World Bank assures support for BRICS Development Bank

World Bank today expressed its willingness to support the proposal of BRICS nations to set up a Development Bank to insulate their economies from the ongoing economic problems, rising oil prices and currency volatility.

"India was one of the sponsors of this idea (BRICS bank). And partly because they wanted more funds for infrastructure development...if they do develop an institution, the Bank will want to be partner with it", World Bank President Robert Zoellick told reporters at the end of his five-day visit to the country.

The summit of BRICS -- Brazil, Russia, India, China and South Africa -- yesterday decided to examine the possibility of setting up a Bank on the lines of World Bank and Asian Development Bank to mobilise resources for infrastructure and sustainable developments in emerging economies.

"We direct our Finance Ministers to examine the feasibility and viability of such an initiative, set up a joint working group for further study and report back to us by the next summit", said the declaration issued after the summit which, among others, was attended by Prime Minister Manmohan Singh.

Replying to questions on the possibility of setting up of such a multilateral bank, Zoellick said, "just as we are with NGOs, civil society groups and National Development Banks... we will be able to compliment each other.

"We have the benefit of being global, we have 187 shareholders and operate in 120 countries. So might be able to share the knowledge and experience", he added.

Earlier, the World Bank Chief had a meeting with Finance Minister Pranab Mukherjee and discussed the role which the Bank can play for development of economies of the region.

Besides the finance minister, he also held meetings with economists and think-tanks as part of his India visit.

China allays fears over its domination of BRICS 'Bank'

Allaying apprehensions that China with its financial muscle would dominate the proposed BRICS Bank, Beijing today said it is a "meaningful endeavour" aimed at achieving a win-win deal for developing countries.

Foreign Ministry spokesman Hong Lei told reporters here that the just concluded New Delhi BRICS summit discussed a proposal to set up such a bank in order to pool financial resources for infrastructure and sustainable development projects in the developing countries.

"The meeting asked Ministers to conduct a feasibility study on the setting up this bank," he said, adding that the proposed bank aims at enhancing the well-being of developing countries.

"I think this is very meaningful endeavour and such a step will contribute to investment, trade and development of the developing countries and will result in win-win outcomes for all countries. China would like to play a positive role in it," he said.

About the summit, Hong said the "successfully concluded" meeting showed the spirit of solidarity and partnership with a message of unity, cooperation and win-win outcome to the world.

China, India, Brazil, Russia and South Africa are members of the BRICS grouping.

He said the meeting has brought about an important consensus on promoting global economic governance besides pushing ahead practical cooperation among the BRICS countries in all fields.

"The leaders reached important and wide ranging consensus on major international and regional issues of common interest," he said.

The meeting has shown that the cooperation among BRICS countries is in line with the trend of peace, development and cooperation.

"China believes that this cooperation will reach higher levels and will continue to play a constructive role in promoting global economic growth, improving global economic governance, strengthening multilateralism and democracy in international relations," he said.

"We are fully confident in the development of BRICS countries and their cooperation," he said.

Source: Financial Express

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Tax of Rs 181 crore realised in HSBC bank Geneva cases

The Income Tax department has realised taxes of about Rs 181 crore with respect to the cash deposits of Indians who had unreported accounts in HSBC bank Geneva, government said today.

"An amount of about Rs 181 crore has been realised," Minister of State for Finance S S Palanimanickam told Lok Sabha in a written reply.

He was asked if the government was able to receive taxes on cash deposits by some of the 700 Indians who had unreported accounts with HSBC bank Geneva.

The Minister replied in the negative when he was asked whether some of the persons charged with tax evasion had volunteered to reveal their accounts with HSBC Geneva and revise their returns, weeks before the list was handed over to the tax investigation wing.

"Appropriate action is taken strictly in accordance with direct tax laws and relevant procedures in all cases wherein information regarding tax evasion is received, including undisclosed foreign assets or transactions of Indians abroad," he said.

Source: Financial Express

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Vijaya Bank raises Rs 147 cr thru preferential issue to LIC

Vijaya Bank has raised Rs 147 crore through preferential allotment of equity shares to Life Insurance Corporation of India. The capital raised would be utilised to shore up the capital adequacy of the bank.

The bank issued 2,28,72,258 shares to LIC at Rs 64.57 per share.“The funds raised would also be utilised to finance our growth in 2012-13,” Ms Shubhalakshmi Panse, Executive Director, Vijaya Bank, told Business Line.

The bank is looking at 20 per cent growth next fiscal. The bank's capital-adequacy ratio as on December 31, 2011, stands at 12.11 per cent, with tier-I capital of 8.8 per cent.

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Karnataka Bank to open 50 branches next fiscal

Karnataka Bank Ltd plans to open 50 branches during 2012-13.

