Govt banks to install 60,000 more ATMs

After a gap of six to eight months, public sector banks (PSBs) have geared up to establish 60,000 more Automated Teller Machines (ATMs) across the country over the next two years. The state-owned lenders had put their ATM expansion on hold as a centralised outsourcing model was being worked out by a committee appointed by the government.

ATM machine manufacturers and payment service providers will be participating in the bidding process, being led by six major PSBs — State Bank of India, Punjab National Bank, Union Bank of India, Bank of India, Bank of Baroda and Canara Bank.

“This will be a completely outsourced model. The requirements for 22 regions across India have been clubbed into 16 bidding circles,” said a senior official from a payment service provider company.

“We expect the whole process to be completed in June and results to be announced by June-end,” the official added.

According to data from National Payments Corporation of India, the number of ATMs in the country — of private, public, foreign and cooperative banks, part of the National Financial Switch connecting all ATMs — had reached 98,025 by the end of April 2012.

A study by ATM manufacturer NCR Corporation India shows about 70 per cent of deployment has been in urban areas.

“Though the total requirement does not specify an urban-rural ratio, a higher deployment in rural areas is being considered,” said a senior official of a large PSB.

Customised ATMs for rural areas are also being tested. “The machines used in metros may not be relevant in rural areas,” said Jaivinder Gill, managing director, NCR Corporation. He said the company had developed machines that could interact with the user in 23 languages and use biometric authorisation as a safety feature if the user was not comfortable with PIN identification.

Of the ATMs in rural India, about 20 per cent are owned by private sector banks. The ratio is expected to change with the entry of non-bank entities or White Label ATM operators. White label ATMs are those owned and operated by non-bank entities.

“The banking space has seen considerable growth through ATMs, but it has been restricted principally to the urban/metro areas,” said the Reserve Bank of India in a draft report on White Label ATMs released in February.

The central bank said allowing entities other than banks would help the overall objective of financial inclusion. The final guidelines on the proposed model are awaited.

Source: Business Standard

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Axis Bank ups minimum balance on savings a/cs

Axis Bank, the country’s third largest private lender, said it will raise the minimum average quarterly balance by 20 times to Rs 10,000 from Rs 500 now on its students’ savings account (SBSTU) in metro and urban centres. “We periodically review our charges and fee structures to stay in line with market practices and related changes.

As part of the review, the average quarterly balance requirements of various accounts have been revised with effect from next quarter cycle — June 15 to September 14. Non-maintenance of balances attracts charges as per extant guidelines,” the bank told its savings account depositors in a notice.

The minimum average quarterly balance has been raised for 17 savings deposit products too. “The prescribed average quarterly balance for savings bank accounts, revised after a gap of nine years, is now in line with (other) banks offering similar services,” the bank’s official spokesperson said.

With the bank shedding home branch concept, it has introduced cash transaction charges for deposits and withdrawals of funds at all branches. Earlier, these transactions were charged only if they were made at a non-home branch.

According to the new norms, the first five transactions or Rs 10 lakh of cash deposit or withdrawal across the branches will be free. However, once this limit is crossed, the bank will charge Rs 4 per Rs 1,000 or Rs 100 on bigger transactions.

“We have revised our cash transaction limits and charges for anywhere banking services, which allow you to deposit or withdraw cash at any Axis Bank branch pan India. These charges will be calculated on a monthly basis and will come into effect from 15 May, 2012,” the bank said.

Earlier, ICICI Bank and HDFC Bank had increased their charges on savings deposits. The lenders have also mandated that customers will now have to maintain the minimum balance on a monthly basis instead of the earlier practice of quarterly cycle.

These banks , including Axis Bank, have not raised the interest rate on savings deposit accounts after the rate was deregulated by the Reserve Bank of India late October 2011. Some of the mid-sized private lenders, including YES Bank, Kotak Mahindra Bank, IndusInd Bank, Ratnakar Bank and Karnataka Bank, have already announced hike in their savings deposit rates.

Source: Business Standard

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RBI urges banks to levy fixed rates on cheques above Rs 1 lakh

The Reserve Bank of India has asked banks to levy fixed service charges for cheques valued above Rs 1 lakh cleared through speed clearing and outstation cheque clearing mechanism.

The central bank issued this instruction as it has come across instances of banks levying charges on an arbitrary percentage to the value of the cheque.

In a notification, the RBI said, “Banks, which have fixed their service charges for out-station or speed clearing for instruments valuing above Rs One lakh as percentage to the value of instruments are, therefore, advised to review the same and fix the charges on a cost-plus basis.”

The customers must be notified about the revised charges structure. It may also be placed on the bank’s website. This has been done to encourage the use of speed clearing and national clearing facilities.

Speed clearing refers to collection of outstation cheques (a cheque drawn on non-local bank branch) through the local clearing. It facilitates collection of cheques drawn on outstation core-banking-enabled branches of banks, if they have a net-worked branch locally.

Meanwhile, the central bank has also issued guidelines for clearing of cheques with no formal clearing house.

