LIC open to picking up Govt stake in Axis Bank, L&T, ITC'

LIC today said it has not been approached by the Government to pick up the latter’s stakes in Axis Bank, L&T and ITC, which are currently held by the Special Undertaking of Unit Trust of India (SUUTI), but added if it is so asked, it will definitely look at it.

“As far as LIC is concerned, we have not been approached (to buy the Government’s stakes in Axis Bank, L&T and ITC). In case they approach us, we will definitely have a look at it,” Corporation Chairman Dinesh Kumar Mehrotra told presspersons on the sidelines of a capital markets summit organised by industry body FICCI here.

SUUTI, created in 2002 after the then UTI was wound up, owns strategic stakes in three listed blue-chip entities: ITC (11.54 per cent), Axis Bank (23.58 per cent) and L&T (8.27 per cent).

Besides, SUUTI also owns significant stakes in unlisted firms such as the Stock Holding Corporation, in which it owns 16.96 per cent valued at about Rs 300 crore.

The Government is planning to encash these holdings, which are worth over Rs 40,000 crore, as part of its efforts at meeting the fiscal deficit target by divestment.

The plan is to sell the SUUTI stakes to an SPV. The SPV holding will not pledge shares but will borrow funds by way of negative liens, under which it cannot sell the shares without the permission of lenders and the Government.

When asked about the 10 per cent equity exposure cap, Mehrotra said: “The corporation has been approaching the regulators and the Finance Ministry on this issue for quite some time. I think both of them have taken it very positively. Hopefully, something should come and we will get some headroom.”

LIC, which had bailed out the Government last March — when the follow-on option of ONGC bombed — by picking up almost the entire stake worth over Rs 12,000 crore, plans to invest Rs 2.4 lakh crore this fiscal.

“We propose to invest Rs 2.4 lakh crore this fiscal and have invested Rs 65-70,000 crore so far,” Mehrotra said, adding of the total investment, 10-15 per cent constitutes pure equity investments out of which it has invested Rs 7,000-8,000 crore as of now.

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SBI to acquire 50,000 PoS machines

State Bank of India group plans to acquire 50,000 Point-of-Sale (PoS) machines for deployment over the next 18 months.

These are being done as part of its plans to upgrade its technological infrastructure and improve the speed of customer handling at its branches as well as merchant locations.

SBI has over 14,100 branches while its five associate banks have over 4,500 branches. The group has about 28,000 ATMs.

Green Channel

At present, the bank and its associates have a Single Window Operator counter called Green Channel at their branches. Under this facility, it is possible to withdraw, deposit or remit amount up to Rs 40,000.

The SBI group plans to enlarge the type of transactions at these Green Channel counters through deploying these terminals.

Among other things, the transactions would include bill payment, bus/train/air ticketing, gold coin sale, mobile top-up, merchant acquiring business activity, etc.

Currently about 35 per cent of the transactions done by SBI’s 200 million customers is through alternate channels (non-branch) such as internet, mobile, ATMs, PoS terminals etc.

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RBI to issue Rs 50 notes with rupee symbol

The Reserve Bank will soon issue Rs 50 denomination banknotes incorporating rupee symbol with improved security features.

“The RBI will shortly issue Rs 50 denomination banknotes incorporating rupee symbol, with inset letter ‘R’, in the Mahatma Gandhi Series—2005 with improved security features, bearing the signature of D Subbarao, Governor RBI,” the bank said in a statement.

The year of printing, 2012, will be on the reverse of the banknote, it said.

The design of these notes to be issued now is similar in all respects to the Rs 50 banknotes in Mahatma Gandhi Series— 2005 issued earlier.

All the banknotes in the denomination of Rs 50 issued by the bank in the past will continue to be legal tender, the release added.

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Federal Bank blood donation camp in Kochi

Federal Bank organised a blood donation camp at Federal Towers here as part of CSR initiative. The camp was inaugurated by Ranjini Jose, renowned playback singer.

The donors were the officers and staff members of the bank from Ernakulam Zone and also the different offices at Federal Towers.

This initiative is a countrywide campaign linked to the celebration of the 67th Founders Day of the bank.

On a pan-India basis, the bank hopes to arrange for 1,000 units of blood during the two month campaign, a release said.

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HDFC Bank Q2 net jumps 30% to Rs 1,560 cr

HDFC Bank has reported a 30 per cent increase in net profit at Rs 1,560 crore in the second quarter ended September 30, 2012 against Rs 1,199 crore in the year-ago period.

Net interest income (interest earned less interest expended) of India’s second largest private sector bank grew 26.7 per cent to Rs 3,732 crore.

NII was driven by a loan growth of 23 per cent and a net interest margin of 4.2 per cent.

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Syndicate Bank announces festival offer for loans

Syndicate Bank has announced festival offer for home loans and vehicle loans.

The bank is offering home loans at 10.5 per cent (equated monthly instalment is Rs 944 per lakh) up to Rs 25 lakh for 25 years and at 10.75 per cent for above Rs 25 lakh up to Rs 75 lakh. For loans over Rs 75 lakh, the interest charged is 10.9 per cent.