Speaking at the inauguration of the 500th branch of the bank at Shiruru in Udupi district, Mr P. Jayarama Bhat, Managing Director of the bank, said the bank will open three more branches during the fiscal, taking the total number to 503.

The bank will set up 50 more branches and 250 ATMs during the next financial year, he said. Karnataka Bank now has 350 ATMs.

The bank is keen on working towards rural development. The 500th branch at Shiruru is oriented to reach out to the people in rural areas, he said.

The bank, which serves more than 50 lakh customers, has crossed a business of Rs 51,000 crore, Mr Bhat said.

Mr Ananthakrishna, Chairman of the bank, who presided over the function, said the development of rural areas is very much on the financial planning of the bank, and all banking activities are oriented towards reaching this objective.

Stating that Karnataka Bank has given highest priority for inclusive banking, he said most ATMs set up by the bank these days are in rural areas. These ATMs are providing unique banking facilities to villagers through technological services.

vinayakaj@thehindu.co.in

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Govt nominee director quits IDBI Bank board

IDBI Bank has announced that Mr Rakesh Singh, a director, has resigned from the bank's board.

This follows his appointment as Chief Secretary of Punjab.

Mr Singh, who was additional Secretary in the Department of Financial Services, was a Government nominee in IDBI Bank's board. He took charge as Chief Secretary of Punjab on March 26.

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ICICI Bank to get $100-m credit line from ADB for energy projects

The Asian Development Bank will provide a $100-million credit line to ICICI Bank to fund renewable energy and energy efficiency projects.

The central bank's board approved the sanction on Wednesday.

The credit will be available to projects identified by the ADB and ICICI Bank. This is taking into consideration Indian Government objectives and overall impact assessment, according to ADB.

The bank's support will help in developing renewable energy and energy efficiency in priority sectors. It will also catalyse local commercial bank financing to support the development of smaller and medium-size renewable energy and energy efficiency projects that are too small for ADB to support on a project-by-project basis.

The credit line will fill a market gap in terms of financing such projects. This is in light of the recent global financial crisis and the resulting limitation on funding sources. It will also achieve energy savings contributing to reducing India's energy supply-demand gap and mitigating climate change, the central bank said.

Against an estimated 80,000 MW renewable energy-based grid connected power generation potential in the country, about 6,000 MW installed capacity has been realised. This is an opportunity to exploit renewable energy sources.

The renewable energy constitutes 5 per cent of the total installed power generation capacity in the country. The target is to achieve up to 10 per cent of additional installed capacity to be set up till 2012 to come from renewable energy sources, according to Indian Renewable Energy Development Agency Ltd.

The promotion of renewable energy and energy efficiency are key objectives under ADB's Strategy 2020, ADB's Country Partnership Strategy for India and ADB's private sector operations.

Starting in 2013, ADB's annual target for clean energy investments will double to $2 billion. This will accelerate low-carbon growth and reduce greenhouse gas in the region, the bank said.

raja@thehindu.co.in

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Deutsche Bank sees 50 bps cut in RBI policy in Q1

German lender Deutsche Bank expects the Reserve Bank of India (RBI) to cut rates by 50 basis points (bps) till June as it will otherwise lead to further imbalance on fiscal and current account fronts.

"The Reserve Bank could cut rates by 25 percentage points each in April and June, if fuel price increase decision is pushed all the way out to late June like last year," the bank said in its report on monetary policy in Asia.

"The Reserve Bank has been keen to cut rates since the January policy meeting, but with both global and local economic indicators bottoming out and inflation not easing sufficiently, its room for cutting rates has arguably shrunk."

The report warned if the apex bank is unable to cut rates, it can pose a risk to the economy.

"The risk of RBI not being able to cut rates would stem from a further surge in global oil prices from current levels... A renewed bout of food inflation, and deterioration of fiscal and current account balances in the absence of any substantive reforms."

Deutsche Bank expects two more rounds of rate cuts during the second half of the calendar year.

"We are still calling for two more rate cuts in the second half of this calendar. We see RBI cutting rates by 1% this calendar year, although the window of opportunity for these cuts is narrowing as the government contemplates fuel price hike."

The RBI left all key policy rates unchanged during the March 16 review of the third quarter policy, citing persistence of inflation risks due to rising global crude oil prices, a weak fiscal position and a vulnerable exchange rate.

Headline inflation was 6.95% in February.

"The saving grace is that core inflation is waning and inflation momentum has declined in recent months. The decline in core inflation can be seen as reflecting that demand pressure in the economy is weak," the report said.

Noting that investment activity has gone for a toss, it said: "Investment activities remain anemic and some support is warranted to revive capital expenditures."

