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Saturday, October 27, 2012

Loans to small units safe: Corpn Bank official

Corporation Bank’s small and medium enterprises (SME) asset quality continues to be robust with gross NPA ratio at 1.66 per cent, said Ashwani Kumar, Executive Director, Corporation Bank.

Addressing reporters to announce the bank’s ‘SME festival loan bonanza’, Kumar said “Funding SMEs is a challenge. So far the bank has exposure to the tune of Rs 15,000 crore and we are managing it well.”

“The bank has set a target of lending Rs 5,300 crore to SMEs by March 2013. Though the target is steep, we hope to achieve it. In the last six months (April to September), we have sanctioned around Rs 2,000 crore, of which disbursal is Rs 1,400 crore,” he added.

The bank’s NPA ratio of large corporate/companies is at the same level at 1.66 per cent. “At present SME NPAs are manageable, but lending to large corporate like Kingfisher Airlines and Deccan Chronicle Holding is slipping,” he said.

To attract SMEs, during the period from October to January, the bank is offering interest rate concession of 0.50 per cent on all SME Credit Scheme; an additional interest rate concession of 0.25 per cent for women entrepreneurs, and 50 per cent concession on processing charges.

In Karnataka, the bank has Rs 245-crore exposure to SMEs spread across two Loan Centres — Bangalore and Mangalore.

To cater to the SME segment, the bank set up exclusive SME Loan Centres in 15 cities.
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ICICI Sec to counsel govt for public sector ETFs

The Department of Disinvestment has selected ICICI Securities (ICICI Sec) to act as its adviser to create and market the proposed central public sector enterprise (CPSE) exchange traded funds (ETFs).

Three other i-bankers — Citi, SBI Caps and Yuanta Fund — were in the fray for this.

The proposed PSU ETF will comprise shares of listed central PSUs and will act as an additional mechanism for the disinvestment process.

“Yesterday, we made a presentation to the Disinvestment department, after which we have been selected to act as the adviser to the process,” Vineet Arora, Executive Vice-President, ICICI Securities said, adding that the final mandate would follow later.

As per a notification on the Disinvestment department’s Website, i-banks, namely ICICI Securities, Citi, SBI Caps and Yuanta Fund, were asked to make presentations before the department on October 25 to form the CPSE ETF.

Arora said, after the company received the final mandate, it would work closely with the disinvestment department towards the creation of the PSU ETF.

“We hope that the PSU ETF will be launched in few months,” Arora said without divulging any detail regarding the fee structure for its advisory services.

About the responsibilities as an adviser, Arora said it would be helping the government create an ETF basket, which will comprise PSU shares, apart from assisting the government in the selection of AMCs, and launch and marketing of the ETF, among others.

The Centre has a budgeted target of Rs 30,000 crore from the disinvestment process this fiscal for which it has already initiated process for diluting its stake in some of the PSUs.

CPSE ETF is seen as another way of diluting government stake, barring the usual IPO, FPO or OFS route, which will help the government in meeting its disinvestment target along with increasing retail participation in the equity market.
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Punjab and Sind Bank Q2 net falls 21%

Punjab and Sind Bank on Friday said its net profit for the July-September period fell by 20.8 per cent to Rs 117.07 crore.

Its net profit over the same quarter a year ago stood at Rs 147.76 crore.

The total income of the state-owned lender grew by 10.2 per cent to Rs 1,885.75 crore in the second quarter from Rs 1,711.27 crore over the corresponding period a year earlier, PSB said in filing to BSE.

However, its income from other sources fell to Rs 87.34 crore in the second quarter from Rs 104.74 crore.

“Net NPA stood at Rs 774.49 crore as on September 30, 2012 against Rs 297.46 crore as on September 30,2011. The net NPA ratio is 1.58 per cent as on September 30, 2012 as against 0.71 per cent as on September 30, 2011,” it said.

Its total business stood at Rs 1.15 lakh crore as on September 30, 2012 against Rs 1.03 lakh crore as on September 30, 2011.

PSB scrips settled at Rs 66.20 a piece on the BSE today, down 3.98 per cent from the previous close.
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IDFC Q2 net drops 13% on higher finance costs

Infrastructure finance company IDFC has reported a 13 per cent drop in standalone second quarter net profit at Rs 461.38 crore on the back of higher finance costs.

In the corresponding quarter last year, the company had posted a net profit of Rs 529.21 crore.

For the June to September quarter, finance costs (the cost at which the company borrows to lend) increased 44 per cent to Rs 1189.71 crore (Rs 825.66 crore, a year ago).

Total income from operations rose 17 per cent to Rs 1947.94 crore.

The shares of the Mumbai-based company ended at Rs 157.65, up 0.35 per cent on the BSE. The results were declared after close of market hours on Friday.
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Indian Overseas Bank Q2 profit dips 24%

As a result of interest reversal on restructured loan accounts during the quarter, Indian Overseas Bank reported a 24 per cent drop in net profit for the quarter ended September 30 at Rs 158.43 crore against Rs 207.46 crore in the corresponding previous year quarter.

The bank’s total income rose to Rs 5,515.02 crore from Rs 4,822.56 crore, registering a growth of 14.36 per cent. Announcing the results, the bank’s Chairman and Managing Director M. Narendra, said interest reversal on restructured accounts and additional provisions made during the quarter amounted to Rs 168 crore. “But for that, our gross and net profits would not have fallen,” he said.

Gross NPAs (non-performing assets) as on September 30, went up to Rs 5,930 crore from Rs 3,898 crore in the previous year. Narendra said this was because there were a few major accounts which turned NPAs during the quarter. According to him, nine major accounts — from pharma, engineering and manufacturing sectors — worth Rs 650 crore became NPAs.

“However,” he said, “some of them are in the process of a corporate debt restructuring programme and the results are expected.”

Giving the break-up of the gross NPA, he said while domestic NPAs accounted for Rs 5,300 crore, overseas NPAs accounted for Rs 629 crore. Net NPAs at the end of the quarter stood at Rs 3,378 crore (2.25 per cent) as against Rs 1,505 crore (1.21 per cent) in the previous year.

Net interest margin for the bank stood at 2.46 per cent.

He said the bank’s recovery and upgradation target for the current (third) quarter is Rs 500 crore.

