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Friday, May 18, 2012

Union Bank cuts home loan rates

Public sector lender Union Bank of India has cut home loan rates for new and existing floating rate customers. The interest rate cut ranges from 25 basis points (at the lowest loan slab of up to Rs 30 lakh) to 150 basis points (on loans above Rs 75 lakh and up to Rs 5 crore). One basis point is equal to 0.01 percentage points. Customers can get home loans up to Rs 30 lakh at the Base Rate (10.50 per cent).

Interest rate on home loans above Rs 30 lakh and up to Rs 75 lakh will be 10.75 per cent (Base rate + 0.25 per cent). For loans above Rs 75 lakh and up to Rs 5 crore, the interest rates will be 11 per cent (Base Rate + 0.50 per cent). Besides effecting a cut in home loan rates, the bank said fixed rate customers can also avail the revised rates by switching to floating rate.
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SBI to approach Moody's for review of rating

State Bank of India plans to approach global credit rating agency Moody's Investors Services for a ratings upgrade.

The bank was downgraded in October last year on account of its low Tier-I capital ratio and deteriorating asset quality. SBI reported a Tier-1 capital of 7.60 per cent as of June 30, 2011.

“Our Tier I capital has improved to 9.79 per cent as of March 31, 2012. We now plan to go back to them (Moody's) and seek a review and re-rating,” said Mr Pratip Chaudhuri, Chairman, SBI.

The improvement in Tier-I capital was primarily on account of the Rs 8,000 crore worth fund infusion by the Union Government in March.

“This apart, we have also had a robust internal generation and we are taking huge efforts in optimising use of capital by going in for various credit guarantee schemes by way of CGTSME and ECGC,” Mr Chaudhuri said. The bank's asset quality was under pressure during the second and third quarters of the last fiscal, Mr Chaudhuri said.
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Syndicate Bank staff assn proposes campus recruitment to address manpower shortage

The Syndicate Bank Staff Association (SBSA) has suggested campus recruitment as a one-time measure in view of acute shortage of manpower in the banking industry.

SBSA, an affiliate of Bharathiya Mazdoor Sangh, floated the suggestion at its meeting held here recently.

Mr K. S. Bhat, secretary, SBSA told Business Line that shortage of manpower had forced unscientific recruitment practices in banks.

Monitoring of loan accounts

Bank branches are unable to properly monitor and do regular follow-up of loan accounts at regular intervals as they used to do for decades now.

This, he said, could be one main reason why non-performing assets have been growing on banks’ books in recent times.

Proper and regular monitoring of loan accounts and sending demand notice to defaulters are more effective than random recovery campaign here.

Random recovery

“Random recovery is much like an antibiotic treatment, which kills the pain and not its cause/reason.”

It also helps raise the liability of the borrower as the banks are charging heavy service charges such as taxi charges and personal expenses of the recovery personnel to the borrowers.

Some of the recovery personnel view their work as an incentive and as an opportunity to avoid from the responsibilities from internal work, Mr Bhat said.

Default of loans

Lack of proper briefing of borrowers on conditions at the time of sanctioning of loans is another reason for the default of loans.

Frequent changes in interest rates as per RBI directives and failure to update borrowers on the change of (higher) interest and EMI could also drive NPAs in housing and personnel loan accounts of the salaried class.

Core banking solution

Core banking solution has failed even branch heads in tracking those accounts which would become NPAs the next day — some due to technical faults and others by its failure to spot them.

Frequent changes in policies by the top hierarchy are another area of concern with respect to performance of some banks.

Controlling authorities are neglecting the branches and least priority is given to their functioning, Mr Bhat said.

It is unfortunate that instead of supporting branches by providing efficient and adequate personnel, administrative offices of banks are happy gathering data and statistics.
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Union Bank to upgrade its overseas offices

Union Bank will look to upgrade its overseas representative offices into full-fledged branches, Mr Debabrata Sarkar, Chairman and Managing Director of the bank, said here on Friday.

The bank has representative offices in Shanghai, Sydney and London. It also has a financial centre in Dubai. All these four offices will be upgraded, he said. Union Bank has one branch in Hong Kong and it had done business worth Rs 10,000 crore in 2011-12.

“We are looking to upgrade them into full branches,” Mr Sarkar said on the sidelines of the ‘4th ICC Banking Summit,' here on Friday.

He, however, did not give a timeline for the conversion of the offices into branches.

According to Mr Sarkar, the bank is looking to hire 2,500-odd people during the year.

“We had hired 3,000 people last year. We are looking to hire 2,500-odd people this year,” he said.

