PSBs to get interest subsidy of 2% on farm loan: RBI

The Reserve Bank today said all public sector banks will get an interest subsidy of 2 per cent per annum against short term production loan up to Rs 3 lakh to farmers.

"Government will provide interest subvention of 2 per cent per annum to Public Sector Banks (PSBs) in respect of short-term production credit up to Rs 3 lakh during the year 2012-13," RBI said in a notification.

This subvention will be available to PSBs on the condition they make available short-term production credit up to Rs 3 lakh at ground level at 7 per cent per annum, it added.

The amount of subvention will be calculated on crop loan amount from the date of its disbursement/drawal up to the date of actual repayment of crop loan by the farmer of up to the date of loan fixed by banks for the repayment of loan, whichever is earlier, subject to maximum period of one year.

Also the government will provide additional interest subvention of 3 per cent per annum to banks in respect of the farmers paying their loan within one year. This will be applicable on farm loans up to Rs 3 lakh.

RBI said the subvention will be applicable only if banks provide such loans at 4 per cent per annum and the benefit would not include those farmers who repay after one year of availing such loans.

The government in the Budget 2012-13 had said the interest subvention scheme for providing short-term loans to farmers at 7 per cent would be continued in this year.



Source: EconomicTimes

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Corp Bank opens gold loan centre at Chandigarh

Corporation Bank opened a loan centre for small and medium enterprises and a gold loan shoppe at Chandigarh recently.

A bank release said here that Chairman and Managing Director Ajai Kumar launched the centre in the presence of Ashwani Kumar, Executive Director of the bank.

The SME loan centres of the bank are located in Delhi, Hyderabad, Bangalore, Chennai, Coimbatore, Pune, Mumbai, Vadodara, Kolkata, Mangalore, Ludhiana and Chandigarh.

The release said that the gold loan shoppe is an exclusive gold loan counter to provide quick and fast clearance of gold loans to the customers. The bank provides loans to the customers against gold ornaments. The loans will be given at Rs 2,000 a gram if repayable within 12 months, and at Rs1,900 a gram if repayable above 12 months, it added.

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Central Bank of India raises Rs 500 cr via bond offer

Central Bank of India said it has raised Rs 500 crore by issuing bonds via private placement basis.

“The Bank on September 28, 2012 has raised Rs 500 crore by issue and allotment of 5000 unsecured Perpetual Tier-I Bonds (Series II) of face value of Rs 10 lakh each on private placement basis,” it said in a BSE filing.

It, however, did not provide further details.

The leading public sector bank had posted a profit of Rs 336 crore and total income of Rs 5,625 crore in the April-June quarter.

Besides, its deposits were Rs 1,96,977 crore in the June quarter, while its gross NPAs in the quarter had stood at Rs 7,510 crore.

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Kotak Mahindra Bank hikes savings rates

Kotak Mahindra Bank is wooing customers to open savings bank accounts with its 6 per cent rate on deposits above Rs 1 lakh, and the ad campaign for the same has resulted in impressive growth, according to Virat Diwanji, the Executive Vice-President and head, branch banking.

He told presspersons here on Friday that along with four other private banks, Kotak was offering six per cent on savings bank accounts. Most of the other public sector and private banks were offering only four per cent. He said the bank had launched an aggressive ad campaign in June 2011 and in one year the bank's SB account savings had risen from Rs 3,307 crore to Rs 5,540 crore. He said the ad campaign would continue to take the message to the public.

The bank had set up 382 branches and 866 ATMs in the country. It had 20 branches in Andhra Pradesh and this number would go up to 500 by end-2013.

In the first quarter, the bank reported a proft after tax of Rs 282 crore and NPAs of 0.78 per cent. He said the bank was offering all financial services under one roof, with the exception of general insurance.

Diwanji said the bank’s deposit base in Andhra Pradesh was Rs 650 crore. "Our SB account savings have gone up from Rs 100 crore to Rs 162 crore in Andhra Pradesh in one year of the launch of the campaign. This represents 62 per cent growth against the all-India average of 68. We want to improve our performance in the State," he said.

He said customers in Andhra Pradesh could pay VAT through the bank online. Such a facility was also available in Gujarat. The Visakhapatnam branch manager K. Nageswara Rao also spoke.

On deposits below one Rs 1 lakh in savings accounts, the bank pays 5.5 per cent.

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YES Bank gets RBI nod to enter equity broking biz

YES Bank said it has received the Reserve Bank of India’s (RBI) approval to foray into securities broking business.

The private sector lender will offer its retail customers a complete suite of banking services, including savings, investments, wealth and loan products. The bank expects to launch the securities broking business operations during FY'13 and FY'14.

Brokerage subsidiary

According to current RBI guidelines, the bank will have to float a new subsidiary to domicile the equity broking business. The bank will invest about Rs 25 crore in setting up the brokerage subsidiary.

The retail broking services from YES Bank will be a complementary service offering for retail customers and will increase the scope for higher fee income and drive the bank’s Current and Savings Account (CASA) share.

