CBS enabled banks should issue only payable at par cheques: RBI

The Reserve Bank has asked all CBS ( core banking solutions) enabled banks to issue only 'payable at par' or 'multi-city' cheques to their customers to bring about more efficiency in cheque clearing.

This is after taking into consideration the availability of processing infrastructure for clearing outstation cheques at all clearing locations across the country and to bring about further efficiency in cheque clearing, it said.

"... All CBS enabled banks are hereby advised to issue only 'payable at par'/ 'multi-city' CTS 2010 Standard cheques to all eligible customers," RBI said in a notification today.

It further said since such cheques (payable at par) are cleared as local cheques in clearing houses, customers should not be levied extra charges.

RBI also asked the banks to put in place the appropriate board approved risk management procedures based on risk categorisation of accounts. An updated board approved policy of banks in this regard may be put on their web-sites, it said.

While a few banks are issuing 'payable at par'/ 'multi- city' cheques with value cap, some other banks issue these cheques as per category of account (High Net-worth Customers), it said.

Leveraging the CBS, banks issue 'payable at par'/ 'multi-city' cheques to select customers with separate transaction codes (29, 30 and 31) by putting in place infrastructure for processing such cheques at all CBS enabled branches, it said.



Source: EconomicTimes

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ICICI Bank plans $1 billion bond sale

ICICI Bank, the nation's second biggest lender, will join the State Bank of India and Indian Overseas Bank in raising funds from overseas bond sale in the next few weeks with a billion dollar issue as credit markets ease after the European Central Bank pledge to save the Euro.

The bank is negotiating with a few global investment banks on the interest rate range that it could pay on those bonds, two people familiar with the matter said. If the bank manages good rates it may raise the size of offering, they said. This would be the first bond issue by ICICI since May 2011, when it raised $ 1 billion in a 5.5 year fixed rate notes with a coupon of 4.75%.

""We continuously keep exploring various avenues of fund raising in form of public bond issuances and private placements under the Global Medium Term Notes based on market conditions and pricing,"" said an ICICI spokesman through an e-mail.

After a 5-month gap, the State Bank of India kicked off overseas fund raising by Indian entities with a $1.25 billion issue last month. It was soon followed by the Exim Bank with a $500 million sale. Indian Overseas Bank, Syndicate Bank also plan to raise funds through such bonds to mainly fund Indian companies that seek overseas loans. The revival in issuances from Indian companies is after such sale fell to the equivalent of $140 million last quarter, the lowest since 2009, Bloomberg data shows.

Indeed, the rates are getting better by the day with Exim Bank, with a sovereign backing, managing to better State Bank. While SBI sold its 4.125% five year notes at 375 basis points above similar maturity US Treasuries, Exim managed to sell its 4% similar maturity notes at just about 325 basis points over the Treasuries. Lesser the spread between the yields of the seller's bonds and US Treasuries, the cheaper it is for borrowers.

Borrowers may rush in the next few weeks to take advantage of better state of the European markets before India's potential rating downgrade pushes up the cost of borrowing higher again.

Standard & Poor's, a rating company, lowered India's credit outlook to negative from stable citing slowdown in investment and economic growth, and widening of the current-account deficit which hit a record 4.5% of the gross domestic product for the March quarter. S&P rates India's sovereign long-term debt at BBB-, just a notch above junk.



Source: EconomicTimes

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Central Bank to seek Rs 700-cr infusion from Govt: CMD

Central Bank of India will need capital to the tune of Rs 1,200 crore to fund its growth needs this year. The bank aims to achieve 20 per cent credit growth in 2012-13.

According to Chairman and Managing Director M. V. Tanksale, the bank will approach the Centre for infusion of Rs 700 crore this year. 

“We will need Rs 1,200 crore worth of capital. We will be requesting the Government to infuse Rs 700 crore and the rest will be by way of internal accruals. We also have headroom in Tier-II for raising capital,” Tanksale told newspersons on the sidelines of a banking conclave organised by the Federation of Indian Chambers of Commerce and Industry here on Friday.

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RBI to issue new 5 rupee coin soon

The Reserve Bank of India (RBI) will shortly issue five-rupee coins in their new shape and size.

The obverse of the coin shall bear the Lion Capital of Ashoka Pillar with the legend ‘Satyamev Jayate’ inscribed below, a RBI release said here today.

On its left periphery it will bear the word “Bharat” in Hindi and on the right upper periphery the word “India” in English.

