Sebi slaps Rs 60-Lakh fine on senior Jaiprakash Associates executives for 'insider trading'

MUMBAI: Capital market regulator Sebi has pulled up Jaiprakash Associates chairman Manoj Gaur, his wife Urvashi Gaur, brother Sameer Gaur, S D Nailwal, wholetime director of the company, and Harish K Vaid, senior president corporate affairs and company secretary, for alleged insider trading in the company's shares. A total of Rs 60 lakh fine has been imposed on them.

The regulator has alleged that these individuals had taken advantage of their position by trading shares of Jaiprakash Associates while they were in possession of unpublished price sensitive information (UPSI). Sebi had investigated all trades in the stock from September 29, 2008, to October 27, 2008.

But Manoj Gaur in a statement issued late Friday evening denied any wrongdoing. "The findings in the Order are completely erroneous and contrary to factual position. It is unfortunate that despite adequate representation to the Adjudicating Officer, frivolous inferences have been drawn. Aggrieved by the Order, we are in the process of challenging the same before the Securities Appellate Tribunal," said the J P Associates chairman.

Gaur said the Sebi order related to the purchase of 1,000 shares by his wife and 7,400 shares by his brother between October 13 and 16, 2008. These purchases were not based on any insider information and had not even been sold.

According to Sebi, the probe revealed that the company had received the trial balances for the quarter ended September 30, 2008, from its various units in the first week of October 2008. After this the company had announced that its board would meet to consider the unaudited financial result for the quarter, interim dividend and rights issue.

"The consolidated trial balance is the base document from which the financial results of a company would be derived and decision about dividend can be taken. The financial results and dividend declaration are both price sensitive information," Sebi said in its adjudication order.

"The fact that JAL (Jaiprakash Associates) closed its trading window on October 11, 2008, itself proves that UPSI existed from that date," it said. The trading window is closed for directors, specific category of employees and all connected persons in the run up to the announcement of financial results.

The regulator has alleged that Manoj Gaur, who was in possession of unpublished price sensitive information with regard to the company, had communicated the same to his wife Urvashi and brother Sameer, who traded in the stock, thereby making use of certain prior information.

Sebi said that by virtue of their relation with Manoj Gaur, they would fall within the ambit of "person deemed to be connected person" and were in possession of information which were not in public domain.

The regulator has issued a separate order against S D Nailwal who was holding the finance portfolio. According to Sebi, Naliwal was involved in the consolidation of quarterly results at the company level and in the preparation of agenda of proposed interim dividend and rights issue.

The regulator has accused that Nailwal traded in the company scrip during the period when the trading window was closed for promoters and senior employees.

"Noticee (Nailwal) should have complied with the same. The Noticee being the Director, Finance of a large corporate like JAL should have been more vigilant about his dealings. He is also expected to be well aware of the sensitivities of his position and take due care to ensure that there is no infringement of the law in respect of his own dealings," Sebi said. Sebi also accused Harish K Vaid of similar violations.

Source: EconomicTimes

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Bank of India says Kingfisher loan 'sub-standard'

The troubles of cash-strapped Kingfisher Airlines worsened today with another lender classifying its loan to the Vijay Mallya-promoted company as "sub-standard", a day after State Bank of India termed the airline as defaulter.

City-based, state-run lender Bank of India (BoI) has classified its Rs 575.27 crore loan to the Kingfisher as sub-standard, as the airline has defaulted on repayment.

When contacted, BoI Deputy General Manager (Large Corporates) Bupinder Nayyar, who handles the Kingfisher account, refused to comment. However, a bank official, seeking anonymity, confirmed the development. Bank of India has overall exposure of Rs 4,000 crore to the airline industry.

Kingfisher, which owes Rs 6,419 crore to banks, could not be contacted for response.

A bank classifies an account as sub-standard when it is close to the write-off stage. A loan turns into a non-performing asset when the borrower fails to service it for 90 consecutive days. Since Kingfisher had gone for corporate debt restructuring in November, 2010, it gets some additional days to clear the dues and make the loan a standard asset.

Yesterday, State Bank Chairman Pratip Chaudhuri said the Kingfisher account was a non-performing asset (NPA).

Source: Business Standard

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SREI to raise Rs 300 cr via tax-saving bonds in first tranche

SREI Infrastructure Finance has come out with a maiden issue of tax -saving bonds and would be looking to raise up to Rs 300 crore in the first tranche.

The company would be looking to raise a total of Rs 500 crore by the end of this financial year.

Although the issue opened on December 31, marketing of the issue started only today. “We had to open the issue in December-end due to technical reasons. The response should pick up now as people are back after new year,” a spokesperson of the company said.The yields are linked to the closing ones of government securities of comparable tenor.

The bonds issued are of 10 and 15 years maturity, carrying a coupon of 8.9 per cent and 9.15 per cent, respectively, both on an annual as well as cumulative basis. The bonds also have a buyback option after five years and have been rated AA by CARE.

Although the non-banking financial company can raise up to Rs 800 crore through tax-saving bonds this year, they have kept the upper limit lower than this. “The tax-saving bonds are newer and exclusively for retail investors. Hence, it takes many more subscriptions than that for normal bonds and tax-free bonds to match up to the issue size,” said Sanjeev K Sancheti, chief financial officer.

