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Saturday, September 8, 2012

Federal Bank’s gold loan access facility

Private sector lender Federal Bank has introduced a gold loan access facility for customers through the use of their debit card. The product ‘Easy Gold’ enables customers to withdraw or use loan amount through any ATM or at POS (point of sale) terminals. Level of finance goes up to 75 per cent of the market value of gold with an upper limit of Rs 75 lakh. An interest rate of 14.75 per cent will be charged on the amount utilised or withdrawn by the customer.

The loan will be sanctioned for a period of up to 3 years, “The loan, which amounts to 75 per cent of the total gold pledged with the bank, is offered by opening a separate overdraft account and can be availed through an ATM debit card according to the requirement of the customer,” said D Sampath, Head Retail Banking, Federal Bank. In addition, a customer can utilise their pledged jewellery for personal use for up to five times a month. However, they will have to maintain a balance with the bank which is equivalent to the value of the gold being used.
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RBI permits investment in Pakistan by India Inc

Reserve Bank permitted Indians to invest in Pakistan, a move which will help enhance bilateral trade and investment.

The RBI notification comes on a day when Indian External Affairs Minister S M Krishna is visiting Pakistan aimed at strengthening bilateral relations.

"It has now been decided that the overseas direct investment by Indian parties in Pakistan shall henceforth be considered under the approval route," RBI said in a notification.

The moves comes days after India allowed investment from Pakistan.

"Necessary amendments to the Foreign Exchange Management (Transfer or Issue of Any Foreign Security), Regulations, 2004 are being issued separately," the RBI said.

Bilateral trade between the neighbours stood at about USD 3 billion and is expected to reach USD 6 billion in the next three years.

Earlier, Pakistan had expressed concern over certain issues related with investments from India.


Source: Financial Express
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Rs 4.51 crore tax evasion by Muthoot Precious Metals

Muthoot Precious Metals Corporation, a sister concern of Kochi-based Muthoot group, has evaded Rs 4.51 crore in central excise duty in manufacturing and selling of branded gold and silver coins during one-year period up to March this year.

"Muthoot Precious Metals Corporation manufactured branded gold and silver coins through job-worker VNM Jewel Crafts Ltd for their customers and sold through their branches located throughout India during March 1, 2011 to March 16, 2012 without payment of central excise duty violating notification ... and thereby evaded central excise duty to the tune of Rs 4,50,55,933," Central Excise Commissionerate (Kolkata) said in a statement.

When contacted Muthoot group Chief Executive Officer P E Mathai told PTI that the company has no information about such a development.

"We have not been intimated through a notice or any other means.... We can react only after receiving proper information," he said.



Source: EconomicTimes
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Festival bonanza: Corporation Bank hopes to disburse Rs 3,000-cr retail loans

With a keen focus on growing the retail loan portfolio, Corporation Bank has launched Grand Festival Bonanza.

During the three-month period beginning September 1, the bank offers loans at ‘special rates’ for the retail segment, including housing and vehicle loans.

At a press conference organised by the bank here on Friday, S. Pattabiraman, General Manager, said the target is to disburse at least Rs 3,000 crore under the scheme. The bank is in the process of teaming up with select builders and automotive dealers to facilitate this. This will also enable the bank to post at least 25 per cent growth in the retail loan portfolio for the whole of 2012-13, over the previous year. He said in the first five months (April-August), the portfolio registered 21 per cent growth.

During the festival period, home loans under the floating rate will get a concession of a minimum of 25 basis points, and vehicle loans 75 basis points. Under other schemes such as Corp Vyapar — targeted at the retailer community and Corp Doctor Plus (for doctors), the reduction will be to the extent of 50 basis points, he explained.

ravikumar.ramanujam@thehindu.co.in
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SBI group requires Rs 1 lakh cr to meet Basel-III norms

The State Bank of India and its associates and subsidiaries will require around Rs 1 lakh crore of capital over the next five years to meet Basel III norms (in addition to retained earnings).

Diwakar Gupta, Managing Director and Chief Financial Officer of SBI, told Business Line this was based on a 20 per cent growth rate, and a return on equity of between 18 and 20 per cent. He conceded that the estimate could vary since growth rates during the last year as well as current year are lower.

The RBI estimates that Indian banks would need about Rs 5 lakh crore in the next five years to get ready for Basel-III norms that will be effective from 2018. The norms, developed in the backdrop of the global crisis in 2008, impose higher capital prescriptions on banks to cater to various risks.

Asked about the capital that the bank would receive from the government in the current year, Gupta said, “The number being bandied about in the press is closer to Rs 4,000 crore. We are reasonably comfortable with capital. Rs 4,000 crore will see that we don’t breach anything.”

SBI received Rs 7,900 crore infusion from the government last fiscal. He said, “We don’t need further capital under Basel III all the way up to 2015. Counter-cyclical buffer introduction may require capital beyond 2015. The extra 2.5 per cent will come up in 4 tranches and the fiscal 2015 may require a little capital.”

Capital conservation

Gupta also said that the bank would continue with its capital conservation strategy (routing SME, export credit through guarantee schemes thereby reducing the credit risk on such assets and also lowering the capital requirement on the loans). The measures had contributed to a 62 basis point rise in the tier-1 ratio of capital last fiscal (one basis point is one-hundredth of a percentage point). SBI had a capital adequacy ratio of 13.8 as of June with tier-1 ratio at 9.8 per cent.