It shall also bear the denominational value ‘5’ below the Lion Capital, the release said.

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Andhra Bank expects Rs 300-cr loans for recast in second quarter

Andhra Bank expects loans aggregating about Rs 300 crore to come up for restructuring in the current quarter, according to a top official.

In the April-June quarter, 29 loan accounts of the public sector bank required restructuring. The amount involved aggregated Rs 751 crore.

Of the 29 loans accounts, three large loan accounts alone amounted to Rs 530 crore. The bank hopes to recover about Rs 400 crore from these accounts by September.

As on June-end 2012, 39,225 loan accounts aggregating Rs 6,769 crore were restructured by the bank.

According to Andhra Bank Chairman and Managing Director B.A. Prabhakar, more project and infrastructure loans are coming up for restructuring.

Credit growth

The bank will step up loans to the priority sector loans (that is loans given to micro and small enterprises, home and agriculture segment) so that the 17-18 per cent credit growth target can be achieved, said Prabhakar. Andhra Bank is falling short of the 40 per cent priority sector lending target by 3 percentage points.

To achieve this target by March-end 2013, the bank will have to increase credit to the priority sector by about Rs 1,500-2,000 crore.

A. A. Taj, Executive Director, said overall, the bank will recover bad loans aggregating Rs 1,000 crore by March-end 2013 at the rate of Rs 250 crore every quarter.

On the capital front, Taj said the bank will be able to support a 20 per cent growth in credit without raising capital until 2014-15.

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SBI net jumps 137% to Rs 3,751.6 cr

Despite a general slowdown in the economy, State Bank of India has posted a 137 per cent jump in net profit at Rs 3,751.56 crore in the April-June quarter against Rs 1,583.55 crore in the corresponding year-ago period.

In the reporting quarter, India’s biggest bank posted a 17 per cent increase in total income at Rs 32,415.49 crore (Rs 27,731.67 crore), according to a filing made by the bank with the BSE.

Notwithstanding the robust bottomline performance, the bank’s shares were trading at Rs 1,920 per share, down 2.63 per cent, on the BSE at 12.55 pm.

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No proposal of SBI to raise funds via FPO pending: Govt

No proposal of State Bank of India to raise funds through public offer is pending and the government is committed to keep public sector banks adequately capitalised, Minister of State for Finance Namo Narain Meena said on Wednesday.

“At present, there is no proposal pending with the Government to mobilise money by SBI by issue of shares,” Minister of State for Finance Namo Narain Meena said in a written reply in Lok Sabha.

He also said the Centre is fully committed to keep PSBs, including SBI adequately capitalised.

The government had infused Rs 7,900 crore in SBI to increase the Tier I capital of the bank in March 2012.

The minister said that the bank’s Capital Adequacy Ratio (minimum capital requirement norm) is well above the norms stipulated by the Reserve Bank of India (RBI).

In March 2012, SBI Chairman Pratip Chaudhuri had said that in 2012—13 the bank would discuss with the government for dilution of its stake through follow—on—public offer (FPO) or Qualified Institutional Placement (QIP).

Despite increase in the bank’s net non-performing assets to 1.82 per cent at March 2012 end against 1.63 per cent a year ago period, Meena said the financial condition of the country’s largest bank “continues to be stable“.

“There is no reduction in profit. In fact, net profit of SBI has increased by 41.66 per cent over the previous year,” he added.

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New GM for Syndicate Bank, Kolkata region

S. Ramachandran has taken charge as the general manager of Kolkata region of Syndicate Bank effective from Monday. Prior to his elevation as the general manager, Mr Ramachandran was heading the Ernakulam region as regional manager and deputy general manager.

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Coming soon, flexi-timings for RBI officers

Come January, the Reserve Bank of India will become a tad flexible. No, not with the banks and institutions it oversees, but with its own staff.

The RBI plans to offer flexi-timings, MNC-style, for its 3,000-odd officers in the rank of Manager and above in phases. The central bank has about 18,000 employees across the country.

In keeping with the adage ‘All work and no play makes Jack a dull boy’, the central bank seems to want its employees to have a work-life balance.

Flexi-time does not mean that the officers grappling with the nitty-gritty of regulation, supervision and inspection of banks and non-banks and crafting the monetary policy walk in and out of office as they please.

According to an RBI spokesperson, during core time bands of 11 a.m. to 1 p.m. and 3 to 4 p.m. officers have to be in office. Also, they will have to put in the mandatory minimum eight hours of work a day.

