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Saturday, September 15, 2012

SBI’s bad loans jump in June quarter

State Bank of India’s gross NPAs increased to Rs 47,156 crore for the quarter ended June 30 from Rs 27,768 crore during the same period last year, according to Managing Director and Chief Financial Officer Diwakar Gupta.

“NPAs are the biggest source of concern. A majority of these NPAs, which came from mid-corporate and SME segments, were driven by low demand, cash flow issues, inability to pass on costs and low profitability, among others,” Gupta told newspersons on the sidelines of a banking colloquium organised by the Confederation of Indian Industry.

The bank, however, expects its NPA situation to improve in the next few quarters.

Responding to a query on the impact of the cancellation of allotted coal blocks, Gupta said that it might not result in a surge in its NPAs. “We are very hopeful that this will get resolved in sometime. Right now projects are under implementation. I think we will have a solution in the next three to six months. Things should be fine as far as banks are concerned,” he said.

According to him, a total of projects of 50,000 MW involving an investment of around Rs 2.5 lakh crore were under various stages of implementation. “If you take away Rs 50,000-75,000 crore of the promoter, then you have Rs 1,75,000 crore of funding. That is a large sum, but that does not mean everything of that will be stressed,” he said. The bank’s exposure to the power sector stands at about Rs 50,000 crore.

Even while there has been a dip in credit offtake, SBI expects 18 per cent growth in credit this year, compared with 15.6 per cent last year. “The credit growth is lagging behind the deposit growth at present. In the last five months we have accrued deposits worth Rs 74,000-75,000 crore while we have been able to lend only Rs 15,000 crore,” he said.

The bank is hoping for infusion of Rs 4,000 crore by the end of this fiscal.
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Federal Bank deploys Finacle software

Federal Bank has tied up with Infosys Technologies arm Finacle to strengthen the bank’s existing authentication system for its corporate and retail Internet banking customers.

The private sector bank has integrated and implemented Finacle enabled Two Factor Authentication (2FA) solution that ensures mutual strong authentication between the bank and the end-user that will enable an easy and transparent user login.

This solution supports both retail and corporate Internet banking channels across multiple form factors like hardware token, software credential and one time password.

The solution also supports public key infrastructure, and dynamic passcodes which protects customers against existing and emerging security threats such as phishing, replay attacks, man-in-the-middle among others.

KP Sunny, CIO, Federal Bank said: “Post the deployment of two-factor authentication module, we have built the capability to provide extra security to our customer’s online transactions and enhance our end-user’s experience.”
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5-day week mooted for banks

All India Punjab National Bank Officers Association has mooted 5-day week for bank employees in line with other public undertakings under the Union Government.

K D Khera, General Secretary of the Association also expressed concern over the staff shortage in banks, which would have a direct bearing on the quality of customer service. This also affects the various social oriented schemes of the Government, he told reporters here.

This will be a Key area of discussion at the 22{+n}{+d} triennial General Council Meeting of the Association to be held in Kochi on Saturday and Sunday. Wage revision, due in a few months from now, will be among other matters that will be discussed in the meeting, he said.

Around 1000 delegates, representing all states and Union territories will be participating in the conference.
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Friday, September 14, 2012

Oxigen launches mini ATM cum point of sale device

Payments solutions provider Oxigen launched a mini ATM cum point of sale device that will enable the people living in rural areas to withdraw money from their account without visiting the bank or locate an ATM.

For this Oxigen has tied-up with Chinese firm Telepower, that will design and develop a GPRS enabled point of sale (PoS) business terminal named OxiShaan.

This terminal will enable the small kirana (or mom and pop shops) to function like touch point for ATM like banking services.

"...Masses of India will not only have benefits of ATM like banking services such as cash-in, cash-out, but will also have the advantage of paying for utility services...OxiShaan termial is specially designed to offer all these services," Oxigen Chairman and Managing Director Pramod Saxena told reporters after the launch of the device here.

The customers will have to open a State Bank of India MobiCash account to avail to this facility, he said.

When in need of cash, the customer instead of going to the bank or the ATM can go to the retailer and get a receipt in lieu of the cash withdrawn.

"It is an ATM terminal for villages. Money can be transferred from any bank to State Bank of India MobiCash account. The consumer can withdraw money from his MobiCash account," Saxena said.

Oxigen has tied up with SBI, Yes Bank, ICICI Bank as well as National Payments Corporation of India (NPCI), which connects 60 banks, to facilitate transfer of money from any account to a person living in rural area.

Oxigen currently provides services like mobile recharge, bill payments, ticketing and pre-paid value added services etc.

