United Bank of India opens office in Myanmar

United Bank of India has commenced operations at its representative office at Yangon in Myanmar.

United Bank is the first bank from India to open an office in Myanmar. The setting up of a representative office is likely to give a boost to the Indo-Myanmar trade, said a press statement issued by the bank.

No financial transactions

Though the representative office will not handle any financial transaction, officials will maintain liaison with the Government, banks and traders and will extend help and cooperation toward resolving all issues relating to settlement of trade-related transaction between both the countries, the release said.

shobha.roy@thehindu.co.in

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Karnataka Bank eyes Rs 1-lakh cr biz in 3 years

Karnataka Bank is targeting a business of Rs 1-lakh crore by March 2015, according to its Managing Director.

Inaugurating the new premises of the Balmatta branch of the bank in Mangalore on Friday, P. Jayarama Bhat, Managing Director, said that the bank, which achieved 20 per cent growth in business in the last fiscal, is targeting 25 per cent business growth during the current fiscal.

“We have plans to achieve 30 per cent business growth in the next fiscal. We want to achieve a business of Rs 1-lakh crore by March 2015,” he said.

The bank, which has 514 branches, will take the total number to 550 branches by March 2013, he said.
Takeover rumours

Denying the takeover rumours in the market, he said: “Many rumours are doing rounds in this regard. There is no need for panic in this matter. Your Karnataka Bank will remain as yours.”

Bhat said that Karnataka Bank is not promoted by any individual institution or promoter.

vinayak.aj@thehindu.co.in

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Education loan scheme a top priority for UPA: Chidambaram

Education loans are one of the highest priorities of the UPA government, which is committed to making it an even greater success, Finance Minister P. Chidambaram has said. The Government is also confident of achieving the target of allocating 15 per cent of all bank loans to minorities, Chidambaram told Lok Sabha during question hour. Chidambaram reeled out statistics to show how education loans have been a success. 

In a span of three years, the banking system’s education loan portfolio has grown to Rs 52,480 crore. As many as 24.62 lakh accounts have been opened so far towards education loans. On loans to minorities, Chidambaram said that banks have already achieved a level of 14.8 percent and that it should be easy to achieve the 15 per cent target.

Srivats.kr@thehindu.co.in

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RBI extends deadline for new format cheques

Bank account holders can continue to use their old format cheques for another three months as the Reserve Bank of India has extended the deadline for banks to issue new format cheques with uniform security features till March next year.

The RBI, in a notification today, said: “Taking into consideration representations, it has been decided to extend the time up to March 31, 2013 for banks to ensure withdrawal of non-CTS 2010 Standard cheques and replace them with CTS-2010 Standard cheques.”

While most of the banks have confirmed that they are issuing only multi-city or payable at par CTS-2010 standard cheques at present, representations have been received from various stakeholders requesting an extension beyond December 31, it said.

As per earlier direction to all banks, the RBI had fixed December 31 as the last date for phasing out non-CTS (Cheque Truncation System) 2010 Standard cheques.

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RBI may cut rate by FY-13 end, says Uday Kotak

The Reserve Bank of India (RBI) is likely to slash the lending rate by about 0.5 per cent by March and inflation is likely to be trend down to around 7 per cent levels by 2012-13 fiscal end, Kotak Mahindra Bank Managing Director Uday Kotak said.

“My view is that between now and March, we should see about 50 basis points drop in repo (rate). That will happen in two stages. My sense is one, either in December or January and one before March,” Kotak said on the sidelines of Delhi Economics Conclave here.

Repo is the rate at which RBI lends money to the banks, which is at 8 per cent currently.

The RBI will announce its mid-quarter monetary policy review on December 18. The third quarter review of monetary policy is slated for January 29.

The RBI has so far resisted a widespread call for the growth-propping rate cuts for some time now, citing the elevated inflation.

Kotak also expected that inflation may come down to 7 per cent by March.

“I would believe that by March, we should see inflation around 7 per cent on the wholesale. But consumer price index is still pretty high and we should see more positive moves on that,” he said.

Inflation, as measured by the Wholesale Price Index (WPI), came down to 7.24 per cent in November from 9.46 per cent in the same month a year ago.