Rana Kapoor, Founder, Managing Director and Chief Executive Officer, YES Bank, said, “We are pleased to be granted approvals by the Reserve Bank of India for establishing a brokerage subsidiary. The timing is opportune given our thrust and focus on retail banking.”

The bank will compete with players like ICICI Securities, HDFC Securities, Kotak Securities and SBI Capital Markets that operate their securities broking business for the respective banks.

The approval comes at a time when the brokerage firms are going through a tough time due to the high volatility in the equity markets and lower commissions by the exchanges.

Beena.parmar@thehindu.co.in

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Syndicate Bank opens branch in Birbhum

Syndicate Bank opened a new branch at Suri in Birbhum district of West Bengal. It is the fifth branch of the bank in Birbhum, an economically backward district, and the 91st branch in West Bengal.

S. Ramachandran, General Manager, said Syndicate Bank now has over 2,715 branches spread across the country.

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RBI to raise Rs 1.3 lakh crore through bond auctions

The Reserve Bank of India will auction bonds worth Rs 1,30,000 crore in the third quarter of the current fiscal on behalf of the Government.

"The RBI, in consultation with the Government of India, after reviewing the cash position of the Government of India, has decided to notify the amounts (worth Rs 1,30,000 crore) for the issuance of Treasury Bills for the quarter ending December 2012," the central bank said in a release.

The bond markets responded favourably to the news as the new borrowing programme indicated that the Government will stay close to its budgeted borrowing limit of Rs 5,70,000 crore in the current fiscal.

In the first half of the current fiscal, the RBI (on behalf of the Government) has raised Rs 3,70,000 crore through bond auctions.

Yields on the 10-year-benchmark, 8.15 per cent Government security softened to 8.11 per cent in opening trade today. Yields were firm at 8.16 per cent on Thursday.

satyanarayan.iyer@thehindu.co.in

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HSBC issues first documentary credit in yuan to pharma co

The second largest foreign lender HSBC India said it has issued its first yuan-denominated documentary credit (DC) in the country for a Mumbai-based pharma firm, without naming the borrower.

A documentary credit is a commitment issued by a bank to pay a supplier within a prescribed time limit as long as the clearly defined terms and conditions are met, and acts as a shield for traders against cash flow issues.

Commenting on the development, HSBC India Managing Director and Commercial Banking Head, Sandeep Uppal, said “domestic businesses have recognised the enormous growth potential of doing business with suppliers in China.

“As trade between the two economic powerhouses gathers pace, domestic businesses that use DCs in yuan can expect higher discounts from their Chinese suppliers who no longer need to hedge against the dollar.”

Quoting HSBC’s own research, he said around $2 trillion, or a third of China’s annual trade, will be settled in yuan by 2015. Momentum is building fast as over 10 per cent of China’s trade was settled in yuan in the first quarter of this year.

As per the HSBC Global Connections report released in July, China is India’s largest import partner and growth is projected to remain strong at around 10.5 per cent over the next five years, led by audio visual, telecom equipment and computers, Uppal said.

China is also the third largest export partner, led by iron ore, copper and cotton, for India with growth projected at around 9.5 per cent over the next five years.

“Our research reveals a clear shift in global trade, with China set to become the world’s largest importer by 2016, said HSBC India global trade & receivables finance head, Surath Sengupta.

HSBC India recently executed its first yuan-denominated cross-border trade finance for a major Chennai—based pharma firm. Currently HSBC Group offers yuan trade services in over 59 markets.

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Yes Bank to launch a broking subsidiary 'Yes Securities'

Yes Bank has received Reserve Bank of India approval to set up a broking subsidiary, Yes Securities Private Ltd. This subsidiary will have a capital of about Rs20 to 25 crore.

The broking business will compliment our retail liabilities and wealth management proposition,'' said Rana Kapoor MD & CEO Yes Bank. It would bring granularity in our current and saving account base. The focus would be on retail broking,'' said Kapoor.

The bank wants to increase its current and saving account base to 20% by 2013 from 16.2% at the end of June 2012.

The broking space is crowded with many large private sector banks like ICICI Bank, HDFC Bank and Axis Bank having sizeable market share. With the economic slowdown the margins in profitability of many broking houses are under pressure.

The new generation private sector bank has not done any senior hires. We have hired Pralay Mondal and Chitra Pandeya from HDFC Bank to run our retail banking business. They would be leading this business also,'' said Kapoor. The bank will recruit four to five senior research analyst.



Source: EconomicTimes

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Citi India says withholding tax reduction to drive US bond issues

Citi India said the government's decision to reduce withholding tax to 5% is a driver for increased issuance activity in the $ bond markets by Indian corporates.

NTPCBSE was the first to take advantage of this move and received a very positive response. The issue was oversubscribed by over 8 times, 4.75% coupon for 10 years. "This certainly sets the right tone for other Indian corporat to follow," Rajiv Nayar, head of capital markets origination at Citi India said.