The issue closes on January 31. The bonds carry a lock-in period of five years, after which they can be traded on the Bombay Stock Exchange.

SREI has raised Rs 4,500 crore till now, against a target of Rs 7,000 crore for this financial year.

The company plans to borrow $15 million via external commercial borrowings this month. “We had raised $15 million during December- end and in the next 10 days or so will be taking overseas loans worth $ 15 million at a coupon of Libor+ 375 basis points,” Sancheti added.

Source: Business Standard

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Uco Bank plans to open 11 more branches in AP

The Uco Bank is planning to open 11 more branches in Andhra Pradesh, in addition to the existing 66, and two of the new branches will be in Visakhapatnam region, according to Mr Khaleel Bhasha, the Assistant General Manager.

He was talking to reporters here on Friday after the inauguration of personal banking branch at Dwarakanagar, on the occasion of the bank's foundation day. He said the bank had made great strides in recent times, with 2,004 branches in the country and four abroad. The deposits as on December 31, 2011, stood at Rs 1,32,636 crore and advances Rs 97,825 crore.

He said that on the occasion of the foundation day,a credit camp had been organised in the branch. A prawn processing unit, set up by Seven Seas Aqua, was sanctioned Rs 2 crore and Mr Srinivas, the Managing Director, received the sanction letter. Self-help groups were sanctioned Rs 35 lakh, and a sum of Rs 40 lakh was also sanctioned for purchase of commercial vehicles to different customers.

Mr Bhasha said greater stress would be laid on retail lending at the branch. He said all the branches of the bank were networked and having core banking solutions. The bank had also launched “bank on wheels” for the first time in the country. A number of villages had been adopted under the financial inclusion scheme and the bank had also launched Uco Uthan, a scheme for the families below the poverty line.

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LIC Housing Finance banks on parent for revival

MUMBAI: LIC Housing Finance, the mortgage lender battered by corruption over a year ago, is leaning on its parent's ubiquitous 15 lakh agents and chasing middle-class customers sacrificing profitability, as it attempts to revive growth and erase the blot.

The second-biggest mortgage lender has slammed the doors on brokers, formed a risk-management team for the first time since beginning in 1989, and invested in technology to avoid a recurrence of events that shaved off more than a third of its market value within days of the arrest of its executives on corruption charges.

Investors who dumped LIC Housing shares after the arrest of its former chief executive in November 2010, are flocking back and have made it to outperform bigger rival Housing Development Finance Corporation and the benchmark indices last year.

Foreign investors now hold 49% of the company, up from 40% in December 2010. "We will primarily be with the end-user, typical middle class," says VK Sharma, chief executive at LIC Housing Finance. "That is why even in this high interest rate regime, we have not felt the stress. Margin on retail is less, so my net interest margin will come down."

LIC Housing's chief executive Ramachandran R Nair and seven bank and brokerage officials were arrested in November 2010 by the Central Bureau of Investigation for allegedly taking bribes and giving away improper loans. The lender slowed disbursals and top officials travelled to branches across the nation to lift staff morale and win back customers.

"The pedigree of the company remains that it is an LIC company," said Vibhav Agarwal, analyst at Angel Broking. "It enjoys the trust factor of LIC. People have forgotten that event."

Source: EconomicTimes

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RBI tells banks to ensure NEFT confirmation

Taking note of non-adherence by some banks to rules on sending confirmation of payments made through the National Electronic Funds Transfer (NEFT) system, the RBI has directed lenders to put in place a system for issue of such receipts. In a circular, the Reserve Bank has also asked banks to submit a copy of their plan for putting in place, within 15 days, a system to generate confirmation of NEFT payments.

“... All banks should put in place systems to ensure positive confirmation is sent to the originator (sender)...

While it is expected that such confirmation messages are sent as soon as the beneficiary account is credited, it should not exceed beyond the end-of-the-day under any circumstance,” the apex bank said.

It has asked the banks to send an immediate report on the existing procedure followed by them for sending such messages, both as originator and receiver.

Guidelines

“Banks are advised to put in place suitable mechanisms immediately by which such confirmation will be sent for all inward/outward messages if such systems are not already in place. A copy of your plan of action in this regard may please be sent to us within 15 days of receipt of this letter,” the RBI said.

The apex bank had issued guidelines in 2010 for banks to put in place a mechanism which would enable NEFT participating banks to provide a positive confirmation to the remittance originator confirming the successful credit of funds to the beneficiary's account.

Banks had been advised to confirm completion of necessary arrangements to ensure its implementation by March 1, 2010.

Penalty clause

Citing a recent analysis, the RBI said in respect of a large number of banks, the percentage of positive confirmations sent vis-à-vis the inward messages received was lower than 10 per cent.

”... Positive confirmation is a unique feature of NEFT and has played a major role in popularising the system amongst users. Non-adherence to instructions in this regard will undermine the customer service efficiency of the system,” it said.

Meanwhile, in another circular, the RBI directed banks to adhere to norms under which they have to pay penalty in case of a delay in crediting funds sent through the NEFT system to the beneficiary customer's account or in returning the uncredited amount to the remitter.