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Post office savings continue to shrink

The small savings maintained by Indians with the post office have dwindled over the past two years. The outstanding amount held by the post office shrunk by 0.5 per cent in the first half of FY13 after declining by 2.2 per cent in 2011-12.

This appears to have been on account of people shifting their savings to avenues offering a higher return. Once quite popular, certificate schemes have fallen out of favour due to the low rate of interest vis-à-vis bank fixed deposits, tax-free bonds and non-convertible debentures. The government had in November 2011 decided to link rates of these schemes with market rates to bolster their appeal but the move has not attracted investors.

While post office deposits witnessed a rise during the first half of 2012-13, subscription to various certificates saw a larger fall, resulting in a decline in overall small savings with the post office.

The cumulative corpus of savings bank, time deposits and recurring deposit schemes rose by 1.2 per cent in the first half of the fiscal, compared to 3.6 per cent erosion in 2011-12.

The outstanding amount parked in certificate schemes, on the other hand, fell by 3.7 per cent in H1, 2012-13, in the wake of a 2 per cent decline in 2011-12.

Postal Public Provident Fund investments rose by 2 per cent in the first half of 2012-13.

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ICICI Bank opens 101 rural branches across six states

ICICI Bank today opened 101 rural branches across six states as part of its financial inclusion plan that aims at providing banking services in unbanked villages.

These 'Gramin' branches will offer all the basic banking services such as savings bank account, fixed and recurring deposit, remittances, Kisan Credit Card, credit cards and tractor loans, ICICI Bank Executive Director Rajiv Sabharwal said here.

These branches were formally inaugurated in 19 districts across the states of Rajasthan, Andhra Pradesh, Gujarat, Maharashtra, Madhya Pradesh and Tamil Nadu, he said, adding, all these branches have been opened in small villages, which were so far devoid of any banking facility.

"We will continue our financial inclusion agenda in the years to come. It is our endeavor to expand financial inclusion of farmers by at least 10 times from approximately 3.5 lakh last year to 35 lakh by FY 2017," he said.

The country's largest private sector bank, he said, has also opened close to 2 million 'no frill' savings accounts this year taking the total number to around 12 million 'no frills' accounts, which is a key part of financial inclusion strategy.

As of November, ICICI Bank had 413 such rural branches across and with the addition of over 100 branches, it has crossed 501, he added.


Source: Economic Times

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Deutsche Bank India gets Rs 1,054 cr more capital to fund growth

Foreign lender Deutsche Bank today announced that it has increased its capital base in India by Rs 1,054 crore (about $194 million) to fund the bank’s growth plans.

With this capital infusion, the bank’s total capital base in India stands at nearly Rs 7,000 crore thereby strengthening its capital adequacy ratio to around 16 per cent. The increase is the sixth since 2007 and second in 2012, the bank said in a statement.

The capital base pertains only to India branches and excludes all other Deutsche Bank entities operating in India, the bank said.

The Germany-based bank’s India net profit-after-tax stood at Rs 823 crore during 2011-12 fiscal with a compounded average growth rate of 30 per cent over the last five years.

Ravneet Gill, CEO, Deutsche Bank India, said: “The capital increases reflect the importance of India franchise to Deutsche Bank’s global growth plans. India is one of the most significant markets for Deutsche Bank globally with market leading transaction banking & investment banking businesses and a rapidly growing asset and wealth management and retail footprint. This capital infusion will enable us to further deepen our client franchise in India. In particular, we will further expand our transaction banking and retail banking businesses.”

Beena.parmar@thehindu.co.in

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Probe against Deutsche Bank CEO over tax evasion in carbon trade

German prosecutors have opened investigations against Deutsche Bank co-CEO Juergen Fitschen and management board member Stefan Krause to probe tax evasion involving the trading of carbon emission certificates.

Fitschen, who took over the reins of Germany’s largest bank together with India-born Anshu Jain in June, is the highest ranking official to become the focus of an ongoing probe into the role of some employees of the bank in tax evasion and money laundering related to the EU carbon trade scheme.

