LIC eastern region targets 37% growth in first premium income

Life Insurance Corporation (LIC) is expecting a healthy growth of 37 per cent in first premium income to Rs 5500 crore in the eastern region during the current fiscal.

“We are targeting first premium income of Rs 5500 crore during the current fiscal as against Rs 4000 crore in the previous year,” LIC Zonal Manager (East) S K Roy said today on the sidelines of 56th year of celebration.

So far the country’s largest insurer had earned Rs 1022 crore in first premium till August this year.

Roy said this year the total premium income growth was expected to be around 10 per cent to Rs 11,000 crore as against Rs 10,000 crore achieved last fiscal.

He said the share of single premium which was about 65 per cent till last year had come down.

“Now the share of single premium and other traditional product had come down to 50 per cent,” he said.

Meanwhile, eastern region topped in selling single premium product Jeevan Vaibhav in the country with 25 per cent share of the total policies sold so far.

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SBI signs MoU with Japan Bank for International Cooperation to help Japanese SMEs

The country's largest lender State Bank of India (SBI) signed an MoU with Japan Bank for International Cooperation (JBIC) to help small companies from the far east nation to do business here.

Regional banks from Japan do not have a presence in India but SMEs from that country operating here or planning to enter the market here need to avail of financial services and "This MOU would assist JSMEs (Japanese small and medium enterprises) to meet their financial requirements from SBI," the SBI statement said.

JBIC has been mandated by the Japanese government to coordinate with regard to the needs of JSMEs.

The MoU was signed by SBI's managing director and group executive (International Banking) Hemant Contractor and managing executive officer of JBIC, Kazuo Yuhara, today.



Source: EconomicTimes

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Vijaya Bank cuts MSME loan rates up to 1%

Vijaya Bank has slashed interest rates on MSME (Micro, Small and Medium Enterprises) loans by up to one per cent across the board, effective from Saturday.

Also, in order to encourage MSME units to go in for rating by accredited external credit rating agencies, it has offered them incentives by way of a further reduction in the rate of interest ranging from 0.25 per cent to one per cent depending upon the ratings obtained, the public sector bank said in a statement.

The bank has identified MSME sector as a thrust area and it has recorded a 22.43 per cent annual growth under this segment for the year ending March, 2012, it said.

“Already several MSME melas have been conducted and the bank has also implemented ‘E-tracking’ of MSME for online loan applications,” it added.

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OneAssist Consumer partners HDFC Bank

OneAssist Consumer Solution announced that it has tied up with HDFC Bank to offer its customers product offerings — WalletAssist and EverydayAssist.

The partnership will enable HDFC Bank to offer all its new credit card customers assistance and protection service of their wallets, mobiles and important documents.

HDFC Bank, at a later stage, plans to extend this service to all its existing card customers through subscriptions at the bank’s various customer contact points, said a company release.

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Central Bank cuts home, car loan rates

Banks are going the whole hog in chasing retail customers by cutting interest rates on home and vehicle loans.

With credit demand muted on the corporate side, banks are marketing retail loans in a big way.

Over the last few weeks, banks such as State Bank of India, Union Bank of India and Corporation Bank have announced festival offers for retail loan borrowers.

Central Bank of India on Friday joined the festival offer bandwagon by cutting interest rates on home loans and car loans by 10 basis points and 150 bps, respectively. (A basis point equals one-hundredth of a percentage point.)

The public sector lender has also reduced the interest rate on personal loans and loans against gold by up to 200 bps and 100 bps, respectively.

The new interest rates are effective from September 1. The bank has waived processing charges on retail advances.

Home, car loans

While Central Bank’s home loans up to Rs 30 lakh will continue at its base rate of 10.50 per cent, the new rates in the above Rs 30 lakh to Rs 75 lakh, and above Rs 75 lakh to Rs 15 crore buckets will be 10.65 per cent (10.75 per cent) and 10.90 per cent (11 per cent), respectively.

The reduced interest rates on home loans have also been extended to the existing borrowers, the bank said in a statement.

Car loans will come at 11 per cent, against 12.50 per cent earlier.

Loans for buying old/second-hand cars will be given at 12 per cent (13.50 per cent).

Personal, gold loans

The new interest rates on personal loans to corporate and non-corporate employees are pegged at 14 per cent (14.50 per cent) and 15 per cent (15.50 per cent), respectively.

The bank has effected a steeper cut of 200 basis points in the interest rate on personal loans for pensioners to 12.50 per cent.

In the case of gold loans, the interest rates on overdraft and demand loan against the pledge of gold will be 12.50 per cent (13.50 per cent) and 11.50 per cent (12.50 per cent), respectively.

ramkumar.k@thehindu.co.in

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Visa’s new fraud detection system set to make e-payments more bankable

Visa Inc has introduced an advanced fraud prevention technology to step up security for India’s banks and provide greater protection for Visa cardholders.

Visa Advanced Authorisation (VAA) and Visa Risk Manager (VRM) offer financial institutions real-time protection and responses across Visa’s entire global network.