Equity infusion

Narendra said the Government is “actively considering” Rs 1,500-crore equity infusion during the current financial year.

Last year, the government infused Rs 1,441 crore. Total restructured loans at the end of the quarter stood at Rs 14,775 crore. Of this, a major portion was from the power sector (around Rs 3,438 crore). This was followed by textile (Rs 1,630 crore), aviation (1,448 crore), iron and steel (Rs 1,082 crore) and telecom (around Rs 1,055 crore).

According to Narendra, the bank has been in the process of recruiting over 300 rural development officers, and opening 40 specialised agriculture credit branches in Maharashtra, Karnataka, Uttar Pradesh and Chhattisgarh to handle agri business exclusively.

In the first half of the current financial year, the bank disbursed Rs 15,500 crore under special agriculture credit plan as against the annual target of Rs 26,875 crore. The bank has also taken special initiatives for MSME lending.
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Bank of Baroda to scale up recruitment from institute

Bank of Baroda will increase the intake of candidates through the Baroda-Manipal School of Banking to meet its human resource requirement.

Addressing presspersons here on Friday, M.D. Mallya, Chairman and Managing Director of the bank, said that the institute began offering one-year diploma in banking in August 2011.

The bank offers jobs to students graduating from the institute, besides education loans at subsidised rates, he said.

“Every quarter, we take one-fourth of the requirement of the year. Last year, we had taken 180 per quarter. For the second year, we have scaled up the intake to 240 per quarter,” he said.

The bank, which had taken 720 candidates through this mode in the first year, has increased the intake to 960 for the second year. “Depending on our requirement, we can scale up further in the days to come. May be over a period of time, the entire requirement of the bank is met by this,” Mallya said.

He said 180 candidates, who were part of the first batch, have been working in different fields in different locations.

Under its Baroda-Manipal School of Banking model, the candidates are first trained in banking and finance before they take up career in Bank of Baroda. Participants are put through an on-campus curriculum spread over nine months. This curriculum gives thrust on application of knowledge and overall development of personality. After that, these candidates are given practical training at various branches of the bank through a three-month internship programme.

To a query on the expectations from RBI’s quarterly policy review on October 30, he said RBI has been consistent in terms of balancing the growth vis-à-vis anchoring inflationary conditions. He hoped that RBI would continue to pursue the strong policy of balancing.
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ICICI Bank net jumps 30% in Q2 on strong interest income

Higher interest and dividend incomes helped boost ICICI Bank’s net profit by 30 per cent, to Rs 1,956 crore, in the July-September quarter.

India’s largest private sector lender had posted a net profit of Rs 1,503 crore in the year-ago period.

Net interest income (the difference between interest earned and expended) rose 35 per cent to Rs 3,371 crore (Rs 2,506 crore in Q2 FY12).

Non-interest income grew 17 per cent to Rs 2,043 crore (Rs 1,740 crore). Dividend income increased to Rs 160 crore ( Rs 120 crore).

Provisions towards bad loans increased 59 per cent to Rs 508 crore as compared with Rs 319 crore in September quarter last year.

“Our profitability will remain robust. However, we may see a decline in fee income. Net interest margins are likely to remain above the current levels, driven by international gains,” Chanda Kochhar, Managing Director and CEO, said.

On the bank’s exposure to media group Deccan Chronicle Holdings Ltd, she said the bank has classified its Rs 500-crore exposure to the ‘media company’ as non-performing. The bank has also made a provision covering 85 per cent of this exposure.

Net interest margin rose to 3 per cent from 2.61 per cent.

The ICICI Bank scrip ended 0.73 per cent lower to close at Rs 1,078.25 on the BSE on Friday.
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United Bank net rises 16% on treasury gains

Backed by growth in other income, United Bank of India posted 16 per cent rise in net profit at Rs 145 crore for the quarter ended September 30.

Other income grew 49 per cent. However, the bank’s net interest income dipped three per cent.

Sequentially, however, profits dipped about 17 per cent from Rs 174 crore in the first quarter ended June 30.

According to Bhaskar Sen, Chairman and Managing Director, the drop in net interest income was on account of a slowdown in credit offtake.

“The growth in net profit came from a higher other income, primarily treasury. We took a conscious decision of going slow on the credit front,” Sen told Business Line.

The slowdown in credit offtake also impacted the bank’s profitability. Net interest margin (NIM) was down to 2.7 per cent during the period under review compared with 3.16 per cent during the corresponding quarter last year.

The bank is however, hopeful of achieving NIM of three per cent by the end of this fiscal.

“We expect credit growth to pick up. We have already started getting some good loan proposals. Moreover, we are also looking at reducing our deposit rates to bring down the cost of funds. Supported by these measures, we expect our NIM to improve,” Sen said.

Gross non-performing assets increased to 3.88 per cent (3.48 per cent), even while net NPAs declined to 1.95 per cent (2.21 per cent).

United Bank has submitted a proposal pertaining to capital requirement to the Union Government. “It is under consideration and we hope to get the funds by the end of this fiscal,” he said refusing to divulge details of the amount sought.

The fund infusion would help boost capital adequacy ratio, which currently stands at 12.08 per cent, he added.

On Friday, shares of United Bank closed at Rs 64.95, down 2.26 per cent, on the BSE.
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Higher provisioning drags PNB net down 11.5% in Q2

A sharp rise in provisioning towards bad loans weighed on Punjab National Bank’s bottomline in the September quarter.

The bank’s net profit declined 11.5 per cent to Rs 1,066 crore (Rs 1,205 crore). NPA provisioning was higher at Rs 1,140 crore (Rs 319 crore).

The public sector lender’s financial performance was hit by incremental slippage in bad loans of Rs 4,544 crore in the second quarter and Rs 6,875 crore in the first half of this fiscal.

The recovery during the first half of the fiscal was Rs 954 crore, and during the current quarter was Rs 383 crore. The write-off was only Rs 50 crore.

“The bank had an option of presenting a better gross NPA ratio by writing off fully provided debts. But consciously we decided not to write-off any debts to keep the pressure on us and preferred to show gross NPA ratio at a higher level (4.66 per cent)”, K.R. Kamath, Chairman & Managing Director, said.