Some of the employees of the bank have been charged with helping its clients to evade taxes estimated at over €300 million.

The prosecutor’s office in Frankfurt said on Wednesday it decided to extend its investigations to Fitschen, Krause and some other employees of the bank to determine whether they are hiding any relevant evidences related to tax evasion and money laundering.

Altogether 25 Deutsche Bank employees are currently under investigation and arrest warrants were issued against five of them, chief prosecutor Guenter Wittig said in a TV interview on Wednesday night.

Earlier on Wednesday, over 500 police officials and tax inspectors raided the headquarters of Deutsche Bank in Frankfurt as well as its branches and private properties in Berlin and in Duesseldorf.

The investigators charge that between 2009 and 2010, Deutsche Bank had helped an internationally operating ring of traders to buy emission certificates abroad without paying the value-added tax and to sell them among each other, enabling them to receive the tax returns legally.

Fitschen and Krause had signed Deutsche Bank’s tax declaration in 2009.

Fitschen headed the bank’s German operations at that time while Krause was the chief financial officer.

The EU’s emissions trading system to reduce CO2 emissions, sets limits on the emissions of industries and power plants and allows them to buy carbon permits for additional emissions if needed as well as to sell their surpluses.

In December last year, a judge at the regional court in Frankfurt sentenced six men of different nationalities to jail after finding them guilty of tax evasion in emissions trade between 2009 and 2010.

Investigations at that time showed that Deutsche Bank staff had cooperated with them.

Deutsche Bank confirmed Wednesday’s police raid and said it would continue to cooperate with the authorities.

In a statement, the bank said Fitschen and Krause were involved in the investigations as they signed the value added tax statement for 2009.

“The bank corrected this voluntarily a long time ago.

Unlike the public prosecutor’s office, Deutsche Bank is of the opinion that this correction took place in due time,” the statement said.

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Kotak Mahindra Cap ties up with SMBC Nikko for M&A advisory services

Investment bank Kotak Mahindra Capital Company has announced a strategic alliance with (SMBC) and SMBC Nikko Securities Inc, a wholly-owned subsidiary of SMBC for cross-border M&A advisory services between India and Japan.

Kotak Mahindra Capital Company is a subsidiary of Kotak Mahindra Bank while SMBC is the core financial institution of Sumitomo Mitsui Financial Group. SMBC Nikko is a full-service securities and investment banking firm in Japan.

In 2010, Kotak and SMBC entered into a Memorandum of Understanding for business cooperation across various businesses of mutual interest, subject to relevant regulations. Since then, both groups have collaborated in and are working on a number of areas such as trade finance, treasury products, corporate customer referrals, asset management and alternate assets.

Commenting on the alliance, TV Raghunath, Managing Director & CEO, Kotak Investment Banking said, “Japan is a priority market for cross-border M&A with India. The India-Japan corridor is one of the most important and active markets for cross-border M&A involving India. Till date in 2012, Japan ranks among the top 3 acquiring nations into India and 3 of the 10 largest announced M&A transactions involving India took place in this corridor. This is expected to increase in the future as the linkages between the two economies continue to grow.”

Kotak Investment Banking and GCA Savvian Corporation have mutually concluded their exclusive strategic cooperation agreement for M&A Advisory Services between India and Japan.

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Yes Bank enters credit card space with AmEx

Private sector lender YES Bank today announced its entry inot the credit card segment under a tie-up with American Express to offer credit cards for the high-value customer segment.

The premium cards -- American Express Platinum Reserve Credit Card, American Express Platinum Travel Credit Card and American Express Gold Card -- will be offered from the bank’s branches in seven cities.

The mid-sized bank will benefit from American Express' "membership rewards programme, service and access to a network of merchants across 200 countries," the bank said in a statement.

Rana Kapoor, Chief Executive Officer and Managing Director, said, "Credit Cards are a natural extension and will constitute an important part of our payments portfolio and the immense brand and franchise value of American Express is a complementary fit to our product suite. We will leverage each other’s strengths to provide valuable product offerings to our discerning customers."

