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Saturday, February 11, 2012

Bank of Baroda expects 24% growth by March 2012

State-owned Bank of Baroda (BoB) is expecting total business growth of about 24 percent over last year at the end of March 2012.

"We plan to achieve a total business of more than Rs 6,50,000 crore at the end of March (2012). We are expecting a total business growth of about 24 percent year-on-year basis," Bank of Baroda chairman M.D. Mallya told reporters on the sidelines of "SME(small marginal enterprise) Festival 2012" here Friday evening.

Mallya said the bank will gain a domestic credit growth of 20 percent at the end of the current financial year.

"As far as domestic credit is concerned, up to Dec (2011) on year-on-year (YoY) basis we have grown by about 19 percent. At the end of the current fiscal our credit growth would be about 19 percent to 20 percent," he said.

The PSU (public sector unit) bank's global credit growth has been 24 percent to 25 percent, said Mallya.

"We will be able to maintain the growth," he stated. BoB has posted a 21 percent increase in its net profit to Rs 12.89 billion for the third quarter in the fiscal year, 2012.

According to Mallya, the central government will infuse a capital of Rs 7.75 billion in the bank.

"The government in a letter has indicated that it will be infusing Rs 775 crore by March," he said.

With the capital infusion taking place, the state-run bank expects that its capital adequacy ratio, which currently stood at 13.45 percent, would go above 14 percent at the end of March.

Source: EconomicTimes
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Bank of Baroda to expand overseas network

Public sector Bank of Baroda (BoB) will expand its overseas network by increasing up its presence in Africa, Middle East and entering New Zealand for the first time, a top company official said.

"We want to increase our presence in the overseas market. We are present in 87 countries, which will go up to 100 by June 2012," BoB's Chairman and Managing Director M D Mallya said.

The bank would increase its presence in Africa and the Middle East, while it would enter New Zealand for the first time.

Regarding African operations, he told reporters last night that "every subsidiary is doing good business in Africa. A large chunk of our incremental growth will be coming from Africa".

The bank is expecting to clock a business volume of more than Rs 6,50,000 crore by the end of current financial year, he said adding it is looking at a growth of 24 per cent year-on-year.

After the government infuses a capital of Rs 775 crore in the bank, Mallya said the bank expects the capital adequacy ratio to go above 14 percent by end of March.

Source: Business Standard
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Friday, February 10, 2012

Vijaya Bank organises housing loan campaign in Hubli

Vijaya Bank Regional office in Hubli is organising a two-day housing loan special campaign on Saturday and Sunday at RACPC Center at Vijaya Bank, Vidyanagar Branch, Hubli (phone 0836-237485/ Mobile - 8904090903).

According to Regional manager Mr B.A. Tata, the main purpose of the mela is to attract more housing loan customers and the highlight of the campaign is offering lowest interest rate on housing loan, 50 per cent concession in processing charges, no pre-payment charges and loans will be sanctioned within three days.
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ING Life Insurance launches 3 new plans

ING Life Insurance has launched three new products in the traditional insurance space.

According to the company, the new products are: ING Secured Income Insurance Plans, ING Star Life and ING Critical Illness Riders.
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IDFC Q3 net profit up 27%

Infrastructure finance company, IDFC Ltd posted a net profit of Rs 387 crore in the December-ended quarter, up 27 per cent from Rs 304 crore in the corresponding quarter last year, said a press release from the company.

Net interest income during the period increased by 30 per cent to Rs 1,527 crore (Rs 1,171 crore).

Non-interest income decreased by 3 per cent to Rs 710 crore (Rs 729 crore). This was primarily on account of a decline of 63 per cent in income from investment banking and broking activity to Rs 60 crore (Rs 161 crore). Loan-related and other fees decreased by 47 per cent to Rs 108 crore (Rs 203 crore).

Net loan book increased by 25 per cent to Rs 43,897 crore (Rs 35,021 crore).

Net NPAs were at 0.2 per cent of outstanding loans.

The average assets under management were at Rs 37,228 crore, as on end-December.
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SIDBI's credit growth likely to dip to 21% this fiscal

The Small Industries Development Bank of India (SIDBI) might witness a dip in credit growth on a year-on-year basis at 21 per cent this fiscal, as against 25 per cent during year ago period.

The 21 per cent growth is however, marginally higher than the targeted growth of 20 per cent for this fiscal, said Mr N. Raman, Executive Director, SIDBI.

“We had achieved more than 25 per cent growth in credit last fiscal. This year, however, the growth is slightly subdued. We might be able to post a credit growth of about 21 per cent this year,” Mr Raman told newspersons on the sidelines of a conference organised by the CII here on Friday.

There were some issues with loan repayment, particularly in the MSME sector, and SIDBI was looking at the possibility of restructuring of accounts, he said.

MSME sector

“The quantum of non-performing assets is larger for the MSME sector than that of the corporates and repayment is an issue. We are looking into restructuring of loans wherever possible, it is an on-going process,” he said.