Lending Rates

Hinting at a possible reduction in lending rates by the bank, Mr Sarkar pointed out that asset-quality will remain a concern. According to Mr Sarkar, poor asset quality might call for higher provisioning thereby impacting bank's profits.

The bank on Friday launched its re-designed branch model under the brand Union Xperience in the satellite township of Salt Lake in Kolkata.

The bank has already launched close to 100 such re-designed branches across the country so far, to offer superior experience to its customers. The bank plans to launch 250 such branches by September this year.

Union Bank has implemented a huge amount of automation in these branches through self-service machines like passbook printers, cheque deposit machines and queue management. It has also revamped the sales and service model in these branches.
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SBI posts record Rs 4,050-cr profit in Q4 on lower provisioning

Riding on the back of higher interest income and lower provisioning, State Bank of India posted a record jump in its fourth quarter net profits. The bank has recommended a dividend of Rs 35 a share of Rs 10 each.

The profit after tax jumped 192 times to Rs 4,050 crore for the quarter ended March 31. SBI posted a profit of Rs 21 crore during the corresponding period in 2010-11.

Profits took a beating in the previous year on account of higher provisioning towards bad loans, pension and gratuity.

Sequentially, profits rose 24 per cent from Rs 3,263 crore during the third quarter ended December, 2011.

“We have consolidated our gains on the interest side. Revenue growth has outstripped growth in expenses,” the SBI Chairman, Mr Pratip Chaudhuri, said. “Our net profit is on the rising trend,” he added.

Total provisioning decreased 8 per cent to Rs 5,547 crore. Provisioning towards bad loans dropped 13 per cent to Rs 2,837 crore.

Other income during the year was hit on account of loss on sale of investments amounting to Rs 920 crore, as against a profit of Rs 921 crore in 2010-11.

“The equity markets were bad last year and some of our investment decisions were also not too right,” he explained.

Net interest margin improved to 3.85 per cent (3.32 per cent) higher than the guidance of 3.5 per cent for the year. Mr Chaudhuri is hopeful to retain the margins during the current fiscal.

Slippages/Asset Quality

Slippages during the year increased to Rs 26,936 crore (Rs 18,145 crore).

Slippages were higher in the mid-corporate, SME and agriculture sectors. “We cannot be immune to what is happening in the economy. There are asset quality concerns in the mid-corporate segment,” he said.

The percentage of gross non-performing assets (NPAs) to advances increased to 4.44 per cent (3.28 per cent), while net NPAs increased to 1.82 per cent (1.63 per cent).

However, sequentially, gross and net NPAs have come down.

SBI restructured accounts amounting to Rs 8,571 crore during the year.

The total amount outstanding on restructured accounts stood at Rs 37,168 crore.

“Of the total restructured accounts, 15-18 per cent falls into the NPA category and only 4-5 per cent of them turn into eventual loss on account of non-repayment. So it (restructured accounts) is not a concern,” he said.


SBI aims to grow its advances by 16-18 per cent and deposits by 20 per cent this fiscal.

The capital adequacy ratio of the bank stood at 13.86 per cent (11.98 per cent) as on March 31, 2012. “Government holding is at 62 per cent so there is room for QIP. However, we will not use this route right now as we are comfortable on capital position,” he said.
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RBI will weigh options to protect rupee

The Reserve Bank of India (RBI) on Friday said that it was weighing several options, including extension of lending support, to help oil marketing companies negotiate foreign currency volatility.

According to Dr Subir Gokarn, Deputy Governor, RBI, the apex bank does not want to do anything without measuring the benefits of its actions or their future impact.

Adequate reserves

“At this point all options are being actively considered. But we have to keep in mind the pros and cons. We do not want to do something that might end up being costly or destabilising,” he told newspersons on the sidelines of the 4th Banking Summit organised by the Indian Chamber of Commerce in the city.

He further added that the RBI will continue to use a mix of intervention and administrative steps to protect the rupee and said that the central bank has adequate reserves to meet its obligations.

The rupee closed at Rs 54.49 on Friday against the dollar.

“In last 2-3 days, pressure has been global and the currency has responded to that. We want to ensure that if we take any action there is some scope of impact,” Dr Gokarn said.

“Curbing volatility (of the rupee), still remain our specific objective. At the same time we do not want to come in the way for any end use. So we would like to balance,” he added.

Rising NPAs

Asked about the rise in non-performing assets of banks, Dr Gokarn said that although the increase of such non-performing assets was a “matter of concern”, it would not be a “threat to the system”.

“While the rise in non-performing assets is matters if concern, I do not think the numbers are threat to the system,” he said adding that following a moderation of growth, an increase in non-performing assets is to be expected.
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SKS Microfinance hopes new law to revive growth by easing loan recovery

SKS Microfinance, India's largest publicly-traded lender to the poor, says proposed legislation will spur a revival by easing loan recovery just as mounting losses force it to curtail operations.