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SIDBI inks MoU with Indian Overseas Bank

Small Industries and Development Bank of India (SIDBI) today inked an MoU with Indian Overseas Bank to provide Rs 100-crore growth capital to micro, small and medium enterprises.

The MoU was inked between SIDBI Chairman and Managing Director, Mr S. Muhnot, and Indian Overseas Bank CMD, Mr M. Narendra, at a function here.

Mr Muhnot told presspersons that as per the understanding, SIDBI would provide a line of credit of Rs 100 crore to the city based bank for a period of seven years.

“...it will be given from the risk capital fund managed by SIDBI and the line of credit will be given as growth capital to deserving MSMEs.”

Mr Muhnot said that the move by SIDBI was to channelise the growth capital to a large number of MSMEs and hence it has decided to partner with select banks. MoU with Indian Overseas Bank was a first of its kind initiative, he said.

Asked whether SIDBI would have similar tie-ups with other banks, he replied in the affirmative but did not elaborate.

Mr Narendra said the bank would be offering this service to MSMEs present across the country through its branches.

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IIFCL inks MoU with IDBI Bank for infrastructure debt funds

India Infrastructure Finance Company Ltd has joined hands with IDBI Bank to launch infrastructure debt fund (IDF) schemes.

A memorandum of understanding (MoU) to this effect was signed on Thursday by Mr S. K. Goel, Chairman and Managing Director of IIFCL, and Mr R. M. Malla, Chairman and Managing Director of IDBI Bank, in the presence of Union Finance Minister, Mr Pranab Mukherjee.

The MoU is seen as the first step towards the rollout of an IDF, which IIFCL expects will be up and running by February end.

Under the MOU, which will be valid for five years, IDBI Bank and IIFCL may act as strategic investors of IDF scheme. Both could also invite other strategic investors in the fund.

It also provides for accepting and approaching other entities, such as a scheduled commercial bank or infrastructure finance company or an international multilateral financial institution, to participate as strategic investor for the schemes.

Advisory committee

Each IDF scheme will have an advisory committee comprising nominees of strategic investors, which will decide on the investment policy and monitor the scheme.

Recently, IIFCL had, in a change of tack, decided to float an infrastructure debt fund through the mutual fund route instead of the non-banking finance company route.

Last month, Mr Goel had said that IIFCL was looking to float a $1 billion infrastructure debt fund and would rope in IDBI Bank and LIC to co-sponsor the fund, along with foreign institutions like the ADB and HSBC.

In June last year, the Finance Ministry had come out with guidelines allowing IDFs to be set up, either as trusts or companies.

While the trust-based IDFs are to be regulated by SEBI, those set up as NBFCs will come under the RBI's ambit.

krsrivats@thehindu.co.in

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RBI official for implementation of Basel III norms

The RBI Deputy Governor, Mr Anand Sinha, has called for implementation of the Basel III norms by banks to achieve growth and sustainability.

Delivering the key note address at a seminar on ‘Basel III-Implementation Challenges in Banks' organised by Bank of Maharashtra, he observed that putting regulations in place was only one part, but their implementation was equally important.

The RBI recently issued draft guidelines for implementation of Basel III norms. They seek to improve banks' ability to withstand periods of economic and financial stress by prescribing more stringent capital and liquidity requirement, by raising minimum core capital stipulation, introducing countercyclical measures and enhancing banks' ability to conserve core capital in the event of stress through a capital conservation buffer.

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SBI to fill up 3,100 clerical vacancies

State Bank of India is recruiting clerks to fill up about 3,100 vacancies across the country.

The bank has called for applications as part of a special recruitment drive for Scheduled Castes/Scheduled Tribes and Other Backward Class category. It is also having a regular recruitment exercise for posting at the north eastern circle of the bank.

Clerks will be paid starting emoluments of Rs 14,177 per month in a metro like Mumbai. The minimum age requirement is 18 years while the maximum is 28 years.

The upward ceiling is however relaxed by a few years for each category (including ex-servicemen, widows etc.) The last date for registration of online applications is January 20. The exam will be conducted on March 18.

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IRDA issues uniform ALM norms for insurers

Insurance regulator IRDA has issued uniform asset-liability management norms for insurers to manage their solvency, and asked insurance companies to undertake stress tests to ascertain their ability to meet financial obligations in the event of a crisis.

On examination of the extant norms being followed by insurance companies, IRDA found they were “incomplete and inconsistent. As the mandate by the authority was very broad, each insurer had adopted their own measures in reporting such details”.

“The Asset-Liability Management (ALM) is relevant to and critical for the sound management of the finances of the insurers that invest to meet their future cash flow needs and capital requirements,” IRDA said in a circular.

The guidelines, which would come into effect from April 1, make it mandatory for insurance companies to prepare an ALM policy and have it approved by the Insurance Regulatory and Development Authority (IRDA) by March-end.

“Stress testing being critical in the management of risks and the financial soundness of the insurers… the authority has mandated all insurers to conduct scenario and sensitivity testing,” IRDA said.

Effective procedures

IRDA has asked the insurance companies to determine their ability to meet financial liabilities after taking into account factors like a 30 per cent fall in equity values and a one percentage point decline in yields on fixed investments, among others.

