UBI engages Accenture for transformation programme

United Bank of India (UBI) has entered into an agreement with management consultancy firm Accenture to support the bank’s strategic transformation programme.

CMD of UBI Bhaskar Sen said the bank was embarking upon a transformation programme to enhance the productivity by harnessing technology and operational changes.

“Accenture will provide management consulting advisory services to support the bank change programme”, Sen told reporters here on Saturday.

He said the consultancy firm would also assist UBI in its talent and human resource strategies by helping to strengthen the bank’s manpower planning in fostering meritocracy.

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IRDA: Insurers to open 25% new offices in smaller areas

Insurance sector regulator IRDA has proposed to make it mandatory for insurers, who have been in business for 10 years, to open at least 25 per cent of new offices in areas that have a population less than 1,00,000.

“An insurer that has completed 10 years of business is proposed to be mandated to open at least 25 per cent of new places of business in places where population is not more than 1,00,000,” IRDA has proposed in its Draft Exposure on Insurance Regulatory and Development Authority (Places of Business) Regulations, 2012.

The proposed regulations have been made to help increase the penetration of the sector in rural and semi-urban areas, IRDA said.

The existing regulatory approach of requiring insurers to follow certain requirements while opening/closing/relocating various places of business deserve to be strengthened.

IRDA said an insurer having solvency ratio of 1.5 and expenses of management within the extant limits in the preceding three financial years are proposed to be permitted to open new places of business, in places where population is not more than 1,00,000, 15 days after submitting the information on the same.

“The proposed limit of 1,00,000 on population is, to encourage the opening of places of business in Tier 2 and below towns/villages,” it said.

It added that in respect of all other places of business, the insurers will be accorded approvals on an aggregate basis once in a financial year, based on their expansion plans.

However, insurers are allowed to approach IRDA for any urgent business proposals for opening any other places of business, it added.

The Draft Exposure also proposes to mandate insurers to offer minimum policyholders’ services such as collection of premiums/proposal deposits and status confirmation of policy service requests in all the places of business.

It has also been proposed in the draft regulations “that the objective of opening a new place of business shall be for long run, shall not be for short term durations”.

Further, IRDA said closure/relocation of the places of business by insurers should be after due consideration of all the factors including possible inconvenience to its policyholders.

“A minimum of 2 months advance notice on the proposed relocation/closure should be notified to policyholders serviced by that place of business along with information on alternate arrangements being made to provide services to them.

It said the details of relocation as well as closure of place of business shall be reported to IRDA soon after any such move.

Irda has invited comments on its draft regulations by various stakeholders.

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SIDBI, IOB ink pact to launch risk sharing facility

Small Industries Development Bank of India today signed a memorandum of understanding with Indian Overseas Bank to launch the scheme of risk sharing facility-II for guaranteeing collateral-free credit facilities to micro and small enterprises (MSEs).

Under the scheme, collateral free and /or third party guarantee free credit facilities over Rs 100 lakh and up to Rs 200 lakh sanctioned to eligible MSEs are proposed to be guaranteed through select member lending institutions of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

CGTMSE, set up by Government of India and SIDBI, offers collateral-and-third party guarantee free credit facilities to enable enhanced flow of credit to the MSE sector.

The scheme will enable banks to take up MSEs financing as a viable and profitable business proposition, by sharing the credit risk of participating banks, while at the same time, making participation contingent on better credit assessment and risk identification by banks, SIDBI said in a statement.

M. Narendra, Chairman and Managing Director, IOB, said, “The bank is focusing on lending to the MSME and the agricultural sectors.”

Beena.parmar@thehindu.co.in

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IDBI Bank launches scheme for urban poor

IDBI Bank today launched the ‘Urban Financial Inclusion Programme’ (UFIP) in Mumbai to expand its banking facilities to those financially excluded in urban areas.

It aims to begin by initiating liability business, by offering savings bank and current account facility, recurring deposits and fixed deposits for the local people. There is scope for providing insurance and investment services to the people by imparting financial literacy, the public sector bank said in a statement.

According to the bank’s assessment, over 2,500 washermen labour, among other residents, operating in the Dhobi Ghat area (where the programme was launched) in Mumbai , have variable income levels and require remittance facility to their family or relatives outside Mumbai on regular basis.

As part of the UFIP, accounts with limited or relaxed KYC would be opened and smart cards would be provided to customers to do deposit, withdraw and remit money through business correspondent model.

In addition, remittance facility through National Electronic Funds Transfer (NEFT) and M-Remit through the Interbank Mobile Payment Service (IMPS) would be provided to the customers in the area, the bank said.

 “UFIP has been introduced with the view to uplift the urban poor. Financial products such as remittance, loans and savings account are the foremost needs of the urban poor. Managing savings is critically important but often neglected leading to absence of a secured source of finance,” said Reserve Bank of India’s Deputy Governor, K C Chakrabarty.

At present, IDBI bank has an overall network of 1,016 branches and 1,595 ATMs.



