BoI scraps pre-payment fee on fixed & floating home loans

Bank of India on Saturday became the second major bank, after the SBI, to abolish the pre-payment charges on both fixed and floating rate home loans, with immediate effect.

“We have decided to implement the Damodaran committee recommendation on customer service. Accordingly, we have decided to give total liberty to our home loan customers, both on floating rates as well on fixed rates to switch if they choose to do so irrespective of the source of funds, including takeover by another lender,” a BoI official told PTI.

Before this, Bank of India, which has a home loan book of worth Rs 15,000 crore, used to charge 2.5 per cent penalty on the outstanding amount in case of pre-payment.

The country’s largest lender, State Bank of India (SBI), and the largest private sector bank ICICI Bank, had on November 25 abolished pre-payment penalty on home loans.

While the SBI had done away with pre-payment charges for loans on fixed and floating interest rates irrespective of source of funds, ICICI Bank will continue to charge 2 percent on the outstanding amount of fixed-interest loans.

Earlier this week, another state-run lender Central Bank of India too had waived pre-payment charges on its fixed rate home loans.

The Reserve Bank on October 25 had indicated that it was planning to scrap prepayment charges altogether saying in such a product the customer is taking the complete risks.

However, banks are allowed to charge appropriate pre-payment penalties in the case of fixed rate loans.

Within a few days, the National Housing Bank had asked mortgage players to abolish the charges through a circular.

But RBI is yet to issue a circular on this. Normally an RBI directive/advice becomes mandatory only after a circular.

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RBI frees rates on NRE deposits to attract dollar inflows

KOLKATA: The RBI has unleashed new ammunition to support the rupee from depreciating. On Friday, it deregulated interest rates on NRI deposits to attract more dollar flow into the country.

It has decided to deregulate interest rates on non-resident (external) rupee (NRE) deposits and ordinary non-resident (NRO) accounts with immediate effect. This will attract more dollar as banks are likely to increase the interest rates.

In case of NRI deposits, the dollar or any other foreign currency gets credited to a nostro account of a local bank which, in turn, deposits money in local currency.

This comes within a day of taking a slew of administrative measures that helped the rupee to close higher 52.70 Friday from 53.65 the previous day, giving indication that the central bank is using all its ammunition arrest the rupee from sliding further.

The rupee had depreciated by about 17% against the US dollar over its level on August 5, 2011, the day on which the US debt downgrade happened. RBI said the latest measure will provide greater flexibility to banks in mobilising non-resident deposits.

Banks have been freed to determine interest rates on both savings deposits and term deposits of maturity of one year and above under NRE and savings deposits under NRO accounts.

Source: EconomicTimes

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Irda to develop electronic re-insurance platform

The Insurance Regulatory Development Authority (Irda) said it would take steps to introduce an electronic re-insurance platform for insurers and both Indian and foreign re-insurers.

"The proposed electronic re-insurance platform will have to be mandatorily used by insurers and Indian reinsurers as well as foreign reinsurers operating in India," Irda Chairman J Harinarayan said.

He said Irda had taken up an ambitious programme of designing an exchange or an inter-faceted, interlinked, electronic platform, on which reinsurance broking transactions would be executed.

"The entire operation on the reinsurance side will be done through this particular platform once it is in place," Harinarayan said on the sidelines of the Eighth Insurance Brokers' Summit here.

Harinarayan said that it would be an ambitious task.

"There are entities working on it for some time. GIC has taken good steps in this regard but the kind of platform we are thinking would be a national and a much larger platform for placing all re-insurance contracts," he said.

Source: Business Standard

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PNB appointed lead bank for Pathankot and Fazilka

MUMBAI: The Reserve Bank assigned to state sector lender Punjab National Bank the responsibility of being the lead bank in newly created districts of Pathankot and Fazilka in Punjab.

"It has been decided to assign the lead bank responsibility of the two new districts viz Pathankot and Fazilka to Punjab National Bank," the Reserve Bank of India said in a statement.

The two new districts were created by the Punjab government in July this year.

While Pathankot was carved out of the Gurdaspur district, Fazilka has been carved out from the Ferozepur district.

"The lead bank responsibility of existing Gurdaspur district and Ferozepur district will continue to be with Punjab National Bank and Oriental Bank of Commerce, respectively," the RBI added.

Source: EconomicTimes

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ICICI may have to reduce stake in Firstsource Solutions to 10%

MUMBAI: India's biggest private lender ICICI Bank may have to cut its holding in Firstsource Solutions - the global business process outsourcing firm, which it originally promoted a decade ago - to comply with new norms announced by the Reserve Bank of India. The central bank seeks to restrict equity investments by banks in non-financial services.

ICICI Bank, which still controls 18.1% of the company's equity, may have to pare its holding to 10% in line with the guidelines issued by the banking regulator late on Monday.

The new rules say that banks can hold only up to 10% of the capital of the investee company or 10% of its paid-up capital and reserves, which is less.