By allowing them the flexibility, the RBI hopes productivity will improve and officers will come up with bright ideas for the various problems, including the slowdown, rising inflation, limited fiscal and monetary room for policy action, and the rising bad debts of banks.

Flexi-time is to ensure employees give their 100 per cent at workplace by allowing them to complete household tasks either before clocking in or after office hours.

With the banking regulator turning ‘accommodative’ towards its employees, there is some food for thought for other regulators in the financial system — capital markets, insurance, and pension funds. Maybe, even banks can think of giving similar flexibility to their employees who do not deal with customers.

ramkumar.k@thehindu.co.in

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More SBI branches in Hyderabad

State Bank of India has launched two new branches in the Hyderabad city.

The Chief General Manager of the Hyderabad Circe Rakesh Sharma inaugurated the branches. The branches are located at Liberty centre in Himayathnagar and D.D. Colony at Amberpet.

Speaking at the launch events, Rakesh Sharma said the two branches were equipped to cater to the personal banking and needs of NRI customers. They will have ATM, Internet and mobile banking services to suit individual customers.

The branches will provide full-fledged services, including locker facility.

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HDFC ERGO General introduces add-ons in motor insurance scheme

Private insurer HDFC ERGO General Insurance on Wednesday said it has incorporated add-ons in its motor insurance scheme aimed at catering to the growing needs of customers.

With the introduction of add-ons, the customers can now claim expenses incurred towards repair or replacement of internal parts of gear box and labour cost to overhaul the damaged engine and gear box.

“With growing needs and dynamic external factors, the regular motor insurance is no longer sufficient. Keeping this in mind, we have designed the motor insurance add-ons, which offer greater benefits to our customers at minimum additional cost,” HDFC ERGO Strategic Planning, Human Resource and Marketing Head Mukesh Kumar said in a release.

Other add-ons offered by the firm are: zero depreciation cover which pays for the depreciation of part for partial loss claims at the time of accident. It will also offer to pay a daily benefit for each day that the vehicle is in a garage following an accident, claim being admissible under the own damage part of the policy.

HDFC ERGO General Insurance is 74:26 joint venture between housing finance institution HDFC and ERGO International AG, the primary insurance entity of Munich Re Group.

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J&K Bank Q1 net up 35 per cent to Rs 246 crore

Jammu Kashmir Bank reported a 35 per cent growth in net profit to Rs 246 crore for April to June quarter on higher interest income and lower provisions.

The bank had posted a net profit of Rs 182 crore in the year-ago period.

Net interest income (difference between interest earned and interest expended) rose by 23 per cent to Rs 536 crore from Rs 437 crore in the same quarter lat year. Non interest income increased by 41 per cent to Rs 422 crore (from Rs 299 crore in Q1FY12).

Provisions during the quarter stood at Rs 50 crore as compared with Rs 84 crore in the January to March quarter. The bank’s provision coverage ratio as on June 30, 2012 stood at 94.09 per cent.

Gross non performing assets (NPAs) increased to Rs 541 crore from Rs 517 crore in the previous quarter. Percentage of gross NPAs was at 1.60 per cent (1.54 per cent in Q4FY12), while net NPAs marginally declined to 0.14 per cent (0.15 per cent in Q4FY12). Net Interest Margins stood at 3.84 per cent as on June 30, 2012.

Total advances increased by 26 per cent to Rs 33,225 crore, while deposits increased bygrew by 23 per cent to Rs 53,117 crore.


beena.parmar@thehindu.co.in

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IDBI Bank launches IDBI Samriddhi online portal

IDBI Bank launched an online portal - IDBI Samriddhi - to facilitate investors to invest in certificate of deposits issued by IDBI Bank. Both individual and institutional investors can avail of this facility.

The portal is launched by Anand Sinha, deputy governor, Reserve Bank of India at an event held at IDBI Bank's head office at Mumbai.

"Banks need to fully leverage on the potential of technology," says Anand Sinha, deputy governor, Reserve Bank of India who commended the initiative. He further added that technology provides great opportunities for increasing transparency, enhancing efficiency and also in reaching out to a wider investor base.

Certificate of deposits are typically issued for one year and three year tenure. The interest rate on one year certificate of deposit hovers around 9% to 9.15% and for three month certificate of deposit it ranges from 8.5% to 8.75%.