Beena.parmar@thehindu.co.in

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Exim Bank to refinance $500 mn SME loans taken for tech upgrade

Exim Bank today said it would refinance $500 million in loans given by commercial banks for their technology upgrade to boost lending to export-oriented small businesses.

“We have taken an approval to launch the scheme about a month back and will make it operational before the end of the fiscal,” Exim Bank Chairman and Managing Director TCA Ranganathan told reporters here on the sidelines of an SME financing seminar.

He said banks can aggregate their portfolios devoted to technology upgrade by export-oriented SMEs in the manufacturing sector and get it refinanced from the Exim Bank.

The tenor of the loan can be up to seven years, Ranganathan said, adding, this will help banks take care of potential asset liability mismatches.

Exim Bank will raise the resources required to operationalise the refinance facility, and the final rates for banks will be subject to market conditions, he said.

When asked about the benefit to the borrowers and if this would help reduce the interest rates, he said the finer details of the scheme are being worked out.

Apart from this, the bank is also contemplating to launch a similar refinance facility for short-term loans with tenure of up to one year, to meet the working capital requirements of SMEs, Ranganathan said.

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5 banks launch Aadhaar-linked bank account

Five banks, including SBI, ICICI Bank and Axis Bank, today launched Saral Money bank account product which allows customers to open an account using Aadhaar card as address as well as identity proof.

The RBI has recently directed banks to accept Aadhaar letter as the proof of both identity and address if the address provided by the account holder is the same as that on the Aadhaar card.

“Through a product like Aadhaar-enabled KYC (Know Your Customer), we are bringing down the cost of account and that makes a product lot more attractive. And it will definitely further the cause of financial inclusion,” Axis Bank Managing Director and CEO Shikha Sharma said during the launch of Saral Money’, which is jointly launched by Axis Bank, ICICI Bank, HDFC Bank, SBI and Indian Overseas Bank.

Customers would be able to open a Saral Money banking account by providing Aadhaar letter as the proof of identity and address at any of these banks and the BC (business correspondent) outlets.

“Both for address proof and identity, Aadhaar can be used. To me of course, all of us would change our process and will not require a separate address proof (for opening an account). We needed it because of the regulatory requirement,” Sharma said.

The Visa payment settlement-based Saral Money account would enable the customer to make purchases, send money or receive government disbursements at the existing ATMs, point of sale terminals and proposed micro ATMs.

The service targets currently enrolled 210 million Aadhaar holders. The UIDAI plans to bring 600 million people under Aadhaar fold by 2015.

The first phase of the Saral Money rollout will include Delhi and National Capital Region and others parts of the country would be covered by the end of next year.

“This initiative will not only help the financially undeserved to access formal banking processes, but will also serve as a forerunner for the inclusive applications which we hope to see emerge on the Aadhaar foundational platform,” UIDAI Chairman Nandan Nilekani said.

Visa Group Country Manager of India and South Asia Uttam Nayak said this payment solution specifically targets India’s financially excluded regions and will support cash transfer of subsidies, scholarships and other government disbursements.

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IndusInd Bank raises Rs 2,000 cr thru QIP

IndusInd Bank raised Rs 2,000 crore ($369.11 million) to conclude its third qualified institutional placement (QIP), the bank informed the BSE on Tuesday.

The bank allotted a total of 5.21 crpre new equity shares. These shares constitute 9.98 per cent of the total equity shares of the bank following the QIP issue, which was launched on November 26.

The QIP issue was priced at Rs 384 an equity share equivalent to 2.7 per cent premium to a floor price of Rs 374.05, the private sector bank said in a statement.

Romesh Sobti, CEO and Managing Director, said, “Although the bank is well capitalised, this equity raising will ensure that its growth continues apace.” On Tuesday, the shares of IndusInd Bank ended lower by 1.27 per cent at Rs 411.90 on the BSE.

Beena.parmar@thehindu.co.in

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HSBC to pay $1.9 b to settle money laundering case in US

HSBC will pay out a total of $1.92 billion to US authorities to settle long-running investigations into breaches of US anti money-laundering rules. The figure is slightly higher than the $1.5 billion that HSBC had flagged up, though this settlement is expected to be a final amount, bringing to an end a period of uncertainty with US authorities.