He added, “We will try a couple of other levers, but by and large we will improve the integrity around our data and around our ratings better. We clawed back 91 basis points totally last time. Hopefully this year, we will do another 25- 30 basis points based on the same parameters.”

Rating agencies

Asked if the improvement in capital ratio would warrant a ratings upgrade by rating agencies, Gupta said, “It is very hard to say. Our stock is taking a beating. In the short term, markets reflect the mood more than the basics and I think that is the case for rating as well.

Asset quality is a problem for all banks and therefore the rating agencies are well within their rights to say that there is enough stress to warrant a ratings revision. But another big item that they said affected the ratings was the inability of State Bank to raise capital at will. Now this has not changed since 1955. Why suddenly that should become an important factor while re-considering a rating? I think it is more a factor of perception than fact. We will, of course, ask the rating agencies to review our performance which is quite strong.”

Gupta said that SBI was delivering the second largest corporate profit in the country and was the largest tax payer. “That is something the rating agency should also look at,” he added.

santosh.majeti @thehindu.co.in
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Friday, September 7, 2012

All isn't lost on eco, upside surprises in offing:Deutsche Bank

A Deutsche Bank report today said that all is not as bad as it is being made out to be about the country and that there can be some positive surprises in the offing, as the economy is still fundamentally strong andpro-growth measures are being rolled out.

Noting that the consumer demand is still strong and the country still remains a relatively attractive destination for investors with the rising global turmoil, the report said, "There may be an undue concentration of pessimism, which may be ripe for some upside surprise, as the economy is not dysfunctional," Deutsche Bank chief economist Taimur Baig said in a research note.

The German bank said the report was prepared after its research representatives recently met with policy advisors and economic and political thinkers in New Delhi.

Though there are domestic as well as global risks, the report notes that "despite the ongoing slowdown, the economy remains characterised by strong consumer demand, nimble business owners and continued goodwill from foreign investors as well as NRIs, thus job creation has not been impacted, nor have capital inflows."

Though it notes that the consensus is bearish on the country with strong macro headwinds, weak policy momentum and mounting political uncertainties, when growth supportive policy measures are taken, there will likely be a positive feedback as typical problems associated with a dysfunctional economy which is marked with excessive corporate and household leverage, pessimistic consumers, financial sector stress, etc) are not yet a part of the India story.

Secondly, the report notes policy is not in total paralysis. While far from satisfactory, there is movement in New Delhi to get infrastructure spending going and provide further investment incentives.

Third, the report says, "We may have already seen the worst of the macro environment, with a rising likelihood of growth bottoming out and inflation having peaked. Finally, given the fiscal and financial stagnation in the industrial world, India remains a relatively attractive destination for investors."

Despite these optimism, the report, which is mildly constructive on the macro front and has only limited optimism about the structural reform agenda, says the macro environment remains hostage to further slowdown in global growth and financial events in Europe.

On the impact of European and US monetary easing measures, the report said, "More monetary accommodation in the US and Europe could cause yet another global commodity price rally, undermining India's inflation and fiscal outlook."

On the political side, it says political tension could rise further, causing more damaging policy slippages.

However, the report concludes that even as the ruling political leadership continues to struggle, we are cautiously optimistic that between the finance ministry and the RBI, at the very least infrastructure spending, will be revived and some monetary easing would take place.


Source: Financial Express
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HDFC, Kotak Bank in Forbes' Asia Fab 50 list

HDFC Bank and Kotak Mahindra Bank have pipped their Chinese peers in the Forbes Asia's 'Fab 50' list this year.

HDFC Bank, the country's most valued bank with the largest market capitalisation, and Kotak Mahindra Bank are the only two banks from Asia in the list, and among the 11 companies from India in the 2012 edition of Forbes Asia's Fab 50, HDFC Bank said in a statement here.

By the end of today's trade, HDFC Bank had a market value of Rs 1,39,246 crore, while Kotak Mahindra Bank which rose 0.7% today had a market capitalisation of Rs 42,827 crore.

Against this, the largest lender SBI had m-cap of Rs 1,26,661 crore and ICICI Bank had Rs 1,07,123 crore. While HDFC Bank rose only 0.60% on a day when Sensex rallied 2%, or 337 points, SBI rose 1.9% and ICICI soared 4.7%.

HDFC Bank said it was in the Forbes list for five consecutive years (from 2005 to 2010).

The four largest Chinese banks -- Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank together have market capitalisation of nearly a trillion dollars.

India stands in the second spot after China, which tops the list with as many as 23 companies making the top 50. Last year, there were seven companies from India in the survey.

The 'Fab 50' list this year is a testament to companies which are weathering the economic slowdown and are still growing across markets like Asia, the US and Europe.

"A slowing economy weeds out the merely good companies from the truly great ones," writes Forbes magazine.

Tata Consultancy Services and HCL Technologies have made a comeback into the list this year. Other domestic companies in the list include drug major Sun Pharmaceutical, which is making its debut, Asian Paints, Bajaj Auto, Bharti Airtel, ITC, Tata Motors and Titan Industries.

The top 50 companies are chosen from a list of 1,295 companies that have at least USD 3 billion in annual revenue or market cap, with return on equity, price to earnings ratio, share price movements, etc., being key parameters.


Source: Business Standard
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Federal Bank opens branch in Thiruvananthapuram

Federal Bank has opened its 1011th branch at Poovar in the outskirts of the capital City. The new branch features an on-site ATM and locker facilities, a spokesman for the bank said here.

Jameela Prakasam, Member of the Legislative Assembly representing the area, inaugurated the branch.