Source: Financial Express
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Canara Bank effects 25 bps cut in lending rates

Bangalore-based public sector lender Canara Bank has reduced interest rates by 25  basis points  across  most  slabs  under  housing  loans with rates varying from 10.50% to a maximum of 10.75% as part of its festival offer with effect from September 17, 2012.

The bank has also reduced car loan rates by 25 bps with interest rates ranging from 10.75% to 11.25%. The festival offer will be on till January 31, 2013, the bank said in a statement.

Source: Business Standard
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Banks must ensure poor get loans easily: Rahul Gandhi

Amid complaints that the poor do not get loans easily unlike the rich, Congress leader Rahul Gandhi said farmers and women, who were most needy, should be helped as they take the country forward.

"I have been told by people that while the rich get loans easily, those who are most needy, including poor farmers and women do not...," he said inaugurating a UCO Bank branch in his Lok Sabha constituency.

Before the functions, students of government girls inter college sat on dharna at Jais to protest lack of facilities and teachers. Rahul's route was diverted in view of the protest.

On complaints regarding difficulty in getting loans, the Congress leader said, "I will like to tell bank officials that this should not happen. I am confident that everyone is treated equally."

Rahul said those who are most needy should be helped "because they are the people, who take the country forward."

He said the new computerised branch will provide farmers and women all facilities which till now were available in big cities like Delhi and Bangalore. Rahul also distributed Kisan Credit Cards among beneficiaries.

On the occasion, the bank adopted two villages – Bhadar and Ghroa.

Earlier, the Congress leader attended a meeting of the district vigilance and monitoring committee in which it was stated that Amethi has ranked 6th in the state in MNREGA implementation. Rahul said efforts should be made to take it to the top position.

On complaints of beneficiaries of Indira Awas scheme being asked to pay bribe, it was decided that an inquiry would be conducted and action taken against erring officials.

Source: Financial Express
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Thursday, September 13, 2012

SBI to hire 20,000 over the next one year

State Bank of India is set to expand its staff by ten per cent over the next one year. The bank is planning to add 20,000 personnel across both the officer and clerical cadres. As of June 2012, the bank had 2.14 lakh staff on its rolls.

A large portion of the new recruits will be required for the 1,200 new branches that it proposes to open this year. SBI is also recruiting to get ready for the impending retirements of its existing staff. Asked about this, A. Krishna Kumar, Managing Director and Group Executive (National Banking), said, “We estimate about 35-40 per cent of the SBI’s staff or about 70-80,000 people will be retiring in the next five years across all levels.”

Short on clerks

SBI proposes to recruit 19,000 clerks and 1,000 officers now. It had 80,329 officers and 95,018 clerks on its rolls in June. Asked about the higher number of clerks being recruited, Krishna Kumar said that this was being done to address the deficit in clerical staff in many branches.

He said that the interview process is currently going on for clerks while they will shortly be starting the process for recruiting probationary officers.

What about the attrition rate? Krishna Kumar said, “Of the newly recruited people at least about 10-15 per cent leaves in any case. That has been the experience in the last couple of years.”
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Reliance MF signs distribution pact with IOB

Reliance Mutual Fund, a part of Reliance Capital, on Thursday said it has entered into a distribution tie-up with Indian Overseas Bank (IOB).

As per the agreement, IOB will sell Reliance MF products through its 2,689 branches.

“This agreement would help us expand our customer base, especially in tier II and III cities, leveraging on the wide network of the bank,” Reliance Capital Asset Management chief executive Sundeep Sikka said.

Referring to the distribution tie—up, IOB Chairman & Managing Director M Narendra said, “This would enable the bank to operate as a financial super market and help in strengthening the relationship of the existing and potential customer base, providing an opportunity to cross—sell.”
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Karnataka Bank, NCMSL sign warehousing services deal

Karnataka Bank has signed a memorandum of understanding with the National Collateral Management Services Ltd (NCMSL) for warehousing services.

Under this agreement, the bank will offer financing against the godown receipts/cold storage receipts issued by NCMSL under its ‘KBL-Krishik Bhandar’ scheme.

A press release said here on Thursday that generally during harvesting season, the price of the agriculture produce will be at a lower level. Hence, farmers can store their agriculture produce in the godowns/cold storages of NCMSL.

In the off-season, farmers can sell the produce in the market at a higher price. Hence, they will benefit by availing finance under this scheme.

Insurance coverage

NCMSL will also ensure insurance coverage for risks such as fire, burglary, earthquake, riots, malicious damage, war and flood, it said.

The release said NCMSL is one of the largest institutions engaged in providing quality storage solutions to farmers in the agro-commodity value chain.

The storage network, which is spread across the country, stores grains, pulses, oil seeds, commercial crops, spices and plantation crops .