The draft law would let microcredit companies improve debt collection and may also help raise funds, chief financial officer S Dilli Raj said in an interview. The Hyderabad-based lender's loss last quarter widened almost fivefold, prompting it to cut jobs and shut branches. The stock is down 94% from a September 2010 peak.

SKS, backed by Sequoia Capital, forecasts relief from a bill approved by Prime Minister Manmohan Singh's Cabinet last week that would enable the Reserve Bank of India to regulate the industry. SKS has reported five consecutive quarters of losses after the southern state of Andhra Pradesh curtailed debt recovery, capped interest rates and waived loans to arrest a spate of suicides by farmers unable to make payments.

"The long-term clarity on the regulatory environment will have an immediate impact on the balance sheet," Raj said. "We are confident of bridging the widening gulf between demand and supply in small loans," he said.

The bill, if approved by parliament, will override provincial rules that differ from state to state and help improve the flow of credit to the poor and farmers left out by lenders including State Bank of India and ICICI Bank, the nation's two biggest by assets. The central bank, as the sole regulator, would cap interest rates and fees levied by microfinance companies under the new law, and also stipulate rules for debt collection.

The Micro Finance Institutions (Development and Regulation) Bill will require all microlenders to register with the RBI, create a reserve fund from profits and audit their financial performance annually. In December, the RBI proposed an upper limit of 26% for annual interest rates on loans to individuals.

Prime Minister Singh, seeking to revive an economy expanding at the slowest pace in three years, is turning to microcredit companies to provide financing to the almost 43% of the nation's 1.2 billion people who don't have a bank account.

Less than 5% of the country's 6 lakh villages have banks, data provided by the RBI show.

Non-urban consumers account for almost 8% of gross domestic product in India, where the World Bank says almost 70% of the population lives on less than $2 a day.

Source: EconomicTimes
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SBI's Q4 results unlikely to throw up negative surprises

State Bank of India's fourth-quarter results are unlikely to throw up any negative surprises like last year when chairman Pratip Chaudhuri presents them on Friday afternoon.

Analysts expect the country's largest lender to report a net profit of Rs 3,400 crore to Rs 3,550 crore and net interest margin (NIM) of about 4%, but concerns over asset quality are likely to remain. Last year, the bank was forced to make some exceptionally high provisioning to cover rising bad loans and create a counter-cyclical buffer that pulled down net profit to a mere Rs 21 crore.

"Fresh slippages will continue but SBI is expected to be back on the normal profitability path as exceptional provision burden like last year will not be there this time," Vaibhav Agrawal, vice-president for banking research with Angel Broking told ET.

According to Angel Broking's estimates, SBI is likely to post a net profit of Rs 3,549 crore for the quarter to March 2012 and its operating profit is likely to be at Rs 8,732 crore. Motilal Oswal expects the lender to report a net profit of Rs 3,416 crore with operational profit at Rs 8,518 crore. The bank's operational profit for the corresponding quarter last fiscal was Rs 6,080 crore.

Both the firms expect SBI to maintain NIM at over 4% like in the third quarter. Vishal Narnolia, a banking analyst with SMC Global Securities, said it was a challenge for SBI to maintain NIM at the last quarter's level as banks in general had to mobilise high-cost deposits amid tight liquidity to fund credit growth. The bank is expected to announce 18% growth in advances, in line with the industry, and a 14% growth in deposits.

Angel Broking sees fresh slippages of about Rs 8,500 crore for SBI, while Motilal Oswal said improvement in upgrades and recoveries should contain the rise in gross non-performing assets to 4.9% from 4.6% a quarter ago. Public sector banks that have already announced results have shown higher slippages.

SBI is expected to see the same trend due to its exposure to power, aviation, and SME sectors, as the economic growth has slowed.

Source: EconomicTimes
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Oriental Bank cuts education loans rates

OBC has reduced lending rates on education loans after factoring in the market trend and customer feedback.

Taken together with the latest reduction in base rate to 10.5 per cent, the overall reduction in interest rates for a borrower would range from 40 to 115 basis points, depending on the loan slab, Mr S.L. Bansal, Chairman and Managing Director, said. The revised lending rates will apply for new loans only.

For loans up to Rs 4 lakh, the rate has now been pegged at bank rate plus 2.5 per cent against the earlier regime of bank rate plus 2.75 per cent. With the base rate now coming down to 10.5 per cent from 10.65 per cent earlier, the effective rate under this slab will be 13 per cent against 13.4 per cent earlier.