Among those present on the occasion were Anto Marceline, president of Poovar panchayath. Sasidharan C. P., deputy general manager and zonal head of Federal Bank, presided over the function.
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Corp Bank to add 30 branches in Gujarat

Public sector Corporation Bank plans to increase the number of its branches in Gujarat to 115 this fiscal, from 85 in the previous fiscal year, , a senior official said here on Friday.

Of the new 30 branches planned , 15 have already been opened, N. B. Kulasekaran, General Manager, told presspersons.

The bank will also increase the number of its ATMs from the existing 82 to 242 .

The bank is also expected to disburse Rs 6,000 crore nationwide under the grand festival bonanza scheme for purchase of houses and vehicles by individuals, and loans for businessmen and healthcare professionals.

In Gujarat, the bank is expected to advance loans worth Rs 300 crore during the scheme period from September 1 to November 31. Corporation Bank’s business in Gujarat was about Rs 14,000 crore in 2011-12.

virendra.pandit@thehindu.co.in
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NCR Corp to set up 50 ‘talking’ ATMs in passport offices

ATM major NCR Corporation India, which has a 47.5 per cent share in the country’s ATM business, will instal 50 ‘talking’ automated teller machines in various passport offices.

The company recently set up India’s first talking ATM in Ahmedabad for the visually challenged as a Union Bank of India (UBI) initiative, Mr Jaivinder Gill, Managing Director, told Business Line. The bank has mandated NCR to set up 100 such “accessible ATMs”. Of these, 50 will be set up at the bank’s branches and the rest at passport offices.

From a meagre 35 ATMs in 1991, India had 1.04 lakh ATMs in July 2012, according to National Payments Corporation of India (NCPI). The number is projected to increase to 2.05 lakh by 2015-16. Public and private sector banks are testing out NCR’s various ATM solutions as pilot projects.

Apart from cash dispensing ATMs, NCR also offers specialised models to dispense customised information and non-cash items such as bill payments, tickets and coupon dispensers. “Our SelfServ ATMs help financial institutions to reduce operating costs, improve customer service and increase revenue generation opportunities,” said Mr Gill.

NCR’s SelfServ 32 is India’s first “no-envelope” multi-function intelligent deposit ATM with dedicated cash deposit and recycling functionality. In order to help banks deploy ATMs in remote areas, it also brought out NCR Smart Connections, a GSM-based wireless solution. The issue of power availability in the rural areas was addressed by NCR’s solar power ATMs which allow banking transactions through batteries charged by a solar panel.

Recently, NCR launched NCR SelfServ 22e, which has a smaller foot-print, uses low-energy LED lighting and fixed length receipts to minimise power consumption, carbon footprint and paper waste.

NCR Corp also provides multi-lingual and biometric-enabled solutions and customises solutions for each bank. The price of an ATM varies between Rs 3 lakh and Rs 4 lakh.

Whilst the hardware of the ATMs remains the same, the software customisations depend on the specific needs. Banks do not need to change their entire fleet of ATMs for installation of new solutions, he added.
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Thursday, September 6, 2012

RBI wants banks to upgrade credit mgmt system to lower NPAs

There is an urgent need to beef up the credit management systems at banks as the lingering global economic turmoil and domestic growth concerns have increased downside risks to financial stability which is evident from rising bad assets, Reserve Bank Deputy Governor, Anand Sinha warned today.

“Deteriorating asset quality of banks can be contained by substantially upgrading their credit management systems,” Sinha said in his address on the concluding day at the three—day Ficci—IBA banking summit here.

Though Sinha was quick to add that the domestic financial system remains robust, as per the RBI stress tests, he said, “The downside risks to financial stability have worsened due to several global and domestic factors. Our banks are no doubt strong, but there are many challenges we have to live with.”

Flagging the surge in bad assets levels and requests for loan restructuring, the Deputy Governor said, “The NPA levels are higher than what they were a while back. So there is definitely a stress in the system. The amount of restructured assets has gone up. Restructured assets, whether you call it standard or sub—standard, the fact is that even if they are standard, they represent stress in the system,” he told reporters later.

While the overall bad assets in the system rose to 5.7 percent in FY12, from 4.2 percent a year ago, the quantum of restructured loans is set to cross Rs 2 trillion by the end of this fiscal.

Listing out the challenges before the domestic banks, Sinha said the immediate challenge facing the banks is arresting the deteriorating asset quality, while the mid—to—long term challenge is to raise capital to meet the Basel III norms.
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Milestone achievement for State Bank of Travancore, says MD

Hiving off the Office of the General Manager represents a milestone achievement in the growth and reach of State Bank of Travancore (SBT), says P. Nanda Kumaran, Managing Director.

He said this while delivering the presidential address at the launch of the Network 1, the decentralised office of the General Manager, based outside of its headquarters here.

Coming of age

Coming after 67 years of its existence, this represented the coming of age of the bank coinciding as it did with the level of empowerment of the people of its home State.

Nanda Kumaran described the initiative as a new level of employing management control or decontrol, depending on whichever way one might wish to look at it.

It is another way of taking banking services to the grass-roots. More decentralisation of powers eases decision-making and brings to table empowerment of beneficiaries.

While the bank has looked at expanding within the State, it has also realised the need for growing outside of the home base.

The bank is also looking at Chennai as a base for a network under a general manager, Nanda Kumaran said.

Business volumes

Business volumes handled by the newly set up Thiruvananthapuram Network better the total size of the business handled by the bank’s closest competitor, he said.