Source: Business Standard

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Muthoot Estate can't accept public deposits: RBI

The Reserve Bank of India (RBI) today directed Muthoot Fincorp arm -- Muthoot Estate Investments -- not to accept any deposits from public in any manner.

"The RBI has directed Muthoot Fincorp Ltd to stop allowing the use of its premises or branches or officials, in any manner by Muthoot Estate Investments for accepting deposits from public," the RBI said in a notification.

Muthoot Fincorp, a Kerala-based non-deposit taking and non-banking financial company (NBFC), has a partnered with its arm Muthoot Estate Investments.

"Acceptance of deposits from the public by Muthoot Estate Investments is prohibited. Members of the public are hereby cautioned that acceptance of deposits by the company or its arm [Muthoot Estate Investments] is punishable with imprisonment...," the notification said.

Muthoot Estate Investments, in which the promoters of Muthoot Fincorp are partners, has collected and has been collecting deposits in the form of fixed deposits, cumulative deposits and special public deposits from the public, it added.

Source: Business Standard

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Muthoot Estate can't accept public deposits: RBI

The Reserve Bank of India (RBI) today directed Muthoot Fincorp arm -- Muthoot Estate Investments -- not to accept any deposits from public in any manner.

"The RBI has directed Muthoot Fincorp Ltd to stop allowing the use of its premises or branches or officials, in any manner by Muthoot Estate Investments for accepting deposits from public," the RBI said in a notification.

Muthoot Fincorp, a Kerala-based non-deposit taking and non-banking financial company (NBFC), has a partnered with its arm Muthoot Estate Investments.

"Acceptance of deposits from the public by Muthoot Estate Investments is prohibited. Members of the public are hereby cautioned that acceptance of deposits by the company or its arm [Muthoot Estate Investments] is punishable with imprisonment...," the notification said.

Muthoot Estate Investments, in which the promoters of Muthoot Fincorp are partners, has collected and has been collecting deposits in the form of fixed deposits, cumulative deposits and special public deposits from the public, it added.

Source: Business Standard

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Third party motor premium rates set to rise

The motor third party premium rates will go up by up to 20 per cent from April 1.

The Insurance Regulatory and Development Authority has upwardly revised third party premium rates from different categories of vehicles for 2012-13.

In an order hosted on IRDA's Web site, its Chairman, Mr J. Hari Narayan, said the claims payout showed an upward trend because of increase in court awards, wages and inflation, etc.

The increase in premium rates for different category of vehicles is in the range of 5-20 per cent.

For private cars and two-wheelers, the increase was the lowest when compared to the last year while for commercial vehicles of different categories, the hike was more.

The insurers were not permitted to cancel the current insurance policies and issue fresh ones to effect new premium rates, the Chairman said. The insurers were also directed to ensure its availability at their underwriting officers with speedy processing.

The new rates were calculated on the basis of a formula based on average claim amounts, frequency and expenses involved. The hike is expected to give some relief to the industry as insurers incurred huge losses, leading to the dismantling of the pool from March 31, 2012.

Motor premiums stood at Rs 18,000 crore out of a total premium of Rs 44,000 crore collected by the general insurance companies during 2010-11.

Last year, IRDA increased premium rates by 10-70 per cent for various categories of vehicles.

nagsridhu@thehindu.co.in

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RBI keeps ‘Ways and Means Advances' to States at last year's level

The Reserve Bank of India has pegged the aggregate normal Ways and Means Advances (WMA) limit for State governments at Rs 10,240 crore for 2012-13.

The WMA limits for States, inclusive of the Union Territory of Puducherry, are unchanged from the last year's limits, said the central bank in a statement.

The RBI provides WMA facility to States banking with it to help them to tide over temporary mismatches in the cash flow of their receipts and payments.

A State entrusts its banking business — including payments, receipts, collection, remittance of money, management of public debt and issue of new loans — to the RBI by voluntarily entering into an agreement with the RBI.

Ways and Means advances are repayable in each case not later than three months from the date of making that advance. There are two types of WMA — normal and special. While normal WMA are clean advances, special WMA are secured advances provided against the pledge of Government of India dated securities.

“States repay their Ways and Means Advances by issuing bonds (State Development Loans),” said Mr N. S. Venkatesh, Chief General Manager (Treasury), IDBI Bank.

Any amount drawn by a State in excess of WMA is an overdraft. No State is allowed to run an overdraft with the RBI for more than 10 continuous working days. In case an overdraft appears in the State's account and remains beyond 10 continuous working days, the RBI and its agencies stop payments on behalf of the State.

At present, the interest rate charged on WMA and overdrafts are the Bank Rate (9.50 per cent) and the Bank Rate plus two percentage points (11.50 per cent), respectively.