Meanwhile, speaking at inaugural session of the conference, Dr Anup Chanda, Additional Chief Secretary, Department of MSME & Textiles, West Bengal, suggested the need for development of different set of policies for the augmentation of all the separate segments within the MSME sector.
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Paperless insurance likely in a year: IRDA chief

You can expect your insurance transactions to be paperless in the next one year, thanks to an initiative by the Insurance Regulatory and Development Authority.

“We are working on making insurance paperless and have short-listed about four data repositories, including National Securities Depository Ltd, for the purpose,” Mr J. Hari Narayan, Chairman, IRDA, told newspersons on the sidelines of a roundtable on distribution in insurance organised by the Confederation of Indian Industry here on Friday.

Data repositories and data warehouses are vital for making insurance online or paperless, he added.

The first priority for the regulator with regard to distribution channels is bancassurance, which means distribution of insurance by banks.


“By the beginning of the next financial year, we will have a new regulatory regime for bancassurance,” the IRDA chief said.

In the draft guidelines issued earlier, IRDA favoured limited opening up of bancassurance.

Referring to decline in the life insurance industry in the first nine months of the current fiscal ended December 31, 2011, he said that the industry would close the year with about 13 per cent de-growth.

Earlier, while addressing the delegates, he said the IRDA was also taking a re-look at the nature of regulation, especially in the distribution segment.

The widening of the broking channel was needed as the existing regulation for opening branches was causing financial strain on the small brokers,” he said.


Referring to insurance penetration of about 4.2 per cent, he said it was not low as a percentage of the Gross Domestic Product.

Asking insurers to build trust, he said: “Insurance depends on trust. This is a bigger issue than distribution.”

He also released a CII report on addressing distribution challenges in insurance.
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Thursday, February 9, 2012

BoI to revamp 350 large city branches

Public sector lender Bank of India will revamp up to 350 key branches in metro and large cities to project these as “Branch of the Future” over the next 18 months to scale up the retail business.

Executive director N Sheshadri said its first pilot branch is already operational at Chembur, a Mumbai suburb. The bank will remodel 200 such branches in the next six to eight months.

The focus is on upgrading customer services to retail clients. Attracting the young by providing the latest communication devices at branches for transactions will top the agenda.

These branches will have a spacious customer lobby, self-service kiosks and a separate area for high net worth individuals, with dedicated relationship managers.

About 70 per cent of staff time will be spent in customer engagement. Staff engaged in customer relations will be designated as personal bankers, Sheshadri said.

Given network of 3,815 branches, the share of retail segment in total domestic loan book is small at about 11 per cent. Its retail loan book stood at Rs 18,004 crore at end of December 2001 while its gross domestic advances stood at Rs 1,63,325 crore. The home loans (Rs 8,575 crore), educational loans (2,168 crore) and auto loans (Rs 1, 7181 crore) are key components of retail portfolio.

Besides credit and deposits products bank would also push for financial products like mutual fund and insurance policies through remodelled branch.

It already has life insurance joint venture Star Dai-ichi Union Ltd. It recently signed a pact to pick up 51 per cent stake in Bharti Axa mutual funds. Both are expected to increase fee-based income through cross selling of products.

Source: Business Standard
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Sebi wants 500 violators blacklisted

Capital market regulator Sebi has decided to share with the Ministry of Corporate Affairs the names of about 500 companies that allegedly garnered money from investors in violation of its Collective Investment Scheme (CIS) rules.

Sebi (the Securities and Exchange Board of India) would also give the names of the directors of such entities to the ministry so that necessary action can be taken to prevent these companies and persons from associating with any new company, a senior official says.

The Collective Investment Schemes, where an entity pools in money from investors for certain pre-specified purposes and later distributes the profits or income, come under Sebi’s ambit.

In some recent crackdowns, Sebi had barred companies including Rose Valley Real Estate, Sun-Plant Agro and Pearl Green Forest from raising public money and from launching any new schemes.

Many of these entities and their operators and directors tend to restart similar business under a new name and numerous investors are taken for a ride before they come under the Sebi scanner, the official says.

Sebi has requested the ministry to circulate the names of defaulter CIS entities and their directors among all the Registrars of Companies (RoCs) in the country to prevent them from being associated with any new company. Sebi is also of the view that an overhaul of the current CIS regulations is needed, as loopholes in the existing rules allow investors to be taken for a ride.

Sebi will take up the issue of these regulatory gaps at a meeting of the Financial Stability and Development Council chaired by the Finance Minister. The council includes top financial sector regulators such as the RBI Governor and the Sebi Chairman.

While hundreds of companies have engaged in CIS activities in the country, just one such entity is registered with Sebi to undertake such business. According to Sebi data, more than 100,000 investor complaints are pending with it in connection with such schemes, and the matters have been sub-judice for long in most cases.

While Sebi is the regulatory authority for such schemes, a number of other government agencies and departments also govern similar investment products and a lack of clarity in this regard comes in the way of bringing the guilty to book.

Source: Business Standard
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Standard Chartered Bank lends Rs 250 crore to Bangalore realty firm, DivyaSree Developers

Standard Chartered Bank has lent 250 crore of construction loan to DivyaSree Developers for developing a mixed used project in Bangalore, said more than one person with direct knowledge of the development.