IRDA has issued these guidelines to bring about uniformity in the ALM norms being followed by both life and non-life insurance companies.

IRDA has said that insurers would have to put in place effective procedures for monitoring and managing their asset-liability positions to ensure that their investment activities and asset positions are appropriate to their liability, risk profiles and solvency positions and it should be used to measure the interest rate risk faced by insurers.

The ALM policy should enable the insurers to understand the risks they are exposed to and develop ALM policies to manage them effectively.

deepa.n@thehindu.co.in

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UCO Bank to auction up to Rs 400 cr of NPAs

UCO Bank will hold open auction next week for sale of Rs 300 crore to Rs 400 crore non-performing assets (NPA).

"We will auction for sale of Rs 300 crore to Rs 400 crore of NPAs next week," Chairman and Managing Director of UCO Bank Arun Kaul said.

"We had one round, we did not get a good response and we did not sell anything," Kaul told reporters on the occasion of the bank's 69th year celebrations.

Kaul said he was confident the sale would come through by March.

About capital infusion, he said we had sought funds from the government. "We are working out that [capital infusion from the government]...We have given some projections to government. Let us see what happens," Kaul said.

The bank's credit growth was 19.16% as of December-end, Kaul said. "I am confident of achieving the 18% stipulation of the apex bank by March-end."

He said the bank has no immediate plans to change the current base rate of 10.7%.

"We have no plans to change the base rate right now unless some monetary policy changes take place," Kaul said.

Source: Business Standard

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Govt guarantee for Nabard refinance loans to co-ops

The State Government will stand guarantee to refinance loans from the National Bank for Agriculture and Rural Development (Nabard) to the counterpart apex bank at the State-level.

This would translate into incremental Nabard refinance loans to the Kerala State Co-operative Agricultural and Rural Development Bank (KSCARDB), according to the Chief Minister, Mr Oommen Chandy.

DEPOSIT TAKING

The Chief Minister said this at a function here on Wednesday held on the occasion of the State-level apex agricultural and rural development bank being authorised to accept deposits from the public.

The Chief Minister handed over the sanction certificate to Mr Solomon Alex, President of the KSCARDB.

He hoped that the farmers and rural people in the State would benefit from enhanced access to low-interest loans through the primary co-operative land banks.

There are 46 such primary co-operative land banks with KSCARDB at the helm. The KSCARDB proposes to disburse up to Rs 1,000 crore in loans during the current financial year.

ADDITIONAL EQUITY

The Chief Minister said the State Government would only be too willing to forego the claim of commission on the guarantee, if the KSCARDB were to accept the same in lieu of infusion of additional equity of an equivalent amount in the bank.

This would in turn enable the bank pass on the savings to ordinary borrowers in the rural areas even as the State Government's equity in the bank increases by the same extent.

Until now, the KSCARDB was allowed to merely route refinance loans from NABARD and National Cooperative Development Corporation (NCDC) to its customers.

With the bank now winning sanction to accept deposits from the general public, it could work on expanding its resource base.

MOU WITH CENTRE

The Chief Minister also sought to use the opportunity to clarify the State Government's position with regard to implementing the Vaidyanathan Commission recommendations for cooperatives on a ‘selective basis.'

The State Government has decided to sign a memorandum of understanding with the Centre in this regard with a view to reforming the co-operative sector through legislations.

This has invited criticism from sections of largely politically-oriented cooperative sector in the State.

PACKAGE BENEFITS

Mr Chandy said he was aware of the fears being expressed over the decision to sign the MoU with the Centre.

“Even my own Cabinet colleague in charge of co-operatives has raised some apprehensions. But we can articulate them before the Centre and get them corrected,” he said.

The moot point is that an opportunity to avail of the benefit as offered by the package aiming to strengthen the cooperative sector should not be wasted, he added.

vinson@thehindu.co.in

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HDFC Bank, ING Vysya objects Wockhardt paying SBI at par with other FCCB holders

HDFC Bank and ING Vysya, domestic lenders to Wockhardt, have objected to the pharma company offering SBI the same treatment as agreed with other FCCB holders who are being paid following the court order.

Wockhardt has agreed to pay SBI Rs 242 crore in instalments. However, in 2009 SBI had settled for preference shares against $40 million FCCB it held.

In a recent meeting of the corporate debt restructuring ( CDR) forum, HDFC Bank and ING Vysya made an observation that SBI should not be paid at par with other FCCB holders since they had already accepted preference share as settlement.

But Wockhardt is forced to pay SBI because of a clause that if the pharma company offers a better deal to any other FCCB holders, the same should be offered to SBI.

Source: EconomicTimes

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General insurers' rejected more claims in 2010-11

The number of claims rejected by the general insurance industry has been increasing in 2010-11, according to the Insurance Regulatory Development Authority's (IRDA) annual report.

