ICICI Bank repays $750-million bonds, skips costly refinance

MUMBAI: ICICI Bank dug into its internal resources to repay $750 million of bonds that matured on Thursday instead of taking the usual refinance route, said two people familiar with the payout.

The development reflects the high borrowing costs for Indian corporates who have more than $125 billion of overseas debt coming up for repayment this year.

International investors are demanding higher rates as the European sovereign crisis has heightened risk-aversion among EU banks, one of the biggest lenders to Indian companies.

ICICI Bank decided not to pay at least 50% more in coupon than the bonds it raised in 2009 at 5.75% and has opted to wait for rates to ease once the EU crisis abates, the two people said.

"Any fresh bond-raising would be evaluated based on market conditions and new lending opportunities," the bank said in an email response. "ICICI Bank has repaid the bonds using its existing liquidity.

The bank's existing liquidity and incoming repayments from its foreign currency asset portfolio are adequate to meet repayment obligations on bonds and bilateral & syndicated loans."

The cost of borrowing in dollar-denominated bonds for Indian companies has shot up to more than 600 basis points above the benchmark London Interbank Offered Rate (Libor), from about 350 basis points in the first half of 2011, say investment bankers.

Most Indian companies that borrowed overseas due to lower interest rates are at the receiving end after the rupee slid 16% last year, inflicting losses on many.

Source: EconomicTimes

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PNB identifies five countries for possible foray

Banking major Punjab National Bank (PNB) is looking to further expand its overseas presence and has identified at least five countries for possible entry in the coming days.

Maldives, Singapore, Brazil, South Africa and Bangladesh are the five countries that the bank has identified for overseas foray, Mr K. R. Kamath, Chairman and Managing Director, PNB, told Business Line here.

“Our board has cleared the bank's entry into Maldives. We are also looking at Singapore and Bangladesh. Surveys have also been done for countries like South Africa and Brazil,” Mr Kamath said.

He also said that the bank would be interested in converting its representative office in Sydney into a branch or a subsidiary. PNB had in September last opened a representative office in Sydney, which was the tenth overseas destination for the bank.

PNB has already received regulatory approval from the Reserve Bank of India for opening a subsidiary in Canada. It is still awaiting the nod of Canadian regulatory authorities for opening a subsidiary in that country.

The bank has subsidiaries in London and Bhutan, besides many branches in Dubai, Hong Kong and Kabul. It also has a joint venture in Nepal.

krsrivats@thehindu.co.in

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B.K. Batra appointed IDBI Bank Deputy MD

The Government has appointed B.K. Batra as Deputy Managing Director of IDBI Bank.

He was working as Executive Director looking after the corporate banking function and formulation of corporate level policies and processes.

In addition, he was also discharging the responsibility as chairman of credit committee and systems and procedures and several other committees, IDBI Bank said in a statement.

Mr Batra has served IDBI Bank in various positions from 1983 till date, it said.

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Andhra Bank launches car loan campaign

Andhra Bank has launched a special package for four-wheeler loans with special interest rates and concession in processing charges.

The package, ‘New Year Car Campaign' will offer vehicle loans at 12.25 per cent for a repayment period of up to three years with a 50 per cent reduction in processing charges.

For loans above three years, the interest rate is 12.50 per cent.

The offer will be in valid till February 15, Andhra Bank said in a release.

On the deposit front, it had also launched ‘AbhayaFirst Wealth Pack'. The package will offer customers a savings bank account, a recurring deposit account, a group term insurance and unit-linked insurance.

The insurance products would be provided by IndiaFirst Life Insurance, the release added.

nagsridhu@thehindu.co.in

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RBI imposes Rs 5 lakh fine on Ghandhidham Cooperative Bank

MUMBAI: The Reserve Bank of India (RBI) has imposed a penalty of Rs 5 lakh on Kutch-based cooperative sector lender Ghandhidham Cooperative Bank for violation of customer identification norms.

"The Reserve Bank has imposed a monetary penalty of Rs 5 lakh on the Ghandhidham Cooperative Bank Ltd, Adipur, Dist Kutch (Gujarat)... for violation of RBI's instructions relating to Know Your Customers (KYC) norms," the apex bank said in a statement.

The RBI had earlier issued a show cause notice to the bank, in response to which Ghandhidham Cooperative Bank had submitted a written reply.

"After considering the facts of the case and the bank's reply in the matter, the RBI came to the conclusion that the violation was substantiated and warranted imposition of the penalty," the statement said.

Source: EconomicTimes

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Maharashtra seeks more time for co-op banks to get RBI licence

The Maharashtra government has written to the Union Finance Ministry seeking an extension of the March 31 deadline set by the Reserve Bank of India for 11 District Central Co-operative Banks and the State Co-operative Bank to obtain banking licence.

In an interaction with media persons at a State credit seminar organised by the National Bank for Agriculture and Rural Development (Nabard), the Chief Minister, Mr Prithviraj Chavan, said the deadline for obtaining banking licence should be extended by a few months.