It said that the banks must put in place arrangements to ensure that the instruments drawn on other banks are delivered or exchanged at a mutually decided place and time on each working day.

While doing so, banks must ensure that the cheque’s fate is known on the same day and the return instruments are re-exchanged at a mutually decided place and time.

Banks are advised to instruct their branches in such locations to adhere to the said guidelines for faster realisation of cheques and better customer service, said the RBI.

beena.parmar@thehindu.co.in

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J&K Bank net up 50% at Rs 208 cr in Q4

Jammu & Kashmir Bank today posted 50.2 per cent jump in net profit at Rs 208.1 crore for the fourth quarter ended March 31, 2012. The bank had a net profit of Rs 138.5 crore in the same period last year.

Total income of the bank increased to Rs 1,479.81 crore in the January-March quarter from Rs 1,132.8 crore in the same period previous year.

The bank has proposed a dividend of Rs 33.50 (335 per cent) per share on face value of Rs 10 for the year 2011—12.

For the year ended March 31, 2012, the bank’s net profit grew by 31 per cent to Rs 803.25 crore, against Rs 615.2 crore in the previous fiscal. Total income of the bank increased to Rs 5,169.70 crore in 2011-12, compared to Rs 4,077.8 crore in the previous fiscal.

Significantly, the gross NPA of the bank as a proportion of advances declined to 1.54 per cent against 1.95 per cent at the end of March last year.

Net NPA also slipped to 0.15 per cent during the year from 0.20 per cent.

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Union Bank cuts prime lending rate by 50 bps

Union Bank of India has cut its Benchmark Prime Lending Rate (BPLR) by 50 basis points to 15 per cent from 15.50 per cent.

The BLPR cut will come into effect on May 15, 2012.

The revised BPLR is applicable to all existing accounts where the floating interest rate is linked to BPLR and those customers who have not opted to change to Base Rate.

The public sector bank had revised the Base Rate by 15 bps from 10.65 per cent to 10.50 per cent from May 1, 2012.

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Indian Bank fourth quarter profit dips 21%

Indian Bank has reported a 21.29 per cent dip in its net profit for the fourth quarter of 2011-12, to Rs 345.43 crore, compared with the corresponding quarter of last year. The bank's board has recommended a dividend of Rs 7.5 a share.

The Chairman and Managing Director, Mr T.M. Bhasin, told a press conference that the decline in net profit was due to Rs 171-crore “reversal of interest” and Rs 190-crore provision for bad debts.

The “reversal of interest” was on restructured loans, which today stand at Rs 8,902 crore. The bank had to make an “excess provision” on bad loans of Rs 190 crore, to meet an RBI guideline, which calls for banks to provide for 70 per cent of their gross non-performing assets.

Both these expenses were incurred in the fourth quarter of last year, Mr Bhasin said.

The bank's gross NPAs rose to Rs 1,850 crore from Rs 740 crore in the fourth quarter of last year. In terms of percentage of advances, gross NPAs rose to 2.03, from 0.98 earlier. Mr Bhasin said that these were “soft NPAs” which are recoverable. He noted that NPAs were growing in the entire banking sector, given the tough economic environment.

Full-year profit up marginally

For the full year 2011-13, Indian Bank made a net profit of Rs 1,747 crore, compared with Rs 1,714 crore for the previous year – a rise of 2 per cent.

Mr Bhasin said that in the current financial year Indian Bank would look to SMEs, agriculture and retail sectors for growth. He expects a 20 per cent rise in the bank's loan book, which stood at Rs 75,726 crore at the end of last year.

mramesh@thehindu.co.in

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Federal Bank Q4 net up 38% at Rs 238 cr

Federal Bank today reported a growth of 38 per cent in net profit at Rs 238 crore in the January-March quarter 2012 as compared with Rs 172 crore in the year ago period.

Provisions including taxes declined to Rs 135 crore in the quarter from Rs 179 crore in the same quarter last year.

Net Interest Income (difference between interest earned and interest paid) during the quarter rose by 10 per cent at Rs 491 crore (Rs 448 crore in fourth quarter FY11).

For the year ended March 31, 2012, net profit increased by 32 per cent at Rs 777 crore (Rs 587 crore in FY11).

Net non-performing assets (NPAs) as on March 31, 2012 stood at 0.53 per cent from 0.60 per cent last year. Capital Adequacy Ratio stood at 16.64 per cent from 16.79 per cent as on March 31, 2011.

Deposits increased by 14 per cent at Rs 48,937 while advances grew by 18 per cent at Rs 37,756 crore as on March 31, 2012.

Net Interest Margin (NIM) for the year stood at 3.79 per cent.

The bank’s board recommended a divedend of Rs 9 per share on face value Rs 10 as compared with Rs 8.50 per share for the previous year.

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Banks must have Board-approved policy on loan takeovers: RBI

Banks should put in place a Board approved policy with regard to take-over of loans from another bank, according to the Reserve Bank of India.