Karnataka Bank has set a lending target of Rs 3,770 crore to the agriculture sector by March 2013, it said.

Mahabaleshwar M.S, General Manager of Karnataka Bank, and Shyamal Gupta, Chief Business Officer of NCMSL, signed the agreement, the release added.
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Slowdown effect: SBI prunes home loan target to 20% this fiscal

State Bank of India has lowered its home loan growth target to 20 per cent for this fiscal, as lenders are grappling with a slowdown in the housing sector.

“We have already cut interest rates. We expect credit offtake in this sector to pick up in the latter part of the year,” Pradeep Kumar, Deputy Managing Director and Group Executive of the bank, told Business Line here on Thursday.

He was in Hyderabad to inaugurate the first ATM in Andhra Pradesh under the brown label arrangement, envisaging TCBIL, a Tata Group company, as the outsourcing agency. (A brown label ATM is one where an outsourcing agency will install, maintain and service the machine, with the bank providing only cash and connectivity.)

India’s biggest lender was looking at a home loan growth target of 25 per cent at the beginning of the year, but has now scaled it down it in the wake of the economic slowdown. SBI has a home loan portfolio of Rs 1.05 lakh crore, with a market share of 17 per cent in the individual home loan segment.

On the treasury income front, Kumar said the bank was hopeful of maintaining last quarter’s level in the current quarter. He however said profitability for the bank through treasury income was relatively lower than the ‘other income’ channels.

SBI had a mark-to-market gain of Rs 521 crore during the last quarter, which boosted its net profit significantly.

Kumar said a total of 2,700 ATMs under the new brown label arrangement will be set up in Andhra Pradesh in the next two years. Of these, 1500 will come up this fiscal and the remaining in 2013-14.

Under this arrangement, the outsourcing agency agency will be given a transaction fee of Rs 6.70 for each financial transaction and Rs 1.69 for each non-financial transaction.

Currently, about 30 per cent of SBI’s transactions across the country were through the alternative channels, including ATMs and mobile banking. “We want to take this share to 50 per cent in the next two years,” Kumar said.
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HDFC can deliver 18-20% loan growth with stable margins

HDFC has said that the company is well placed to deliver 18—20 per cent loan growth with stable margins and asset quality driven by growth in the smaller towns.

Giving their presentation at the CLSA investor forum, HDFC Chairman Deepak Parekh, Vice Chairman and CEO Keki Mistry and MD Renu Karnad highlighted that the competitive environment has been stable and HDFC can deliver 18—20 per cent loan growth with stable margins and asset quality.

At present, home ownership levels in India are under penetrated and considering the favourable demographics, financiers can reap positive results in the long run.

According to the management while metros have seen some moderation in demand due to high interest rates and property prices, growth from smaller towns is holding—up well and will be the key growth driver.

At present HDFC has a widespread branch reach with nearly 320 own outlets. Besides, more than 2,500 branches of HDFC Bank market HDFC’s mortgage loans. It has also tied—up recently with IndusInd Bank.

The management highlighted that not only are the longer—term potentials of mortgage financing strong in India, near—to—medium term demand is also holding—up well.

It also highlighted that the HDFC’s consolidated profit is likely to grow faster, driven by growth of profit in HDFC Bank and the profits of the life and general insurance subsidiaries.

“Stable competitive environment in mortgage lending and HDFC’s focus on the high underwriting standards, for retail and corporate loans, are the key drivers of its superior asset quality,” according to a CLSA report.
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Religare Finvest to raise Rs 500 cr via NCDs; issue opens tomorrow

Religare Finvest, a wholly-owned NBFC subsidiary of Religare Enterprises, on Thursday said it is planning to raise up to Rs 500 crore through retail issuance of non-convertible debentures (NCDs) to support its financing activities.

The company will raise NCDs aggregating up to Rs 250 crore with an option to raise an equal amount in case of over-subscription, aggregating to a total of up to Rs 500 crore,” Religare Finvest Chief Executive Kavi Arora said here.

"The NCDs issue, which opens tomorrow for subscription, will have a coupon of 12.25 per cent for various tenors with yield ranging from 12.25 to 12.62 per cent per annum. The issue closes on September 27, 2012.

“The present NCD issue is part of our effort to diversify fund-raising programme of the company,” he said.

The proceeds of the issue would be used for its various financing activities, including lending and investments.

In addition, funds would be used to repay the company’s existing debt and to meet its capital expenditure and working capital requirements.

The NBFC raises around 65 per cent of its fund from banking sources and rest from capital market and through commercial papers (CPs).

On requirement of capital for the company, Arora said: “With a capital adequacy ratio of above 19 per cent, we are comfortable to take care of our growth plans till the end of this fiscal.”

