ATM fraudsters auction data abroad, says SBI official

ATM fraud is an organised crime with international linkages for procurement of hi-tech gadgets and auction of data, Mr M S S Srinivas, Additional General Manager, SBI Switch Centre Mumbai said today.

“The fraudsters procure skimmers to copy ATM card data from as far as Ukraine and lately stolen ATM card data are auctioned at an international market,” Mr Srinivas said in an awareness programme on ATM frauds here.

A pinhole camera on the skimmer placed inside the card slot was used by culprits to read PIN number, he said.

The authorities had detected 29 Canara Bank ATMs fitted with skimmers in Chennai and eight in Bangalore recently. The fraudsters had stolen in 1.5 lakh data and sold them off to Russia, he said.

They used different techniques like tampering of ATM keypads, swapping of cards of unsuspecting customers and by using skimmers to copy the card data.

While ATM machine is built with maximum security and in-built camera, Mr Srinivas said low awareness among customers, online real time operations and anonymous identity accepted in case of CNP (Card not Present) transactions were some of the challenges faced by banks.

The SBI official has also advised ATM users change PIN numbers of their bank cards in frequent intervals to avoid frauds.

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Printing of MICR, IFSC code must on passbook, a/c statement: RBI

The Reserve Bank of India has made it mandatory for all banks to print the MICR and IFSC code on the passbook and statement of account of the customers.

“Currently, the MICR (Magnetic Ink Character Recognition) code is available on the cheque leaf along with the IFSC (Indian Financial System Code) code of the branch. On a review it has been decided that this information should also be made available in the passbook/statement of account of the account holders,” RBI said in a statement.

As per RBI guidelines, MICR code is necessary for all electronic clearing services (credit and debit) transactions.

IFSC code is a pre-requisite for national electronic funds transfer (NEFT) and real time gross settlement (RTGS) transactions.

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SBI to cut interest on auto, small biz loans

State Bank of India will reduce interest rates on vehicle loans and on loans to small and medium enterprises.

“We have already started adjustment of rates on the loan side. Auto loan rates will be cut today or tomorrow,” Mr A. Krishna Kumar, Managing Director, State Bank of India, told newspersons here on Saturday.

This will be followed by a reduction in the rates on smaller-ticket loans to small and medium enterprises, he added. On the likely impact of the interest-rate cut on bank profits this financial year, Mr Krishna Kumar said as about 47 per cent of deposits were under current accounts and savings accounts, net interest margins would not be impacted.

Following the repo rate cut of 50 basis points by the Reserve Bank of India on April 17, some banks, including ICICI Bank, Bank of Baroda, Punjab National Bank and Bank of Maharashtra, had already reduced their deposit and lending rates.

TARGET

For the year 2012-13, SBI is targeting 25 per cent and 22 per cent growth in deposits and advances respectively.

“As per rough estimates, the growth was not as high as expected during the last financial year, at 18 per cent and 15-16 per cent, mainly due to the general economic scenario,” he said.

As SBI had surplus liquidity, meeting credit targets for the current financial year would be a problem, he added.

During last year, the growth of the SME and farm sector portfolios was in the range of 18 per cent to 22 per cent, while mid corporate and retail segments showed ‘sluggish' growth.

Earlier, he inaugurated a small and medium city credit centre for speedy processing of loans to small and medium entrepreneurs.

nagsridhu@thehindu.co.in

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Bank of Maharashtra trims lending rates

Bank of Maharashtra (BoM) has decided to reduce its base rate to 10.5 per cent from 1 May. The interest rates on loans that are linked to base rate will be reduced by 0.10 per cent and the rate cut will benefit existing and prospective home loan borrowers, auto loan borrowers, micro, small and medium enterprises (MSME) and all other categories of borrowers. Following the slash in the base rate, the bank on Thursday released its new floating interest rate structure.

As per the revised interest rate structure, the loan taken for the tenure up to and inclusive of 5 years up to Rs 25 lakh can be availed at the base rate of 10.5 per cent.

The loan amounting to Rs 25 lakh to 30 lakh taken for the same tenure will also come at the same interest rate, while as the amount exceeding Rs 30 lakh but less than Rs 75 lakh can be availed at the interest rate which is 0.5 per cent more than the new base rate and that of Rs 75 lakh and above will come at an interest rate which would be 0.75 per cent more than the new base rate.

The loan taken for the tenure above 5-years and up to and inclusive of 10 years and amounting to Rs 25 lakh will come at 0.2 per cent more rate than the base rate, while as the loan between Rs 25 lakh to 30 lakh will come at a rate which will be 0.25 percent more than the base rate.

The loan exceeding Rs 30 lakh but less than Rs 75 lakh will come at 1 per cent more interest rate than the base rate while as the loan amounting to Rs 75 lakh and above will come at a rate which is 1.25 per cent more than the base rate. The loan with the tenure of more than 10 years, but below and inclusive of 20 years will come at the rate which is 0.3 and 0.5 per cent more than the base rate for up to Rs 25 lakh and that between Rs 25 lakh to Rs 30 lakh. The loan amount exceeding Rs 30 lakh, but less than Rs 75 lakh will come at a rate more than 1.25 per cent of the base rate, while Rs 75 lakh and above will come at 1.5 per cent more than the base rate.