The bank also soon hopes to reach an agreement with Britain’s Financial Services Authority. This agreement is expected to focus on the bank’s compliance procedures and monitoring systems, rather than involving a fine.

The bank reiterated its apology, pledging to continue to work with regulators across the world and to strengthen its procedures. “We accept responsibility for our past mistakes,’ said CEO Stuart Gulliver on Tuesday. “Over the last two years, under new leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters.”

The settlement covers agreements with eight different bodies in the US, including a deferred prosecution agreement with the US Department of Justice, avoiding any prosecution so long as certain conditions are met. Under that agreement, over a five-year period an independent body will monitor some of the changes already brought in by the bank, and any further ones recommended.

The bank has undergone a major restructuring of its procedures, including enhancing the position of Group compliance, and its ability to monitor national compliance divisions, bringing in guidelines to limit its involvement in high-risk countries, and conducting a $700 million review of its “know your customer” files. The payment to regulators is expected to fall within the current financial year.

HSBC is the latest foreign bank to reach a settlement with US authorities over breach of regulations. On Monday, Standard Chartered said it would pay a total of $327 million to US regulators, after agreeing earlier this year to pay New York’s state regulator $340 million over claims it had schemed to hide up to $250 billion of transactions with Iran.

Others to have faced fines include ING, which paid out $619 million, and Barclays, which two years ago paid out $298 million. In a 330-page report published in July, the US Senate Permanent sub-committee on investigations accused HSBC of “playing fast and loose with US banking rules,” and having a “pervasively polluted,” banking culture, alleging that it had acted as a means for Mexican drug cartels to send illicit funds to the US, and breached sanctions relating to Iran.

While the agreements announced on Tuesday may end the uncertainty over the US investigations, analysts at Bank of America Merrill Lynch pointed to a number of “significant litigation issues” that remained for the bank, including a $3.5-billion claim relating to Household International (now HSBC Finance), the US division that made billions of dollars of losses during the sub-prime crisis, as well as other actions related to Bernie Madoff, and the Libor-fixing scandal.

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Single document having identity, address proofs enough to open bank account: RBI

Banks can accept documents such as Passport, PAN Card, Drivers’ Licence, Aadhaar letter, and NREGA Job Card as proof of identity as well as address, according to the Reserve Bank of India.

However, this is subject to the address on the document submitted for identity proof by the prospective customer is the same as that declared by him/her in the account opening form.

The single document submission for proof of identity and address is aimed at easing the burden on the prospective customers in complying with know-your-customer requirements for opening new accounts, the RBI said in a notification.

So far, banks have been calling for separate documents for verification of identity and address even though the documents for identity proof (Passport, PAN Card, Drivers’ Licence etc.) also carry the address of the individual concerned. This was to comply with their obligation under the Prevention of Money Laundering (PML) Act, 2002.

The RBI has also done away with the requirement of introduction from an existing customer of the bank for opening of bank accounts.

Since introduction is not necessary for opening of accounts under PML Act and Rules or Reserve Bank’s extant KYC instructions, banks should not insist on introduction for opening bank accounts of customers, the central bank said.

ramkumar.k@thehindu.co.in

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Credo ups stake in IndusInd Bank, buys 28.6 lkh shares for Rs 119 cr

Credo India Thematic Fund today hiked its stake in IndusInd Bank by picking up 28.6 lakh shares in the private sector lender for about Rs 119 crore.

Credo, which held 1.53 crore shares or 3.28 per cent stake in IndusInd Bank at the end of September quarter, bought 28.6 lakh shares in the private sector lender (amounting to 0.6 per cent holding), the stock exchanges data showed.

The shares were purchased on average price of Rs 415.5 aggregating the deal size to Rs 118.83 crore.

The shares were acquired from Banque Profile De Gestion Sa, one of the shareholder of the bank. At the end of July-September quarter, the entity owned 1.24 crore shares or 2.65 per cent holding in IndusInd Bank.

IndusInd Bank scrip rose 1.41 per cent to close at Rs 417.20 on the BSE.