The move is likely to sit well with the regulatory direction that recently stressed the need for all India’s banks to adopt proactive real-time fraud detection, increase consumer protection, and proactively identify and deny fraudulent transactions.

Several Indian banks have already adopted the technology. Visa’s new technology detects emerging threats and helps shut them down on the spot. VAA/VRM also has the ability to pinpoint and address coordinated attacks on multiple accounts in real time.

In 2010, Rs 8,250 crore (or $1.5 billion) global fraud avoidance opportunity was identified by VAA.

“Securing and building trust in the card payments landscape is of paramount importance to us. To ensure optimum consumer protection, we are securing all our payment channels with participation in two-factor authentication for e-commerce, issuance of EMV/chip cards and implementation of Visa’s real-time fraud solution for monitoring domestic and international transactions,” said Mahesh Rajaraman, Senior Vice-President and Head of Risk Control, HDFC Bank.

Jairam Sridharan, Head of Consumer Lending and Payments, Axis Bank, said: “Building customer confidence in the security around electronic payments is important. With the RBI guidelines around securing card transactions in the country, we too have implemented the real-time fraud solution to further strengthen our transaction monitoring capabilities.”

Uttam Nayak, Group Country Manager, India and South Asia, Visa notes said, “Visa’s unique ability to analyse up to 24,000 transactions per second that cross our global network, and then immediately act on that intelligence is what separates this from other local or international systems. We can literally spot a needle in the haystack.”

VRM enables banks to turn VAA’s unique global insight into immediate action by creating custom responses to decline or query suspicious transactions in real-time. Given the different criteria for different institutions, VRM lets issuing banks tailor their responses in line with their risk profile and their risk criteria.

Currently, fraud detection is primarily based on identification, alarm and response. However, it is difficult to identify global fraud schemes.

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Karnataka Bank gets shareholders’ nod to raise authorised capital

Shareholders of Karnataka Bank have approved the resolution to increase the capital of the bank. The present authorised and paid-up capital of the bank is Rs 200 crore and Rs 188 crore, respectively.

At the bank’s 88th annual general meeting here on Thursday, the shareholders approved the proposal to increase the authorised share capital of the bank from Rs 200 crore to Rs 300 crore to facilitate further issue of equity shares.

Chairing the meeting, Ananthakrishna, Non-executive Chairman, said that the capital-to-risk-weighted assets ratio of the bank was at 12.84 per cent at the end of March 31.

To augment the capital, the bank may enter the capital market with an issue of equity shares.

Many shareholders, who attended the meeting, demanded that the bank issue bonus shares. Ananthakrishna said this would not help increase the capital of the bank.

To a query, P. Jayarama Bhat, Managing Director, said that the bank could not reach the agriculture credit target of 18 per cent in 2011-12. As a result, it has invested in RIDF (Rural Infrastructure Development Fund) of Nabard. (RIDF investment is seen as a penalty for banks that do not achieve agriculture credit target).

“We want to reduce investment in that. Now the bank has almost reached 15 per cent in agriculture credit. We hope to reach 18 per cent by the end of this fiscal,” Bhat said.

On the impact of issue of new licences on Karnataka Bank, Ananthakrishna said: “We are in the private sector. We are small and happy. Competition will be there. With your support and efficient workforce, we will face the competition.”

vinayak.aj@thehindu.co.in

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Corp Bank to cut interest rates on home, car loans from Sep 1

Corporation Bank has decided to slash interest rates on home, car and educational loans with effect from September 1 for a three-month period.

The state-run bank has also decided to waive the processing fee for these loans.

The bank’s Chairman and Managing Director Ajai Kumar said the interest rates for Corp Home Housing loan for up to Rs 50 lakh would be 10.50 per cent.

The rates would be 10.75 per cent for loans up to Rs 1 crore and 11 per cent for loans exceeding Rs 1 crore.

The bank hitherto charged 11.25 per cent interest on home loans, he told reporters here yesterday.

In case of vehicle loans, customers would be charged at 11.25 per cent for a five-year period.

The interest rate for auto loans with tenure of 7 years would be 11.75 per cent as against 12 per cent charged so far, he said.

Ashwani Kumar and Amar Lal, both Executive Directors of the bank and K Ramamurthy, General Manger were also present at the event.

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Union Bank cuts vehicle loan rate to 10.95%

Union Bank of India has slashed the interest rate on vehicle loans to 10.95 per cent (0-7 years) with immediate effect.

Earlier, the interest rates were: 12.50 per cent (0-3 years) and 13.50 per cent (3-5 years).

The public sector bank has extended its ‘Independence Day to Republic Day Festive Offer’ to vehicle loans by waiving processing fees during this period.

Home loan

As part of the festive offer, the bank is offering floating interest rate home loans at 10.50 per cent for loans up to Rs 30 lakh; 10.75 per cent for loans of Rs 30-75 lakh; and 11 per cent for loans between Rs 75 lakh and Rs 5 crore. It is not charging any processing fees on home loans under the offer.