The mixed-use residential project, DivyaSree Technopolis, is being built on the Old Airport Road in Bangalore.

DivyaSree Developers refused to comment on the transaction. Standard Chartered could not be reached for a comment.

The Bangalore-based builder is also in talks with private equity funds, including the PE arm of Standard Chartered to raise $30 million by selling a stake in its residential development in Bangalore.

"The company plans to raise around $100 million in the next six to nine months in three tranches across different residential projects and to buy land," said a Divyashree executive, who did not wish to be named.

So far, the company has developed seven million square feet of commercial space, and has around three million square feet under construction that is slated for completion in the next eighteen months. The company is also looking at selling around 2.7 million sq ft of income producing office space for 1,600 crore in different developments in Bangalore and Hyderabad.

DivyaSree has a total debt of 750 crore.

The IT capital of India has been attracting large PE deals, in the largest real estate this year, PE major Blackstone in June picked up 37% stake in Manyata Tech Park for over 1,000 crore ($200 million).

In a similar instance Maple Tree has acquired 2 million sq ft from Assetz Global Technology Park in a deal valued over 800 crore and Baring Private Equity Partners invested 450 crore in RMZ Corp for acquiring 6 million sq ft of office space in Bangalore.

Source: EconomicTimes
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United bank signs remittance deals with Nepal's Global bank

Kolkata State-run United Bank of India has entered into an agreement with Nepal's Global Bank to launch remittance facility to a large segment of Nepalese population working in India. UBI became the third bank in India to offer Indo-Nepal remittance services.

Under the agreement, a person of Nepalese origin can remit funds in Indian rupee to a beneficiary in Nepal through any of the designated branches of UBI. The remitter will be provided with a unique PIN which will then be communicated by the remitter to the beneficiary in Nepal.

The beneficiary in Nepal can claim the funds within seven days in Nepalese Rupee by producing the PIN along with identity proofs at any of the 31 branches of Global Bank or the 1,741 Claim Outlets of the International Money Express (IME).

Source: EconomicTimes
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Air India begins sounding LIC and mutual funds for bond sale

Government-owned Air India, which is to issue non-convertible debentures (NCDs) to raise funds for repaying its debt mountain, has begun informally sounding Life Insurance Corporation (LIC) of India, mutual fund houses and government-owned non-life insurance companies to subscribe to the issue, bankers said.

Permission from a group of ministers came yesterday for the NCD issue, as part of a debt recast plan; it has still to be approved by the Cabinet.

The NCDs are, goes the proposal, to be guaranteed by the government and aimed to raise Rs 7,400 crore. They’d have a 20-year maturity and carry a slightly higher coupon rate than comparable government securities.

At present, the yield on government bonds maturing in 2030 is 8.55 per cent, according to Clearing Corporation of India data.

Sources said AI and merchant bankers to the issue would make a detailed presentation to prospective investors within the next few days. “We are yet to receive any formal proposal from Air India, but we will look into it. Since AI bonds will be government-guaranteed, these will be safe investments,” said a top LIC official.

Funds won’t be a problem for the insurance behemoth and it has plans to invest Rs 80,000 crore in debt and equities during the January-March period of the current financial year.

Of this, Rs 60,000-75,000 crore would be invested in debt instruments, with the rest to equities. So far during 2011-12, the largest life insurer in the country has invested Rs 1.15 lakh crore, of which Rs 25,000 crore was in equities.

Of around Rs 90,000 crore debt investments, a large part has gone to government securities and 25-30 per cent in corporate instruments. In 2010-11, LIC invested Rs 1.95 lakh crore, of which Rs 43,000 crore was in equities.

Of total AI debt of Rs 43,000 crore, as much as Rs 22,500 crore was proposed for restructuring. While Air India will pay back Rs 7,400 crore to banks, the remaining amount will be converted into long-term loans, with an interest rate of 11 per cent.

Due to the recast, banks have to make a provision of around Rs 2,000 crore. A consortium of 26 banks, including Punjab National Bank, Bank of Baroda and Central Bank of India, with State Bank of India as the lead institution, have exposure to the troubled carrier.

The Reserve Bank of India has said the restructuring should be completed by March 20, failing which banks have to classify the exposure as a non-performing asset.

Source: Business Standard
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Deutsche Bank exits Lodha Developers, gains $183 mn

MUMBAI: Germany's Deutsche Bank has gained 9 billion rupees ($183.09 million) after exiting from a four-year investment in Mumbai-based builders Lodha Developers, the Indian company said.

Deutsche Bank was paid 25.42 billion rupees, 55 percent more than its investment of 16.4 billion rupees in late 2007, it said on Thursday.

A spokesman for Deutsche Bank in Mumbai declined comment. Lodha funded 17.2 billion rupees of the repayment from cash generated through sales of residential units in its projects across Mumbai, including in its flagship 117-storey World One, which is expected to become the world's tallest residential tower.

The remainder was funded through issue of bonds. The company's debt has dropped by 10 billion rupees to 30 billion rupees after the repayment to Deutsche Bank, Managing Director Abhisheck Lodha said.