This directive follows the regulator receiving complaints that critical information on the health of the borrowal accounts (loans) being taken over is not being shared by the transferor bank with the transferee bank. This is resulting in inadequate due diligence at the time of taking over of accounts.

The RBI said the policy should include norms relating to the nature of accounts being taken over, authority levels for sanction of takeover, reporting of takeover to higher authorities, and monitoring mechanism of taken over accounts.

Further, banks should ensure credit audit of taken over accounts, examination of staff accountability especially in case of quick mortality of such cases after takeover, periodic review of taken over accounts at Board /Board Committee level/ Top Management level.

The central bank has prescribed a format so that the transferee bank can obtain necessary credit information from the transferor bank before taking over a loan. This will enable the transferee bank to be fully aware of the irregularities, if any, existing in the borrower's account(s) with the transferor bank.

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Manappuram Finance defers results announcement

Manappuram Finance has postponed its board meeting to consider results to May 18.

Earlier, it was scheduled to announce full-year financial performance on May 14.

The company, however, did not disclose the reason for the rescheduling of board meet. For fiscal 2011, the company posted a revenue of Rs 1,178.75 crore and a net profit of Rs 282.66 crore.

For the December quarter in the current fiscal, the company's net profit stood at Rs 161.37 crore on a revenue of Rs 726.4 crore. Meanwhile, the stock opened firm at Rs 20.45, a gain of 1.5 per cent.

The stock's 52-week high and low are Rs 126.85 and Rs 18.6 (on May 10) respectively.

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RBI asks banks to share borrower's account information while transferring it with another bank

The Reserve Bank has asked banks to put in place a board approved policy for take over of accounts from another banks.

In a notification issued to banks on Thursday, India's banking regulator has asked that Banks should put in place a Board approved policy with regard to take-over of accounts from another bank.

"The policy may include norms relating to the nature of the accounts that may be taken over, authority levels for sanction of takeover, reporting of takeover to higher authorities, monitoring mechanism of taken over accounts, credit audit of taken over accounts, examination of staff accountability especially in case of quick mortality of such cases after takeover, periodic review of taken over accounts at Board /Board Committee level, Top Management level, etc." said the RBI notification.

The rationale behind this directive to banks is that the banking regulator has been receiving complaints that critical information on the health of the borrowal accounts being taken over is not being shared by the bank which transfers the loans account or transferor bank with the transferee bank or the bank which takes over the account. This results "in inadequate due diligence at the time of taking over of accounts." the RBI said.

In addition, before taking over an account, the transferee bank should obtain necessary credit information from the transferor bank as per the format prescribed in our circular dated December 8, 2008 on "Lending under Consortium Arrangement/Multiple Banking Arrangements". This would enable the transferee bank to be fully aware of the irregularities, if any, existing in the borrower's account(s) with the transferor bank, the RBI noted. The transferor bank, on receipt of a request from the transferee bank, should share necessary credit information as per the prescribed format at the earliest.

Source: EconomicTimes

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Bandhan Financial Services aims to grow 30% this fiscal

Microfinance company Bandhan Financial Services has set a 30% growth target for 2012-13 while it grew by 50% last fiscal.

Chandra Shekhar Ghosh, the chairman and managing director of the country's largest MFI by outstanding loans said the new operational guidelines would bring down the possibility of exponential growth and encourage the micro lenders to consolidate their businesses.

""We are told to provide two-year loans instead of one year and therefore the scope to step up the loan every year does not exist any more,"" Ghosh told ET. ""It is not easy to acquire new customers,"" he said.

Reserve Bank of India has also said total indebtedness of the micro borrower should not exceed Rs 50,000. It said that MFIs have to lend without a collateral and with a cap of Rs 35,000 in the first cycle and Rs 50,000 in subsequent cycles. The banking regulator has started regulating NBFC-MFIs since last year to guide the troubled sector out of the danger of a virtual collapse.

While most MFIs in Andhra Pradesh had to go for debt restructuring to avoid shut down, the entities outside Andhra were better off and even managed to grow business.

Bandhan aims to enhance its outstanding loan portfolio to Rs 4,850 crore by end of this fiscal from Rs 3,739 crore on March 2012. SKS Microfinance, the country's sole listed MFI, has Rs 1,669 crore of outstanding loans.

It plans to raise Rs 2,500 crore worth of resources this year to lend to poor people.

""We are reviewing the new securitisation guidelines as it would impact our fund raising strategy,"" Ghosh said. The MFI had inked securitisation deals worth Rs 723 crore last fiscal, including one Rs 500-crore transaction with IDBI Bank.

The Kolkata-based MFI operates in 18 states through a network of 1,553 branches. It has catered to over 37 lakh poor borrowers.

Source: EconomicTimes

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Education loan: HDFC manager held for girl student's suicide

Manager of a bank here was arrested in connection with the suicide of a nursing student, who was denied an education loan.

Jobin, Manager of HDFC bank here was arrested yesterday after a case was filed against him under Section 306 of the IPC (abetment of suicide).