“The rise is due to the fact that the sector is expanding rapidly and business volumes are increasing. The number of policies issued by non-life insurance companies is increasing year on year. It stood at 7.93 crore in the year 2010-11 (4.67 crore in the year 2006-07, at the time of de-tariffing). Accordingly, the number of claim intimations is also higher and, therefore, an increase in claim repudiations in numerical terms,” IRDA said in the report. The net incurred claims of the 24 non-life insurers stood at 29,536 crore in 2010-1, against 22,274 crore in 2009-10. The incurred claims showed an increase of 32.60 per cent during 2010-11. While the public sector insurers reported growth at 30.95 per cent in the incurred claims, the same was higher for private insurers at 35.99 per cent However, overall the growth in incurred claims during 2010-11 at 32.60 per cent was significantly higher than 12.97 per cent recorded during the previous year.

Among the various segments, motor insurance and health insurance had high claims ratios, at 102.69 per cent and 100.08 per cent respectively. Compared with the previous year, the incurred claims ratio in all segments except in health insurance, has increased. There was a substantial reduction in the incurred claims ratio in the health segment from 111.13 per cent in 2009-10 to 100.08 per cent in 2010-11.

Overall, the percentage of claims rejected at the non-life industry level is only 2.6 per cent, from the total number of claims processed during 2010-11.The industry settled 85.3 per cent claims of the total claims lodged.

IRDA has constituted an elaborate grievance redressal mechanism, Integrated Grievance Management System (http://www.igms.irda.gov.in), which enables access to grievances lodged with insurers on the website of IRDA.

deepa.n@thehindu.co.in

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StanChart sees 25-30% growth in pvt banking in 2012

Standard Chartered India is eyeing 25-30 per cent growth in its private banking business in 2012. This is part of the bank's strategy to focus on high-value customer segments, said Mr Sanjeeb Chaudhuri, Regional Head of South Asia and Chief Marketing Officer, Consumer Banking.

The foreign bank's private banking segment, launched in 2007, manages assets of over $2 billion.

The bank is looking at leveraging its corporate and SME (small and medium enterprise) clients to increase the private banking customer base.

“It is not just revenues from the private banking segment, but revenues from the relationships we have with the customer that makes this segment important for the bank,” Mr Chaudhuri said.

Flexible on assets

While the threshold for private bank customers is investible assets worth $3 million, the bank insists it is flexible.

“No customer brings all business on day one. There are customers who are starting by just opening an account. We are happy to do that. If I have a significant corporate relationship and if the CEO or CFO wants to open a private banking account, we will not say that because you don't have $3 million right now you cannot open an account with us,” Mr Chaudhuri said.

The bank has plans to organise seminars for its private and priority banking clients, where experts will talk to them about investment trends.

Customers will be encouraged to bring along friends to such seminars, who in turn could be potential customers for the bank. The bank already conducts such seminars in countries like Singapore, Hong Kong and Indonesia.

Long-term view

“We are seeing that private banking consumers are not looking for quick returns. They are willing to take a long-term view because markets are unpredictable in the short term. This is a trend we are seeing across geographies,” Mr Chaudhuri said.

The bank also plans to increase its staff strength for this segment by 25 per cent over the next 12-18 months as capacity increases. It has hired about 350 frontline staff in the first half of 2011, he added.

priyan@thehindu.co.in

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IDFC's Rs 4,400 cr infra bond issue soon

New Delhi: Infrastructure Development Finance Company (IDFC) today said it will raise Rs 4,400 crore through the issuance of a second tranche of tax-saving long term infrastructure bonds on January 11.

The second tranche of the bond issue would be open for subscription till February 25, IDFC said in a filing to the Bombay Stock Exchange.

In December, IDFC had mopped up Rs 538.08 crore from the a first tranche of tax-saving long-term infrastructure bonds.

The company plans to raise Rs 5,000 crore from infra bond issues this fiscal. The five-year bonds have a coupon of 9 per cent.

The NBFC had mopped up Rs 1,451 crore from over 7.3 lakh retail investors through the issue of long-term infrastructure bonds in FY'11.

Source: Financial Express

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RBI nixes banks' subsidiary plans

Bank of India, South Indian Bank, Lakshmi Vilas Bank’s proposals rejected, to add to the earlier ones of ICICI Bank and Axis Bank.

The Reserve Bank of India (RBI) has rejected several banks’ proposals to launch wholly-owned subsidiaries, as the regulator did not find any merit in floating such arms.

Public sector lender Bank of India, which wanted to float a subsidiary to train human resources and recruit professionals, did not find favour with the regulator. State-run banks have to follow a uniform remuneration package, which is unattractive compared to their private sector counterparts. However, a bank could offer market related pay package for the employees that are hired by its subsidiary.

RBI, however, was not convinced by the idea.

FALLING FLAT
Banks	Subsidiary planned
Bank of India	Human resources
South Indian Bank	Gold loan
Lakshmi Vilas Bank	Housing loan
ICICI Bank	Infrastructure finance
Axis Bank	Infrastructure finance

Similarly, South Indian Bank wanted to open a subsidiary to exclusively offer gold loans. RBI has also nixed that plan, as a bank is allowed to offer gold loan directly through its branches and a subsidiary route is not required for this activity, the regulator felt.

"We had initially taken shareholders' approval to launch a gold loan subsidiary. The idea was to gold loans through this subsidiary in areas where we don't have a branch," said VA Joseph, managing director and chief executive officer of South Indian Bank.

