Huge potential for project exports, says Exim Bank chief

Exim Bank is to promote project exports in a big way this year. Though the global economic condition is expected to remain subdued for another two years, there is enough room for Indian project exports to grow, provided exporters manage to identify potential markets and importers.

According to T.C.A. Ranganathan, Chairman and Managing Director, Exim Bank, this is precisely what prompted the bank to focus more on market research and mapping of importers from across the world and, thereby, provide Indian exporters with sufficient database.

Exim Bank played a lead role in promoting project exports from India last year too. As on March 31, 2012, some 340 project export contracts were under execution in 62 countries by 74 Indian companies, with support from the bank.

According to Ranganathan, going by the bank’s market research, currently there is huge potential for project exports across verticals such as engineering, construction and equipment, followed by chemicals and pharma products, petroleum products, and electronic goods.

These segments have witnessed a marked growth in the last decade. Between 2002-03 and 2011-12, exports of petroleum products grew at a compounded annual growth rate of over 40 per cent, followed by engineering goods and electronic goods, at 25.2 per cent and 24 per cent respectively.

However, he said exports in the current financial year may remain flat or marginally lower than last year. In the first half of this year there was a marginal drop against the comparable period in 2011-12, whereas last year it grew 40 per cent over the previous-year period.

ravikumar.ramanujam@thehindu.co.in

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Chidambaram opens door for more reforms, offers tax relief

In an attempt to lighten the burden on aam aadmi (common man), cheer corporates and boost the markets, Finance Minister P Chidambaram announced a slew of measures offering tax breaks on Friday.

This was the second successive day of big action as the government battled to contain the fallout of alliance partner Trinamool Congress withdrawing support.

Chidambaram’s first announcement related to waiver of import and excise duties on non-subsidised domestic cooking gas (LPG) cylinders. Two others were on implementation of Budget announcements on reduction of withholding tax rate on external borrowings, and tax breaks for investors under the Rajiv Gandhi Equity Savings Scheme.

He said, “Since some LPG cylinders will not be subsidised, we have amended the notification for the non-subsidised household LPG cylinders... Customs and excise (on them) will be zero.” A formal notification dated September 18 has already been issued.

This move has come after the Government announced capping of the number subsidised cylinders per connection to six a year. Asked about the impact of zero duty, the Finance Minister said “it could be around Rs 30, but the final figure is still being worked out.”

However, according to oil companies, after the abolition of 5 per cent import duty and 8 per cent excise duty, the consumer price in Delhi would come to Rs 757 from over Rs 800, providing a relief of almost Rs 50. Subsidised cooking gas (LPG) in Delhi is currently sold at Rs 399 a cylinder.

Foreign Currency Borrowing

The Finance Minister announced a reduction in withholding tax on foreign currency borrowing to come into effect. “Interest rates are low abroad and these low-cost funds can come to India,” Chidambaram said. Withholding tax is similar to the Tax Deducted at Source (TDS) but is levied on payment to non-residents.

The rate of withholding tax has been cut to 5 per cent from 20 per cent. The lower rate will be applicable for overseas borrowings made after July 1, 2012 and before July 1, 2015. Borrowings under a loan agreement or by way of issue of long-term infrastructure bonds that comply with External Commercial Borrowings regulations as administered by the Reserve Bank of India would be eligible for benefits of the concessional tax regime.

He further said the guidelines would have some generic conditions which, if met, will enable corporates to directly access the overseas market for raising funds.

“Anyone satisfying general conditions need not come to government for case-by-case approval,” Chidambaram said, adding the borrowings could be done in the form of loan agreement or by way of long-term infrastructure bonds that comply with the ECB regulations.

Rajiv Gandhi Equity Saving Scheme

The Finance Minister approved the much awaited Rajiv Gandhi Equity Saving Scheme with one change. Now this scheme will also provide tax benefits through investment in mutual funds and exchange trade funds, besides blue-chip shares.

Shishir.Sinha@thehindu.co.in

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Govt asks banks to promote e-payments, cut cheque transactions

To promote electronic payments, the government has asked banks to reduce cheque-based transactions by at least 20 per cent through identified branches in 2012-13.

The Finance Ministry has directed banks to ensure that e-payment mode gets the attention it deserves, sources said.

"It is considered imperative for banks to take six minimum steps, including identification of top 20 per cent branches in terms of business volume (2011-12)," sources said.

The aim is to bring down the number of cheque-based transactions by at least 20 per cent through identified branches in 2012-13.

The government has been encouraging transactions through e-payment channels to reduce the number of transactions through cheques and other expensive modes.

The Finance Ministry has also asked public sector banks (PSBs) to ensure that all payments and disbursements by the banks, except sundry payments, are made only electronically.

"Banks must devise suitable monitoring parameters to judge the effectiveness of the e-payment drive," sources said, adding that the Executive Director dealing with the matter should be assigned the responsibility of supervising e-payment drive in the respective banks.

The government expects that successful implementation of the e-payment drive should result in significant reduction in the volume as well as value of transactions using cheques and pay orders.


Source: Financial Express

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Central Bank again opposes separation of DMO function

The Reserve Bank of India (RBI) has again voiced concern on separation of the Debt Management Office (DMO) from its ambit.