Similarly on four-wheeler loans, the interest rate is at 10.75 per cent (equated monthly instalment is Rs 1,699 per lakh) for 84 months with bank finance up to 95 per cent of the cost of vehicle on road.

The bank has announced that there will be no processing/documentation charges for four-wheeler and home loans during festival offer.

anil.u@thehindu.co.in

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In Q2, Vijaya Bank retires Rs 7,200 cr bulk deposits

Vijaya Bank has retired around Rs 7,200 crore of bulk deposits and certificate of deposits at the end of second quarter of this fiscal.

“The bank is making conscious effort to stop overdependence on bulk resources. It is time for us to reduce this over-reliance,” said H. S. Upendra Kamath, Chairman and Managing Director, Vijaya Bank, while announcing the bank’s ‘festival bonanza campaign’.

At the end of the second quarter, the bank’s bulk deposits and certificate of deposits to total resources stood at 38.9 per cent from a high of 46.6 per cent in the first quarter.

Banks normally offer higher rate of interest on bulk deposits/certificate of deposits than retail deposits. Vijay Bank is replacing bulk deposits with retail term deposits.

“It is a good, long-term bet we are taking. It is beneficial for growth and profitability of the bank. It also helps protect and improve net interest margin in the medium/long term,” said Kamath.

Festival bonanza

Vijay Bank has launched three schemes to shore up both deposits and advances.

V-Vaibhav is a one-year term deposit scheme with interest rate of 9.30 per cent. “In the first-nine days of launch, the bank has mobilised Rs 450 crore and has set a target of Rs 7,000 crore,” said Kamath.

Under the ‘Vijay Home Loan’ scheme, the bank has set a target of Rs 600-700 crore loan disbursals. Through ‘V-Wheels’ (auto loans), it plans to lend Rs 7,000 crore.

Deposits, advances

At the end of the second quarter, the bank’s deposits, at Rs 85,178 crore, were Rs 2,100 crore more than at the end of the first quarter. Advances were also higher by Rs 1,200 crore at Rs 59,802 crore.

The bank’s total priority sector advances improved by 13.5 per cent to Rs 17,822 crore as against Rs 16,700 crore in Q1. In Q2, retail lending, at Rs 12,116 crore, was 17 per cent more than in Q1 .

anil.u@thehindu.co.in

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On the Net, HDFC Bank is most searched banking brand

HDFC Bank was the most searched banking brand among Internet users in India during the period April 2011-March 2012, a report compiled by Google India has revealed.

On the insurance front, Life Insurance Corporation (LIC) was the most searched brand. And in the investment (brokerage) category, it was ICICI Direct that emerged as the most searched brand.

This report combined the Google search trends in India and an independent research report of TNS Australia on the influence of the Net on the purchase decision of financial products.

Today, India has over 137 million Internet users, and a very high percentage of them are urban (99 million) with high disposable income.

With over 99 million urban Indians active on the Net, financial service providers need to adopt a new approach to engage and serve the needs of the digitally savvy customers, the Google India report has said.

“Given the reach of the Internet to high-value customers and its influence on the decision making for financial products, we believe that financial services can create significant value by innovating on the digital medium,” said Rajan Anandan, Managing Director and Vice-President Sales & Operations, Google India, on the occasion of the launch of the report. Financial services should look at adopting an ‘online first’ approach to serve the needs of the digitally savvy customers,” he said.

The total search volume for finance-related queries is growing at over 43 per cent year-on-year on Google.

The report also highlighted the increase in usage of mobile phones to surf the Internet for finance-related information, with mobile queries on Google search growing three times faster than the searches coming from desktop. Further, one out of 10 finance-related queries in India comes from the mobile.

According to the report, online medium is the most preferred source of information for Internet users with over two-thirds of them using online sources when researching for financial products.

During the online research phase, over 66 per cent of the Net users who were in the market to buy financial products changed their mind about the product and brand.

The influence of Internet research was highest for loans (75 per cent home loans, 73 per cent personal loans) followed by insurance (motor insurance 70 per cent, health insurance 70 per cent and life insurance 69 per cent).

srivats.kr@thehindu.co.in

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‘Will do whatever appropriate’ to recover Kingfisher loan: SBI

State Bank of India on Thursday said it will do whatever appropriate to recover the loans that banks have made to the beleaguered Kingfisher Airlines (KFA).

The cash-strapped airline owes about Rs 7,000 crore to a consortium of 17 banks, including SBI, IDBI Bank, Bank of Baroda and Bank of India.

SBI Managing Director S. Visvanathan said: “Our effort is to recover the maximum from the company by all possible methods. There are many methods by which we (banks) recover money.

“We let the company run and they give us the money back. We wind up the company, sell the assets and get the money back. We sell the company itself and get the money back. We will do whatever is appropriate in the best interest of the group of banks.”

Pointing out that SBI had fully provided for its exposure of about Rs 1,500 crore to KFA, the top SBI official said “(from now on) we are only going to look to the upside, if there is any.”

Banks are looking at KFA from all aspects to ensure that the money that has been lent to it is recovered.

