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Saturday, June 2, 2012

SBT launches mobile payment service facility

State Bank of Travancore (SBT) has launched Inter Bank Mobile Payment Service facility. 

This is a unique facility managed by the National Payment Corporation of India for transferring money between bank accounts, using mobile phones and mobile banking facility. 

This facility enables a customer having mobile banking facility to transfer funds to the account of any other beneficiary, either with the same bank or with another bank, on a 24 x 7 basis. 

The beneficiary should have a unique seven-digit number known as Mobile Money Identifier (MMID) assigned by his bank, which is linked to the account and mobile phone number. 

Mr A. P. Hota, Managing Director and Chief Executive Officer, NPCI, launched the IMPS facility at function held at the SBT head office here. 

Mr P. Nanda Kumaran, Managing Director, SBT, presided over. 

Among those were present included Mr Ram Rastogi, Head (IMPS), NPCI; Mr M. C. Jacob, Chief General Manager; and Mr V. Kannan Kutty, General Manager (technology and business processes), SBT.
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IRDA may scrap highest NAV guaranteed products

The Insurance Regulatory and Development Authority (IRDA) is considering withdrawing highest net asset value (NAV) guaranteed products. 

Highest NAV-guaranteed products assure to pay the highest value the fund achieves during a certain period, say, seven or ten years. The regulator has been expressing concern on such products as insurers have to take risks by investing in stocks to maintain that NAV consistently. 

“Yes, we are considering. We have not really issued any orders but we are actively considering it,” said Mr J. Hari Narayan, chairman, IRDA

IRDA expects some slowdown in the insurance industry in 2012-13. “We expect some slowdown. I believe the growth in the insurance industry is closely interlinked with the growth of the economy. If one takes a negative trend the other will follow,” he told newspersons on the sidelines of a seminar on policyholder protection and welfare organised by IRDA here on Saturday. 


shobha@thehindu.co.in
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SBT launches month-long KYC campaign

 
State Bank of Travancore has launched a month-long campaign highlighting the need for updating of Know Your Customer documents. 

This is being done with a view to creating awareness among customers about the need to update KYC details, an SBT spokesman said here. 

Directives of the Reserve Bank of India and the Centre require that all bank accounts be KYC-compliant by June 30. 

KYC documents, such as ID proof, address proof and latest photograph, will be collected from all customers who have not submitted the same to the bank. 

Mr P. Nanda Kumaran, Managing Director, inaugurated the campaign at a function held at the head office of the bank here. 

He emphasised the need for customers to comply, given the raised level of threat to national security and the scourge of money laundering.
Mr S. Harikrishnan, General Manager and Chief Vigilance Officer, highlighted the importance of observance on KYC. 

He called upon staff to put in their best by forming teams for effective implementation of the process of KYC

Mr Rajani Kanta Naik, Deputy General Manager (compliance), proposed the vote of thanks. 

vinson.kurian@thehindu.co.in
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Friday, June 1, 2012

Fitch downgrades Indian Bank to negative

Global rating agency Fitch today downgraded state-run Indian Bank credit outlook to negative from stable.

It, however, affirmed the Chennai-based bank's national long-term rating at AA+ with a stable outlook and national short-term rating at A1+.

"The risk is somewhat mitigated by the bank's reasonable standalone financials, including robust core capitalisation, falling, though above-average profitability and stable funding and liquidity profile, which explains the stable outlook on the national long-term rating that is one notch below the highest level," Fitch Ratings said in a statement. 

Source: Economic Times
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Top SEBI babu arrested on bribe charge

CBI has arrested a deputy general manager of Securities and Exchange Bureau of India (SEBI) and a middleman on bribery charges.

SEBI had barred an Ahmedabad-based share trading company from trading in September 2011 for alleged market manipulation using Global Depository Receipts (GDR) issues and initiated an enquiry against the firm.

"The DGM rank official of SEBI who was conducting investigation had issued show cause notice to the firm of the complainant. Meanwhile, the complainant came in contact with the middleman based in Mumbai who assured to get the work done in favour of the complainant, claiming close contact with the SEBI official," CBI said in a statement.

It said the middleman had allegedly demanded Rs 25 lakh from the complainant on behalf of the SEBI official.

"The complainant also met the said official of SEBI who asked him to give the bribe amount to the middleman. The accused asked for the first installment of bribe of Rs 10 lakh. As the complainant did not want to pay the bribe, he lodged complaint with CBI," the statement said.

The agency laid a trap and the middleman who came to Ahmedabad for taking delivery of the bribe was caught while accepting illegal gratification of Rs 10 lakh on behalf of SEBI DGM, Mumbai.

The SEBI official was also arrested.

Searches were conducted at the premises of the middleman and the SEBI official at Mumbai and New Delhi. The accused were produced today in the designated court, the CBI said.