Source: Financial Express

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For Oriental Bank, Kingfisher Airlines account turns substandard

Cash-strapped Kingfisher Airlines has turned into a non-performing asset for the Gurgaon-headquartered public sector lender Oriental Bank of Commerce.

This follows the airline not servicing the interest payments on the bank's exposure of Rs 55 crore (pre-delivery payment finance for aircraft), sources close to the developments said. The repayments were to start in 2013.

OBC will make a provision when it closes its books for the quarter ended March 2012 as the account has turned substandard, they said. OBC's financial results for the financial year ended March 31, 2012, are slated to be released this month end.

The banking industry (13-member consortium) has a total exposure of over Rs 7,000 crore in Kingfisher, of which, Rs 4,000 crore is in the form of term loans.

The OBC Chairman and Managing Director, Mr S. L. Bansal, had in early March said that the bank would not shy away from financing viable units in the airline industry just because a few of the players had landed themselves in financial trouble.

The bank had recently given finance to low-cost carrier Indigo.

OBC is also likely to take a hit of about Rs 170 crore in 20 quarterly instalments from Air India's debt recast. OBC's exposure to Air India is about Rs 1,550 crore.

krsrivats@thehindu.co.in

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Bank of Baroda cuts lending, deposit rates by 25-50 bps

Bank of Baroda cut deposit rates by 25-50 basis points across various maturities on Friday. The bank also cut its Base Rate and Benchmark Prime Lending Rates by 25 basis points each.

This move follows the 50 basis points cut in the repo and reverse repo rates by the Reserve Bank of India.

A press release from BoB said the bank's Base Rate will be at 10.5 per cent and its BPLR will be 14.75 per cent with effect from May 1.

On Tuesday, after the RBI action, banks did not seem raring to take the cue, but they now appear to be giving in to Government and RBI pressure.

IDBI Bank was the first to flag off the rate cuts on Wednesday, with a 25 bps cut in lending rates and a 10-50 bps cut in deposit rates.

On Thursday, ICICI Bank, Punjab National Bank and Bank of Maharashtra also announced cut in lending and deposit rates.

State Bank of India, the largest bank in the country is likely to announce a cut in auto loan rates soon. The SBI Chairman, Mr Pratip Chaudhuri, said the bank would cut rates in specific segments.

The move will result in lower home, education and auto loans rates for existing and new customers. Simultaneously, the returns from bank fixed deposits would also decrease following the cut in rates.

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Banks bow to government; ICICI Bank, PNB cut lending rates, others to follow suit

ICICI Bank and Punjab National Bank took the lead among major lenders in lowering deposit and lending rates by 25 bps, which will not only reduce monthly payments on home and car loans but also cheer policymakers.

But Bank of Maharashtra's decision to bring down its benchmark rate by just 10 basis points to 10.5% probably reflects the reality - that few believe market rates will trend down and deposit growth will be sufficient for future rate cuts. A basis point is 0.01 percentage point.

Bankers, who were unwilling to commit on rate cuts the day the Reserve Bank of India surprised with a 50-basis-point cut in benchmark interest rates, are now falling in line partly due to moral suasion, say experts.

"While there is government pressure on public banks to reduce rates, private banks like ICICI Bank or others will follow suit under competitive pressure," said PK Choudhury, vice-chairman and group CEO at rating company ICRA. "Otherwise, they will lose quality customers. Everybody will take baby steps and look at the reaction of competitors."

ICICI Bank's so-called base rate, the rate below which it can't lend, is now at 9.75%. Punjab National Bank's base rate falls to 10.5% after the cut.

IDBI Bank made the first move on Wednesday and others such as Union Bank of India and State Bank of India are likely to follow.

"With the easing of systemic liquidity, we have already seen some correction in wholesale deposit rates," said Chanda Kochhar, managing director and chief executive officer at ICICI Bank. "We expect the cost of funds to gradually come down and this reduction in the lending rates is a proactive move by us to pass on the benefit."

Rates in the overnight call money market are down to 8.25%, from 8.75% before the policy rate cut, and three-month certificates of deposits are being sold at 9.2%, compared with 10.5% before the policy. Banks are still borrowing more than 1,00,000 crore a day from the RBI, reflecting tight liquidity.

The banks' action follows a letter from DK Mittal, secretary, financial services, at the finance ministry, to chairmen of state-owned banks to reduce interest rates.

RBI Governor Duvvuri Subbarao was also vocal that banks should pass on the benefits of his action to customers as lenders in the past profited from the central bank's largesse.

"One of the considerations between a milder policy rate action and what you consider a more decisive action is the impact it will have on transmission," Subbarao said Wednesday after the rate cut. "We wanted to send a stronger signal."