"This transaction marks the first USD bond issuance from an Indian public sector corporate in 2012, which was well oversubscribed, demonstrating the strength of the underlying credit and the strong management team at NTPC," he said

""Citi has led all US dollar bond offerings by Indian issuers in 2012. This marks our 2nd consecutive USD bond offering for NTPC, reiterating the strength of our relationship with leading corporates like NTPC,"" Nayar said.

NTPC has raised $500million through issue of medium term note in the international markets on September 24 2012 taking advantage of the government's guidelines for lower withholding tax on external commercial borrowings issued on September 21.

This is the third offering under the company's $2 billion MTN programme since it was set up in 2006, taking the cumulative amount raised under the programme to $1.3 billion.

Citigroup was joint bopok runner for the issue along with Barclays Capital, Deutsche Bank and The Royal Bank of Scotland.



Source: EconomicTimes

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Punjab & Sind Bank pays Rs 36.61-cr dividend to Centre

Punjab & Sind Bank has paid Rs 36.61 crore to the Central Government towards dividend for the financial year 2011-12.

A sum of Rs 5.94 crore has also been paid as dividend distribution tax.

The dividend cheque was handed over to Finance Minister P. Chidambaram by the bank’s Chairman & Managing Director D.P. Singh here today.

For the financial year 2011-12, PSB had declared 20 per cent dividend on the equity shares.

srivats.kr@thehindu.co.in

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Greater Bombay Coop Bank offers loan scheme

Greater Bombay Cooperative Bank on Thursday said that it will offer loan against gold ornaments besides doling out a savings account to customers. Borrowers can avail loans ranging from Rs 10,000 to Rs 25 lakh at an interest rate of 13 per cent a year on a daily reducing balance without any documentation charges. Customers will get loan within an hour of their arrival at the branch as all 22 branches of the bank have gold assaying machines, the bank statement said. The Mumbai-based Urban Cooperative Bank has got active in the gold loan business this year. Last year, the bank built its gold loan portfolio from scratch to Rs 90 crore. This year it plans to grow this portfolio to Rs 200 crore, Narendrakumar Baldota, Chairman, Greater Bank had told Business Line in an interview.

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Kotak Mahindra sees 50% growth in saving bank deposits

Kotak Mahindra Bank said on Wednesday that it expects 50 per cent growth in saving bank deposits this fiscal.

The private sector bank has already posted a growth of 68 per cent in saving bank deposits at Rs 5,540 crore as on June 30, 2012 as against deposits of Rs 3,307 crore in corresponding period of last fiscal.

“We expect 50 per cent growth from saving bank deposits in current fiscal,” the bank’s President (Consumer Banking) KVS Manian told reporters here.

The bank offers 6 per cent rate of interest on saving bank balances above Rs 1 lakh and 5.5 per cent for balances up to Rs 1 lakh.

It also offers value added services like cash back on purchases, home banking, doorstop account opening and just in time payment.

Because of offering high rate of interest, bank’s saving bank deposits grew from Rs 3,351 crore in 2010-11 to Rs 5,050 crore in 2011-12.

After the deregulation of savings bank interest rate by the Reserve Bank of India in October 2011, Kotak Mahindra Bank was among the first banks to increase rate of interest on Savings Bank account to a record high of 6 per cent, he said.

“The 6 per cent per annum interest offering on saving bank 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.

“Additionally, interest earned on savings account up to Rs 10,000 is now tax free. As a result, a whole lot of customers now have a hassle free option to grow their monies without having to lock it in term deposits,” he said.

With car sales in the country slowing down, Kotak Mahindra Bank which is one of the biggest lenders for auto finance said the growth in auto finance might be 15—20 per cent in current fiscal as against 25 per cent in last fiscal.

Kotak Mahindra expects 25 per cent growth in total business comprising Rs 42,000 crore of advances and almost equal amount of deposits.

Kotak Bank has also planned to expand in the country by taking total strength of branches from 379 at present to 500 by December, 2013.

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Now, ATMs that scan your hand to shell out cash

Forgot your ATM card at home? No worries, this Japanese machine will scan your hand and give cash.

A regional bank in Japan on Wednesday started operating ATMs for cash withdrawals, deposits and balance inquiries that do not require plastic cards but instead identify account holders by scanning their hands.

Account holders using the service offered by Ogaki Kyoritsu Bank based in Gifu Prefecture are required to input their birthday, place their palm on the sensor and input a PIN at an automated teller machine, Kyodo News agency reported.

Registration is required at a teller counter beforehand and the bank said customers may access their accounts even if they lose cards or passbooks after a major disaster, for instance.

The service was offered at the bank’s Hashima city branch in the prefecture and at a vehicle-mounted “mobile branch” that is typically used in time of a disaster.

The bank is planning to expand the service to include 18 outlets in Gifu, Aichi, Mie and Shiga prefectures tomorrow.

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IRDA working on mechanism for faster approval of products

The Insurance Regulatory and Development Authority of India (IRDA) is expected to come out soon with a mechanism for faster regulatory approval of new insurance products. The regulator will also encourage companies to launch low premium products for increasing insurance penetration.