Religare Finvest reported a net profit of Rs 137.8 crore in the last financial year and its loan book stood at Rs 12,573.5 crore.
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NRI deposits in banks surge six-fold in April-July

Attracted by high interest rates in their homeland, Non-Resident Indians (NRIs) are pouring money into bank deposits.

In the financial year so far (April-July), NRIs have parked almost six times more money in deposits compared with the year-ago period.

According to Reserve Bank of India data, NRIs made deposits aggregating $7.375 billion in banks, against $1.246 billion in the year-ago period.

A break-up shows that all inflows have been into the Non-Resident (External) Rupee Accounts (NR(E)RA) deposits.

However, two other NRI deposit schemes — Foreign Currency Non-Resident (Banks) or FCNR (B) and Non-Resident Ordinary Rupee Account or NRO — have seen outflows.

In the first four months of the current financial year, NR(E)RA deposits saw robust inflows of $8.389 billion against outflows of $641 million in the year-ago period. FCNR(B) deposits have seen an outflow of $625 million against inflows of $853 million in the year-ago period.

NRO deposits too have seen outflows of $389 million against an accretion of $1.034 billion in the year-ago period.

The attractiveness of NR(E)RA deposits lies in the fact that they fetch high interest rate (for example, State Bank of India offers 8.50 per cent on deposits between one year and 10 years).

Further, the accrued interest income and balances held in the account are exempt from income-tax and wealth tax. The other two deposits schemes — FCNR(B) and NRO — do not enjoy tax exemptions, said a banker. Loans up to Rs 1 crore can be extended against security of funds held in NRE Account either to the depositors or third parties.

“Due to higher interest rate and tax exemptions, NRIs are parking money in NR(E)RA deposits. The proceeds of FCNR(B) and NRO deposits are also finding their way into NR(E)RA deposits,” said a public sector bank official.

As at July-end, NRI deposits with banks stood $62.45 billion against $53.33 billion in the year-ago period.
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UCO Bank unveils special deposit scheme

In a bid to expand its customer base and mobilise low-cost core deposits, UCO Bank has launched a special deposit scheme ‘UCO 999 Fixed Deposit Scheme’.

The scheme would be available for a limited period between September 10 and October 31.

The ‘UCO 999 FD Scheme’ with 999 days maturity period will help the bank mobilise medium and long-term resources, said a press statement issued by the bank.
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FinMin, SIDBI launch portal for small businesses

The Finance Ministry, in association with the Small Industries Development Bank of India (SIDBI), has launched an online portal ‘’ to support the micro, small and medium enterprises (MSME) sector.

To begin with, the Ministry will work in tandem with four banks — Dena Bank, Oriental Bank of Commerce, Corporation Bank and Indian Bank — to extend credit to MSMEs and prospective entrepreneurs.

This initiative will be extended to a cluster of 110 specialised branches across the country, Sunil Soni, Additional Secretary, Department of Financial Services, said.

“India has a distinct comparative factor advantage (vis-à-vis China) of a vast reservoir of skilled manpower. Out of 2.40 crore university graduates only 70 lakh people were absorbed in the organised sector for employment,” Soni said.

“Going forward every bank will be part of the online portal. We have already created the enabling environment. If we can create 10,000 such entrepreneurs every year, it will be a huge achievement for the country,” Soni said.

S. Muhnot, Chairman and Managing Director, SIDBI, said: “Today, start-ups are growing faster than corporates…This is proposed to be accomplished through Web-based approach to reach out to a larger number of aspiring young entrepreneurs.”

Basel III

On the Basel III capital norms, Soni said, “They come into effect in 2015…so immediately there is no crisis per se. We have 2-3 years to prepare….During the preparatory stage, if banks improve their profitability, then perhaps the need for capital from the Government or from the public will go down to that extent.”

The Finance Ministry has allotted Rs 14,000 crore in the Budget for recapitalisation of banks in FY13. Soni said the recapitalisation amount may increase in 2015.

Capital injection of Rs 15,000-20,000 crore every year can be sustained without any issues. If it goes beyond that, then there could be a problem, he added.
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Andhra Bank slashes interest rates on retail loans

Andhra Bank has slashed its interest rates on retail loans, deputy general manager G Ravi Kumar said on Wednesday.

The rate of interest has been reduced on housing loan from 11% to 10.50% upto 30 lakhs, and above 30 lakhs from 11.25% to 10.75%, on mortgage loans from 16 pc to 15.50%, and on cars from 12.25% to 11.50%.

The bank targets Rs 300 crore retail loans from Krishna district in this financial year, including Rs 100 crore worth of housing loans, Rs 50 crores for car and mortgage loans and Rs 150 crores under non agricultural gold loans, Kumar said.

