Kotak Bank says seeing fall in home loan book growth

Private sector lender Kotak Mahindra Bank is witnessing a sizable reduction in its home loan book growth in the current fiscal at 10-15% levels on poor consumer sentiment, a senior official has said.

"For the past two years, our home loan book has been growing at 30-40%, but this year it has grown by only 10-15%," executive vice-president and head of retail assets Sumit Bali told PTI.

He said the poor market sentiment is the prime reason for the slowdown in home loan growth and the same trend is being witnessed by the realty sector as well where demand has slowed down.

The official of the bank, which had cut its home loan rates by up to 0.25% last week, said people decide on home purchases when they see certainty, which includes multiple factors like a low and stable inflation, steady job creation, etc.

If that does not happen, they tend to pull back and wait for certainty to emerge before making their decision, he said adding that one should ideally enter in a depressed market for the best valuations.

As of the September quarter, the bank's home loans had stood at Rs 11,307 crore and had posted a year on year growth of 17%.

Kotak Mahindra Bank, one of the youngest lenders among the domestic players, joined its larger peers SBI, ICICI Bank and mortgage major HDFC in cutting the home loan rate by 0.25% last week.

Bali said competitive environment and a reduction in cost of funds were the drivers for Kotak to cut its rates.

When asked about the impact of the move on margins, he exuded confidence that the bank will broadly be able to hold on to them and added that a pick up in volumes following the move will also help.


Source: Business Standard

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PSU banks raise over Rs 15,000 cr through QIPs

State-run lenders including SBI and IDBI Bank have lined up more than Rs 15,000 crore worth of share-sales to institutional investors to shore-up their capital base.

Apart from State Bank of India and IDBI Bank, Indian Overseas Bank, Dena Bank and Allahabad Bank has also evinced interest in raising funds through qualified institutional placement (QIP). Some more public sector banks are in the process of taking approvals from their boards for QIPs.

These banks are collectively planning to rake in over Rs 15,000 crore through the proposed share-sale to institutional investors. Many of these lenders are expected to raise funds next year.

This alternate resource mobilisation is over and above Rs 14,000 crore capital infusion to be made by the government for the public sector banks during this fiscal.

The funds will be used to boost the capital base of the banks to maintain future growth and Capital Adequacy Ratio (CAR) under new global risk norms.

The country’s largest lender, SBI, which is planning to mop-up Rs 9,576 crore through a QIP in January-March quarter, has already received government approval for it.

Besides, IDBI Bank plans to raise Rs 1,200 crore via sale of shares to institutional investors, Dena Bank - Rs 800 crore, IOB - Rs 350 crore and Allahabad Bank - Rs 320 crore.

Last week, private player Dhanlaxmi Bank had allotted 1.75 crore equity shares at Rs 38.25 a piece, aggregating Rs 67.22 crore to qualified institutional buyers through qualified institutional placement.

QIP is a capital raising tool whereby a listed firm can issue equity shares, fully and partly convertible debentures, or other securities that are convertible to equity shares to institutional investors.

Overall, Indian companies raised over Rs 12,000 crore in 2013 through QIP issuance, as against nearly Rs 10,000 crore garnered in the preceding year. However, the number of issuance declined to 21 in 2013 from 47 last year.

Market experts said attributed the growth in fund raising via QIPs to volatile market conditions and it was easier to raise funds from institutional investors.


Source: Thehindubusinessline

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Pradeep Kumar takes charge as MD Corporate Banking, SBI

State Bank of India has appointed P Pradeep Kumar as its Managing Director (Corporate Banking).

Kumar, as one of the four managing directors, will look after the corporate banking portfolio of the bank.

“ ...with effect from December 27, as per notification of government of India, P Pradeep Kumar will be the Managing Director & Group Executive (Corporate Banking) of State Bank of India (SBI),” the bank today said in a statement.

Kumar, a post graduate in statistics, joined SBI in 1976 as a probationary officer and held several key assignments including the bank’s US operations. He also served as the managing director of State Bank of Travancore.