The current lock-out at the airline due to strike by pilots and engineers is a concern, said Visvanathan. He added that the revival plan (to resume operations) will be shared by KFA in the third or fourth week of this month.

ramkumar.k@thehindu.co.in

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ICICI Bank’s new home loan rates for festival season

Private sector lender ICICI Bank has announced its new interest rates for home loans at the onset of the festival season. This offer is effective from and valid for sanctions up to December 31, 2012. Under this offer, the bank will offer floating rate home loans at 10.25 per cent for amounts below Rs 30 lakh and 10.50 per cent for above Rs 30 lakh and up to Rs 3 crore, the bank said in a statement. The same rate of interest is applicable for fixed rate home loans for the one and two-year fixed tenures. For a fixed rate loan of three-year period, the rates are 10.50 per cent amounts below Rs 30 lakh and 10.75 per cent for above Rs 30 lakh and up to Rs 3 crore, the statement said.

Beena.parmar@thehindu.co.in

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Karnataka Bank looking to double biz in 3 years

Karnataka Bank wants to double its business in the next three years with the help of business process re-engineering (BPR). The bank has engaged KPMG Advisory Services Pvt Ltd for BPR implementation.

P. Jayarama Bhat, Managing Director of the bank, said that the BPR initiative will be rolled out across its 510 branches, and is aimed at high quality growth across its assets, liabilities, products and services.

“We want to to take the total business from the present Rs 55,000 crore to Rs 1.20-lakh crore by March 2015.” Bhat said that KPMG will provide support with its dedicated team positioned at Mangalore. The bank is aiming at an annual growth rate of 25-30 per cent.

Based on the diagnostic study of the processes at Karnataka Bank last year, KPMG gave some recommendations. “We wanted their (KPMG) presence in the implementation of the recommendations also,” Bhat said. Through this BPR, the bank will comprehensively reengineer and reposition its marketing efforts, sector prioritisation, delivery channels, brand building, and so on, with optimum utilisation of the resources at its disposal, he said.

“We want to increase our bottom-line and per employee productivity with the existing setup,” he added.

Narayanan Ramaswamy, Partner, KPMG Advisory Services, and Bhat signed the MoU on BPR in Mangalore on Wednesday.

vinayak.aj@thehindu.co.in

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Corporation Bank denies extending overdraft to Vadra’s company

Corporation Bank has denied giving overdraft to Robert Vadra’s company, as reported in a section of the media.

When contacted, the bank’s Chairman and Managing Director Ajai Kumar said: “As per the information given to me by the branch, there is no overdraft at all.”

There was a report in a section of the media that the Friends Colony branch of Corporation Bank in Delhi had extended in 2008-09 an overdraft of Rs 7.94 crore to Sky Light Hospitality, one of the companies of Robert Vadra. The report also stated that it was repaid later on.

“I have confirmation with me that there is no overdraft given from the branch, which a financial daily has mentioned,” Ajai Kumar said.

B. Sambamurthy was the Chairman and Managing Director of Corporation Bank during that period. When contacted, Sambamurthy endorsed the views of the present CMD, Ajai Kumar. He said he has nothing more to add on this.

vinayak.aj@thehindu.co.in

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RBI relaxes norms for opening subsidiaries by foreign NBFCs

Relaxing norms for foreign-owned NBFCs to open subsidiaries, the RBI said such entities can now set up arms even if the overseas investment is less than 100 per cent.

"NBFCs having foreign investment more than 75 per cent and up to 100 per cent and with a minimum capitalisation of USD 50 million, can set up step down subsidiaries for specific NBFC activities," RBI said in a notification.

Earlier, only 100 per cent foreign owned non-banking financial companies (NBFCs) with minimum capitalisation of USD 50 million were allowed to set up subsidiaries.

The notification further said that the step down or operating subsidiaries could be set up without any restriction on their number and without bringing in additional capital.

The RBI notification follows government's decision last week in this regard.



Source: EconomicTimes

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Karnataka Bank aims to double biz; engages KPMG for re-engineering

Karnataka Bank wants to double its business in the next three years with the help of business process re-engineering (BPR). In this regard, the bank has engaged KPMG Advisory Services Pvt Ltd for BPR implementation.

P. Jayarama Bhat, Managing Director of the bank, said that the BPR initiative will be rolled out across its 510 branches, and is aimed at high quality growth across its assets, liabilities, products and services.

Speaking to Business Line, he said: “We want to double the business over the next three years with this BPR. The bank wants to take its total business from the present Rs 55,000 crore to Rs 1.20 lakh crore by March 2015.”

High growth and superior quality is the mandate given to KPMG, as the bank is aiming to clock an annual growth rate of 25-30 per cent, he said.

Based on the diagnostic study of the processes of Karnataka Bank last year, KPMG gave some recommendations. “We wanted their (KPMG) presence in the implementation of the recommendations also,” he said.

Through this BPR, the bank will comprehensively reengineer and reposition its marketing efforts, sector prioritisation, delivery channels, brand building, etc., with optimum utilisation of the resources at its disposal, he said.