Beena.parmar@thehindu.co.in

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Bank strike a total success: AIBEA

Nearly five lakh bank employees stayed away from work, paralysing banking operations in many parts of the country.

However, employees of SBI Group (about 3 lakh) did not participate in the strike, but provided "fraternal support" to bank employees of other public sector banks, it is learnt.

SBI employees did not join the strike and the bank was not closed.

"Today's strike has been a total success. As per reports reaching us from other centres, the day-long strike has paralysed banking operations in all places," C.H.Venkatachalam, General-Secretary of the All India Bank Employees Association (AIBEA), told Business Line here.

Cash transactions were affected, clearing operations were not held, forex transactions and money market transactions were affected, Venkatachalam said.

"ATM cash became dry in certain places," he said.

The main intent of the day-long strike was to draw the attention of people to the danger of banking reforms being pursued by the Government through the Banking Laws (Amendment) Bill 2011, Venkatachalam said.

Even as most bank employees struck work, the Finance Minister P. Chidambaram moved the Banking Laws (Amendment) Bill for consideration in Rajya Sabha today.

srivats.kr@thehindu.co.in

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Karnataka Bank opens new delivery channel for customers

In its efforts to create additional delivery channels to customers, Karnataka Bank recently launched a new service — ‘KBL Mobile.’

Mobile banking transactions are those where customers undertake banking transactions by using pre-registered mobile phones with the bank.

According to P. Jayarama Bhat, Managing Director of the bank, safety and convenience are the highlight of ‘KBL Mobile.’ In the mobile banking services, utmost importance is given to maximum convenience in usage to the customer. Adequate caution has been taken in protecting the customer’s interest in terms of safety and security, he said.

On the target for the number of customers under mobile banking, he said: “To begin with, our bank is proposing to have over one lakh customers subscribing for ‘KBL-Mobile’ services.”

Karnataka Bank wants to make use of mobile banking services as a financial inclusion platform by reaching out to large section of people across India, he said.

Transaction limits

At present, the total transaction amount limit is specified at Rs 50,000 a day within the bank and bank-to-bank (intra-bank and inter-bank). The bank has set the transaction limits based on risk perceptions and it is fixed at Rs 50,000 a day, inclusive of all transactions, in the high-end mobile sets enabled with GPRS/J2ME (encrypted end-to-end handsets).

However, for other mobile handsets, under SMS mobile banking (unencrypted format), the limit has been fixed at Rs 5,000/ day.

To activate the services, customers are required to register at their base branch and the facility will be rolled out across India.

On successful registration, ‘mobile banking user id’ and ‘mobile banking PIN (MPIN)’ will be delivered to the customers’ registered mobile number through SMS. The customer needs to activate the facility by using this ‘user id’ and ‘MPIN.’

The mobile banking services to the customer are inclusive of enquiry option, requests, fund transfer, Karnataka Bank ATM/branch locators, m-commerce transactions, payment of utility bills and feedbacks to the bank.

With the approximate mobile subscriber base of more than 900 million in India, mobile banking services is an opening to enable the country achieve inclusive growth. It enables customers access money any time, anywhere, he added.

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Central Bank to open 9 branches

Central Bank of India will open three new Branches in the Mumbai region at Kandivli (E), Diamond Bourse (BKC) and Dharavi on the occasion of its 102nd Foundation Day on December 21. The public sector bank will also inaugurate six branches at Uran, Kharghar, Nerul, Kopar Khairane, Seawood, and a retail asset Branch at Sanpada. It will also unveil 5 ATMs in Navi Mumbai.

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YES Bank launches mobile point of sale services

Private sector lender YES Bank on Thursday launched a mobile point of sale (mPOS) service allowing merchants to use a mobile device as a payment collection mechanism.

Under this service, the merchants can use a mobile phone-based internet connectivity to facilitate debit or credit card payments.

For this, the mid sized bank has developed mPOS card reader device ‘Dongle’ that can be inserted into any mobile phone to access the application of the bank. The merchants can buy the Dongle for Rs 2,000 and incur a rental in the range of Rs 250 to Rs 500 on any additional integration over and above the merchant service fees.

“This is largely targeted at any merchant that requires home delivery service for payment collection especially high-end corporates, insurance agents, restaurant chains and e-commerce platforms among others offering cash delivery,” said Chitra Pandeya, Senior President, Cards and Direct Banking.

Beena.parmar@thehindu.co.in

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ING Vysya Bank appointment

ING Vysya Bank has appointed Sanjeev Aga as an additional director of the bank effective December 17. Bank’s release to exchanges said decision was taken by the Board of Directors of the Bank at its meeting held on November 30. Aga is to hold office up to the date of 82nd Annual General Meeting of the Bank to be held in the year 2013. He will be a Non-Executive and Independent Director.

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ATMs, e-payment options take sting out of bank strikes

“Is there a bank strike today? I am not aware and not bothered.”