Source: FinancialExpress
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Deutsche Bank aims to be among top 6 global lenders: Anshu Jain

Deutsche Bank's new leaders said on Friday they intended Germany's flagship lender to be among the world's top global banks as the sector consolidates.

Speaking to staff on his first day as co-Chief Executive, Anshu Jain took a swipe at Swiss and French competitors by saying Deutsche would likely be the only "truly global" bank from continental Europe, a person familiar with the meeting told Reuters.

Although Deutsche Bank is dwarfed by banks from China, Brazil and Russia and is ranked around 24th largest lender by market value, its geographical footprint is much more diversified than that of Russian or Chinese banks.

Only a few lenders can boast a substantial market presence in Europe, North America and Asia, substantially narrowing the peer group against which Deutsche will measure its progress towards being among the world's top five or six global lenders.

A raft of large investment banks have expanded globally including UBS, Credit Suisse, Barclays , HSBC, JP Morgan, Morgan Stanley

Bank of America, Societe Generale and BNP Paribas.

But some are scaling back their ambitions, bruised by the euro zone crisis and strategic missteps which Deutsche hopes will help it win market share.

Closer to home, Deutsche Bank said it would integrate the asset management and wealth management divisions into a new standalone unit as part of a strategic overhaul introduced by Jain and co-Chief Executive Juergen Fitschen.

Other divisions include the sales and trading arm, corporate banking and securities, retail banking arm private and business clients, and global transaction banking which is responsible for cash management and transactions.

The move marks the implementation of a reshuffle, the details of which were reported by Reuters in March.

Fitschen told staff that Deutsche needed to create its own capital, a signal that it is not preparing to tap markets in the short-term.

Deutsche Bank outlined key appointments at the investment banking arm with a 15-member management committee.

Aside from co-heads Colin Fan and Robert Rankin the bank installed Zar Amrolia as Head of Foreign Exchange, Henrik Aslaksen as Head of Corporate Finance EMEA, Jacques Brand, Head of Corporate Finance, Americas, and Ivor Dunbar as Head of Client Franchise Development.

The bank named Wayne Felson as Head of Rates and Credit Trading, Rich Herman as Head of the Institutional Client Group, Jeff Mayer, Head of Corporate Banking and Securities North America and Miles Millard as Head of Capital Markets and Treasury Solutions.

Ram Nayak was named Chairman of the Emerging Markets Committee while Michael Ormaechea was named head of Fixed income currencies commodities Asia Pacific.

Garth Ritchie will be Head of Equities, Elad Shraga will be Head of Structured Finance and Bhupinder Singh will be Head of Corporate Finance & Structuring, Asia Pacific, the bank said.

source: Economic Times
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Reserve Bank launches 28th inflation expectations survey

The Reserve Bank launched the 28th round of its annual inflation expectation survey on Friday. The survey will help the central bank with monetary policy formation.

The survey, based on individual consumption patterns, will be conducted across 4000 households spread over 12 cities. Beaumont Consultancy Services from Mumbai will conduct this survey on behalf of the Reserve Bank.

The Survey will seek qualitative responses from households on price changes (general prices as well as prices of specific product groups) in the next three months as well as in the next one year and quantitative responses on current, three-month ahead and one-year ahead inflation rates, a RBI statement said.

The Central Bank conducts this survey every quarter and for the full year. For April 2012, inflation was 7.23 per cent based on the the wholesale price index (WPI) and 10.4 per cent based on the consumer price index (CPI).

satyanarayan.iyer@thehindu.co.in
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DK Mehrotra takes over as LIC chairman

Mr D.K. Mehrotra took charge as Chairman of the Life Insurance Corporation of India on Thursday.

He headed the corporation as Current-in-charge Chairman during the last year.

Mr Mehrotra joined Life Insurance Corporation of India as a Direct Recruit Officer in Jamshedpur Division in 1977. He has been the Managing Director of LIC since 2005. He has held important portfolios such as Investment, Personnel, Information Technology, Actuarial, Engineering, International Operations, Corporate Communications etc. LIC’s market share in premium stands at 71.36 per cent and 80.90 per cent in policies.
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J&K Bank reworks wholesale lending strategy

Jammu & Kashmir Bank has revamped its wholesale banking strategy to increase its emphasis on working capital finance as against term loans.

Keeping in mind the slowdown and challenges in the economic and business environment, the bank will be selective in extending project finance assistance.

While the earlier focus was on term loans, it will now be on working capital and fee-based income. But, this did not mean that the bank would stop long-term funding. It would continue to look for opportunities in project and term-lending space, said Mushtaq Ahmad, its chairman and chief executive officer.

The present mix of term-loan and working capital is 60 per cent and 40 per cent, respectively. The Srinagar-based bank will work to improve share of working capital to 50 per cent. Its advances rose 26.28 per cent to Rs 33,077 crore in March 2012.