Kamath said that there was a possibility for the bank to write-off as much as Rs 900 crore and reduce gross non-performing assets (NPAs) by 0.3 to 0.4 per cent. But the management decided against it.

Pressure building

“There is a pressure building. We decided to let the pressure be on the management in facing a larger NPA number and work more vigorously to bring it down, rather than deriving false comfort by pruning it to a lower level by writing off”.

Kamath said that the bank would definitely take a call on write-offs based on the numbers of the subsequent two quarters. “We may go in for write-offs of bad debts”.

For the quarter under review, the bank restructured advances Rs 2,625 crore. As much as 11 per cent of the bank’s restructured book has turned into NPAs, Kamath later told Business Line.

Kamath said higher provisioning was on account of higher NPA slippage. It is difficult to answer as to whether the worst is over, he added.

“This is in some way a reflection of what is happening in the economy. We are quite hopeful, because there are some positives in this quarter. There are possibilities of economic downturn taking a U-turn. If that were to happen, then it may also take a U-turn on the NPA front. All depends on how the economy behaves in the next three months, he said.

Kamath said there was no concentration of NPAs in any particular sector or geography. He, however, declined to give any future numbers on the NPA front. “Internally we will work to contain delinquencies and come out with a better performance next quarter”.

Kamath also declined to comment on the Kingfisher Airlines account, which is not a standard asset for the bank. The 17-bank consortium will have to take a call on the matter, he said.

PNB shares declined 6.72 per cent at the National Stock Exchange on Friday to close at Rs 749.80. This was Rs 54.05 lower against the previous day’s close of Rs 803.85.
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Thursday, October 25, 2012

Syndicate Bank plans joint venture to enter life insurance sector

Syndicate Bank has firmed up plans for diversifying into insurance business. It has decided to form a joint venture with a large insurer to enter the life insurance sector.

The Executive Director of the Manipal-headquartered bank, A. Anjaneya Prasad, told Business Line : “We have shortlisted the company and will announce the name as soon as we get the okay from the Reserve Bank of India and the Insurance Regulatory and Development Authority”.

The bank has a small presence in the bancassurance sector with a tie-up with the General Insurance Company for general insurance products such as vehicle and accident insurance. It has a tie-up with Tata AIG for group life insurance to housing loan customers.

The efforts of the bank to enter the insurance sector pan several years. In 2011, it had shortlisted four domestic insurance companies, which included Birla Sun Life, Aviva Life and Reliance Life.

The move is in line with the bank’s strategy to grow rapidly in the fee-based income sector. Syndicate Bank has tied up with atleast nine mutual funds. It is gearing up, including training its staff, to vend these products.

Referring to its efforts to raise capital, Anjaneya Prasad said the bank is likely to raise around Rs 1,000 crore in December under tier- II bonds. It would be used to meet future credit requirements and Basel-III norms.

He said the bank received very good response to the medium term note issue. “We raised $500 million (approximately Rs 2,600 crore) in the London market. The issue was oversubscribed five times, with investors mostly from Singapore, Gulf and Europe.

The bonds, with a five-and-half year tenure, are tradable, and would meet the credit requirements serviced through the London branch.

On international expansion, he said the bank was looking at opportunities in Africa, Europe and Asia.
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Kotak Mahindra Bank Q2profit muted at Rs 280 cr

Higher interest expenses and provisions tempered Kotak Mahindra Bank’s net profit in the July-September period.

The private sector lender’s standalone net profit increased 8 per cent to Rs 280 crore in the reporting period from Rs 260 crore in the year ago period.

Net interest income (the difference between interest earned and expended) grew 25 per cent at Rs 758 crore (Rs 605 crore in the year ago period).

Interest expended rose 36 per cent to Rs 1166 crore (Rs 859 crore). Provisions towards bad loans jumped to Rs 78 crore (Rs 16 crore).

During the quarter, the bank acquired a portfolio of non-performing assets (NPAs) of less than two years duration from non-banking financial companies.

“Entire amount of the purchase (net of subsequent recovery) amounting to Rs 42 crore has been treated as NPA and fully provided for,” said Dipak Gupta, Joint Managing Director, Kotak Mahindra Bank.

Net interest margins (NIMs) remained steady at 4.6 per cent. Year-on-year, advances rose 22 per cent to Rs 45,443 crore on the back of agriculture and corporate loans. Deposits increased 25 per cent to Rs 45,463 crore as on September 30, 2012.

“Commercial vehicles and construction will continue to slow in the fiscal year ahead,” Gupta said.

Consolidated results

The bank’s consolidated net profit for the second-quarter grew 16 per cent to Rs 502 crore from Rs 433 crore in the year-ago period.

The consolidated financials, among others, include the results of Kotak Mahindra Bank, Kotak Mahindra Prime, Kotak Securities, Kotak Mahindra Old Mutual Life Insurance.

On Thursday, the shares of Kotak Mahindra Bank ended 0.85 per cent higher at Rs 625.65 on the Bombay Stock Exchange.
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Better operating efficiency boosts Oriental Bank net 80%

Oriental Bank of Commerceon Thursday reported an 80 per cent increase in net profit at Rs 302 crore (Rs 168 crore) for the quarter ended September.

A 21 per cent rise in operating profits boosted bottomline performance. Provisioning requirement for the quarter was also lower.

In the second quarter of last fiscal, there was a spurt in provisions towards non-performing assets (NPAs) as the bank had moved to system-driven NPA recognition. There is a base effect that has played to the advantage of the bank in the quarter under review, as the NPA provisioning is lower now.

Improved efficiencies on credit growth (credit deposit ratio has grown by 3 percentage points) and shedding of bulk deposits in the quarter under review helped increase operating profits.

The net profit of Rs 302 crore was, however, lower than the net profit of Rs 390 crore recorded in the first quarter this fiscal.

S.L. Bansal, Chairman and Managing Director, OBC, said that the right way to analyse the bank’s performance would be to look at it from the standpoint of operating profit.

Operating profit of Rs 921crore was higher both sequentially and on a year-on-year basis, he pointed out.

OBC’s operating profit in the first quarter this fiscal was Rs 897 crore. The bank had recorded net profit of 758 crore in the July-September quarter last fiscal.