ICICI Bank's revised rates would be effective from April 23 and PNB's from May 1.

Following the revision, ICICI Bank's rate on home loans below Rs 30 lakh will be 10.25%, little cheaper than its rivals HDFC and SBI as both are charging 10.50%.

However, in case of big-ticket home loans above Rs 75 lakh, ICICI Bank's new rate at 11.25% will continue to be higher than HDFC and SBI's 11%.

While most banks will lower rates, at least to be seen as responding to policy measures, there could be a hit on profitability of some banks.

"Cost of deposits varies between banks and base rate calculations also take parameters like overhead cost into consideration," said MR Nayak, executive director at Allahabad Bank. "We will examine all these parameters before taking a decision on base rate. We are also watching what others are doing."

Source: EconomicTimes

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HDFC Bank sees no need to offer premium on bulk deposit rates

HDFC Bank, the second-largest private sector lender in the country, will not offer a higher rate on bulk deposits than it pays for retail deposits of similar maturities.

The lender’s comfortable liquidity position, combined with downward bias in interest rates and slow credit growth expectations in the first three months of this financial year, has allowed it to take this decision.

“The difference between bulk and retail deposit rates has come down sharply. The difference is probably 50 basis points now. Our view is that the bulk deposit rates should actually collapse to the retail rates,” Paresh Sukthankar, executive director, said.

He added despite the decline in bulk deposit rates in recent weeks, these would be lowered further to match the retail deposit rates, as the outlook on credit growth in the current quarter appears muted. “It is logical that bulk deposit rates will decline first before any reduction in retail deposit rates,” Sukthankar said.

Earlier this week, the Reserve Bank of India (RBI) had said banks must aim to reduce the variation in interest rates on bulk and retail deposits of similar maturities. The central bank's view did not find favour with most bankers, who felt offering a premium on bulk deposit rates was necessary to address liquidity mismatch.

"We cannot wish away the market reality. Of course, this will be the ideal way to go. But a high value customer always wants a premium and that has to be respected...The rates are determined by market conditions. Hence, it is difficult to prescribe a stance like this," Pratip Chaudhuri, chairman of State Bank of India, said.

According to banking analysts, while HDFC Bank's strong liquidity position may allow it to remove the premium on bulk deposit rates, the same may not be possible for most others, especially the smaller ones.

Sukthankar also said that the bank was not in a hurry to collect deposits. "Our liquidity is extremely comfortable. It has been mostly in surplus and we have been a lender (in the money market) at times. From the liquidity side, there is no push to get deposits at high rates," he said.

The uncertainty over loan demand in the traditionally "weak" first quarter of the financial year is also a factor why HDFC Bank is likely to cut its wholesale deposit rates.

While credit demand is expected to improve following reduction in lending rates, Sukthankar said deposit costs need to fall for loan rate cuts to happen.

HDFC Bank has so far not announced any revision in its lending and retail deposit rates since RBI reduced its policy rate by 50 basis points on April 17.

Source: Business Standard

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SBI officials drive Rs 1 cr NRI acct scam

The CBI has arrested three State Bank of India (SBI) officers for their alleged involvement in siphoning off money to the tune of Rs 1.35 crore from the Non-Resident Indian (NRI) accounts, sources said today.

The accused including alleged mastermind and in-charge of NRI section of the main branch Anup Rajurkar, deputy manager Prakash Bhalkar and senior executive Mamata Motwani were apprehended yesterday for their alleged role in fraudulently withdrawing the money from the NRI accounts of the bank, they said.

Though the scam was unearthed two years back but after initially ignoring the fraud, the State Bank authorities lodged a formal complaint with CBI only in July last.

Rajurkar was placed under suspension by the SBI pending inquiry against him.

According to CBI sources, Rajurkar enjoyed a clout with a section of BJP leaders.

He allegedly used to provide fake receipt to the NRI bank account holders and transfer money to his own account and would later withdraw the same.

The fraud was committed between the period 2004 and 2011.

CBI produced the trio in a designated court here and obtained three-day police custodial remand (PCR), sources said.

Source: Financial Express

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IndusInd Bank Q4 net rises 30% at Rs 223.38 cr

IndusInd Bank on Thursday, reported over 30 per cent jump in net profit at Rs 223.38 crore for the fourth quarter ended March 31, driven by increase in advances, as against a net profit of Rs 171.76 crore in the same period of last fiscal.

Total income increased to Rs 1,773.07 crore in the January-March 2012 period from Rs 1,230.47 core in the same quarter of last fiscal, IndusInd Bank said in a BSE filing.

Net interest income (interest earned less interest expended) during Q4 was Rs 464.4 crore, as against Rs 388.08 crore in the same period a year ago, registering a growth of 19.66 per cent.

As on March 31, 2012, advances of IndusInd Bank stood at Rs 35,063.95 crore, up from Rs 26,165.65 crore year-on-year.

In the fiscal 2011-12, the bank reported a net profit of Rs 802.61 crore, up by about 39 per cent, from Rs 577.32 crore in the previous year.