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IOB to hire 1,500 probationary officers

Indian Overseas Bank has notified 1,500 vacancies for probationary officers in junior management grade.

Candidates, who had qualified the common written examination for probationary officers conducted by the Institute for Banking Personal Selection, are eligible to apply.

The standard total weighted score for general category is minimum 120 while for reserved categories, it is 105.

The online registration for recruitment will open on March 30, 2012 and the last date for applying is April 19, 2012, according to a notification issued by the bank.

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SBI to lend Rs 2,500 cr to Neyveli Lignite Corpn

State Bank of India has agreed to lend Rs 2,500 crore to Neyveli Lignite Corporation Ltd to part-fund its 2 x 500-MW Neyveli New Thermal Power Station project. The first unit is expected to be commissioned in June 2015 and the second in December 2015.

The project was sanctioned at an estimated cost of Rs 5,907 crore and would have a debt-equity ratio of 70:30. It would replace the existing 600-MW TPS-1 power plant that has been in existence for about 50 years.

Fuel would come from the mines operated by the company and the power generated would meet the needs of the South. NLC has signed Power Purchase Agreements (PPAs) with TANGEDCO of Tamil Nadu and the distribution companies of other states.

While the equity part of the expenditure would be met through internal accruals, the loan component would be funded through rupee term loan, external commercial borrowings, bonds and other debt instruments.

An agreement for the rupee loan was signed in the presence of Mr Pratip Chaudhuri, Chairman, SBI, and Mr A.R. Ansari, CMD, NLC. It was signed by Mr K. Sekar, Director (Finance), NLC, and Mr S.B. Nayar, Deputy Managing Director & Group Executive (Corporate Banking), SBI.

NLC has at present operates three mines at Neyveli and one at Barsingsar in Rajasthan with a total capacity of 30.6 million tonnes of lignite and three power stations with a total installed capacity of 2,740 MW.

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Jagaran Microfin sells loans worth Rs 17 crore to Ratnakar Bank to release capital

One-year old Jagaran Microfin has sold 50% of its assets to Ratnakar Bank in a rated pool transaction to release capital and push business growth. The deal will help Ratnakar Bank in meeting its priority sector lending commitment.

The Kolkata-based microfinance company has sold a pool of small loans worth Rs 16.91 crore to the private commercial bank last week. Unitus Capital has arranged the deal.

""This transaction will not only boost the confidence of investors but also go a long way to facilitate funding for the relatively new MFI working in underserved geographies,"" said Abhijit Ray, a director at Unitus Capital.

Before the deal, Jagaran had an outstanding loan portfolio of around Rs 35 crore. The sold loans will now be shown in the bank's balancesheet and the attached credit risk will be transferred to the buyer. Crisil has rated the pool of loans as ""A3(SO)"", reflecting moderate degree of safety in regard to timely payment.

As the current fiscal draws to an end, banks with shortfall in priority sector lending are rushing to buy loans from MFIs. Commercial banks are stipulated to fulfil an 18% agriculture lending target of last year's adjusted net credit with an overall 40% target for priority sector advances.

Jagaran is a wholly-owned subsidiary of GTFS Multiservices Pvt Ltd, a financial distribution company with 275 branches and 10 lakh distribution partners.

Source: EconomicTimes

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PNB raises Rs 1,590 crore by issuing preferential shares to LIC

State-owned Punjab National Bank (PNB) has raised Rs 1,589.90 crore by issuing shares to Life Insurance Corporation (LIC) on preferential basis.

On receipt of allotment money of Rs 1,589.90 crore from LIC, the bank has allotted 1.58 crore (1,58,40,607) shares of the face value of Rs 10 each at a premium of Rs 993.69 to the insurer on preferential basis, the bank said in a filing to the BSE.

PNB is in the process of issuing up to 1.28 crore shares to the government, which holds 58 per cent in the bank.

Last year, PNB got a capital infusion of Rs 184 crore from the government.

In 2010-11, the government provided capital support to the tune of Rs 20,157 crore to public sector banks.

Source: EconomicTimes

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Income Tax department mulling prosecution of HSBC bank in black money cases

The Income Tax department is said to be mulling prosecution against the HSBC bank for allegedly being the conduit for Indians in stashing money abroad.

The department, which had received more than 700 names in a list of black money account holders in HSBC bank in Geneva reportedly provided by the French government, has approached the Central Board of Direct Taxes (CBDT) in this regard, sources said.

The I-T department is believed to have recommended that action may be initiated against the bank under the provisions of Income Tax Act relating to abetment of false income tax returns, concealment of income to thwart tax recovery, sources said.