While the economic and credit growth in 2012-13 will remain subdued, the bank expects to reach business (deposits plus advances) volume of Rs 1,00,000 crore by 2013. The bank has targeted to grow business to Rs 1,50,000 crore by March 2015. The total business expanded to touch Rs 86,418 crore mark in March 2012 from Rs 70,863 crore in March 2011.

Earlier, it had set an target to garner a business of Rs 1,00,000 crore by March 2012 with a net profit figure of Rs 1,000 crore. However, bank decided to defer target by one year due to uncongenial socio-economic conditions in Jammu and Kashmir and a diffident national economy, said Ahmad.

Its income from fee, insurance commissions and treasury shrunk 8.40 per cent in FY12 to Rs 334.12 crore from Rs 364.76 crore a year ago. It will also push for fee-based income by reviving its subsidiary J&K financial services.

To support business growth plans, the bank would open 300-400 branches till 2015-16. During 2011-12, the bank opened 55 business units, increasing network to 603.

It set up 147 ATMs, taking their number to 508. It will also increase headcount by 300-400 each year till FY16 to manage expanding branch network and various functions.


Source: Business Standard
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IRDA issues draft norms on health insurance

In a bid to strengthen the health insurance industry, the Insurance Regulatory and Development Authority (IRDA) has laid down terms and conditions for health insurance such as entry age, claim settlement period and specific reasons for denial of claim.

The regulator has said that companies will have to provide health insurance for up to 65 years and that it should be renewed for life once it is accepted and premium is paid regularly.

Life insurers can offer products with four-year term while non-life companies can offer up to three years. The regulator has asked all stakeholders to give their feedback by June 30.

In the exposure draft, the regulator has asked insurers to reimburse at least 50% of cost incurred by the insured in pre-insurance medical examination, if the policy is accepted.

IRDA has proposed to establish a separate channel to address health insurance-related claims and grievances of senior citizens.

Insurers are allowed to provide coverage to non-allopathic treatment provided the treatment is done at a government hospital or in any institute recognised by government. Also, the regulator has specified that all policies offering critical illness should have standard definitions.

Companies will have to offer a new product before withdrawing a plan. IRDA has asked insurers to file an uncomplicated one page customer info sheet in simple language. The regulator has discouraged companies from asking the insured to shift to another plan. If a claim has to be rejected, the insurer will have to do it within 30 days giving reasons for denial.


Source: EconomicTimes
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UCO Bank stops lending to power, road, realty sectors

Kolkata-based UCO Bank has put a halt on lending to power, road and real estate sectors. The bank also plans to do selective lending to sectors like iron and steel and textiles to de-risk its portfolio.

“If economic growth slows down then there could be some stress on assets. So we have decided to go slow on certain sectors,” said Mr Prabir K Datta, General Manager, Flagship Corporates, UCO Bank.

The bank is also taking corrective measures to improve its skewed loan book which has very high exposure to large corporates.

“No bank can sustain with such a lopsided portfolio. We are focusing on correcting the lending mix by improving our retail loan book,” Mr Datta told Business Line.

Corporate loans account for almost 60 per cent of the bank's total advances at present.

UCO Bank restructured almost 25 per cent of the total loans extended to state power distribution companies (discoms) amounting to Rs 5,000 crore during the fourth quarter of last fiscal. The total restructured assets grew to Rs 7,370 crore during the year, from Rs 6,345 crore last year.

Retail focus

The bank would focus on increasing its retail exposure both on assets and liabilities front. The bank aims to grow its CASA (current account and savings bank account) deposits to Rs 40,000 crore by March 2013, from Rs 23,000 crore as on March 2012.

“We have hired a young team of officers and have entrusted them with this task of mobilising CASA deposits,” he said. The bank added 1,000 employees in the clerical and another 1,000 in the officers' cadre last year. It is likely to hire a similar number this year.

On the assets side, the bank has been taking adequate measures to ease out processes and speed up the disbursements. “We have a number of good loan products, but they have not been doing too well due to delay in processing. So we have streamlined the system and we are monitoring it on a real time basis,” he said.

The bank also plans to add 600 branches to its existing network of 2,400 branches to shore up advances. The bank aims to double the share of retail to its total advances from the present level of nine per cent by the end of this fiscal.

shobha@thehindu.co.in
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Corporation Bank cuts home, vehicle loan rates

Corporation Bank has reduced interest rates on home and vehicle loans with effect from June 1.

The reduction varies from 10 basis points to 75 basis points for different tenors and the amount of loans sanctioned. Following are the floating rates of interest for home loans. For loans up to 10 years tenor, the new rate will be 10.50 per cent for amount up to Rs 25 lakh; 10.75 per cent for loans above Rs 25 lakh and up to Rs 50 lakh; and 11 per cent for loans above Rs 50 lakh and up to Rs 1 crore; and 11.25 per cent for loans above Rs 1 crore.

(Previously, there were two tenors of up to five years, and above five years to 10 years.)