Bansal said that the second quarter bottomline performance was lower than the first quarter primarily due to the Rs 200 crore gain realised in Q1.

“You remove that exceptional gain in first quarter (Rs 200 crore-Rs 130 crore from marked-to-market gains and Rs 70 crore from write-back of excessive provisions not required), our second quarter net profit will be substantially higher than the first quarter,” he said.

For the September quarter, there was recovery of Rs 141 crore from past technical write-off, besides treasury gain of Rs 54 crore.

Bansal said the bank was confident of achieving a net interest margin of 2.85 per cent this fiscal.


On expectations from the upcoming RBI monetary policy review, Bansal later told reporters that he was confident that repo rate would be cut and not Cash Reserve Ratio.

“Feel good factor is there in the market. The RBI will support it. I expect the repo rate to come down. There is liquidity in the market”. OBC’s shares surged at the National Stock Exchange on Thursday to close at Rs 314.45, up Rs 20.55 over the previous day’s close of Rs 293.90.
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Wednesday, October 24, 2012

YES Bank Q2 net up 30% on higher income

YES Bank reported a 30 per cent increase in net profit at Rs 306 crore for the second quarter ended September 30.

The private sector lender had recorded a net profit of Rs 235 crore in the year ago period.

Net interest income (the difference between interest earned and expended) increased 36 per cent to Rs 524 crore (Rs 386 crore).

Other income grew 29 per cent to Rs 277 crore (Rs 214 crore) on the back of financial advisory, transaction banking, and retail banking fees.

The bank’s gross non-performing assets (NPAs) during the quarter declined to 0.24 per cent from 0.28 per cent in second quarter of FY12.

The bank’s incremental provisions during the quarter stood at Rs 51 crore of which Rs 45 crore have been provided for a big account in the last two months. Rana Kapoor, CMD and CEO, said, “Of the total debt of that (big) account, 80 per cent of the unsecured loans have been provided for in this quarter. We have been proactive in biting the bullet as far as its maximum impact is concerned…risks are expected.”

He also mentioned that the account “could turn into a non-performing asset” in the next quarter of the fiscal year.

The bank has already exited the corporate debt restructuring (CDR) mechanism and “prefers to have bilateral transactions with the clients opting for restructuring”.

With no restructuring during the quarter, the bank’s restructured accounts portfolio stood at Rs 192 crore (0.46 per cent of total loans).

The CASA (current and savings account) ratio of the bank jumped 87 per cent to 17.3 per cent as on September 30 compared with 11 per cent in the year ago period. The capital adequacy ratio increased to 17.5 per cent compared with 16.5 per cent in the preceding quarter.

Year-on-year, total advances grew 23 per cent to Rs 42,019 crore, while the deposits grew 19 per cent to Rs 52,291 crore.

On Tuesday, shares of YES Bank ended up 3.18 per cent at Rs 399.35 on the Bombay Stock Exchange.

Nod for MF business

YES Bank will enter the mutual fund business in the next one year. The foray into mutual fund business, which was approved by the board today, will augment the bank’s retail offering, said Kapoor.

The bank will approach the Securities Exchange Board of India and the Reserve Bank of India (RBI) for permission to start the mutual fund.

Last month, the bank had received a retail equity broking licence from the RBI. It expects to launch this business next year.
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Western Union, ICICI Bank launch pre-paid card

Western Union has launched a pre-paid card in India with ICICI Bank and MasterCard.

The target customer base for this product is mainly un-banked people who use cash for transactions. With this card, the company hopes to reach out to people, for instance migrant workers, who are looking for a safe store-house for their cash.

Customers can load money on their pre-paid cards, which will be issued by Western Union at a fee of Rs 100. The card can be used at any of the ICICI Bank ATMs free of cost and at other non-ICICI Bank ATMs at Rs 25 a transaction.

The card can also be used for purchase at retail outlets which use MasterCard-enabled point of sale terminals. There is no restriction on the average daily balance as is required by a typical savings bank account.

This service will be available at 1,000 participating Western Union agent locations by the year-end.

The card comes with a high maintenance charge.

For instance, if an owner of a prepaid card loses or forgets his PIN, the same will be re-issued to him at Rs 100. The customer will have to pay Rs 50, if he wishes to update his contact details or address.

The loading fee on the card will be Rs 20 for a load. If the customer wishes to load the card from a remote location, then he will be charged 2 per cent of the load value. The card will also attract annual maintenance fees of Rs 50 a year from the second year onwards.
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Bank of Maharashtra Q2 net up 65% at Rs 166 cr

Pune-based Bank of Maharashtra has registered a 65.3 per cent growth in its Q2 FY’13 net profit which stands at Rs 166 crore versus Rs 100.4 crore in the same quarter of FY’12.

Total income in the two quarters being compared rose 25 per cent to Rs 2,434 crore (versus Rs 1,945 crore), while gross NPAs dipped slightly to stand at 2 per cent against 2.15 per cent as on September 30, 2011.

With total business crossing the 1.5 lakh crore milestone to touch Rs 1,51,320 crore at the end of September 2012, the bank has joined the league of medium category banks. This translates into a 25.8 per cent growth over Rs 1,20,281 in total business at the end of the same quarter of 2011.

Results for the half-year period ended September 30, 2012 indicate 37.8 per cent rise in its net profit which stands at Rs 306.5 crore versus Rs 222.5 crore in H1 FY’12. Total income rose 23.6 per cent to Rs 4,651 crore (Rs 3,762.6 crore).

Employee productivity improved with business per employee rising from Rs 8.61 crore at the end of Q2 last fiscal to Rs 10.99 crore this fiscal.

Business per branch stood at Rs 92.38 crore against Rs 76 crore as on September 30, 2011. Branches in the metro regions (425 in number) accounted for 63.5 per cent of the total business, while 570 branches in the rural regions accounted for 9.25 per cent share in business.

Narendra Singh, CMD, said that the bank was focusing on Maharashtra and wanted to grow its market share in the Pune region. It plans to open 220 new branches, including 99 in the State during FY’13.

Around 25 per cent of the new branches will be in un-banked areas. It also proposes to have a presence in Manipur and Nagaland where it has no branches to date.