D. Sarkar, Chairman and Managing Director, Union Bank of India, said the reduction in interest rates and the festival offer will boost the bank’s retail portfolio.

At Rs 16,769 crore, the bank’s retail portfolio, which includes home and vehicle loans, accounted for 10.27 per cent of the total domestic advances of Rs 1,63,229 crore as at June-end 2012.

ramkumar.k@thehindu.co.in

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Citigroup to pay $590 m to settle investor suit

Citigroup has agreed to pay $590 million to settle a suit by investors who accused the bank of misleading them on its subprime mortgage-based security losses in 2007-2008.

The agreement settled the four-year-old class-action suit that arose from the collapse of the US real estate market, which savaged the bank’s share price in part due to its heavy losses on collateralised debt obligations (CDO).

Investors who bought Citigroup shares between February 2007 and April 2008 accused the company of hiding its exposure to the CDO market, so they took heavy losses when it became public and the bank’s shares plummeted in value.

Citigroup denied the charges, but said it was agreeing to settle the lawsuit to avoid any more legal costs.

“This settlement is a significant step towards resolving our exposure to claims arising from the period of the financial crisis,” Citigroup said in a statement.

“Citi is fundamentally a different company today than at the beginning of the financial crisis. Citi has overhauled risk management, reduced risk exposures and, through our core businesses in Citicorp, we are focused on the basics of banking, leveraging our unique presence throughout the emerging and developed markets to serve our clients and the real economy.”

The suit said Citigroup masked losses on its holdings of CDOs in 2006 and 2007 as the property market was collapsing. That helped keep its share price high, above $47 in October 2007, before it plunged to below $2 in early 2009 after some $50 billion in asset write-downs.

The settlement only covered a subset of the group of investors who originally sued. The suit previously included investors claiming losses between January 2004 and January 2009, but the claims outside those included in today’s settlement were dismissed by the judge.

New York law firm Kirby McInerney LLP, which represented investors in the suit, called the settlement “a significant recovery relating to the subprime/credit crisis’’.

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Oriental Bank to lower deposit rates soon

Oriental Bank of Commerce (OBC) will soon lower deposit rates in some of the term buckets, its Chairman and Managing Director, S. L. Bansal, has said.

The bank’s asset-liability committee will meet next week to take a call on the issue, he added. Bansal, however, declined to comment on the likely time buckets where the rate revision may be effected.

One thing that is certain is that the bank is looking to only reduce deposit rates, not hike them.

OBC had, in mid-August, lowered its base rate by 10 basis points to 10.40 per cent, signalling that interest rates may have peaked. It had also reduced interest rates on term deposits of Rs 15 lakh and above.

NIM

Despite the revision in its lending and deposit rates, OBC is confident of achieving its net interest margin (NIM) guidance of 3 per cent for the current fiscal. It is also confident of meeting its net profit growth target of 20 per cent, Bansal said.

He said that the liquidity situation was quite good, but credit offtake had been somewhat muted.

Retail term deposit growth has been robust with year-on-year growth at 28 per cent.

Capital situation

On capital raising plans, he said that the bank was comfortable on the capital front, especially with tier-I capital at 9.92 per cent.

OBC has adequate room for raising tier-II capital and is looking to raise about Rs 800 crore before the end of the current calendar year.

“Our board has already approved this (tier-II plan) and we are waiting for the right market condition,” Bansal said.

srivats.kr@thehindu.co.in

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Kamath disagrees with SBI chief, says CRR not an issue

ICICI Bank Chairman K.V. Kamath today disagreed with the suggestion of SBI chief Pratip Chaudhuri that the RBI should scrap CRR, saying it is part of the monetary policy and no issue can be made of it.

Asked to comment on the vocal slugfest between Chaudhuri and RBI Deputy Governor K.C. Chakrabarty on the issue, Kamath said in the whole issue of monetary policy, several tools are being used, including Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio.

CRR is the portion of deposits kept by banks with the Reserve Bank on which no interest is paid.

“I think the monetary authority (RBI) in its wisdom uses all these tools as appropriate and that’s what is being done.

This (CRR) is nothing new. India always had a CRR for as long as I can remember and I don’t think honestly (there is) an issue to be made here”, he told reporters.

“You should look at it (CRR) as part of monetary policy that it is exercised and part of it is liquidity policy for the banks”, added Kamath, also non-executive Chairman of Infosys Ltd. Earlier, he addressed the eighth India Innovation Summit, organised by CII.

Last week, the SBI chairman made a strong pitch for the abolition of CRR, saying that keeping required funds with the Reserve Bank without any interest was costing the banking system about Rs 21,000 crore.

He called for phasing out of CRR, saying it would allow banks to lower lending rates. If the RBI can’t do away with it, it should at least pay some interest on CRR since banks pay their depositors, he had said.

Chaudhuri had also contended that “the CRR policy has possibly denied the country growth, income and employment”, and argued that since the RBI does not pay any interest on CRR, this acts as a tax on the banking system.

Chakrabarty had this week frowned on Chaudhuri’s contention on phasing out CRR. “If the SBI chairman is not able to do business as per our regulatory environment, he has to find some other place,” he had said.