At the same time IDBI Bank offers 7% and 9% for three and one year fixed deposits. The minimum investment in certificate of deposit is pegged at Rs one lakh.

Earlier this year in January 2012, IDBI Bank had launched an online platform to trade in government securities for retail investors. At the end of June quarter of FY13 Bank's balance sheet size was at Rs 2.72 trillion and total business of Rs 3.6 trillion.



Source: EconomicTimes

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StanChart refutes US charges on Iran deals; share tanks in London

Standard Chartered has rejected New York regulators’ accusations of the bank scheming to hide $250 billion worth of transactions with Iran, generating “several hundreds of millions of dollars” of fees for itself and leaving the US financial system “vulnerable to terrorists, weapon dealers, drug kingpins and corrupt regimes.”

But this did little to halt the steep slide in its share price, down over 24 per cent in early afternoon trading in London on Tuesday.

On the BSE, the StanChart IDR tumbled 20 per cent on Tuesday.

The bank said it “strongly rejects” the position adopted by the New York State Department of Financial Services (DFS), and that the order issued by the regulator did not present a “full and accurate picture of the facts.”

It also insisted that the value of the transactions that did not follow the regulator’s “U-turn” framework came to under $14 million (Rs 77.1 crore), less than 0.1 per cent of the total transactions relating to Iran.

In addition, its own review had not found a single payment on behalf of an entity that the US government had designated a terrorist organisation at the time.

But Credit Suisse analysts said that “the timing of this release appears to come as a surprise to the company given the wording and the confident management tone at the results presentation last week.”

Analysts at JP Morgan Cazenove said while the bank’s strong capital position meant it would be able to absorb a penalty of the size of the fees it had gained, there were a number of additional concerns, such as its New York licences and US dollar clearing operation.

Standard Chartered has been ordered to meet the regulator on August 15, where among other things it will have to demonstrate why its licence to operate in New York State should not be revoked, and why its US dollar clearing operations should not be suspended pending a full hearing.

Over the past couple of years, banks have faced huge fines for violating US Office of Foreign Assets regulations, including HSBC, which has set aside Rs 3,860 crore, ING, which has been fined Rs 3,410 crore, and Barclays, fined Rs 1,640 crore.

Work outsourced to India under lens

PTI reports from New York

The DFS is also looking into the outsourcing of key banking jobs by Standard Chartered to India for exposing the US financial system to terrorists and money laundering risks.

A DFS probe has found deficient money laundering controls in outsourcing of work.

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Chidambaram to meet public sector bank chiefs on August 18

Finance Minister P. Chidambaram will meet public sector banks and financial institutions chiefs on August 18 in the Capital.

This will be his first meeting with PSU bank chiefs after assuming charge as Finance Minister on August 1.

This meeting is significant as it comes in the backdrop of the banking industry facing a crisis-like situation on several fronts, including rising bad loans and human resource problems.

There is also the threat of drought in several parts of the country, adversely impacting bank balance-sheets in the second quarter.

Chidambaram has also invited the heads of Nabard, Exim Bank, National Housing Bank, India Infrastructure Finance Company Ltd and SIDBI. The Chairman of pension regulator, PFRDA, has also been invited, official sources said. Chidambaram’s predecessor, Pranab Mukherjee, also followed the practice of meeting chief executives of PSU banks.

Such meetings offer an opportunity to the Finance Minister to review the status of financial inclusion, extent of farm credit growth and progress on the education loans front.

Already, Chidambaram has indicated that he would prefer lower interest rates to spur investments.

The RBI expects the Indian economy to grow 6.5 per cent in the current fiscal, while the Prime Minister’s Economic Advisory Council Chairman, C. Rangarajan, had pegged it higher than 6.5 per cent.

srivats.kr@thehindu.co.in

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Muthoot Finance to raise Rs 500 cr via NCDs

Muthoot Finance Ltd intends to raise Rs 500 crore by way of an issue of non-convertible debentures.

The company will issue NCDs to raise Rs 250 crore, but will accept up to Rs 500 crore if the issue is over-subscribed, Managing Director George Alexander Muthoot told Business Line on Saturday.

The interest rates will be decided closer to the date of the issue.

“We are seeing some softening of interest rates,” he said, but stressed that the company would not wait for further softening of rates.

If the rates come down further, there could be another issue, he said.

In the last 12 months, the company has come out with NCD issue thrice to raise Rs 1,400 crore. There could be another three issues in the current financial year too, he said.