Regarding its plans to go overseas, Singh said that the RBI approval was awaited, and the bank was willing to go to any overseas location.
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RBI to issue Rs 100 note with rupee symbol

The Reserve Bank will soon issue bank notes of Rs 100 denomination with the rupee symbol in the Mahatma Gandhi Series—2005.

These bank notes will bear the rupee symbol on the observe and the reverse with inset letter E in both the numbering panels, bearing the signature of governor D Subbarao, RBI said in a notification.

The bank notes with the year of printing 2012 on the reverse, will be similar in all respects to the Rs 100 bank notes in Mahatma Gandhi Series—2005 issued earlier, it said.

All the bank notes in the denomination of Rs 100 issued by RBI in the past will continue to be legal tender, it added.
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LIC files applications for 2 more online products

Life Insurance Corporation of India has filed applications for two new products in the online term insurance segment, Chairman D.K. Mehrotra said.

“We have got one product online. We have made applications for two more products with the insurance regulator. Once it goes through, we will take it online,” he said.

He said that putting money into equity issues of public sector companies is not a bail-out for the Government but purely for investment purposes. LIC will invest about Rs 2-2.2 lakh crore in the markets this year, including equity and debt. Equity investments alone will be to the tune of Rs 45,000 crore, he added.

In the last fiscal, LIC had invested about 1.95 lakh crore in the markets. “At the moment, my estimate is that pharmaceuticals, fast moving consumer goods, banks and information technology are good sectors to invest in,” he said.

Housing Finance

The housing finance unit of LIC plans to complete the qualified institutional placement, which it had announced earlier, by this year end.

“We have already appointed merchant bankers. Most likely, the process of fund raising will be completed by this year end,” V.K. Sharma, Chief Executive, LICHFL, said.

We need capital to support LICHFL’s growth over the next financial year. Some 4.6 crore shares will be placed with the QIPs, he said.
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Syndicate Bank raises $ 500 mn to fund overseas biz

State-owned Syndicate Bank has raised $ 500 million (about Rs 2,600 crore) through bonds to fund its overseas business growth.

“We have raised from overseas market $ 500 million, the second and final tranche under the bank’s MTN (medium term note) programme size of $ 1 billion,” a senior Syndicate Bank official said.

The bond with maturity period of 5.5 years carries a coupon rate of 4.125 per cent per annum payable semi-annually in arrear.

The money raised would be utilised for expanding operation of the bank’s London branch functioning since 1976, the official said.

The services rendered at its London branch include corporate lending, participation in syndications, handling Letters of Credit and Guarantees transactions, trade finance, NRI services, ECBs and international treasury services.

Syndicate Bank has reported 43.3 per cent increase in net profit at Rs 463 crore for the second quarter ended September.

The bank had a net profit of Rs 323 crore during the same quarter of the previous fiscal.

However, gross NPAs rose marginally to 2.47 per cent of loan assets as on September 30, 2012 as compared to 2.38 per cent at the end of second quarter of the previous fiscal.
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YES Bank plans to enter mutual fund biz

Private sector lender YES Bank on Tuesday announced that its Board has approved to enter into the mutual fund business.

“We will enter as an Asset management Company (AMC) in the next 12 months in the business of mutual fund to augment our retail offering,” said Rana Kapoor, Managing Director and Chief Executive Officer, YES Bank.

After the approval today, the bank will now apply for regulatory licence from the Securities Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).

Last month, the bank had received a retail equities broking licence from the RBI, for which it expects to launch operations during 2013-14 fiscal year.

“Selling and cross-selling will be our foray and we will be better distributor than a manufacturer,” Kapoor said as he announced the bank’s second quarter results on Tuesday.
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Moody’s affirms Exim Bank’s Baa3 ratings; outlook stable

Moody’s Investors Service has affirmed Export-Import Bank of India (Exim Bank)’s foreign currency long-term deposit, issuer, and senior unsecured debt ratings of Baa3.

The Baa3 foreign currency issuer and senior unsecured debt rating is in line with the Baa3 rating for the Indian Government.

The foreign currency short-term deposit rating for Exim Bank remains at P-3. The outlook on all ratings is stable, a release issued by the international credit rating agency said.


These ratings take into consideration Exim Bank India's stand-alone credit assessment of ba2, and Moody’s assessment of a very high dependence and a high support probability from the Indian Government. The stand-alone credit profile reflects the bank's adequate liquidity management with minor mismatch in maturity between its assets and liabilities, ongoing capital support from the Indian Government as a shareholder, and improving profitability, it said. Moody's analysis also considers the marginal deterioration on Exim Bank India's asset quality with increase in gross non-performing loans (NPLs) as a percentage of gross loans to 1.46 per cent as of March 2012 vis-a-vis 1.04 per cent at end March 2011.

Similarly, restructured loans increased to Rs 812 crore (1.48 per cent of gross loans) from Rs 230 crore (0.5 per cent of gross loans) over the same period. NPL provision coverage is over 80 per cent.

“With nearly 45 per cent of loan exposures in the form of interbank exposure and lines of credit carrying Indian government guarantee, and the balance of 55 per cent as direct export development loans linked to domestic companies, we expect asset quality of Exim Bank India to continue compare better to other Indian banks”, the release said.

Furthermore, Exim Bank does not have exposure to the troubled sectors in India of airline, power distribution and telecom, which have been a source of asset quality challenges at other Indian banks, lending support to its asset quality.

“Our expectation of a high support probability is based on the bank’s strong linkage with the government, including its establishment under a law designating its quasi-sovereign status, government ownership and clear policy role as an export credit agency”, the release added.
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LICHFL plans Rs 1,200-cr QIP issue by December

LIC Housing Finance is targeting to raise up to Rs 1,200 crore through an institutional placement offer by December, company’s top executives have said.

“We have already appointed five merchant bankers and will be completing the QIP (qualified institutional placement) in a month or two,” LICHFL Chief Executive V K Sharma told reporters on the sidelines of an event here last evening.

Sharma did not give a possible size of the issue, maintaining only that the company plans to issue 4.6 crore new shares.

However, a senior company executive said it is hoping to raise up to Rs 1,200 crore through the proposed issue of new shares.

The scrip of the company, the home finance subsidiary of insurance major LIC, shed 0.30 per cent to close at Rs 246.35 apiece on the BSE on Tuesday.