The 20-year-old girl student had allegedly committed suicide on April 30 last after she came to know that her education loan was rejected by the bank citing various reasons, including that her mother had defaulted payment against a loan that she had availed earlier from the same bank, police said.

Jobin was remanded to judicial custody till May 23, police said.

Another accused, also an official of the bank, is absconding, police said.

Source: Financial Express

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SKS Micro collections dip in West Bengal, Gujarat

SKS Microfinance is in trouble in Gujarat and West Bengal even as it is still battling the AP crisis.

Collections in West Bengal and Gujarat have decreased for the Hyderabad-based company in the fourth quarter of 2011-12 compared to the third quarter.

The collections dropped from 81.7 per cent to 80.2 per cent in West Bengal, while it dropped 10 per cent to 58.5 per cent in Gujarat, SKS informed investors.

West Bengal accounts for 11.8 per cent of SKS portfolio and 13.5 per cent of future receivables as the second largest State in operations after Karnataka.

Gujarat accounted for 0.8 per cent of the total portfolio. As on March 31, 2012, SKS' outstanding portfolio in non-Andhra Pradesh States was at Rs 1,320 crore (Rs 2,700 crore in the year-ago period).

REGISTERED OFFICE

Meanwhile, the company's board had approved a proposal to shift the registered office from Hyderabad to Mumbai.

When contacted, a SKS functionary said the process will start soon. "There are some regulatory procedures and it will take about three to six months,'' he said.

However, the company might contunue to have some presence in Hyderabad, he added.

SKS scrip gained 2.93 per cent at the opening of trade on the Bombay Stock Exchange on Thursday and was trading at Rs 91 at 10.50 a.m.

nagsridhu@thehindu.co.in

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IRDA slaps Rs 28 lakh fine on Shriram Life Insurance

The Insurance Regulatory and Development Authority has imposed Rs 28 lakh penalty on Shriram Life Insurance Company Ltd.

The fine was imposed for violation of norms pertaining to payments made to referral partners, wrongful application of regulator’s circulars and violations of unit- linked insurance plans guidelines, among others.

The company was also warned by the regulator to strictly adhere to underwriting norms, according to an order issued by IRDA.

nagsridhu@thehindu.co.in

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Canara Bank Q4 net down 7.7% as expenses mount

Hit by a 12 per cent dip in operating profits, Canara Bank's net profit was down 7.76 per cent to Rs 829.09 crore in the fourth quarter of last fiscal, against Rs 898.9 crore in the corresponding quarter of the previous year.

Operating profits fell 12 per cent to Rs 1,409.7 crore (Rs 1,694.87 crore), mainly on account of a 33 per cent increase in total expenses. Net interest income rose 5 per cent, as a result of a 29 per cent growth in interest income.

“Our focus during the year was on business consolidation rather than growth, besides de-risking our portfolio. For the first time in several quarters, our NPA ratios have come down during the quarter compared to the previous quarter (sequentially),” Mr S. Raman, Chairman and Managing Director, Canara Bank, said while announcing the results.

NPA provisioning

Total provision for the quarter was at Rs 662 crore, which includes Rs 390 crore towards NPA provisioning, he pointed out. Gross NPA stood at 1.73 per cent (1.49 per cent), while it was at 1.81 per cent in the December quarter. Net NPA was at 1.46 per cent (1.1 per cent), and in the December quarter, it was at 1.41 per cent.

For the fiscal ended March 31, 2012, the bank's net profit was down 18 per cent to Rs 3,282.72 crore (Rs 4,025.89 crore). Net interest income came down marginally to Rs 7,689.34 crore (Rs 7,699.33 crore).

Net interest margin was at 2.5 per cent (3.12 per cent), caused by a 155 basis point increase in cost of deposits and only a 120 basis point rise in yield on advances.

“Some of the RBI rate hikes during the last fiscal were not transmitted, and there was also a significant increase in cost of deposits. With less demand for credit, we were not able to transmit,” said Mr Raman.

The bank's board of directors has recommended 110 per cent dividend, or Rs 11 per equity share of the face value of Rs 10, for the year ended March 31, 2012.

anju@thehindu.co.in

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SKS Microfinance to retrench 1,200 staff, close 78 branches

SKS Microfinance Ltd will retrench 1,200 field staff in Andhra Pradesh as it is closing down 78 branches. Currently, the Hyderabad-based company has 3,400 employees in 180 branches in the State.

“Closing down and reducing branches are extremely painful decisions for us but these have become urgent in view of the present financial situation,'' Mr M.R. Rao, Managing Director and Chief Executive Officer, SKS, said in a release on Thursday.

TWO MONTHS SALARY

When contacted, Mr Rao told Business Line that the field staff would be given two months salary and 15 days pay for every one year of service they had put in the company.

“Today, we convened a meeting with the local leadership in various regions. They are confident of implementing the decision smoothly,” he said. For about 18 months since the beginning of the Andhra Pradesh crisis in October 2010, the company did not retrench anybody.

“We are also full in terms of headcount in other states as well,” he said.