Narayanan Ramaswamy, Partner, KPMG Advisory Services Pvt Ltd, and Bhat signed the MoU on BPR in Mangalore on Wednesday.

vinayak.aj@thehindu.co.in

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Govt invites applications for IRDA Chairman post

The Department of Financial Services, Ministry of Finance, Government of India, has invited applications for the post of Chairperson, Insurance Regulatory and Development Authority (IRDA), Hyderabad. The post is falling vacant on February 21, 2013.

As per Section 5(1) of the IRDA Act, the person will be appointed for a tenure of maximum period of five years or up to 65 years of age, whichever is earlier. The pay and allowances of the Chairperson shall be Rs 3.75 lakh consolidated per month without the facility of house and car.

The applicant should have worked at least for 30 years and should have worked as Secretary to the Government of India or its equivalent level in State governments or private sector and have a track record of leadership and authority in decision taking.

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Vijaya Bank eyes Rs 800-cr business from festival schemes

Vijaya Bank said on Wednesday that it is eyeing business mobilisation of Rs 800 crore from its festival bonanza scheme from its Chandigarh region.

“We are targeting deposit mobilisation of Rs 500 crore and lending to the tune of Rs 300 crore in festival bonanza scheme which is valid till January next year,” bank’s DGM Pradeep Naik told reporters here.

Vijaya bank’s Chandigarh region has 62 branches across Punjab, Haryana, Chandigarh, Jammu and Kashmir, Uttarakhand and Himachal Pradesh with total business size of Rs 5,500 crore.

The bank is offering 9.30 per cent rate of interest and 9.75 per cent to senior citizens on deposits up to the deposits of Rs 10 crore for one year.

It is also offering advances to doctors and schools at lending rate of 12 per cent and 12.70 per cent respectively for loan up to Rs 1 crore. Apart from this, housing and vehicle loans are being offered at 10.50 per cent and 11 per cent respectively, he said.

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Syndicate Bank offers cheap loans

In a bid to spur credit demand during festive season, Syndicate Bank has rolled out home loans at 10.5 per cent interest rate for loans up to Rs 25 lakh.

The bank will charge interest rate of 10.75 per cent on loans above Rs 25 lakh and up to Rs 75 lakh, said a press statement issued by the bank.

Syndicate Bank will also offer vehicle loans at an interest rate of 10.75 per cent for a tenure of seven years.

The bank will finance up to 95 per cent of the cost of vehicle on road.

The bank has further waived off processing and documentation charges on these loans disbursed during the festive season.

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Fee, interest incomes boost IndusInd Bank profit 30% in Q2

IndusInd Bank has reported a 30 per cent increase in net profit at Rs 250 crore in the second quarter ended September 30, 2012 against Rs 193 crore in the year-ago period.

The private sector bank has reported a 30 per cent increase in net profit at Rs 486.51 crore in the half-year ended September 30, 2012 against Rs 373.27 crore in the year-ago period.

During the quarter, net interest income (the difference between interest earned and interest paid) rose 22 per cent to Rs 510 crore (Rs 419 crore). Non-interest income was up 34 per cent at Rs 320 crore (Rs 239 crore).

Net interest margin for the current quarter was a tad lower at 3.25 per cent against 3.35 per cent in the corresponding quarter of the previous year.

IndusInd Bank scrip was trading at Rs 357.90 per share, down 2.40 per cent from the previous close.

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RBI slaps Rs 30 lakh fine on ICICI Bank, Rs 55 lakh on ING Vysya for KYC violations

The Reserve Bank today slapped a penalty of Rs 30 lakh on ICICI Bank and Rs 55 lakh on ING Vysya Bank for violating certain norms related to Know Your Customer and anti-money laundering, among others.

"The penalties have been imposed on these banks for contravention of various directions and instructions issued by the RBI on Know Your Customer norms/Anti-Money Laundering Standards/Combating of Financing of Terrorism /Prevention of Money Laundering Act, 2002," RBI said in a statement.

These include "failure to obtain adequate documents for opening accounts, failure to carry out sufficient customer identification procedures, failure to examine control structure of entities."

The banks also failed to ascertain the identification of natural persons behind entities, to carry out effective enhanced due diligence, to carry out appropriate risk categorisation, besides delaying filing of the Suspicious Transaction Reports, RBI said.

On a careful examination of the banks' written replies to the show notices RBI had issued and the oral submissions made during the personal hearings, the RBI said "the violations were established and the penalties were accordingly imposed".



Source: EconomicTimes

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IDBI Bank looking to boost retail business

IDBI Bank is planning to focus more on growing its retail portfolio without losing sight of its corporate clients. Though being the sixth largest public sector bank in the country, it has only 972 branches. Saying that this is not a small number for an eight-year-old bank, K. Ramaswamy, Chief General Manager, Personal Banking Group, IDBI Bank, said during the current financial year it will launch 160 branches across the country.

Besides, to increase its brand visibility, it proposes to spend a substantial amount on advertising. To lure more retail consumers, the bank intends offering more customised products. According to Ramaswamy, as far as the retail loans are concerned, the bank’s unique selling proposition is its shortest processing time. In 2011-12, the bank reported a total business of Rs 3.91-lakh crore. Gross NPA (non-performing asset) stood at 2 per cent and net NPA at 1.6 per cent as on March 31, 2012.