The bank, while confirming it will have to dilute its stake in the BPO, said the RBI norms do provide a room for holding investments in excess of the limit with regulatory approval. An ICICI Bank spokesperson said there is a three-month window during which the bank can approach the RBI with a proposal on its existing investments. "We will deal with it appropriately in due course," the spokesperson said.

The RBI has capped the equity investment of a bank and its subsidiaries in non-financial services at 20% of the investee company's paid-up share capital. According to the banking regulator, the new norms were aimed at checking indirect influence or misuse and to ensure that banks focus on their core banking activities. The new rules may not impact other banks, the state-owned lenders, who hardly have any investments in non-financial services.

"The RBI guideline covers investments in non-financial companies, which by definition exclude investments in insurance and other subsidiaries of the bank, which are financial companies. Further, the bank's insurance subsidiaries are not expected to require significant capital infusion going forward based on the current regulations and guidelines. The guidelines would not have any material impact on ICICI Bank," the bank's spokesperson said.

The new norms also cap the investment of a bank, entities which are the bank's subsidiaries, associates or JVs or entities directly or indirectly controlled by the bank and mutual funds managed by Asset Management Companies controlled by banks at 20% of the investee company's paid up share capital.

"The Reserve Bank of India norms are aimed at ensuring that banks do not go bust on account of exposure to a single group," said a senior banker. According to this banker, who declined to be identified, the new rules were based on a recommendation of the Board for Financial Supervision (BFS) to check the loophole wherein prior approval of the RBI was not required when it came to investment in non financial services. On the Bombay Stock Exchange, the ICICI Bank scrip ended the day down 0.33% at 705.30.

Source: EconomicTimes

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Standard Chartered Bank to consolidate private banking business

MUMBAI: The Indian unit of Standard Chartered Bank has decided to consolidate its private banking business by relocating some of its relationship managers in centres such as Chennai, Bangalore and Kolkatta to Mumbai and New Delhi after being hit by cases of mis-selling of debt securities, earlier this year.

"After the incident of mis-selling, the bank had run a compliance audit and, in a bid to ease the selling process, the bank has decided to consolidate its business," said a person with knowledge of this development. A bank official, who spoke on the condition of anonymity, said that the operative business model was being changed to ensure better allocation of resources and compliance checks.

According to him, there will not be any job losses and relationship managers in Chennai, Bangalore and Kolkata would be moved to the new hubs - Mumbai and New Delhi - as the bank reckons that it is a better business model since customers can also be serviced at the bank branches.

A Standard Chartered Bank spokesperson said that information relating to the bank shutting down what is known as booking centres for private banking in a few cities was untrue.

"There is no change in our wealth management business, which is seeing strong growth and we continue to hire frontline staff to service customers better. We are aggressively hiring and aim to increase our relationship managers across Private Banking, Priority Banking, SME Banking and Wealth Managers by over 25% over 2012-2013,'' the spokesperson said.

In the first half of 2011, the bank hired over 340 relationship managers to support its growing business. "We are not shutting our centres in South, or any other centre. We continue serving clients across cities and satellites. We have had double-digit growth in wealth Management assets under management and will continue to invest in this business," the spokesperson said.

In early 2011, a relationship manager of the bank sold debt securities to private banking clients with a promise to buy them back, according to sources in the wealth management industry. The products on offer included debentures of real estate firms and a Delhi-based education company. Investors were attracted by the buyback option - something not allowed under current regulations - and higher returns. Later, the bank helped the customer find another investor who agreed to buy the debentures.

Source: EconomicTimes

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Fitch affirms investment grade to SBI

Global rating agency Fitch on Friday affirmed ‘BBB—’ or investment grade with stable outlook to the country’s largest lender State Bank of India. The agency has also affirmed SBI’s Viability Rating (VR) at ‘bbb—’.

The ratings of SBI are driven by a high probability of support from the government, given its systemic importance as the largest bank in India, as the sole banker in many economically backward regions and as a banker to various government entities, Fitch said in a statement.

Notwithstanding the revenue strengths, internal capital generation has remained and is likely to remain under pressure, firstly due to increasing credit costs and secondly on account of pension costs, at the time of the next wage revision. The weakening operating environment means Fitch expects credit costs to increase and the level of non—performing loans to rise, it said.

The operational and data integrity risks associated with a large organisation have also been highlighted by the size and timely recognition of pension liabilities, it said.

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RBI pauses - finally!

The Reserve Bank of India took a pause from its rate tightening cycle in its mid- quarter monetary policy announcement today. After 13 consecutive hikes over the past 20 months, the Reserve Bank of India decided to stay still and do nothing. It also provided guidance that a reversal in its tightening cycle may happen if conditions improve.

The RBI's last 13 hikes cumulatively amounted to a 350 basis point increase in key interest rates. The repo rate (the RBI's key policy rate - the rate at which the RBI lends money or infuses liquidity to banks) remains at 8.50 per cent, while the cash reserve ratio remains at 6 per cent.

Over the past few weeks, there has been a clamour from bankers and the market for a reduction in repo rates as well as cash reserve ratio, as growth was slowing down. However, with inflation still remaining high at over 9 per cent, a cut might have sent the wrong signal about its intentions. As leading economist and a former Deputy Governor, Dr S.S.Tarapore, put it in an edit page article in Business Line today, "A monetary policy relaxation would earn encomiums for the RBI but would be deterimental to long term growth with price stability".