The Thrissur based lender is a major player in the gold loan market and gold loans account for 20 per cent of its credit portfolio.

Another south India-based lender, Lakshmi Vilas Bank wanted to float an arm to sell home loans, again an activity which a bank is allowed to undertake through its branches. This proposal was also rejected by the regulator on similar grounds.

As a result, Lakshmi Vilas Bank scrapped its plans to set up a housing finance subsidiary. The bank’s housing loan portfolio is currently around 2.5 per cent of its total advances. Its credit portfolio was Rs 8,813 crore as of September 30, 2011.

“RBI is of the view that those businesses, which are possible through bank branches, should be done directly by the bank. There is no need to create a separate non-banking finance subsidiary for those businesses. Hence, for businesses like gold loan, housing finance, etc RBI is not keen to allow banks form a separate subsidiary,” said a top executive of a private sector bank.

Earlier, proposals from ICICI Bank and Axis Bank to float an infrastructure subsidiary also did not find favour with the regulator. In the last couple of years, RBI has given its permission to open subsidiaries to undertake those activities which a bank cannot do directly through its branches. These businesses include securities broking and insurance underwriting.

In addition, the regulator has also approved Bank of Baroda’s application to convert its credit card subsidiary into a joint venture by selling 51 per cent stake to the second largest bank of Spain, Banco Bilbao Vizcaya Argentaria.

Source: Business Standard

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Interest rates on post office savings scheme to remain fixed till maturity

The Government today said that the interest rates on post office savings scheme, except the PPF, will remain fixed throughout the term of the scheme.

It clarified that the interest rate for such small savings will be declared on April 1 every year and will remain valid till the maturity of the scheme.

However, in the case of Public Provident Fund (PPF), which is a 15-year scheme, interest rates would not remain fixed for the entire period. The annual interest accruals in the PPF account will depend upon the rate for that particular year, the Finance Ministry said.

“The rate of interest on small savings schemes will be aligned every year with the rates of Government securities of similar maturity ... the rates are fixed and not floating so far as individual investments except PPF are concerned,” it said, while responding to media reports that the interest rates on all small savings schemes are floating.

Interest rates on PPF

With effect from December 1, 2011, the Government has increased the interest rates on PPF to 8.6 per cent from 8 per cent now, and also raised the ceiling on annual contributions to the fund to Rs 1 lakh from Rs 70,000.

Interest rates on savings account in post offices also rose to 4 per cent from 3.5 per cent. Similarly, interest rates on deposits of other maturities too were raised from December.

“The rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revision in interest rates in subsequent years will only be applicable to the investments made in the relevant period,” it said.

Kisan Vikas Patra

The sale of ‘Kisan Vikas Patras’ (KVP) has also been discontinued from November 30, 2011. There was an apprehension about KVP, which was kind of a bearer instrument, that it was used for money laundering.

In addition, the maturity period of monthly investment schemes (MIS) and national savings certificates has been reduced from six years to five years. MIS earns an interest of 8.2 per cent, but accounts opened on/after December 1, 2011, would not be entitled for bonus.

Besides, loans taken from PPFs would attract an interest of two per cent per annum from December 1, 2011.

Agents commission

The Government has done away with the commission paid to the agents for opening PPF accounts and Senior Citizens Savings Schemes, while the agents’ commission for Mahila Pradhan Kshetriya Bachat Yojana (MPKBY) has been fixed at four per cent. Besides, agency commission for all other schemes has been halved to 0.5 per cent.

With bank deposits giving over nine per cent return, people are now preferring parking funds in banks and hence there has been a net outflow from the small savings schemes, which are administered by the National Small Savings Fund (NSSF).

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SIB M-Pay launched

Mr B. Sambamurthy, Director, IDRBT, the technical arm of the Reserve Bank of India, has launched South Indian Bank's mobile banking service — SIB M-Pay — on CBS platform, which enables fund transfer round-the-clock throughout the year.

The scheme facilitates the convenience of fund transfer to other banks even on holidays. The customer receives the money instantly to the account from anyone without sharing the account number. All transactions are followed by an instant SMS confirmation . All the facilities offered are without any additional charge.

Mr Gigo Joseph, CEO, Infopark, released the wallet size ‘User Guide' on SIB M-Pay by handing over a replica to Mr Abraham Thariyan, Executive Director, South Indian Bank.

Mr P. J. Jacob, DGM, DICT, South Indian Bank, welcomed the gathering and Mr A. Sony, AGM, Marketing, SIB, delivered the vote of thanks.

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HDFC Life launches online term insurance plan

Private insurer HDFC Life has augmented its online channel with the launch of ‘HDFC Life Click2Protect’ — an online term insurance plan.

The plan is aimed at those who seek insurance cover at nominal premiums against their liabilities, HDFC Life said in a release issued here.

“HDFC Life Click2Protect is available in more than 750 cities across the country, the highest reach of an online term insurance plan in the industry. The objective of launching HDFC Life Click2Protect is to cater to the needs of informed customers based not only in metros, but also in Tier 2 and 3 cities in the country,” HDFC Life Executive Vice-President and Head, Marketing and Direct Channels, Mr Sanjay Tripathy, said.