Its total Income increased to Rs 6,370.98 cr from Rs 4,303.02 crore in the fiscal ending March 31, 2011.

The gross non-performance asset (NPA) as a proportion of advances declined to 0.98 per cent against 1.01 per cent in the previous fiscal. Net NPA declined marginally to 0.27 per cent from 0.28 per cent in 2011—12, the bank said.

Meanwhile, IndusInd Bank’s Board of Directors has proposed a dividend at a rate of Rs 2.20 per share on the face value of Rs 10.

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Religare Health gets R2 licence from IRDA

Religare Health Insurance Company Ltd has received the R2 licence from the Insurance Regulatory and Development Authority (IRDA). The shareholders of Religare Health Insurance are Religare Enterprises Ltd, Union Bank of India and Corporation Bank.

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ICICI Bank launches system for toll collection

ICICI Bank launched the first electronic toll collection on National Highway 1.

The Bank said the project was initiated by the Ministry of Road, Transport & Highways. Toll operators would issue RFID (radio frequency identification device) tags to commuters to be read at the toll plazas. Through the system, the commuters will get a convenience of payment without stops at toll plazas, which would lead to less traffic congestion.

The Bank will make the tag interoperable so that it can be used across several toll-collection plazas on the Highway. The Bank will act as a central clearing house for settlement of financial transactions of the toll agencies and update the tag accounts of commuters. This will help minimise toll operators' operating cost and offer them better control through centralised user accounts. Additionally, the Government will benefit through improved transparency on toll transactions and reduced revenue leakages.

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PNB reduces base rate; slashes home loan, car loan rates

Close on the heels of the Reserve Bank reducing the repo rate by 50 basis points, the Punjab National Bank (PNB) on Thursday decided to cut its base rate by 25 basis points from 10.75 per cent to 10.50 per cent. It also slashed lending rates on housing and car loans.

All the revised rates will be applicable from May 1, the bank said in a statement here.

The bank had last changed its base rate on August 1, last year when it hiked it by 75 basis points to 10.75 per cent. Base rate is the minimum rate below which banks cannot lend.

For home loans up to Rs 75 lakh, it will now charge interest of 10.75 per cent. For home loans above Rs 75 lakh, the lending rate will be 11 per cent, irrespective of the loan’s tenure. Till date, home loan interest rates were linked to its tenure.

Car loans will now have interest rate of 12 per cent from 12.75 per cent to 13.25 per cent at present. The reduction in lending rates will be applicable to both new as well as existing customers.

In the wake of improved liquidity in the system in general and the bank in particular, PNB has also reduced interest rates on domestic and NRE term deposits by 25-50 basis points in select maturity buckets. With this revision, the peak rate on single domestic retail term deposits will now be 9 per cent for maturity period of 1,111 days.

PNB also highlighted that it had kept the base rate unchanged when the RBI had hiked the repo rate by 25 basis points each on September 16 and also on October 25 last year.

krsrivats@thehindu.co.in

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Andhra Bank to hire 600 clerks

Andhra Bank will be recruiting 600 clerks to work in branches located in various parts of the country.

According to a notification released by the Hyderabad-based bank, graduates in the age group of 18-28 and who scored a minimum of 124 in the common written examination for clerical posts are eligible to apply.

For candidates in the reserved category, the minimum score has been fixed at 105. As the recruitment will be State-wise, candidates should apply to the vacancies in the State from which they had taken the common written examination.

The online registration for recruitment would commence on April 24 and close on May 5.

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ICICI Bank cuts deposit, lending rates by 25 bps

ICICI Bank has cut the interest rates on retail fixed deposits for various tenors by 25 basis points. It has also pared its lending rate benchmark — the base rate — by 25 basis points.

Both the rate cuts come into effect from April 23. The revised base rate will be 9.75 per cent against 10 per cent at present.

India’s largest private sector bank has also announced a reduction of 25 basis points in its benchmark prime-lending rate to 18.5 per cent from 18.75 per cent and in its floating reference rate for consumer loans (including home loans) to 15.5 per cent from 15.75 per cent.

BPLR and FRR are used for determining the interest rates on loans and advances sanctioned up to June 30, 2010.

The bank, in a statement said, fixed rate customers will not be impacted by the above reduction and their contracted rates will remain unchanged.

Ms Chanda Kochhar, Managing Director & CEO, said: “With the easing of systemic liquidity, we have already seen some correction in wholesale deposit rates. We expect the cost of funds to gradually come down and this reduction in the lending rates is a proactive move by us to pass on the benefit to our valued customers.’’

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Centre turning dictator? Government orders PSU banks to cut rates immediately

The government has ordered state-run banks to lower lending rates immediately even before the ink has dried on the Reserve Bank of India's decision to cut interest rates, potentially adding to the corporate governance debate triggered by the imposition of its will on Coal India.

The direction from DK Mittal, secretary, financial services, may put many lenders in a tight spot as profitability and cost structures differ between banks, said two persons familiar with the development.