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Union Bank launches Xperience branch in Kolkata

Union Bank of India launched its 181st Union Xperience Branch in Kolkata on Monday. This is the seventh such branch of the bank in the city.

Union Xperience branches are a part of the bank’s initiative towards bringing superior customer experience for its customers. The bank has introduced automation through self service machines like pass book printers, cheque deposit machines and queue management among others and also completely revamped the sales and service model in these branches, said a bank press statement.

The bank also launched its green banking service at the branch, said Chairman and Managing Director D. Sarkar. Customers in Union Xperience branches will not require pay-in slips or withdrawal forms for cash and transfer transactions.

The bank has launched such branches in 16 cities.

The bank aims to take the module to 250 branches by March-end and plans to bring all its metro and urban branches under Union Xperience roll-out in a phased manner.

shobha.roy@thehindu.co.in

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Kotak Mahindra deploys Microsoft products

Kotak Mahindra Group has deployed Microsoft Exchange 2010 and Lync 2010 for better collaboration and communication among its employees.

The group implemented the technology platform as part of a unified communications strategy across its different business units. The deployment supports improved employee efficiency and better IT management.

This implementation involved consolidation of server computers across the group leading to improved cost-efficiency from higher utilisation of resources, standardisation and improved manageability of the IT infrastructure.

The deployment provides support for enhanced communication and collaboration across all employees of the group.

Adoption of the technologies is speeded up by the fact that the products have an interface similar to other Microsoft products and they are intuitive to use, according to Kotak Mahindra officials.

The familiarity of the products further made it easy for the employees to start using it right away.

“With Exchange 2010 and Lync 2010, Kotak Mahindra Group is assured of a reliable, unified communications and collaboration platform that is backed by a comprehensive service level agreement and our 24/7 customer support is included at no additional expense,” said Aruna Rao, Executive Vice-President, Kotak Mahindra Bank.

“We strive to help our employees collaborate better with each other, and Microsoft technology offers the agile ability to grow as needed,” she added.

“The deployment of Exchange 2010 and Lync 2010 at Kotak Mahindra Group will support employees in collaborating in a seamless fashion,” said Ramkumar Pichai, General Manager, Microsoft Office Division, Microsoft India.

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IOB to raise Rs 800 cr via perpetual bonds

Indian Overseas Bank’s board of directors has approved raising of Rs 800 crore by way of tier 1 (perpetual) bonds - a bond with no maturity date - in one or more tranches, the bank said in a notification to the stock exchanges.

The announcement led to jump in IOB's share price by 1.61 per cent to Rs 85.35 on the BSE.

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South Indian Bank eyeing 25% growth this fiscal

Kerala-based South Indian Bank hopes its business will touch Rs 1-lakh crore by March 2014. As on September 30, 2012, the bank’s business stood at over Rs 67,000 crore.

According to Cheryan Varkey, Executive Director, South Indian Bank will look to achieve 25 per cent growth in its business this fiscal. The bank’s advances stood at Rs 29,000 crore as on September 30.

“We have grown by 23-24 per cent till date (up to September). Though the current economic conditions do pose a challenge in achieving this growth, we are hopeful of growing our business as per our targeted plan this year,” Varkey told Business Line at the inauguration of its corporate branch here on Monday.

The bank will focus on small loans, primarily aimed at the traders’ community.

“We are looking at tapping traders in the textiles, pharmaceuticals and jeweller community to grow our advances,” he said.

Talking about asset quality, Varkey said, the bank would aim to bring down the share of gross non-performing assets to around 1.2 per cent of its total advances by the end of this fiscal. Gross NPA of the bank currently stands at 2 per cent.

Nafed loan

“Our asset quality has been good except for our Rs 150-crore exposure to Nafed (National Agricultural Cooperative Marketing Federation of India Ltd) which has slipped into NPA during the second quarter due to employee-related fraud,” he said.

The bank has already made a 15 per cent provisioning during the second quarter and plans to provide 15-20 per cent every quarter for the next 3-4 quarters. “We hope that Nafed will be out of our books by March 2014,” he said.

According to Varkey, there is likely to be some pressure on margins as the yield on advances was getting slightly suppressed.