The bank charges 13 per cent interest on non-agricultural gold loans. The amount under gold loan is enhanced from Rs 1,650 to Rs 2,100 of hallmarked ornaments with 916 purity, he said.

Under housing loan, the beneficiary will get one per cent interest subversion from the government on loans upto Rs 25 lakhs, he mentioned.
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Kotak Bank savings bank deposits jump 68% in Q1

Kotak Mahindra bank has seen a full 68 per cent jump in its savings bank deposits to Rs 5,540 crore thanks to its aggressive offering, following the deregulation of savings deposit interest rates, a senior bank official said on Wednesday.

The savings bank deposits have grown to Rs 5,540 crore as of the June quarter from Rs 3,307 crore a year ago, bank’s executive vice-president, Virat Diwanji, said here.

Following the RBI move to deregulate interest rate cap of 4 percent on the savings bank accounts last October——the last of the rates to be deregulated——a host of new age private sector lenders struggling to garner savings bank deposits had increased their offerings.

Yes Bank was the first one off the block and announced a hike to 6 percent on the day of the RBI announcement, which was followed by others including Kotak Bank and cooperative lender Saraswat Bank, among others.

In central Gujarat, there has been a 50 percent increase in saving bank account deposits to Rs 100 crore, Diwanji, who was speaking on the sidelines of the launch of a new television commercial campaign, said.

Kotak Bank offers its entire bouquet of products in Gujarat and will be launching two more branches in the city in the next six months, he said, adding the Bank’s 60th branch in the state will be inaugurated at Rajkot in two months.

The bank’s network currently comprises 377 and it is targeting to take it to 500 by FY14, he said.
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ICICI Bank cuts deposit rates by 50 bps

India’s largest private bank, ICICI, cut interest rates on fixed deposits for tenures ranging from 91 days to five years by 50 basis points.

Following the revision in interest rates, which is effective from September 11, the highest interest rate that the bank will pay is 8.75 per cent (9.25 per cent earlier) on deposits of 390 days to less than five years.

Fixed deposits with tenure of more than 290 days but less than one year will get an interest of 7.25 per cent.

Senior citizens earn 50 basis points higher interest than general customers.

HDFC Bank revises

Private sector HDFC Bank has also revised interest rate on fixed deposits by up to 0.50 percentage points on select maturities.

For deposits of maturity between six months 17 days and nine months 15 days, the upward revision is 0.50 percentage points to 7.75 per cent.

Term deposits for nine months 16 days would earn 25 basis points lower at 7.75 per cent.

The rate on nine months 17 days to one year fixed deposit would go up by 0.50 percentage points to 7.75 per cent, as per the data posted on the bank’s Web site.

Interest rate for term deposits of 366-380 days is down by 0.25 percentage points to 8.75 per cent.

Deposits of 381-day maturity would attract 8.75 per cent, a decline of 0.50 percentage points.

However, fixed deposits of 382-730-day maturity would earn 8.75 per cent, up by 0.25 percentage points.
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Prepaid payment instruments yet to pick up: RBI

Growth of prepaid payment instruments (PPIs) continues to be sluggish though non-bank entities also can issue them, said G. Padmanabhan, Executive Director, Reserve Bank of India.

PPIs allow purchase of goods and services against the value stored on such instruments.

The value stored on such instruments represents the value paid for by the holder, by cash, by debit to a bank account or by credit card.

The issuance of PPIs during the year averaged 48.96 million, with a peak issuance of 57.46 million in July 2011.

“The volume of transactions (2.3 per cent) and value transacted (2.5 per cent) with PPIs as a percentage of total card transactions is also very marginal,” said Padmanabhan at an event organised by the Internet and Mobile Association of India (IAMAI) here.

Pointing out that paper vouchers like gift vouchers account for about three-fourths of the PPIs, Padmanabhan said “What is the innovation that has taken place if paper PPIs are merely acting as a substitute for cash?” He urged the industry to create more awareness on the benefits of using a PPI.

He asked the seminar participants to explore the possibility of PPI issuers working as business correspondents (BCs) with banks and load government disbursements onto the PPIs, which in turn would lead to promoting inclusion through electronic payments.

The access and inclusion concerns are far greater in semi-urban and rural areas. Most issuers are geographically restricted. In this context, Padmanabhan said there may be a need to review the entry norms so that only serious players come in.

KYC Norms

It is believed that embracing electronic payment systems will provide critical trails of transactions. This will aid in Anti-Money Laundering (AML) and Combating of Financing of Terrorism (CFT) efforts. “However, we have observed that there is no proper system to track card issuance let alone system for tracing the transaction trails,” he said.

There have been demands for increasing the transaction limits.