On the recent decision of the board to shift the registered office to Mumbai, Mr Rao said the decision was taken because of lack of business in Andhra Pradesh and the presence of many financial services in Mumbai.

The top management, however, would continue to operate from Hyderabad for some time, he added.

nagsridhu@thehindu.co.in

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Dewan Housing Q4 net jumps 60% at Rs 93.76 cr

Dewan Housing Finance Corporation Ltd (DHFL) on Friday posted 59.8 per cent jump in net profit at Rs 93.76 crore for the fourth quarter ended March 31, 2012.

The company had a net profit of Rs 58.65 crore in the same period in the previous fiscal, DHFL said in a statement.

Total income rose to Rs 721.11 crore during the quarter as against Rs 434.63 crore in the corresponding quarter last year.

For the year ended March, 2012, the company’s net profit grew by by 33.40 per cent to Rs 306.41 crore, as against Rs 265.13 crore in the last fiscal.

At the same time, total income of the housing finance firm increased to Rs 2,469.68 crore in 2011-12, compared to Rs 1,451.24 crore a year ago.

During 2011-12, home loan sanctions increased to Rs 12,845.30 crore as against Rs 8,949.48 crore in the previous fiscal, an increase of 43.5 per cent.

Disbursements rose to Rs 9,065.24 crore in compared to Rs 6,505.57 crore in 2010-11.

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PNB net climbs 18.6% in Q4; maintains dividend at 220%

Faced with increased non-performing assets (NPAs), public sector lender Punjab National Bank has decided to focus its attention on improving recoveries.

Towards this end, the bank has set up dedicated teams at the level of general managers for better NPA management, Mr K. R. Kamath, PNB's Chairman and Managing Director, said here on Wednesday.

For the first time, Mr Kamath, who had all along maintained that the situation was not that alarming as long as Gross NPAs were less than two per cent, said that he was worried about the NPA situation.

The loan quality is a direct reflection of the state of the economy, Mr Kamath said at a press conference to announce the fourth quarter results. He highlighted that many industries are facing tough times mainly due to the economic slowdown.

The bank is taking concerted steps to tackle the situation and in the first 40 days of this fiscal there has been up-gradation and recoveries to the tune of about Rs 390 crore, he added.

From Rs 4,379 crore in the beginning of fiscal 2011-12, gross NPAs have gone up to Rs 8,719 crore as of end-March 2012. As a percentage of advances, it stood at 2.93 per cent in end March 2012, much higher than the 1.79 % at end-March 2011. Net NPAs more than doubled to Rs 4,454.24 crore (Rs 2,038.68 crore)

KINGFISHER, AN NPA

The debt-laden Kingfisher Airlines is now an NPA for PNB. This bank has an exposure of about Rs 600 crore in Kingfisher Airlines. This account was restructured in the third quarter and became a NPA for the bank in the March quarter.

In 2011-12, PNB had restructured advances to the tune of Rs 15,334 crore, of which, Rs 6,874 crore was for power and Rs 2,245 crore for the aviation sector. Three State electricity boards (Uttar Pradesh, Rajasthan and Tamil Nadu) and two aviation companies benefited from the restructuring move, bank officials said.

Meanwhile, aided by write-back of depreciation in investments, PNB has reported a 18.58 per cent increase in net profit for the quarter ended March 31,2012, at Rs 1,424.06 crore (Rs 1,200.89 crore).

PNB's Board of directors on Wednesday declared a dividend of 220 per cent (Rs 22 per share), the same as in the previous year.

Mr Kamath gave a net interest margin (NIM) guidance of 3.5 per cent for the current fiscal. For 2011-12, the bank achieved an NIM of 3.84 per cent.

krsrivats@thehindu.co.in

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UCO, 4 Iranian banks settle trade payments in rupees

India and Iran have found a way out for settling delayed trade payments. UCO Bank and four Iranian banks, including the Persian Bank, are settling payments in rupees.

This was disclosed at a meeting organised by the Federation of Indian Exporters' Organisation on Wednesday for a visiting Iranian business and trade delegation. Dr Yahya Ale-Eshaq, President, Tehran Chamber of Commerce, Industries and Mines, said bilateral trade payments aggregating to Rs 700 crore have been settled between the Indian public sector bank and the four Iranian banks.

Mr Rafeeque Ahmed, President, FIEO, said bilateral trade between India and Iran will increase to $25 billion by 2016.

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Union Bank profit up 29% in fourth quarter

Public sector lender Union Bank of India reported a 29 per cent growth in net profit at Rs 773 crore in the January-March 2012 quarter compared with Rs 598 crore in the year-ago period.

Net profit for the full year ended March 31, 2012, however, declined by 14 per cent to Rs 1,787 crore (Rs 2,062 crore in FY11) due to increase in provisions towards non-performing assets (NPAs), restructured advances and depreciation on investments.

In the reporting quarter, net interest income (the difference between interest earned and interest paid) grew by 9 per cent to Rs 1,877 crore (Rs 1,717 crore). ‘Other income' rose by 26 per cent to Rs 755 crore against Rs 601 crore in the same period a year ago.