The bank, which had a net interest margin of 3.1 per cent during the quarter ended September, aims to achieve a NIM of 3 per cent by the end of this fiscal.

shobha.roy@thehindu.co.in

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Standard Chartered to pay $327 mn to resolve US sanctions case

British bank Standard Chartered will pay the United States $327 million to settle charges it violated US sanctions on Iran, Myanmar, Libya and Sudan, the US Treasury announced today.

US authorities said the bank had stripped messages on financial transfers routed through US banks of information that would show the beneficiaries were businesses and entities that fell under US sanctions.

The fines from the Treasury’s Office of Foreign Assets Control (OFAC) and other US federal and local regulators took to $667 million the total the bank has been charged for sanctions violations.

In August the New York state banking watchdog fined Standard Chartered $340 million in the same investigation, saying it hid 60,000 transactions with proscribed Iranian clients worth $250 billion over 10 years.

“Today’s settlement is the result of an exhaustive interagency investigation into Standard Chartered Bank’s attempts to violate US sanctions programmes through the ’stripping’ from payment messages of critical information,” said OFAC Director Adam Szubin in a statement.

The sanctions avoidance involved mainly the bank’s London head office and its branch in Dubai, which masked the details of messages so US authorities would not see the real identity of those sending and receiving the payments.

“As a result, millions of dollars of payments were routed through US banks for or on behalf of sanctioned parties in apparent violation of US sanctions,” the OFAC said in a statement.

The OFAC added that the settlement also covered eight apparent violations of US sanctions on drug lords.

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Allowing insurers to invest up to 30% in a co is imprudent: IRDA

Raising the investment limit of insurers to 30 per cent of the paid-up capital of a company would be an “imprudent” move, cautioned insurance regulator IRDA.

Pegging the investment limit at 30 per cent would lead to insurance companies behaving like venture capital undertakings, which would not be warranted, according to IRDA Chairman, J. Harinarayan.

“The question is whether insurance investment must be as aggressive as venture capital companies.

“I think not. Insurance companies must be conservative in their approach”, Harinarayan said on the sidelines of a FICCI Health Insurance conference in the Capital.

The Government has circulated a draft that seeks to increase investment limit of Life Insurance Corporation from the current 10 per cent to 30 per cent of the paid-up capital of the investee company.

“The level suggested in the draft is very high. These are the levels at which venture capital companies invest as per SEBI norms”, he said, adding that raising investment limit to 30 per cent would also raise issues on SEBI takeover code.

Acquiring a 25 per cent stake in a company would trigger open offer obligations for the insurance companies, resulting in their taking controlling interest.

Insurance companies should not be in the business of running companies, he indicated.

Harinarayan also said that even at the current level of 10 per cent, there was enough room for insurance companies to invest.

Asked if IRDA will allow private insurers to invest higher than the 10 per cent level if the LIC’s investment limit were to be raised to 30 per cent, he replied in the negative. “No certainly not, I think it is very very imprudent”.

Demands tax breaks for pension products

The suggested that a separate bucket be introduced in the income-tax law to provide for tax breaks on investments in insurance policies.

This would encourage citizens to buy more insurance products, IRDA Chairman Harinarayan said when asked about his Budget wish-list.

He also said that the current provision in income-tax law that exempts the sum received under a life insurance policy should be extended for long-term insurance policies as well.

On pension products, Harinarayan suggested that pension products approved by IRDA should be given the same tax breaks as currently available under the new pension system (NPS).

Srivats.kr@thehindu.co.in

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Indian Overseas Bank to focus on rural lending, to open 40 agri branches

Indian Overseas Bank is planning to open 40 specialised agri business branches to focus on rural lending, with two of the branches in Andhra Pradesh, according to M. Narendra, Chairman and Managing Director of the bank.

He told presspersons here on Monday after inaugurating the new premises of the regional office of the bank, that 12 such branches would be opened soon in Karnataka, Maharashtra, and Odisha. “There is immense potential for such branches in Andhra Pradesh too, and we are initially planning two such branches in Godavari district,” he said.