This is how 24-year-old Vivek Sarma, who works for TCS, responded, when asked on the impact of Thursday’s bank strike, at an ATM located in Lakdikappool in the heart of the city here.

In fact, he is not alone and many belonging to Gen-Y responded in a similar vein.

Compared to earlier days when bank strikes had brought the normal financial world of the public to a halt, bank-strikes these days seem to be a non-issue for many, thanks to technology.

The increasing presence of ATMs, usage of Internet banking and e-payment gateways are obviously working in favour of bank customers these days.

“I think technology made bank-strikes irrelevant for many because of increasing use of alternative channels,’’ B.A. Prabhakar, Chairman and Managing Director, Andhra Bank, told Business Line.

The data from the country’s largest bank support this. The percentage of total transactions on alternative channels had gone up to 35.14 per cent in State Bank of India as on September 30, 2012, compared to 31 per cent in the year-ago period.

“From booking movie tickets to paying examination/recruitment test fees is happening mostly online, bank-strikes tend to remain largely as an internal matter though some transactions like clearing may get impacted sometimes,’’ said a senior SBI official.

In rural areas, the impact could be higher, he added.

According to M. Bhagavantha Rao, Managing Director, State Bank of Hyderabad, electronic mode is being used mostly for clearing/transfer of funds.

About 7 lakh bank employees belonging to four unions are striking work today in protest against Banking Laws (Amendment) Bill.

naga.gunturi@thehindu.co.in

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CanMobile - banking while you are on the move

Canara Bank, established in 1906, has been introducing a host of services to cater to the customer’s needs.

The bank is one of the largest with a customer base of 4.52 crore, and a dynamic market presence across the country and overseas.

The introduction of technology products has been a huge challenge in the banking industry, as it was the banks’ responsibility to deliver through the alternate banking channels — directly into the customer’s hand and also ensuring it to be safe and secure. Mobile banking is one such technological product that has enormous advantages for the bank and the customer.

While some banks launched mobile banking at an early stage under different SMS and GPRS-based platforms, Canara Bank worked hard to introduce a strong and secure solution for mobile banking to facilitate its customers.

Canara Bank launched a full-fledged, safe, secure, and instant mobile banking service under the name ‘CanMobile’ on June 6, 2011, which is accessible in all platforms (SMS, GPRS, WAP, USSD) and works on all types of mobile handsets.

Canmobile is equipped with facilities like balance enquiry, mini statement, ATM locator, intra-bank fund transfer, inter-bank fund transfer and mobile recharge.

Interbank transaction solution is provided on NPCI’s IMPS platform. Unlike NEFT, this is a superior technology that offers an instant inter-bank transfer 24X7.

Canara Bank was the first nationalised bank to implement the inter-bank fund transfer using IFSC code and account number, and also the first bank to introduce IMPS fund transfer facility at ATMs.

To add more services

The bank plans to add more value-added services on CanMobile and is moving towards delivering a steady and reliable alternate banking channel in the hands of valued customers to serve them better.

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SIDBI inks pacts with RRBs, urban co-op banks in Bengal

The Small Industries Development Bank of India (SIDBI) has entered into agreements with eight regional rural banks (RRBs) and urban co-operative banks in West Bengal.

SIDBI has already signed memorandums of understanding with the RRBs and co-operative banks for increasing credit flow to the micro, small and medium enterprises (MSMEs) in the region, said a press statement issued by SIDBI.

The MoUs would aim at training the staff of RRBs and co-operative banks in project appraisal, monitoring and collection as also providing free access to software on a down-scaling methodology developed for lending to micro enterprises.

“The down-scaling model focuses on cash flow-based lending instead of the traditional security-based lending, which is important for small and tiny enterprises,” the release said.

shobha.roy@thehindu.co.in

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Rs 1.7 lakh crore home loans may be disbursed this fiscal

Banks and housing finance companies are expected to collectively disburse home loans aggregating Rs 1,70,000 crore in the current fiscal, up from Rs 1,30,000 crore in the previous fiscal, said R.V. Verma, Chairman & Managing Director, National Housing Bank.

There is good demand for home loans in the tier-II and tier-III centres as house prices are moderate. A majority of the buyers are end-users and therefore delinquencies are relatively lower, Verma said.

India’s largest lender, State Bank of India, has already sanctioned Rs 20,000 crore of home loans in the first nine months of the current fiscal. In the year 2011-12, SBI disbursed Rs 28,000 crore to about two lakh units.

“Home loan growth has been quite robust since August. Our growth this year will be better than last year,” R.K. Saraf, Deputy Managing Director, State Bank of India said. The average loan size of SBI is about Rs 12 lakh.

Housing Finance Development Corporation (HDFC), the country’s largest housing finance company, reported a 31 per cent rise in disbursements in the first six months of the current year, said Keki Mistry, Vice-Chairman and CEO.

The average loan size of HDFC is about Rs 21.5 lakh.

Property prices

There is a need to index priority sector lending in housing to appreciating property prices, according to a research paper authored by Professor Tarun Ramadorai, University of Oxford.