For loans above Rs 4 lakh and up to Rs 7.5 lakh, the revised rate stands at bank rate plus 3 per cent against bank rate plus 3.5 per cent.

For loans above Rs 7.5 lakh, the revised rate stands at base rate plus 2.5 per cent against the earlier rate of bank rate plus 3.5 per cent.
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Corp Bank opens SME loan centre in Pune

Corporation Bank has opened an SME loan centre in Pune.

A press release said here that Mr Amar Lal Daultani, Executive Director of the bank, launched the SME loan centre in Pune recently.

Mr Ajay Mehta, Managing Director of Deepak Nitrites Ltd and Vice-President of Maratha Chamber of Commerce, who was the chief guest on the occasion, said that such partnerships with small and medium enterprises yields growth of such industries and business in the country. Corporation Bank’s effort in coming forward and organizing such meets could go a long way in the industrial and economic development of the country, he said.
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SBI to lend Rs 1,400 cr to Damodar Valley

State Bank of India has decided to lend Rs 1,400 crore to Damodar Valley Corporation (DVC) to part-fund its 500-MW Bokaro Thermal Power Station (A) Project.

SBI's associate banks will also lend Rs 1,000 crore to the project, said a bank statement.

The Rs 3,500-crore project will have a debt-equity ratio of 70:30. It would replace the old and abandoned 247-MW Thermal Power Plant which was built in 1953. The Bokaro Unit is expected to be commissioned in April 2014.

Fuel for the project will come from Central Coalfields Ltd and the power generated will be fed to the national grid.
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RBI staff appeal on coins, notes distribution

The Reserve Bank of India (RBI) staff and officers’ unions have urged top officials to desist from abdicating public duty of delivering coins and currency notes.

This comes in the context of the policy statement that henceforth the distribution of currency coins will be channelised only through currency chests and bank branches.

This would mean closure of RBI in metro centres and state capitals which have been hitherto delivering this service.

The RBI staff union has said that this move will deprive the public of the quality service delivered over decades and seriously hit the staff strength of RBI.

The central bank will have abdicated itself of one of the core functions, the unions said.

The RBI offices have been doing the job since inception through its own offices as well as network of commercial banks.

Currency chests, coin depots

At least 5,000 currency chests and more than 4,000 small coin depots have been involved in the exercise.

As per RBI data, 11,218 crore pieces of coins of value Rs 12,628 crore were in circulation in March 2011. This must have crossed 11,225 crore pieces by now and is adequate to meet the national need given their high velocity of circulation.

A crisis here, if at all, is mostly because the network of commercial banks has failed to supply coins/small denomination notes to retail customers.

Either coins supplied by RBI remain accumulated or are distributed only in bulk in preference to retail customers or small businessmen, who are mostly in need.

This would only aggravate the crisis and people in cities would only rush to RBI counters even more.

Strangely, RBI has sought to restrict the entry of customers on specious pleas creating panic about shortage of coins.

In this backdrop, it is incumbent on the part of RBI authorities to monitor retail currency/coin distribution by banks and fully activate the system.

Instead, they have decided to close down the existing channels of distribution through RBI counters.

Currency distribution

The Finance Minister has recently said that currency distribution is a key sovereign function and among the primary functions of a central bank.

"It is also the most visible of its functions, as it touches directly and immensely the common person.''

The unions also referred to complaints from members of public with regard to supply bottlenecks. Unscrupulous people are already taking full advantage.

If the RBI totally disappears from the scene, this will send signal to the racketeers who will be emboldened to carry in with their nefarious activity. This will lead the entire currency management to anarchy, the unions said.

RBI intervention

The RBI should gear itself up for more effective intervention for activating the chest offices and the bank branches by undertaking regular inspections.

Abdicating its responsibilities in others’ favour or assigning private agencies for the job will be most unbecoming of RBI and a sure recipe for disaster.
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Oriental Bank scraps service charges on NEFT payments up to Rs 1 lakh

Taking the lead, Oriental Bank of Commerce (OBC) has done away with service charges on all NEFT payments up to Rs 1 lakh originating through its branches.

This move will encourage retail customers to adopt electronic mode in a big way for their payments, Mr S.L. Bansal, Chairman & Managing Director, said here.

Currently, under NEFT scheme, banks are allowed to charge from the remitter up to Rs 5 (plus service tax) for outward remittances up to Rs 1 lakh.

National Electronics Fund Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer.

Under this scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the scheme.

Lower service charge

OBC has also settled for a lower service charge on NEFT outward payments beyond Rs 1 lakh and up to Rs 2 lakh. The remitter will now be charged Rs 10 (plus service tax) against the earlier charge of Rs 15 (plus service tax), Mr Bansal said.