This will need to be increased in keeping with the safety and security of transactions as applicable to other card schemes, he said.

The RBI is in the process of finalising a payment system ‘vision’ document after taking into consideration views from the stakeholders and the industry.
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Wednesday, September 12, 2012

Oriental Bank to offer finance for Piaggio vehicles

Oriental Bank of Commerce (OBC) has signed a preferred financier agreement with Piaggio Vehicles Pvt Ltd, a manufacturer of small commercial vehicles.

Under this tie-up, Piaggio Vehicles customers will be able to avail themselves of vehicle finance services from any of the 1,827 branches of the bank.

The memorandum of understanding was signed by Atul Gautam, General Manager, OBC, and Praveen Nagpal, Vice President, Piaggio Vehicles.

Speaking on the occasion, Gautam said that the bank is expanding its operations in commercial vehicle financing. The bank has now come up with attractive schemes for financing commercial vehicles in terms of interest rates and margin norms for prospective buyers of Piaggio vehicles.

Nagpal said that the tie-up would be mutually beneficial. By mapping their dealership with the bank’s branches, they will accelerate the sales of their vehicle as well as route their customers to the bank for availing finance.
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Ravimohan appointed RBI nominee Director of BOI

Government has nominated the Regional Director, Reserve Bank of India of Bhopal, P R Ravimohan as the RBI nominee director of Bank of India (BOI) with immediate effect.

Bank of India has informed BSE that...Government of India has nominated P R Ravimohan, Regional Director, Reserve Bank of India, Bhopal as RBI Nominee Director of the bank in place of P K Panda with immediate effect and until further orders,” the Bank said in a BSE filing today.

The shares of the bank traded at Rs 260.45 a piece on the BSE in noon trade, up 0.83 per cent from the previous close.
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HDFC inaugurates 10,000th ATM in Rajasthan

HDFC Bank, country’s leading private sector lender, today launched its 10,000th Automated Teller Machine (ATM) in Rajasthan.

With the inauguration of this ATM located near Ajmer Sharif Dargah, HDFC Bank is now the third Indian bank and the second Private Sector Bank to have a network of 10,000 ATMs across the country.

Having a network of ATMs that are strategically located allows lakhs of customers to fulfil their banking requirements. In the near future, HDFC Bank will continue to look at expanding its ATM network further into deeper geographies, the bank statement said.

Rahul Bhagat, Country Head, Retail Liabilities, Marketing & Direct Banking Channels of HDFC Bank, said, “Over the years, HDFC Bank has built its electronic channels to offer choice and convenience to its customers across geographies with 70 per cent of our ATMs being outside the four metros. Also, 82 per cent of our total transactions happen on our electronic channels and 83 per cent of our active customers use the ATM at least once in a month.
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United Bank cuts rates on select loans by up to 275 bps

United Bank of India has slashed interest rates on medium- and small-term loans above Rs 1 crore by 75-275 basis points.

The revised rates are effective from September 10, said a press statement issued by the bank.

The bank had already reduced the rates for loans below Rs 1 crore by 50-400 basis points effective August 15.

United Bank has extended the concessional rate it offers to rice mills to all other agro-processing units such as flour, oil and dal mills by reducing the spread by 150-175 basis points.
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Tuesday, September 11, 2012

Onno Ruhl appointed World Bank Country Director for India

World Bank has appointed Onno Ruhl as the Country Director for India. He will replace Roberto Zagha who retires in October.

Ruhl, a Dutch national, was previously the Director for Operations Services and Quality in the South Asia Region of the World Bank, the multi-lateral funding agency said in a statement here on Monday.

“His strong experience on finance and operations, and his leadership skills, will ensure that the Bank’s strategy for India is formulated and implemented in order to support the development objectives of one of our most important clients in these challenging times,” said Isabel Guerrero, World Bank Vice-President for the South Asia region.

Ruhl joined the World Bank in 1993 and has held various positions within the Bank in east and central Asia and Africa, the statement said.

Prior to working in the Bank, Ruhl was with the Ministry of Foreign Affairs of the Netherlands government and was also the Alternate Director on the Board of the Multilateral Investment Guarantee Agency.
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Five foreign consultants in race for ‘Post Bank of India’ project

The Department of Posts has issued request for proposals (RFP) to five top notch foreign consultancy firms for the proposed Post Bank of India project.

The five short-listed firms are Accenture Services, Boston Consulting Group, Ernst & Young, KPMG Advisory Services and McKinsey & Co.

The Department of Posts (DoP) is looking to set up a bank — Post Bank of India (PBI) — to provide banking services with special focus on rural areas.

Besides providing a platform for financial inclusion, the Post Bank of India will provide means of additional revenue generation for the DoP.