Source: EconomicTimes
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Shriram Transport to get new MD

Non-banking finance company, Shriram Transport Finance, Deputy Managing Director Mr Umesh Revankar is all set to become the company’s new Managing Director from April.

The company said “regarding the succession plan for the Chief Executive Officer, the board of directors will decide the appointment of Mr Umesh Revankar as Additional Director as well as Managing Director of the company with effect from April one, 2012“.

Mr Revankar, alumni of Mangalore University and also from Harvard Business School respectively has been in Shriram Transport Finance for the last 24 years.
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Wednesday, February 8, 2012

Bank of Maharashtra to raise capital from LIC, second after Dena Bank

MUMBAI: The Bank of Maharahstra will be the second bank after Dena Bank to raise capital from Life Insurance Corporation (LIC), in a move aimed at boosting their capital. The board of the bank will meet on February 10 to consider issuing shares on preferential basis to government or LIC, according to a statement issued to the stock exchange.

Widening fiscal deficit has prompted government to approach LIC to invest in government owned banks- a move which will help government to trim expenses and yet retain control over banks.

Government had targeted fiscal deficit- difference between income and expenses - at 4.6% of gross domestic product (GDP) for the current fiscal, but many fear it would cross 5% as government failed to raise money by divesting their stake in state run companies.

The board of Syndicate Bank too will meet on February 11 to discuss proposal of issuing shares to government or others, it said in a notice to the exchange. Till December end, LIC's stake in Bank of Maharashtra stands at 6.68% while that in Syndicate Bank is 10.27%.

Dena Bank is among the first bank to announce decision to dilute equity in favour of LIC. The insurance company would be acquiring 5% stake for an investment of around Rs 125 crore and the transaction would be complete by end of this fiscal. LIC's stake in Dena Bank will increase to little over 11% after it issues shares on preferential basis to them. However government's stake would fall to 55% - which is below 58% threshold limit they prefers to hold in state run banks.

The current move of seeking capital support from LIC is mainly aimed at small to medium sized banks. The large banks like State Bank of India, Central Bank of India and Punjab National Bank has received capital directly from government.

Government has committed around Rs 18000 crore capital to PSU banks this fiscal. So far it has allotted Rs 7900 crore to SBI, Rs 1285 crore to PNB and Rs 700 crore for Central Bank of India. Union bank of India and Indian Overseas Bank too has received firm commitment about capital from government although the exact quantum is yet to be decided.

Source: EconomicTimes
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Punjab & Sind Bank abolishes prepayment fines on housing loans

NEW DELHI: Punjab & Sind Bank on Wednesday said it has abolished pre-payment penalties on housing loans for all types of borrowers with immediate effect.

"The decision to waive repayment charges on housing loans reflects the concern of the bank for its borrowing clientele desirous of repaying housing loans before their repayment schedule," PSB Chairman and Managing Director D P Singh said in a statement.

He said the bank has kept the interests of the customer in the forefront while framing policies. State Bank of India, ICICI Bank and Central Bank of India abolished pre-payment penalty last year.

Housing finance companies has already been barred from charging foreclosure charges. In October 2011, the sector regulator National Housing Bank had directed housing finance companies to desist from imposing a pre-payment penalty on home loan borrowers.

Source: EconomicTimes
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FIR vs Kotak Mahindra, directors stands

The Supreme Court has refused to quash an FIR against Kotak Mahindra Bank and its nine top executives in a case relating to alleged criminal conspiracy to cheat a liquor manufacturer on the pretext of settling debts.

However, the apex court also said "no coercive measures" will be taken against the executives till eight weeks' time during which they can seek bail from the concerned court.

The FIR was lodged in Raisen district of Madhya Pradesh against the Kotak Mahindra Bank and its directors-- Anand Mahindra, Pradeep Kotak, Cyril Shroff, Shivaji Dam and Asim Ghosh-- and C Jayaram and Dipak Brijmohandas Gupta, Executive Directors, Shankar Nath Acharya, part-time Chairman and Uday Suresh Kotak, Executive Vice-President and MD.

A bench of Justice B S Chauhan and J S Khehar rejected the petition filed by the bank and its top bosses challenging a Madhya Pradesh High Court judgement which had upheld the order of a trial court directing lodging of the FIR.

"We are not inclined to entertain the special leave petitions. The petitions are dismissed accordingly," the bench said in its order passed on February 6.

"However, the petitioners are protected for a period of eight weeks and thus no coercive measures be taken against any of them. They may apply for bail. They are also at liberty toagitate all factual and legal issues before the court concerned at the time of framing of the charges," it said.

"The court below shall consider the case on merit without being influenced by any observations made by the High Court.

It is also made clear that we have also not expressed any opinion on merits of the cases," it added.

The bank and its executives are accused of cheating Som Distilleries and Brewries, a Bombay Stock Exchange listed company, by entering into an agreement to negotiate debts of the liqour manufacturing company with nationalised banks against one-time settlement amount but later buying the same debts and charging high penal interest for the same.