"With the reduction of CRR and repo rate, all lending rates be relooked at very quickly," Mittal wrote to state-run banks' chairmen. "Direct lending to agriculture has to be 13.5% and growth has to be 25% over 2011-12."

The RBI has cut cash reserve ratio twice and bought government bonds, releasing more than 2 lakh crore into the system to ease liquidity pressures. It cut repo rate - the rate at which it lends to banks -by 50 basis points to 8% on Tuesday. A basis point is 0.01 percentage point.

"Micro management is not desirable when it becomes a routine," said DK Dhingra, former executive director at state-run Uco Bank.

IDBI Bank, a relatively small lender compared with State Bank of India or Punjab National Bank, cut its benchmark lending rates by a token 25 basis points to 15% on Wednesday. But many big banks that raised deposit rates recently are still studying the market.

"It's not acceptable that someone interferes on a daily basis," said Ravi Trivedy, a consultant and former partner at KPMG. "The government or the Reserve Bank can frame the policy parameters. Once these are in place, one should allow the professional managers to take independent decisions. It's a governance issue," he said.

Bank chairmen say policy rate cut does not automatically lead to lower market interest rates since there are issues such as slow deposit growth, rising bad loans and an uncertain environment where inflation could rear its head again and upset all calculations. "I will be genuinely concerned about the deposits growth because bank deposits are getting crowded out because of other competing savings instruments," State Bank of India Chairman Pratip Chaudhuri said after the rate cut.

Source: EconomicTimes

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Loans set to get cheaper, deposits to earn less

Get ready to pay lower loan instalments. Banks are gearing to pare their lending and deposit rates, a day after the Reserve Bank of India (RBI) signalled a reversal in the interest rate regime by cutting the key policy rate 50 basis points (bps).

State-run IDBI Bank on Wednesday announced a cut in the base rate — to which loan rates are linked — by 25 bps to 10.5 per cent. It also announced a reduction in the benchmark prime lending rate — the erstwhile benchmark rate, to which loans taken before July 2010 are linked — by 25 bps to 15 per cent. The bank will reduce deposit rates by 10-50 bps across various maturities.

“The impact of the rate cut on the margin will be neutral, as we have adjusted the interest rates on assets as well as liabilities,” said P Sitaram, chief general manager.

State Bank of India (SBI), the largest lender in the country, indicated it would lower lending rates by 25-50 bps in a couple of days. SBI has one of the lowest of base rates among banks and may not cut it, but may reduce spreads over the base rate.

According to a senior SBI official, the bank might decide to offer lower rates in the next few days on segments such as small and medium enterprises and in retail categories such as automobile loans. However, it may take a month or so for the base rate to fall, as the banks would first like to revise the deposit rate. “Base rate will be revised once the overall cost of funds fall. And, that will happen once we lower the deposit rate,” the official added.

Other state-run lenders Central Bank of India (CBI), Indian Overseas Bank (IOB) and Andhra Bank are in the process of evaluating their cost of funds in their Asset-Liability Committee (Alco), after which they’d come out with rate revision announcements.

“Our Alco is meeting tomorrow to decide on the lending and deposit rates,” said V R Iyer, executive director of CBI. “We have not decided on the quantum of the cut. We are considering a cut in the base rate as well.”

Similarly, IOB chairman and managing director M Narendra said the bank would bring down the deposit rate before taking a call on lending rates. “Cost of funds needs to come down first and for that, the deposit rates would be cut by, say, 25-50 bps. The base rate would come down only after some time. However, we might bring down the lending rates on some selected segments,” he said. Andhra Bank said it would focus on bringing down the cost of funds by first lowering the deposit rates before taking a call on lending rates. “We would take a call on lending rates in June. The cost of fund needs to come down first,” said B Prabhakar, chairman and managing director.

Source: Business Standard

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RBI cuts bank rate to 9 per cent

The Reserve Bank today issued a notification to reduce the bank rate or the interest the banks and financial institutions pay to the central bank on borrowed funds to 9 per cent from 9.5 per cent now.

"The Reserve Bank of India (RBI) has decided to lower the Bank Rate to 9 per cent per annum from 9.5 per cent per annum with effect from April 17, 2012," the RBI said in a statement.

The notification follows the announcement made by RBI Governor D Subbarao in the annual credit policy which was unveiled yesterday.

In line with 0.5 per cent cut in short-term lending (repo) rate, the RBI also reduced the bank rate to 9 per cent.

The RBI decided to reduce the benchmark repo rate to 8 per cent from 8.5 per cent, after a gap of three years, to promote growth which during 2011-12, which slipped to a three year low of 6.9 per cent.

The central bank has pegged the GDP growth rate for the current fiscal at 7.3 per cent.

Source: EconomicTimes

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Federal Bank chief projects two more rounds of rate cut

“The RBI has given the much needed impetus to the market with the repo rate cut of 50 bps. It is a bold move that should see confidence returning to the markets and lead to the virtuous investment/ capital formation cycle,” the Chief Executive of Federal Bank, Mr Shyam Srinivasan, said.