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Seek more time to repay corporate loans: SBI

“The other day, we received a (loan) proposal for setting up a hotel, with a repayment period of eight to nine years. I told my officers ask this gentleman to take the loan for 12-13 years...Our advice is in the future, whenever you are applying for a loan, try to negotiate for a longer repayment tenure,” said Chairman Pratip Chaudhuri.

Such advice is aimed at capping a further rise in the bank’s restructured loan portfolio. In 2011-12, SBI’s restructured loan portfolio nearly doubled to Rs 8,093 crore from Rs 4,979 crore a year earlier. In the quarter ended June, the bank restructured loans worth Rs 564 crore. At the end of June, SBI’s total restructured loan portfolio stood at Rs 36,904 crore. Of these, loans worth Rs 7,373 crore were classified as non-performing assets. The Reserve Bank of India (RBI) has proposed tough norms for loan restructuring, and if the new rules are implemented, the provision burden on the bank would rise, eroding its profitability further.

Chaudhuri added SBI would not penalise its borrowers if they wanted to pre-pay loans ahead of the repayment schedule.

“In the current scenario, with the rules RBI has proposed, it is difficult to increase the tenure after the loan is sanctioned. It would increase the burden on the bank. So, we are telling our customers to negotiate for more time. If one is able to repay ahead of the schedule, it is fine — there would be no penalty for pre-payment,” he said.

However, most banks were reluctant to agree.

“The repayment period is based on the projected cash flow. The schedule is fixed after making a conservative assessment of the earnings, and taking into consideration the risk factor. We have no immediate plans to deviate from this practice,” said the chairman and managing director of a Mumbai-based public sector bank, requesting anonymity.



Source: Business Standard

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Indian Bank to open 1,525 ultra small branches in rural areas

Indian Bank proposes to set up 1,525 ultra small branches in rural areas across the country as part of its focus on taking banking services to villages,

Indian Bank Chairman and Managing Director T.M. Bashin speaking at Pattamangalam in Sivaganga district near here recently said that the bank would be opening 1,525 ultra small branches comprising one clerk, one laptop and one rural development officer.

This would be in addition to the 1,965 branches the bank has all over the country, he said while addressing the reporters recently on the sidelines of a function in which Union Finance Minister P. Chidambaram inaugurated the bank's 850th branch in the State.

He said rural branches were picking up and more advances were being given through the rural banks. In Tamil Nadu especially, business in some branches have crossed the Rs 50 crore mark, he said.

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Mobile banking set to become user-friendly

Banking transactions on mobile phones are set to become easier in a few days time.

You will just need to key in the service code ‘*99#’ in your mobile to initiate funds transfer and check the balance in your bank account.

To begin with, about 20 banks will offer the service code based mobile banking facility to customers who are subscribers of Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd. State Bank of India, Bank of India, Bank of Baroda, Canara Bank and Union Bank of India will be part of the initial roll-out.

All mobile banking transactions will be routed through the National Payments Corporation of India’s National Financial Switch for ATMs.

The service code based facility will work even on the most basic GSM mobile phone. It does not require users to download any software (application) for mobile banking.

A customer registering with his bank for mobile banking will be given a seven-digit mobile money identifier (MMID) and a mobile personal identification number (MPIN).

To initiate a mobile banking transaction, all that a customer will need to do is key in the ‘*99#’ service code.

Then a prompt will ask the customer to enter the MMID. Next, he has to choose from a menu of banking services — balance enquiry/funds transfer/merchant payment — to complete the transaction.

“Some banks may require customers to key in the second factor authentication (MPIN) only for financial transactions while others may require it for all transactions,” said a senior public sector bank official. The RBI has set a daily transaction cap of Rs 5,000 a customer including funds transfer and purchase of goods/services for mobile banking transactions facilitated by banks without end-to-end encryption.

According to A.P. Hota, Managing Director and Chief Executive Officer, NPCI, the service code based mobile banking will further the cause of financial inclusion.

The Corporation is working to get all banks to roll out this facility for their customers. Further, efforts are on to get all mobile service providers to activate the service code for their customers, said Hota.

Long-queues of migrant workers outside bank branches in metros and big cities to remit money may become a thing of the past if the ‘*99#’ based mobile banking service clicks.

ramkumar.k@thehindu.co.in

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Growing trend of Govts adopting e-payments methods: MasterCard

Governments world over are increasingly adopting electronic payment methods as an alternative to cash and cheque-based benefit programme, as a measure to save money and improve financial inclusion.

The United States, Italy, Canada, United Arab Emirates and Romania are some of the latest examples of governments going paperless as a cost-savings opportunity and a method of addressing financial inclusion, MasterCard Worldwide said in a statement.

Most recently, the South African Social Security Agency distributed more than 2.5 million debit cards to social grant recipients across the country with a target of 10 million cards by March 2013, the statement added.