Som Group had alleged that Kotak Mahindra, as their agent, was required to get one-time settlement negotiations with the Bank of Baroda and Bank of India.

According to the the brewery firm, it was to pay 14 percent interest on the one-time settlement amount but after negotiations with the bank, Kotak purchashed the same debts from two nationalised banks and imposed a penal interest up to 33.5 per cent on the amount.

It contended purchase of debts, a non-peforming asset, amounts to an act of securitisation which is not permitted without registration for the same with the Reserve Bank of India and thus Kotak bank flouted the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002.

The brewery firm alleged the bank, in order to show default in payment of money, kept its post-dated cheques pending for a few months and then deposited several cheques on one day resulting in their dishonouring.

Source: Financial Express
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Axis Bank travel currency card volume crosses $2 bn mark

Private sector lender, Axis Bank today said sales and usage volumes for its travel currency card used for international travel have crossed USD 2 billion.

In a statement issued here, the bank claimed it holds 48 percent market share in the segment currently and that this is the first time anywhere in the world that any bank has crossed USD 2 billion in sales for such a card.

The city-based bank said the product, launched in 2003 crossed, had surpassed the USD 1 billion mark in 2009.

The card allows users the ability to top-up money in 11 currencies by paying in rupee terms. The money is converted to the international currency of choice at the prevailing exchange rate and customers can use it for transactions abroad, the statement said.

Source: Financial Express
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Federal Bank announces scholarship programme

Fedbank Hormis Memorial Foundation, the public charitable trust formed by Federal Bank to perpetuate the fond memories of its founder K.P. Hormis, has invited applications for the Foundation's scholarships for the year 2011-12.

Students of Indian origin studying in Kerala and Tamil Nadu in any of the Government/Aided/ self-financing colleges are eligible for reimbursement of 100 per cent of tuition fees, subject to a maximum of Rs 75,000 a year. The courses eligible for the scholarship are Medicine (MBBS); Engineering (BE/ B.Tech); Agriculture (BSc); Nursing (BSc) and MBA.

For applying for scholarships, the student should have secured admission under merit list during the academic year 2011-12.

Family income of the student should be below Rs 2.50 lakh. Ten students in each discipline will be offered the scholarship, of which, one seat will be kept aside for a physically challenged student.
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Corp Bank workshop on forex

Corporation Bank, in association with FEDAI (Foreign Exchange Dealers' Association of India) Mumbai, has organised an orientation workshop on foreign exchange in Mangalore.

A bank release said here that the workshop, from February 6 to 11, is being attended by 33 bankers from 17 banks.

Inaugurating the workshop, Mr H.S. Saini, General Manager of the bank, said that it is very important for bankers to be abreast with the latest guidelines of the Reserve Bank of India and the Foreign Exchange Management Act as today's customers are well informed and expect better services from the bankers.

Mr P.M. Pethe, Officer on Special Duty (Training) from FEDAI, spoke about the scope of the training.

Mr T.V. Dattamurthy, coordinator of the programme from Corporation Bank, welcomed the participants.

Mr A.G. Satyanarayana, Chief Manager from the bank's HRD and Training Division, proposed a vote of thanks.
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Vijaya Bank revises rates on FCNR (B) deposits

Vijaya Bank has revised interest rates on FCNR (B) deposits with effect from February 1. The revised interest rates are as follows: For one year to less than two years period – £3.14 per cent, $2.35 per cent, €2.98 per cent, AU$6.13 per cent, CAD 3.12 per cent.

For two years to less than three years period - £2.49 per cent, $1.78 per cent, €2.42 per cent, AU$5.09 per cent, CAD 2.44 per cent.

For three years to less than four years period - £2.51 per cent, $1.87 per cent, €2.50 per cent, AU$5.13 per cent, CAD 2.50 per cent.

For four years to less than five years - £2.63 per cent, $2.06 per cent, €2.66 per cent, AU$5.37 per cent, CAD 2.61 per cent.

For five year period only - £2.75 per cent, $2.30 per cent, €2.85 per cent, AU$5.50 per cent, CAD 2.75 per cent.
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Central Bank plans to hire 2,700 personnel this year

One of the oldest state-run banks, Central Bank of India is on a massive recruitment exercise, a senior official of the bank said here. The bank plans to recruit 2,700 people this year to add to the 3,200 recruited last year.

Ms Vijayalakshmi R. Iyer, Executive Director, Central Bank of India, said that this number would be exclusive of the addition in specialised segments such as treasury operations, legal, and so on. “The recruitment exercise was triggered by large number of retirements. Around 1,500 to 1,800 are retiring every year, over the last two years and in the next three years.”
Good response

She said the bank had gone to about 20 institutions across the country last year to hire people.

“The response was phenomenal. The number of applications was four-five times the number of vacancies and filtration was a mammoth task.”

“Interestingly, a good number of engineers are joining the bank,” said Ms Iyer. While complimenting their quality and sincerity, she did express some concern as to whether they would continue to work in a bank in the long run or were just looking at the job as a stop-gap arrangement.