Even earlier, Dr Subir Gokarn, Deputy Governor, Reserve Bank of India, had pointed out that CRR was a monetary policy tool which would not be used merely to address liquidity shortages.

CYCLE REVERSAL SOON

The RBI reiterated the guidance it had given at the time of the second quarter review. While noting that downside risks to growth remained, it said, "The guidance given in the second quarter review was that, based on the projected inflation trajectory, further rate hikes might not be warranted. In view of the moderating growth momentum and higher downside risks to growth, this guidance is being reiterated. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth."

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IRDA chief tells companies not to indulge in ‘unhealthy competition'

Insurance companies should not indulge in “unhealthy competition” and fight for the topline at any costs, Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority of India, said here on Friday. This unhealthy competition, according to him, might lead to financial trouble for the companies.

“(Insurance) companies need to improve their practices when it comes to unhealthy competition and be more responsible in accepting policies,” Mr Hari Narayan said on the sidelines of a summit organised by the Insurance Brokers' Association of India (IBAI) said here.According to him, post de-tarriffing, general insurance companies have been offering huge discount on insurance products to tap new customers. For 2010-11, the underwriting losses of domestic general insurance companies were close to Rs 10,000 crore. In portfolios like fire, the discounts have been as high as 70-80 per cent.

“To my knowledge, except for one company all companies are making underwriting losses. What we do is we keep monitoring the health of the companies in terms of overall income because the income of an insurance company is not only the underwriting profit, but it is also their investment income,” he said.

In order to improve transparency in reinsurance contracts, the IRDA is also planning to introduce a comprehensive platform soon. Through reinsurance, general insurance companies insure their risks with a foreign or Indian company.

abhishek.l@thehindu.co.in

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RBI to conduct additional repo auction tomorrow

The Reserve Bank of India will conduct additional repo operations (by which banks can borrow money from the RBI) under the Liquidity Adjustment Facility, on Friday, December 16, between 4.30 and 5 pm.

The RBI has decided to conduct the additional repo operation keeping in view the prevailing liquidity conditions and with a view to providing flexibility to scheduled commercial banks in their liquidity management, said a press release issued on Thursday.

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Karur Vysya Bank opens 8 new branches

Karur Vysya Bank has added eight new branches today and taken its total branch network to 426. The branches inaugurated today include the Santhosh Nagar branch at Hyderabad apart from branches at Tanuku, Gajapathinagaram in Andhra Pradesh, Tripunithura in Kerala, Kalapatti in Coimbatore, Tamil Nadu, Bhiwandi in Maharashtra and Joka, Baruipur in West Bengal.

It plans to add two more branches to its network on Friday with one each at Bobbili in Andhra Pradesh and Kharagpur in West Bengal.

With the inauguration of these branches, KVB has opened 59 new branches so far this fiscal. The bank is planning to launch a co-branded credit card with SBI.

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SBI opens branch in Saudi Arabia

State Bank of India started operations in Saudi Arabia with the opening of a branch in Jeddah. The branch was inaugurated on December 14 by His Excellency Dr Abdulrahaman Al kalaf, Deputy Governor for Technical Affairs, Saudi Arabian Monetary Agency.

SBI's Managing Directors, Mr Hemant Contractor and Mr A. Krishna Kumar were also present on the occasion, said a press release issued by the bank.

The Jeddah branch is a full commercial branch that offers a bouquet of banking services to the around two million Indian residents of Saudi Arabia. It also offers remittance facility for Indians residents in Saudi Arabia, said a press release issued by SBI.

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IBPS to conduct 5 ‘common' exams every year for bank jobs

The day may not be far off when Dr Manmohan Singh, or any future prime minister, will just have to call up the Institute of Banking Personnel Selection (IBPS) to fill up a vacancy at the Prime Minister's Office (PMO). That was the aspirational goal that Infosys Chief Mentor, Mr N.R. Narayana Murthy, gave to IBPS in the course of an address at its campus on Tuesday evening.

IBPS currently functions as an autonomous body that is mainly engaged in conducting competitive exams for recruitment to clerical and officers' posts in the banking sector (public sector). Its advisory services (competency mapping, recruitment, promotion, talent retention etc) have also been used by other private organisations.

IBPS proposes to conduct five exams every year for the banking sector's recruitment needs, its Director, Mr M. Balachandran said. There will be two exams for probationary officers, two for clerical levels and one for specialist officers (agricultural, law, technical).

The scores provided by IBPS for the common written exam will be valid for a year and successful candidates can apply to any bank of their choice based on these scores. Earlier, candidates had to write multiple exams conducted by each bank for their vacancies. The first such common test for probationary officers was conducted in September while the first set of clerical exams just got over on December 11. The first common test for specialised officers will be conducted in March 2012.

Last year, IBPS screened 13 million candidates for employment while this year it is expected to screen 15 million candidates. Urging the institute to expand its activities, Mr Narayana Murthy complimented it for ‘providing hope' of gainful employment to 1.5 crore Indians, of whom about a third were women.