“Property prices in cities like Mumbai have shot up significantly. So, is there a need to increase the priority sector classification for housing loan beyond the present Rs 5 lakh? This needs to be examined,” Ramadorai said in his presentation at a seminar jointly organised by the Centre for Advanced Financial Research and Learning and NHB.

The research also showed that reclassification of non-performing loans from 180 days to 90 days have led to better recovery of home loans as lenders are actively managing their loan portfolios.

It also shows that the recovery law (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) has helped in the loan recovery process.

satyanarayan.iyer@thehindu.co.in

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PSU bank unions on nation-wide strike today

New Delhi: Four bank employee unions will go on one-day strike today to protest the Banking Laws (Amendment) Bill and merger plans of banks.

The unions decided to go ahead with the strike after the conciliatory meeting with Indian Banks' Association before the chief labour commissioner here failed, AIBEA General Secretary C H Venkatachalam said.

Besides All India Bank Employees Association (AIBEA), Bank Employees Federation of India (BEFI), All India Bank Officers' Association (AIBOA) and National Union of Bank Employees (NUBE) are participating in the nation-wide strike.

The unions claimed that about 7 lakh employees of various public sector banks would participate in the strike.

The strike follows Lok Sabha clearing Banking Laws (Amendment) Bill after the government dropped controversial provisions relating to allowing banks to trade in futures.

The Bill paves the way for foreign investments in the sector and establishment of new private banks.

The Bill will allow RBI to supersede boards of private sector banks and increase the cap on voting rights of private investors in PSBs to 10 percent from 1 percent.

Many banks, including Indian Bank and Corporation Bank, have informed customers that normal functioning of branches may be affected if strike materialises.

Corporation Bank said that a section of the bank's employees may participate in the proposed strike on the said date, if the strike materialises. In view of the above, it is likely that the normal functioning of the branches may get affected, it said further.

The unions are contesting that the amendment to the banking laws will dilute the interest of public sector banks.

In August, employees of public sector banks had gone on two-day nationwide strike opposing banking sector reforms and outsourcing of non-core activities.

Source: http://daily.bhaskar.com

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Exim Bank extends $76.5-million line of credit to Malawi

Export-Import (Exim) Bank of India has extended a $76.50-million line of credit (LOC) to the Government of Malawi at the behest of the Union Government.

The LOC has been extended for development of an irrigation network under the greenbelt initiative, setting up of refined sugar processing equipment and development of fuel storage facilities in Malawi, the bank said in a statement.

This is Exim Bank’s third LOC extended to the Malawi Government, taking the total value of LOCs to $156.50 million.

The LOCs have supported setting up of cotton ginning facilities, supply of equipment for the Green Belt Initiative, a dal processing plant, equipment for the small holders’ irrigation programme and supplies under the one village-one project programme.

Under the LOCs, Exim Bank reimburses 100 per cent of the contract value to the Indian exporter upfront upon the shipment of goods or provision of services.

With the signing of this LOC agreement, Exim Bank has in place 164 lines of credit covering 75 countries with credit commitments of over $8.61 billion available for financing exports from India.

Beena.parmar@thehindu.co.in

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Bank of Maharashtra to increase equity capital

Bank of Maharashtra has informed the BSE that a meeting of the board of directors of the bank will be held on December 22, 2012, to consider the proposal of raising equity capital by way of preferential allotment to Government of India and/or to qualified institutional buyers or rights issue. The government's shareholding as of September 2012 was nearly 79 per cent of the share capital.

The bank had a capital adequacy ratio of 10.75 at the end of September 2012. It had come down sharply from a level of 12.46 three months earlier as business volumes rose sharply in the second quarter. Risk weight assets rose from Rs 51,497 crore to Rs 59,059 crore in the second quarter of the fiscal.

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Allahabad Bank cuts retail term deposit rate to 9%

Allahabad Bank cut its domestic retail term deposit rate by 0.15 per cent to 9 per cent.

"...the Bank has decided to revise the interest rate downward by 0.15 per cent per annum i.e. from existing 9.15 per cent to 9 per cent on domestic retail term deposits scheme with maturity period of one year to less than two years," it said in a BSE filing.

The new rates would be applicable from December 18, 2012, it said.

Earlier in October, Oriental Bank of Commerce and Bank of India had lowered term deposit rates for select maturities.

Source:Economic Times

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Corporation Bank to hire 2,433 this fiscal

Corporation Bank plans to recruit 2,433 personnel during 2012-13, according to its Chairman and Managing Director Ajai Kumar. Of these, nearly 1,100 will be in the officer cadre and the rest in clerical cadre, Ajai Kumar told Business Line.

The bank is in the process of building a talent pool, particularly in specialised areas such as risk management, forex, IT, credit, including agriculture, etc.

The recruitment process is in progress and is expected to be completed by the end of the month, he said.

When asked if all of them would join the bank, he hoped at least half of them would .