“Separation of debt management from the central bank needs to be revisited in the wake of global financial crises,” said H R Khan, deputy governor, at a conference in Doha recently.

Earlier, the government had proposed that the DMO work independently, under the finance ministry’s purview. This would be responsible for managing the government's borrowing programme.

The government's market borrowings had increased in recent years and RBI had to put in much effort in the exercise.

However, RBI Governor D Subbarao had stressed there was no conflict of interest in this job and being a central banker. He said only a central bank had the requisite market pulse and instruments to make the needed contextual judgments. According to him, an independent debt agency, driven by narrow objectives, would not be able to do this.

Subbarao felt the advantages of shifting the debt management function out of the central bank were overstated. The advantages were described as higher transparency, helping in debt consolidations, lowering the cost of debt and resolving conflicts of interest. According to Subbarao, these advantages might be valid in a few nations but when it comes to India, where the government borrowings are large, sovereign debt management was beyond merely an exercise in resource raising.

Added Khan: “For development of a deep, efficient and resilient debt market, each country has to focus on the role and responsibility of the state, keeping in view the significance of the debt market, in particular the government bond market in overall economic development and the financial system, even if a country has a budget surplus.”

According to Khan, there is also a need to keep in view a credible and efficient debt management strategy and framework within the overall macro economic policy environment, a strategy for deeper, wider and resilient debt market, and a safe and robust financial market infrastructure. Besides this there should be an effective regulatory and supervisory framework, focusing on financial stability, market integrity, transparency and consumer protection, he said.

He said there might be a confluence of interest between monetary policy and debt management in India.



Source: Business Standard

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Indian bank signs MoU with National Small Industries Corporation

Public sector Indian Bank today entered into a Memorandum of Understanding (MoU) with National Small Industries Corporation (NSIC).

As per the MoU, NSIC will sponsor MSMEs' proposal (for loan) after due scrutiny at at regular intervals to various branches of Indian Bank all over the country, Chennai-headquartered Indian Bank said in a statement.

The arrangement is expected to provide more momentum to the growth of MSME advances of Indian Bank.

As of June 30, 2012, MSME advances of the Bank stood at Rs 10,776.30 crore with an annual growth of 24.32 per cent.

Indian Bank Executive Director Rajeev Rishi exchanged documents with NSIC Director (Finance) Ravindra Nath at a function.



Source: EconomicTimes

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HDFC Bank uses technology-led marketing to keep costs low

A marketer who helped revitalise the sales of chocolate brands such as Picnic, Perk and 5-Star for Cadbury and launched India's first end-to-end portal to buy insurance for ICICI Lombard, is now busy changing the way the country's largest issuer of credit cards and auto loans markets itself.

Kartik Jain, 42, executive vice-president and head marketing at HDFC Bank, has been pushing result-oriented local and digital marketing since he joined India's second-largest private bank last year.

"We want our marketing campaigns to result in at least thrice the revenue they cost," says Jain, an IIT and IIM alum.

He launched some 4,000 campaigns and 400 analytical solutions (a 40% y-o-y increase) in the past year to bring in more customers to the bank and aggressively stepped up its digital presence to increase business from this channel by over 60%.

Jain, a keen trekker who has run three half marathons (and wishes he had time for more), is pushing his colleagues to shift away from a centralised marketing function, and think local by setting up local marketing teams to cater to specific needs of a community or locality. "I want our marketers to focus on the catchment areas around branches and run campaigns to suit residents or businesses there," he says.

His result-oriented approach is something his rivals and industry watchers admire. "He's an objective-driven marketer who has been able to effectively leverage technology and digital programmes," says Sanjay Jain, chief marketing officer of Reliance Capital. HDFC's Jain stands out for his focus on return on investment and not spread across many hard-to-measure campaigns, he says.

Ajay Kelkar, COO of customer relationship solutions firm Hansa Cequity, says Kartik Jain uses technology and digital media more effectively than most of his peers. "This gives the bank an opportunity to get one view of the customer and, in a muted economy, opens up better opportunities to cross sell products," he says.

As marketers become more concerned with cost, the idea of highly visible above-the-line advertising rarely appeals to Jain. "We haven't done a big-ticket campaign in 2-3 years," he says. Instead, the ads will be targeted, like its Infineon credit card ads pegged at big spenders.

While he wouldn't disclose his marketing budget, Jain says HDFC BankBSE 3.02 % spends less than one-fifth of it on above-the-line activities, with the rest reserved for below-the-line campaigns. "Marketing is about customer engagement that leads to measurable business results," he says.

While it's a challenge to get close enough to customers to garner key insights for new campaigns, marketers like Jain are increasingly under pressure to reduce spends in a slowing economy.

Jain is leaning heavily on digital campaigns to proselytise HDFC Bank. Under him, the bank's website has become the most visited private bank website and the most responsive bank on Facebook, according to a survey by Social Bakers in May 2012.

"With increasing penetration of internet and mobile, digital marketing has become an inexorable element of marketing...this is especially true in the case of financial services, where products and services cannot be distributed efficiently without the use of technology," Jain says. Parag Rao, who heads HDFC Bank's credit card business, says while Jain's overview across the bank's businesses has allowed him to synergise marketing campaigns, his data analytics team is a welcome bonus.