A broad roadmap for the development of insurance sector is expected to be out any time now. This issue has become important after the Prime Minister and the Finance Minister promised measures for the insurance sector. In this regard, the Finance Minister P Chidambaram discussed possible measures with IRDA Chairman J Hari Narayan on Wednesday.

Coming out of the meeting, Financial Services Secretary D.K. Mittal said, “Roadmap have been agreed upon for faster approval of products (by IRDA).” The meeting also dealt with issues relating to increasing insurance penetration, service tax and augmenting investment flow into the infrastructure sector.

“The meeting discussed how to increase insurance penetration, how insurance companies can do more business, how better products can be introduced at lower premium, and how more investments can flow into infrastructure sector,” Mittal said.

The insurance companies have been demanding faster clearances of products from IRDA. Earlier in a meeting with Chidambaram, relaxation in investment norms to help the sector earn more premium was also discussed.

The Finance Ministry is now looking at the possibility of relaxing norms for insurance companies to attract more funds for the infrastructure sector as part of efforts to prop up the sagging growth rate.

According to our estimates, the investment corpus with the life insurance companies is around Rs 13 lakh crore. Of this, only 20 per cent currently goes towards the infrastructure sector. Going by the current Insurance Regulatory Development Authority (IRDA) norms, insurance companies can invest only in highest rated ‘AAA’ or ‘AA’ credit-rated debt paper.

Life insurance companies are allowed to invest up to 50 per cent in Government securities, 15 per cent in infrastructure bonds and 35 per cent in other investment grade corporate bonds and equities. The regulator is mulling options to allow sector companies to invest more in non-AAA rated securities, including ‘A+’ and ‘A’ papers of corporates.

Last year, the Department of Industrial Policy and Promotion (DIPP) had favoured allowing life insurance companies to invest in greater quantity in non-AAA rated debt instruments to encourage flow of funds to the infrastructure projects. The country needs about a trillion dollars of (Rs 54 lakh crore) investment in the infra space during the 12th Five Year Plan (2012-17).

shishir.sinha@thehindu.co.in

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IRDA Chief favours FDI hike in insurance sector

Insurance Regulatory and Development Authority (IRDA) Chairman J. Hari Narayan welcomed the suggestion to hike foreign direct investment in the sector. He was speaking to the media at an insurance summit organised by Assocham.

“Capital from FDI will definitely help. The total volume of money in the IPOs (initial public offer) raised by insurance companies is limited. So, like other sectors, insurance too will require greater levels of investment and in that regard, we will welcome steps to increase FDI in the industry,” he said.

Hari Narayan said the Bill for raising FDI level in insurance has been moved in Parliament and that the inputs by the regulator have been given.

Talking about replicating banking sector’s “lead banking model,” he proposed the idea of “lead insurance model” to focus on the social and rural areas on the basis of geographies.

“A lead insurance player will take the lead in certain geographies and focus more in some States… It is just an idea,” Hari Narayan said.

“Our Act imposes burden on insurance companies to sell certain products in rural and social areas living in certain geographies. Our experience is that insurance penetration in social and rural areas has not happened,” he said.

Asked if the industry is ready for reforms, the IRDA chief said, “The good part of the reforms in the insurance sector is tied up with the insurance amendment Bill. The reforms can be considered only if the Bill is passed. Unless that is done, the rest will be in the form of window dressing and the present structure will remain.”

beena.parmar@thehindu.co.in

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HDFC Bank hints at rate cut by weekend

Private sector lender HDFC Bank said it will decide on a possible interest rate cut later this week.

“When costs go down, interest rates will go down. That (a rate cut) the Alco (asset liability committee) will decide now,” bank’s Managing Director and Chief Executive Aditya Puri told reporters here, adding that the Alco will meet “by the end of the month“.

He said the bank is saving 0.06 per cent as a result of the recent cut in the cash reserve ratio (CRR), which is the amount of deposits banks have to pass with RBI, while there is also additional relief coming in from the 0.5 per cent cut in deposit rates announced recently by the bank.

Mr Puri said HDFC Bank does not have any excess statutory liquidity ratio (SLR) holdings. SLR is the amount of deposits to be held in G-secs.

Replying to a question on the margins, he said the bank continues to stick to its projection of 4 to 4.2 per cent.

HDFC Bank’s credit growth is on track, courtesy good demand from retail and working capital segments, Puri said, but added that there are difficulties in demand from the infrastructure and the capital goods sectors.

When asked about the progress on the negotiations between the bank and its parent HDFC over transferring of loans to the bank by the latter, which can be run into problems because of RBI’s new securitisation guidelines, Puri said both the entities are “almost there” and an arrangement will be finalised by the end of the month.

On asked about the special dispensation for the ailing discoms announced by the government yesterday wherein nearly Rs 1.9 trillion is being restructured, Puri said it is a very positive step.

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Yes Bank intervenes in Deccan Chargers-BCCI dispute

Yes Bank, the financial supporter of beleagured Deccan Chronicles Holdings Ltd (DCHL), today moved the Bombay High Court, saying it would like to intervene in the petition filed by DCHL challenging the decision of the BCCI to terminate its IPL franchise ‘Deccan Chargers’

Yes Bank Counsel Milind Sathe filed a Chamber Summons before Justice S J Kathawala, urging that they should be made a party to the petition and heard in the matter.