However, there is no change to the service charge on outward remittances beyond Rs 2 lakh, he said, adding that they remain at Rs 25 (plus service tax).

Benefits of NEFT

There are several benefits that NEFT offers over the other modes of funds transfer. The remitter need not send the physical cheque or demand draft to the beneficiary.

The beneficiary need not visit his/her bank for depositing the paper instruments. NEFT is cost-effective and there is near real time transfer of the funds to the beneficiary account in a secure manner.
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J&K Bank eyes Rs 1 lakh-crore business, Rs 1,000-cr profit in this fiscal

The Jammu & Kashmir Bank has set its sights on achieving two milestones in the current fiscal. It aims to clock a total business of Rs 1 lakh crore and earn a net profit of Rs 1,000 crore, said a top bank official.

In the past fiscal, the 74-year-old private sector bank's total business (deposits and advances) grew by 22 per cent from Rs 70,864 crore to Rs 86,419 crore. Net profit was up 30.57 per cent to Rs 803 crore in the fiscal (Rs 615 crore in fiscal 2011).

According to Mr Mushtaq Ahmed, Chairman and Chief Executive Officer of the Bank, retail lending would be a thrust area for the bank. The bank's home, Jammu & Kashmir, is a rich source of low cost current account and savings accounts (CASA) and provides opportunities for deployment of funds towards meeting priority sector lending targets.

Currently, the bank sources 70 per cent of its deposits from J&K. Overall, CASA deposits were steady at 41 per cent of the total deposits of 53,342 crore as at March-end.

When it comes to loans, non-home States account for 63 per cent of the total of Rs 33,078 crore.


In the next few years, the bank's loan exposure will be equally divided between J&K and the rest of the country. Loan schemes targeted at orchard growers, handicrafts, and micro-, small and medium enterprises in J&K will help the bank grow its loan book in the State, Mr Ahmed said.

“In J&K we enjoy better margins. We have a very strong CASA base. Out of the total deposits mobilised from J&K, 50 per cent is CASA.

“So, there is a sense to mobilise deposits in J&K State and first deploy them locally. But the ticket size in the State is smaller. Hence, we deploy the surplus with large corporates and strong public sector undertakings,” said Mr Ahmed. The J&K bank chief said the endeavour will be to maintain the net interest margin in the 3.5-4 per cent range in this fiscal. As on March-end, the margin stood at 3.84 per cent, against 3.69 per cent as on March-end last year.

The bank plans to add 100 branches in the current fiscal to its bank network of 600 branches.

Mr Ahmed said, till September-end, he does not see any further rate cuts by the Reserve Bank of India. High inflation, volatile crude and commodity prices will constrain the Reserve Bank of India from effecting any further rate cuts.
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Wednesday, May 16, 2012

Indian Bank to recast Rs 1,157-cr loans in Q1

Indian Bank is expected to restructure a further Rs 1,157 crore worth of advances in the first quarter of the current year. Half of this is on account of its loans to the Rajasthan Electricity Board, an analyst report from Angel Broking has said.

In the last quarter of 2011-12, Indian Bank’s ‘restructured loans’ increased by Rs 3,330 crore to Rs 8,902 crore. The bank restructured loans worth Rs 800 crore given to Air India and Rs 1,200 crore to various companies in the power sector.

Even after restructuring loans worth Rs 3,330 crore, Indian Bank’s gross non- performing assets rose to Rs 1,851 crore, or 2 per cent of advances.

The report says a larger portion of loans have gone to SME and mid-corporate sectors, which contributed to the bank’s relatively high yield on advances (10.9 per cent). This, the report notes, is higher than banks that have much higher levels of low cost deposits than Indian Bank does.

“Past experience shows that banks that delivered high net interest margins on the back of high yields (on advances) have later paid the price for the higher risk taken, in the form of higher NPAs in the subsequent years,” it said.

The Indian Bank stock was trading 0.88 per cent lower at Rs 189 on the BSE in morning trade.
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LIC hikes stake in Bank of Maharashtra

Life Insurance Corporation of India has picked up 4.63 per cent stake in Bank of Maharashtra (BoM) through the acquisition of about 2.76 crore shares.

Post the acquisition, LIC’s stake in BoM has increased to 9.97 per cent.

BoM scrip was down 0.6 per cent to Rs 47 per share today.
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Allahabad Bank plans to open four foreign, 250 domestic branches

Allahabad Bank plans to open 250 branches across the country, besides four foreign branches this year.

“We have applied for four licences to the Reserve Bank of India, and we hope to get them shortly,” Mr J.P. Dua, Chairman and Managing Director, Allahabad Bank, said here on Wednesday. The four foreign branches will be located in Shanghai, Singapore, Dhaka and an additional branch in Hong Kong at Kowloon.