The debentures are of two, three and five year tenors.

Secured NCDs (‘Muthoot Gold Bonds’) today account for 34 per cent of the company’s funding at Rs 7,117 crore, next only to bank borrowing, which accounts for 42 per cent of Rs 8,823 crore.

The company has got its NCDs rated by Crisil and ICRA. Crisil has given it a rating that indicates “high degree of safety with regard to timely payment of interest and principal on the instrument’’.

ICRA’s rating indicates “high quality credit rating and lowest credit risk, with a stable outlook’’.


mramesh@thehindu.co.in

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Dhanlaxmi Bank posts Rs 12-cr net loss

Dhanlaxmi Bank reported a net loss of Rs 11.81 crore for the quarter ended June 30, 2012.

However, the bank had posted a profit of Rs 3.4 crore in the same quarter last year.

Total income during the quarter stood at Rs 365.08 crore, down from Rs 370.50 crore in the year-ago period, the bank said in a filing to the BSE.

Shares of the bank were trading at Rs 52.25 apiece on the BSE, up 0.67 per cent from their previous close.

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IRDA to finalise whistleblower policy soon: Hari Narayan

In light of the recent ICICI Lombard controversy, the insurance regulator said that it will soon finalise the whistleblower norms akin to what the Reserve Bank of India has.

J. Hari Narayan, Chairman, Insurance Regulatory Development Authority, said that it will come out with the new exposure draft for investments for insurance companies in a couple of days. This was one of the key demands of some insurance companies.

The draft will contain guidelines for option on buying swaps and hedging operations.

IPO norms in a week

The regulator also said that it will unveil the guidelines on initial public offerings (IPOs) for non life insurance companies in about a week.

The IRDA Chairman also said that the regulatory body is considering giving a risk weighted assessment on assets and liabilities of insurance companies. This will help bring down the solvency margin below the present level of 150 per cent and provide more cushion to insurance companies.

satyanarayan.iyer@thehindu.co.in

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Corporation Bank presents Rs 177.7 cr dividend warrant to Centre

Corporation Bank has presented a dividend warrant of Rs 177.71 crore to the Centre. A bank release said here on Monday that Ajai Kumar, CMD of Corporation Bank, presented a dividend warrant of Rs 177.71 crore to P. Chidambaram, Finance Minister, in the presence of Namo Narain Meena, Minister of State for Finance, and D. K. Mittal, Secretary, Department of Financial Services, in New Delhi on Monday. The amount pertains to the dividend declared by the bank for 2011-12, it said.

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SBT to recruit 2,500 for clerical posts

State Bank of Travancore (SBT) has invited applications for 2,500 vacancies in the clerical cadre at its branches all over the country.

This is the largest ever recruiting drive by this State Bank of India-associate, an official spokesman said.

He reminisced the heavy recruitment drive during the mid-seventies when thousands joined the bank.

Their retirements are expected to happen over the next couple of years. “Bunching up” of these retirements is what has principally triggered the need for an encore now. Also, a number of existing employees in the clerical cadre are due for promotion as officers. This would also open up fresh vacancies.

The bank is also on an aggressive branch expansion.

During the last three months alone, 100 new branches have been opened. An equivalent number of units are expected to be opened very soon.

These offices would need at least two clerical cadre employees and an officer to man them, the spokesman said.

Candidates can apply for the cadre vacancies in one State only and will have to appear for a written test from a centre of that particular state.

Age and educational qualification needed as on August 1 are: 18-28 of years and 12th standard (10+2)-pass or equivalent with a minimum of 60 per cent aggregate, or a degree (graduation) from a recognised university.

Reservation and age relaxation are applicable to scheduled castes/scheduled tribes/other backward classes/persons with disabilities /ex-service persons as per guidelines.

A written test will be conducted on October 7 and October 14. Candidates may visit www.statebankofindia.com or www.sbi.co.in under the ‘recruitment link’ for online registration. Details are also available on www.statebankoftravancore.com.

vinson.kurian@thehindu.co.in

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Muthoot Finance to recruit 2,000 people this year

Muthoot Finance will recruit about 2,000 people this year, Managing Director George Alexander Muthoot told Business Line .

The current year marks the beginning of a “consolidation phase”, when the company will slow down branch expansion. It will open not more than 250 new branches this year compared with 1,000 in each of the last two years.

He said the company prefers to recruit graduates from the same area.