DCHL Counsel Zal Andhyarajunam asked for time to file a reply, following which the court fixed the matter tomorrow to hear the parties and pass an order on the plea made by Yes Bank.

Yes Bank put up three conditions in their plea, saying unless these were met it would not be possible for them to give financial support to DCHL, and that they may consider withdrawing the finance given to them. The bank has issued demand drafts for Rs 33 crore for payment to players of Deccan Chargers and these DDs are lying with BCCI.

The three conditions put forth by Yes Bank are withdrawal of BCCI decision to terminate the Deccan Chargers’ franchise, deposit whatever amount is due or receivable by Deccan Chargers in their account with Yes Bank and the Cricket Board release Rs 41 crore due to Deccan Chargers.

The bank said if these conditions were not met, the entire exercise of trying to save the franchise would be futile. “If the franchise does not survive and we do not get the money, then what is the use of giving Deccan Chargers Rs 33 crore to clear its dues?” its counsel said.

The court had yesterday asked BCCI and DCHL to settle their dispute over termination of the franchise by referring the matter to a mutually acceptable arbitrator. Both the sides were asked to submit names of arbitrators today. But it could not be done in view of plea made by Yes Bank.

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UB Group can tap other business to save Kingfisher: SBI

The Vijay Mallya-promoted United Breweries (UB) Group can unlock a lot of cash from its liquor business and non-core businesses and deploy the same to revive Kingfisher Airlines (KFA), said a top State Bank of India official.

India’s biggest bank and 16 other banks have a loan exposure of about Rs 7,000 crore to the beleaguered KFA.

According to SBI Chairman Pratip Chaudhuri, from all accounts, UB Group and Vijay Mallya are very keen to retain control of KFA as his entire branding and image revolves around Kingfisher.

“Lot of his (Mallya’s) products are named after Kingfisher. So, we think they (promoter group) will do everything possible, including big sacrifices, to keep that name going and we have his personal guarantee, which shows his great commitment,” said Chaudhuri at a press meet.

The UB group, from its liquor business, and Mallya from his other unrelated business can unlock a lot of cash which, the SBI Chairman felt could be deployed into the airlines.

“In the case of some of their (UB Group’s) non-core businesses, for example Mangalore Chemicals & Fertilisers, if they think that it does not add strategic value to their business and if they can unlock some value from there that would be most welcome,” said Chaudhuri.

Referring to the stock prices of aviation companies, including KFA, going up, Chaudhuri said “This is obviously indicative of higher interest by foreign aviation companies in the Indian aviation sector. At one point what looked absolutely hopeless, looks relatively better now.”

The SBI chief emphasised that aviation is a capital intensive business and only companies with deep pockets will succeed.

According to S. Vishvanathan, Deputy Managing Director, SBI, lenders will have another round of negotiation with the KFA management, including its promoter Vijay Mallya, regarding their action plan to revive the airline in the next few days.

“We will hear them (KFA) out on what their plans are. They have not yet come out with any specific plans. What we understand is that they are talking to a lot of people (regarding Foreign Direct Investment) and we do think they are going to come up with something,” said the DMD.

The KFA stock ended 1.91 per cent up at Rs 13.37 per share on the BSE on Monday against the previous close of Rs 13.12.

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BoB plans to hire 20k people in 4 years; to add 500 branches

Bank of Baroda (BOB) is planning to hire around 20,000 people over the next four years and will add more than 500 domestic and international branches and offices in the current fiscal, a top official said today.

Besides, the Australian regulator had issued licence to the bank, paving the way for it to open an office there, Bank of Baroda Chairman and Managing Director M.D Mallya said.

The bank is planning to hire around 20,000 people over the next four years, he added.

BOB has a network of 4,000 branches in India and 96 foreign branches and offices, M.D Mallya told reporters after inaugurating “Baroda Pride,” the new Zonal Office here.

“We plan to add another 500 domestic branches by March 2013, and four new foreign offices are coming up – one each at Uganda and Kenya and two in Dubai – taking the total international network to 100,” he said, adding that BoB had presence in 25 countries.

The bank also proposed to open 500 ATMs to its existing chain of over 2,000 facilities by March 2013, he said.

A slew of security enhancements including installation of CCTV cameras in ATMs were in the offing, M.D Mallya said.

He said the bank has been posting good growth over the years and its total business was around Rs 6.72 lakh crore, with international transactions accounting for 28 per cent.

The Bank had posted growth rates better than industry trends “despite the ups and downs of the economic cycle and mainly due to our prudent policies”, M.D Mallya explained.

With a net NPA (non-performing assets) rate of 0.54 per cent, it was the “lowest” in terms of NPAs among peer banks, he claimed.

He said the rate of assets restructured is 5.5 per cent but this is “not significant and compared to peer banks, we are in a favourable position. We have strong, robust assets quality in books“.