In FY12, deposits rose by 10 per cent to Rs 2,22,869 crore (Rs 2,02,461 crore as on March-end 2011) while advances were up by 18 per cent to Rs 1,81,031 crore (Rs 1,53,022 crore).

According to Mr D. Sarkar, Chairman and Managing Director, the bank is projecting a 17 per cent growth in deposits and 19 per cent growth in advances in FY13. NIMs are expected to be above 3 per cent.

Restructured advances

The bank's total restructured assets portfolio increased by Rs 6,263 crore in FY12 to Rs 11,879 crore. In the fourth quarter alone the restructured advances portfolio rose by Rs 3,236 crore.

“The assets are getting restructured on account of economic slowdown. We have restructured assets in sectors such as telecom, power, steel and commercial real estate,” said Mr Sarkar.

The Union Bank chief said he was hopeful that the restructured assets problem will be arrested in the current fiscal.

Year-on-year, gross NPAs increased by 50 per cent to Rs 5,450 crore (Rs 3,623 crore). Provisions towards non-performing assets jumped by 131 per cent to Rs 226 crore (Rs 98 crore in Q4 FY11).

Mr Sarkar said the bank will place emphasis on retained profits to boost its capital. The bank sought Rs 650 crore from the Government.

Union Bank has proposed to pay a dividend of Rs 8 per share on face value of Rs 10.

Shares of the bank ended down 4.04 per cent at Rs 202.90 on the Bombay Sock Exchange.

beena.parmar@thehindu.co.in

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LIC Housing Finance raises Rs 250 crore for real estate private equity fund

LIC Housing Finance Limited (LICHFL) Asset Management, the asset management arm of India's biggest insurer, has achieved a first close of Rs 250 crore for its maiden real estate private equity fund.

Launched late last year, the fund has a target size of Rs 500 crore, with a green shoe option of Rs 250 crore. This provision will allow LIC Housing Finance Asset Management Company, the manager of the fund, to sell more units than planned.

"We have raised Rs 250 crore so far from institutional investors like banks and corporates," AK Sharma, chief executive of LICHFL Asset Management, told ET.

"We also have additional commitment of Rs 50 crore and are hopeful to finish fund raising by June end."

The fund has a target net internal rate of return of over 22%. It will invest in urban real estate such as mid-income housing projects, IT parks and warehouses across tier I and II cities.

"There is a huge demand for mid income category homes in the range of Rs 1,600-4,000 per sq ft and we will target such opportunities," Sharma said.

The fund is already looking at various proposals.

The asset management arm of LIC has received a commitment of Rs 50 crore each from LIC and LIC Housing Finance.

LIC, which earlier targeted retail investors, is now looking to raise the remaining capital from the institutional investors.

"Retail investment in private equity is yet to pick up. Small retail investors do not understand the risks and rewards associated with the business," Sharma said.

There are at least half a dozen real estate-focussed funds in the market that are trying to scoop up fresh or follow-up funds to invest in Indian real estate. These include HDFC Property Fund, JP Morgan Asset Management, IndiaReit Fund Advisors and Kotak Realty Fund.

Source: EconomicTimes

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Shriram Transport Finance to raise Rs 500 crore through NCD issue

Shriram Transport Finance, the largest commercial vehicle financier in the country, plans to raise Rs 500 crore by issuing secured non-convertible debentures to meet the lending requirement. The issue, with a coupon of 10.5%-11% will open in July and will close in 15 days.

""We are planning to raise Rs 500 crore through NCD issue,"" said Sanjay Mundra vice president Shriram Transport Finance. "While the coupon rate would depend on the interest rate movement but would be in the range of 10.5%-11%."

The Chennai-based company today posted lower net profit of Rs 308 crore in the fourth quarter of 2011-12 from Rs 340 crore, due to lower growth in advances. The company disbursed loans worth Rs 5,000 crore in the quarter against Rs 6,200 crore in the same period last year. Margins for the non-banking finance company has come down to 7.24% from 7.59% a year ago.

Source: EconomicTimes

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Restructuring of loans pushes Central Bank into loss in Q4

Central Bank of India reported a loss of Rs 105 crore in January-March 2012 compared with a net profit of Rs 133 crore in the corresponding year-ago period.

The loss was on account of restructuring of large corporate loans, including Rajasthan Distribution Company and Air-India.

In the year-ended March 31, 2012, the public sector bank's net profit dipped 57 per cent to Rs 533 crore (Rs 1,252 crore in FY11).

Slippages (net) jumped to Rs 4,557 crore as at March-end 2012 as against Rs 847 crore in March-end 2011.

As at March-end 2012, the bank's restructured loans portfolio stood at about Rs 17,000 crore. Rajasthan Distribution Company (Rs 6,400 crore) and Air-India (Rs 1,600 crore) accounted for a chunk of the outstanding restructured loans.

The bank's management indicated a return to profitability in the April-June period, and said that the worse was over when it comes to bad loans. “We will increase our exposure to retail loans…Our high NPA figures have been because a few accounts, particularly from steel and power, have slipped into NPAs,” the Chairman and Managing Director, Mr M.V. Tanksale, said.