He also set a ‘stretch' goal – asking IBPS to design a series of tests and develop new methodologies (with at least a 95 per cent confidence level) that would help detect leadership qualities in candidates for industry and the banking sector.

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Indian Overseas Bank may raise $500 mn next year

MUMBAI: State-run Indian Overseas Bank may look at borrowing $500 million in the overseas market next year to meet dollar demand from Indian companies, its chief M. Narendra told Reuters on Wednesday.

"We may, at an appropriate time, look at medium-term notes for $500 million next year, when the market is right," he said over the telephone. "This is to meet credit growth in international market, corporates who want ECBs."

"There are other markets like Chinese, Japanese where we can also raise money. So, all options can be looked at. Not immediately, but next year," he added.

Last month, India's central bank eased overseas borrowing rules for local corporates and directed that funds raised abroad meant for rupee expenditure in India would have to be brought in immediately, in a move to boost inflow of foreign currency.

Source: EconomicTimes

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SBI expects Rs 3,000-4,000 cr capital infusion

State Bank of India (SBI), the country's largest lender, today expressed hope it would get capital infusion of Rs 3,000-Rs 4,000 crore from the government this fiscal.

"It [infusion] is round the corner. It could happen any day now. I think [the mode] is not decided, but whatever we are getting we will be getting in cash. We are expecting Rs 3,000-4,000 crore either in December or by March," SBI Chairman Pratip Chaudhuri said.

Talking to reporters on the sidelines of Delhi Economics Conclave, he said that "if they [government] put in Rs 3,000 crore [in SBI], so this will mean another 3% increase in government holding". Currently, the government of India holds 59.4% in the bank.

The government has earmarked Rs 6,000 crore for the fiscal for capital infusion in public sector banks to ensure that they meet the regulatory requirements. In 2010-11, the government had provided capital support to the tune of Rs 20,157 crore to public sector banks.

The Centre is committed to providing adequate capital to public sector banks so as to maintain their Tier-I capital at 8%.

When asked if RBI will cut interest rates in its Friday monetary policy review, the SBI chief said, "I don't think so because food inflation has come down significantly and steadily. RBI has said 7% is the level they are targeting".

Food inflation has started easing over the past few weeks and declined to 6.6% in the week ended November 26.

On the bank's liquidity condition, Chaudhuri said it was "all right,...[but] systemic liquidity I believe is little tight".

However, he does not expect RBI to slash the Cash Reserve Ratio (CRR) as it would be contradictory to the monetary stance of targeting inflation.

Chaudhuri further said that SBI has revised its Net Interest Margin (NIM) upward for the current fiscal.

"I am encouraged to revise the (NIM) guidance upward. We had given a guidance of 3.5% at the start of the year...Now I am inclined to revise it upwards to 3.7-3.75 % on aggregate basis," the SBI chief said.

He also said that non-performing assets of the bank stood at 2.04% of the total advances and "we would like to continue at that".

Source: Business Standard

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Irda set to allow foreign branches for pvt insurers

Says companies should ensure policyholders’ liabilities remain ‘ring-fenced’.

Private insurers that have been operating for more than 10 years would be allowed to open branches and set up insurance joint ventures, including subsidiaries, outside India. The norms would apply to all sets of insurance companies involved with life, non-life, health and reinsurance businesses.

The Insurance Regulatory and Development Authority (Irda), in a note issued to insurers, said the companies should put in place appropriate arrangements to ensure policyholders' liabilities are adequately “ring-fenced”. This means any capital to start operations outside India should be met from the shareholders' fund, thereby protecting policyholders' money in the parent company. All liabilities shall be restricted to the paid-up capital of the foreign insurance joint venture.

“Whenever a company's foreign branch office operation results point to a loss, the additional capital requirement for meeting the losses shall be contributed out of the shareholders' funds, as no contribution from the policy holder's funds of the parent company would be available for the purpose. Also, the solvency requirement recourse may be taken to the shareholder's fund only,” Irda said in the note.

Currently, state-owned general insurance companies and Life Insurance Corporation of India (LIC) are allowed to conduct foreign operations. However, there are no separate guidelines for these. It is understood the current move has resulted from an increasing number of inquiries from private insurance players seeking permission to open branch offices or subsidiaries in other countries.

Irda, however, clarified foreign subsidiaries of an Indian insurer would not be allowed to set up branches in India on a reciprocal basis. “Foreign insurance joint venture shall mean a company registered outside India, the paid-up capital of which is subscribed by an Indian insurance company. The permission for setting up foreign branch offices or foreign insurance joint venture companies by Indian insurance companies shall, in no way, be taken for allowing foreign insures to set up branches on a reciprocal basis. Currently, the entry of insurance companies into India is permitted only through joint ventures, with FDI (foreign direct investment) limits,” Irda said.

The regulator also proposed underwriting policies, reinsurance policies and risk management policies for foreign offices have to be separately designed and approved by the insurer's board. Similarly, companies would have to follow separate reporting norms, based on Irda's guidelines for foreign operations.