Though there is no attrition by way of resignations in respect of selection for the post of Assistant Managers, it is observed that the number of candidates joined is considerably less.

In the case of single window operators (clerical cadre), he said the number of candidates who have joined is considerably less. However, attrition is reasonably limited at 8.17 per cent. He said the reason for this could be that candidates have offers from more than one bank, etc. He hoped that the common recruitment process, which is administered through Institute of Banking Personnel Selection, will help enhance the retention rate in the coming years.

vinayak.aj@thehindu.co.in

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ICICI Bank ties up with MMP Mobi Wallet for money transfer biz

Private sector lender ICICI Bank has partnered a Tata Teleservices subsidiary to launch a money transfer service in two cities. 

Under this service, customers can deposit cash into a retail store of MMP Mobi Wallet Payment Systems along with an advice giving details of the account of the payee, the bank said in a statement.

This money will then be transferred to the bank account of the payee using currently available electronic fund transfer mechanisms such as National Electronic Funds Transfer (NEFT) and Interbank Mobile Payment Service (IMPS).

For this service, MMP Mobi Wallet Payments Systems, a 100 per cent subsidiary of Tata Teleservices, will act as a business correspondent of that will allow customers to transfer money for a nominal fee without opening an account.

The money transfer service will be launched in Mumbai and Delhi to begin with and will later extend the services to other parts of the country.

Rajiv Sabharwal, Executive Director, ICICI Bank said, “This service will allow us to fulfill a basic need of the migrant population to remit money to their homes.”



Beena.parmar@thehindu.co.in

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State Bank of Bikaner to offer education loans online

State Bank of Bikaner and Jaipur (SBBJ) plans to offer loans to students and small and medium enterprise (SME) online.

The Associate Bank of State Bank of India intends to replicate its ‘make a home or a car loan application online and get interest concession model’ to student loans and small ticket SME loans (up to Rs 1 crore).

SBBJ Managing Director Shiva Kumar said home and car loan customers are gradually getting accustomed to the concept of applying retail loans online. Hence, the bank plans to extend the concept to other products.

Currently, the Jaipur-headquartered bank offers customers applying home loans online a 10 basis points interest rate concession — that is they will get loans at 10.40 per cent interest against the card rate of 10.50 per cent. Similarly, SBBJ is offering customers applying car loans (over Rs 10 lakhs) online a 25 basis points concession -- that is they will get loans at 10.25 per cent interest against the card rate of 10.50 per cent.

“Online retail loans are gradually gaining traction. Home loans and auto loans are sanctioned in 20 minutes and 10 minutes, respectively.

Customers can apply for loans from the comfort of their homes,” said Shiva Kumar.

If all the required documents are in order then the turnaround time for disbursement is three days for home loans and 24 hours for auto loans. In October, the bank received 167 car loan applications and 57 home loan applications online, he added.

ramkumar.k@thehindu.co.in

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Central Bank to recruit 3,196 clerks

Central Bank of India is recruiting 3,196 clerks across the country. Candidates who have appeared in the common written exam conducted by IBPS in 2011-12 and have valid scorecard are eligible to apply.

Registrations open online on December 22 and will close on January 7, 2013. Full details are available on the bank's Web site.

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Banking Bill passed by Lok Sabha: Corporates set to open bank accounts

Large Indian business houses such as the Tatas , Birlas, Bajaj and Reliance came a step closer to entering the banking space with the Lok Sabha passing the Banking Regulation (amendment) Bill on Tuesday, a move which has been cited by the Reserve Bank of India (RBI) as a pre-requisite for granting new bank licences.

The passage of the bill in the Lok Sabha was facilitated by the removal of a controversial Forward Market's Contract clause that would have allowed banks to enter into future trading of commodities. Very few banks were keen on trading in commodities and some felt that the clause had been incorporated to provide banks a level playing field with corporate giants.

The amendments empower RBI to inspect books of conglomerates , make board and top management appointments in banks and control transfer of large chunks of shares. The bill also allows investors to have voting rights with a higher cap of to 26% from the existing 10% in case of private sector banks and 10% from 1% at present in case of public sector banks.

The increased voting rights to investors, commensurate with their shareholding in existing banks, would help both private and public sector banks to get more foreign investors and help in expanding their capital base. The bill also seeks to exempt certain mergers and acquisitions (M&As), such as peer group mergers, from the purview of the Competition Commission of India (CCI). However, it was clarified that the banking sector will not be outside the CCI's purview.

"The amendments have a much wider ramification than the entry of new banks. It empowers the regulator and gives it much more say in M&As and in appointment of directors," said Ashwin Parekh, partner & global financial leader, Ernst & Young.

Existing banks will gain as their strategic shareholders will be encouraged by the move to increase voting rights. "Entry of new banks may create new market segments and may not hurt existing banks as much as there is undepenetration of banking services in India. We have also seen in the past that competition has benefited the industry as a whole when there is enough room for growth," said Monish Shah, director, Deloitte India.