“The bank now believes it is in a position to bring services closer to its customers. This is just in order for a bank of its size, approaching a business of Rs 1.33 lakh crore.”

This is a humongous amount, and is at least 50 per cent more than the second largest bank, private of public, in the State.

The branch network is also far more extensive than that of its peers, and counts top names in corporates and companies as borrowers.

Trust as addition

Last year, the State Government had decided to enable its employees to draw their salaries from banks.

At least 60 per cent of them chose SBT as their bank, which is indicative of the reliability and trust that people associate with it.

“It is this long tradition of trust that has sustained SBT’s status as the premier bank of the State. This would not have been possible without the commitment, dedication and sense of purpose displayed by the employees of the bank, ’’ he said.

“I salute each and every employee who made this possible,” Nanda Kumaran said.

vinson.kurian@thehindu.co.in
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Oriental Bank reduces home, vehicle loan interest rates

Oriental Bank of Commerce (OBC) has reduced interest rates on home loans and vehicle loans by 25 basis points and 40 basis points respectively. Hundred basis points is equivalent to 1 percentage point. While home loans will now be available at 10.65 per cent, vehicle loans will be available at 11 per cent.

For loyal customers, the existing 0.25 per cent concession will continue as announced earlier. Simply put, for loyal customers, the bank will provide home loans at an interest of 10.40 per cent.

For vehicle loans, the interest rate for loyal customers will now be 10.75 per cent. Also, processing fee on home loans has been waived till December 31, 2012. The revised rates on home and vehicle loans will be applicable only for new customers and available from September 10.
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RBI cold to mobile wallet

Reserve Bank of India deputy governor H R Khan on Wednesday said mobile telephone operators cannot be permitted to provide a cash-out facility from virtual wallets to customers, as such an activity would amount to ‘bypass banking’. However, they could do so if they acted as a business correspondent (BC) to a bank, he added.

Recently, Airtel had launched m-wallet services that enable a customer to make utility payments and transfer money from one user to another. By the norms, mobile transactions are permitted only if attached to a specific use, such as paying electricity bills or shopping at retail establishments that accept mobile payments.

RBI does not allow encashment of the balance available in mobile wallets, though mobile operators are reported to have requested the banking regulator to allow them to provide a cash-out facility to their customers.
THUMBS DOWN TO VIRTUAL MONEY
  • RBI Deputy Governor says mobile phone operators can’t be allowed to provide a cash-out facility from virtual wallets to customers, as it would amount to ‘bypass banking’
  • Airtel launched m-wallet services to enable a customer in making utility payments and transfer money from one user to another
  • Current norms allow mobile transactions if it is attached to a specific use, such as paying electricity bills or shopping at retail establishment
  • Central bank does not allow encashment of the balance available in mobile wallets
  • Security, privacy and acceptability are other obstacles in the way of moving towards mobile payments
  • Bankers feel the regulator may consider allowing issuance of mobile wallets by business correspondents without the need of a Know Your Customer exercise 


“Basically, it is an e-money product, so we have to see that mobile network operators do not get into ‘bypass banking’ and that is why we said cash-out will not be permitted. Of course, if it acts as a BC, then at the BC point, cash-out is permitted,” said Khan. He was addressing the Annual Ficci-IBA Banking Conference on Wednesday. He added mobile banking and payments have to be a bank-led model, as a mobile operator will only be able to provide remittance services and not full-fledged services such as bank does.

Khan said mobile banking transactions grew 140 per cent in terms of volume and more than doubled in terms of value over the year ended June 2012. “The whole idea is that there is great potential to grow, as it can be used for payments of goods and services without customers having to carry any additional card. But we have a limitation as far as cash-out is concerned,” he added.

Security, privacy and acceptability are other obstacles in the way of moving towards mobile payments. Also, merchant establishments do not accept electronic payments, in order to evade tax obligations. A panel discussion here on mobile payments had suggested allowing cash-out facility to boost mobile wallet usage.

Bankers also felt the regulator could consider allowing issuance of mobile wallets by BCs without the need of a Know Your Customer (KYC) exercise by banks. “We need to work with the regulator and see if nil KYC wallet can be provided by BCs.

The wallet can have limited usage facility,” said R Karthikeyan, chief general manager at State Bank of India. He said going through a KYC exercise for a large number of m-wallet customers led to congestion at bank branches. SBI, the country’s largest lender, has rolled out mobile banking services on a pilot basis in around five cities.

On allowing cross-border mobile transactions, the deputy governor said there was an issue relating to the quality of inflows, as India was a target of terrorist activity.



Source: Business Standard
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ING Vysya's strong performance to continue

The strong performance of Karnataka-based ING Vysya Bank in the first quarter of FY13 is likely to continue through the rest of the fiscal. For its asset quality is good - due to the relatively low exposure to stressed sectors - loan growth is higher than average and CASA ratio and margins are stable.

The bank's loan growth, which has been about 3-4 per cent higher than the industry average over the past two years, is expected to continue on similar lines. ING Vysya's exposure to troubled sectors such as state electricity boards (SEBs), infrastructure, aviation, realty and oil companies is negligible, which indicates healthy asset quality.



Source: EconomicTimes
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Wednesday, September 5, 2012

Axis Bank rolls out new home loan scheme with EMI waiver

Private sector lender Axis Bank has launched a new housing loan scheme that will waive off the last 12 equated monthly installments (EMIs) for borrowers who have been diligently repaying their loan.

Termed Happy Ending Home Loan, the scheme will offer interest rates applicable under the floating loan option. The EMI waiver will be offered to all home loans that have an initial tenure of at least 20 years and cross their 15th year with the bank.