"We undertake a lot of customer analytics across our different businesses and since Kartik has an insight across them we have visibility of their spends and can target them with specific products," Rao says.



Source: EconomicTimes

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SBI reclaims most valued bank status, topples HDFC Bank

SBI today reclaimed its position as the country's most valued bank with a total market valuation of over Rs 1.48 lakh crore, surpassing private sector player HDFC Bank.

Shares of State Bank of India surged 4.3 per cent to close the day at Rs 2,212.6, taking its market value to Rs 1,48,475 crore, making it the overall seventh most valued company.

On the other hand, shares of HDFC Bank gained 3.02 per cent to Rs 625.25. In the process, the market capitalisation (m-cap) of the private bank rose to Rs 1,47,444 crore.

HDFC Bank had on July 27 toppled SBI to become the country's most valued lender in terms of market cap.

Meanwhile, Reliance Industries Ltd (RIL) continued to remain at the number one position with a m-cap of Rs 2,74,987 crore, while TCS was at second place with Rs 2,55,084 crore value.

It was followed by ONGC (Rs 2,50,975 crore), Coal India (Rs 2,34,905 crore) and ITC (Rs 2,05,254 crore).

Among the top-10 on the Sensex, Infosys was at sixth place with a market value of Rs 1,48,992 crore, while SBI was at seventh position, followed by HDFC Bank, NTPC (Rs 1,39,059 crore) and ICICI Bank (Rs 1,22,821 crore).

In the broader market today, the BSE benchmark Sensex closed at 18,752.83, up 403.58 points or 2.2 per cent.



Source: EconomicTimes

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Kotak Mahindra Bank to focus on NRIs in Kerala

Kotak Mahindra Bank has chalked out plans to focus on Kerala’s NRI population to boost its business in the State.

Virat Diwanji, executive vice-president and head of branch banking, business assets and NR, said that the focus is more on NRI customers in the State and the bank has enlarged its team size to chase the population.

Diwanji, who was here in connection with the launching of the bank’s new ad campaign, told reporters here that the NRI contribution to the overall deposit base of Kotak Mahindra Bank in Kerala is over one-third and the bank wanted to take it to half in the next one year. Kerala, he said, is a state for NR population and the bank is aiming to capitalise their deposits.

The current customer base of Kotak Mahindra Bank in Kerala is 20,000 and the bank is looking at 20-25 per cent growth in the next one year. The deposits in the State are around Rs 200 crore. The bank, with five branches in the State, will add one more in the next 3-4 months, he said.

He pointed out that the bank’s savings bank account has grown over 40 per cent from Rs 40 crore to over Rs 56 crore in Kerala region following the introduction of 6 per cent p.a. interest rates on savings account.

The newly launched interest offering on SB accounts has had a very positive impact as it has enabled customers to match this return with the post tax yields of term deposits of short to medium tenure, he said adding, that the bank has registered a 68 per cent increase in the SB deposits nation wide.

The entire product suite of the bank available in Kerala are – car loans, business loans, loans against shares, loans against property, agriculture loan etc.

Asked about the bank’s gold loan exposure, Diwanji said the bank is gradually building its business in gold loan portfolio, which is now available in Maharashtra, Tamil Nadu and Rajasthan. This will be expanded to Kerala very soon, he added.

sajeevkumar.v@thehindu.co.in

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Corp Bank’s new branch in Bangalore

Corporation Bank opened its new branch at Akshaynagar in Bangalore recently.

Amar Lal Daultani, executive director of the bank, said on the occasion that Akshaynagar is an upcoming residential area having a lot of housing complexes. To reach out to prospective customers, the bank has opened the branch, he said.

A bank release said here that S.N. Jayaram, commissioner of Karnataka Housing Board, inaugurated the new branch. K. Giridhar Shenoy, circle general manager, and N. Vijaya Kumar, deputy general manager and zonal head, Bangalore South, were present on the occasion, the release added.

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Sundaram BNP Paribas Fund Services to recruit 100 people

As part of its expansion plans, Sundaram BNP Paribas Fund Services would recruit 100 people across its delivery centres during the next fiscal.

Sundaram BNP Paribas Fund Services is a 51:49 per cent joint venture between the Chennai-based Sundaram Finance Ltd and BNP Paribas Securities Services, a 100 per cent subsidiary of BNP Paribas.

The Chennai-based Sundaram BNP Paribas Fund Services employs 200 people in its two-delivery centres in Chennai and Madurai.

“It expects to hire around 100 people in the next financial year,” a company statement said.

Meanwhile, the company said as part of providing full-fledged fund accounting services, Sundaram BNP Paribas has inked an MoU with Mumbai-based private equity player.

Sundaram BNP Paribas Fund Services said during their first full year of operations, the company successfully migrated over 2.8 million investor files along with 35,000 distributor records.

“The fact that we have achieved transition of almost three million folios with no disruption of services to individual customers and distributors is very fulfilling,” Sundaram BNP Paribas Fund Services, CEO, Shridhar Iyer said.

In 2010, Sundaram Finance and BNP Paribas Securities Services had said they would invest Rs 60 crore in fund services over a three-year period, the statement added.