Once the amendments are enacted, RBI is expected to come out with its final guidelines for the entry of new private banks. Although several conglomerates - including L&T, Tatas, the Aditya Birla Group, Bajaj FinservBSE -0.35 %, Shriram Transport, Religare , ADAG, LICHF and SREI - had evinced interest, there are a host of riders.

The big challenge for RBI would be in the selection process. Bankers say that following the telecom licence scandal and the report of the Comptroller and Auditor General on the issue of licences, RBI would find it necessary to come out with a watertight process.

Replying during the debate in Parliament, finance minister P Chidambaram said the government would infuse Rs 15,000 crore in public sector banks by March 31, 2013. He said that though Indian public sector banks were very well capitalized, infusion of fresh capital is required to meet increasing demands. He also said that banks would recruit more than 84,000 in the current year and add at least 6,000 more branches, while replying during the debate on the banking bill, which was passed by a voice vote.

Source: Economic Times

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Chidambaram promises more funds to public sector banks

The Centre is committed to infusing more capital into public sector banks (PSBs), Finance Minister P. Chidambaram said.

Replying to the discussions on the Banking Bill in Lok Sabha on Tuesday, Chidambaram said that another Rs 15,000 crore capital will be infused in PSBs before end-March.

He said that the Bill would pave the way for PSBs to raise capital through every accepted mode including rights issue, bonus shares without diluting their public sector character.

Chidambaram pointed out that private sector banks are able to grow because they are able to raise more capital. But in the case of PSBs, they have to rely on the Government to infuse capital.

“Today, public sector banks have a share of 75 per cent of the business. Notwithstanding the competition posed by private sector banks, the public sector banks are holding on their own,” he said.

Chidambaram also said that more capital has to be infused into State Bank of India if its status as the largest commercial bank were to be maintained. SBI is looking for more capital infusion from the Government and has already indicated that an option of rights issue was on the table.

He also expressed confidence that economy will come out of the present trough and recovery will happen. “When recovery happens, banks will be required to lend more money”.

On consolidation, Chidambaram pointed out that none of the Indian banks are among the top 20 banks of the world. “China has three”.

India for the size of its GDP and the future that is envisioned needs world-size banks, he said.

“Nobody said that all 27 public sector banks will be consolidated. We said that we need two or three world-size banks. The two or three world-size banks will come by some smaller banks consolidating into larger banks. But we will still have 20 public sector banks and each of them will grow”

If the private sector banks should become larger and larger, should not the public sector banks become larger and larger, Chidambaram asked.

“I think there is a case for merger of banks and there is a case for two or three world-size banks,” Chidambaram said.

The Banking Laws (amendment) Bill 2011 was later passed by the Lower House.

Srivats.kr@thehindu.co.in

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Bank unions call strike to protest Govt move to amend banking laws

Employees and officers from 26 public sector banks, 12 old-generation private sector banks and eight foreign banks will observe an all-India strike on December 20 to protest the UPA Government’s move to push amendment to the banking laws.

The All-India Bank Employees’ Association (AIBEA), the Bank Employees’ Federation of India and officers’ unions such as the All India Bank Officers’ Association have called for a strike in which nearly 7 lakh bank employees and officers are expected to participate, said Vishwas Utagi, Secretary, AIBEA.

“The present generation of politicians must raise their voice in Parliament against the proposed amendments to the banking laws which are aimed at handing over Indian private sector banking to multinational banks and increasing the presence of Indian corporates and FDI in public sector banks,” said Utagi.

The proposed amendments to the banking law are aimed at effecting the merger of banks, allowing more private and foreign capital in banks, and upping the ceiling on voting rights. Further, the amendments will enable the central bank to grant licenses to corporate business houses to start their new banks.

“There is an attempt to close down rural branches and resort to a number of ultra small branches thereby privatising rural banking operations through contractual business correspondents and lack of stringent measures to recover increasing NPAs and bad loans,” said the trade union leader.

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Axis Bank gets board nod to raise share capital

Axis Bank board today approved the decision to increase the authorised share capital of the bank by Rs 350 crore to Rs 850 crore, the bank informed the Bombay Stock Exchange today. At present, the authorised share capital stands at Rs 500 crore.

The private lender’s board of directors at its meeting today said the bank will raise Tier - I capital of the bank by issue of equity shares not exceeding 45.8 million equity shares through GDRs/ QIP issue and preferential issue to promoters of the bank.

This being “subject to approval of shareholders, Reserve Bank of India and other regulatory authorities as may be required,” the statement said.

Further, the private sector bank will increase the number of stock options which can be granted under the Employee Stock Option Scheme of the bank.

The bank will seek approval of shareholders to the above proposals through postal ballot.

The shares of Axis Bank ended higher by 0.50 per cent at Rs 1,359.75 on the BSE.

beena.parmar@thehindu.co.in

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You can soon apply and get SBI home loan sanctioned online

State Bank of India intends to turn up the heat on its competitors in the retail loans segment.