The department, which is set to begin prosecution of cases against a certain number of account holders on this list, has sent a communication in this regard to the CBDT.

When contacted, HSBC officials refused to comment. The CBDT, the sources said, has now asked for an opinion from both the Law and External Affairs Ministry pertaining to the possible action against the bank.

Various investigation and enforcement units of the I-T across the country, where these names were sent for verification and realisation of unpaid taxes, have come together to state that the deposits in the HSBC Geneva accounts were allegedly made through the bank branches in India and this was hidden from the tax authorities.

The I-T department is of the view that the onus of declaring overseas accounts is not just on the account holder but also on the banks.

Source: EconomicTimes

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Axis Bank point-of-sale terminals cross 2 lakh

Axis Bank, the third largest private sector bank, now has over 2 lakh point-of-sale terminals.

The bank’s PoS network is present across major segments such as departmental stores, pharmacies, super and hyper markets, jewellers, hotels, retail fashion, hospitals, education institutions, government utility payments, insurance, dining and fuel pumps in over 692 cities, said a bank press release.

Earlier, Axis Bank launched Dynamic Currency Convertor which offers the flexibility to international cardholders to pay in their local currency. It has already introduced cash withdrawal facility on the PoS network, said the release.

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Corp Bank extends loans at 3% interestrate to fisherwomen

Corporation Bank has extended loans at three per cent interest to around 2,700 fisherwomen. This follows a scheme of the Karnataka Fisheries Department to finance the fishing community at three per cent interest rate.

Launched in association with the Dakshina Kannada and Udupi Co-operative Fish Marketing Federation through the formation of joint-liability groups (JLGs), the loan carries interest rate of 3 per cent for beneficiaries. It is repayable in 35 months.

Addressing the gathering of fisherwomen during the launch of the scheme in Mangalore on Wednesday, Mr Ajai Kumar, Chairman and Managing Director of Corporation Bank, said each JLG shall have a minimum of four members and maximum of 10 members. Each member is eligible for a maximum loan of Rs 50000.

In Mangalore, Corporation Bank has identified 72 JLGs with around 700 fisherwomen. The bank extended around Rs 3.50 crore of loans through 11 branches.

He said the bank has financed 233 JLGs with 2,000 fisherwomen in Udupi district. It has extended loan of Rs 9.73 crore to them through six branches in that district.

Mr Ajai Kumar said the bank would like to be associated with larger number of people through such schemes.

SHGs

The bank is also active in credit-linking self-help groups (SHGs) in the country. Till now it has credit-linked around 1.24 lakh SHGs, he said. Recently, Nabard honoured the bank for giving best loans in Karnataka with best asset quality.

Terming Corporation Bank as a pioneer in implementing financial inclusion programme in the country, he said the bank has implemented branchless banking model of financial inclusion in 3,216 locations.

vinayakaj@thehindu.co.in

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IOB to open 400 branches next fiscal

Indian Overseas Bank (IOB) is planning to open 400 branches during 2012-13.

Mr M. Narendra, Chairman and Managing Director of IOB, told Business Line that the bank wants to increase the total number of branches from the present 2,616 to 3,000 by the end of the next fiscal.

The bank has opened nearly 540 branches in the last 18 months. This includes 432 branches opened during the current financial year. Another 14 branches will be opened by this month-end.

Mr Narendra said the bank had 144 branches in Karnataka at the end of February 2012. Stating that the bank is focussing on next generation customers in some of the locations, he said the bank has opened three such branches now. While the first such branch was opened in Chennai, the second one was inaugurated in Bangalore.

The third such branch was opened at Manipal in Udupi district on Monday.

vinayakaj@thehindu.co.in

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Indian Bank asked to reinstate compulsorily retired clerk

The Madras High Court, in a recent order, directed Government-owned Indian Bank to reinstate a clerk/shroff, who was compulsorily retired by order dated July 8, 2004 on charge of alleged stealing of a pay order.

The Court ruled that Central Industrial Tribunal, which investigated alleged charge against Mr G.R. Swamy, “committed a grave error” in not adhering to legal precedents.

According to the bank clerk, he joined Bank in 1978 and was posted to work in Chintadripet branch. The allegation against him was that while serving in the branch, he had removed a BPO (pay order). He was served with show cause notice for alleged criminal charge. On July 8, 2004, he was compulsorily retired for the offence.

He raised industrial dispute before the Assistant Labour Commissioner (Central), Chennai. Curiously enough, even before order of reference was made by the Government, the writ petitioner (clerk) was acquitted by a criminal court, which found that there was no evidence to show that the petitioner was responsible for stealing BPO.