The Rakesh Mohan Committee recommendations, which have been accepted by the Union Finance Ministry makes it mandatory for all the cooperative banks to get a licence before the March deadline.

Across the country, there are 134 banks which have not received the licences from RBI. If the banks are unable to get a licence, then they have to either become a cooperative credit society or merge with another bank.

In the State, the Maharashtra State Co-operative (MSC) Bank and 11 district central cooperative banks are functioning without banking licences. These banks either have a negative net worth or their Capital to Risk Assets Ratio (CRAR), is lower than four per cent.

Mr Pramod Karnad, Managing Director of MSC Bank, said that the bank could have a CRAR of more than 4 per cent by March 31 but it would require more time, so that it gets reflected in the balance sheet. It already has an adequate Cash Reserve Ratio and Statutory Liquidity Ratio, which are pre-conditions for getting the licence, he said.

He said that the bank has also started the process of selling assets of 18 sick sugar co-operatives, which have defaulted on loan repayments. From the sale of their assets about Rs 300 to 400 crore would be recovered. The bank has also raised a fresh demand of Rs 275 crore from Maharashtra government, so that the CRAR level reaches four per cent.

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Private, foreign banks cannot pay 'excessive' salary to CEOs: RBI

MUMBAI: The Reserve Bank today said CEOs and staff of private and foreign banks cannot draw "excessive" salary, but it did not impose any cap on their remuneration.

Issuing guidelines on compensation of CEOs and staff of private and foreign banks, RBI said all private and foreign lender will have to obtain prior approval from it for renumeration of CEOs and whole time directors as per the Banking Regulation Act, 1949 which prohibits excessive renumeration.

However, the guideline did not specify what would constitute excessive renumeration. Banks are required to ensure that the fixed portion of compensation is reasonable, taking into account all relevant factors, including the industry practice, it said.

While designing the compensation arrangements it should be ensured that there is a proper balance between fixed pay and variable pay, it said. Variable pay, however, should not exceed 70 per cent of the fixed pay in a year.

The guidelines would be implemented from 2012-13. "As hitherto, private sector and foreign banks operating in India would be required to obtain regulatory approval for grant of remuneration to whole time directors or chief executive officers in terms of Section 35B of the Banking Regulation Act, 1949," RBI said in a notification.

"The approval process will involve an assessment whether the compensation policies and practices are in accordance with the Financial Stability Board (FSB) Principles," it said.

The principles are intended to reduce incentives towards excessive risk taking that may arise from the structure of compensation schemes. The principles call for effective governance of compensation, alignment of compensation with prudent risk taking, effective supervisory oversight and stakeholder engagement, it said.

The principles have been endorsed by the G-20 countries and the Basel Committee on Banking Supervision and are under implementation across jurisdictions, it added.

Source: EconomicTimes

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SBI caps losing its hold on debt restructuring business

MUMBAI: SBI Capital Markets, the undisputed leader in loan syndication as well as debt recast, is slowly losing its grip in the market. Unlike in the past, lenders in the domestic market are no longer signing on the dotted lines if a loan is syndicated or restructured by SBI Caps, the investment banking arm of State Bank of India.

A number of bankers on condition of anonymity say they are no longer comfortable if a proposal is attached to SBI Caps and that they would prefer to vet it themselves -a far cry from the days when SBI Caps' project-appraisal skill was perceived to be impeccable.

A perceived failure in a series of restructured cases like GTL, Air India and Kingfisher added to the growing feeling in the market that SBI Caps is driven more by the fees it earns on advisory than being fair to all lenders in the consortium SBI Caps did not comment to a mail sent by ET on the matter.

The classic case is that of GTL. In June 2010, SBI Caps syndicated a Rs 5,000-crore loan for GTL Infra to pay for Aircel Cellular's tower business. One of the key responsibilities of a loan syndicator is to convince lenders that they have appraised the company and that the company is worth investing in.

However, a year after the loan syndication, SBI Caps was back in the picture to help GTL Infra in a financial crisis. "SBI Capital would suggest appropriate steps or remedies required to protect lenders' interest," the company had then said in a notice to the exchange.

In September 2011, GTL Infra had to go for corporate debt restructuring, with SBI Caps as its advisor. This annoyed lenders who felt SBI Caps did not do its homework before approaching them for investment in GTL. Further, they were disappointed with the CDR package itself, which proposed that lenders would convert 25% of the Rs 16,200-crore debt into equity, while the promoters would infuse only Rs 300 crore.

Similar was the case with Kingfisher Airlines. SBI Caps restructured the loan in May 2010 under a one-time dispensation given by banking regulator Reserve Bank of India. Bankers are now questioning SBI Caps' credibility in assessing the financials of companies, as it has now gone back to banks for another round of restructuring.

"In the past, the restructuring exercise used to be a collaborative effort where lenders took a very practical approach. That does not seem to be the case now," said a senior executive from an asset restructuring company. Willy-nilly, lenders gave their nod to the recasting of GTL's debt and are eagerly waiting for SBI Caps' viability report on Kingfisher.

