make good the retirements that are likely to take place and to create resource to meet its expansion targets. Close to 1,000 employees of the bank are set to retire in the next two years, Mr Abraham Chacko, Executive Director, Federal Bank, said. “The banking industry had witnessed massive recruitments during the post-nationalisation period. A majority of these employees are due for retirement over the next two-three years. This is a huge...

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Exim Bank: Bill to enhance authorised capital introduced in Lok Sabha

A Bill to enhance the authorised capital of Exim Bank from the existing Rs 2,000 crore to Rs 10,000 crore was introduced in the Lok Sabha on Thursday. Also, it has been proposed to empower the Centre to raise the amount of authorised capital from time to time through executive orders. This would imply that Parliament's nod would not be required if the Centre decides to increase the authorised capital beyond Rs 10,000 crore. The Bill — Export Import Bank of India (Amendment) Bill, 2011 — was introduced in the Lower House by Mr Namo Narain Meena,...

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Now, pay Rs 500 to close your HDFC Bank savings account

MUMBAI: HDFC Bank, the lender with the highest proportion of low-cost deposits to total, has raised charges on closure of savings bank accounts and other services as it attempts to ring fence customers from flocking to rivals who offer higher rates on these deposits. It is the first lender to raise such charges probably to save its profitability after the Reserve Bank of India freed up the rates that banks pay their customers in their savings bank accounts, said two bankers who did not want to be identified. For closure of savings account, an HDFC...

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NHB to raise Rs 4,500 cr in next 6 months

NEW DELHI: Housing finance regulator National Housing Bank (NHB) today said it will raise about Rs 4,500 crore this fiscal to fund housing activities. "We have already raised Rs 4,500 crore and Rs 4,500 crore will be raised during the remaining period of the current fiscal," NHB Chairman and Managing Director R V Verma told PTI on the sidelines of a Royal Institution of Chartered Surveyors (RICS) event here. The bank, which is wholly-owned by RBI and follows the July-June financial year, has fixed the refinancing disbursement target for 2011-12...

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SKS Microfinance plans to prune micro-lending exposure

HYDERABAD: SKS Microfinance, India's only listed microfinance lender, has announced a derisking strategy wherein it plans to significantly prune down exposure, over the years, to the microfinance sector that has plunged into crisis over the past year or so. The micro lender has decided to reduce its exposure to microfinance in terms of assets, revenues and profits, said chief executive officer MR Rao and CFO Dilli Raj at a media conference in Hyderabad on Wednesday . The company will launch a wholly-owned subsidiary for its non-microfinance business. It...

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IRDA slaps Rs 5 lakh penalty on NIC

The Insurance Regulatory and Development Authority has imposed Rs 5 lakh penalty on National Insurance Company Ltd for violation of certain norms. Acting on a complaint from a policyholder, the Authority found that the public sector general insurer had violated norms pertaining to policy proposal and repudiation of claim. There was also delay in informing the policyholder, who had a shop-keeper's policy, about the rejection of the claim, Mr J. Hari Narayan, Chairman, IRDA, said in an order issued on Wednesday....

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IDBI Bank enters into 2 CDS deals with ICICI Bank

IDBI Bank on Wednesday underwrote two credit default swap transactions in respect of REC and IRFC bonds held by ICICI Bank, thus becoming the first public sector bank to enter into such a transaction for managing credit risks associated with Indian corporate bonds. The CDS transaction involved IDBI Bank selling protection (or insurance) to the private sector bank (protection buyer) in respect of a possible credit default on the latter's holding of REC and IRFC bonds for a notional amount of Rs 5 crore each. Will boost funding “The launch of the...

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SKS faces collection problems in West Bengal, Gujarat

SKS Microfinance Ltd, which has been hit by the Andhra Pradesh microfinance crisis, is now facing collection-related problems in parts of West Bengal and Gujarat. “Due to local and process-related issues the collections in some districts in West Bengal and Gujarat have dropped to about 86 per cent,” Mr M. R. Rao, Managing Director and Chief Executive Officer of SKS, told newspersons here on Wednesday. Earlier, these States had over 92 per cent collections. West Bengal is the third largest market for the Hyderabad-based company which operates in...

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