"By supporting governments around the world with electronic payment programmes we are helping save money and improve efficiencies. But more importantly, together we are opening up a world of inclusion for those who have previously not had access to traditional financial services," MasterCard Worldwide Chief Products Officer Tim Murphy said.

According to Mastercard, the United States Department of the Treasury is also moving towards all electronic payments, including the Direct Express debit card, which is used to deliver social security and other federal benefits.

The programme is expected to save the US government USD 1 billion over the first ten years, the statement said.

Some of the other examples include the Italian central government's launch of the "Carta Acquisti" social card programme to assist citizens in need. In Romania, the Poste Romania also began distributing prepaid cards across the country to social benefit recipients.

Meanwhile, the Toronto Employment and Social Services (TESS) recently launched prepaid benefits cards for the delivery of social assistance disbursements. In Mexico, a pilot is underway for the residents of Oaxaca to access a variety of financial instruments through their mobile phone's SMS functions.


Source: Financial Express

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Vijaya Bank signs MoU with SIDBI arm to tackle bad loans

Public sector lender Vijaya Bank has tied up with India SME Asset Reconstruction Company (ISARC) to tackle the issue of mounting bad loans in the banking system.

The asset reconstruction company promoted by SIDBI has entered into a memorandum of understanding with Vijaya Bank with a mandate to offer services in management of stressed assets.

Under the agreement, ISARC will act as a resolution-cum-enforcement agent for the bank for the resolution of its non performing assets. ISARC is in the process of execution of similar agreements with other public sector banks.

beena.parmar@thehindu.co.in

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StanChart jumps 5% as Sebi permits IDRs' conversion

Standard Chartered today jumped by over 5 per cent on Indian bourses after financial sector regulators RBI and Sebi allowed partial flexibility in conversion of Indian Depository Receipts (IDRs) into equity shares by investors.

Standard Chartered scrip on the BSE surged by 5.57 per cent to close at Rs 101.45 defying the weakness in the broader market. During the trading session, the stock rose by 8.22 per cent to touch the day’s high of Rs 104.

At the NSE, IDRs of Standard Chartered were up 5.26 per cent to settle at Rs 101.10. During intra-day trade, the stock touched a high of Rs 104 and a low of Rs 99.

The BSE benchmark Sensex fell by 141 points to close at 17,490.81 points.

Shares underlying the IDRs are deposited with the custodian, who holds the shares on behalf of the depository.

Yesterday, RBI and Sebi allowed partial flexibility in conversion of IDRs into equity shares by investors, while capping the funds to be raised through IDRs at $5 billion.

The move follows a proposal in the 2012—13 budget to allow two-way fungibility of IDRs, subject to a ceiling.

The decision is expected to help in attracting foreign entities to list their IDRs on domestic bourses.

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SBI, SBBJ donate Rs 4 crore for relief in Rajasthan

State Bank of India (SBI) and State Bank of Bikaner and Jaipur (SBBJ) on Wednesday donated Rs 4 crore to the Chief Minister’s relief fund for works in flood hit areas in Rajasthan.

Rains causing floods displaced several people in the state.

SBBJ, MD, Shiva Kumar and SBI, CGM, Zonal office, B Sriram handed over cheques of Rs. 2 crore (each) to Chief Minister, Ashok Gehlot.

Senior officers of the bank were also present on the occasion at the Chief Minister’s office.

Sriram told reporters that the financial assistance was provided for relief works in rain-hit areas of the state.

The bank uses minimum one per cent of its profit for activities under corporate social responsibility, he said.

In reply to a question, he said the bank which has 325 branches in Rajasthan targets to add 25 more branches in the state during the current fiscal.

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L&T General Insurance incurs Rs 106 cr loss in FY’12

L&T General Insurance Company (LTGI) has incurred a loss of Rs 106 crore in its first full financial year of operations in 2011-12.

LTGI, a wholly-owned subsidiary of engineering major Larsen & Toubro, had received the regulatory approval to operate as a general insurer in July 2010. It commenced operations in October that year.

“The existing resources being properly re-deployed and utilised resulted in motor line showing a significant growth. However, lower price realisation in this line has resulted in higher loss ratio. The loss in the current year stands at Rs 106 crore,” L&T said in its latest annual report.

LTGI operates mainly in areas including fire, marine, motor, public liability, group personal accident and group health insurance.

LTGI in its second year of operations and in first full financial year achieved Gross Written Premium of Rs 143 crore by selling nearly hundred thousand policies (97,766).

L&T said delay in getting approval of health products had resulted in lower achievement of LTGI’s health business during 2011—12.

“The company’s prudent underwriting practices resulted in lower levels of engineering business where the market did not support by adequate increase in price realisation,” it added.

LTGI has a “pan-India” presence with 10 branch offices as hub locations, it said.

The top-line of the Indian general insurance industry recorded an impressive 23 per cent growth to Rs 58,344 crore in 2011-2012, L&T said.

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Corporation Bank launches ‘festival bonanza’ for loan schemes

Corporation Bank will focus on the retail and SME (small and medium enterprise) segments to boost growth during the second and third quarters of the current fiscal.