Pact with IBPS

She said, “We are in fact trying to do locational recruitment and to the extent possible post them closer to their home town. We have since inked a pact with IBPS (Institute of Banking Personnel Selection) for clerical recruitment.”

Admitting that manpower management was a challenge, the experienced banker said, ‘We find the younger generation highly tech-savvy. They take a lot of initiative in connecting with the customers and are good at customer acquisition. This is a welcome change.”
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Manappuram Finance plunges 20%; corporate governance in question

KOCHI/MUMBAI: Manappuram Finance, the second-biggest lender against gold, plunged 19.96% as investors worried about its ability to continue sourcing funds and questions were raised about corporate governance after the RBI said the company and its group cannot access public deposits.

Depositors remained calm with little signs of panic as the company assured that all was fine with its operations and the central bank's diktat will have limited impact on its operations or its ability to serve them.

"There are enquiries and clarifications, but everything is under control," said I Unnikrishnan, Managing Director, Manappuram Finance. Manappuram shares ended 19.96% lower at 45.50.

The RBI on Monday said Manappuram Finance and an unlisted group company are not eligible to accept public deposits as it was a violation of rules governing its licence to function as a lender. Any such act is punishable with imprisonment, the bank said. Members of the public depositing money with Manappuram Finance or MAGRO would be doing so at their own risk, it said.

Although this may affect one source of funding for Manappuram, but the company could still access funds from banks and through sale of bonds that could keep it going.

"Deposit is not a source of funding for NBFCs. They have higher exposure to banks and institutions," said Rajiv Suneja, partner at KPMG. "It does not change the business mix."

The lender founded in 1949 has been the best performer in the stock markets given its secured lending business that has high profit margins. Unlike traditional lending by banks, the risk of default is quite low and even if such an event happens, the loan amount is fully recovered unless there's a sharp crash in gold prices.

"The total retail deposits are just about 3-4% of the liabilities of Manappuram," say Ambit Capital analysts, led by Pankag Agarwal. "Hence, we do not see any impact on the business of the listed entity from this ruling.

However, the management will have to come clean on the involvement of a promoter entity in the whole episode to clear any doubts arising in the minds of the investors in terms of corporate governance."

The board of directors of Manappuram Finance will meet on February 10 at the company headquarters in Thrissur, Kerala, to discuss about the press release of the RBI. The board will also discuss measures to be taken to improve the corporate governance of the company.

Source: EconomicTimes
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Temasek to sell 1.4% in ICICI Bank

Singapore state investor Temasek Holdings is selling 1.38 per cent stake in India’s No. 2 lender, ICICI Bank, according to a term sheet seen by Reuters, in a deal to raise up to Rs 1,472.3 crore.

The share sale comes less than a week after Carlyle Group and Warburg Pincus took advantage of India’s recent market gains to pare stakes in two financial companies, in deals worth Rs 2,138 crore.

The Sensex is up 14 per cent so far this year, mainly led by financial stocks.

Temasek held 39.83 million shares of ICICI Bank, or 3.46 per cent, as of end-December, via its unit Allamanda Investments Pte, according to exchange data. ICICI Bank’s 15.9 million shares are being sold in the range of Rs 924 to Rs 937.75 each, the term sheet showed, a zero to 1.5 per cent discount to on Tuesday’s closing price. The deal would raise Rs 1,490 crore at the top end of the band.

Goldman Sachs is sole bookrunner to the issue, the term sheet showed. ICICI Bank and Temasek spokesmen declined comment. Temasek’s move to reduce its ICICI Bank holding is part of the investor’s rebalancing of financial portfolio and there could be more partial exits in other banks, sources said.

About 36 per cent of Temasek’s portfolio was in financial services in the financial year that ended March 31, which could change in the months ahead under a team that includes investment bankers from UBS and Credit Suisse.

Buyout firms that invested billions of dollars during the Indian market’s boom years before the global financial crisis are widely expected to look for opportunities to cash in their holdings, with more stake sales anticipated in coming months.

Source: Business Standard
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Tuesday, February 7, 2012

RBI asks banks to refund unclaimed deposits of Rs 1,700 cr

In a development which may bring cheer to some, RBI on Tuesday asked banks to locate and refund unclaimed deposits estimated at over Rs 1,700 crore.

“Keeping in view public interest, it has been decided that banks a more pro-active role in finding the whereabouts of the account holders of unclaimed deposits/ inoperative accounts.

“Banks are, therefore, advised that they should display the list of unclaimed deposits/inoperative accounts which are inactive/inoperative for ten years or more on their respective websites,” the Reserve Bank said in an instruction to banks.

A whopping Rs 1,723.24 crore in 1.03 crore non-operational accounts in different banks were lying unclaimed as on December, 2010.

“Banks should also give on the same website, the information on the process of claiming the unclaimed deposit/activating the inoperative account and the necessary forms and documents for claiming the same,” RBI added.

Banks have been asked to complete the exercise by June 30 and keep their websites updated at regular intervals

Expressing concern over the “increase in the amount of the unclaimed deposits with banks year after year and the inherent risk associated with such deposits”, RBI said the lists to be displayed on websites should contain only the names of the account holder(s) and his or her address.