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Movida, mobile banking platform, to go live next month with HDFC Bank: Visa

The Visa-promoted Movida mobile payments platform will go live next month with the second largest private sector lender HDFC Bank as its banking partner, a top Visa official has said.

“Movida will go live next month...on HDFC Bank it should be live. Other banks are in the pipeline,” Visa country manager for India and South Asia Uttam Nayak told PTI.

The work of integration and testing is on right now, before the product goes live, he said.

Movida, an equal joint venture between Visa and the LSE-listed mobile banking solutions company Monitise, had in February this year announced a tie-up with HDFC Bank for the platform.

The product is pitted against the interbank mobile payment service (IMPS) launched by the National Payments Corporation of India, which already has 50 banks as members.

Nayak said even though it is starting up with HDFC Bank only, the company is in talks with other lenders to grow the network of banks as the solution is designed for inter-bank operability.

He, however, declined to give any names or the number of banks the company is in talks with.

Nayak said to start with, HDFC Bank account-holders will be able to do “remote” transactions such as money transfer to other account holders, mobile payments and ticketing, while the next phase will involve “face-to-face” transactions including merchant payments.

When asked about the IMPS, he said, Movida will be competing with the NPCI platform, but it has some differences.

The IMPS is an account-to-account transfer of money and requires a special registration while the Movida solution will allow for a card-to-card transfer of cash using the mobile platform, he said.

Nayak conceded that NPCI’s IMPS being the entrenched player has got an advantage in the sphere, but said the market opportunity to be tapped is very large which gives space to newer players as well.

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Sabbatical yet to gain momentum

For most women, priority is home, however career minded they may be. While some have the advantage of having a member of the extended family take care of their children, most mothers prefer to stay with them during their decisive growing years.

Considering this, the Khandelwal Committee report on HR issues of public sector banks (PSBs) recommended in 2010 that sabbatical of two years be allowed at request to women employees to meet their special problems during their career.

Following this, the Ministry of Finance issued a broad guideline on February 28 this year asking the PSBs to grant sabbatical of two years to women employees.

The annual report of Central Bank of India for 2011-12 says that it implemented this with effect from April 1. Some other banks are also mulling this decision now.

Usha Ananthasubramanian, Executive Director of Punjab National Bank, said that her bank has also implemented this recommendation.

“Recently, one of our sub-staff availed herself of this as her husband, who was working in another PSB, was posted to an overseas branch of that bank. We were certain that she will be away for the two-year period. This gives some clarity, and helps us in manpower planning,” she said.

Though the union representatives agree with the fact that this is a good move by the Government, they cite the shortage of manpower as the main problem for its implementation in PSBs.

Yet another banker said: “Read between the lines of the recommendation.”

It says two years sabbatical during the career. There are people who go on a sabbatical in instalments, first for a period of six months, then they return to work for a couple of months and prefer to take the rest after a gap. “We cannot deny them this, but the manpower planning goes for a toss,” said this official.

revathy.lakshminarasimhan@thehindu.co.in

vinayak.aj@thehindu.co.in

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HSBC to pay Rs 20,000 compensation to credit card holder

Hongkong and Shanghai Banking Corporation (HSBC) has been ordered by a consumer forum here to pay Rs 20,000 as compensation to one of its credit card holders for adding his name in CIBIL’s defaulters list even though he had paid all his dues.

While awarding the amount to the HSBC credit card holder, the New Delhi District Consumer Disputes Redressal Forum said the Bank should have “gracefully” accepted its fault instead of adopting an “obstructionist attitude” by seeking rejection of his complaint.

“We are shocked to observe the obstructionist attitude of opposite party (HSBC) which instead of accepting the fault gracefully by filing a reply has sought rejection of the complaint on ground of remedy of arbitration under the Credit Information Bureau (India) Limited (CIBIL) Act,” said the bench presided by C.K Chaturvedi said.

“It (HSBC) has not disputed facts. The remedy under the Consumer Protection Act is not affected by the arbitration agreement. We dismiss the application of the opposite party and award a compensation of Rs 20,000 to the complainant (Rakesh Gupta) inclusive of litigation expenses,” said the bench.

Delhi resident Rakesh Gupta in his complaint had alleged that he had been issued a HSBC credit card on understanding that no annual charges would be levied, yet after the first two months of usage the Bank started levying the charges.

When he made a representation to the bank about annual charges, the same were reversed temporarily, he said adding that in 2006 he paid all the outstanding dues and asked the bank to close the card.

Rakesh Gupta alleged the bank, instead of closing the card, continued showing the annual charges as outstanding and informed CIBIL that he was a defaulter, without giving him a notice.

The bank had sought dismissal of the complaint against it on the ground that the remedy available was through arbitration only.

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ATM Pin: Avoid birth date, numerical sequences

If your ATM pin code is your birth date, a year in the 1900s, or an obvious numerical sequence, the chances of thieves cracking your password are way higher, according to a new study.

Researchers from the data analysis firm, Data Genetics have found that the three most popular combinations — “1234”, “1111”, and “0000” — account for close to 20 per cent of all four-digit passwords.

Every four-digit combination that starts with “19” ranks above the 80th percentile in popularity, with those in the upper-1900s coming in the highest, Slate magazine reported.

Also quite common are combinations in which the first two digits are between “01” and “12” and the last two are between “01” and “31”.