The merchant bankers appointed for the issue include Nomura, Kotak Securities, HSBC, Citigroup and Avendus Securities, the official said.

The parent, Life Insurance Corporation’s stake in the company currently stands at 40.31 per cent which will come down to the 36.54 per cent level after the issue, he added.

“We had raised Rs 800 crore through a preferential allotment to LIC early this year. The share of LIC will come down to the pre-preferential allotment level of 36 - 37 per cent after the QIP issue,” he said.

The 23-year-old home mortgager also moved into a new corporate office in the Cuffe Parade area of south Mumbai yesterday.

The place it had moved into was earlier used by private lender Axis Bank as its corporate headquarters and Sharma said LICHFL has invested close to Rs 38 crore in the property.
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We will recover Kingfisher dues, says Oriental Bank chief

Oriental Bank of Commerce has said it is confident of recovering its money from the ailing Kingfisher Airlines even as other lenders have nearly given up hope.

The bank also said that such one off cases will not affect its working.

“We are in the business of banking. Banking is a business of taking risks. If you don’t take risks, what is the intermediation (part a bank plays),” the bank’s Chairman and Managing Director S.L. Bansal told Business Line.

He pointed out that the airline had serviced the interest component of the loan till June so the asset continues to be standard.

The bank had extended a loan of Rs 55 crore to the airline as part of pre-delivery payment finance towards future aircraft deliveries to the manufacturer, Airbus Industrie.

“Our finance is relatively safe and our asset continues to be standard,” Bansal said.

He explained that as the payment (loan) is like a guarantee and is not part of working capital, it was relatively a different kind of advance. “In case the airline does not take delivery of the aircraft, we will get back the amount though it may attract some penalty,” he said. Bansal said there were two or three banks which have similar exposure which should not be treated as advances towards working capital needs of the airline.

He also said that the airline promoter Vijay Mallya had indicated that his company was in talks with a few foreign airlines during his last meeting with the consortium of lenders in Bangalore earlier this month.

His airline has also been given time till the end of this month to come up with a workable revival plan.

Bansal said such cases are part of conducting business. He explained that as professionals, each case is evaluated with care. He said as depositors do not have the capability of taking risks, they do not directly fund an entrepreneur or a business.

“He therefore trusts us to do our job. We are supposed to be professionals. We evaluate the party and take credit decision. In certain cases, casualties are bound to happen, because the economy is not doing well.”

Bansal said the bank will continue to fine-tune its due diligence mechanism but such “ups and downs,” will continue to occur in the industry.
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Corp Bank offers 0.75% concession on interest rate to women SME customers

Corporation Bank will offer 0.75 per cent concession on interest rates for women SME customer under its 'grand festival loan bonanza' campaign.

Quoting Ajai Kumar, Chairman and Managing Director of the bank, a press release said here that the ‘SME grand festival loan bonanza’ is specially launched for the benefit of the SMEs for the ongoing festival season.

Under this offer, the bank offers interest rate concession of 0.50 per cent on the applicable rate on all the SME credit schemes. Added to this, women entrepreneurs will get additional interest rate concession of 0.25 per cent.

The release said that there will be a 50 per cent concession on processing charges.

The festival bonanza is offered on 10 SME credit schemes. They are: Corp SME Tex Plus Scheme, Corp Term Plus Scheme, Corp SME Auto Plus Scheme, Corp SME Liquid Plus Scheme, Corp SME Gold Card Scheme, Corp SME Receivable Funding, Corp Commercial Vehicle Loan Scheme, Corp Collateral Free Loan Scheme, Corp SME Credit Card Receivable Funding, and Corp Laghu Udhyami Credit Card Scheme.

To encourage entrepreneurs, the bank offers various specialised and tailor-made credit schemes suiting their credit and business requirements, the release said.

The bank has launched exclusive SME loan centres in 14 cities across the country. Each SME centre is supported by a team of relationship managers and central credit processing mechanism, the release added.
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Home loans up to Rs 35 lakh must get priority sector tag: IBA panel

Banks want strategic changes in regulations, including revision in the definition of home loans under priority sector and reduction in margin requirement for buying a house, to give fillip to the housing sector.

Given the increase in property prices in the last few years, an Indian Banks’ Association committee has recommended to the Finance Ministry that home loans up to Rs 35 lakh (extant limit: Rs 25 lakh) should get the priority sector tag.

The move will lead to banks providing loans to house buyers at affordable interest rates, said the committee on housing sector. This will also benefit a large group of customers in Tier- II and Tier- III towns. Further, loans to builders constructing affordable homes costing within Rs 35 lakh a unit could be classified as priority sector. Builders can then get loans at preferential interest rates, thereby accelerating housing projects in segments where the unit cost does not exceed Rs 35 lakh.

Loans (up to a certain limit) given by banks to categories such as agriculture, micro and small enterprises, micro credit, education loans, housing loans, export credit and weaker sections are classified as priority sector lending.

The committee observed that customers were finding it difficult to stump up 20 per cent margin as well as pay for stamp duty and registration, and other charges, which aggregate to as high as 25 to 30 per cent of the value of house property.

In order to mitigate this, the committee is of the view that banks should fund up to 85 per cent of the cost of house (that is reduce margin from 20 per cent to 15 per cent).

Margin requirement

Bringing down the margin would increase the ability of customers to buy homes.

Historically, housing and landed property has indicated a rising trend, which would result in better loan-to-value ratio (the amount of loan given by the bank/ value of property) in subsequent times, said the committee.
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Monday, October 22, 2012

Syndicate Bank Q2 profits jump 43.5%

Syndicate Bank profits jumped 43.48 per cent to Rs 463.37 crore during the second quarter of this fiscal.

Revenues were also up 13.21 per cent to Rs 4,546.33 crore, while EPS stood at Rs 7.70 (Rs 5.63).

The bank’s asset quality is robust with Gross NPA ratio and Net NPA ratio at 2.47 per cent and 0.92 per cent, respectively as on September 30, 2012 compared with 2.38 per cent and 0.93 per cent, respectively during the same period last year.

Return on assets of the bank rose to 1.03 per cent from 0.83 per cent in the same period last year.