Responding to a query on the bank’s credit portfolio, he said it is “well-balanced,” and projected a 19 per cent year-on-year growth in this area.

The bank was offering concession on vehicle and home loan rates as part of festive offers.

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Sebi imposes fine on CA firm owner in BoR matter

Market regulator Sebi on Monday imposed a penalty of Rs 6 lakh on Dilip S Mehta, owner of a chartered accountancy firm, for failing to respond to summons issued by it in relation to a probe into the affairs of erstwhile Bank of Rajasthan.

The matter pertains to alleged irregularities committed by former promoters of Bank of Rajasthan (BoR).

Imposing a “penalty of Rs 6 lakh”, Sebi in its order today said Mehta’s failure indicates that the default is repetitive in nature.

The Securities and Exchange Board of India (Sebi) had summoned Mehta to examine his link to Sangeeta Jayram Sawant, director of 30 companies that were connected to the promoters which were buying and selling shares of BoR.

It had issued two summonses to Mehta. Both were received by him but did not comply with them.

The market regulator observed that the information sought from Mehta was critical and imperative to the investigation and failure on his part to comply with the summons had hampered the probe.

Sebi noted that the “information provided by the noticee now is of no relevance and cannot be accepted as the same was required by the Investigating Authority before the completion of the investigation. Hence the submissions made by the noticee are not accepted”.

The matter relates to Sebi’s investigation into the affairs of BoR for a period between June 2007 and December 2009. Since then, BoR has been acquired by ICICI Bank.

The probe revealed that BoR’s then promoters, led by Pravin Kumar Tayal, along with some companies that were connected to him and his relatives, by way of their continuous disclosure publicly announced that their stake had come down from 44.2 per cent as on quarter ending June 2007 to 28.6 per cent as on quarter ending December 2009.

However, it was alleged, though as per disclosure their holding seemed to have reduced, but in reality the holding of the promoters actually increased with the active collusion of front entities.

Thus, the shareholding of the promoters of BoR with PACs (Person Acting in Concert) had increased from 46.8 per cent in June 2007 to 63.15 per cent in December 2009.

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Canara Bank to farmer’s aid in changing times

In the ever changing world, change is the only unchanging facet.

Agriculture in India, too, has been seeing its fair share of changes over the last few decades — from the time of Green Revolution of the ‘60s. Agriculture is now more than growing crops and rearing livestock.

Indian agriculture transforming into a commercially viable occupation. Intensive farming, considering small holdings, and corporatisation and contract farming are turning the face of Indian agriculture.

Dedicated line

Canara Bank has a dedicated line for disbursal of credit to high-value and capital-intensive agri-business projects, projects that involve high-end technology and provide value addition. This consists of setting up specialised hi-tech agriculture finance branches, manned by experienced personnel that is also qualified in agriculture sciences.

The bank has 10 specialised agriculture branches across the country at various centres which are some of the biggest potential clusters of agri-business like floriculture, poultry, etc. These are at Bangalore, Chennai, Coimbatore, Hyderabad, Kolkata, Pune, Bijapur, Karnal, Jalandhar and Kottayam.

The projects that are financed include seed production and floriculture under controlled conditions (green house technology), poultry breeding and hatcheries in controlled atmosphere, high-end cold chains and storage logistics, and other value-addition projects such as vegetable cultivation, processing and export.

Facilities extended are term loans for setting up the project or for capital, short-term production credit to help contract farming, working capital for running the facility, inventory limit against stocks/consumables, packing credit for procurement and post-sales-bills limit for domestic and export market.

These credit delivery modules complement about 2,029 rural and semi-urban branches. Canara Bank’s role is critical as the value chain and post-harvest infrastructure significantly reduce post-harvest losses (which is about 20-25 per cent in case of grains and about 35 per cent in case of perishables such as fruits and vegetables), ensuring food security.

The credit delivery modules through specialised agriculture finance branches are backed up by agriculture consultancy services. The consultants conduct extensive survey/field visits to assess the feasibility of various projects, including under sunrise sectors, provide detailed project reports to the clients, including from corporate sector, and extend support by assisting in implementation of the projects too.

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LIC sells pension plan online

The Thiruvananthapuram division of Life Insurance Corporation of India has commenced online sales of Jeevan Akshay, a pension plan.

Alexander Jacob, additional director-general of police, handed over the first policy at a function held here to commemorate LIC’s 56th anniversary. This is a guaranteed plan where the pension starts with effect from the subsequent month on payment of the purchase price.

The minimum purchase price is Rs 1.5 lakh, minimum age of entry is 30 and the maximum 85. There is an increase of one per cent of annuity if the plan is purchased online.

On death of the annuitant, the same pension can be continued for spouse.

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Higher interest draws more SB deposits in Kotak Mahindra Bank

Deregulation of the savings bank interest rate has led to a sharp spike in the savings bank deposits of Kotak Mahindra Bank in Tamil Nadu.

The bank, which has 19 branches in the state, will open three more branches over the next six months.