In the loans above10 years and up to 25 years tenor, the new rates will be 10.75 per cent for amount up to Rs 25 lakh; 11 per cent for loans above Rs 25 lakh and up to Rs 50 lakh; and 11.25 per cent for loans above Rs 50 lakh.

(Previously, there were two tenors of above 10 years and up to 15 years, and above 15 years and up to 25 years.)

The fixed rate of interest for amount up to Rs 25 lakh remains unchanged at 13.35 per cent, and for loans above Rs 25 lakh at 13.85 per cent.

In the case of vehicle loans, the rate of interest for period up to five years is 12 per cent, and above five years and up to seven years it is 12.50 per cent.

(Previously, there were three tenors of up to three years; above three years and up to five years; and above five years and up to seven years.)

vinayakaj@thehindu.co.in
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Thursday, May 31, 2012

Lakshmi Vilas Bank Q4 net falls 9%

The net profit for Lakshmi Vilas Bank dropped by 9 per cent to Rs 24.96 crore, while its business grew 32 per cent during the last quarter of 2011-12.

Calling it a year of mixed performance, Mr P R Somasundaram, Chief Executive of LVB, said, “It has also been a year of consistent growth amidst challenges. While there is huge satisfaction, there is some disappointment as well. I am happy because few fundamentals have been addressed, but there is a setback on account of some temporary NPAs.”

“We raised Rs 250 crore tier II capital during the fourth quarter. This pulled down our profits as costs were high. However, we have invested this (capital raised) very well,” he explained.

The overall performance in 2011-12 showed a 6 per cent growth in net profit after absorbing higher interest costs and operating investments for future growth.

“Our net profit has, for the second year in a row, crossed the Rs 100-crore mark to reach Rs 107.02 crore (Rs 101.14 crore),' said the LVB Chief.

The bank's total income grew 40 per cent to Rs 1677.18 crore (Rs 1201.85 crore).

While total deposits grew 27 per cent, the growth of retail deposits was higher at 44 per cent. Gross credit expanded, but was lower than the deposits growth.

“We maintained liquidity, and were consciously not focusing on advances,” said Mr Somasundaram.

Driven by higher costs and substantial growth in term deposits, LVB's net interest margin dropped from 3.75 per cent to 2.91 per cent in the 2011-12 fiscal.

The bank's net NPA rose to 2.98 per cent (1.93 per cent).

The Board has recommended a 35 per cent dividend for the 2011-12 fiscal against 25 per cent declared during the earlier year.

LVB added 17 more branches to take the total branch network to 291. The total number of ATMs rose to 547 at the close from 227 at the start of the 2011-12 fiscal.
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Tuesday, May 29, 2012

SBI makes highest-ever recovery of Rs 1,000 cr

Taking a que from Union Finance Minister Pranab Mukherjee, who expressed concern on Monday over the asset quality of the banks, the country's largest public sector Bank State Bank of India (SBI) today said it will bring down its net NPA to 1.62% during this fiscal, from 1.8% now.

To achieve this target, the Bank has constituted a Stressed Asset Management Group, which so far made a cash recovery of around Rs 1,000 crore in one year, the highest in the bank's cash recovery history, according to State Bank of India (SBI's) Chairman Pratip Chaudhuri.

He was speaking to reporters after handing over keys of the Ambulance van to Cancer Institute in Chennai as part of Bank's CSR.

The Group has around 400 people and opened nine offices, which are focusing only on Stressed Assets.

He noted that prior to this, the recovery was around Rs 700 crore in the Bank's history.

"We are also asking borrowers to consider restructuring of loans, ahead of default," said Chaudhuri, adding that most of the stressed assets relate to exports, especially textile.

"This fiscal we will bring down the bad debts by 20%," he said.

On whether the bank would consider selling these stressed assets, he said, “Last year we could not, since asset reconstruction companies did not have cash.”

Meanwhile, SBI is planning to approach Moody's to relook the negative rating the firm gave it. The request comes on the back of an increase in the bank's capital.

Chaudhuri added, "As our capital position has strengthned now, we will go back to them (Moody's) to rate us again".

SBI's Deputy Managing Director Sharad Sharma said, "One major issue which they (Moody's) had while rating the Bank relates to uncertainty of the capital. Since we have enough capital now, we are planning to approach them for rerating.".

The bank has received around Rs 8,000 crore from the Government, and has got Rs 11,000 crore from the profit it made.

Chaudhuri said, "The bank's capital is comfortable now and the government has assured us that they have kept aside Rs 12,000 crore, which could be made available to SBI if required.”

SME loans to get cheaper

SBI is also planning to bring down the interest rate for SMEs, Chaudhuri said, adding that at present, the bank's interest rate is around 12-17% for the SME segment, and will be brought down to 10.5-15.3%.

The reduction is likely to come with effect from June first week.