In other words, if you decide to switch your lender or prepay your loan before the completion of this 15-year-period, you will not be entitled to this benefit. Also, as mentioned earlier, only those borrowers who have been discharging their EMI commitments on time will be eligible for the waiver.

According to an official release from the bank, a borrower with a floating-rate home loan of Rs 50 lakh and an interest rate of 11% will be able to save up to Rs 6.19 lakh in form of the waiver.

All other terms and conditions will be similar to those of regular home loans.



Source: EconomicTimes
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HDFC Bank launches credit card for teachers

The country’s largest credit card issuer, HDFC Bank, today announced the launch of a credit card for teachers on the occasion of Teacher’s Day.

The private sector bank said the card offers features such as multiple reward points, week-end bonanza points, petrol surcharge waiver and 500 teacher’s day special gift reward points that will get credited annually on Teacher's Day.

According to a CSFB report, KPMG analysis, with a combined market size of more than 450 million students and a growth rate of 10-15 per cent expected over the next decade, education is one of the largest service sectors in India.

The industry is largely fragmented with over 95 per cent held in the unorganised sector.

With huge demand in investment in the education sector, total market of education institutions expected to increase to Rs 250,000 crore by the end of 2012, the education sector will have attractive margins, the report said.

Under cards for professionals, the HDFC Bank had recently launched a credit card for doctors. The bank's total number of outstanding credit cards as on June, 2012 stood at 5.8 million.

beena.parmar@thehindu.co.in
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ICICI Bank to add Facebook as transaction platform

ICICI Bank will soon add another digital platform for dispensing its banking transaction services — Facebook.

The country’s largest private sector lender was the first bank in India to use the social media site to provide services such as account enquiry and cheque book request.

Now it is preparing to take this initiative one step forward by offering transaction services to its Facebook customers. This is part of its efforts to provide its customers next gen banking solutions in line with its Khayaal Aapka (your care) philosophy.

Mukesh Kumar Jain, Chief Technology Officer, said the bank was working on this technology and indicated that it could come out with the new service in the next few months. The social media channel will in the near future form an important platform for banking services, he told mediapersons here today.

He was in the city to launch its electronic branch, Tab Banking and E-Locker services, as part of the bank’s nationwide roll-out of next-gen banking solutions. The lender is opening 25 electronic branches across the country, two of which are located in Andhra Pradesh.

In response to a question, Jain said security was not a challenge for offering transaction services through the social media platform. He said this platform would not only make it easier for customers to avail of bank services but also help the bank expand its customer base.

amitmitra@thehindu.co.in
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SBI cuts deposit rates by up to 100 bps

State Bank of India has slashed domestic term deposit rates by up to 100 basis points.

This is the fifth time in the last six months that the bank has cut deposit rates. The revised rates come into effect from Friday. SBI has, however, left its base rate at 10 per cent. Base rate is the benchmark lending rate below which no bank can lend.

Explaining the rationale for the deposit rate cut, SBI Chairman Pratip Chaudhuri said “From April 1 till August 31, our deposits have grown by about Rs 78,000 crore while our loans have grown only by about Rs 20,000 crore.

“… The pipeline for loan growth in large credit is rather dry; hence, we want to go slow on deposit mobilisation.”

Chaudhuri said there will be no cut in the base rate.

SBI will quote only two interest rates on term deposits below Rs 15 lakh — 6.50 per cent on the five deposit slabs maturing in less than a year and 8.50 per cent on the four deposit slabs beyond one year and up to 10 years.

Further, the bank will quote only two interest rates on term deposits of Rs 15 lakh to less than Rs 1 crore — 7.50 per cent on the five deposit slabs maturing in less than a year and 8.50 per cent on the four deposit slabs beyond one year and up to 10 years.

The deposit rate cut by SBI is likely to trigger realignment in deposit rates by other banks.

ramkumar.k@thehindu.co.in

beena.parmar@thehindu.co.in
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Axis Bank to expand retail loan share by 25% in 3 yrs

Axis Bank, the country’s third largest private sector lender, plans to take the share of retail credit in its overall loan book from the current 24 per cent to 30 per cent in the next 2-3 years.

“On the retail asset side, we have a very strong growth in housing and auto segments. In both these segments, Axis Bank has been growing higher than the national average,” said R K Bammi, executive director (retail banking), Axis Bank.

Banks were betting on retail loan segment to drive credit growth following one per cent cut in Statutory Liquidity Ratio (SLR) to 23 per cent by the Reserve Bank of India (RBI) in its last policy review in August.

Asked if Axis Bank expected the RBI to slash key policy rates in its next review meet, Parthasarathi Mukherjee, president (treasury and international banking) said, “The economy is still facing a slowdown. RBI is battling both slowdown and inflation and it has to finetune a balance between the two.”

The private sector lender, however, is concerned about slowing long-term credit demand from the corporate sector.

“There is a general feeling that new projects from the corporates are slowing down. Infrastructure is particularly affected because of policy issues. Pharmaceuticals is one of the very few sectors that has been somewhat immune to the meltdown,” said Mukherjee.

The bank maintained its net interest margins (NIM) have not been impacted because of the slowing economy.

“We don’t give guidance on how NIM margins will be growing in the future. But, our NIM has been in the range of 3-3.5 per cent,” Mukherjee informed.

The private bank is also expecting a healthy growth in its current and savings accounts (Casa) deposits.