However, they have rejected the Air India recast package, again designed by SBI Caps. Here the tension between the lenders and SBI Caps was evident as they rejected the proposal saying the provisioning requirement is much higher for all lenders except for SBI.

SBI Caps had proposed conversion of a part of the debt into preferential shares, which involved huge amount of provisioning. "SBI Caps is becoming a darling among companies that are under stress and approaching CDR.

Source: EconomicTimes

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LIC Home Finance launches Rs 500 cr VC fund

Life Insurance Corporation's housing finance arm LIC Housing Finance (LICHFL) today launched a Rs 500-crore venture capital fund to finance realty and micro infrastructure projects.

LICHFL and LIC, have pooled in Rs 50 crore each and another Rs 100 crore have been raised through external investors to launch the fund.

The fund christened 'LICHFL Urban Development Fund' will be managed by LICHFL's dedicated subsidiary LICHFL Asset Management Company and targets to raise the remaining Rs 300 crore in the next nine months, LIC acting chairman DK Mehrotra said here.

Half of the amount will be invested in mid-income housing projects, while the other half will be dedicated to income yielding micro-infrastructure projects like schools, hospitals, special economic zones, industrial IT parks, the company said.

Stating that LICHFL's pedigree in the sector will be a big asset, Mehrotra did not answer queries on the timing of the launch.

With headwinds like repeated interest rate hikes, lower growth, job uncertainties and policy paralysis, the realty and housing sector is facing stress at present.

LICHFL Chief Executive VK Sharma said the company has invested in other similar realty-focused funds earlier too and the decision to enter the fray by themselves is prompted by handsome returns which have been yielded in the past.

For investors, LICHFL AMC is assuring a return of 12 per cent, he said, adding that it will be targetting institutional investors and high networth individuals to raise the balance amount.

Source: Business Standard

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HDFC Q3 net up 10% on robust loan growth

Mortgage lender HDFC has posted a net profit of Rs 981.25 crore for the quarter ended December 31, 2011, on the back of higher loan approvals and disbursements.

The company had reported a net profit of Rs 890.88 crore for the October-December quarter of 2010-11.

The company’s total income stood at Rs 4,472.51 crore during the quarter, up from Rs 3,321.04 crore in the corresponding quarter last fiscal, Housing Development Finance Corporation said in a filing to the BSE.

As of December 31, 2011, the company’s loan book stood at Rs 1.32 lakh crore compared with Rs 1.09 lakh crore in the year-ago period, it said.

Net profit of the company during the April-December period stood at Rs 2,796.48 crore compared with Rs 2,393.01 crore in the previous fiscal.

Total income during the nine-month period stood at Rs 12,463.25 crore against Rs 9,093.21 crore in the corresponding year-ago period.

Cross currency interest rate swaps

The figures are not comparable as the company changed its accounting policy for cross currency interest rate swaps.

These swaps, which were earlier recorded at fair value, are now being recorded at a higher liability by marking only the foreign currency component to spot rates and excluding the benefit of interest rate differentials, HDFC said.

“... Had the corporation followed the earlier method of accounting... net profit for the nine months ended December 31, 2011, would have been lower by Rs 54 crore,” it said.

Net interest margin

Net interest margin (NIM) of the company stood at 4.3 per cent at the end of December 31, 2011. Gross non-performing loans stood at Rs 1,109 crore or 0.82 per cent of total advances during the quarter.

Shares of the company were being quoted 1.83 per cent higher at Rs 693.90 apiece in the late afternoon trade on the BSE.

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RBS to cut 3,500 jobs in 3 years

Royal Bank of Scotland today announced 3,500 job cuts over the next three years, as part of a business reorganisation and shrinkage of its investment banking operations.

RBS, a government-owned banking giant in the UK, also plans to reorganise its wholesale businesses into “markets” and “International banking”, besides closure and downsizing of some other select activities, RBS said in a statement.

The bank would exit from cash equities, corporate broking, equity capital markets, and mergers and acquisitions businesses.

“The actions announced today are outlined...will begin immediately, but may take up to three years to implement,” RBS said.

RBS said its wholesale businesses would cater to corporate and institutional clients globally. The bank’s marketing division would focus on its existing strengths in fixed income, foreign exchange, debt financing, transactions services and risk management solutions.

The financial services major said that changes in its wholesale banking operations have been announced to ensure it would continue to deliver against the Group’s strategy announced in 2009.

“At this stage we envisage a further net employment reduction over three years of circa 3,500, split between our UK and non-UK locations, in addition to the approximately 2,000 reduction in staff in GBM in the second half of 2011,” RBS said.

The bank reduced its headcount by 2,000 last year.

According to media reports, it has cut around 30,000 jobs since being bailed out by the government.

”...It is clear that, particularly in the wholesale banking arena, significant new pressures have emerged. The changes we are announcing today seek to ensure that RBS is at the front of the pack in pursuing a strategy that reflects the environment we expect to operate in,” the RBS Group Chief Executive, Mr Stephen Hester, said.