Of the total business, Rs 1.8-lakh crore was advances and Rs 2.1-lakh crore, deposits. One-third of the advances was from its retail portfolio.

“For the current financial year, the thrust will be on growing this part of the business,” he said.

ravikumar.ramanujam@thehindu.co.in

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Merit students taking management quota seats too can get bank loans

Merit students taking admission in recognised private institutions under management quota will also be eligible for bank education loans.

This clause has been incorporated by the Indian Banks’ Association in its revised model education loan scheme. The reason is that there have been cases of meritorious students, despite getting admission in a government college, preferring to join a private institution. This can be for several reasons including proximity to home and notgetting the course of choice in the government college.

Another new clause pertains to the fees benchmark. Henceforth, for courses under the management quota, banks will take into account the fees as approved by the State government or an approved regulatory body for payment seats, subject to viability of repayment.

The third clause expands the scope of the courses eligible for bank finance. Students intending to pursue degree/diploma in nursing approved by the Indian Nursing Council or any other discipline approved by any other regulatory body, as the case may be, will be eligible for financing from banks.

Meanwhile, Finance Ministry has asked banks to enter into Memorandum of Understanding (MoU) with educational institutions to provide loans to students. Further, it wants an annual review of the asset quality of educational loans given under the MoU. As per Reserve Bank of India data, as on August 24, 2012, banks’ education loans portfolio stood at Rs 52,700 crore (Rs 47,600 crore as on August 26, 2011).

The IBA first put together the model educational loan scheme in 2001 to help meritorious students pursue higher education in technical and professional courses. The same was advised to banks for implementation by the RBI.

As the focus of the scheme is on development of human capital, repayment of the loan is expected to come from future earnings of the student after completion of education.

Hence, the assessment of the loan by banks is be based on employability and earning potential of the student upon completion of the course and not the parental income/family wealth.

Based on experience gained in the operation of the scheme, the plan was revised twice earlier — 2004-05 and 2007-08.

ramkumar.k@thehindu.co.in

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S. Visvanathan is new MD of SBI

The Central Government has appointed S. Viswanathan as the Managing Director of State Bank of India.

Prior to his elevation, he was the Deputy Managing Director (Mid-Corporates) at India’s largest bank.

Viswanathan’s appointment takes effect from the date of taking over charge of the post till April 30, 2014 i.e. the date of his attaining the age of superannuation or until further orders, whichever is earlier.

Following the elevation of Viswanathan, SBI now has four MDs. The other three MDs are: Hemant Contractor, Diwakar Gupta and A. Krishna Kumar.

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ING Vysya announces top-level changes in retail division

ING Vysya Bank has announced a top-level change in the retail banking division. The retail division will now be structured into two verticals -- retail assets and branch banking and private clients.

Additionally, ING Vysya Bank has appointed Brett Morgan new Country Head, Branch Banking, Marketing & Private Clients. Brett, who has over 17 years experience, moves from ING DIRECT Australia and will be based out of Bangalore.

ING Vysya Bank has appointed Mahesh Dayani as Country Head for Retail Assets, who will be responsible for its entire retail lending portfolio, which includes business banking, agri and rural banking, gold loans and consumer assets.

Uday Sareen, who was previously Country Head, Retail and Private Banking, is taking up an international assignment within the ING Group as Chief Strategy Officer at ING-DiBa in Germany, a bank press release said.

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Canara Bank offers retail loan scheme

Canara Bank today introduced a retail loan scheme for salaried and non-salaried individuals for purchase of consumer durables.

Under the scheme, customers can avail loans up to Rs one lakh at 14.50 per cent interest and repayable in 36 instalments, the bank said in a statement here.

The bank would hypothecate the durables purchased under the scheme as security and would not charge processing fees till January 31.

It said there would be no prepayment or hidden charges for loans.

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SBI sees early signs of credit pick-up

State Bank of India today said it is witnessing early signs of revival in credit growth as mid-corporates have started seeking fresh funds.

“There are early signs of credit uptake. Mid-size corporates are coming for fresh lending...,” SBI Managing Director and Group Executive for National Banking A. Krishna Kumar told reporters on the sidelines of a banking event here.

He, however, said it is too early to predict a full-fledged credit revival based on these early figures.

Retail credit

Referring to retail credit, which has not been badly impacted in the first half, Kumar said the number of applications has nearly doubled in the home and auto loan segments after the recent reduction in interest rates in these segments.

Credit growth has been flat in the second quarter at 0.1 per cent to 16.4 per cent, according to RBI data for the period.

Kumar, however, added that there is less space for further reduction in interest rates in these segments as the spreads are already lowered in the retail segments.

“We have already reduced our interest rates on home and auto loans, which are just above our base rate. So, there is less space for further reduction in interest rates in these segments,” he said.

Credit growth target

Talking about revision in credit growth target, Kumar said, “As of now, we are not revising credit growth target. We expect 18-20 per cent growth this fiscal in retail segment,” he said, adding that deposit growth is likely to be around 25 per cent in the retail segment.

He, however, pointed that pick-up in the retail segment may not compensate the slow growth in corporate sector.