In a press release issued here, the bank said that after the RBI deregulated the savings bank rates, it has begun offering two sets of SB interest rates — 6 per cent for balance above Rs 1 lakh and 5.5 per cent up to Rs 1 lakh balance maintained in the SB account.

The bank said the high interest rates offered by it on SB deposits clicked with the customers since it matched the post-tax yield of term deposits of “short to medium tenure’’. That the interest earned in the savings bank account up to Rs 10,000 per year was tax free also weighed in with the customers.

Kotak Mahindra Bank said that after the new liberalised interest regime for SB deposits was announced by the RBI in October last year, it has witnessed a surge in SB deposits in Tamil Nadu. The SB deposit amount has grown by 45 per cent from Rs 181 crore to more than Rs 263 crore.

(The bank had, at the all India level, seen a huge spurt of 68 per cent in the savings bank deposits over a one-year period ending June 30, 2012 — from Rs 3,307 crore as on June 30, 2011 to Rs 5,540 crore as on June 30, this year. But this period also includes about four months before the qcame out with its announcement on SB rates).

The bank is aiming at increasing its branch network, including its customer base, by 15 per cent annually over the next few years in Tamil Nadu. The bank’s Tamil Nadu branches have a cumulative deposit of around Rs 1100 crore, of which Coimbatore, where it has two branches, accounts for about Rs 150 crore.

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BoB aims at 19-20% biz growth this fiscal

Bank of Baroda hopes to grow its business 19-20 per cent during the current financial year. This is despite that the demand for credit is likely to remain subdued for some more time to come as a result of the current economic slowdown.

Notwithstanding the ups and downs, the bank has been growing on an average by 27 per cent every year.

“From 2005, we have been doubling our total business every three years,” said M.D. Mallya, Chairman and Managing Director of the bank.

BoB closed the year 2011-12 with the total business size of Rs 6.72 lakh crore, and it managed to maintain 20 per cent return on equity.

He said, as liquidity is not an issue, he expects the credit offtake to grow at least by 18-19 per cent this year. As on March 31, 2012, the bank’s total credit stood at Rs 2.3 lakh crore.

Though the current economic condition will have an impact on the bank’s asset quality, he hopes to contain the incremental delinquency rate at 1.3–1.4 per cent.

According to him, the bank’s restructured loan portfolio stands at Rs 780 crore, with no single industry segment accounting for any significant portion of it.

The “well capitalised bank”, which has 4,000 branches nationally, is planning to add another 500 in the current financial year. Besides, it has 96 branches in 25 countries. This will also be expanded with four new branches planned in the immediate future — two in Dubai, and one each in Kenya and Uganda.

“We have also procured licence to set up a branch in Sydney in Australia, and we will open our branch there in the next one month,” said Mallya.

To man these proposed new branches, the bank intends to hire 4,000 people this year. “From 2013-14, we may have to recruit at least 5,500 people every year for three years,” he said.

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20 entities seek SEBI nod to set up AIFs

As many as 20 entities have sought SEBI’s approval to set up Alternative Investment Funds (AIFs), a newly created class of pooled-in investment vehicles for real estate, private equity and hedge funds.

SEBI (The Securities and Exchange Board of India) has already allowed seven AIFs to set up shop in the country, all of which got their approvals from the market regulator last month.

According to the latest SEBI data, 20 applications were pending with it for registration as AIFs as on August 31, 2012.

The regulator had notified in May this year the guidelines for a new class of market intermediaries named AIFs, which are basically funds established or incorporated in India for the purpose of pooling in of capital from Indian and foreign investors for investing in line with a pre-decided policy.

Of the 20 pending applications, SEBI said 15 applications were “being processed”, while the regulator has sought further details from five others as they had provided “incomplete information” as on August 31.

Most of these applications were filed in August, while some were submitted in June and July as well.

SEBI last month decided that promoters of listed companies can offload 10 per cent of their equity to AIFs to attain a minimum 25 per cent public holding.

Among others, registration has been sought by CapAleph Indian Millennium Fund, DSP BlackRock, HDFC AMC Real Estate, India Advantage Fund, India Realty Fund, Kedaara Capital, Kotak Alternative Opportunities Fund, Real Estate Opportunities Trust and Start-up Village Fund.

Entities whose applications have “incomplete information” are — CapAleph Indian Millennium Private Equity Fund, DARC MentorCap Film Fund, IIFL Opportunities Fund, IIFL Private Equity Fund and L&T Infra Investment Partners.

The AIFs already registered with SEBI include IFCI Syncamore India Infrastructure Fund, Excedo Realty Fund, Sabre Partners Trust and KKR India Alternate Credit Opportunities Fund.

Under SEBI guidelines, AIFs can operate under three broad categories. The SEBI rules apply to all AIFs, including those operating as private equity funds, real estate funds and hedge funds, among others.

Category-I AIFs are funds that get incentives from the Government, SEBI or other regulators and include Social Venture Funds, Infrastructure Funds, Venture Capital Funds and SME Funds.

The Category-III AIFs trade with a view to make short-term returns and include hedge funds, among others.