“The account number, its type and the name of the branch are not to be disclosed on the concerned bank’s website,” it added.

It also directed banks to give “information on the process of claiming the unclaimed deposit/activating the inoperative account and the necessary forms and documents for claiming the same”.
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Islamic finance training comes to India

Ethica Institute of Islamic Finance, a leading Islamic finance training and certification institute, has granted Infinity Consultants, an India-based advisory firm, rights to exclusively market and sell Ethica training across India.

Bids for the Ethica country exclusivity licence began last year and were concluded recently. Other country exclusivity licences currently under discussion include ones for Pakistan, Oman, Australia, Nigeria, France, and Germany, a statement released here said.

Ethica is currently offered in 43 countries and this will be the first time a partner has the right to exclusively sell Ethica to an entire country.

“Ethica’s entry into India may be a critical turning point for bringing Islamic finance to a growing economic powerhouse with over 150 million Muslims...,” the statement said.

Ethica’s spokesperson said: “In the aftermath of the global financial crisis, governments around the world recognise the precariousness of purely conventional capital markets and the need for asset-backed, equity-based finance.

“If India is going to attract Shariah-compliant investment at this critical time, when Gulf liquidity is fast making decisions about where to go next amid a growing Euro crisis, it will first have to train its professionals in AAOIFI-based Islamic finance.”
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Nabard to help introduce CBS in 4 district co-op banks

To face competition from regional rural banks and scheduled commercial banks, Nabard plans to help introduce core banking solutions (CBS) to four district central co-operative banks in Karnataka.

The four districts identified are Kodagu, Kanara, Chikmagalur and Bijapur. Tata Consultancy Services is the technology provider in Karnataka. The four banks signed agreements with TCS on Tuesday.

According to Mr S.N.A. Jinnah, Chief General Manager, Nabard, “We are to play the role of an advisor and facilitator in the process and extend project management support during the roll out of the CBS.”

“By this, we ensure that the interests of the banks are protected throughout the implementation process,” he added.

Nabard had initiated the demand for adoption of CBS from DCCBs all over the country before negotiating with the technology provider, which has facilitated cost effectiveness.

Mr Jinnah hoped that this initiative strengthens co-operative banking in the State and will augur well for the future of these banks in their march towards adoption of high tech banking.

Cooperative banks with their technology can be the most suitable agency in financial inclusion, he added.

Mr S.G. Hegde, Karnataka Registrar of Cooperative Societies, assured support of the State Government to the project aimed at taking the cooperative banks to the higher level of technology.

Mr K.H. Ashwathanarayana Gowda, CEO, KSCAB, complemented the banks and thanked Nabard for the technological initiative. Dr Manjunath Hegde, Director, Kanara DCCB, Dr K.V. Nagaraju, General Manager and other senior officers were present.
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YES Bank ties up with Buldana society for doorstep service

YES Bank, which is keen to enhance its priority sector lending, has tied up with the Buldana Urban Cooperative Credit Society to help the Society with its new customer service initiative entailing door-step para-banking services.

The Society has launched a new doorstep service, called Nano Teller, where the credit society employee visiting the customer's house can help him make a deposit or allow withdrawal up to Rs 10,000 from his savings account.

The cash handling would be done by the society's employee using a small swipe card machine and a cell phone.

The society based in Buldhana, Northern Maharashtra, has a business mix of over Rs 3,500 crore.

Through its 230 branches it caters to the business needs of over one lakh customers, who are mainly located in the rural and semi-urban areas of the State.

Mr Ajay Desai, Head of Financial Inclusion at Yes Bank, told Business Line that the bank is providing the National Electronic Fund Transfer (NEFT) facility as a back-end support to the new service. The society is a customer of the bank and by providing NEFT facility it is only adding value to the relationship, he said.

The private sector bank is seeking to leverage its relationship with the Society to source agriculture and micro and small enterprise loans to fulfil the statutory priority sector lending targets.

Mr Shirish Deshpande, CEO of Buldana Urban, said that the service was recently launched in Pune and the society is planning to launch it in another 130 locations across the State.

Due to the initiative, the customer base will get broad-based and also increase the quantum of low cost saving deposits. The society will get money at cheaper interest rate, he added.

Mr Sandeep Pimple, CEO of Upass, an IT solution's company which has developed the mobile software for Buldana Urban said that Nano Teller will help the credit society in servicing remote villages in the State.

A swipe card machine and a low-end mobile will eliminate the requirement for a society branch and other infrastructure like computers and leased lines, he said.
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SBH launches welfare scheme for underprivileged girls

State Bank of Hyderabad has launched a welfare scheme to provide financial assistance to underprivileged/differently abled girl students.

Under the scheme, christened as ‘SBH Vidya', each of the 1,410 branches of SBH in Andhra Pradesh will adopt a student studying between VI-X standard based on the recommendation of the school management committee.

The identified students would be extended Rs 5,000 per year as financial support to meet various requirements till she reaches X standard.