Mr Justice K. Chandru, who heard the writ petition of the clerk challenging award of Tribunal (R-1), declined to accept contentions of respondent Bank in the absence of investigating officer being examined.

In the absence of worker (petitioner) pleading guilty before domestic enquiry, and when document's credibility was impeached by criminal court, could not become sole basis for holding petitioner guilty of stealing BPO from Bank. CGIT (R-1) had committed a “grave error” in not adhering to legal precedents and evidence made available in domestic enquiry.

Hence, impugned order of R-1 was set aside, Judge said and R-2 Bank was directed to reinstate petitioner with full back wages.

Subramanian.v@thehindu.co.in

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Central Bank confident of maintaining NIM in Q4

Central Bank of India (CBI) is hopeful of maintaining its Net Interest Margin (NIM) at the current level of around 2.53 percent in the current quarter, a top bank official said.

“Net interest margin will be the maintained (at the same level of the last quarter). But, the NPA level may not see a dramatic change during the current quarter,” said the official.

During the last quarter (September—December), the gross NPA of the bank rose to 3.69 percent from 2.34 percent a year earlier. Similarly, its net NPA rose to 2.04 percent from 0.71 percent reported a year ago.

However, the official maintained the NPA level would begin to come down from the first quarter of the next fiscal. “The NPA movement will stabilise and start coming down from the first quarter of next financial year.”

The public sector bank posted a 72 per cent drop in its net profit to Rs 113.24 crore in the third quarter against Rs 404 crore a year ago. Its total income grew 21.9 percent to Rs 5,099 crore during the period.

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SBI hikes interest rate on short-term deposits to 8%

State Bank of India hiked interest rates on retail term deposits having maturity periods of less than one year by 25-100 basis points.

The bank announced this in a notice to the Bombay Stock Exchange, on Tuesday.

The interest rate on deposits having maturity periods ranging between seven days and less than one year has been hiked to a uniform 8 per cent.

According to an official from the bank the hike is to boost deposit growth as the financial year draws to a close.

Banks are also revising short-term deposit rates upwards as they are facing liquidity crunch. On Tuesday banks borrowed a total of Rs 1.78 lakh crore from the RBI through the repo auction. On Monday, the borrowing had touched a record high of Rs 1.95 lakh crore.

priyan@thehindu.co.in

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Sidbi offers Rs 30 crore support to microfinance companies

The state-run Small Industries Development Bank of India or Sidbi has committed 30% of its Rs 100-crore microfinance development fund to some of the country's poorest microfinance companies, which are yet to get significant commercial funding post the liquidity crisis of 2010-11.

MFIs, especially the smaller ones, operate in the country's interiors and provide a veritable financial link to the poorest sections of the population, which are not yet covered by the banking system.

Sidbi's support will offer a fresh lease of life to these smaller MFIs and allow them to leverage the capital fiveto-six times and raise resources from banks or overseas investors with less hassles. While lenders have opened their purse strings for bigger MFIs like Bandhan Financial Services and SKS Microfinance, bank loans remained largely inaccessible to the smaller ones, resulting in skewed growth of the sector.

The development financial institution has sanctioned eight proposals worth Rs30 crore and the disbursement is likely in a month's time. It will pick direct equities in NBFC-MFIs and offer subordinated debt to Section 25 MFIs.

"We are very happy and enthusiastic," said Mukul Jaiswal, managing director at Varanasi-based Cashfor Micro Credit, one of the likely recipients of Sidbi's capital. "We will be able to raise at least five times the loans from banks as they will be more comfortable now to lend to us," he said.

Cashfor has an outstanding portfolio of Rs 300 crore and is likely to receive Rs5 crore from Sidbi. West Bengal's Society for Model Gram Bikash Kendra and Assam's RGVN-Credit & Savings Program are also likely to receive fresh capital.

MFIs lend to the poor at a maximum 26% annual rate. Sidbi's Rs100-crore dedicated fund was created by the government for investing in smaller MFIs to help them overcome the liquidity crisis of 2011 and grow in a regulated environment.

Sidbi will offer the debt for seven years and charge 8% interest rate a year on subordinated debt, with a clause that if any MFI converts itself into an NBFC in between, the debt may be converted into equities. The recipients will also enjoy a three-four year moratorium on principal payment.

Source: EconomicTimes

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SBI rolls out one-time settlement scheme for small units

State Bank of India has launched a one-time settlement (OTS) scheme for recovering bad loans in its micro, small and medium enterprises portfolio. To make the scheme attractive, the bank is also offering discounts to borrowers.

India's largest bank has seen a net increase of Rs 3,902 crore in bad loans in its MSME portfolio in the first nine-months of the current financial year.

Given the increase in bad loans, the bank has launched a non-discretionary and non-discriminatory scheme of OTS to give relief to MSME borrowers affected by the downturn in the economy.