The consultancy firms chosen, out of the five short-listed ones, will as part of the assignment focus on Detailed Project Report (DPR) on creation of PBI, financial viability of PBI, proposed organisational structure of PBI in the light of RBI regulations, and relationship between PBI and Post Office Savings Bank.
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Exim Bank raises Rs 1,120 cr in Singapore market

Export-Import Bank of India has raised Singapore $250 million (around Rs 1,118 crore) through five-year bonds.

The coupon on the bonds, which have been issued at par, is 3.375 per cent.

This is the longest tenor of publicly listed Singapore dollar bonds by an Indian entity so far.

According to David Rasquinha, Executive Director, Exim Bank, the resources will be utilised to support export transactions, government-backed lines of credit, trade credit, and to fund overseas acquisitions by Indian corporates.

Of Exim Bank’s loan book of about $11 billion, about half is in the form of foreign currency loans, said Rasquniha.

The Singapore $250 million bond issue is part of Exim Bank’s umbrella $2.5 billion medium term note programme.

Strongly subscribed

According to Rajiv Nayar, Head of Capital Markets Origination at Citi India, Exim Bank’s inaugural five-year S$250 million bond was strongly subscribed by several regional asset managers and private banks, resulting in tight pricing of 3.375 per cent.
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Monday, September 10, 2012

SBI to add 1,200 branches this fiscal

The State Bank of India plans to add 1,200 branches this fiscal, its Managing Director and Group Executive (National Banking), A. Krishna Kumar, said. The bank had added 645 branches in fiscal 2011-12. The last fiscal was a period of consolidation after the bank had added about 1,000 branches during the preceding three fiscal years.

SBI has a network of 14,127 branches (as at the end of the June 2012).

Its dominance in the physical space is evident from some comparative numbers. Its nearest public sector competitor, Punjab National bank has 5,697 branches while its nearest private sector competitor ICICI Bank has around 2,755 branches.

Two-thirds of SBI’s network or 9,400 branches are in rural and semi-urban areas. The RBI mandates that at least one in four new branches should be in an un-banked rural area. The existing branch structure allows them considerable cushion to expand in urban and metro areas.

New branches of SBI will come up predominantly in the urban/metro areas. The bank is enhancing its presence to a level commensurate with its market share in these areas. Krishna Kumar said, “We are roughly looking at around 700 branches in the urban/metro areas, 300 in un-banked areas, and the remaining in whichever areas we wish to expand our presence in.”

Most branches tend to breakeven within 18 months of their opening, according to SBI.
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BoB cuts home loan rates by 0.25%

Bank of Baroda (BoB) today announced a 0.25 per cent reduction in home loan rates across all categories and for both new as well as existing customers, in line with its state-run peers.

The new rates will be effective today, BoB said in a statement here.

“To offer a stimulus to sagging demand amid the ongoing slowdown, we have reduced the interest rates on home loans by 25 bps across the board for our existing and new borrowers,” it said.

The country’s largest lender, State Bank of India, had last month taken everybody by surprise and announced a similar cut in its retail offerings, including home and auto loans.

SBI has said since then it has seen an uptick in demand.

Others such as IDBI Bank, Oriental Bank of Commerce, Corporation Bank, Dena Bank and Indian Bank, too, have cut the interest rates following the SBI move.

BoB has said that the benefits of rate cut are also applicable to existing borrowers.

In another development, the bank has announced a reduction in spreads on its trader loans facility by 1 percentage point, after which loans will be available at 13.5 per cent. The new rates will be effective today.
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Finance ministry wants Irda to double insurers' equity play limit

The finance ministry is coaxing the insurance regulator to double insurers' equity exposure limit in a company, ostensibly to make disinvestment a success without drawing criticism that state-run entities violate prudential measures to bail out the government.

The demand, if accepted by the Insurance Regulatory and Development Authority (Irda), will increase the risk for insurance companies, especially Life Insurance Corporation, which has breached the limit in many state-owned companies. Officials from the ministry have been lobbying the regulator to raise the stake an insurance firm can own in a company to 20% from 10%, said two people familiar with the matter. While LIC itself has been demanding such an increase, the regulator had in the past turned it down, citing risk.

"We have set up a committee to examine the issue," said J Hari Narayan, chairman, Irda. "In my view, 20% is just asking for trouble. Risk is to be looked at and LIC is ultimately an important financial institution. The focus of the insurer is not to expose it to risk, but provide stable return. If policyholders are looking for only equity-linked return, they will go to mutual funds." Although Irda has been averse to doubling the equity exposure limit, there could be a compromise, with it raising the limit to 15%, with some riders, said the aforementioned people, who did not want to be identified.