So choosing your birthday, your birth year, or a number that might be a lot of other people’s birthday or birth year makes your password significantly easier to guess.

On the other end of the scale, the least popular combination 8068 - appears less than 0.001 per cent of the time.

Rounding out the bottom five are “8093”, “9629”, “6835”, and “7637”.

Data Genetics came up with the numbers by analysing a database of 3.4 million stolen passwords that have been made public over the years.

Most of these are passwords for Websites. But by looking specifically at those that comprise exactly four characters, all of which are numerals, the researchers figured they could get a decent proxy for ATM pins as well.

The data also showed that people prefer even numbers to odd, so “2468” ranks higher than “1357”.

Far more passwords start with “1” than any other number.

In a distant second and third are “0” and “2”.

Among seven-digit passwords, the fourth-most popular is “8675309,” which should ring familiar to fans of ‘80s music.

The 17th most popular 10-digit password is “3141592654”.

Two-digit sequences with large numerical gaps, such as “29” and “37” were found often among the least popular passwords.

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SBI tops ATM expansion in non-metros: Study

The largest public sector lender, State Bank of India, is leading in expansion of ATMs in non-metro and semi-urban centres, an Assocham analysis of RBI data shows.

While SBI has 5,783 automated teller machines (ATMs) in metro cities, the cash dispensing machines in urban centres other than metros and in semi-urban areas are 7,511 and 6,419, respectively . Even in the rural areas, the bank has 2,756 ATMs.

Following SBI is another public sector lender, Punjab National Bank, which has a larger number of ATMs in the non-metro cities than in the metros, as per the latest RBI data.

Private sector banks, ICICI Bank, Axis Bank and HDFC still have “bias and preference” for ATMs in metro cities, followed by tier-II cities, the Assocham study released here on Wednesday reveals.

Among the private banks, Axis Bank had the largest ATM network in July 2012, followed by HDFC Bank and ICICI Bank.

“The Finance Ministry is rightly very keen of achieving financial inclusion of a large number of people in rural areas.

“This can best be achieved by leveraging of technology and use of mobile telephony and ATMs,” Assocham Secretary-General, D. S. Rawat, said.

aditi.n@thehindu.co.in

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UCO Banks cuts lending rates by 25-150 bps

UCO Bank has slashed interest rates by 25-150 basis points on various retail and priority sector loans with immediate effect.

The bank has reduced rates on home loans by 25 basis points to 10.50 per cent, car loans by 50 basis points to 10.75 per cent, education loans by 150 basis points to 12.75 per cent, said a press statement issued by the bank.

This apart, the bank has also lowered interest rates on advances above Rs 1 crore to the MSME and agriculture sectors by 25-150 basis points. These rates would be applicable on all fresh loans sanctioned by the bank with immediate effect.

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SBI cuts base rate by 0.25% to 9.75%

Acting on RBI's cue, State Bank of India today reduced the minimum lending rate by 0.25 per cent, giving relief to all types of borrowers.

"The cut in base rate was driven largely by the RBI's decision to cut the CRR yesterday," State Bank's Chairman Pratip Chaudhuri told late this evening. The reduction is effective from September 20.

The decision by the country's largest lender comes a day after the Reserve Bank cut CRR by 0.25 per cent to 4.5 per cent inducting Rs 17,000 crore into the system.

SBI is the first to cut base rate after RBI's policy announcement and its rate is among the lowest in the market. Other banks are likely to follow suit and cut lending rates in the coming days.

Chaudhuri said the cut will have a "very minor" impact of up to four basis points or 0.04 percent on its margins.

The bank's Asset Liability Committee ( Alco) met today and decided to cut the base rate to 9.75 per cent.

Of the bank's Rs 6 lakh crore loan book, up to Rs 5 lakh crore is linked to the base rate mechanism, Chaudhuri said.

The base rate mechanism ame into effect in July, 2010 as a new transparent alternative to the earlier benchmark prime lending rate.



Source: EconomicTimes

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IOB observes Kisan Month

A.K. Bansal, executive director of Indian Overseas Bank, gave away farm loans and assets to borrowers and inaugurated exhibition of products of beneficiaries at Vilavoorkal Panchayat as part of Kisan Month celebrations.

S.N. Misra, general manager (retired) and adviser to the bank; C. Haridas, chief regional manager; and Sukumariamma, president, Vilavoorkal panchayat, were present at the function.

More than 1,500 customers attended. The bank sanctioned loans amounting to Rs 20 crore to 800 beneficiaries at the venue, an official spokesman said.

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Citi opens first ‘smart banking’ branch

Citibank India announced the opening of its first smart banking branch in Noida.

The smart banking branch offers services covering general banking, wealth management, loans and credit cards.

Facilities such as a media wall to display information, touch screens to view product demonstrations, a workbench that allows customers to conduct independent banking transactions and video conferencing facility for consultation from Citibank personnel.

Anand Selvakesari, Country Business Manager, Global Consumer Group, Citi India, said, “The introduction of smart banking branches underlines our continued investment in technology and commitment to customer-centric innovation. We plan to convert many of our existing branches into Smart Banking branches.”