Source: Business Standard

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KVG Bank rolls out phase II plan for intensifying rural lending

Karnataka Vikas Grameena Bank (KVG Bank), Dharwad-based regional rural bank, has rolled out second phase of rapid action plan for intensifying lending in rural areas.

Addressing the Grama Sabha at Hulikatti Village, Mr C. Sambasiva Reddy, Chairman, KVG Bank, said “Grama Sabhas are helpful in giving disseminating information relating to Kisan Credit Cards (KCC) and General Credit Cards (GCC) and other specific products designed by the banks to cater to the financially excluded segments especially small and marginal farmers.”

The bank is rolling out second phase of intensifying lending in rural areas according to the guidelines issued by the Department of Financial Services under the Union Ministry of Finance, and the sponsorer, Syndicate Bank.

Field survey

Field level officers' even executives and the Chairman of KVG Bank have begun visiting villages in the service area of the bank spread across 13 districts in North Karnataka and are holding Grama Sabhas. “During the visit to villages, our officers are surveying each house to find out if any one is left outs and arrangements are being made to take application on the spot for quick disbursement,” said Mr Reddy.

So far, KVG Bank has conducted 415 Grama Sabhas, disbursed nearly Rs 50 crore under second phase of rapid action plan in north Karnataka.

“In some villages our bank is organising ‘Padayatra' for ensuring that none of the farmers are left out and the implementation of this process is being closely monitored by us at Dharwad,” said Mr Reddy.

KVG Bank has designed innovative means/products to reach out to the poor and vulnerable sections of the society. Some of the loan products would have been redesigned considering the cash flow and credit requirements of the farmers as against the present system of single loan product also, said Mr Reddy.

While addressing the gathering Mr Suryakanta Ganga, Lead District Manager-Belgaum, said With an objective to ensure uniform progress in provision of banking services in all parts of the districts, banks are advised to draw up a specific roadmap for opening banking outlets in every unbanked village having a population of more than 2,000.

anil.u@thehindu.co.in

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1.11 lakh candidates pass bank officers' exam

About 1,11,993 candidates have passed the first common written exam (CWE) for probationary officers in 19 nationalised banks. The exams were conducted by the Institute of Banking Personnel Selection (IBPS) in September this year.

A little over 10 lakh candidates had appeared for the exam. Of them, 36 per cent of the successful candidates were women, while a similar number of candidates were from the rural areas.

The CWE for clerical posts has been held across the country over the past three Sundays. Nearly 43 lakh candidates have appeared for the exam. “The results would be available in February,” said Prof Konar, senior faculty of the institute, here on Wednesday.

vageesh@thehindu.co.in

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MasterCard Foundation, ILO enter into pact

The MasterCard Foundation and International Labour Organisation (ILO) have forged a five-year partnership to enhance global awareness among youth about challenges facing them in the world of work.

The Foundation, which has pledged $14.6 million for the Work4Youth partnership, will aid ILO in school-to-work transition surveys to be undertaken in 28 countries across five regions. The data and information generated by the surveys will be included in a series of analytical national, regional and global reports on youth employment.

A recent ILO report indicated that even though the absolute number of unemployed youth fell slightly since its peak in 2009 from 75.8 million to 75.1 million in late 2010, young people were struggling to find jobs or are giving up on finding work.

Ms Deepali Khanna, Director of Youth Learning for The MasterCard Foundation, said: “The partnership is a good example of how policy-makers, the private-sector, employers and educational institutions can engage with international organisations to promote the expansion of decent work opportunities for young women and men.”

The Toronto-based MasterCard Foundation advances microfinance and youth learning to promote financial inclusion and prosperity.

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PNB installs Cash Deposit Machine in Ernakulam

To help customers speed up their transactions without waiting in the queue, Punjab National Bank has installed the first Cash Deposit Machine in Kerala at its Market Road Branch in Ernakulam district. Mr K.V. Rajesh, the Bank Circle Head, said the machine would accept currency notes in three denominations — Rs 100, Rs 500 and Rs 1,000, and customers can make up to two deposits through the machine in a day. The customer's account will be credited instantly and a receipt will be issued.

This is a customer-friendly machine and can be handled easily by the customers, he said. The Cash Deposit Machine would check the authenticity of the currency notes deposited before accepting the machine. The bank also launched a gift scheme for its ATM/Debit card holders. There are two types of gift schemes — one through manual response of the card users and automatic rewards for those who use the cards for shopping, utility bill payments and booking of various types of tickets.

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Citi India launches mobile payment facility for corporate clients

Citi India has launched a cash management service which will help its corporate customers collect receivables from their retailers or customers using mobile payment technology.

Called Cash-To-Mobile, this solution will increase the efficiency of collection for the company. It will also help reduce the cost of transaction and ensure the safe transfer of money.

Citi launched a pilot project with Coca Cola in Hyderabad about two weeks back. Using the solution, Coca Cola will receive payments from its retailers through mobile payments.

The transactions will be settled with customers through the National Payments Corporation of India's (NPCI) Interbank Mobile Payment Service (IMPS). This allows the remitters' account to be debited instantaneously and provides an immediate transaction confirmation to the customer.