The scrip was trading at Rs 121.45, down 1.62 per cent on the BSE.
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Karnataka Bank conducts exporters’ meet in Ludhiana

Karnataka Bank, in association with the Federation of Indian Export Organisations (FIEO), conducted an exporters’ meet in Ludhiana recently, according to a bank release here on Monday. The meeting was organised to promote export business in Punjab, especially in and around Ludhiana, it said. Speaking on the occasion, P. Jayarama Bhat, Managing Director of the bank, said that the bank has earmarked Rs 1,100 crore for export credit disbursement during 2012-13, the release said. Chandrashekar Rao , Deputy General Manager of Karnataka Bank, said that the bank is committed to achieving an export credit target of 12 per cent of net bank credit. More than 150 exporters from Ludhiana region attended the meet, the release said.
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HDFC Q2 net up 18.5% at Rs 1,151 cr

Individual loan borrowings lifted Housing Development Finance Corporation’s (HDFC) net profit 18.5 per cent to Rs 1,151 crore in the second quarter ended September 30, 2012.

In the corresponding quarter of 2011, India’s largest private housing loan lender earned a net profit of Rs 970.70 crore.

For the half year ended September 30, 2012 the loan book stood at Rs 1,55,128 crore against Rs 1,26,992 crore a year ago.

“About 78 per cent of the increase in loan book was because of individual loans and the rest came from non-individual loans,” Keki Mistry, Vice-Chairman and CEO, said.

Realty prices

There will be no crash in real estate prices as the demand far outpaces supply, Mistry said.

“My own view is that there will be no crash in real estate prices as in a country like India as the demand is far greater than supply,” he said.

If there is a considerable increase in supply of houses, then housing prices might see a correction, he said.
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Bank of Baroda net profit up 12% in Q2

Bank of Baroda today reported a better-than-expected net profit of Rs 1,301 crore for the quarter ended September 30 this year.

This reflects a 12 per cent increase over the net profit of Rs 1,166 crore recorded in the same quarter last year.

Total revenue for the quarter under review increased 20 per cent to Rs 9,551 crore (Rs 7,986 crore).

M.D.Mallya, Chairman and Managing Director of the bank, expressed optimism that the current strong performance will continue in the coming quarters as well.

He also maintained the guidance of 19-20 per cent growth in advances and deposits for the current fiscal.
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PNB to raise headcount; expand network

Punjab National Bank (PNB) today said it will recruit about 6,000 to 8,000 personnel each year for the next few years and open 500 branches across the country in the current year.

“We will be recruiting 6,000-8,000 personnel each year for the next few years,” S R Bansal, Executive Director, PNB said here.

“As of now, we have over 5,800 branches across the country. In the current year, we plan to open another 500 branches. The new branches would include about 22 in Tamil Nadu and 10 in Tiruchirapalli circle alone,” he added.

Its new venture, PNB Pragati, which offers round the clock services, among other things, is in the pilot stage after its August 2012 launch, he said.

PNB will convert 500 existing branches into PNB Pragati in metro and urban locations before December 2012, Bansal said.

The 24x7 service would include withdrawal of cash, deposit of cash and cheque and updation and printing of passbooks in specially installed machines and trained staff at venue of the branches.

PNB has a customer base of 17 million. As of June 2012, net NPA stood at 3.34 per cent and CAR (Capital Adequacy Ratio) at 13 per cent.

To a query, he said the audited Q2 results would be released on October 26.

Earlier, he handed over two electrical water purifiers and their utility items to Arivalayam, a charitable trust run by Public sector BHEL for special children at BHEL Township.
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Sunday, October 21, 2012

Central Bank adopts new management solution to speed up process, cut costs

Central Bank of India has implemented a human resource management solution (HRMS) package to improve the productivity of its 36,000 odd employees, ensure skill development and chart out succession planning.

After automating all customer-centric functions through the core banking platform, the bank has done the same for its internal customers (employees), said Executive Director V.R. Iyer.

The HRMS package, which has been implemented by IBM, has automated 30 human resource (HR) processes, including pay roll, leave application, reimbursement of hospitalisation, newspaper, and leave travel concession, and booking of holiday homes.

“The HRMS package is based on the self-service concept. It has brought about considerable reduction in the turnaround time of the processes involved.

“Earlier, payroll processing in the central office used to take 12 hours. Now it takes just 20 minutes. We have provisionally estimated this would lead to savings of around 2,000 person days every month. The benefits are clearly visible,” said Iyer.

The public sector bank expects to see significant reduction in costs as a result of the HRMS. Due to automation of the 30 HR processes, every month it will save on one lakh sheets of paper. Further, it will save on the cost of courier and stationery.

“With all the HR processes being put on the self-service mode, sanction goes within a day or two. Otherwise, in the normal course it used to take about a week, 10 days, even 15 days for settlement of claims.

“There is transparency in the processes. There is no subjectivity involved and it is all rule-based. Centrally also, monitoring of the HR processes takes place,” said the ED.

Vanitha Narayanan, Managing Partner (Global Business Solutions), IBM, said the HR process transformation will give the bank sustainable benefits in terms of talent management, improvement in productivity, and support green agenda even as employees get transparency.

Central HR repository

The HRMS has a module for central HR repository. At the click of a button, officials can know the profile of staff; the qualification, experience, expertise, performance appraisal and posting.

Iyer observed that the repository is helping the bank in taking decisions on promotions, skill development, and transfers.

“Any type of HR analysis that we want can be done at the central office based on the management information system generated by the HRMS. So, it will also help substantially in succession planning,” she said.

e-learning module

Going forward, the bank plans to incorporate an e-learning module in the HRMS. Any employee who goes for training will be encouraged to post on the module what he has learnt.

“This way knowledge will be shared. This way talent building and skill development will happen,” said Iyer.

The bank also plans to have online tests on each product for employees. It will incentivise staff members to periodically take tests so that it helps them gain product knowledge. This, in turn, will help the bank identify key resources for deployment in growth centres in each of its 16 zones.


To objectively assess the contribution based on various parameters (low-cost current account and savings account deposits, recovery, third-party accounts, etc.) of every staff member, the bank will leverage the HRMS so that it can disburse incentives at monthly or quarterly intervals.