“Our goal from these changes is to be more focused for customers, more conservatively funded, more efficient and with better, more stable returns for shareholders overall,” he added.

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HUDCO to raise Rs 4,685 cr via tax-free bonds

Housing and Urban Development Corporation Ltd (HUDCO) today said it will raise up to Rs 4,685 crore through a public issue of tax-free bonds.

The company said that it had filed a draft prospectus yesterday for the same with the National Stock Exchange (NSE), where these bonds would be listed.

“The company proposes to make a public issue of tax-free bonds of face value of Rs 1,000 each in the nature of secured, redeemable, non-convertible debentures... aggregating up to Rs 4,684.72 crore,” HUDCO said in a statement.

These bonds would have tax benefits for subscribers under the Income-Tax Act, 1961.

HUDCO is a public sector firm fully owned by the government for the financing of housing and urban infrastructure activities in India.

“The Finance Ministry has given us approval for raising Rs 5,000 crore through tax-free bonds. We have raised Rs 315 crore through private placement of bonds. Now we are coming up with a public issue of tax-free bonds to raise up to Rs 4,685 crore,” HUDCO Senior Executive Director, Mr R.K. Khanna, told PTI.

The funds would be utilised in project financing, he said, adding that the public issue of tax-free bonds is likely to be launched by the month-end.

“In the 2010-11 fiscal, we sanctioned Rs 19,762 crore and out of that, Rs 5,293 crore was in housing and about Rs 14,500 crore in infrastructure projects. We are targeting the sanction of Rs 24,000 crore this fiscal and out of that, 25 per cent would be toward housing schemes,” he said.

The lead managers of the issue are Enam Securities and SBI Capital Markets. The trustee for the bondholders is SBICAP Trustee Company.

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LIC to launch online term plan next month

Life Insurance Corporation (LIC) will sell its policy through the Internet for the first time with the launch of a pure term plan next month.

“The online term plan is ready.

“We had some issues that we have sorted out. It should be launched by the end of next month,” said acting chairman of LIC, Mr D. K. Mehrotra.

The premium rates of the online term plan are expected to be lower than what the company charges for the offline term plans.

deepa.n@thehindu.co.in

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SBI slashes processing fee for greater home loan pie

MUMBAI: State Bank of India (SBI) has slashed processing fees on home loans by half, a move aimed at garnering a larger pie in the home loan market and giving competition to private banks and housing finance companies.

"The decision is aimed at creating goodwill. With regards to fees charged from retail customers, SBI will charge only to the extent of covering its cost and not earn profit on it," said a senior official from the bank on condition of anonymity.

The bank has reduced processing fee on home loan above Rs 75 lakh to Rs 10,000 from Rs 20,000. For loans in the range of Rs 30 to Rs 75 lakh, the fees has been lowered to Rs 6,500 from Rs 10,000 earlier. The processing fee for loan below Rs 30 lakh continues to be 0.25% of the loan amount.

The reduction in the rates follows a decision taken by the policy committee chaired by SBI chairman Pratip Chaudhuri. The new charges will be effective from January 11. Axis Bank and ICICI Bank charge 0.5% of the loan amount sanctioned as processing fee, while housing finance leader HDFC charges 0.50% of the loan amount with a cap of Rs 10,000.

So, on a loan of Rs 50 lakh currently, SBI's processing fee would be the cheapest among the four banks - it would be stand at Rs 6,500 as against Rs 25,000 (0.5% of Rs 50 lakh) charged by ICICI Bank and Axis Bank, and Rs 10,000 by HDFC. This is yet another aggressive stand taken by SBI to grab the home loan pie.

In November, SBI was the first bank to do away with pre-payment penalty on floating and fixed rate loans. "In an environment where all banks are moving towards zero pre-payment charges, we believe processing fee in the industry would tend to rise over a period of time," said Jairam Sridharan, head - consumer lending and payments at Axis Bank. "Also, the waiver of pre-payment penalty will only encourage customers to prepay more loans, more frequently.

Therefore, it is not sustainable to have a lower processing fee." "At a time when corporate sector is going through a lot of pain, SBI may prefer to decelerate its corporate loan book and expand its retail loan book. And this move may be aimed at that," said Hemindra Hazari, head of research - institutional equities at Nirmal Bang, a broking firm.

Source: EconomicTimes

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RBI cracks the whip on overseas banks

The regulator said these transactions are partly responsible for sharp depreciation in the rupee against the dollar.

The Reserve Bank of India (RBI) has cracked the whip on some of the large foreign banks in the country for encouraging companies to participate in speculative trades in the foreign exchange market.

The banking regulator in a meeting with senior representatives of foreign lenders have cautioned them for taking part in these trades, as it felt these transactions were partly responsible for sharp depreciation in the rupee against the dollar, three people familiar with the development said. Foreign banks were acting as arrangers for the companies in these transactions.