Before moving to the present assignment, Kumar was deputy managing director and group executive of the corporate banking group, which looks after corporate accounts and project finance of the bank.


Source: Thehindubusinessline

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Banks' loans up 14.9 per cent y/y in two weeks to December 13: RBI Read more at: http://economictimes.indiatimes.com/articleshow/28012658.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst Read more at: http://economictimes.indiatimes.com/articleshow/28012658.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Banks' loans rose 14.9 per cent from a year earlier in the two weeks to December 13, while deposits grew 17 per cent, the Reserve Bank of India's weekly statistical supplement showed on Friday.

Outstanding loans rose 363 billion rupees to 57.01 trillion rupees in the two weeks to December 13.

Non-food credit rose 329.6 billion rupees to 55.94 trillion rupees, while food credit rose 33.4 billion rupees to 1.08 trillion rupees.

Bank deposits rose 462.9 billion rupees to 75.24 trillion rupees in the two weeks to December 13.


Source: Economic Times

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Canara Bank to expand overseas over next 2 years

Canara Bank is expanding its overseas presence and plans to add around 14 new branches in overseas locations over the next two years.

It also wants to increase the share of overseas business from about six per cent currently to 15-20 per cent over the next two to three years.

New branches

The bank, which currently has five branches and three representative offices overseas, is opening a branch in Johannesburg in the next three months, followed by those in New York, Dubai and Frankfurt by September 2014.

Another ten branches in Sao Paolo, Dar-es-Salaam, Tokyo, Abuja, Jeddah, Qatar, Sydney, Ontario, Wellington and Singapore are awaiting regulatory approvals, Canara Bank Chairman-cum-Managing Director R.K. Dubey said.

He added that after they all become operational, the bank’s target is to achieve 15-20 per cent share of the overseas business.

New circles

Speaking on their expansion plans within the country, he said that Canara Bank is adding eight new circles (34 at present) in Jalandhar, Gurgaon, Indore, Varanasi, Raipur, Kochi, Tirupati, and Salem by April 2014, and plans to increase the branch-network from the current 4,500 to 5,500-6,000 in the next two years.

A significant number of these branches will be in rural, semi-urban and un-banked areas, including in the regions of Naxalites or terrorist activity like in J&K, Gadchiroli and some parts of the North-East, he said.

In West Bengal, the panchayats have allotted 35 centres for branches at a rent of Re 1, while the Orissa Government is giving them 500 sq ft of space free of rent for 100 branches.

To cater to the expansion, as well as replace employees who will retire, the bank had recruited 8,000 people this year and will hire another 8,000 people next year.

e-lounge in Pune

Launching its second e-lounge in Pune circle, Dubey said that the bank has chalked out a plan to adopt over 60 villages across the country for integrated development.

“We want to develop a model village in each of our circles and 26 lead districts,” he said, adding that the initiative would include developing infrastructure like roads, solar lights and drinking water schemes in addition to promoting financial inclusion, and training youth for earning a livelihood.

In Pune circle, it has adopted village Ghangaldare, situated 102 km from the city. Dubey today handed over a demand draft of Rs 5 lakh to the village development committee as the bank's initial contribution to the scheme.

Source: thehindubusinessline

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Arun Tiwari is new CMD of Union Bank

Public sector lender Union Bank of India said Arun Tiwari assumed charge as its new Chairman & Managing Director.

Tiwari, who has over 30 years of experience, started his banking career with Bank of Baroda and was an executive director at Allahabad Bank prior to his new job.

An MSc in chemistry, Tiwari set up the operations of Bank of Baroda in Kuala Lumpur and Singapore and played a key role in the bank’s Project Navnirman and Project Sparsh initiatives.

As an executive director at Allahabad Bank, Tiwari was a member of audit, customer service, IT, management and risk management committees.

Source: thehindubusinessline

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Corp Bank to open 10 branches in North-East

Corporation Bank will open 10 branches in the Northeastern part of the country by March. Of this, four branches will be opened in Guwahati.