India’s largest bank plans to put in place an Internet-based customer acquisition solution that will allow prospective customers to not only apply for home loans but also generate in-principle loan sanction letter online.

The move to have an online customer acquisition solution could save the net-savvy GenNext customers the bother of repeat visits to the bank’s branch for completing the formalities associated with getting a home loan.

Instead, the bank’s sales executives will follow-up on the loan proposal with the customer, collect necessary documentary proofs and forward the application to Retail Assets Processing Centres for processing.

SBI’s gambit to provide the ‘do-it-yourself’ convenience for prospective home loan customers comes at a time when it is seeing a spurt in home loan applications on the back of competitive interest rates.

The bank is charging 10 per cent and 10.15 per cent interest on home loans up to Rs 30 lakh and above Rs 30 lakh, respectively. Besides, it has halved the processing charges and waived pre-payment penalty. The Web-based customer acquisition platform will provide the customer the option to request “expert callback” should he/ she get stuck at any stage.

Validation process

Once an online loan proposal is submitted by the customer with details such as the loan amount, income and KYC (Know-Your-Customer), it will go through a four-stage validation process.

The components of validation will be — online PAN verification; online enquiry with Credit Information Bureau; online evaluation of loan eligibility; evaluation of the customer based on internal risk scoring model and loan policy, said a senior official.

Post the validation stage, the customer will be e-mailed a digitally signed copy of the in-principle loan sanction letter.

All regional branch offices of the bank, which deal with home loans, will be mapped to the customer acquisition solution and the customer will be given the option of selecting the nearest branch from where he wants to take the home loan.

Login code

Customers will be given a unique login code to access the status of their application at each stage of the sourcing and loan processing period. The bank will have a dash board for monitoring follow up of proposals.

The customer acquisition solution will have the provision of ‘property search’ so that customers can search the properties based on various categories such as area, price, builder, and geographical location.

If the online customer acquisition solution clicks with home loans, the same will be extended to cover other retail banking products, said the official.

As at September-end 2012, SBI saw about 13 per cent year-on-year growth in home loans to Rs 1,08,381 crore against Rs 95,947 crore as at September-end 2011. The bank has about 26 per cent market share in the home loans segment.

ramkumar.k@thehindu.co.in

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IDBI Bank launches ‘kisan credit smart card’

Public sector lender IDBI Bank has partnered with National Payment Corporation of India (NPCI) to launch the ‘Kisan Credit Smart Card’ (KCSC) to provide adequate and timely credit to farmers under a single window.

Under this facility, farmers can avail themselves of assistance to meet their credit needs for agriculture and allied activities, such as, cultivation of crops, consumption requirements of farmer household, post harvest expenditures etc, with flexible and simplified procedures, the bank said in a statement.

The card would render the benefit of revolving cash credit facility to the farmers, allowing unlimited withdrawals and repayments within the credit limit. The credit limit would be fixed on the basis of operational land holding, cropping pattern and scale of finance etc.

Additionally, a flexible limit of up to Rs 50,000 would be provided to the marginal farmers based on their land holding pattern and crops grown by them. All eligible farmers / SHGs would be provided with a Kisan Credit Card and a pass book.

The card can be used to draw cash from any bank ATM and from a later date also for purchase of inputs such as seed, fertiliser and pesticide from dealers using the POS machines.

S.K.V. Srinivasan, Executive Director, IDBI Bank, said “This initiative shall go a long way in making banking easy and bring down the transaction cost for the farmers.”

beena.parmar@thehindu.co.in

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Axis Bank offers ‘e-Gift Card’

Axis Bank, India’s third largest private sector bank, will now allow its domestic customers to send an online card with the launch of ‘e-Gift Card’.

The card offers customers an alternative channel facility through which they can buy a gift card on www.gogiftacard.com where a customer can buy and send a card of his choice by either e-mailing it or sending it via SMS to their loved ones, the bank said in a statement.

Domestic customers can purchase these online e-Gift Cards using their credit/debit card issued by their respective bank. All purchase transactions shall be limited to sites that support verified by Visa and MasterCard Secure Code for two factor authentication.

‘Axis Bank e-Gift Card’, which is an online version of the physical plastic gift card, can be sent via email/SMS to the recipient, who can then use it to purchase anything online across categories like apparels, airline tickets, books etc. The validity of the card is one year from the date of issuance.

Jairam Sridharan, Head, Consumer Lending & Payments, Axis Bank, said: “Each one of us has faced a time when we wanted to send someone a gift, and do it right away. Axis Bank e-Gift Cards are now the answer. With these cards, you can now turn your loved one’s inbox into a Gift Box - instantly!”

Uttam Nayak, Group Country Manager – India and South Asia, VISA, said, “India has a strong culture of gifting and Visa e-Gift Cards are perfect to give and to receive on any occasion and work at the hundreds of online Visa merchant sites with the same convenience and security of all Visa cards. With this launch, Axis Bank takes the guessing out of gifting and provides the freedom to the recipient to buy what they want and reflects the changing preferences of Indian consumers.’’