Iyer said that “This will help us engage with all the employees and ensure that the incentive (one per cent of the profit can be given to staff members as incentive according to the government directive) is shared with them.”
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Axis Capital to commence operations from Monday

With all regulatory clearances in place, private sector lender Axis Bank on Sunday said Axis Capital would commence operations from tomorrow.

Axis Bank has launched Axis Capital upon completion of the required legal processes for the transfer of the financial services business of Enam Securities to a wholly-owned subsidiary of the bank,” a statement issued here said.

Axis Capital combines Axis Bank’s financial strength and Enam’s expertise to create a vibrant financial services powerhouse by bringing together the bank’s commercial banking and debt capital markets franchise and the latter’s investment banking and equities franchise, it said.

Axis Capital will be headed by Manish Chokhani as its Managing Director and Chief Executive Officer.

“We now have compelling capabilities to service our corporate clients spanning credit, equity and advisory, creating an unbeatable value offering,” Chokhani said.

For the investors, Axis Capital offers access to and insights about corporates and a continuation of its established institutional and retail investor franchise, he said.

The investment and financial advisory business of Enam which provides solutions to institutional and corporate clients will also be a part of Axis Capital and will work in close conjunction with the bank’s private banking division.
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Syndicate Bank aims for 15% loan growth

Syndicate Bank is targeting a loan growth of 15 per cent and net interest margin of over 3 per cent in 2012-13, a top official said on Saturday.

“We are estimating about 15 per cent loan growth, that we are likely to achieve....Net Interest Margin (NIM) actually we are targeting 3 per cent plus for the year and that we will definitely meet,” Syndicate Bank Executive Director, Ravi Chatterjee, said on the sidelines of a launch here.

In 2011-12, Udupi-based public sector lender’s global advances grew by 15.94 per cent to Rs 1,25,617 crore.

Meanwhile, the bank here launched international gold debit card and RuPay kisan cards on the occasion of its 88th Foundation Day.

“The international gold debit card is for premium segment customers. The RuPay kisan credit card will help farmers to buy fertilisers and seeds,” Chatterjee said.

The premium customers having gold debit card would have the facility of Rs 25,000 withdrawal a day and point of sale transactions up to Rs 50,000.

RuPay Kisan credit card would also facilitate farmers to meet their short-term credit needs of crop cultivation, post harvest expenses, household consumption as well as working capital for maintenance of farm assets and allied agricultural activities.

RuPay is the domestic ATM/debit card payment system on the lines of international systems like Visa and Mastercard.

Besides, the bank also launched zero balance ‘Synd Navratna’ savings bank account and online donations facility to Prime Minister’s National Relief Fund.

“Even if one has zero balance, we will not levy any charge,” Chatterjee said.

The bank has over 2,700 branches including one overseas branch in London and two exchange houses in Qatar and Oman.
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KVB bags CNBC–TV18 award for consistent performance

Karur Vysya Bank has received the CNBC–TV18 Special Jury Commendation Award for ‘Consistent performance in growth and profits’ under the Small Banks Category for the year 2012.

The award was received by K. Venkataraman, MD and CEO of the bank, from C. Rangarajan, Chairman of Prime Minister’s Economic Advisory Council, at Mumbai on Wednesday.
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South Indian Bank net up 24% in H1 as interest margin improves

South Indian Bank posted 24 per cent growth in net profit at Rs 220.18 crore for the half-year ended September 30 against Rs 177.44 crore in the corresponding period of the previous year.

V.A. Joseph, Managing Director and CEO of the bank, stated that despite subdued growth of the economy during the first half, the bank could achieve this performance due to improvement in net interest margin.

The bank will be able to achieve the total business target of Rs 75,000 crore, 750 branches and 750 ATMs by March 31, 2013, as envisaged in the Vision Document 2008, he added.

The total business in the first-half increased from Rs 56,386 crore to Rs 67,110 crore on a year-on-year basis, registering a growth of 19.02 per cent.

While deposits grew 16.50 per cent, from Rs 33,038 crore to Rs 38,490 crore, advances went up 22.58 per cent, from Rs 23,348 crore to Rs 28,620 crore.

CASA grew 9.17 per cent from Rs 7,038 crore to Rs 7,684 crore.

The bank earned a total income of Rs 2,289 crore during the half year against Rs 1,751 crore in the corresponding period of the previous year, a growth of 30.75 per cent.

The net interest income (NII) increased 28.20 per cent, from Rs 464 crore to Rs 595 crore. The Net interest margin (NII) rose to 3.09 per cent (2.97 per cent).

Annualised earnings per share increased from Rs 3.13 to Rs 3.80. And book value per share rose from Rs 17.87 to Rs 21.19.

The capital adequacy ratio stood at 14.43 per cent (under Basel-II standards) against the regulatory requirement of 9 per cent.
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Corp Bank aims to disburse Rs 5,000 cr to SME sector

Corporation Bank is targeting to disburse Rs 5,000 crore loans nationally this year to the SME sector.

The bank is planning more visibility for the Small and Medium Enterprise sector, Corporation Bank Chairman and Managing Director, Ajai Kumar, told reporters here on Saturday.

In Kerala alone, Rs 500 crore will be disbursed as loans to the sector, he said.

Since small entrepreneurs are finding it difficult to get loans, loans of up to Rs 1 crore would be given by the bank to the sector without any collateral, he said.

There were also plans to introduce SME loan counselling, he added.

Meanwhile, the bank today launched SME loan festival bonanza, offering interest rate concession on various SME credit schemes offered by the bank.

To encourage entrepreneurs, bank offers various specialised and tailor made credit schemes suiting their credit and business requirements.

Interest rate concession of 0.50 per cent on the applicable rate on all SME credit scheme offered by the bank, additional interest rate concession of 0.25 per cent for women beneficiaries and 50 per cent concession on processing charges, he said.

The bank has drawn up appropriate strategies for increasing credit to this sector and offers specialised loan schemes at attractive interest rates designed to cater to the specific requirements of the SME sector.

Each SME sector is ably supported by dedicated team of Relationship Managers and exclusive Central Credit Processing Mechanism, Kumar said.

Along with the Customer Centric approach, the bank is aiming for focussed growth by adopting a targeted marketing approach that would help entrepreneurs convert their business blue print into a reality not only at a competitive cost, but in the shortest possible time, he added.
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