At present, Citibank India’s retail network is spread across 30 cities with 42 full service branches and over 700 ATMs.

beena.parmar@thehindu.co.in

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Federal Bank tightens security verification system

Federal Bank announced that it has strengthened its Internet banking security verification system. It has implemented the Finacle-enabled two-factor authentication solution for its corporate and retail Internet banking customers, says a press release from the bank.

Finacle from Infosys, through its strategic partnership with CA Technologies, has put in place a vigorous security framework which provides two-factor authentication.

The solution helps ensure mutual authentication between the bank and the end-user, enabling an easy and transparent ‘user login’ experience.

It protects customers against various kinds of existing and emerging security threats such as phishing, man-in-the-middle, brute-force attacks, and replay attacks to name a few, the release added.

ravikumar.ramanujam@thehindu.co.in

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PNB steps up presence in Kerala

The Punjab National Bank has taken steps to increase its presence in Kerala. The number of outlets will touch 310 by the end of October from the present 290 in the State.

The bank, with 141 branches and 149 ATMs has also plans to open more ATMs.

K.V. Rajesh, deputy general manager and circle head, said the business in Kerala has crossed Rs 7,500 crore by June and the bank is aiming to achieve a business of Rs 10,000 crore from the State by the end of this fiscal.

New branches

The new branches are located at Maradu and Piravom in Ernakulam district, Aroor (Alappuzha), Kothanelloor, Vaikom and Earattupetta (Kottayam), Varkala and Karunagappally (Kollam), Vizhinjam and Attingal (Thiruvananthapuram) and Wadakkanchery in Thrissur district. These branches will be equipped with ATM facility also.

He said that PNB has been identified as the lead bank in Kerala for installation of cash dispensers (ATM machines) by the Finance Ministry. In addition to Kerala, the bank will also lead installation of cash dispensers in Haryana, Chandigarh, Himachal Pradesh, Delhi, Uttarakhand and Lakshadweep.

In Kerala, the bank is all set to establish e-lobbies in 10 branches immediately. This will facilitate customers for self service pass book printing terminal using hologram, cash deposit machine, cheque deposit machine and cash dispensers.

PNB remit card

The bank is also set to launch PNB remit pre-paid card under tie-up with UAE Exchange. It is a non-personalised co-branded card with Xpress Money applicable on pan-India basis.

Beneficiaries receiving inward remittance under Money Transfer Service Scheme from abroad through UAE Exchange are eligible.

The remit card will be activated by the PNB branch immediately after getting information of the beneficiary of the card from the office of UAE Exchange on a daily basis. Loading and reloading of the card based on remittance received will be done by UAE Exchange office through Internet Banking Service.

sajeevkumar.v@thehindu.co.in

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IOB to disburse Rs 1,200-cr crop loans by month-end

Indian Overseas Bank (IOB) is observing July-September as ‘kisan months’, according to M. Narendra, Chairman and Managing Director, IOB.

Addressing presspersons here, Narendra said that the bank will disburse around Rs 1,200 crore of crop loans by September-end; since July, the bank has disbursed around Rs 600 crore.

The agricultural lending of the bank stood at Rs 19,932 crore at the end of March 2012. The bank wants to take this to Rs 26,000 crore by the end of this financial year, he said.

To encourage priority sector lending, particularly to the agriculture sector, the bank is planning to open 40 special agriculture credit branches. Of them, 10 branches in Karnataka and five in Maharashtra will be opened by September-end.

These branches will be equipped with agricultural officers, who process and appraise the loan proposals of nearby branches also, he said.

The bank has introduced some agricultural loan products to meet the specific needs of identified segments.

He said that ‘IOB Sagarlakshmi’ is designed for financing fisherwomen. Under this, loans up to Rs 1 lakh are granted.

‘IOB Bhoomi Shakti’ provides financial assistance to women having farmland in their name. The scheme provides interest concession of 0.50 percentage points for limits up to Rs 50,000 and 0.25 percentage points for limits above Rs 50,000, he said.

Narendra said that ‘IOB Urban Horticulture’ is meant for individuals and institutions for raising kitchen garden, flower garden, small orchards or roof gardens. Margin and collateral security are waived for loans up to Rs 1 lakh under this, he said.

vinayak.aj@thehindu.co.in

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SBH cuts home, car loan rates by up to 50 bps

With the festival season round the corner, banks have started cutting interest rates to attract customers.

The State Bank of Hyderabad (SBH) has launched a festive campaign, which runs from September 17 to December 31, for its home and car loan schemes.

The bank has slashed interest rates by up to 50 basis points on both these segments.

Further, no processing charges would be levied for car loans and there is a 50 per cent concession on charges for home loans, the bank said in a press release.

SBH has about 1484 branches across the country, where the offer will be valid.

In the home loan scheme, interest rate for loans up to Rs 30 lakh has been slashed from 10.75 per cent per annum to 10.50 per cent, and for loans above Rs 30 lakh, the rate is down from 11 per cent to 10.50 per cent.

The rate of interest is ‘floating’ and applicable for all tenors.

Now, for every Rs 1 lakh, the customer has to pay an EMI (equated monthly instalment) of Rs 915 for a 30-year loan, as against Rs 934 so far.

As for car loans, the rate for a seven-year loan has been reduced from 11.25 per cent to 10.75 per cent.