He said the branches would focus on lending to small farmers and agri-processing units rather than promoting high-tech agriculture. He said 70 per cent of the bank’s branches were in rural and semi-urban areas. During the current financial year, apart from crop loans, the bank had pumped in additional investment of Rs 616 crore for agri-processing units.

Apart from agriculture, he said, the bank had floated special loan schemes for urban horticulture. Under the scheme, an individual could borrow Rs 25,000 to Rs 2.5 lakh for raising a roof garden or a backyard garden in his or her house, while institutions could borrow up to Rs 25 lakh. The bank wanted to lend at least Rs 100 crore under the head during the year.

He said the bank was also concentrating on medium and small enterprises by opening special SME loan processing centres and on the retail business by opening rapid retail centres. IOB had also provided credit linkage to 4,35,000 women's self-help groups, Narendra said.

As the bank was rapidy expanding, he said, it had recruited 1,500 officers and 1,500 clerks recently and 500 special credit officers would be appointed. The bank’s total business amounted to Rs 3,45,000 crore. The bank had set up six branches overseas and four representative offices. The representative offices in China, Dubai and Vietnam would soon be upgraded into full-scale branches.

NPAs: He said non-performing assets of the bank were on the slightly higher side, but they were still within manageable limits. “As on September 30, the gross NPAs stood at Rs 5,930 crore (inclusive of Rs 630 crore contributed by overseas branches), roughly 3.87 per cent of advances. The net NPAs stood at Rs 3,378 crore, roughly 2.25 per cent. We are expecting economic recovery in the near future and we will recover the amount. Certain sectors such as iron and steel and textiles have contributed to the NPAs. But there is really no cause for concern,” he added.

sarma.rs@thehindu.co.in

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Union Bank of India expects Rs 1,000 cr infusion

Union Bank of India expects fund infusion of about Rs 1,000 crore as part of recapitalisation plan of the government.

“We have applied and we are expecting about Rs 950—1000 crore (capital infusion during the current fiscal),” said D Sarkar, Union Bank of India Chairman and Managing Director.

“The government has agreed in—principle to infuse the capital and may be in week’s time we will be getting information from the government,” he added.

Last fiscal, the state—owned bank got capital support of Rs 280 crore.

With the infusion, Tier I capital of the bank will go up, he said, adding, it was 8.17 per cent as on September 2012.

The capital infusion will help the bank to enhance lending to productive sectors.

The government has made budget provision of Rs 15,000 crore for recapitalisation of public sector banks in the current fiscal.

On the stressed assets, Sarkar said, rise in NPA is reflection of economic situation. With improvement in the economy, things would get better.

“We aim to bring down the gross NPA to 3 per cent of the total advances by March 2013,” he added.

Gross NPA of the bank stood at 3.66 per cent at the end of first half of the current fiscal.

Asked about the expectations from upcoming mid—quarter review of monetary policy by RBI, Sarkar said: “As a banker I expect that there should be some reduction in the policy rates. It will boost up the sentiment and economic sentiment.”

There is expectation that repo rate or CRR could come down by about 25 basis points, he said.

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Union Bank gets in-principle nod for opening offshore unit in Dubai

Union Bank of India has received in-principle approval for opening an offshore banking unit in Dubai International Finance Centre (DIFC), D. Sarkar, Chairman & Managing Director, has said.

The public sector lender is confident of setting up at least three units abroad in 2013 as part of efforts to expand its overseas footprint, Sarkar said.

Besides Dubai, the bank is also looking to open a subsidiary in London, a branch each in Sydney and Antwerp in calendar year 2013.

Having a presence in DIFC will help the bank raise money in foreign currencies and on-lend to borrowers in non-rupee denominations.

Sarkar was in the capital for the launch of the bank’s 180th ‘Union Xperience’ branch. This branch has been opened under its ‘Nav Nirman’ transformation initiative, which aims at delivering superior customer experience.

“We are at an advance stage of getting clearances and completing the formalities for London subsidiary and a branch in Sydney,” Sarkar said.

At present, Union Bank’s international footprint includes a full-fledged branch in Hong Kong and a representative office each at London, Sydney, Beijing and Shanghai.

Srivats.kr@thehindu.co.in

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