The bank currently has a branch in Hong Kong and a representative office in Shanghai.

Recruitments too

Allahabad Bank, which currently has over 2,500 branches across the country, plans to add 250 branches to its network this fiscal. The bank also plans to add 1,000 more ATMs to the current network of 350. “We have already floated tenders for the machines,” said Mr Dua.

The expansion will help the bank achieve a 21 per cent growth in total business, which was at Rs 2.7 lakh crore during the last fiscal. “We plan to achieve a business of Rs 3.2 lakh crore by March 31, 2013, and hope to cross Rs 4 lakh crore within the next two-year horizon,” he said.

The bank plans to recruit 1,600 probationary officers and 350 specialist officers during 2012-13.

Allahabad Bank is adequately capitalised currently with a capital adequacy ratio at over 13 per cent with tier-I at over 9 per cent, said Mr Dua. “We are adequately capitalised to meet the business growth till 2014, as we added Rs 1,500 crore to our balance sheet through internal accruals during the last fiscal,” he added.

The bank received Rs 460 crore from Life Insurance Corporation of India last fiscal. “In tier-II capital, we have a head-room of Rs 7,000 crore,” said Mr Dua. “The bank will explore all routes for funds, if the bank needs any capital needs for our credit growth in the coming years,” he added.
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Vijaya Bank to recruit 894 probationary officers

Vijaya Bank is recruiting 894 probationary officers for vacancies across the country.

The bank has specified that candidates with graduation and a total weighted standard score of 138 and above in the common written examination conducted by the Institute of Banking Personnel Selection are eligible to apply.

The minimum age requirement is 20 years while the maximum is 30 years. Applications have been invited online and are open from May 16 till June 2.
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Federal Bank launches three cards

Federal Bank on Wednesday launched three cards -- two debit and a travellers card -- in partnership with MasterCard to address the needs of its varied customer base.

The Kerala-based private sector bank is offering – Federal Bank Maestro Card, Premium Master Debit Card and the Cash Passport Card.

Federal Bank Maestro Card is a debit card with a daily transaction limit of Rs 1.25 lakh (up from Rs 50,000 limit per day on other cards).

Targeting high net-worth Individuals, the bank said it will offer a Premium Master Debit Card with a daily transaction limit of Rs 2 lakh.

Federal Cash Passport Card will target overseas travellers, the bank said. The card will be available in three currencies – US dollars, British pounds and the euro. The travellers card will be prepaid and sold over-the-counter (OTC). Holding an account with Federal Bank for the Cash Passport Card is not a pre-requisite. Loading fee on the card will be Rs 100 for any amount and reloading fees will be Rs 75 each time the money is added to the card.
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Regional rural banks' staff to go on strike on June 8

Close to 70,000 officers and employees at 82 regional rural banks (RRBs) across the country will go on strike on June 8.

Some of the key demands of these employees working across 17,000 branches of RRBs include parity of pension, formation of National Rural Bank of India, regularisation and absorption of part-time workers in RRBs.

According to Mr Dilip Kumar Mukherjee, Secretary General, All India Regional Rural Bank Employees' Association (AIRRBEA), the employees have also been demanding for the withdrawal of government order on HR policy and representation of workman and officers in the board of management.

“In spite of the specific direction of the Supreme Court to extend parity of wage structure to the RRB staff, more specifically by the Karnataka High Court and the Rajasthan High Court to extend parity of pension benefits, the Union Government has not yet extended the benefit of pension to the RRB staff,” said a press statement issued by AIRRBEA.
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Airtel, Axis Bank tie up to provide mobile banking

Bharti Airtel, through its wholly owned subsidiary Airtel mCommerce Services Ltd, on Wednesday partnered with Axis Bank for extending banking and payment services on mobile platform.

No-frills savings account of Axis Bank will be opened for customers on the Airtel Money platform called ‘airtel money Super Account powered by Axis Bank’ offering customers banking transactions including cash deposit, money transfer and withdrawal.

These accounts will provide convenient, safe and secure savings avenue to financial inclusion customers’ paying them savings account interest and also enabling them to make remittances.

To begin with, savings and remittance solutions will be provided in the top four remittance corridors involving Delhi and Mumbai on the sending side and Bihar and East Uttar Pradesh on the receiving side.

"With Axis Bank’s expertise in banking and Airtel’s distribution network that spans over 1.5 million outlets, this association will play a transformational role in furthering economic empowerment and fast-tracking India’s financial inclusion agenda,”Mr Sanjay Kapoor, Chief Executive Officer – India & South Asia, Bharti Airtel said in a company statement.
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Canara Bank launches new payment facilities

Canara Bank launched technology products and facilities for easy and secure banking on Monday.