The Cash-To-Mobile solution identifies remitters through their mobile numbers and automates reconciliation of orders and collections by linking to the company's Enterprise Resource Planning solution.

Since it is a mobile-based transaction, the limit is Rs 50,000 per day per transaction as prescribed by the Reserve Bank of India.

Mr Sudeep Yadav, Managing Director, Head-India, Global Transaction Services said Global Transaction Services accounted for about one-third of Citi India's net income and revenues in the first three quarters of the current calendar year.

For the bank, apart from fee income, it is an opportunity to earn interest income as well, Mr Yadav added. The bank would offer the solution to over 100 of its corporate customers under its cash management service. It is also an opportunity for the bank to tap into the mobile payment segment, which is estimated to reach $350 billion by 2015.

Companies in the FMCG, healthcare and insurance sectors, among others, would benefit from this solution.

The fee would be paid either by the customer or by the remitter depending on the industry, Mr Yadav said.

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Government clears creation of new ED slot in public sector banks

KOLKATA: Large state-run lenders like Bank of Baroda and Punjab National Bank will get a third executive director (ED) on their board from next April, while smaller banks like Dena or United Bank will get their second ED.

The government has just cleared the Khandelwal Committee's recommendation to this end, two chief executives at state-run banks said. Banks with more than Rs 3 lakh crore business are considered as large entities.

The government has created the new slot in six large banks and said the third executive directors will be responsible for human resource development and technology.

Bank of India, Canara Bank, Central Bank of India and Union Bank of India are dubbed as large banks and will benefit from this move. This is in step with the director-HR position that exists in public sector undertakings like ONGC, Indian Oil, HPCL or BPCL.

"Creation of the ED position for HRD is an important step in the banking industry as this will help in bringing human resource development under board's direct attention," said AK Khandelwal, who headed the HR reform panel and submitted a series of recommendations in June 2010.

The government has also created a second executive director's position in five small banks having a business of less than Rs 1.5 lakh crore. Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, United Bank of India and Vijaya Bank fall in this category and their second ED will also be responsible for HRD and technology. All these banks have one ED at their top deck at present.

Source: EconomicTimes

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Bank of Baroda selected as best public sector bank in India: Report

Bank of Baroda and Karur Vysya Bank have been selected as the best banks in the public and private sectors, respectively, at the national level for this year by a jury appointed by the State Forum of Bankers Clubs in Kerala.

The awards in the various categories would be presented at a function here on December 17, the State Forum of Bankers Club President L R R Warrier and General Secretary K U Balakrishnan told reporters here.

Minister of State for Consumer Affairs, Food and Public Distribution K V Thomas will present the forum's 'Businessman of the Year' award to NRI businessman B Ravi Pillai, the Managing Director of the Dubai-headquartered RP Group of companies.

Kerala Finance Minister K M Mani will present the best bank award in the public sector category to Bank of Baroda Managing Director and CEO M D Mallaya, while State Excise Minister K Babu will present the best bank award in the private sector of K Venkitaraman, the CEO and Managing Director of Karur Vysya Bank.

Justice V R Krishna Iyer will present the best bank award in the rural development category to V K Saigal, the Chairman of North Malabar Gramin bank, and the best bank award in the new generation banks category to IndusInd Bank Ltd Managing Director and CEO Romesh Sobti.

Corporation Bank and Indian Overseas Bank were adjudged the second and third best banks in the public sector and Lakshmi Vilas and City Union Bank in the private sector, respectively.

Among the new generation private banks, YES Bank and Axis Bank have been selected for the second and third slots.

About 27 parameters, including the banks' deposits, advances and NAP level were taken into consideration while selecting the best banks, Balakrishnan said.

Source: EconomicTimes

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Reserve Bank of India may cut rates by 25 bps by mid-2012: Poll

MUMBAI: The Reserve Bank of India is widely expected to keep rates on hold at its review on Friday, but economists in a poll expect it to accelerate monetary easing in 2012 as economic conditions worsen in Asia's third-largest economy.

All but one of the 20 economists surveyed expect the Reserve Bank of India (RBI) to keep rates on hold at its mid-quarter review on Friday.

The RBI has raised interest rates 13 times since early 2010, lifting its key lending rate, the repo rate, to 8.50 per cent. It signalled in October an inclination to leave rates on hold in coming months on expectations that persistently high inflation will begin to ease.

While most economists polled did not forecast an interest rate cut until the second calendar quarter of 2012 -- retaining the view held in a poll conducted in mid-October -- they now expect the RBI to begin trimming the cash reserve ratio

earlier than they did previously. All but one of 15 respondents expect the RBI to keep the CRR, the per centage of deposits banks must maintain with the RBI, firm at 6 per cent on Friday, with one expecting a cut, despite market chatter that the RBI might trim the requirement in order to ease tight market liquidity.

However, 5 of 11 respondents expect a CRR cut by the end of the first quarter of 2012, and a majority among the same group expect a cut by June. In an October poll, the median view held that CRR would stay at its current 6 per cent through September.