“I am not sure that whether growth in retail segment will be able to offset the sluggish demand in the corporate sector,” Kumar said adding that the bank is hopeful of maintaining its margin in the second quarter as it sees asset quality improving in the second quarter.

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Federal Bank hopes credit demand to improve in H2

Demand for credit is likely to be better in the second half, a top official of Federal Bank said here today.

“Credit demand is expected to be better in the second half of the current financial year compared with the first half,” Federal Bank Managing Director and Chief Executive Shyam Srinivasan told reporters here.

He, however, said big capital expenditure programmes would take another three to six months to kick-start.

Talking about possible reduction in interest rates in various loan segments offered by the bank, Srinivasan said any decline in interest rate will depend on the reduction in the base rate.

He, however, said the bank has recently announced special offers in home loan segments for a specific period on the occasion of its founder’s day celebration.

“We may come up with some special offers during the festive season as well,” Srinivasan said.

Talking about branch expansion, he said, “We have already crossed 1,000-mark in the recent past. We will like to maintain the momentum“.

Federal Bank posted a 30.4 per cent rise in its net profit at Rs 190.4 crore in the June quarter. Net interest income rose 7 per cent to Rs 491.6 crore from Rs 460 crore during the same period.

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Statutory auditor of Bank of Baroda resigns

Bank of Baroda has informed the BSE that Khimji Kunverji & Co, one of the Statutory Central Auditors (SCAs) of the bank for FY 2012-13, has resigned on technical grounds of the number of audit assignments handled by them at present.

Consequently, the limited review of the financial statements of the bank for the half-year/ quarter ended September 30, 2012, will be done by the remaining five SCAs: Brahmayya & Co; Ray & Ray; S. K. Mittal & Co; N B S & Co; and Laxminiwas Neeth & Co.

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Festival bonanza...PNB waives of processing fee on retail loans

To cash in on the festive fervour, the state-owned Punjab National Bank (PNB) today announced waiver of processing fee for housing, car and personal loans.

The offer is valid from October 9 to November 30, PNB said in a statement.

To meet the sentiments and aspirations of public, it said, the bank has announced a series of relaxations and concessions.

It further said rate of interest on housing loans up to Rs 75 lakh was slashed to 10.50 per cent last month.

The base rate or minimum lending rate of the bank stands at 10.50 per cent.

Similarly, the car finance would be made available up to 100 per cent of ex-showroom price at very competitive rates of 11.5-12 per cent, it said.

Loans for purchase of consumer durables also available at a very attractive rate of interest of 15 per cent with no processing charges, it added.

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RBI open to raising intl e-commerce transactions cap

The Reserve Bank of India (RBI) is open to looking at increasing the limit on international e-commerce transactions currently set at $ 3,000, a top official said today.

“If the system wants the limit to be enhanced, that is something that we are positively inclined to look at,” G Padmanabhan, Executive Director, Reserve Bank said on the sidelines of a CII event.

Padmanabhan said the limit was set in consultation with PayPal, a major player among the international payment gateways, and added that as many as 99 per cent of the e-commerce transactions fall under the limit of $ 3,000.

Giving rationale for setting the limit (there are no limits for domestic e-commerce transaction) he said it is needed in a country like India which has exchange controls.

To a question on extending trading hours in the forex market beyond 1700 hrs, the RBI official said it is difficult to relax as “we do not have full capital account convertibility”.

“Most of the currency markets which work beyond a reasonable time are the markets which are capital account convertible, where in case there is a liquidity concern, you can source the money from some other country or currency,” he said.

“As long as we have certain capital account controls, or as long as we think liquidity has to be provided within the system, then we have to work within certain time limits,” he said, adding considering the needs of trade, the RBI is conscious of the fact that there is a need to re-look at it.

When asked about the volatility in the rupee and how domestic businesses, especially the smaller ones should cope with it, Padmanabhan said we have to learn to live with the fluctuations and opined that the only way it can be handled is through hedging of cash flows.

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Karur Vysya Bank looking to offer students fee-payment service via mobile

Students can soon reduce the drudgery of standing in queues to pay their fees. They can instead use their mobile phone and do it from the comfort of their hostels or homes, a top official of Karur Vysya Bank said.

The Tamil Nadu-based bank wants to tap universities and institutes with large student strength to offer mobile banking services. All that the students need is to have an account with the bank, says K.Venkataraman, Managing Director and Chief Executive Officer.

Students need not go to their college or bank, they can pay their fees using the mobile. If their parents have an account in KVB, they can also make the payment, he told Business Line in a telephonic interaction.

Fee collection is a big challenge for universities and educational institutions. By offering mobile, Internet banking and ATM services we can save time and effort. “We have offered this facility to a few universities in Tamil Nadu and are talking to Lovely Professional University in Punjab, which has one of the largest student enrolments. We have a branch there and have made a presentation,” he added.

The data captured on the electronic platform goes on the MIS (Management Information System). It would be easy to send SMSes or email reminders to students and simplify the entire process, Venkataraman said.

Referring to the bank’s growth plans, Venkataraman said: “We are looking at diversifying our loan portfolio to include pharma, engineering, chemicals and small and medium enterprises this year.”