A press release from the bank said that the products and facilities would enable customers to avail themselves of the service from anywhere, anytime. Dr Thomas Mathew, Director, Canara Bank, and Joint Secretary (CM), Ministry of Finance, Government of India, launched the products and facilities.

Some of the facilities include Internet banking — bill payment; funds transfer by corporate account holder up to Rs 50 lakh per day; welcome kit – provision of Net banking login password; payment of fee to Indian Institute of Science (IISc), Bangalore; electricity bill payment by consumers of Bihar State Electricity Board; and release of booklet on technology products

On the cards segment, the bank launched facilities such as bill payment, electricity consumption bill payment by consumers of Bihar State Electricity Board, payment of fee to IISc Bangalore, bill payment through bill desk and sending e-statement of credit card.

On the ATM front, the bank introduced fund transfer using IMPS, payment of direct taxes, and activation of mobile banking.

For Government business, the bank launched a new pension system, Public Provident Fund 1968 Scheme – launching additionally in all its 3,177 branches.

Customers can avail themselves of these products and facilities from Monday, the release added.
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Tuesday, May 15, 2012

J&K Bank profit up 50%; declares Rs33.50 dividend

Jammu & Kashmir Bank posted a 50 per cent jump in fourth-quarter net profit at Rs 208 crore compared with Rs 138.50 crore in the year-ago period.

For the year ended March 31, the bank earned a net profit of Rs 803 crore compared with Rs. 615 crore a year ago.

For the January to March quarter, the bank's interest earnings jumped 34 per cent to Rs 1,358 crore (Rs 1,014 crore in fourth quarter of FY11).

As at March-end 2012, the private sector bank had a capital adequacy ratio of 13.36 per cent (13.72 per cent as on March-end 2011).

Gross NPA of the bank as a percentage of advances declined to 1.54 per cent against 1.95 per cent. Net NPA declined to 0.15 per cent (0.20 per cent).

The board of directors have recommended a dividend of Rs 33.50 a share.

The State of Jammu and Kashmir holds about 53 per cent in the bank and the remaining is held by the public.
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Dena Bank opens 30th branch in TN

Dena Bank has opened its 30th branch in Tamil Nadu at Kotagiri.

The Chairperson and Managing Director, Ms Nupur Mitra, inaugurated the branch on Sunday.

The bank is planning to open its 31st branch in the state at Ambattur in Chennai soon. The Chennai region of the bank achieved a business of around Rs 3,270 crore in 2011-12 out of the total of Rs 1,34,326 crore.

Dena Bank plans to roll out innovative schemes and increase its business in this region, says a bank release, without specifying the target.

Dena Doctor loan scheme, a product designed exclusively for doctors, and Dena Gold Loan Scheme are the latest retail loan product offerings.
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Moody's downgrades 3 private sector banks

Moody's Investor Services has downgraded the standalone bank financial strength rating of the top three private sector banks — ICICI Bank, HDFC Bank and Axis Bank.

The global credit rating agency also downgraded the Life Insurance Corporation of India's foreign currency insurance financial strength rating.

Credit Negative for Reliance

Further, the agency commented that the downward revision in Reliance Industries Ltd's assessment of its proved natural gas reserves and developed reserves are credit negative for the company.

The downward revision in the ratings of the three banks (to ‘D+' from ‘C-‘) and LIC (to ‘Baa3' from ‘Baa2') follows Moody's assessment that their creditworthiness are highly correlated with that of the Government's credit strength.

S&P outlook

Late last month, rival credit rating agency Standard & Poor's had revised the outlook on its long-term counterparty credit ratings on 11 Indian financial institutions, including Axis Bank, Bank of India, HDFC Bank, ICICI Bank, and State Bank of India, to negative from stable.

S&P revision in the outlook on the financial institutions was a result of it revising the outlook on India's long-term credit rating to negative from stable due to slow fiscal progress and deteriorating economic indicators.

Downward revision

Moody's said the key drivers for its rating action on the three banks are: the relatively low level of cross-border diversification of their operations; the high-level of balance sheet exposure to domestic sovereign debt compared with their capital bases; and ‘the absence of ongoing support from foreign ownership'.

“There are little, if any, reasons to believe that these banks would be insulated from a Government debt crisis……

“We view the lower standalone ratings, which are now positioned at the rating of the Indian Government, as more appropriate to capture the credit profiles of the banks,” said Moody's in a statement.

The agency has also downgraded the hybrid ratings of Axis Bank and ICICI Bank to ‘Ba3 (hyb)' from ‘Ba2 (hyb)'.