“Each year, we propose to extend this assistance to new beneficiaries under this scheme,'' Mr M. Bhagavantha Rao, Managing Director, SBH, said after formally launching the scheme here on Tuesday.

The scheme was part of corporate social responsibility and community banking activities, he added.
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Reliance Life launches new money-back plan

Anil Ambani Group controlled Reliance Life Insurance Ltd is planning to engage young graduates and housewives to break into the rural and semi-urban markets.

Unlike the traditional model of paying commission to insurance agents on the basis of business generated by them, Reliance Life plans to engage fresh graduates on a trainee basis on a fixed stipend to distribute its products.

This apart, the company also plans to employ young women freshly out of college or housewives at a fixed monthly salary in select locations, said Mr Malay Ghosh, Executive Director and President, Reliance Life.

Reliance Life, Mr Ghosh said, will report accounting profits this year.

Financial outlook

However, the company, which had expected to break even in the next three years, will be able to do so only after five years.

“For the last 18 months we have been making profits on a month-on-month basis. We are hopeful of making accounting profits this year. However, we will take five more years to break even because of the recent regulatory changes in the industry,” he pointed out.

The company today unveiled protection riders for its existing policies and also launched a new product — Reliance Life Insurance Guaranteed Money Back Plan. This apart, the company will also launch a unit-linked product — Classic II — by the end of this month.
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Vijaya Bank sanctions Rs 500 cr for MSME

Vijaya Bank has accorded in-principle sanction of up to Rs 500 crore for the MSME (Micro, Small & Medium Enterprises) sector during 21 mela's across the country.

With a view to give thrust to the MSME sector, the bank is organising a two-day mela at Patancheru Industrial area. The event was inaugurated by Ms Shubhalakshmi Panse, Executive Director of the Bank today.

Speaking at the function she said Vijaya Bank was giving more than 28 per cent to MSMEs through special cells of the bank across the country. The sector is very important and growing in the country. It requires support from the banks.

Ms Shubhalakshmi said the bank wants to be an important player in the India growth story. With manufacturing, infra and services sector being key drivers for GDP growth, the bank feels MSME sector needs a push.

“We want the sector to treat our bank as Chief Financial Officer of the company so that we many nurture them financially from a nascent period”, she said.

To unlock the potential of the MSMEs and specially help women entrepreneurs and nurture them on their way to growing into bigger industries, banks can play an important role, the Vijaya Bank executive said.

The Regional Head of Vijaya Bank, Hyderabad, Mr Seetharama Shetty, gave the welcome address, while Mr S. Narsing Rao, President , SSI Industries Association of Medak and Mr B. Chandrasekhar, Director, MSME Development Institute, here addressed the gathering of entrepreneurs.

At the mela top management representatives are available through out the day and in-principle clearance is given to MSME customers after discussions on one-to-one basis.
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Monday, February 6, 2012

Dhanlaxmi MD and CEO Amitabh quits

In a surprise move, the managing director and chief executive of Thissur-based private sector lender Dhanlaxmi Bank, Amitabh Chaturvedi, who has been credited for turning around the bank since he took over in 2008, has put in his papers, according to a bank official.

"It is true that our MD Amitabh Chaturvedi has resigned today. The board meeting is underway now to consider his resignation," the bank spokesperson said.

She also scotched rumours that he was removed by the board. "There is no substance to this. He has resigned on his own and a formal announcement will be made after the board meeting."

The resignation comes following major unrest from a section of the bank's officers' union in the past few months which had alleged about financial irregularities at the bank.

The section of the union having allegiance to the All-India Bank Officers Confederation had recently accused the bank of 'window-dressing' its books and showing inflated profits. The bank had dismissed the allegations as baseless.

The regulator RBI had also not found anything wrong with the books of the bank.

The RBI had even allowed Chaturvedi a two-year extension before the union alleged irregularities.

Chaturvedi, who earlier worked with ICICI Bank and Reliance Capital, took charge of the nearly a century-old bank in 2008.

The bank, which is yet to announce its results for the December quarter, had reported a net profit of Rs 4.35 crore from Rs 1.62 crore in the September quarter, an increase of a whopping rose 168 percent.

Source: Financial Express
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Mahesh Bank launches RuPay ATM card

The increasing use of ATM cards will be cost-effective for banks as well as customers, according to Mr A.P. Hota, Managing Director and Chief Executive Officer of National Payment Corporation of India.

Speaking after formally launching ‘Mahesh RuPay ATM card' Mr Hota said Mahesh Bank had taken a lead in the cooperative sector in south India by launching its ATM card.

R. Ramesh Kumar Bung, Chairman, Mahesh Bank said his bank's business had crossed Rs 1,775 crore and the branch expansion was being spread to different states.

Mr A S Rao, Regional Director, Reserve Bank of India said the number of urban cooperative banks had come down from 115 to 103 in the recent past.

ATMs were a versatile instrument and an important delivery channel, he added.

The National Payment Corporation of India Ltd has launched the ‘Rupay' ATM card mainly for no frills account holders in collaboration with banks.

It is expected to reduce overall transaction costs for banks by introducing competition to international card schemes like Visa and Master.
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