Chronic, non-performing assets (doubtful or loss) in the MSME sector with investment in plant and machinery of up to Rs 10 crore are covered under the OTS scheme, said a bank official.

Many MSME units have been affected by the sharp rise in interest rates and fall in demand for their products.

Corporate portfolio

In the first nine-months of the current financial year, the highest net increase in bad loans for SBI was in the corporate portfolio (Rs 6,469 crore), followed by the MSME portfolio.

It is difficult to give corporates an OTS as banks usually have large exposure to them. Hence, banks prefer taking the legal recourse to make recoveries, said a senior banker.

Overall, SBI has recorded a net increase of Rs 14,772 crore in bad loans in the first nine-months of the current financial year.

As on December-end 2011, MSME advances accounted for 16 per cent of the bank's overall lending portfolio of Rs 8,46,266 crore.

As per the terms of the OTS, the application for compromise will be processed on deposit of a minimum of 5 per cent of the amount outstanding as on the date the account is declared an NPA.

The deposit is to commit the borrowers to the OTS process. The bank will receive applications for compromise settlement up to July 31, 2012.

A borrower has to pay 25 per cent (including the 5 per cent already deposited at the time of application) of the compromise amount upfront on sanction of the OTS by the bank. The balance amount of the compromise has to be paid within six months of the date of sanction without interest or 12 months with interest.

The bank has also thrown in an incentive to make the OTS attractive. It will give 15 per cent and 10 per cent discount on the OTS amount to those borrowers who make full payment within one month and three months, respectively, from the date of approval of the OTS.

kram@thehindu.co.in

priyan@thehindu.co.in

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ICICI Bank to pay customer Rs 25K for freezing his account

The ICICI Bank has been ordered by a Delhi consumer forum to pay one of its customers Rs 25,000 as compensation for freezing his account, leading to the bouncing of his loan repayment cheque, to his embarrassment.

"Since, the saving account had been put under freeze, the ICICI bank dishonoured the cheque. It caused embarrassment and harassment to the complainant. It was due to the deficiency in service on the part of the bank.

"We believe the case of the complainant and hold that the acts of the bank were due to negligence of its officials. Those acts amount to deficiency in service. The complainant has suffered harassment, pain and mental agony," the District Consumer Disputes Redressal Forum said.

The forum's order came on a pea by one Krishan Lal Jatav, whose account was frozen. In his plea, he had said he handed over three blank cheques to the bank to clear his dues against his credit card, as per a settlement between the two.

Later, he said, a cheque for Rs 21,934 issued by him to repay a car loan facility was dishonoured as the bank had illegally frozen his saving account, to which his credit card was attached.

The ICICI Bank, in its reply, said Jatav had utilised the credit card but did not make the payment and that is why the bank froze his account.

The forum, however, observed that the bank's officials were at fault as they had filled in Rs 1,000 instead of Rs 10,000 in one of the blank cheques issued by Jatav due to which settlement of credit card dues was not finalised.

It directed the bank "to pay the complainant Rs 20,000 as compensation for causing harassment and Rs 5,000 as litigation charges", adding they should have informed him about the mistake instead of freezing his account.

The forum also directed Jatav to pay Rs 9,000 to the bank to settle his credit card dues, on receipt of which the bank will issue him a 'no-due certificate'.

Source: Financial Express

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Opposition for Khandelwal panel recommendations

The Syndicate Bank Staff Association (SBSA) has decided to gear up the agitation against the recommendations of the Khandelwal Committee. The Khandelwal Committee had recommended abolition of the 40- year-old method of bi-partite negotiations and collective agreement at the industry level for improving the wages and service conditions of the bank employees. 

Mr K.S. Bhat, All-India Secretary, SBSA, said that the recommendations of the committee for bank-wise wage revision in place of the industry-level agreement, would cause problems in the banking sector, besides unrest among the bank employees, he said in a statement. Opposing the committee's recommendations, the Association has also decided to support all agitation programme of UFBU.

sajeevkumar@thehindu.co.in

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BoI launches online remittance service for NRIs in UK

Bank of India has launched an online remittance service for non-resident Indians in the UK. Using this service, the customer no longer has to visit a branch and can execute the online money transfers from the comfort of his home or office, said a press release issued by the bank.

The bank is offering the service jointly with TimesofMoney.

BoI has an overseas presence of over 65 years.

It has offices in 19 foreign centres spread over five continents, where its services are extended through 49 outlets, including seven in the UK.

Almost 25 per cent of the bank's business is contributed by its foreign offices, the release said.