Diversifying portfolio

The bank wants to launch nationwide campaigns tailored to different markets. For example, we will have a campaign to focus on SME loans to rice millers, transport operators, and so on. Similarly, emphasis will be on housing loan, where processing and sanctioning of loans is being centralised, to help branches concentrate on marketing, Venkataraman said.

Currently, the bank has a business of Rs 59,000 crore, with a deposit base of Rs 33,450 crore and advances of Rs 25,675 crore, he said.

somasekhar.m@thehindu.co.in

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BoB cuts home loan rates by up to 150 bps

Bank of Baroda has announced up to 1.50 percentage points concession in interest rates on home loans of different tenures/amounts as part of its festival loan campaign.

During the campaign period, home loans of 25 years tenure of up to Rs 30 lakh, and above Rs 30 lakh will be available at 10.50 per cent (11.25 per cent earlier) and 10.75 per cent (12-12.25 per cent) respectively.

The campaign, which kicked off on October 1, will be on till November 30, 2012.

Customers can get car loans at 11.25 per cent (13 per cent earlier) for repayment up to five years and 11.75 per cent (13.50 per cent) for repayment between five and seven years.

If a customer is an existing home loan borrower of BoB, then he can get an additional concession of 0.25 percentage points on a car loan, said the bank in a statement.

Along with the concessions in home and car loan interest rates, BoB has also waived processing charges.

The public sector bank has also reduced rate of interest on personal/consumer loans from 17 per cent to 15 per cent.

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Citi Bank official to pay Rs 15 lakh for leaking account details

The Delhi State Consumer Commission has ordered a Citi Bank branch manager to pay Rs 15 lakh as compensation to a credit card holder for leaking his account details to a third party.

The consumer body awarded the damages saying the supply of credit card statement details of the card holder to a third party is a “violation of confidential relationship” between the bank and its customer and “betrayal of trust”.

“It appears that in the case, the copies of account of the complainant were produced before the civil court. Such accounts are universally treated as confidential and are not supposed to be supplied to any one without prior approval of the account holder...”

“The availability of the said account to a third party, which produced it in the civil court, is therefore a flagrant violation of confidential relationship between a bank and a customer and a betrayal of trust, which not only calls for alarm and dismay but also adequate financial compensation,” said the bench presided by Justice Barkat Ali Zaidi.

The commission fixed the liability solely upon the manager of the bank’s Punjabi Bagh branch here saying “he has to owe responsibility for all matters relating to the branch”.

“The opposite party 1 who is the branch manager has therefore to be held responsible for the leakage,” it said adding “opposite party 1 Hemant Kumar, Branch Manager, Citi Bank, will pay Rs 15 lakh as compensation to the complainant (Amit Mittal).”

Mittal, in his complaint, had alleged that bank officials had unauthorisedly and illegally leaked details of his credit card account statements to a third party who, in turn, had produced it before a civil court in a private dispute.

The branch manager in his defence had contended that no information was leaked from the bank and that the complaint is not maintainable as Citi Bank was not made a party.

The commission, however, rejected the contention saying that as the account details found their way to a civil court, “it clearly indicates that they were leaked from the bank”.

It also rejected the argument that the bank was not made a party in the complaint saying “the person who is responsible for such leakage is primarily responsible.”

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BoI cuts short-term deposit rates

Bank of India has said in a filing to the Bombay Stock Exchange that it has cut its short-term deposit rates by between 25 and 50 basis points across different maturities with effect from today.

For its special 555 days deposit, the bank has cut rates by 10 basis points.

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Citibank India opens new counter for securities lending

Citibank India has come up with a new service that will allow its domestic and offshore clients to get seamless access to the Indian securities lending and borrowing market.

From being a custodian of securities, Citibank India has now assumed a market participant’s role. This is expected to impart the much-needed liquidity for it to take off. Simply put, FIIs and domestic institutional clients can do securities lending and borrowing through Citi’s new solution called ‘OpenLend’.

Different structures

Securities lending and borrowing (SLB) in India is an exchange traded model — trades are executed via order-matching platforms set up by the clearing corporations of exchanges. Currently, FII participation in this market is ‘next to zero’. While securities lending is largely an over-the-counter (OTC) activity in most countries, in India, it is done through an anonymous, exchange-traded central counterparty model.

Thus, it took international players unusually long to adapt to the Indian system. SEBI had, in 2010, made several changes to the SLB system in India, paving the way for some revival of this market. For the ‘OpenLend’ service, Citibank India has entered into an agreement with the National Stock Exchange Clearing Corporation Ltd (NSCCL), the NSE’s clearing corporation.

FIIs, as lenders of securities, will benefit from Citi’s solution as it would generate incremental revenues for them. For borrowers, the service will provide good access to securities. The service is offered on a fee-based model.

“The primary objective of launching the solution (Citi OpenLend) is to help inject liquidity and volumes into the securities lending and borrowing market,” said Debopama Sen, Managing Director and head of Securities and Fund Services, Citibank India.

Higher turnover

By enabling FIIs and domestic institutions to access this market through Citi’s new service, the international bank expects market activities in securities lending and borrowing to increase substantially.