“RBI was aware that many foreign banks were encouraging speculation in the market. But it could not take any action as most of these trades were done offshore outside its regulatory purview. There was a meeting last month where RBI issued oral warning to some of these banks,” said a source privy to the discussions with the regulator.

According to industry players, most of these speculative trades were done taking advantage of the difference in forward premium rates in India and non-deliverable forward (NDF) contract market abroad.

According to bankers, the difference in forward premium rate in India and NDF market, which widened sharply in the second half of 2011, offered a perfect opportunity for banks and corporates to benefit from the rupee’s depreciation.

Industry sources said between August and December many large corporate houses were approached by banks to take part in foreign exchange trades in India and NDF market through subsidiaries and associates.

They will enter into a contract to buy dollar in India, while their subsidiaries will take another forward sale contract in the NDF market with a view that rupee will depreciate further. The difference in forward premium rates in the two markets allowed the corporates to benefit from these simultaneous trades.

“Banks were getting a hefty fee for arranging these transactions,” said another person aware of these deals. Adding: Often the lenders were getting as much as one-third of the windfall.

These trades were believed to be one of the reasons for volatility in the Indian rupee movement in the latter part of 2011. The Indian currency depreciated by almost 18 per cent in less than six months between August 5 and December 15 with the volatility as measured by annualised standard deviation of daily percentage changes doubling from five per cent to 12 per cent.

“Primarily, to discourage these trades RBI came out with the new guidelines. The opportunity to gain from arbitrage is hardly there anymore as the difference in forward premium rates in India and NDF market has narrowed,” said an independent foreign exchange analyst.

On December 15, RBI restricted rebooking of cancelled forward contracts and reduced the net overnight open position limit or trading limits for banks in the foreign exchange market.

Source: Business Standard

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SBI to get Rs 6,000 cr fresh capital via pref issue before fiscal-end

The government has agreed to infuse up to Rs 6,000 crore fresh capital into State Bank of India through a preferential issue before the fiscal-end, the bank Chairman, Mr Pratip Chaudhuri, said here today.

“We will be having a preferential issue and will be getting capital through it,” Mr Chaudhuri told PTI when asked about the progress on its proposed recapitalisation.

When asked what could be the quantum of infusion, he said: “The size will be Rs 5,000 to Rs 6,000 crore.”

He did not give any specific indication about the timing of the issue, though he said it will happen before March 31.

SBI’s total capital adequacy ratio stood at 11.4 per cent as of September quarter, of which core Tier-I capital stood at 7.7 per cent, below the 8 per cent-level desired by the government.

Rights issue

It had first announced its intention to raise up to Rs 20,000 crore through a rights issue over a year ago, but the government, which holds a 59.4 per cent stake in the lender, has delayed the proposal as it will have to subscribe to almost two-thirds of the money.

For the past three months, the SBI brass has been pegging the capital infusion size at around Rs 6,000 crore. Last month, Chief Financial Officer, Mr Diwakar Gupta, said an infusion may happen “any time”, while Mr Chaudhuri had last week said that he has received a letter from the Finance Ministry on recapitalisation.

The recapitalisation will take the bank’s Tier-I capital ratio to over 9 per cent, he had said.

Fund infusion

A slew of lenders, including Bank of Baroda, Bank of Maharashtra and Union Bank have made similar announcements in the recent past. Bank of Baroda would be getting Rs 775 crore this fiscal, while Bank of Maharashtra is ready for an Rs 860-crore preferential issue.

“As part of increasing its stake to the mandated 58 per cent, the government has agreed to pump in Rs 775 crore into the bank. The fund infusion will happen before the end of the fiscal,” Bank of Baroda Chairman and Managing Director, Mr Mallya, told PTI last month-end, adding that this would be done by way of a preferential issue.

In March last year, the Government pumped Rs 2,675 crore into BoB, increasing its stake to 57.3 per cent from 53 per cent earlier. With the infusion of Rs 775 crore, government ownership in the bank will touch the mandatory 58 per cent level, Mr Mallya added.

Union Bank also said that it would be recapitalised by the government this fiscal. UBI said it would receive a capital infusion of Rs 280 crore from the government.

Last week, a Finance Ministry official said the government would be pumping Rs 17,000 crore into various state-run banks this fiscal. This makes the additional requirement Rs 11,000 crore, which the official said would be met through a supplementary demand.

The FY’12 Budget had earmarked only Rs 6,000 crore for the recapitalisation of state-run banks in the current fiscal. The other banks that are likely to get a fresh capital infusion are IDBI Bank and Syndicate Bank, among others.

In 2010-11, the government had provided capital support worth Rs 20,157 crore to various public sector banks.

A committee headed by Finance Secretary, Mr R.S. Gujral, is working out a strategy for the capitalisation of public sector banks over a period of next 10 years to meet Basel III requirements, under which the 26 state-run lenders would need Rs 3.6 lakh crore in fresh capital.