According to him, the year could see at least two more rounds of rate cuts, and depending on the macro economic variables, he foresees a cut in CRR as well.

“The challenges on the domestic and overseas front remain. However, I believe that appropriate policy measures can reignite the growth cycle,” Mr Srinivasan said.

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IDBI Bank cuts deposit, lending rates

IDBI Bank has cut deposit rates by 10-50 basis points across various maturities. It has also pared lending rate benchmarks — base rate and benchmark private lending rate — by 25 basis points.

The public sector bank is the first bank to cut rates following the 50 basis points cut in repo rate by the RBI.

Following the rate cut, the new base rate is 10.5 per cent and the BPLR is 15 per cent, said Mr P. Sitaram, Chief General Manager, IDBI Bank.

“The impact of the rate cut on the margin will be neutral as we have adjusted the interest rates on assets as well as liabilities,’’ said Mr Sitaram.

Meanwhile, banking behemoth State Bank of India is expected to soon take a call on cutting deposit and lending rates.

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Bank of India to recruit 3,149 clerks

Bank of India is recruiting 3,149 clerks across the country. Recruitment for these posts will be done State-wise. So, the candidates have been asked to apply for vacancies in the State or Union Territory from which they appeared for the common exam conducted by IBPS (Institute of Banking Personnel Selection).

Highest vacancies are in Jharkand (485), Uttar Pradesh (423) and Madhya Pradesh (401).

The cut-off marks vary from State to State. The bank has fixed 131 as the cut-off marks for general category candidates in the North-Eastern States.

While for States such as Haryana and Delhi, it has fixed higher cut-offs of 181 and 176, respectively

The bank has specified that candidates with 50 per cent in their 12th standard exam or a graduation degree are eligible to apply. State-wise and category-wise vacancies are mentioned in the detailed advertisement on the bank's Web site.

The minimum age requirement is 18 years, while the maximum is 28 years.

Applications have been invited online and are open from April 16-28. Tentative dates for the interview may be in May/June. Those who have secured sufficiently high marks in the IBPS common exam will be called for interview in the ratio of 1:3.

vageesh@thehindu.co.in

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RBI looking into window-dressing by banks

Year-end window-dressing is the norm in public sector banks. Figures pertaining to deposits and loans are inflated to show ‘growth'. This is done by the simple expedient of taking on more deposits and lending more for a very short period, around the balance-sheet date of March 31. After the books are closed both deposits and loans are returned and status quo returns.

Fiscal 2012 was no different. Although one thought it could have been.

A couple of weeks ago, the Finance Ministry had let it be known that annual deposit and loan growth would no longer be considered for performance appraisal of the top brass of public sector banks.

Banks and the Finance Ministry have a memorandum of understanding that lays down various parameters against which performance is benchmarked. If banks meet their targets, bank chairmen become entitled to a bonus. This has often led to a chase for ‘growth'.

Take a look at what happened this year. Credit growth had dropped to 15.4 per cent in February 2012 from 22 per cent at the beginning of the last fiscal. But in March this year, it picked up suddenly. Loans given by the banking system show a jump of Rs 3 lakh crore in that month.

The latest numbers show that credit has grown 19.3 per cent in the last fiscal — much above the indicative projections made by the RBI even a few months ago.

Asked about this, the RBI Governor, Dr D. Subbarao, said: “We do get information on credit growth and we do have a handle on the issue. It has come to our notice that there has been a sudden spurt in credit in February and, more importantly, in March. We don't yet have granular data.” He did not say what would happen after the RBI gets the numbers.

vageesh@thehindu.co.in

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Muthoot arm teams up with Axis Bank for prepaid cards

Muthoot Vehicle and Asset Finance Ltd has signed an agreement with Axis Bank for launching Muthoot shopping/utility prepaid cards.

This prepaid card can be used at all merchant outlets on Axis Bank PoS (Point of Sale) / EDC machines.

Comprehensive programme

Mr George Alexander Muthoot, Managing Director, MVFL, said that this comprehensive programme targeting the common man is a secure, efficient and cost-effective payment system.

The prepaid card will be available at all Muthoot branches and can be reloaded from any of them for a maximum amount of Rs 10,000 at any given time. Initially the card will be introduced in Kerala and later on the other States also.

The company has already identified and begun the activation of EDC machines in select merchant locations for this purpose. Muthoot plans to bring in the usage of the card through online portal too, he said.

Mr Jacob Ninan, circle head (Kerala), Axis Bank, said the bank is very happy to join hands with Muthoot Vehicle and Asset Finance Ltd for this initiative.

We are confident that Muthoot shopping / utility prepaid cards will find ready acceptance within their customer target groups.

MVFL is the vehicle financing division of Muthoot Group.

The company has made considerable forays into financing of used and new commercial vehicles and has built up a notable presence in the state in the field of second hand vehicle financing.

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Oriental Bank of Commerce may cut interest rates further

The Oriental Bank of Commerce (OBC) is likely to go in for a simultaneous cut in deposit and lending rates following the 50 basis points cut in the repo rate on Tuesday, its Chairman and Managing Director, Mr S. L. Bansal, has said.