“In 2011-12, we logged a growth of 41 per cent in Casa deposits. This fiscal too, we expect to maintain the same growth tempo,” said Bammi.

On concerns about rising bad debts of banks, Bammi said, “That is not an area of concern for the Axis Bank as our asset quality is very good. Our NPA (non-performing assets) is also amongst the lowest in the industry.”

In the April-June quarter, the bank’s net NPA increased to 0.31 per cent from 0.25 per cent in January-March quarter. Similarly, gross NPA , too, rose to 1.06 per cent as against 0.94 per cent sequentially.

Commenting on the bank’s expansion plans in Odisha, Bammi said, the bank had firmed up plans to open 12 new branches in the state in the current fiscal. Five of these branches would be set up in un-banked locations while the balance seven would come up in rural areas.

On a pan-India basis, Axis Bank boasts of over 1,700 branches, including 62 in Odisha and a network of over 10,500 ATMs. The bank intended to add around 5,000 new ATMs across the country in this fiscal.



Source: Business Standard
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Tuesday, September 4, 2012

Karnataka Bank tier-II bonds get ‘CARE A’ rating

CARE Ratings (Care Analysis & Research Ltd) has assigned ‘CARE A’ to Karnataka Bank’s lower tier-II bonds.

The bank informed the NSE on Tuesday that CARE Ratings has revised the rating from ‘CARE A+’ (single A plus) to ‘CARE A’ (single A) for lower tier-II bonds of the bank for an outstanding amount of Rs 350 crore.

Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of debt instruments. Such instruments carry low credit risk, it said.

vinayak.aj@thehindu.co.in
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Dena Bank cuts interest rates on retail loans

Public sector lender Dena Bank has reduced the interest rates on retail loans in the education, car and personal loan segment.

The interest rate on education loans has been reduced by 2 per cent to 12 per cent (from 14 per cent), while in the car loan segment, the rates have been cut by 1-1.50 per cent to 11-12 per cent (fixed) from 12.5-13 per cent.

The interest on personal and consumer durables loans is reduced to 14 per cent (fixed). The interest on personal loans has been cut by 2 per cent (from 16 per cent), while the rate on consumer durables loan have been cut by 2.25 per cent (from 16.25 per cent).

The decision to lower rates comes after the Finance Minister P. Chidambaram, with a view to revive demand in the flagging consumer durables sector, has asked the public sector banks to ensure that loans for purchase of consumer durables are made cheaper and easier to access.

beena.parmar@thehindu.co.in
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SIB’s Anna Nagar branch inaugurated

South Indian Bank’s Anna Nagar branch in Chennai was renovated and inaugurated on September 1.

K.S. Munirathnam, Founder Chairman, RMK Group of Institutions, inaugurated the branch, while renowned music composer V. Shareth inaugurated the ATM.

The bank has put up an additional vault for safe deposit lockers, as the demand for vaults is high in the area, an SIB release said.
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Allahabad Bank lowers interest rates on retail loans

Allahabad Bank has lowered interest rates and slashed the processing fee on retail loans as a part of its festival scheme.

Under the scheme, the bank would offer up to two per cent discount on interest rate on its housing loans and loans for house furnishing.

The bank has also announced up to 25 basis points rebate in interest rate on AllBank Dream Car.

According to a press statement, the bank has offered up to 100 per cent rebate in the applicable processing fee on AllBank Commercial Vehicle Finance scheme.

It has further announced a rebate of up to 50 per cent in processing fee on housing loan, premium home loans for high networth individuals, car and personal loans.

The festival scheme would be applicable to loans sanctioned between September 1 and December 31, the release said.
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Indian Bank cuts home, car loan rates by up to 50 bps

State-owned Indian Bank has reduced interest rates on home and car loans by up to 0.5 per cent to increase disbursements in these segments.

The Chennai-based bank tweaked interest rates of retail loans soon after Finance Minister P Chidambaram advised banks to keep EMIs at affordable level.

“We have recently reduced interest rate on home and vehicle loans with an aim to increase credit disbursement in these segments” Indian Bank Chairman and Managing Director T M Bhasin said here today.

In the housing loan segment, rate has been reduced by up to 0.5 per cent, while interest rate on car loan has been slashed by 0.25 per cent effective August 25.

Housing loan up to Rs 30 lakh is now available at 10.5 per cent or base rate irrespective of the tenure of the loan.

Similarly, rate has been reduced for home loans between Rs 30-75 lakh to 10.75 per cent or base rate plus 0.25 per cent.

The bank has also waived of processing or administrative charges on such loans.

Besides, it has brought down the car loan from 11.25 per cent to 11 per cent.

The offer, limited till October 31, would be made only to the new vehicle loan borrowers. There will be no processing charge on loan application.

Asked whether the bank would consider reducing the base rate, Bhasin said, “It would depend on the monetary policy indications“.

At present, the base rate or the minimum lending rate of the bank stands at 10.5 per cent.
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Government can dilute stake to help PSBs meet Basel-III norms: RBI

Reserve Bank of India Governor D. Subbarao suggested that the government should consider bringing its stake down to 51 per cent in the 21 state-run banks to help them meet Basel-III requirements.

The government holds more than 60 per cent stake in some public sector banks such as State Bank of India, Central Bank of India, and Indian Bank.

“If the Government opts to maintain its shareholding at the current level, the burden of recapitalisation will be of the order of Rs 90,000 crore; on the other hand, if it decides to reduce shareholding in every bank to a minimum of 51 per cent, the burden reduces to under Rs 70,000 crore,” Subbarao said.