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Fake notes: NIA arrests 14 from 7 states

New Delhi: In a nationwide crackdown spanning seven states, the National Investigation Agency (NIA) has arrested 14 people and seized Fake Indian Currency Notes (FICN) worth several lakhs, alleged to be pumped into India using the borders of Bangladesh and Nepal. The investigations so far have pointed out that the high-quality FICN were being sent from Pakistan. This is the first-ever case registered by the NIA, which is mandated to curtail the circulation of FICN.

Tracking the roots of these FICN, the NIA said notes of the denominations of Rs 1,000, Rs 500 and Rs 100 printed in Pakistan were smuggled to Bangladesh using the air route and then sent to India via Bangladesh border (fencing). Bundles of FICN were thrown into the Indian villages bordering Bangladesh. The arrested kingpin of the racket, Morgen Husain, and his aides used to collect the notes and then distribute them among agents spread all over the country.

“They transport the FICN through trains and other modes of transport to all the states for circulation. The local agents collect 60 per cent of the value of the circulated FICN in genuine notes, which is then remitted to the bank accounts of the key persons,” said an NIA official.

The raids were carried out in West Bengal, Bihar, Jharkhand, Tamil Nadu, Karnataka, Andhra Pradesh, UP, Delhi and Haryana.

Source: Financial Express

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SBI opens exclusive branch for women customers in Hyderabad

A play area for kids and free lockers for keeping personal belongings.

Can you imagine what are we talking of? It an exclusive branch for high-networth women customers opened by State Bank of India here on Wednesday.

The branch, Vasundhara Jubilee Senorita Banking Centre, is only the second of its kind in the country.

It is aimed at tech-savvy, educated women customers including entrepreneurs.

“With play room for kids and other facilities, women customers can handle their banking transactions in a safe and family atmosphere,” Mr A. Krishna Kumar, Managing Director, State Bank of India, told newspersons after formally inaugurating the branch.

An account in the branch can only be opened by women as principal account holders.

The second applicant may be any person of her choice such as her spouse, parents or siblings.

Initial deposit

As of now, there are no restrictions on initial deposit required to open an account.

The branch also has a self-service kiosk with all modern banking amenities.

“As far as possible, we will try to manage the branch with women employees,” Mr Krishna Kumar said.

The first Vasundhara Jubilee Senorita Banking Centre was earlier opened by SBI in Lucknow.

nagsridhu@thehindu.co.in

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SBI sees surge in requests for corporate debt rejig

There has been a significant increase in requests for debt-restructuring from corporates of late, according to Mr A. Krishna Kumar, Managing Director, State Bank of India.

Speaking to newspersons after inaugurating a women-focussed branch here on Wednesday, Mr Krishna Kumar said such requests were coming in from many sectors, including agro-based industries and textiles.

“These include small and medium enterprises as well as big corporates,” he said. Apparently, the worsening economic scenario is responsible for this trend.

SBI is examining requests as some of them should be dealt with through the formal corporate debt restructuring route involving a consortium of banks.

On the issue of Kingfisher Airlines loan portfolio being declared as a non-performing asset, he said: “It is bound to have an impact on our balance sheet. But we should not have too much of pressure during this quarter.”

Referring to debt extended to airlines in general, Mr Krishna Kumar said these loans were too large to be restructured.

NO DISBURSALS

Even though bank has been willing to sanction loans to corporate, most of the businesses are not willing to take the sanctioned loans.

“People are not drawing the loans. We have a large number of sanctions on hand,” he said.

Credit growth, on the whole, however, was good and, for the full year, it could be at about 17-18 per cent he said.

To keep the net interest margins strong, SBI has been focussing more on retail deposits such as current and savings accounts. The net interest margin could be around 3.5 per cent or a tad higher, he added.

On the state of non-performing assets, Mr Krishna Kumar said the situation was not as bad as expected earlier.

The bank took special measures such as coordination of recovery of non-performing assets by deputy general managers, he added.

Special recovery teams consisting of officers and clerks have also been formed in the rural areas.

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Common written exam is for qualifying to take part in recruitment process: IBPS Director

The common written examination conducted by the Institute of Banking Personnel Selection (IBPS) is an ‘eligibility' exam, Mr M. Balachandran, Director, IBPS, said. The IBPS prescribes the minimum requirements, taking into account the least of the qualifying criteria stipulated by the participating banks, so that all aspirants can take a shot at the exam, he said.

He emphasised that in the advertisement issued by IBPS, it was clearly indicated that the examinations were only for qualifying to participate in the recruitment process. After qualifying, the candidates have to comply with individual bank's requirements as and when they call for applications.

He was responding to a query voiced by many candidates who had taken the exam but found themselves ineligible after some banks prescribed higher qualification criteria.

While some banks fixed 55 per cent marks in graduation as minimum criteria, some prescribed a minimum age of 21 years — candidates who were 20 years would hence find that their score would not be valid a year later (validity of the score is one year).

Expressing anguish over the recruitment process, Mr Srivastava, an aspirant, wrote: “Many candidates who scored well in the common written exam are ineligible to apply for the interview. My question is: What was then the need to invite applications, which cost Rs 450, from everybody? We candidates feel cheated.”