Sharma said the move will help the bank to bring back customers that the Bank lost to competitors due to high interest rate.

At around Rs 80,000 crore, SME loans constitute about 12-14% of the bank's total advances.


Source: Financial Express
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SBI to cut interest rates on loans for small units

State Bank of India plans to cut interest rates by 2 to 5 percentage points for the SME (small and medium enterprises) sector.

The bank's Chairman, Mr Pratip Chaudhuri, said it wants to focus more on this sector in order to bring about some balance between its SME loan portfolio and home loan portfolio.

At present, the interest rates for the SME sector hover in the range of 12-17 per cent and this will be brought down to 10-12 per cent, he said. The new interest rates will come into force from the first week of June, he said.

Currently, the SME portfolio, at Rs 80,000 crore, accounts for 12-14 per cent of the total advances of the bank.

Taking a cue from the Union Finance Minister's advice on NPA management, SBI will also beef up its Stressed Asset Management Group. Last year, the group managed to register cash recovery of Rs 1,000 crore, “the highest ever recorded by the bank”, he said.

The group has around 400 people working from nine branches – meant exclusively for stressed asset management.

According to him, the bank will bring its net NPA to 1.62 per cent during the current financial year from 1.82 per cent.

The bank is also advising its borrowers to consider restructuring, “in case it is required, before default”. He said most of the stressed assets are related to export houses, again predominantly in the textile industry.

rravikumar@thehindu.co.in
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RBI cancels Chatrapur co-op bank licence

The Reserve Bank has cancelled the licence granted to Chatrapur Co-operative Bank Ltd, Chatrapur, Odisha. With the cancellation of its licence and commencement of liquidation proceedings, the process of paying the depositors will be set in motion subject to the terms and conditions of the Deposit Insurance Scheme. The RBI said that the bank had ceased to be solvent and with all efforts to revive it having failed and the depositors being inconvenienced by continued uncertainty, the RBI delivered the order cancelling its licence after the close of business on May 23.

The Registrar of Co-operative Societies, Government of Odisha has also been requested to issue an order for winding up the bank and appoint a liquidator.

It may be highlighted that on liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 1 lakh from the Deposit Insurance and Credit Guarantee Corporation.
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RBS unit launches wealth planning services

RBS Wealth Division, a part the Royal Bank of Scotland Group, today announced the launch of wealth planning services in India.

The service will offer customised solutions to clients to meet their long-term plans for structuring of assets, protection and transmission of wealth.

It complements their existing banking and investment services offerings, as part of a comprehensive wealth management proposition.

The services will include advice in the areas of succession planning, asset preservation, asset consolidation, and philanthropy.

Mr Shiv Gupta, Managing Director, RBS Private Banking India, said: “In India, we’re seeing the twin phenomena of significant wealth creation alongside a rising trend of inter-generational wealth transfers.”

beena.parmar@thehindu.co.in
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Karnataka banks fix priority credit target at Rs 48,612 crore

The SLBC (State-level Bankers' Committee) Karnataka has fixed an annual credit target of Rs 48,612 crore under priority sector credit for 2012-13.

According to Mr M.G. Sanghvi, Chairman and Managing Director of Syndicate Bank, and Chairman – SLBC Karnataka, the target is, however, subject to review when Nabard receives the priority sector target for the State fixed by the Union Government, and would be taken up for modification.

Total disbursals

Banks in Karnataka disbursed Rs 55,231 crore under priority sector credit during 2011-12 against the revised annual target of Rs 46,027 crore.

Agri sector

Under agriculture sector, banks disbursed Rs 28,608 crore, of which the share of crop production loan was Rs 19,135 crore.

Other sectors

Under secondary and tertiary sectors, the disbursement was Rs 11,930 crore and Rs 14,621 crore respectively.

Credit-deposit ratio

While reviewing the banks' performance in the State during 2011-12, Mr Sanghvi said that the aggregate deposits stood at Rs 4.02 lakh crore, while aggregate advances were Rs 2.99 lakh crore with a credit deposit ratio of 74.57 per cent. The advances to priority sector stood at Rs 1.21 lakh crore, constituting 40.34 per cent of credit.

Similarly, the advance to agriculture sector was Rs 54,764 crore, comprising 18.26 per cent of the total credit, which is above the stipulated level of 18 per cent.

Advances to MSME sector stood at Rs 51,605 crore as of March 2012.

Financial inclusion

At the 121st meeting of SLBC Karnataka on Tuesday, Mr Sanghvi requested the banks to provide banking outlets in the second phase of the financial inclusion programme and complete the process by the targeted date of March 31, 2013. He urged the banks to complete the process by December 31 this year.

Highlighting the action taken by the State Government in fully computerising the land records, he said that this should be utilised fully to enable the farmers to obtain hassle-free agriculture credit and to avoid tampering of land records.