According to RBI estimate, the banking sector will need an additional Rs 5 lakh crore to meet the Basel-III norms by March 31, 2018. Of this, about Rs 1.75 lakh crore will have to be raised by banks through equity financing.

He said that banks can also tap the markets to raise a part of equity. He, however, said that this will not be easy given the current economic situation.

Subbarao said the markets will have to provide between Rs 70,000 crore to Rs 1 lakh crore based on how much capital the Government provides to the banks. He said, since banks have raised Rs 52,000 crore from the primary markets in the last five years raising an additional Rs 70,000 crore to Rs 1 lakh crore should not be an insurmountable problem.

NORMS FOR D-SIBs

The Governor also mentioned that the Basel committee is working on a framework for domestic systemically important banks (D-SIBs) to prescribe higher loss absorbency capital standards for them.

He said the notion that some banks are too big to fail took a blow after the financial crisis. Basel III seeks to mitigate this by identifying global systemically important banks (G-SIBs) and mandating them to maintain a higher level of capital depending on their level of systemic importance.

satyanarayan.iyer@thehindu.co.in
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Karnataka banks register 41% rise in NPAs

The combined non-performing assets of banks in Karnataka have increased 41 per cent to 7.86 lakh accounts.

According to State Level Bankers’ Committee-Karnataka data, as on June 2012, there were 7.86 lakh NPA accounts, involving Rs 15,473 crore compared with the same period last year’s 5.54 lakh accounts involving Rs 10,177 crore.

Farm sector

As for the farm sector NPAs, there were 3.31 lakh accounts, with total exposure of Rs 3,757 crore constituting 6.63 per cent of advances to agriculture. Last year, there were 2.13 accounts, involving Rs 2,769 crore constituting 5.88 per cent of advances to agriculture.

As for recovery, banks in the state have recovered Rs 140.97 crore against outstanding balance of Rs 535 crore under SARFAESI Act, Rs 7.63 crore against outstanding balance of Rs 221 crore under DRT and Rs 1.37 crore against outstanding balance of Rs 7.53 crore through Lok Adalat.

As of June 2011, 19,444 cases filed by banks under Revenue Recovery Act (RR Act) were pending before Revenue Authorities involving Rs 105.21 crore. The Banks have filed 781 applications during the current quarter (Q1 of FY2012-13) involving loan amount of Rs 2.53 crore. There are 8,785 cases pending for more than three years for recovery under RR Acts.

Deposits

The aggregate deposits of banks was Rs 403153 crore at the end of June 2012, compared to the level of Rs 354999 crore same period last year, registering an increase of Rs 48154 crore or 13.56 per cent.

Advances

The total outstanding advances of banks was Rs 298958 crore at the end of June 2012, compared to Rs 258105 crore same period last year, registering an increase of Rs 40853 crore or 15.83 per cent.

CD Ratio

The Credit Deposit Ratio as of June 2012 was 74.15 per cent as against 72.71% as of June 2011. The CD ratio was the highest at 102 per cent in rural areas as compared to 71 per cent in semi-urban, 71 per cent in urban and 72 per cent in metro areas.

The outstanding level of total priority sector advances of banks stood at Rs 120654 crore as of June 2012 as against Rs 109550 crore as at June 2011, an increase of Rs 11104 crore or 10.14 per cent.

The total agricultural advances as at June 2012 stood at Rs 56706 crore constituting 18.97 per cent of the total advances of banks, out of which direct advances to agriculture stood at Rs 42277 crore forming 14.14 per cent of total advances as against the bench mark level of 13.5 per cent.

The outstanding advances to weaker sections by banks were Rs 37148 crore constituting 12.43 per cent of the total advances with an increase of Rs 8801 crore over the previous corresponding year.

The outstanding advances to small and marginal farmers was to the tune of Rs 25690 crore covering about 35.99 lakh accounts, constituting 45.30 per cent of the total advances to agriculture.

The outstanding advances to SCs/STs were Rs 8432 crore constituting 2.82 per cent of the total advances.

anil.u@thehindu.co.in
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IRDA allows PNB to pick up 30% stake in MetLife India

The PNB-MetLife deal moved a step forward to being operationalised with the Insurance Regulatory and Development Authority giving its nod for induction of the bank as a shareholder in the private life insurer.

This approval, which came at an IRDA board meeting on August 31, will pave the way for PNB to acquire a 30 per cent stake in MetLife India Insurance.

IRDA nod for the induction of PNB as a shareholder came a little over a year after the public sector lender had announced plans to pick up 30 per cent stake in MetLife India Insurance for an undisclosed amount.

The insurance regulator’s nod has however come with certain conditions including appointment of directors on the board of the insurer by PNB, reduction in equity stake by some of the existing shareholders and maintaining solvency margin as per the directions suggested by IRDA.

The IRDA board has also approved inclusion of a limited liability partnership (LLP) as an Indian promoter. Such an LLP can, however, neither be a foreign LLP nor should any of the partners in the LLP be foreign entities, it said.

The IRDA has for some time been examining the inability of some of the existing shareholders of MetLife to subscribe to the capital calls due to certain applicable regulatory restrictions. This constraint was impacting the solvency position of the insurer and limiting its ability to grow.

The board has further advised IRDA that in public interest and with a view to protecting policyholders’ interest, the regulator may issue directions under Section 34 of the Insurance Act, 1938, subject to compliance with due regulatory process.

srivats.kr@thehindu.co.in

somasekhar.m@thehindu.co.in
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Union KBC launches Capital Protection Oriented Fund-Series 1

Union KBC Asset Management Company (Union KBC), a subsidiary of Union Bank of India, today launched Capital Protection Oriented Fund - Series 1.