Beena.parmar@thehindu.co.in

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SBH to hire 1,000 probationary officers

State Bank of Hyderabad (SBH) will soon be recruiting 1,000 probationary officers.

“We have initiated the process as State Bank of India will conduct the recruitment for us,’’ Mr M. Bhagavantha Rao, Managing Director, SBH, told Business Line here.

The bank has recently conducted the recruitment test for hiring 2,200 clerks who would be joining it shortly.

On attrition, especially in the clerical cadre, the official said provision for speedy promotions for clerical cadre would stop youngsters from shifting from one job to another.

On the bank’s performance in the current quarter, Mr Bhagavantha Rao said about 20 per cent growth in operating profit was expected. The net interest margin could be around 3.45 per cent, he added.

SBH’s net profit fell 8 per cent to Rs 213 crore in the quarter ended September 30, 2012 mostly on account of an increase in operating expenditure.

naga.gunturi@gmail.com

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PSU bank employees’ strike on Dec 20

Employees of public sector banks will observe one-day country-wide strike on December 20 in protest against the government’s move to place the Banking Law Amendments bill in the current session of Parliament.

Addressing a press conference here, R A Singh, president of Jharkhand Pradesh Bank Employees Association, said the reform in the banking sector was not in the interest of the country.

The government was trying to pass the Bill to enable easy merger of banks, increased voting rights to private capital in both public and private sector banks, Singh said.

Referring to a bill introduced in the current session of Parliament to amend Sarfaesi Act/Debt Recovery Act, he said the move was aimed at helping corporate loan defaulters by converting bad loans as investments in the equity capital of these defaulters companies, which was not acceptable.

JPBEA deputy general secretary S K Adak and vice-president Sujit Ghosh were also present in the press conference.

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IOB chief hopeful of Centre’s capital support

Indian Overseas Bank is hopeful that the Centre would soon infuse some capital in the public sector lender, M. Narendra, Chairman & Managing Director, has said.

This public sector lender had sought capital support of Rs 1,500 crore from the central government for the current financial year.

Narendra, who was in Delhi on Saturday for the Delhi Economics Conclave, told Business Line that the bank was also toying with the idea of issuing perpetual bonds.

IOB has Tier-I capital of 7.63 per cent and the expectations are that the capital support from the Centre would help lift the Tier-I capital above 8 per cent.

“We are waiting for the right market conditions. A decision on the timing of perpetual bonds issuance will have to be taken by the end of this month,” he said.

On branch expansion, Narendra said the branch network would be expanded to 3,000 branches by end March. Currently, IOB has about 2,736 branches across the country.

On credit growth, Narendra said that he expects IOB's credit growth to be around 16-18 per cent this financial year. This is lower than the earlier anticipated credit growth of 18-20 per cent this fiscal.

The Reserve Bank of India has projected a credit growth of 16 per cent in the banking industry this fiscal.

IOB is also looking to ramp up ATM network to 3,000 machines by end June 2013, from the current level of 1,600 machines.

Last financial year (2011-12), the Centre had infused Rs 1,441 crore capital into Indian Overseas Bank.

srivats.kr@thehindu.co.in

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SBI pays Rs 1,701 cr as advance tax for Q3

State Bank of India has paid Rs 1,701 crore as advance tax for the third quarter of the current financial year against Rs 1,730 crore in the year-ago period.

Overall, the total advance tax paid by India’s largest bank for the three quarters of the fiscal is higher by Rs 210 crore at Rs 4,694 crore against Rs 4,484 crore paid during the corresponding period of FY 2011-12.

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Central Bank of India planning new scheme for low-cost homes

Central Bank of India is targeting a business of Rs 10,000 crore from the home loan segment in the current financial year while planning to launch a new scheme for affordable housing.

Of the target, the Bank has touched Rs 7,900 crore and expects to cover the remaining portion before March-end, according to Ram Sangapuri, General Manager-Retail, Central Bank of India.

Speaking to newspersons at the inaugural two-day home and auto loan expo here on Saturday , he said the bank has set a target of Rs 2,500 crore for vehicle loans during 2011-12. The event brought together property developers and automotive developers under a single platform. Customers also had access to free legal advisory services.

Central Bank is also planning to announce a new scheme to provide affordable housing for socially and economically backward. Under the new scheme, loans of up to Rs 5 lakh will be given to people without any guarantee or surety along with several other flexible terms, the bank official said. He said the bank was conducting a series of property expos across the country.

The construction and housing segment contributes around 13 per cent to the national GDP. A further boost to the housing segment will help the country achieve higher GDP numbers, he said.

N. Uttam Kumar Reddy, Andhra Pradesh Housing Minister, said that the State Government has taken up the largest housing project for urban and rural poor in India through its housing department and is providing Government supported and subsidised homes.

rishikumar.vundi@thehindu.co.in

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