S.R. Bansal, Chairman and Managing Director of the bank, said this while inaugurating a branch of the bank at Nalbari in Assam recently. Quoting Bansal, a bank statement said that the bank is also considering of opening its zonal office in Guwahati in the next year.

He appealed to the people of Nalbari to support the branch.

Vibhash Modi, Additional Deputy Commissioner of Nalbari, was the chief guest on the occasion. D. Purnachandra Rao, Circle General Manager, and N. Ramesh Kamath, Deputy General Manager and Zonal head of Kolkata Zone of the bank, were present on the occasion.

Bansal also visited ‘Nabanir – Home for Aged’ at Chetla in Kolkata and distributed clothes to the inmates of the old age home. He celebrated Christmas with the senior citizens of Nabanir by cutting the Christmas cake and hosting a lunch for the inmates.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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No shortage of life insurance products from January 1: IRDA

There will be no shortage of life insurance products from January 1 when new norms come into effect, according to T. S. Vijayan, Chairman, Insurance Regulatory and Development Authority (IRDA).

“Every life insurer has a minimum 10 to 15 products ready to be launched or already launched. We have cleared about 500 products so far,” Vijayan told newspersons on the sidelines of an interactive session organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry here on Friday.

Life insurers have been barred from hawking old products starting next month. They can only sell products that are compliant with the new product design norms brought in by the insurance regulator early this year.

“As all products have gone to the shelves of the insurers (from IRDA after approval), their exact launch would depend on their market strategies,” he added.

SERVICE TAX

Earlier, while addressing participants at the meeting, the IRDA chief said the imposition of service tax or its removal was not in the purview of the insurance regulator.

The premium on life insurance products, especially those by the Life Insurance Corporation, is likely to go up from January 1 as the market leader would collect service tax separately. Several private insurers have already started doing so.

BANCASSURANCE

Referring to the permission being given to banks to act as insurance brokers , Vijayan said: “Banks should represent the customers. We want banks to sell the best policies of 24 life insurance companies. We are pushing for it.”

The Finance Ministry had issued a circular last week asking banks to turn into brokers of multiple insurance companies.

As of now, banks are only permitted to act as corporate agents of insurers.

Growth

On the state of industry, he said total business in the life and non-life sector should touch Rs 4 lakh crore this year, a 10 per cent growth over last year.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Canara Bank to raise Rs 1,500 cr through bonds

Canara Bank said it plans to raise Rs 1,500 crore from bonds to augment its capital base.

The bank has decided to raise additional capital of Rs 1,500 crore through the issue of Basel-III complaint Tier-II bonds, Canara Bank said in a filing to the BSE.

This capital raising would be over and above Rs 500 crore that the Government has decided to infuse in the bank before March 2014.

To take shareholders approval for issuance of preference shares to the government, the bank will hold an extraordinary general meeting on December 30.

Capital infusion by the Government has been done with the twin objective of adequately meeting the credit requirement of the productive sectors as well as to maintain regulatory capital adequacy ratios in public sector banks (PSBs).

The government’s infusion in PSBs is in addition to their internally generated capital to enable the banks to maintain a comfortable level of Tier-I, or equity, capital.

An amount of Rs 12,517 crore was infused in 13 PSBs during 2012-13. This fiscal’s infusion by the Government is pegged at Rs 14,000 crore.

Source: thehindubusinessline

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Banks look to ‘ad’ to ATM security

Banks are looking at advertising of insurance, mutual fund, and bond products in ATMs to pay for making the booths secure.

After the brutal attack on a woman inside an ATM in Bangalore last month, States, including Karnataka, Andhra Pradesh and Maharashtra, have told banks to beef up the security infrastructure or face closure of booths.

As at November-end 2013, there were about 1.40 lakh ATMs connected to the National Payments Corporation of India’s National Financial Switch. Banks have been asked to place surveillance cameras, both inside and outside ATMs, and connect an alarm in the ATM booth to the nearest police station, said a senior Bank of Baroda official.