Addressing newspersons at the launch of ‘Grand Festival Bonanza’ for various loan schemes here on Wednesday, Ajai Kumar, Chairman and Managing Director of the bank, said that there is a huge market in the retail and SME segments.

Stating that he is enthused by the performance of the bank without any promotional activity or cut in interest rates, he said the initiatives under the ‘Grand Festival Bonanza’ will increase the yield and give new current account and savings bank business. It is a multi-pronged strategy, he said.

The bank, which has 11 SME loan centres, will set up six more in the coming days. “These loan centres alone should give around Rs 5,000 crore business during the current financial year. The bank expects around 15-20 per cent growth in this segment,” he said.

For three months

K. Ramamurthy, General Manager of the bank, said the ‘Grand Festival Bonanza’ will be in force for three months from September 1. Under this, home loans under the floating rate will get a concession of a minimum of 25 basis points (bps) and vehicle loans 75 bps . The reduction will be 50 bps for other schemes such as Corp Vyapar and Corp Doctor Plus, he said.

Ajai Kumar said that the bank is planning to open five agriculture clusters.Loans against gold will also be a focus area, with the bank planning to set up 12 dedicated ‘gold loan shoppe’ at different locations, he added.

vinayak.aj@thehindu.co.in

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IDBI Bank ties up with SME rating agency

IDBI Bank Ltd has entered into a Memorandum of Understanding (MoU) with SME Rating Agency of India Ltd (SMERA) to evaluate its existing as well as potential MSME (Micro, Small and Medium Enterprise) clients.

“The rating will make it easier for the bank to get information and expedite the credit decision in lending to the prospective MSME customers…. The customers will get concessions on the rate of interest if their rating is higher,” said S. K.V. Srinivasan, Executive Director, IDBI Bank.

The public sector lender already has tie-ups with rating agencies such as CARE and Crisil to rate its prospective MSME clients.

IDBI Bank’s outstanding MSME lending stood at Rs 17,000 crore as on March 31, 2012, against Rs 11,000 crore in FY11.

The net non performing assets (NPAs) for the segment (MSME) increased to 2.29 per cent in FY12 as compared with 1.83 per cent in FY11.

“IDBI Bank is keen on expanding its lending to the MSME sector considering it as a key driver of the Indian economy in terms of contribution to GDP, employment and exports,” said D. C. Jain, Chief General Manager, MSME Business, IDBI Bank.

beena.parmar@thehindu.co.in

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SKS Microfinance allots 44.5 lakh shares to Kumaon investment

SKS Microfinance has allotted 44.5 lakh shares on preferential basis to Kumaon Investment Holdings.

As per the details of the acquisition, Kumaon Investment Holdings will acquire 44.5 lakh shares carrying voting rights equivalent to 4.11 per cent, SKS said.

Kumaon Investment Holdings is a promoter of the company.

In a BSE notification last week, SKS informed the BSE that “the Board of Directors of the Company has made allotment of 44,50,000 equity shares of Rs 10 each at a premium of Rs 65.40 per share to M/s Kumaon Investment Holdings, on a preferential basis.”

Shares of SKS Microfinance traded at Rs 103.25 apiece on the BSE in noon trades today, down 6.52 per cent from the previous close.

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NPAsource.com registers Rs 13K cr properties in first year of operations

NPAsource.com, a dedicated portal for the resolution of non-performing assets of banks and financial institutions in India and globally, has registered properties worth over Rs 13,000 crore in its first year of operations.

Currently, the portal has over 1,000 registered users, comprising banks, corporates, chartered accountancy firms, lawyers, tax consultants and real-estate brokers, amongst others. NPA properties from over 15 banks in India can be accessed on this portal which focuses on resolving and finding appropriate buyers at optimum rates for as many of these NPA properties as possible, Devendra Jain, Chairman and Managing Director, Atishya Technologies Pvt Ltd, a financial consultancy firm which set up the portal in 2011, said here on Wednesday.

Atishya Technologies has put in place a franchisee network which will soon span 20 major cities in India. The company has also set up operations in Dubai to get foreign banks post their NPA properties on the portal and get foreign corporates and other facilitators to register and look at investing in NPA properties in India.

Currently, NPAs in India amount to around Rs 1 lakh crore and are expected to go up further due to a slowdown in the economy and high interest rates.

The portal provides a one-stop solution to stakeholders such as lenders, borrowers, investors and facilitators to access data for faster resolution of NPAs, he said.

Jain said the portal also plans to begin its US operations by end-2012. It will open the first office in Europe by June 2013. In India, it plans to expand operations by setting up own offices in New Delhi and Bangalore, in addition to its existing ones in Mumbai and Ahmedabad.

ons by setting up own offices in New Delhi and Bangalore, in addition to its existing ones in Mumbai and Ahmedabad.

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KVB to launch new recurring deposit product

Karur Vysya Bank is piecing together a new product that is expected to revive interest in recurring deposits. The private lender is expected to soon unveil the product that will provide flexibility in deposit amount.