This plan is aimed at an informed customer who understands his liabilities, the extent of cover needed and is fairly conversant with online purchase practices.

Click2Protect offers the convenience of experiencing a simple, fast, convenient, transparent, and cost-effective way of buying a life insurance plan, Mr Tripathy added.

Apart from HDFC Life Click2Protect, HDFC Life also offers other online products such as HDFC SL Young Star Super II and HDFC SL Crest.

HDFC Life is a joint venture between Housing Development Finance Corporation Ltd and Standard Life plc, a leading provider of financial services in the United Kingdom.

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Solar ATMs fuel rural revolution in India

NEW DELHI: An Indian start-up is catalysing a quiet revolution by designing, developing and installing unique solar-powered ATMs in rural areas.

The initial lot of 400 solar ATMs, aptly called Gramateller ('gram' means village), the world's largest order, placed by the State Bank of India ( SBI), has been winning accolades for performance and substantial energy savings.

The ATMs were installed in 2010-11 across several states, usually within 20-50 km of the district headquarters, Vijay Babu, CEO of Vortex Engineering, which makes these units, told IANS from Chennai.

Following SBI's success with solar ATMs, the Catholic Syrian Bank also placed an order for 50 Gramatellers and Indian Bank for 20, while 10 more have been ordered by other banks, he added.

Both Babu and Lakshminarayan Kannan, who founded Vortex, are the alumni of the Indian Institute of Technology-Madras (IIT-M) and the brains behind the Gramateller.

"Our plans to operate ATMs on solar power were greeted with utter disbelief. We faced challenges initially in getting them adopted by our end users, the rural folks, who are not particularly tech-savvy. But once they realised that they were getting control of their own money, they accepted it wholeheartedly," said Babu.

"The workload has increased with more and more people using these facilities which, in most cases, are the only ATMs within 20 km or more, thanks to the solar power backup," added Babu.

The two entrepreneurs took up the project in 2004-05 at IIT-M's suggestion, developing and fine-tuning the product until it became commercially viable in 2008-09.

The IIT-M, which had been initially approached by the banks to develop a robust rural alternative to the existing ATMs, passed on the proposal to Vortex. Babu and Kannan have since inked a royalty agreement with their alma mater.

"Conventional ATMs may not be viable in areas subject to 8 to 10 hours of power cuts, given their dependence on gensets and air-conditioning. But thanks to the rural Gramateller, villagers don't have to undertake time-consuming trips to cities or towns for money," said Kannan.

Vortex is the only Indian company making it to the Time magazine 2011 list of "10 start-ups that will change your life", selected out of 31 companies honoured as "Technology Pioneers" by the World Economic Forum.

Vortex was recently selected as the latest entrant to Business Call to Action (BCtA), a global initiative that encourages private sector efforts to fight poverty, supported by the UN Development Programme, among others.

"The 'no frills' Gramateller has a 12-hour power back-up, provided there is good sunlight at least for five hours daily. Solar panels convert these rays into electrical energy, storing them in a battery. A single unit saves more than 90 per cent of the yearly expenditure incurred on operating an ATM, which works out to Rs.1.44 lakh, half of the amount being accounted by air-conditioning," said Sabarinath Nair, marketing manager, Vortex.

Gramateller comes with a biometric touch pad to prevent fraud and tell villagers that their money is safe. It can also dispense soiled notes in the interiors where crisp currency notes are suspected of being fakes, Nair said.

Source: EconomicTimes

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SBI drops plan for merchant acquiring business JV with Visa, Elavon

NEW DELHI: India's largest lender State Bank of India (SBI) today said it has cancelled a proposed merchant acquiring business joint venture with US-based Elavon Incorporation and Visa International.

The bank has cancelled the negotiations for establishing a joint venture entity with Visa Inc and Elavon Inc for conducting the merchant acquiring business, SBI informed the BSE.

The merchant acquiring business involves facilitation of payments through debit or credit cards at retail outlets.

The RBI had already approved the setting up of a wholly owned subsidiary by SBI in the name of SBI Payment Services for conducting the merchant acquiring business.

The proposed joint venture between SBI Payment Services Pvt Ltd (a wholly owned subsidiary of SBI), Visa Inc and Elavon Inc was first mooted in 2010, it said.

In 2009, the bank had floated a Request For Proposal (RFP) for selection of joint venture ( JV) partners for the merchant acquiring business.

The business was to include acquisition of bank identification numbers (BINs) and providing managed services for point-of-sale (PoS) terminals. The managed services would have included deployment of POS terminals at customer locations, their replacement, merchant training and maintenance, among others.

State Bank of India Group presently has over 26,000 ATMs across the country and has issued over 80 million debit cards.

Source: EconomicTimes

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Axis Bank ranks number one in bond syndication market for 2011

Axis Bank maintained number one position in domestic bond syndication market for the fourth consecutive year, according to data released by Bloomberg. The private bank ranked first in year 2011 cornering 16% of market share in a year where corporates raised Rs 174700 crore through issuance of bonds.

Power Finance, HDFC, Rural Electrification, IDFC and LIC Housing Finance were top debt issuer contributing to 42.4% of total borrowings in the bond market.