Industrial output fell in October for the first time in over two years as capital goods investment slumped. The plunge of 5.1 per cent from a year earlier was far worse than the 0.5 per cent drop economists had forecast in a Reuters poll.

"The authorities should be comforted by signs of moderation in the headline inflation (if the outcome does not deviate much from consensus), though still-elevated levels will deter any possible shift towards an easing bias at least until end-FY12," said Radhika Rao, economist with Forecast Pte in Singapore.

India's 2012 fiscal year ends in March. Headline inflation for November is expected to ease to 9.04 per cent from 9.73 per cent the month before, according to a Reuters poll. It is due to be announced on Wednesday.

Source: EconomicTimes

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SBI’s farm loan NPAs rises to Rs 13,545 cr in Apr—Sept

State Bank of India’s non- performing assets (NPAs) in the farm loans segment rose nearly four fold to Rs 13,545 crore in the first six months of this fiscal, Parliament was informed on Tuesday.

During the April-September period of 2010-11, NPAs in the agriculture segment were Rs 3,718 crore, the Minister of State for Finance, Mr Namo Narain Meena said in a written reply to the Rajya Sabha.

SBI’s overall NPAs increased to Rs 33,946 crore as on September 30, 2011, from Rs 23,205 crore in the same period last fiscal.

Mr Meena added that SBI has taken a number of steps to tackle this situation, including attention to restructuring/ reschedulement of eligible accounts, which are technically viable and economically feasible, and setting up account tracking centres to focus on prevention of probable NPAs slipping into NPAs.

He further said, “All recovery measures, already in vogue, are being seriously reviewed and followed up. Credit—cum— recovery camps are being organised. Involving business correspondents, business facilitators and self—help group in recovery of agricultural NPAs. Performance of enforcement agent is being followed up for quick recovery of overdues.”

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PNB sponsors Vocational Rehabilitation Centre

As part of its CSR activities, Punjab National Bank has sponsored the Vocational Rehabilitation Centre at the Ernakulam General Hospital.

The District Collector, Mr Sheik Pareeth, inaugurated the centre at a function held at the General Hospital Conference Hall. The centre aims to help those patients who have undergone limb replacement and allied treatment at the General Hospital to earn their livelihood without depending on others. The bank will supply raw materials to the centre for the manufacture of soaps, soap solution, phenyl and paper files . Special hands-on training for manufacturing the items will be given to the patients.

Speaking on the occasion, the District Collector lauded the initiative of the bank and assured all support from the district administration in this regard. This will definitely help uplift the economically and socially backward segment of the society, he said.

The bank's Circle Head, Mr K. V. Rajesh, said the bank will also sponsor the day's food for the inmates of the hospital. The bank has also installed two big clocks at the hospital for the benefit of the public. The bank had earlier supplied medicines to the cancer patients of Ernakulam General Hospital.

Explaining the various CSR activities undertaken by the bank , he pointed out that the bank, as part of 117{+t}{+h} year, has adopted 117 villages in the country, which includes the Chennam Pallipuram village of Alappuzha district. The bank has distributed tricycles to the disabled, wheel chairs, drip stands, autoclave electrical, walkers, television set and water cooler to the beneficiaries of the Palliative Care Centre and Cancer Care Centre of the village.

The bank also caters to the various needs of the inmates of ‘Sai Niketan Orphanage,' Ernakulam, and the ‘Home for Disabled Women' at Thevara every month. It had earmarked Rs 60 crore every year for CSR activities, he added.

The bank has been adjudged ‘CSR Bank 2011' by the Government of India.

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RBI sold dollars in October

The Reserve Bank of India intervened in the foreign exchange market for the second month in a row, selling $943 million (Rs 4,714 crore) in October, according to the RBI's 'Current Statistics’ data.

The bank sold $845 million in September. In both these months, the central bank did not buy any dollars.

Contrary to belief that the RBI has been keeping its hands off the foreign currency market, it appears to have intervened to ward off extreme volatility. The rupee had touched a low of Rs 50.32, intra-day, on October 21. The rupee has fallen 19 per cent against the dollar so far in 2011.

The average price (based on the rupee equivalent of the contract rate given by the RBI) at which the central bank sold dollars in September was at Rs 48.99/dollar and, in October, it was Rs 49.98 a dollar.

Net sellers after 2009

The sale of dollars by the RBI in September and October comes after a nine-month hiatus. The bank last sold dollars in November 2010. It, however, bought more dollars than it sold that month. The RBI had, in the whole of FY-11, intervened in the currency market only during four months and was a net buyer in all those months.

The last time the RBI sold more than it bought was in 2009 – April, May, July and November – when the economy was struggling to recover from the global crisis. The rupee had touched a low of Rs 52.02 on March 9, 2009.

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Parliamentary panel recommends CBI probe against IFCI MD

Industrial Finance Corporation of India (IFCI) CEO and MD Atul Kumar Rai is in the dock with a Parliamentary Committee finding him guilty of supressing facts regarding his appointment in 2007 and recommending a CBI probe into it.