For every Rs 1 lakh, the customer has to pay an EMI of Rs 1,699 as against Rs 1,725 until now, the release said.

somasekhar.m@thehindu.co.in

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HDFC bank launches 10,001st ATM at Kovalam

HDFC Bank, India’s second largest private sector bank, commissioned its 10,001st Automated Teller Machine (ATM) at Kovalam in the state capital.

The ATM was inaugurated by K Jayakumar, state Chief Secretary, at a function last night, a bank press release said here today.

The launch of the 10001st ATM in Kerala follows the inauguration of the 10,000th ATM, commissioned last week in Ajmer Sharif, Rajasthan.

The launch reflects the bank’s endeavour to provide all forms of electronic channels – ATMs, net banking and mobile banking, for customers. The strategic location of the growing network of ATMs, allows customers to fulfil their banking requirements at their convenience, it said.

Hari Velloor, Zonal Head – Kerala, HDFC Bank said that with over 133 branches and around 270 ATMs across Kerala, HDFC Bank remains steadfast in its objective to provide world class banking services to its customers in the state.

Rahul Bhagat, Country Head, Retail Liabilities, Marketing & Direct Banking Channels, HDFC Bank, said that the bank had over the years built its electronic channels to offer choice and convenience to customers across geographies with 70 per cent of ATMs being outside the four metros.

The testimony lies in the fact that 82 per cent of the total transactions happen on the electronic channels and 83 per cent of active customers use the ATM at least once a month, he said.

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Fullerton India raises Rs 850 crore

Non-banking financial firm Fullerton India Credit Company said it has raised funds worth Rs 850 crore, including Rs 150 crore in equity capital.

Fullerton India would receive Rs 150 crore additional equity capital from its parent firm Singapore-based Fullerton Financial Holdings, it said in a statement.

Both entities are part of Singapore's Temasek Holdings. "This fresh infusion of capital is timely. Fullerton India required additional capital to support growth plans, expand its distribution, enhance customer service capabilities and to extend strategic presence in under-served markets and customer segments," Fullerton India CEO and MD Shantanu Mitra said.

According to the statement, the company raised Rs 600 crore through issue of non-convertible debentures and about Rs 100 crore in Tier 2 subordinated debt. These funds were raised this month.

"With a capital adequacy in excess of 20 per cent, these infusions provide us with a strong capital cushion, and enable us to meet our business expansion needs for the foreseeable future," Mitra noted.

Fullerton India has plans to increase its mortgage-backed lending to the small and medium business segment.


Source: EconomicTimes

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Home loan rate cut: Options for old borrowers

Many home loan borrowers, who were hoping for a reduction in interest rates, are clearly disappointed with the Reserve Bank of India, which left the rates unchanged in its policy review. They are not enthusiastic about the dovish policy statement, which many bankers say clearly indicates the rates may start coming down gradually. Their main grouse is that even though many banks, especially public sector banks, have already lowered interest on floating rate loans by 0.25% — which translates into a saving of Rs 17 per Rs 1 lakh — these banks have not changed their base rates or the benchmark rate they follow.

This means only new borrowers will benefit from the new lower interest rates announced by these banks. As for old home loan borrowers, they still have to pay a higher rate on their home loans. "Even today there are some old borrowers who are paying an interest rate of 12.5% on their housing loan. But today a new borrower can get a housing loan even at 10.5-11 %, which is 1.5-2 % cheaper," says VN Kulkarni, chief counsellor with the Bank of India-sponsored Abhay Credit Counselling Centre.

In monetary terms, the difference between the EMIs paid by an old borrower and a new one would be around Rs 104 per Rs 1 lakh. "A banker can claim that the old borrower entered into a loan agreement at a time when cost of funds were much higher. Today customers are benefitting from lower cost of funds. However, this is just a policy decision by banks, there are no technical glitches in passing the benefits of lower interest rates to new customers," adds VN Kulkarni.

Number Of Rate Cuts, Yet No Benefit

Banks have started reducing interest rates following the RBI's decision to cut the statutory liquidity ratio (SLR) from 24% to 23% in August. State Bank of India (SBI) reduced its home loan rates by 0.50-0 .85% for its new customers. Several other public sector banks followed suit.

Only Bank of BarodaBSE 6.93 % and Central Bank of IndiaBSE 5.33 % have extended the benefit of rate cuts to its old home loan borrowers. Earlier in April this year, the RBI had cut the repo rate by 0.50%. Subsequently, some banks such as ICICI BankBSE 5.39 %, IDBI BankBSE 4.43 %, Kotak Mahindra BankBSE -0.07 %, Central Bank of India and Punjab National BankBSE 5.58 % cut their base rates (benchmark lending rate) by 0.25%.

At that time both the old as well as new home loan borrowers benefitted from the falling interest rate. However, this time, the banks have not tinkered with the base rate. They have lowered the interest rates only on floating home loans. Hence, old customers have not received any benefit from rate cuts.

"A bank always focuses more on acquiring a new customer at a cheaper rate than incentivising an existing customer. Once the home loan borrower has been locked at a particular rate, any exit options comes at a cost. This can get tricky for the non-savvy borrowers," says Madan Mohan, chief counsellor at Credit Vidya, a credit counselling firm.