Another candidate, Mr S. Kalyan, who scored 172 in the IBPS exam, has an MBA to boot and works in the clerical cadre in a top public sector bank, found himself ineligible because of the requirement to score 55 per cent marks in graduation.

He says his post-graduation marks, which is a higher qualification, should be considered for eligibility and feels the rules prescribed by some of the banks have robbed him of even the basic right to apply.

Minimum criteria

Mr Balachandran said banks could fix their minimum qualifying criteria based on their perception on the likelihood of getting candidates who fulfil their requirements and the vacancies available.

Clarifying with an example, Mr Balachandran said that just as many universities prescribe a higher cut-off for entrance to post-graduate courses even for their own graduate students, banks have the right to fix a higher minimum qualifying criteria.

In the common exam, a general candidate had to score 25 marks in each subject and the pass mark was 125/250.

Banks could fix a higher cut-off at their discretion while others may go with minimum cut-off.

Mr Balachandran said that IBPS had fixed the minimum criteria for its common exam because there were some banks that did not insist on any percentage in graduation.

He said that they did not want to deprive anybody of a chance by fixing a higher qualifying criteria. He said the process was transparent and that most competitive exams even for admissions do follow a similar approach.

vageesh@thehindu.co.in

nagsridhu@thehindu.co.in

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Allahabad Bank may recast Rs 200/300-cr loans to steel, textile sectors

Close to Rs 200-300 crore of loans extended by Allahabad Bank to the steel and textile sectors might be restructured during the third quarter of this fiscal. The bank had restructured loans of about Rs 125 crore during the second quarter of this fiscal, Mr D. Sarkar, Executive Director, Allahabad Bank said.

The total outstanding loans under restructured accounts were at Rs 2,941 crore as on September 30, 2011, up from Rs 2,815 crore as on March 31, 2011.

A total of Rs 2,722 crore of the restructured loans were in the standard category while close to Rs 220 crore was in the category of non-performing assets (NPA) as on September 2011.

“Some companies are finding it difficult to bear the burden of high interest rate as they are unable to pass on the costs to their end-customers. So we have to do some restructuring of accounts in sectors such as steel and textiles,” Mr Sarkar told Business Line.

Gross NPA

Allahabad Bank expects its gross NPAs to inch up slightly during the third quarter. The percentage of gross NPA to total advances was at 1.77 per cent as on September 2011, marginally up from 1.74 per cent as on March 2011.

“We moved to system driven identification of NPAs in September. So there will be some system stabilisation issues in the short term. The restructuring exercise might also lead to some sacrifice by the bank.

“Though it is difficult to get an exact estimate of NPAs until we get the final auditors report, however, both these factors might push up the gross NPAs a bit,” Mr Sarkar said.

NIM stable

Meanwhile, Allahabad Bank expects its net interest margin to remain stable or even marginally improve to 3.7 per cent by the end of this fiscal.

The net interest margin improved to 3.68 per cent during the quarter ended September 30, 2011, up from 3.34 per cent during the corresponding period last year.

“We will maintain our NIMs by focusing on operational efficiency,” he said.

shobha@thehindu.co.in

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Moody's raises India to investment grade

NEW DELHI: Moody's has upgraded India's rating for short-term foreign currency bank deposits from speculative to investment grade after finance ministry sought clarity from the global rating agency.

The upgrade will help the country attract overseas deposits to fill up the void created by the sharp slowdown in equity inflows. Moody's had last month lifted foreign currency bank deposits to Baa3 from Ba1 and rating for domestic currency short-term government bonds to bonds to P-3 from NP but did not mention short term foreign currency bank deposit.

The Finance Ministry had approached the ratings agency seeking clarification regarding the 'shortterm country ceiling on foreign currency bank deposit', Thomas Mathew, joint secretary in the finance ministry told reporters.

Moody's has now lifted the shortterm country ceiling on foreign currency bank deposit from NP (not prime) to Prime (P-3), suggesting acceptable ability to repay short-term obligations.

The Reserve Bank of India had recently freed up interest rates on nonresident (NRE) deposits and ordinary non-resident (NRO) accounts in a bid to attract dollars from overseas Indians.

The revision in ratings will help increase investor comfort at a time India is battling high inflation, low growth, rising fiscal and current account deficit and low sentiment. Justifying the December upgrade, Moody's had said, "Diverse sources of Indian growth have enhanced its resilience to global shocks".

The ratings agency has sent a mail to the finance ministry affirming the upgrade. "The Department of Economic Affairs (DEA) will continue to engage ratings agencies on regular basis to impress upon them the long-term structural strengths and sound fundamentals of the Indian economy," Mathew said.

Six sovereign ratings agencies --Standard & Poor's, Moody's, DBRS, Fitch, Japanese Credit Rating Agency and the Rating and Investment Information Inc - currently have issued India ratings.