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Debit cards based on RuPay platform launched

State Bank of India, Bank of Baroda, Bank of India, and Union Bank of India on Monday formally launched debit cards based on the indigenously developed RuPay payment platform.

The RuPay platform has been developed by the National Payments Corporation of India as a rival to global payment product companies such as MasterCard and Visa.

The RuPay branded debit cards will be accepted at all 91,000 ATMs and over six lakh point of sale (POS) terminals in the country. In due course, these cards would be accepted on Internet and also at ATMs/POS terminals abroad, said a NPCI statement.

NPCI plans to partner banks to introduce RuPay-based credit cards by March 2015.

“Several banks are in the process of testing and certification and we expect all major banks to be a part of the RuPay network in six months time.

“Smaller banks which were not in a position to join the card payment system due to high cost of initial participation fee and quarterly minimum processing fee would henceforth be able to participate in RuPay because there are no such fees under RuPay,” said Mr A. P. Hota, MD and CEO, NPCI.

Since the transaction processing will happen domestically through NPCI's retail payments and settlement platform, it would lead to lower cost of clearing and settlement for each transaction.

Banks will have to pay almost 40 per cent lower fees to the RuPay scheme as compared to the international schemes. Besides, banks will pay only in rupees instead of foreign currency.

kram@thehindu.co.in

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Citibank's multi-channel drive to boost retail growth

As it embarks on growth through retail banking for the second time around, Citibank is looking to acquire customers through multiple channels. No longer will the foreign bank be solely dependent on direct selling agents (DSAs). It is building its own sales force, called ‘universal bankers'.

Universal bankers

This concept (universal bankers) has been introduced for the first time in India, as a pilot project for the Asia-Pacific Region. Over the last 18 months, the bank has appointed about 350-400 universal bankers nationally.

This universal banker model is expected to ensure ‘higher quality of customer acquisition with enhanced customer experience,' said Mr Anand Selvakesari, Head Consumer Banking, Citibank India.

“In order to acquire and bank the right profile of customers within our segmented strategy, you need to have the right distribution channel. We are building on that through our team of universal bankers,” he said.

The universal bankers differ from DSAs as they are trained to sell all products — credit cards, personal loans and deposits. They are employees who are fresh from school or have two-three years' experience.

“They have been provided with extensive training and are capable of handling the entire suite of products and services available with us. It is a client-centric approach. It is not selling a product. It is basically a relationship with the bank,” he said.

Currently, the channel of universal bankers contributes to 50-60 per cent of card sales, about 30 per cent of loan sales and about 40-50 per cent of liabilities, that is, deposit sales. Going ahead, this share will increase as the bank expands the sales force.

However, the bank will still continue to use DSAs, given that it is present in 27 cities in India.

“We still need multiple channels for customer acquisition. Even in the 27 cities that we operate in, it is not enough to acquire customers with 300-400 universal bankers. While we will continue to expand the universal bankers channel, we want to leverage as many channels as we can.

“At the same time we want to ensure that all channels are getting the right profile of customers. Our end focus is acquiring a customer with the right profile and a differentiated customer experience,” Mr Selvakesari said.

priyan@thehindu.co.in

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SBI plans one more zone in Bangalore circle

State Bank of India plans to restructure its Bangalore circle to include one more zone.

The move will enable the bank to focus better on the Bangalore zone, which contributes to 70 per cent of the circle's business, Mr Ashwini Mehra, Chief General Manager, SBI – Bangalore Circle, told Business Line.

“We want to create a separate zone for the coastal belt, as we feel there is scope for expansion there. This way, we will have a separate zone for Bangalore city,” he said.

SBI – Bangalore circle has two zones currently: Bangalore and Hubli. “The accent is also on opening more branches in metros where growth and turnaround is faster,” said Mr Mehra, adding that the bank has good presence in the rural and semi-urban areas.

The bank has about 550 branches in Karnataka, and wants to take it up to 600 by next fiscal. “We want to open the branches by September 2012 in order to stabilise them by the fiscal-end,” he explained.

Areas such as Chitradurga and South Canara would also be under focus for the bank.

The idea of expansion is to get more business from Bangalore, which contributes to 70 per cent of the bank's business. SBI – Bangalore Circle has seen a business of Rs 90,000 crore this fiscal, and “our target is to grow advances and deposits by 20 per cent,” said Mr Mehra.

According to him, agricultural loans are facing a setback as 120 taluks in the State have been affected by drought. Agri NPAs are at Rs 650 crore, and Mr Mehra hoped to bring it below Rs 500 crore.

“Recoveries are challenging,” he said, adding that cash recovery during the current year is Rs 201 crore. “Farmers were hoping to come into money with a good harvest, and that hasn't happened so far,” he explained.

anju@thehindu.co.in

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