The State government has already issued the Gazette Notification authorising bankers to download the records from the Bhoomi Web site.

anju@thehindu.co.in
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ICICI Bank is now top arranger of bond issues

ICICI Bank has emerged as the top arranger of domestic bond issues. The country’s largest private sector bank was the number-one arranger in 2011-12, helping India Inc raise close to Rs 1,04,569 crore via bonds and non-convertible debentures, almost half the funds raised by local companies through this route, according to data with Prime Database Group.

The bank participated in 123 transactions, 26 more than it did in the previous financial year. ICICI Bank was followed by Axis Bank, which was top in the arrangers’ league table in 2010-11. ICICI Bank was actually no better than 10th in this respect as recently as 2008-09. It moved up to third position the following year and to second in FY11.

In the past couple of years, several Indian companies have tapped the corporate bond market to meet funding requirements as bank loans turned expensive due to successive rises in interest rates. Indian companies raised close to Rs 213,578 crore via bond sales in 2011-12, about 24 per cent higher than the previous year. Several new issuers entered the market, including IL&FS Financial Services, Shriram Equipment Finance Company and SEW Infrastructure.

HOW THEY FARED
Top arrangers of domestic bond
Bank Ranking  Total no
of issues
in ‘11-12
 FY11 FY12
ICICI Bank 2 1 123
Axis Bank 1 2 134
Trust Inv 4 3 116
ICICI Sec PD 3 4 97
Darashaw 7 5 64
* Ranking based on total amount of transactions
Source: Prime Database

The momentum has continued in the current financial year after the 50-basis points cut in the repo rate by the Reserve Bank of India (RBI) in April 2012. Hindalco Industries tapped the market after a long while and Tata Group companies such as Tata Steel and Tata Motors raised funds by selling bonds in the local market.

The downgrade on India’s sovereign rating by Standard & Poor’s (S&P) is expected to keep Indian companies’ interest in the domestic bond market, as the revision in outlook is likely to make international borrowing more expensive. “It will affect the international lending rates for India and the cost of borrowing from abroad would rise,” said Abhishek Goenka, founder and chief executive of India Forex Advisors.

S&P had in April downgraded India’s outlook to negative from stable, saying the economic indicators were bleak and fiscal health was poor.

A section of the market, however, feels high government borrowings may crowd out private fund raising programmes in the current financial year, as the liquidity situation continues to remain tight.


Source: Business Standard
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RBI eases banks' short term deposit restrictions

The Reserve Bank of India has removed restrictions imposed on banks which earlier prevented lenders from levying penalty on customers for foreclosure of some term deposits.

The central bank said, in a notification issued on Monday, banks can formulate their own interest rate policies on foreclosure of term deposits for better asset-liability management.

Earlier, the RBI had said banks cannot impose penalty on customers by reducing interest rates due on the term deposit provided the individual reinvests the money in another scheme which is longer than the remaining period of the original deposit.


Source: EconomicTimes
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RBI asks cooperative banks to formulate norms for conversion of FDs

Reserve Bank permitted cooperative banks to formulate policies to check the practice of premature conversion of fixed deposits into other deposit schemes by customers with a view to obtaining higher interest rates.

"In order to facilitate better Asset Liability Management (ALM), it has been decided to permit banks to formulate their own policies towards conversion of deposit with immediate effect", RBI said in a notification.

Under the current norms, a customer can make pre-mature withdrawal of fixed deposit to invest the amount into other schemes of the same bank without payment of any penalty.

Several customers convert their long-term fixed deposits into other deposit schemes to take advantage of higher interest rates.

The freedom to the cooperative banks in this regard follows the announcement made by the RBI in the credit policy for 2010-11.

"On a review of the regulatory norms and in order to facilitate better asset liability management (ALM)...it is proposed to permit banks to formulate their own policies towards conversion of deposits", the policy statement had said.



Source: EconomicTimes
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India Post to foray into core banking solution, set up ATMs in Assam

India Post will to soon take to core banking solution and set up 24 ATMS in Assam. The department will install these ATMs by this fiscal year.

This project is a part of pilot project which India Post has taken up in six states of country. These include Assam, Uttar Pradesh, Tamil Nadu, Karnataka, Maharastra and Rajasthan.

Director postal services (headquarter), Pawan Kumar Singh said, "We are trying if Assam becomes the first state to roll out ATMs under the India Post and take to core banking solution."

There are 4006 post offices across Assam. Singh explained under the core banking at least 625 department post offices of Assam will be connected.



Source: EconomicTimes
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Nabard FY14 operating surplus soars 28 pc to Rs 1,635 cr

The National Bank for Agriculture and Rural Development (Nabard)  reported 27.81 per cent jump in net operating surplus at Rs 1,635 crore for the last fiscal, against Rs 1,279.21 crore in the previous financial year.

Serving special needs, the bank ploughs back the surpluses in its reserves and other funds and does not pass on anything to the government which owns 99 per cent stake in it with the remaining 1 per cent being held by the RBI, the bank said in a statement issued here.