Source: EconomicTimes

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United India bags TN Govt's health insurance scheme

Public sector insurance provider United India Insurance has bagged the Tamil Nadu government’s health insurance scheme.

The health insurance scheme is expected to generate a premium of around Rs 600 crore. It provides medical cover up to Rs 4 lakh (for four years).

The previous government’s Kalaignar Health Insurance scheme provided cover for Rs 1 lakh. This scheme was run by Star Health Insurance, which has missed the bus this time around.

The new scheme, which seeks to give priority to government hospitals, covers 950 types of medical treatment compared with 642 types in the previous scheme. It is expected to be rolled out by the Tamil Nadu government on Wednesday.

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Karnataka Bank conducts NRI meet

The non-resident Indians (NRIs) always respond to the progress of the country and their contribution and role in the development of Indian economy is substantial, according to Mr Ananthakrishna, Chairman of Karnataka Bank Ltd.

A bank release said here on Tuesday that he was speaking at an NRI meet, organised by it in Mangalore recently.

Stating that NRI deposits are important in the deposits portfolio of the banks in India, he said Karnataka Bank provides dedicated, personalised and quick services supported by good technology to its NRI customers.

Speaking on the occasion, Mr P. Jayarama Bhat, Managing Director of the bank, said liberalisation of interest rates on NRI deposits is aimed at increasing the inflow of funds from abroad. He said that Karnataka Bank has wide range of NRI products supported by good technology and also it is extending information to NRIs through its dedicated NRI cell based at Mumbai.

Mr Suresh K., Assistant General Manager at International Division of the bank in Mumbai, gave a presentation on the facilities available to NRIs on the occasion.

vinayakaj@thehindu.co.in

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Sebi levies Rs 10 lakh fine for fraud

Mumbai: Regulator Sebi has imposed a fine of Rs 10 lakh on Saumil A Bhavnagari of V & S Intermediaries for indulging in fraudulent and unfair trade practices while dealing in the scrip of Adani Exports Ltd.

"After considering all the facts and circumstances of the case... hereby impose a monetary penalty of Rs 10 lakh under Section 15 HA of the SEBI Act on the Noticee (Saumil A Bhavnagari)," the Securities and Exchange Board of India said in an order.

The section deals with penalty for fraudulent and unfair trade practices.

Sebi had earlier conducted investigation regarding the buying, selling and dealing in the shares of Adani Exports Ltd (AEL) between July 9, 2004 and January 14, 2005 and again between August 1, 2005 to September 5, 2005.

The price of the scrip of AEL witnessed wide fluctuations during the two periods.

The role of the main brokers and clients who had traded heavily during the period under investigation in the scrip of AEL was scrutinised.

The investigations had revealed that certain entities transacted in the shares of the company in a fraudulent manner that led to creation of artificial volume and price rise in the scrip.

Bhavnagari and his V&S Intermediaries was one such intermediary.

Sebi had in June 2008 issued a show cause notice to Bhavnagari to which a reply was sent.

After considering all the facts, the regulator said that that the trades made by Bhavnagari were fictitious.

It said the trading pattern of the noticee, by which he created a very large volume in the scrip with select counter-party clients, proves that Bhavnagari had executed trades which did not result in transfer of beneficial ownership but merely created artificial volume in the scrip.

Source: Financial Express

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Muthoot Fincorp plans to raise Rs 500-600 cr via private equity route

Non-banking finance company, Muthoot Fincorp Ltd, is looking to raise about Rs 500-600 crore from private equity investors, by offloading 5-6 per cent stake.

The investor could also be a financial institution, which could cross-sell Muthoot's products, said Mr Thomas John Muthoot, Chairman and Managing Director, Muthoot Fincorp.

Muthoot Fincorp, which is the flagship company of the Muthoot Pappachan Group, had a paid-up capital of Rs 181 crore and net owned funds of Rs 766 crore as on end-September 2011. The target is to increase the net owned funds to Rs 1,100 crore by March 2012, Mr Muthoot said.

The company's mainstay is loan against gold. The outstanding portfolio is currently at 6,500 crore and the target is to increase it to Rs 8,500 crore by March 2012.

“Even though many banks are pushing gold loans, for them it is just one of the activities. For NBFCs like us, it is the core activity,” Mr Muthoot said.

To diversify its income sources the company is looking to add more products to increase fee income, such as money transfer and distribution of insurance. “Ultimately we want to increase fee income to 30 per cent of total income. Right now it is only 3-4 per cent,” Mr Muthoot said.

Branch network

Muthoot Fincorp currently has a branch network of 1,650, which it plans to increase to 2,600 by March 2012 and to 4,500 by March 2013.

The company is also is looking to hive off its microfinance business into a separate microfinance institution (MFI) to meet regulatory requirements. It is in the process of acquiring another NBFC for this purpose, as it would be quicker than registering a new MFI.

The microfinance portfolio of about Rs 100 crore is spread across Kerala, Karnataka and Tamil Nadu.

priyan@thehindu.co.in

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