The bank's net interest margin was lower at 2.78 per cent as at March-end 2012 as against 3.31 per cent as at March-end 2011.

Capital adequacy ratio (CAR) improved to 12.40 per cent as at March-end 2012 from 11.64 per cent as at March-end 2011.

Shares of Central Bank of India closed at Rs 77.55 a share, down 12 per cent, over the pervious close of Rs 88.30 on the BSE.

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Dena Bank Q4 net jumps 62% on tax refunds

State-owned Dena Bank reported a 62 per cent jump in net profit to Rs 255 crore in the January-March 2012 quarter compared with Rs 157 crore in the year-ago period.

The profit surged on the back of a tax refund of Rs 70 crore. Without the refund, the profit growth would have been almost flat.

Net interest income (the difference between interest earned and interest expended) during the quarter rose 27 per cent to Rs 598 crore (Rs 471 crore in Q4 FY11). Fee-based income grew by 35 per cent to Rs 150 crore (Rs 118 crore).

The bank's net profit for the full year ended March 31, 2012, grew 31 per cent to Rs 803 crore (Rs 612 crore in FY11).

The public sector bank's board has recommended a dividend of Rs 3 per share of face value Rs 10.

In the reporting quarter, net interest margin (NIM) increased to 3.21 per cent from 3.09 per cent in the year-ago period.

In FY12, the bank restructured assets worth Rs 3,211 crore (Rs 1,213 crore in FY11), of which, Rs 2,000 crore was in the fourth quarter alone.

“Major restructuring has been in sectors such as aviation (Air India) and state-owned power distribution companies. We have brought down our exposure to the power sector from 20 per cent to 15 per cent of total advances,” said Ms Nupur Mitra, Chairman and Managing Director.

Provisions made in the fourth quarter stood at Rs 291 crore (Rs 124 crore).

On RBI's guidelines on Basel III, Ms Mitra said, the bank proposed to raise Rs 1,200 crore this fiscal by issuing subordinated debt to maintain CRAR at 12 per cent.

The PSU lender is aiming at a credit growth of 22 per cent.

Shares of Dena Bank closed at Rs 85.10 a share, down 5.23 per cent over the previous close, on the Bombay Stock Exchange.

beena.parmar@thehindu.co.in

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Andhra Bank revises eligibility criteria for clerical recruitment

Andhra Bank has lowered the minimum educational qualification to Intermediate-First Class for its clerical recruitment notified recently.

As per the revised eligibility criteria, the applicants should have passed intermediate with a minimum of 60 per cent of marks or should gave a graduate degree in any discipline.

Last month, Andhra Bank had notified the recruitment of 600 clerks with graduation as minimum qualification.

Candidates who have a valid score card in the common written exam conducted by the Institute of Banking Personal Selection last year are eligible to apply.

The last date for submitting applications has been extended to May 16, 2012, Andhra Bank said in a notification.

nagsridhu@thehindu.co.in

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Oriental Bank to add 225 branches this fiscal

Oriental Bank of Commerce plans to add 225 branches this fiscal.

“We plan to open 225 branches this year, of which, 175 would be in rural, semi-urban, and urban locations. About 50 branches have been earmarked for the financial inclusion villages, which would be opened if there is sufficient business volume,” Mr V. Kannan, Executive Director, Oriental Bank of Commerce, told Business Line.

The bank was allotted 569 villages with a population of over 2,000 under the financial inclusion programme. Last year, the bank opened 147 branches. About 1,800 employees will be recruited this year, said Mr Kannan. Despite recruitment of 2,675 employees last year, there was a net addition of 1,600 only due to retirement and attrition issues, he added.

For the next few years, the bank would see retirement of about 400 employees every year, he said. The average age of employees in the bank is about 47 years, thanks to the new addition and also the merger of Global Trust Bank, which happened a few years ago.

The bank aims at a business growth of 17 per cent during the current fiscal, and is adequately capitalised to meet the credit growth, said Mr Kannan.

anju@thehindu.co.in

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SKS Microfinance posts Rs 330 cr loss

SKS Microfinance, the country's only listed microlender, has suffered a loss Rs 330 crore in the quarter ended March 31, 2012, due to heavy provisioning and write-offs.

The company allotted Rs 278 crore under provisions and write-offs in the fourth quarter of FY'12 and 1,173.5 crore for the whole fiscal due to non-collection of Andhra Pradesh dues.

SKS Microfinance CFO S Dilli Raj said that total Andhra Pradesh portfolio has been reduced to Rs 236 crore from Rs 1,496 crore after the Microfinance Act was implemented in the state in 2010.

"Income has also gone down because of the reduction in the AP portfolio. We expect 25 per cent growth in revenue in the first quarter of the current fiscal," Dilli Raj said.

Total income stood at Rs 66.15 crore in the January-March quarter, against Rs 175 crore in the same period last fiscal, SKS said in a statement.