Many Indian banks today have reduced their focus on recurring deposit schemes as the returns are comparatively low at times of volatility in interest rates.

These deposits are mainly preferred by people who do not have a lumpsum amount to invest and instead pay a fixed amount every month.

K. Venkataraman, Managing Director and CEO of Karur Vysya BanK, admits that not many banks were giving sharp focus on recurring deposits.

“We are working on a flexi recurring deposit product that will both give us better yields and more benefits to depositors,” he told Business Line on the sidelines of a branch inauguration function here.

One of the major drawbacks with this scheme is the non-flexibility of the amount of deposit, with neither partial payment nor over payment allowed.

“Our product will have flexibility in the deposit amount. We feel small and medium traders will benefit by this product,” he said.

Venkataraman said some banks had introduced such a scheme in the past but these did not work out for some reason. “We are now trying to evaluate the reasons for this and make necessary changes in the new product,” he said.

Expansion mode

The lender, which has been restructuring its organisational set-up based on the recommendations of the Boston Consulting Group since one year, is currently on an expansion phase.

“We added 80 branches last fiscal and this year will add 100 more to take the total number to 550. About 35-40 per cent of these will be in the northern states, where we plan to increase our presence,” he said.

The bank will also be recruiting about 1,500 people, both as officers and clerks, this fiscal. It plans to increase its non-interest income by 35 per cent this year through increased credit, para-banking and insurance products.

amitmitra@thehindu.co.in

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HDFC warrant holders reap a windfall on conversion

Equity warrants may have lost their charm as an investment option in a languid market, but HDFC shareholders may have no reason to complain as their investments in warrants of the country's largest housing finance company have yielded higher returns than benchmark indices.

HDFC shares have been quoting at a premium to the warrant price for many weeks ahead of the conversion date (August 24). As a result, the conversion option turned attractive, prompting holders of Rs 5.5 crore warrants to exchange them for shares. Issued at a price of Rs 55 a piece three years ago, the warrants are estimated to have offered investors as high as 120% plus return on conversion - much higher than a 13% rise in the Sensex during the period.

In recent years investors in many other companies have let their warrants lapse, as they preferred to forgo the initial 25% payment made towards subscription after stock prices slipped below conversion prices. In some other companies, investors chose to convert warrants into equity at a premium to the market price.

On Tuesday, HDFC shares closed flat at 723, resulting in a gain of 68 for warrant holders whose total investment per warrant is Rs 655 (issue price of Rs 55 plus conversion price of Rs 600). As most warrant holders exercised their conversion option in the recent months and closer to the due date, the actual returns, according to analysts, will be based on the initial investment made at the issue price. This works out to 123%.

In August 2009, HDFC had issued over one crore warrants at Rs 275 each and the conversion price was fixed at Rs 3,000 based on the then face value of Rs 10 per share. Subsequently, the company split the Rs 10 stock into five shares of Rs 2 each due to which the number of warrants increased to Rs 5.5 crore while issue and conversion prices were adjusted to Rs 55 and Rs 600, respectively. The warrant holders had the alternative to exercise the conversion option within three years from the date of allotment.

"HDFC is a defensive stock and so the share price has been holding firm despite uncertain market conditions. This prompted warrant holders to exercise conversion option so that they earn a good return on conversion," said Vaibhav Agrawal, vice-president, research (banking), Angel Broking.

He, however, said the HDFC issue was a unique combination of debt and warrants which were mostly issued to institutional investors. In many past cases, companies had issued warrants to their promoters who generally do not invest in such instruments to earn returns on conversion. Thus, returns from investment in HDFC's warrants cannot be compared with those earned from similar instruments issued by other companies, said Agrawal.

A large number of warrants are expected to have changed hands from the original holders to new investors amid active trading in the securities ahead of the conversion. According to brokers, many HNIs and institutional investors bought HDFC warrants in the recent months as they sensed an arbitrage opportunity as well as dividend benefit. HDFC paid 550% dividend for FY12, higher than 450% in the previous year.


Source: EconomicTimes

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RBI to soon issue Rs 1,000 notes with rupee symbol, more security features

The Reserve Bank of India said that it will soon launch Rs 1,000 denomination banknotes with rupee symbol, and improved security features.

“The Reserve Bank of India will shortly issue Rs 1,000 denomination banknotes incorporating rupee symbol, with inset letter ‘L’, in both the numbering panels, in the Mahatma Gandhi Series-2005 with improved security features,” RBI said in a notification.

These banknotes will bear the signature of RBI Governor D. Subbarao and the year of printing 2012 will be on the reverse of the bank note, it added.

The design of these notes to be issued will be similar in all respects to the Rs 1,000 banknotes in Mahatma Gandhi Series-2005.

“All the banknotes in the denomination of Rs 1,000 issued by the bank (RBI) in the past will continue to be legal tender,” RBI said.

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RBI to co-operative banks: Keep interest rates variation on FDs to minimum

The Reserve Bank today asked state and central co-operative banks to ensure minimal variation in interest rates on single-term deposits of Rs 15 lakh and above and other deposits for corresponding maturities.