Reasons for LIC downgrade

The reasons for the downgrade in LIC's rating are: the extent to which its business depends on the domestic economy; the limited degree of cross-border diversification within its operation; its significant level of balance-sheet exposure to domestic sovereign debt, relative to its capitalization; and ‘the absence of strong foreign ownership'.

Moody's said LIC has meaningful and rapidly increasing direct or indirect exposures to the Government through its holdings of Government securities and its equity investments in Government-related entities, including banks and corporations.
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Sunday, May 13, 2012

BoB 2nd most profitable bank in India

State-owned Bank of Baroda (BoB) has pipped PNB to become the country's second largest public sector lender in terms of annual profit.

Mumbai-based BoB's net profit crossed Rs 5,000 crore during 2011-12, a rise of 18 per cent from the previous year.

Punjab National Bank's (PNB) net profit rose by 10.2 per cent to Rs 4,884 crore for the fiscal ended March, 2012.

The country's largest bank State Bank of India in the first nine months of 2011-12 has posted a net profit of Rs 8,243.64 crore. Its profit in 2010-11 stood Rs 8,264.5 crore .

BoB Chairman and Managing Director M D Mallya had said last week the bank had been able to post sound growth despite economic challenges like industrial slowdown, high inflation and elevated interest rates.

During the year, BoB's gross NPA rose to 1.53 per cent of total advances in 2011-12 from 1.36 per cent in the previouis year.

Significantly, the gross NPA for PNB as a proportion of advances went up to 2.93 per cent against 1.79 per cent at the end of March last year.

Bangalore-based Canara Bank retained the third slot among the PSBs despite 18 per cent dip in profit at Rs 3,282.72 crore in FY'12 against Rs 4,025.89 crore in the previous fiscal.

As regards fourth quarter is concerned, BoB had posted net profit of Rs 1,518.18 crore, while PNB's bottom line rose to Rs 1,424.06 crore.

Total income of BoB during the quarter rose by 25.8 per cent to Rs 9,016 crore from Rs 7,168.6 crore in the year-ago period.

Mumbai-based lender which reported a tax gain of around Rs 322 crore in the fourth quarter, posted a 7 per cent rise in net interest income (NII) to Rs 2,797 crore.

Similarly, net interest margin stood at 3.44 per cent for domestic operations and 2.96 per cent for international operations during the fourth quarter of 2011-12.

Source: Financial Express
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Central Bank needs Rs 14K cr for Basel III norms

Central Bank of India has said it will be requiring over Rs 14,000 crore of fresh capital to meet the Basel-III guidelines which will kick in from next fiscal.

“Our bank will require Rs 14,067 crore in order to meet the Basel-III requirements,” the bank’s chairman and managing director Mr M V Tanksale said.

When asked how the bank, which posted a net loss of Rs 105 crore for the March quarter due to a jump in stressed assets, will fund it, Mr Tanksale said it will depend a lot on the proposed follow-on offer.

As of March 31, the government had a 79.15 percent stake in the bank. An FPO will require the government to participate equally in the offering.

According to the research by Care Rating, the banks require up to $55 billion in fresh equity capital to meet the Basel-III norms.

The agency said private banks are better placed than the state-run ones when it comes to capital adequacy. Public sector banks will be required to raise up to $20 billion from the capital markets, it predicted.
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Compliance with Basel-III should be a breeze: PNB chief

Public sector lender Punjab National Bank (PNB) does not see any large pressure or problems in its transition to Basel-III, the new international standards for capital requirements of banks.

This is despite India venturing into over-compliance with Basel-III with higher and more stringent requirements.

The Reserve Bank of India came out with final guidelines on this on May 2.

Large buffer

The Basel-III capital standards require the banks world over to hold thicker buffers of capital to absorb losses.

Under the new regime, banks will have to hold three times as much equity as they had to under the previous norms. As of March 31, 2012, if one works on Basel-III, PNB's capital adequacy ratio works out to 12.08 per cent compared to 12.63 per cent under Basel-II.

PNB's common equity is at 8.49 per cent, against the regulatory requirement of 4.5 per cent, Mr K.R. Kamath, PNB's Chairman and Managing Director, pointed out.

“We don't foresee large pressure in moving to Basel-III,” he said.

Raising Capital

On raising capital for the current fiscal, Mr Kamath said he expects two things to happen in the fiscal.

Because of the focus on recovery, there would be some write-back of provisions, which will be ploughed back as income.

Second, if the interest rate cycle reverses this year, the bank would be able to unlock certain treasury profits. “Depending on the emerging situation, we need to plan our capital raising,” he said.
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