The Parliamentary Committee of Privileges also found Rai guilty of misbehaving with BJP MP Rajiv Pratap Rudy when he had gone to meet the official to discuss some issue.

In its report tabled in the Rajya Sabha, the Committee headed by K Rahman Khan, said, “Rai suppressed factual information pertaining to his appointment as CEO/MD of IFCI.”

The Committee observed that Rai was a Director in the Ministry of Finance and was also nominated to the IFCI Board.

Rai, who belonged to Indian Economic Service, had taken voluntary retirement from February 28, 2007 citing personal and family grounds.

It said that Rai gave false declaration and suppresed vital information before taking up the IFCI job.

The Committee said it was, therefore, recommending that its observations relating to Rai’s conduct “be given serious consideration and properly examined for a CBI probe in the whole matter by the government to find out the facts and fix responsibility at the higher level in the then hierarchy of officers in the Department of Financial Services.”

The Committee went into the matter following a complaint by Rajya Sabha member Rajiv Pratap Rudy that Rai misbehaved with him.

Talking to reporters, Rudy said that during investigation by the Committee, “it was found the appointment of Atul Rai as IFCI CEO was manipulated and fraudulent...He had submitted a fraud certificate to the government.”

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Over 3,100 RRB branches to be opened in 2 years

The Government today said over 3,100 branches of regional rural banks (RRBS) will be opened in different parts of the country in the next two years.

The Minister of State for Finance, Mr Namo Narain Meena, said during Question Hour that 1,297 branches of RRBs would be opened in 2012 and 1,845 in the following year.

As on March 2011, there were 82 RRBs with 16,001 branches. There are 19 nationalised banks with 44,369 branches and 20 private sector banks with 11,874 branches in the country, as on September-end. Besides, 39 foreign banks are operating in the country with 319 branches.

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PNB's total business set to cross Rs 6 lakh cr by this year

The total business of Punjab National Bank (PNB) is set to cross Rs 6 lakh crore in the third quarter ending December 31, 2011.

The bank had reached a total business of Rs 5.90 lakh crore at the end of the second quarter, showing a year-on-year growth of 22.5 per cent. The deposits grew by 25 per cent to Rs 3.41 lakh crore and the advances by 19.3 per cent to Rs 2.49 lakh crore.

The bank's deposits are expected to grow by 21-22 per cent and credit by 19-20 per cent, year-on-year, by the end of the current financial year and this will be around two per cent more than the average industry growth rate, according to Mr K.R. Kamath, Chairman and Managing Director.

Saving fund campaign

He said here on Monday that the bank was awaiting regulatory approvals for acquiring 30 per cent stake in MetLife India Ltd. It had already entered into a corporate agency arrangement with the life insurance major and started selling policies through its branches.

Mr Kamath said that the bank had launched a ‘saving fund campaign' from August 1 to September 30 this year and opened 20.60 lakh saving fund accounts during the period. It had also unveiled a ‘special agriculture credit campaign' from October 15 to November 30 to boost direct agriculture advances.

Biz growth in Kerala

The bank's total business in Kerala grew by around 30 per cent, year-on-year, to cross Rs 7,000 crore as on December 2. The deposits recorded a growth of 36 per cent to Rs 3,600 crore, while the advances grew by more than 24 per cent to Rs 3,400 crore. The credit-deposit ratio of the bank in the State stood at 91.25 per cent.

PNB is opening a new branch in the Kozhikode circle on Tuesday, taking the total number of branches in the circle to 81 and in the State to 141. As part of the saving fund campaign, a total of 40,604 accounts were also opened in the State during the August-September period.

Under the financial inclusion programme, the bank has been allotted eight villages in Kerala, out which all the six villages in Kozhikode circle have achieved the goal.

vinoottan@thehindu.co.in

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South Indian Bank to open corporate finance branches

South Indian Bank is planning to open exclusive corporate finance branches in metro cities to tap potential in corporate sector, according to its Managing Director and Chief Executive Officer, Dr V A Joseph.

Speaking to newspersons after inauguration of 15 branches in Andhra Pradesh here on Monday, Dr Joseph said the corporate finance branches would be opened in New Delhi, Mumbai, Bangalore, Chennai and Kolkata during next financial year.

“Our target is to generate at least Rs 1,000 crore business in each of these branches,'' he said.

Speaking earlier at a function to electronically inaugurate the branches, Dr Joseph said the 82-year-old bank would soon begin operations in Nagaland. “With this, we will be in 27 States and Union Territories making our bank a pan-India bank,'' he said.

To hire 1,000

Plans were afoot to recruit over 1,000 including professionals in engineering and chartered accountancy, he said.

Mr Amitabha Guha, Non-Executive Chairman, said the total number of branches would be increased from existing 675 to 700 before March 31, 2012.

The focus was on financial inclusion. “Out of 15 branches opened today, 11 are in the unbanked areas of Ranga Reddy district,'' Mr Guha added.

Mr E.S.L. Narasimhan, Governor of Andhra Pradesh, who formally inaugurated the braches, said there was a need to upgrade security features on electronic banking.

nagsridhu@thehindu.co.in

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