Muthoot Finance is a non-banking finance company that specialises in giving loans against pledged gold. Today, it manages gold loan assets of Rs 23,000 crore.

George Muthoot said that the company expects to end the year with a turnover of around Rs 26,000 crore.

A part of the reason for slowing down is the realisation that the gold loan business is growing too fast for the comfort of the Reserve Bank of India.

“I don’t blame the regulator,” Muthoot said, referring to the recent regulations brought in by the RBI.

The industry has been growing too fast for comfort, he said. (The RBI regulations include a rule that stipulates that the lender cannot lend more than 60 per cent of the value of the pledged gold, rules that make assignment or securitisation of gold loans difficult, and imposition of tighter limits on banks’ exposure to these NBFCs.

The loan-to-value is seen as the biggest dampener to the growth of loan assets.

Muthoot said that the industry was keenly awaiting the report of the KUB Rao committee of the RBI. The report was to be submitted by July 31, but since it has not yet happened, it is expected to come out any time now.

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Andhra Bank Q1 net down 6% as credit offtake slows

Muted credit off-take and higher provisioning towards non-performing assets dragged down Andhra Bank’s net profit for the quarter ended June 30, 2012, by about six per cent.

The bank reported a net profit of Rs 361.83 crore during the quarter, as against Rs 385.71 crore in the year-ago period. Its total income was Rs 3,357.22 crore, up from Rs 2,851.18 crore.

The bank’s Chairman and Managing Director B.A. Prabhakar said credit offtake, especially corporate loans, has been tardy during the quarter. He expected credit growth to touch 17-18 per cent for the year.

The bank’s provisioning towards NPAs during the quarter was Rs 157.25 crore (Rs 117 crore). Its gross NPAs, at Rs 2,358 crore, rose to 2.72 per cent at the end of the quarter, from 2.12 per cent on March 31, 2012.

Its net interest income in the quarter grew 3.1 per cent to touch Rs 938 crore.

Prabhakar said the recent cut in Statutory Liquidity Ratio by one percentage point will provide an additional liquidity of Rs 1,500 crore for the bank. “We have not yet taken a call on whether to cut interest rates,” he said.

Branch expansion

On expansion plans, he said the bank was adding 200 new branches this year to its current network of 1,716. It was setting up 200 new ATMs, with about 45 per cent to be located in rural areas.

The lender’s retail lending portfolio is about 13 per cent of its total lending, with plans to increase it to 15 per cent this fiscal.

amitmitra@thehindu.co.in

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UCO Bank to raise funds under MTN after India rating improves

State-owned UCO Bank is waiting for an improvement in the country’s credit rating outlook before it hits the market with a $500 million foreign currency debt issue for fuelling its overseas business.

“We will raise not less than $500 million through Medium-Term Notes issue. But, we are waiting for the country rating to improve,” UCO Bank Executive Director S Chandrasekhran told PTI here.

The rating of not just the bank, but the country rating impacted the coupon rate and it could go for the issue in the later part of the year with the hope that rating outlook would improve, the bank official said.

In June, rating agencies Standard & Poor’s and Fitch had downgraded India’s credit outlook to negative, but Moody’s had retained the outlook at stable despite slowdown in the GDP.

UCO Bank registered robust growth in its foreign operations with revenue growing by 20 per cent to Rs 4,407.39 crore during April-June, 2012 over the corresponding period last year.

“We will strengthen the Singapore operations as there is lot of opportunity to grow,” UCO Bank Chairman and Managing Director Arun Kaul said.

Asked about the recapitalisation amount required from the government to meet Basel-III requirements, Kaul said at present the bank was carrying out an assessment for the same.

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Bangalore-based public sector lender Vijaya Bank has said it is hopeful of raising its credit growth to 18-20 per cent in the current financial year.

“We have posted 16 per cent growth in credit offtake in the first quarter. But as third and fourth quarter witness more credit expansion, we are hopeful of clocking 18-20 per cent growth for the whole fiscal,” the bank’s Executive Director Shubhalakshmi Panse told PTI.

However, she said, concerns regarding patchy monsoon and the overall gloomy economic environment may have adverse impact on credit pick-up.

The public sector lender posted a 16 per cent rise in credit demand and 14 per cent increase in deposits in April-June.

“As far as deposit growth is concerned, we hope to end this fiscal with 16 per cent growth,” she said.