The company suffered a loss of Rs 1,361 crore for 2011-12 fiscal. It had a profit of Rs 111.63 crore in the previous financial year.

On further provisioning and write-offs, Dilli Raj said the Reserve Bank has given time up to five quarters to make provisioning and the microlender will take a call at later stage.

"Post the draw-down of Rs 1,000 crore in Q4, which is 2.4 times larger than the sum of Rs 417 crore obtained during nine months ended March 2011, the funding concerns are behind us," Dilli Raj said.

"With a cash and cash equivalent of Rs 669 crore and a capital adequacy of 35.4 per cent, our non-AP portfolio will grow quarter on quarter from now on. Also, the rated and unrated pool assignments of Rs 908 crore bring in concomitant capital relief of Rs 136 crore," he added.

The net tax deferred asset amounting Rs 460 crore as on March 31 has not been recognised. The said sum of Rs 460 crore will be available to offset tax on future taxable income, SKS said.

Shares of the company closed down 1.35 per cent at Rs 94.70 on the BSE.

SKS was the worst hit after Andhra Pradesh, which once considered microfinance capital of the country, witnessed a spate of suicides by borrowers two years ago allegedly due to the coercive recovery practices by some MFI agents.

The situation prompted the state government to come out with AP Microfinance Act which crippled the activities of MFIs.

Source: Financial Express

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Andhra Bank net up 8.6% in Q4

Andhra Bank net profit increased 8.6 per cent to Rs 339 crore in the fourth quarter ended March 31, 2012 compared with Rs 312 crore in the year-ago period.

According to the Bombay Stock Exchange filing, total income has increased from Rs 2,662 croe to Rs 3,229 crore.

For the year-ended March 31, 2012, the net profit stood at Rs 1,344 crore compared with Rs 1,267 crore in the previous year. Total income has increased from Rs 9,188 crore (Rs 12,198 crore).

nagsridhu@thehindu.co.in

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HDFC Q4 net rises 16% on strong loan demand

Housing finance major, HDFC reported a 16 per cent increase in net profit to Rs 1,326 crore in the January-March 2012 quarter against Rs 1,142 crore in the corresponding year-ago period.

The increase in profit comes on the back of a strong demand for home loans and higher income from operations.

In the full year-ended March 31, 2012, the housing finance major recorded a 17 per cent increase in net profit at Rs 4,123 crore (Rs 3,535 crore in FY11).

The board of directors of the housing finance company (HFC) have recommended payment of dividend at Rs 11 per equity share of Rs 2 face value as against Rs 9 per equity share for the previous year.

Mr Keki Mistry, Managing Director, HDFC, attributed the profitability in FY12 to strong demand for home loans and increase in the average size of new individual loans.

Year-on-year disbursements were up 18 per cent to Rs 71,113 crore (Rs 60,314 crore in FY11) and the average size of new individual loans rose to Rs 19.5 lakhs (Rs 18.60 lakhs last year).

Mr Mistry said he expects at least 18 per cent growth in loans in the current financial year.

Further, the net interest margin will be maintained at around 4.4 per cent.

In FY12, HDFC's loan book increased by 20 per cent to Rs 1,40,875 crore (Rs 1,17,127 crore). During the year, it sold loans amounting to Rs 4,978 crore.

NPAs

Gross non-performing loans as at March 31, 2012, amounted to Rs 1,069 crore (Rs 904 crore as at March-end 2011).

This is equivalent to 0.74 per cent (0.77 per cent last year) of the portfolio.

In FY12, HDFC reported a 21 per cent increase in its consolidated net profit (includes the financial performance of life insurance, general insurance and asset management subsidiaries) to Rs 5,462.51 crore (Rs 4,528.41 crore in FY11).

Shares of HDFC closed higher at Rs 663.55 per share, up 0.57 per cent, as against the previous close of Rs 659.80.

kram@thehindu.co.in

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Vijaya Bank aims 20% business growth this fiscal

The Bangalore-based public sector lender Vijaya Bank aims a 20 per cent growth in overall business in the current financial year with added focus on increasing its low-cost deposit base, a top official said.

"We aim an overall business growth of around 20 per cent in the current financial year, which should reach around Rs 1,65,000 crore," executive director Subhalakshmi Panse said.

In the past fiscal, total business stood at Rs 1,41,727 crore, which comprised Rs 83,056 crore deposits and Rs 58,671 crore advances.

"On the advances and deposit fronts, we hope to post 18-20 per cent growth this fiscal," she said adding that advances should reach Rs 68,000-70,000 crore and deposits around Rs 92,000 crore.

The Reserve Bank has set a deposit growth target of 16 per cent and 17 per cent for advances in the current financial year.

Referring to growth in the current account, savings account (Casa) deposit base, Panse said this will get the highest priority during this fiscal.

"We hope to grow our low-cost deposit base in order to protect our margin with lesser dependence on bulk deposits," she said.

By the end of last fiscal, the ratio of Casa to overall deposit stood at around 22 per cent and the bank now aims to increase this base.

Source: Financial Express

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