A Bill is pending in Parliament to allow the RBI to divest this residual one per cent stake too. Earlier, the RBI and the government were equal owners of the development bank.

During the fiscal, Nabard's total advances were up 18.27 per cent at Rs 1,64,969.46 crore, it said.

Concessional rate refinancing facility provided to cooperative and regional rural banks for financing small and marginal farmers reached an all time high, with Rs 48,337.75 crore being outstanding as of March 2012, against Rs 33,884.82 crore a year ago.

On the capital formation and allied investments front, Nabard's total outstanding stood at Rs 43,105.29 crore as against Rs 38,896.43 crore.

The outstanding under the rural infrastructure development fund raised through priority sector lending shortfalls by commercial lenders stood at Rs 70,860 crore against Rs 66,077 crore year ago, it said.


Source: Financial Express
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Monday, May 28, 2012

Federal Bank pact with Bangalore Metro for automatic fare collection

Federal Bank will be the merchant bank for automatic fare collection for 13 stations of the northern reach of Bangalore's ‘Namma Metro'.

Northern reach

The northern reach is expected to be commissioned in December this year.

The bank, which exchanged an MoU with Bangalore Metro Rail Corporation Ltd on Monday, will provide the required top-up facility for all smart card users of Namma Metro.

The 12.4-km northern reach stretches from Sampige Road to Nagasandra.

Mr Shyam Srinivasan, Managing Director and CEO, Federal Bank, said that the bank was keen on availing opportunities such as the Namma Metro projects, alongside opening branches.

Strengthening presence

“We have been focusing on strengthening our presence in Bangalore, and enhance our customer offerings,” he said.

According to Mr N. Sivasailam, Managing Director, BMRCL, Federal Bank was selected through a competitive bidding process.

Facilities

Federal Bank will provide facilities such as Ethernet-based machines at metro stations, topping up of cards through the bank's ATMs, Internet banking, mobile banking and its point-of-sales terminals, and issuance of ‘combo' cards.

anju@thehindu.co.in
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Syndicate Bank briefs customers about e-products

Syndicate Bank had recently conducted a uniform customers' meet across over 2750 of its branches across the country.

As a part of this programme, the NS Road-Kolkata branch of the Bank had organized a meeting on May 23 to brief its customers on the performance highlights of the bank for the financial year 2011-12. At the customer meet, the bank educated its customers about the various products and offerings like SyndArogya, UniHome Care, UniStudy Care Policies, the advantageous features of NEFT and RTGS and the new initiatives for e-products.
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SBI plans $1 billion medium-term notes issue by August

State Bank of India plans to come out with a medium-term notes (bonds) issue worth about $1 billion before August.

Talking to media persons on the sidelines of a CSR event at the Bangalore circle office here on Monday, Mr Pratip Chaudhuri, Chairman, SBI, said that the bank has time till August to come out with a medium-term notes issue.

On the size of the issue, he said whenever SBI has gone to the markets in the past, it has been for about $1 billion.

“The issue is for our overseas operations,” he said, adding that preparation for the issue was going on and the bank has time till August. The exact timing of the issue will be decided at a “strategic moment”, said Mr Chaudhuri.

SBI has a tier-I capital adequacy of 9.67 per cent and its current year profitability is “expected to be good”, he said.

“We are not stressed for capital,” he added.

Merger moves

On the merger of associate banks with SBI, he said that the economic rationale for merger was “as strong as ever”. But mergers “require capital, require funding, and so it would receive some attention”, he said, adding that the bank will decide on it during the year.

On the impact of rupee depreciation, Mr Chaudhuri said that the importing customers have been impacted, but exporters have been on an advantage. Remittances from Indians abroad into NRI accounts have gone up, he added.

Lending rates

On lending rates going down further, he said any interest rate reduction would depend on CRR cut by the RBI. “More the RBI cuts the CRR, greater will be the ability of the banks to reduce interest rates. We see a direct correlation between the level of CRR and the level of interest that banks have to charge,” he explained.

anju@thehindu.co.in
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Current account deficit will see a dip in the short term: Kotak Bank chief

Current account deficit will see a dip to about 3 per cent in the short-term owing to falling crude oil prices and drop in gold imports, said Mr Uday Kotak, Executive Chairman and Managing Director, Kotak Mahindra Bank.

Addressing a banking and financial services (BFSI) conference here, Mr Kotak said the rupee is making the Indian companies more competitive. There is no significant spread of credit problems to different sectors of the industry.

“Any further policy measure will be derivatives of the currency movement,” he added.
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Axis Bank ties up with Bahrain bank for NRI remittances

Private sector lender Axis Bank announced its tie up with Ahli United Bank B.S.C., Bahrain for remitting money from Bahrain to any person in India.

The agreement will provide money transfer services to NRIs in Bahrain using the internet banking platform MyE-Bank.