Only last week, ahead of the Reserve Bank of India's credit policy, OBC had gone in for some reduction in base rate and deposit rates in certain maturities. The base rate was reduced by 10 basis points to 10.65 per cent.

“I am assuring you that our interest rates will further come down….When? You will have to wait,” Mr Bansal told Business Line here on Wednesday, a day after the RBI policy announcement.

Terming the RBI's move to cut repo rate by 50 basis points as a “bold decision”, he said it “surprised” him. Mr Bansal said that the focus of the bank this year would be to improve the retail business. As part of this effort, OBC is opening more retail-focused branches. At present, it has a network of 1,750 branches and 1,250 ATMs.

Mr S. C. Sinha, Executive Director, later indicated that the quantum of reduction in deposit and advance rates could be between 25 and 50 basis points. “It would certainly be not less than 25 basis points”.

Meanwhile, Mr Bansal said that the bank would in 2012-13 aim at a net interest margin of 3 per cent. Several public sector banks, including OBC, had faced some stress on their balance-sheets in 2011-12, primarily due to the slowdown in the economy.

For 2012-13, OBC will target a deposit growth of 19 per cent and advances growth of 17 per cent, Mr Bansal said. The growth rates in deposits (including bulk deposits) and advance in 2011-12 was 24 per cent and 19 per cent, respectively.

krsrivats@thehindu.co.in

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HDFC Bank Q4 net up 30% on retail loan growth

Strong growth in advances, particularly retail loans, and non-interest income helped HDFC Bank's net profit rise 30 per cent to Rs 1,453 crore for the fourth quarter ended March 2012 from Rs 1,115 crore in the same quarter last year.

For the full year 2011-12, the net profit rose 32 per cent to Rs 5,167 crore against Rs 3,926 crore in 2010-11. The bank declared a dividend of Rs 4.3 on shares having face value of Rs 2. Net interest margin, at 4.2 per cent, was the largest driver of profits, said Mr Paresh Sukthankar, Executive Director.

Strong growth in CASA (Current Account/Savings Account) and retail loans, that yield more than corporate loans, helped the bank maintain its margins, Mr Sukthankar said.

Both retail and corporate loans would grow at more or less the same pace. In the retail segment, there could be some moderation in auto and commercial vehicle loan that is dependent on the performance of the underlying industry, Mr Sukthankar said.

Within ‘other income', fees and commissions were the largest contributor, while fees from distribution of third party products dipped.

There could be a reduction in deposit rates over the next few weeks or couple of months. This would be simultaneously followed by a cut in base rates, he said.

“Retail fixed deposit rates will not come off immediately. The only immediate reaction to the RBI's action is seen in bulk deposit rates at the shorter end. Deposit rates will depend on market conditions as competition is intense.”

While lending rates would also see a downward movement, the pace of decline would be faster in corporate loans at the shorter end, he added. Loan quality was stable with the bank having made floating provision of Rs 700 crore for the full year. Restructured loans account for 0.4 per cent of total loans.Cost-to-income ratio rose to 49.8 per cent (48.8 per cent) due to expenses on new branches and ATMs.

priyan@thehindu.co.in

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A good decision, says Canara Bank CMD

Mr S. Raman, Chairman and Managing Director, Canara Bank: It is a good and decisive move by the RBI. Given the limited space available, the RBI has come up with a good decision. Transmission of rate cut to customers should be possible in the next few weeks. But it also depends on reduction in deposit rates. Deposit rates have to come down first as the cost of deposits had increased significantly; hopefully it would happen very soon. Our ALCO will take a call on interest rates on lending and deposits.

Ms Upasna Bhardwaj, Economist, ING Vysya Bank: The RBI’s move clearly reflects its intention towards propelling growth as core inflation provides some signs of relief. However, latent factors continue to provide upside risks to inflation. Such an aggressive step amid persistence of price pressures is likely to keep the RBI on pause in the mid-quarter review in June and subsequently monitor the growth-inflation dynamics to determine its path.

With the current action, we expect the banks to pass on the change via reduction in lending rates, though only gradually.

Mr M. Narendra, Chairman and Managing Director, Indian Overseas Bank: It is a very positive move by the RBI, which would facilitate investment activity. It is a sentimentally positive move. Unless the inflation gets further reduced, I don’t see any further rate cut by the RBI.

Banks have to first work at reduction in deposit costs, and then base rate will also come down. But I feel that it will take at least three months’ time for deposit rates to be moderated, it cannot be done immediately.

The RBI’s repo rate cut is only a signal, and that doesn’t lower the cost of funds automatically. But this signal will excite the investment activity.

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RBI tightens norms for bank lending to gold loan cos

Non-banking finance companies in the gold loans business may find the going tough when it comes to raising loans from banks.

The RBI has directed banks to reduce their regulatory exposure ceiling to a single NBFC, having gold loans to the extent of 50 per cent or more of its total financial assets, from the existing 10 per cent to 7.5 per cent of bank’s capital funds.