Axis Bank arranged Rs 29700 crore while ICICI Bank, the number two arranger, had 13% market share and helped corporates raise Rs 22,700 crore in 2011.

Meanwhile State Bank of India pipped Kotak Mahindra Bank, Citi, A K Capital to emerge 9th in the list from 14th position it held last year. SBI arranged bond of Rs 6300 crore.

Similarly Real Growth Securities and IDFC Capital moved in higher position. While Real Growth was ranked 16th from 24th, IDFC was at 19th from 35th a year ago.

Bloomberg data shows that A K Capital and Barclays Capital lost out to their rivals. A K Capital was ranked 12th in 2011 from 8th position it held last year. Its market share also shrinked 2.8% from 5% a year ago. Similarly, Barclays was pushed to 5th position from 3th position last year. The British bank had market share was 6.9% from 8.5% last year.

Source: EconomicTimes

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Govt sets eyes set on Post Office banks

New Delhi: The government's plan to tap into India's vast postal system to reach out to the unbanked population by utilising offices across the country as banks is expected to take some shape this year as the proposal has been sent to the Finance Ministry for its nod.

The idea that 1.55 lakh Post Offices could double up as banks is aimed at aiding the government's goal of financial inclusion, especially in rural areas. Once implemented, coverage of the country's banking network will increase three-fold in one stroke.

Around 90 per cent of the Post Office branches are in rural areas. In contrast, out of approximately 87,000 bank branches in the country, around 24,000 are in rural India.

India Post is the biggest postal network in the world, a major portion of which, about 1.4 lakh post offices, are located in rural India.

Although the idea has been around for a while, Communications Minister Kapil Sibal brought it centre-stage in July. However, before it takes shape, the Acts governing the banking and postal sectors will have to go through major amendments.

"Before applying for a banking licence, there are certain procedures that need to be completed. The work is in progress and the proposal has been submitted to the Ministry of Finance for its nod to go ahead," a government official privy to the development said.

The year may witness quite a few amendments to the 113-year-old Post Office Act, which are aimed at opening up the sector.

The proposed amendments in The Indian Post Office Act, 1898, include recognising the services of private courier players and bringing them under the regulatory ambit. This will legalise 'forbidden services' like sending personal letters through private courier companies.

However, a lot needs to be done within the Department of Posts before reforms are implemented in the sector, as the industry is demanding that the services wing of the DoP should be a separate entity. This could be done along the lines of BSNL, which was hived-off from the Department of Telecom, industry players have said.

During 2011, Sibal made efforts to kick-off reforms in the sector, starting with India Post.

"After many years, we have seen government is ready to listen to industry. Minister (Sibal) has said that no policy decision will be made without taking views of industry. It's a highly welcome move, but DoP officials are still not ready to open up," said an industry representative.

Sibal had announced a 100-day agenda for revamping the DoP, especially its services. The agenda was designed around objectives assigned under the 11th Five-Year Plan (2007-12).

The agenda included provisions to facilitate round-the-clock transactions by customers through web portals, call centres, ATMs and other tools to modernise and enhance the operational and service efficiency of the government-run 'India Post'.

Sibal attempted to create an image of modernisation in India Post by launching an e-post office portal with an e-commerce section. He pushed India Post to build partnerships with private players for utilising its capacity. The effort did show some results.

In June, 2011, India Post partnered with apparel retail chain Fab India to provide its customers with the facility to ship their purchases to destinations they want from the store.

The DoP also partnered with state handloom centres to provide logistics services to craftsmen for both national and international destinations.

Built up over the years, its reach in the hinterland caught the government's attention as a tool to reach out to the masses under public programmes.

The year for the DoP began with a partnership with the UIDAI to deliver Aadhar numbers. In November, the UIDAI roped in TCIL to support India Post, which could not manage the work load in view of inadequate printing facilities at Kolkata and Delhi.

India Post was printing about 1.5 lakh Aadhaar cards a day, whereas the UIDAI enrollment was over 10 lakh residents daily in that month.

The DoP was also seen as good option to disseminate wages to people under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). However, a lack of capacity and lax management posed questions over its service standards.

A parliamentary Standing Committee on the DoP found a huge gap between the wages disseminated by the DoP and the figures recorded by the Department of Rural development.

In 2009-10, the gaps in the data submitted by both departments widened to 13 lakh in terms of total MGNREGA worker accounts and over Rs 1,000 crore vis-a-vis the wages distributed.

During 2010-11, the DRD furnished the data one month later than the DoP. Upon examination, it was found there was a deviation of 29 lakh in respect of the number of accounts and about Rs 1,221 crore in respect of the amount disbursed vis-a-vis the DoP's figures, the Standing Committee said in its report.

Besides these glitches, a fund crunch left the DoP unable to address urgent and important requirements.

During the 11th Five-Year Plan, the DoP was allocated Rs 2,700 crore for technology upgradation of Post Offices. However, the Expenditure Finance Committee (EFC) restricted this to Rs 2,505.86 crore.

The final amount approved two years after commencement of the Plan was Rs 978 crore.

With immense potential and as possibly many hiccups on the way to realising them, 2012 will be the year to watch which way India's postal system goes.

Source: Financial Express

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