Such remittances would be processed and disbursed to the intended beneficiaries holding an account with Axis Bank or any of more than 83,000 NEFT-enabled branches of over 100 other banks in India.

There is no limit on the number of transactions that can be initiated under this arrangement.

Currently, the customers can initiate transactions up to Bahraini Dinar 5,000 ( approximately Rs 7,31,950) per day.

While transactions pertaining to Axis Bank accounts would be credited instantly, the ones pertaining to non-Axis Bank accounts would be processed on real time basis and the final credit to beneficiary accounts shall take 1 to 2 working days depending on the respective beneficiary banks.

beena.parmar@thehindu.co.in
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Unitech accuses Deutsche Bank of selling ‘unsuitable' interest swap

Real estate player Unitech has become the latest company to seek compensation in the UK over the sale of a controversial type of interest rate derivative product designed to protect firms against rate rises, according to reports.

Unitech has accused Germany's Deutsche Bank of selling it an unsuitable interest rate swap, and not fully explaining the risks of the deal in a lawsuit lodged in the Queen's Bench Division of London's High Court of Justice this month, according to Bloomberg News.

Unitech alleges that Deutsch Bank “knew, or appreciated, that it was likely to make significant amounts of money,” from the interest rate swap on a $150-million loan deal, according to the report.

In the three years till 2010, $23.5 million worth of payments were made showing that the “transaction was not a suitable hedge.” According to the report, Deutsche Bank had previously sued Unitech claiming it was due $11 million under the swap contract.

Both Unitech and Deutsche Bank declined to comment on the story.

Claims stacking up

Claims over controversial interest swap deals have been stacking up in both Europe and the US.

Unitech's case comes a week after Britain's market regulator the Financial Services Authority said it was examining the interest rate swaps sold to thousands of small and medium-size businesses.

“We have requested extensive information from the largest providers of these products including the volumes of sales, the level of complaints, the ways in which the products were sold and the material that was provided to purchasers,” according to the FSA.

The swaps were also discussed at a House of Commons Treasury Select Committee hearing last week.

Earlier this month, Unitech reported a 98 per cent drop in consolidated net profit for the quarter ending March in what it described as “a very challenging year,” forecasting that 2012-2013 would be “significantly better”.
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Sunday, May 27, 2012

New-generation banks like Yes Bank, IndusInd Bank, Kotak Mahindra Bank gain market share on higher rates

A higher interest rate of up to 7 per cent on savings bank deposits seems to be helping small new-generation banks like Yes Bank, IndusInd Bank and Kotak Mahindra Bank expand their market share at the cost of the old public sector banks.

The data suggest that small new-generation banks have seen their incremental savings account deposit market share grow four-fold from 1 per cent in the first quarter of previous fiscal, 2011-12, to 4 per cent in the fourth quarter (January-March).

During the same period, the combined savings account market share of PSU banks has declined, but the large private banks have so far managed to hold onto their market share.

Since the Reserve Bank of India's deregulation of the savings bank account interest rates in October 2011, the small new-generation private banks have raised their interest rates to relatively higher level than most of the other banks, helping them with better savings account acquisitions.

As per the latest report by global financial giant Espirito Santo Investment Bank, the smaller new generation private banks that have raised rates have seen higher SA (savings account) momentum, while large private sector banks are witnessing early weaknesses and PSU banks have seen a deterioration in their savings bank deposits mobilisation.

"We expect smaller new generation private sector banks to gain market share at the cost of PSU banks in the initial phase," the report noted.

Yes Bank offers 6 per cent savings account interest rate for deposits below Rs 1 lakh and 7 per cent above Rs 1 lakh level. IndusInd Bank and Kotak Mahindra Bank offers 5.5 per cent for below Rs 1 lakh and 6 per cent above Rs 1 lakh savings account deposits.

As per the report, the three new generation private sector banks that have increased their SA interest rates are likely to continue to offer higher SA interest rates than competitors to maintain their competitive advantage in terms of pricing differential.

It further said that since SA deregulation, Yes, Indusind and Kotak have increased rates which has helped them to gain significant momentum on SA deposit mobilisation, with rise in their incremental SA deposit market share from 1 per cent in Q1 FY12 to 4 per cent as of Q4 FY12.

The large private banks ( ICICI Bank, HDFC Bank and Axis Bank) are holding the fort for now, as they have managed to hold on to their market shares over the last couple of quarters, as they managed to maintain their Savings Account ratio at 27.9 per cent from Q1 to Q4 FY12.

On the other hand, the PSU banks are losing market share. The top five PSU banks have continuously lost market share and their combined SA market share decreased from 26.6 per cent in Q1 FY11 to 25.2 per cent in Q4 FY12.

The leading PSU banks in the country include SBI, PNB, Bank of Baroda, Canara Bank and Union Bank of India.



Source: EconomicTimes
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