"It has been observed that there are wide variations in the interest rates offered by banks on single term deposits of Rs 15 lakh and above and those offered on other deposits (i.e. deposits less than Rs 15 lakh) of corresponding maturities," RBI said in a notification to these banks.

Stating that there was wide variations in the interest rates on single term deposits of corresponding maturities, RBI said banks should put in place a board approved transparent policy on pricing of liabilities.

RBI further said banks are offering significantly different rates on deposits with very little difference in maturities.

It said such practice of banks suggested "inadequate liquidity management system" and "inadequate pricing methodologies".

Banks are allowed to offer differential rates of interest on term deposits at their own discretion, on condition that they should disclose to the depositor in advance the schedule of interest rates payable on deposits, including deposits on which differential interest is paid.

"The Board/ALCO should ensure that the variation in interest rates on single term deposits of Rs 15 lakh and above and other term deposits (i.e. deposits less than Rs 15 lakh) is minimal for corresponding maturities," RBI said.



Source: EconomicTimes

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Onam offer from HDFC Bank

HDFC Bank has offered a special gift for NRIs and their families with the launch of One Family, One Bank, Zero Balance account in connection with Onam festive season. The Zero Balance account will be available to resident family members of NRIs, who open NRE & NRO accounts on or before September 15. This will enable NRIs to seamlessly transfer funds to their family members’ account. The bank also offers an impressive network of branches and ATMs across India and also a wide array of loans and deposit schemes at attractive interest for NRIs. This offer is currently available only in Kochi city branches and will be extended to other regions in Kerala in the future.

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Bank of India revises rates for fixed deposits

Bank of India has raised its interest rates by up to 1.5 per cent for fixed deposits of up to Rs 1 crore on select maturities.

For fixed deposits of Rs 1 crore and above, the state-run bank, however, has lowered interest rate by up to 0.5 percent.

“The bank has revised Term Deposit Rates in some maturities with effect from September 1, 2012,” Bank of India said in a filing to the BSE.

The bank has raised rates for maturity of 31 days to 45 days for deposits of less than Rs 15 lakh to 7 per cent from 5.5 per cent currently.

For maturity of 46 days to 90 days, it has been revised upwards to 7 per cent from 5.5 per cent.

For deposits above Rs 15 lakh and above but less than Rs 1 crore, the rate has been increased to 7 per cent (from 5.5 per cent) for maturity of 31 days to 45 days. For maturity of 46 days to 90 days, it has been increased to 7 per cent (from 5.5 per cent).

However, for deposits of Rs 1 crore and above the bank has proposed to slash the rates to 7.5 per cent from 8 per cent for maturity of 46 days to 90 days. While, for maturity of 91 days to 179 days, the rate will be cut to 8 per cent from 8.25 per cent.

Similarly, for deposits of Rs 1 crore and above maturing in 270 days but less than one year, the rate has been cut to 8.5 per cent from 8.75 per cent.

Shares of BoI ended at Rs 265.05 apiece on the BSE today, down 0.45 per cent from the previous close.

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SBI opens kiosk in Charminar

State Bank of India has opened a customer service point in Charminar area. It is the 45th such point in Hyderabad and is part of the bank’s urban financial inclusion activity. The service is managed by Geosansar, a corporate banking correspondent of SBI.

Shekar Srivastava, General Manager, SBI, Hyderabad Circle, said that kiosk banking in financial inclusion has been widely successful and Geosansar’s initiatives of Bank on Bike (first of its kind) and mobile banking has been very helpful in rendering wide range of services in the unorganised sector of the country.

S. Ramesh, Managing Director, Geosansar, said that, so far, 59,000 basic savings bank deposit accounts were opened and 3.96 lakh non-home transactions were handled by them in Hyderabad.

Shekar Srivastava added that the kiosks will open basic savings bank deposit account under the liberalised know your customer norms which will offer minimum common facilities to all their customers.

The account does not need any minimum balance. The kiosk will be open from 8 a.m. to 8 p.m. round the year.

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HUDCO re-enters home loan lending

Housing and Urban Development Corporation (HUDCO) said on Tuesday that it has restarted lending for home purchases by launching a competitively priced product.

The corporation, mandated with affordable housing and urban development, will be offering home loans at a floating rate of 10.20 per cent for loans up to Rs 25 lakh, its regional office in the city said in a statement today.

The interest rate on the product is better than the 10.25 per cent currently charged by the country’s largest lender State Bank of India, also the market leader in the segment with one of the most aggressive pricing, for home loans of up to Rs 30 lakh.

“This makes it the most competitive home loan product available for salaried individuals in the major capital cities of India,” the statement said.

The HUDCO statement said it will also offer other features like free personal accident insurance, no charges before sanction, and no pre-payment charges, which are offered by a host of players.

The home loan lending was frozen since May 2011 and has been re-started on August 15, an official said, without giving the reasons for either the closure or restarting.

Additionally, HUDCO will not charge any processing fee till the sanction of the loan, unlike some commercial lenders who charge upfront, the official said.

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