Exit options

At this stage, the old borrowers have two options. He/she can pay switching charges and move to a lower rate within the same bank or switch to another lender. "Borrowers should try and negotiate with their existing lenders to reduce the rates and/or the fees/costs associated with reducing the cost involved in such reduction," says Vipul Patel, director, Home Loan Advisors, an independent mortgage consultancy firm.

Source: EconomicTimes

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IDBI bond issue gets 'BBB-' rating from S&P

Global rating agency Standard & Poor’s (S&P) today assigned ‘BBB-’ rating, indicating investment grade, to the IDBI Bank’s proposed bond issue.

The rating on the proposed issue reflects the “long-term counterparty credit rating” on the bank, S&P said in a statement.

“The proposed notes will constitute direct, unconditional, unsecured, and unsubordinated obligations of IDBI Bank,” it said.

Meanwhile, another global rating agency Moody’s has assigned a Baa3 rating to IDBI Bank’s proposed issuance of senior unsecured notes under its $1.5 billion Global Medium Term Note (GMTN) programme.

The long-term notes will be denominated in USD and issued by the Dubai International Financial Centre (DIFC) branch, Dubai of IDBI Bank, it said.

“We believe that the probability of systemic support for IDBI Bank is very high from the Indian government in an event of a systemic crisis,” Moody’s said.

The government has in the past supported Indian public sector banks, including IDBI Bank, by infusing equity and providing liquidity support when required, it added.

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Karnataka Bank to issue tier-II bonds

Karnataka Bank Ltd has decided to augment its capital funds by issue of tier-II bonds. The bank informed the NSE that the board of directors, which met on September 14, has discussed the matter of raising the capital funds.

“The board, after deliberations, decided not to raise equity capital. It was further decided to augment the capital funds by issue of tier-II bonds,” the bank informed the exchange.

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HDFC Life elevates CFO Padalkar as ED

Private insurer HDFC Life today said it has elevated Chief Financial Officer, Vibha Padalkar as executive director.

Padalkar, who joined the company in 2008 as chief financial officer will continue to hold the post, the company said in a statement.

“Vibha has played a pivotal role in some of the high impact milestones for HDFC Life, including implementation of SAP across our offices, reporting under IFRS, setting up an enterprise wide risk management system, leading the efforts on specific tax changes affecting the industry and managing our cost ratios,” Amitabh Chaudhry, Managing Director and Chief Executive, HDFC Life said.

Padalkar was also associated with Pricewaterhouse Coopers, Colgate-Palmolive and WNS Global Services before joining the private insurer.

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CRR cut will reduce dependence on high cost deposits: Vijaya Bank chief

The RBI's decision to reduce CRR by 25 bps will help bring down dependence of banks on high cost deposits, according to H.S. Upendra Kamath, CMD  of Vijaya Bank.

Speaking to Business Line on the sidelines of a programme here on Monday, he said that this move will release around Rs 16,000 crore into the system.

The profitability of banks will increase as the reliance on high cost deposits will come down, he said.

Those banks who are not dependent on high cost deposits can use this amount for onlending. This will also help the banking system, he added.

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RBI keeps key rates unchanged; cuts CRR

Inflation uppermost on its mind, the Reserve Bank of India on Monday refrained from lowering key rates and restricted itself to a token 25-basis-point cut in the amount of cash that banks need to park with it. After the barrage of reform measures unleashed by the Government last week, the RBI’s move was seen as a calibrated response.

The reduction in the the Cash Reserve Ratio, to 4.50 per cent from 4.75 per cent beginning September 22 fortnight, will release about Rs 17,000 crore into the banking system.

This could lead to a cut in lending rates by banks.

M. D. Mallya, Chairman and Managing Director of Bank of Baroda, called the CRR cut a sentiment booster. The resultant liquidity infusion will slightly bring down the need for mobilising deposits, thereby bringing down the cost of funds. In turn, lending rates could come down with a lag effect, he said.

Limited wiggle room

The strong inflationary pressure did not allow the central bank enough wiggle room to match the big-bang announcements made by the Government last week for fiscal consolidation and attracting foreign direct investment (FDI).

The Government’s announcements would reduce the fuel subsidy bill, hasten sale of stake in public sector enterprises, and open the doors to FDI in multi-brand retail, aviation and non-news broadcasting.

But, according to the central bank’s Mid-Quarter Monetary Policy Review, as the pass through of the recent hike in diesel prices/rationalisation of cooking gas subsidy remains incomplete, there will be pressure on inflation in the short term. Moreover, crude oil prices could be driven up further by global liquidity.

The RBI said that the current situation of persistent inflationary pressures alongside risks emerging from current account and fiscal deficits constrain a stronger monetary policy response to address risks to growth.

Justifying its stance to hold the repo rate (the interest rate at which banks borrow from the central bank) at 8 per cent, the RBI said it front-loaded policy rate reduction of 50 basis points in April.

The expected fiscal policy support for inflation management alongside supply-side initiatives to address the dip in investment and growth had not come and inflation remained well above 7 per cent.

Dangles hope of a rate cut

The central bank, however, held out the hope of a rate cut by stating that as government’s policy actions to stimulate growth materialise, monetary policy will reinforce the positive impact of these actions while maintaining its focus on inflation management.

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