While the lender’s advances increased to Rs 59,306 crore in the June quarter of the current fiscal from Rs 51,130 crore reported in the year-ago period, its deposits increased to Rs 86,464 crore from Rs 75,877 crore in the same period previous fiscal.

Panse also said the bank is actively campaigning to increase its cheap cost deposit base to reduce the cost of funds.

“We are running a campaign `Vision 100’ for garnering Casa (current account, savings account) deposits, which will reduce our cost of funds,” she said, adding this would also help it reduce the dependence on bulk deposits.

The bank has a wait and watch policy about reducing lending rates on some key retail segments.

“We are aware that SBI has reduced its interest rates on auto and home loans. We are watching the overall market environment,” she said, adding the bank doesn’t have any immediate plans to reduce rates.

Vijaya Bank posted a 54 per cent rise in its net profit at Rs 111.36 crore in the first quarter of current fiscal.

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IOB likely to cut lending rates

Indian Overseas Bank is likely to cut interest rates on housing, vehicle and other retail loans after the RBI pared down SLR rate by one percentage point in its latest quarterly monetary policy review.

SLR or statutory liquidity ratio is the proportion of deposits that banks have to maintain in the form of investments in cash, gold or government paper. A cut in SLR rates injects fresh liquidity into the banking system.

“IOB will get an additional liquidity of Rs 1,800 crore after the SLR cut. This has given us room to cut lending rates in the required sectors,” the bank’s Chairman and Managing Director M. Narendra told Business Line.

The bank’s senior management team will be meeting on Monday to take a call on the quantum of rate cut.

The bank will also utilise the liquidity to step up its branch expansion programme. It is adding 400 branches this fiscal to take its total network to over 3,000. “We also plan to add 1,500 ATMs to our network of 1,524,” he said.

It will also be setting up 15 specialised agri-branches in Karnataka and Maharashtra, which will reach out to the farmers for their credit needs. It is setting up a national sales force comprising 450 MBAs, apart from recruiting credit specialists and at least 1,500 clerks in the next few months.

Narendra said the bank would be going ahead with its plans to raise $500 million through overseas bonds unless there was a fresh setback to the global economy. The bank’s optimism is based on the good rates that SBI and Exim got recently for their overseas issue.

IOB will spend the proceeds of the bonds for funding its overseas operations. “We have six overseas branches, which we plan to upgrade. Besides, we are looking at new geographies such as Africa and Senegal,” he said.

amitmitra@thehindu.co.in

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UCO Bank net up 24% at Rs 362 cr

Riding on the back of a growth in core operations, UCO Bank posted 24 per cent rise in net profit during the first quarter of this fiscal.

Net interest income grew by 29 per cent to Rs 1,044 crore for the quarter ended June 30 compared with Rs 808 crore in the same period last year.

Other income, however, dipped by 15 per cent during the quarter. According to Arun Kaul, Chairman and Managing Director, the bank had registered a high profit from treasury trading during the first quarter of 2011-12.

“This year our treasury trading profit was down by about 17 per cent, this dragged down our other income,” he said at a press meet to announce the bank’s performance during the quarter here on Saturday.

Net interest margin (NIM) was at 2.60 per cent (2.58 per cent). The bank would aim to achieve NIM of three per cent by the end of this fiscal, Kaul said.

The percentage of gross non-performing assets (NPA) to advances increased to 3.88 per cent (3.50 per cent), while net NPA increased to 2.23 per cent (2.15 per cent).

The bank expects 17-18 per cent growth in business this year. The capital adequacy ratio stood at 12.35 per cent as on June 30.

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Mobile Banking Security Lab launched

The Reserve Bank of India Governor, D. Subba Rao, on Friday inaugurated a mobile banking security lab set up by the Institute for Development and Research in Banking Technology.

The institute, established by the RBI, supports the Indian banking industry through innovative technology initiatives and interventions.

The security lab will explore solutions to the emerging challenges in mobile banking and security through research and development. Apart from providing guidance to banks in this regard, it will train participants from banks and financial institutions.

The RBI Governor also released the Information Security Framework draft prepared by the institute to help banks in benchmarking their systems against global best standards.

Stringent information security is vital as any breach in this could lead to several financial losses. The institute collaborated with 32 bankers to prepare the common framework and took inputs from ground level practitioners of information security to prepare the “easy-to-use” guidebook.

Rao also launched the Indian Banks’ Technology Consortium that will guide banks in the realm of financial technological developments.

amitmitra@thehindu.co.in

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