“There has been a significant increase in loans against gold by non-banking financial companies in the recent period, which has raised several concerns,” the RBI said in its Annual Monetary Policy for 2012-13.

The central bank also said that banks should have an internal sub-limit on their aggregate exposure to NBFCs having gold loans to the extent of 50 per cent or more of their total financial assets, taken together.

The RBI has constituted a Working Group to undertake a detailed study of gold demand, trends in gold prices and lending by NBFCs against gold.

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SBI to cut lending rates soon

State Bank of India (SBI), today said it will “do a comprehensive cut” in lending rates on various loans following the Reserve Bank of India’s 0.5 per cent reduction in repo rate.

“Of course, there would be a transmission. The transmission of last CRR (cash reserve ratio) cut has also not happened fully because that came in March. We thought we would wait till (April) 17th and do a comprehensive cut,” the SBI Chairman, Mr Pratip Chaudhuri, said after the RBI unveiled its annual credit policy.

Lending rate cut

“It (a lending rate cut) will not be across the board, it will be particularly for segments where the mark up above the base rate is significantly high,” he said.

Asked if there will be a substantial reduction in interest rates, he said: “Yes it will be.”

Base rate, the minimum lending rate below which a bank cannot lend, of SBI stands at 10 per cent. SBI’s base rate is the lowest in the industry.

Last month, the RBI slashed CRR (Cash Reserve Ratio) — the percentage of deposits that banks have to keep with the RBI — from 5.5 per cent to 4.75 per cent. With this, the central bank had infused Rs 48,000 crore into the economy.

“So largely it would be in our case for the SME but it is for our ALCO (asset-liability committee) which is meeting today evening to take a call,” he said.

“But we have to look at some other parameters to take a final call on passing on the rate cut to borrowers. But it will happen very soon,” he added.

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RBI could have cut CRR too: KVB chief

“The RBI has the habit of springing a surprise. Though the market expected a 25 basis points cut, I expected a 50 bps cut in the repo rates,’’ said the Managing Director and Chief Executive of Karur Vysya Bank, Mr K.Venkataraman.

He, however, felt that it could have been more enhanced if it had come with a 25 bps cut in the Cash Reserve Ratio (CRR) as well.

(CRR refers to the liquid cash that banks have to maintain with the RBI as a certain percentage of their demand and time liabilities).

According to him, a 25 bps cut in repo rate would not have made any impact as the problem of liquidity persisted.

Asked if KVB would pass on the reduction to its customers, he said “this definitely gives room for reducing both the deposit and lending rates. But unless the general rate scenario comes down, a reduction in the rate will not be possible.’’

Karur Vysya Bank, according to Mr Venkataraman, did not face any liquidity problem. “But funds have become costly because of tightening measures. Investments have slowed and there is no point in keeping the funds locked up,’’ he added.

‘It’s more than what was expected’

While the KVB chief maintained that he expected a 50 bps cut in repo rates, Mr V.P. Iswardas, Chief Executive and Managing Director of Catholic Syrian Bank, said “it is more than what was expected’’.

CSB has, only a fortnight ago, effected a 25 bps cut in its deposit rates. “We will therefore review our stand in the next ALCO (Asset Liability Committee) meeting,’’ he said, when asked if the bank would be passing on the reduction to its customers.

According to him, there was no dearth in the flow of NRE deposits. “It continues to flow. We have made some minor corrections on the NRE deposit rates too. The rates are more or less equal to our domestic term deposit rates,’’ he added.

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RBI abolishes prepayment charges on home loans

The RBI announced measures that will help home loan customers. Particularly, those who feel shortchanged when they don't get the benefits of lower interest rates.

It has now removed charges and penalties for foreclosure/prepayment of home loans taken on floating interest basis.

The removal of foreclosure charges/prepayment penalty on home loans will lead to a reduction in the discrimination between existing and new borrowers and the competition among banks will result in finer pricing of home loans with the floating rate, the RBI said.

The Damodaran committee on customer service found that banks were hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario. The RBI said that foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source.

Variation in interest rates on deposits to be minimal

The RBI has stipulated, that banks should not discriminate in the matter of interest rate paid on deposits, except in respect of fixed deposit schemes specifically meant for resident Indian senior citizens and single term deposits of Rs 1.5 million and above.

However, there are wide variations in banks’ retail and bulk deposits rates, making it unfair to retail depositors. Further, banks are offering significantly different rates on deposits with very little difference in maturities. This suggests inadequate liquidity management system and inadequate pricing methodologies.

The RBI has therefore, advised that banks should have a board approved transparent policy on pricing of liabilities.

Call it by a different name

Given the stigma attached to no-frills accounts and banks' tendency to mechanically try and meet the targets, the RBI has come up with a variation called a ‘basic savings bank deposit account’.

UID for everyone

Banks are being advised to initiate steps to allot a unique customer identification code (UCIC) number to all their customers.

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