The New Fund Offer will remain open till September 17, the Union KBC said in a release issued here.

"We have equities, an asset class that has historically outperformed debt and cash, and beaten inflation over a medium to long term period, appearing to be relatively attractively priced. However, we also have investors that are nervous to invest because of the recent history of market volatility. This product allows these investors to gain exposure to equities with some degree of comfort about their capital," Union KBC Chief Executive Officer G Pradeepkumar said.

By investing a majority of the funds in highly rated debt and money market instruments, the scheme aims to protect the capital at the time of maturity.

The remaining proportion of the funds will be invested in equity and equity related instruments which may generate a positive return on the initial investment and grow the money.

This scheme is open for investment to individual and non-individual investors and is ideal for investors who do not want to take a major risk on their invested capital but would like exposure to equities.

It is also aimed at first time Mutual Fund investors who have traditionally only invested in fixed income instruments, but would like to participate in the returns offered by the Indian equity markets.
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Monday, September 3, 2012

RBI asks banks to issue cheques with uniform features by September 30

The Reserve Bank today directed all banks to issue cheques with uniform features conforming to Cheque Truncation System (CTS) 2010 standard by end of this month.

The homogeneity in security features act as deterrent against frauds, and the fixed field placement specifications facilitate straight-through-processing at drawee banks' end through the use of optical or image character recognition technology, RBI said in a notification.

Adherence to CTS-2010 standards has inherent advantages as the security features in cheque forms help the presenting banks to identify the genuineness of the drawee banks' instruments while handling them in the image based scenario, it said.

To ensure the time-bound migration to CTS-2010 standard cheque formats, all banks are advised to arrange only "multi-city or payable at par CTS-2010 standard cheques not later than September 30, 2012," it said.

"Arrange to withdraw the non-CTS-2010 standard cheques in circulation before December 31, 2012 by creating awareness among customers through SMS alerts, letters, display boards in branches/ATMs, log-on message in internet banking, notification on the web-site etc," it said.

The introduction of new cheque standards 'CTS 2010' was warranted on account of several developments in the cheque clearing namely growing use of multi-city and payable-at-par cheques at any branch of a bank, increasing popularity of speed clearing for local processing of outstation cheques and implementation of grid based CTS for image-based cheque processing etc., it said.



Source: EconomicTimes
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SBI, UBI and Central Bank revise FCNR deposit rates

The country's largest lender State Bank of India (SBI) today revised its deposit rates on FCNR ( foreign currency non-resident deposit) with maturity of one to five years by 2 to 8 basis points from September 1, a bank release said.

Two other public sector banks-- Union Bank of India (UBI) and Central Bank of India (CBI)-- have also announced revision in FCNR rates.

As per the revised rates announced by SBI, the deposit rates have been reduced by 2 bps to 3.03 per cent for 1-2 year maturity and increased by upto 8 bps on 2-5 year maturity in dollar denominated accounts.

Similarly, rates have also been revised for FCNR accounts in the euro, pound, Australian and Canadian dollars among others.

The bank also said it has introduced four new currencies, namely, Swiss franc, New Zealand dollar, Swedish krona and Danish krone.

In case of Union Bank, deposit rate has been reduced in 1-2 year maturity by 2 basis points but increased in the range of 3-8 basis point for 2-5 year maturities in dollar denominated FCNR accounts.

Central Bank also announced revision of FCNR rates in dollar, pound, euro, Canadian and Australian dollar accounts today.



Source: EconomicTimes
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Atanu Sen is SBI Life new MD, CEO

SBI Life Insurance, the insurance arm of the country’s largest lender State Bank of India, today said that Atanu Sen has taken over as its new Managing Director and Chief Executive.

Sen succeeds M.N. Rao, who retired on August 31.

Sen, who joined SBI in 1977 as a probationary officer, had held posts like chief general manager in the Mumbai circle, deputy managing director and chief credit and risk officer for the bank among others in his previous assignments.

Referring to the growth plans, Sen said, “My mandate will be to focus on impacting a profitable growth and extending the reach of life insurance to the farthest corners of the country, thus driving life insurance penetration.”

SBI Life is a joint venture between State Bank of India and BNP Paribas Cardif, in which SBI owns 74 per cent.
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IOB to step up security for Visa cardholders

Indian Overseas Bank will offer “unprecedented levels” of real-time protection and greater security for Visa cardholders by adopting Visa’s real-time fraud detection solutions. A press release from the bank says this would make all its ATMs, point of sale and Internet transactions foolproof.

IOB cardholders can now enjoy the convenience, reliability and security of VisaNet, Visa’s global processing platform with access to millions of ATMs around the world that accept Visa cards. The release quoting the bank’s General Manager, S. Radhakrishnan, says the bank has also introduced PIN change facility through its ATMs for our credit cardholders to further secure their interests.

Visa Advanced Authorisation and Visa Risk Manager create a safe experience for customers using their cards by offering comprehensive fraud prevention to financial institutions that better identify and stop fraud before it occurs. In less than two seconds, Visa Advanced Authorization can analyse and risk “score” a transaction for the card-issuing financial institution with “unprecedented accuracy”.

Visa Risk Manager then allows issuers to streamline decision-making, so they can turn that insight into action. This remarkable speed and clarity allows issuers to prevent fraud from occurring in the first place, the release added.
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