"There will be a concentration of risk, though it is not going to be relevant for us," said Prashant Tripathy, director and chief financial officer at insurer Max Life, a joint venture between Max and Japan's Mitsui Sumitomo.

Source: EconomicTimes
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Indian Bank may raise capital through FPO next fiscal

Indian Bank may come out with a follow-on public offer (FPO) next fiscal if market conditions improve, a top official said.

“We do not require capital immediately...we may go in for FPO in the next fiscal (2013-14),” the bank’s Chairman and Managing Director T M Bhasin told PTI.

The board has already given approval for equity dilution to the extent of 10 per cent, he said.

At present, the government holds 80 per cent stake in the Chennai-headquartered bank.

Shares of Indian Bank closed at Rs 163 on the BSE on Friday, valuing it at Rs 7,005 crore.

Bhasin said the bank’s total capital adequacy stands at 12.98 per cent. Of this, Tier-I is about 10.72 per cent at the end of June, 2012.

The bank is adequately capitalised to meet credit growth of 18 per cent for the current fiscal, he said.

Talking about overseas expansion plan, Bhasin said the bank plans to open a branch in Hong Kong. The bank has already sought regulatory permissions for opening its office in Hong Kong.

Indian Bank has three foreign branches at Singapore and Colombo and Jaffna in Sri Lanka.

Last month, Indian Bank reduced interest rates on home and car loans by up to 0.5 per cent.

“We have recently reduced interest rate on home and vehicle loans with an aim to increase credit disbursement in these segments,” Bhasin said.

In the housing loan segment, rates 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 the processing or administrative charges on such loans. Besides, it has brought down its car loan rates from 11.25 per cent to 11 per cent.
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LIC seeks hike in corporate investment limit to 20-25%

LIC would ideally like to have headroom of 20-25 per cent for investments in some of its investee companies. As of now, it can invest a maximum of 10 per cent in a company, and any exception to this is approved on a case-by-case basis by the Insurance Regulatory and Development Authority (IRDA).

“The matter has been in discussion with the regulator for some time. Let us see how much leeway the regulator wants to give us. My only concern is that this 10 per cent includes historic holdings which we have since 1956. So, for good scrips, I should have some headroom. Otherwise, what will happen is with the amount of equity we sit upon, we will not have good opportunities in the market,” D. K. Mehrotra, Chairman, LIC, told Business Line. Mehrotra also pointed out that he would not like to risk investment in stocks that do not add value for the insurer. This is why LIC has been asking the regulator to give it some headroom, especially where (in companies) LIC has reached the limit of 10 per cent or nearing it, he added.

Asked how much the life insurance behemoth would be comfortable with, he said: “I do not mind 25 per cent. And it is not that if they give 25 per cent I will reach 25. If they give 25 per cent, it will take care of our investment requirements for the next 10 to 15 years.

Lost opportunity

“It is not that any scrip is so attractive that we will jump on it and we also know that the market will be strongly disturbed if we do so. Anything between 20-25 per cent is good enough.”

When it was pointed out that LIC’s request for a stake of over 10 per cent in a company is already being considered on a case-to-case basis, he said by the time a decision was taken, it was an opportunity lost.
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Corporation Bank offers concessions on loans

Corporation Bank is offering concessions on various loan schemes offered by it for the festival season. Processing fees for loans to buy homes or vehicles and trade/business have been waived.

Under this, floating rate of interest for home loans of up to Rs 50 lakh is 10.5 per cent p.a., for up to Rs 1 crore it is 10.75 per cent and for amount above this 11 per cent.

Interest rate on loans for buying vehicles is 11.25 per cent for five-year tenure and 11.75 per cent for seven years.

Under the Corp Doctor Plus (finance for medical professionals) scheme, doctors can obtain finance for setting up of clinics/hospitals/path labs or purchase of electro medical equipment. Any registered medical practitioner, dentist, physiotherapist or firm managed by doctors can apply for the loan at 12.1 per cent rate of interest.

Under the Corp Vyapar scheme, traders/businessmen engaged in buying and selling of goods/commodities either on retail or wholesale business are eligible for the loans. Rate of interest for up to Rs 20 lakh is offered at 12.5 per cent, and above this amount, the offered rate is 13.5 per cent.

Corp Home Premium, a housing loan scheme for NRIs, the rate of interest for amount up to Rs 50 lakh offered is 10.5 per cent p.a., 10.75 per cent for amount up to Rs 1 crore, and above this 11 per cent.

It’s Combo Offer — taking both Corp Home and Corp Vehicle loan together provides additional concession in the rate of interest on vehicle loans by 0.25 per cent.

Corporation Bank is also providing loans on gold ornaments and has identified 41 branches in various districts.
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