The Category-II AIFs can invest anywhere in any combination but are prohibited from raising debt, except for meeting their day-to-day operational requirements. These AIFs include PE funds, debt funds or fund of funds, as also all others falling outside the ambit of two other categories.

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Federal Bank in tie-up with IDA

Federal Bank Ltd has entered into a banking partner agreement with Indian Dental Association (IDA), Kerala Chapter, as its banking partner for various activities and social programmes. The activities include conducting ‘No Tobacco Day’, ‘Oral Hygiene Day’ and promoting among its members the various facilities and financial products provided by the bank. An MoU in this regard was signed by T. Oommen Benjamin, general manager and M. Raveendranath, IDA president, Kerala, in the presence of D. Sampath, the bank’s additional general manager, among others.

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Union Bank eyes retail business for growth

Union Bank would focus on strengthening its retail portfolio in the current fiscal as a part of increasing its business in the country.

“The bank will have a major focus on retail business during the current financial year”, the bank said in a statement.

The bank’s total business as of March 31, 2012 was Rs 4,03,900 crore with deposits of 2,22,869 crore and advances of Rs 1,81,031 crore. UBI’s capital adequacy ratio is 11.85 per cent.

The bank’s outstanding lending to agriculture sector is Rs 1,739 crore, for Micro, small and medium enterprises at Rs 1,648 crore and Rs 1,539 crore for retail loan, the statement said.

Meanwhile, the bank said it has launched a “remodelled branch” at nearby West Tambaram under the brand “UnionXperience”.

Union Bank of India currently has 3,252 branches and 4,179 ATM networks across the country.

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IDBI Bank to raise $500 million from overseas in next 6 months

State-owned IDBI Bank has said that it plans to raise another USD 500 million (about Rs 2,700 crore) through bonds to fund its overseas business growth.

“We will be raising $500 million from foreign currency bonds by March 2013,” IDBI Bank Executive Director Melwyn Rego told PTI.

The issue would be made under the $1.5-billion Medium Term Note (MTN) programme listed on the Singapore Stock Exchange.

Of the total limit, the bank has raised $1 billion in two tranches of $500 million each.

Last week, the bank raised $500 million from foreign currency bonds.

The transaction received an overwhelming response and the issue was oversubscribed by nine times, Rego said.

The long-term notes denominated in USD were issued by the Dubai International Financial Centre (DIFC) branch of IDBI Bank.

The final coupon was 4.375 per cent (fixed), he said, adding, the transaction attracted interest from a diversified range of foreign investors including asset managers and banks.

Around 68 per cent of the allocation was made to Asian investors, 23 per cent to European investors and 9 per cent to investors in the Middle East, he said.

The bank also plans to double its MTN programme to $3 billion.

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Syndicate Bank plans slew of customer-friendly products

Transferring your balance from savings bank to fixed deposit, will be a click away for customers of Syndicate Bank soon. All that is required is registration on Internet banking.

Called e-Term Deposit, the product will be launched in the next week to 10 days. It will be one of the slew of new customer-friendly products, that the Manipal-headquartered bank is coming out with, said Anjaneya Prasad, Executive Director.

The other new initiatives are a gold debit card and e-lounge branches.

In the case of the gold debit cards, the card-holder will have the option of withdrawing up to Rs 1 lakh from an ATM.

Currently, the upper limit on the debit cards is Rs 15,000 maximum, he told Business Line recently.

The e-Lounge branch, which will be a 24 hour self-operating unit, is coming up in Bangalore.

Soon, such branches will be opened in all the metros, he said. It will also cater to the high networth individuals.

Asked about the bank’s preparedness to meet the Basel II norms, he said “We are on course to be compliant by 2015.

Our requirement is for Rs 1,400 crore. We have represented to the Government for capital as first choice. Will explore raising funds through tier II bonds at a later stage.”

Expansion

On expansion, he said, the target is to reach a network of 3,000 branches and 1,800 ATMs network by March 2013. At present, we have 2,707 branches and 1,240 ATMs and have licence for 250 more branches.

The focus of expansion will be Karnataka, Andhra Pradesh and Delhi.

As part of restructuring to improve operational efficiency and customer focus, three more regions are to be carved out soon.

This will be in Bangalore, Delhi and Mumbai.

Wherever there are more than 130 branches, it is proposed to create two regions. Currently, there are 38 regions, it will grow to 41 soon.

Similarly, to serve the needs of small and medium enterprises, mid corporate credit departments are to be created exclusively in one branch in each region. It will focus on providing credit above Rs 5 crore and drive the business.

Referring to diversified products, Anjaneya Prasad said the bank has identified eight mutual funds. We have signed agreements with four — HDFC, Reliance, IDBI and Birla.

Syndicate bank has tied up with IDBI Asset Management for distribution of their mutual fund products, to provide customers a wide range of investment options, other than the regular banking products.

On the retail loan front, the bank has seen a growth of 65 per cent during 2011-12. Housing, gold, auto and MSME (micro, small and medium enterprises) segment are the main drivers.

Somasekhar.m@thehindu.co.in

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