“We expect the average monthly turnover of the SLB market to go up from the current level of $100 million to $1 billion in next few years.” she said.

srivats.kr@thehindu.co.in

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Karur Vysya Bank to open 100 branches, 400 ATMs this fiscal

Karur Vysya Bank plans to open 100 new branches and 400 ATMs during the current fiscal across the country, according to K. Vekataraman, Managing Director and Chief Executive Officer.

“Our target is to reach 540 branches pan-India by March 2013. This is in line with the long-term goal of achieving a total business of Rs 1,25,000 crore by 2016, when the bank celebrates its centenary”, he said.

Speaking at the 96{+t}{+h} Founders’ Day of the bank here, Venkataraman said that the business has grown to over Rs 59,000 crore with a deposit base of Rs 33,450 crore and advances of Rs 25,675 crore.

On the occasion he announced the bank’s corporate social responsibility programme. It is in the process of identifying around 500 Government schools across the country, where the bank will provide basic amenities of ceiling fans and tube lights in classrooms. He added that the roll out will begin shortly.

K.P. Kumar, Chairman, said support from the bank’s valued customers has been instrumental in the progress of KVB.

The bank was started in the year 1916 in Karur, then a small textile town in Tamil Nadu with a seed capital of Rs 1 lakh.

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Central Bank to launch combo loans, cut deposit rates soon

Public sector lender Central Bank has said it will bring down its deposit rates further soon, to enable it to lower its lending rates, and will launch a combo loan offer within a fortnight.

“We are looking at cutting our base rate going forward. But to do that we have to first lower our deposit rates.

Accordingly, as liquidity is comfortable, we will soon cut the pricing of our liabilities shortly, which will be followed by a base rate cut,” the Chairman and Managing Director, M.V. Tanksale, told PTI here.

Speaking after inaugurating the 40th national convention of the Institute of Company Secretaries of India here on the weekend, Tanksale said the Mumbai-based lender will also be launching a combo loan offer— which means offering a car loan without the processing fee to a customer who has availed of a home loan within the fortnight.

On the rationale behind it, the chairman said, “Normally a home buyer looks for a new car too. So it makes sense for us to fund his car as we already know him/her. Also, credit growth has been a trickle so far this year. We need to ramp up our lending to meet the fiscal target.”

Several other public sector lenders such as State Bank, UCO Bank, Corporation Bank, Union Bank, United Bank, etc, have already come out with combo loan offers ahead of festive season.

The second quarter of the fiscal saw credit uptick almost flat at 0.1 per cent at 16.4 per cent. The Reserve Bank’s guidance for credit is 17-18 per cent.

Credit growth stood at 16.4 per cent, against the central banks projection of 17 per cent for the year during the fortnight ending September 14, according to the RBI data.

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Allahabad Bank ED pitches for CRR cut

Allahabad Bank’s Executive Director T.R. Chawla has joined other top Indian bankers in making a pitch for a cut in Cash Reserve Ratio (CRR) to address the concerns of sluggish credit growth.

The RBI is slated to take a call on rates at its second quarter review of monetary policy scheduled for October 30. CRR is the amount of deposits banks are required to keep with the central bank.

“Inflation is still a cause of worry. A cut in CRR could reduce the overall rates and nudge up credit offtake. I am sure RBI will be looking at (changes in) policy rates if inflation comes down,” he told Business Line in a telephonic interaction.

Bankers had yesterday met the top officials of RBI for a consultation on the upcoming monetary policy. They feel that cut in CRR would enable bankers to pass on the relief to their customers, as they did the last time the rate was cut in September.

Chawla admitted that credit offtake was sluggish not only for Allahabad Bank but for the industry in the first half of the current fiscal. He expects credit offtake to pick-up in the coming months.

On interest rates, he said the rates could soften in the remaining months of the year.

amitmitra@thehindu.co.in

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Ranjan Dhawan appointed as Bank of Baroda ED

The Centre has appointed Ranjan Dhawan as an Executive Director of Bank of Baroda.

Dhawan, who is now Chief General Manager at Punjab National Bank, is expected to assume charge of his new role on November 1.

He will replace Rajiv Kumar Bakshi, who is due to superannuate on October 31.

Currently, BoB has three executive directors.

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HDFC Bank opens representative office in Abu Dhabi

HDFC Bank has opened its first representative office in Abu Dhabi to provide services to a large number of non-resident Indians (NRIs) based in the city.

This is the bank’s second representative office in the UAE, with the first situated in Dubai.

“The UAE is an important global business centre and this initiative reflects our commitment to bring world-class banking services to the doorstep of the Indian community in the region,” HDFC Bank Group Head (Equities, Private Banking, Third Party Products, NRI and International Consumer Business) Abhay Aima said.

HDFC Bank also operates a wholesale offshore branch in Bahrain that provides corporate, trade finance and advisory services to both corporates and ultra high-net worth individuals.

The new representative office will provide services like facilitation of opening NRE accounts in India, remittance services, fixed deposits in India and other related banking services for India accounts to the NRIs in Abu Dhabi.

“We will continue to expand our off-shore operations to meet the banking requirements of NRIs in the UAE,” Aima said.

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