To provide all this and well-trained security guards and other equipment at the ATMs, as mandated by State authorities, banks, according to a senior SBI official, are looking at revenue generation options, including display of advertisements of non-banking products either on the inner walls of the booths or as standing displays.

They also plan to limit the number of free transactions, both at own-bank and other-bank ATMs, to five a month.

More transactions

Also coming are an increase in the service charge (from Rs 15 now to about Rs 18 per cash withdrawal) beyond the fifth ATM transaction, and a hike in the annual maintenance fee for ATM-cum-debit cards.

Currently, bank customers enjoy unlimited free transactions, including cash withdrawal (subject to the daily withdrawal limit set by their bank) and balance enquiry, at their own bank’s ATMs.

Further, they are allowed a maximum of five free transactions per month at other banks ATMs.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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Allahabad Bank gets shareholders' nod for preferential issue, QIP

City-based nationalised Allahabad Bank has got the shareholders’ approval for a preferential issue of Rs 400 crore and a Qualified Institutional Placement (QIP) of Rs 320 crore for shoring up the equity base of the lender.

At an extra-ordinary general meeting of the bank held here yesterday, the shareholders approved the preferential issue of Rs 400 crore to government against capital infusion.

The bank also sought nod of the shareholders to access the market for issue of equity shares through Qualified Institutional Placement (QIP) aggregating up to Rs 320 crore in such a manner that government’s holding will continue to be at 55.24 per cent of the total paid-up capital.

Allahabad Bank would issue and allot 4,45,83,147 equity shares of face value of Rs 10 each at an issue price of Rs 89.72 (including premium of Rs 79.72) per equity share on preferential basis to government.

Chairperson and Managing Director of Allahabad Bank Shubhalakshmi Panse said at the EGM that the money was needed to shore up the capital base of the bank to maintain future growth and Capital Adequacy Ratio under the BASEL-III regime.

Source: thehindubusinessline

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IRFC tax-free bond issue to open on Jan 6

Indian Railway Finance Corp will hit the market on January 6 to raise more than Rs 8,660 crore through tax-free bonds.

The issue of tax-free and secured non-convertible bonds, worth around Rs 8,663 crore, will close on January 20, IRFC said in the prospectus filed with market regulator SEBI.

“Public issue by Indian Railway Finance Corporation of tax-free, secured, redeemable, non-convertible bonds of face value of Rs 1,000 each in the nature of debentures having tax benefits...for an amount of Rs 1,50,000 lakh with an option to retain oversubscription up to Rs 7,16,300 lakh aggregating Rs 8,66,300 lakh in the fiscal 2014,” the company said.

The funds raised through this issue will be utilised by IRFC towards financing the acquisition of rolling stock which will be leased to the Ministry of Railways in line with present business activities.

IRFC is a dedicated financing arm of the Ministry of Railways. Its sole objective is to raise money from the market to part finance the plan outlay of Indian Railways.

SBI Capital Markets, A K Capital Services, Axis Capital, ICICI Securities and Kotak Mahindra Capital Company are the lead managers to the issue.

Karvy Computershare is the registrar to the issue.

The bonds are proposed to be listed on the National Stock Exchange and BSE.

Source: thehindubusinessline

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RBI red-flags use of Bitcoins

If virtual currencies such as bitcoins and litecoins have caught your fancy, beware. Here’s note of a caution from the Reserve Bank of India.

The central bank has warned users, holders and traders of virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks they are exposing themselves to.

In its advice, the RBI said it has been looking at the developments relating to “Decentralised Digital Currency” or VCs, such as Bitcoins, litecoins, bbqcoins, and dogecoins, their usage or trading in the country and the various media reports on them.

The RBI said it is looking at issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations. The creation, trading or usage of VCs, including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority, the RBI said and added that such currencies may pose several risks to their users.

Since such currencies are in the digital form and stored in digital/electronic media that are called electronic wallets, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack, etc. As these virtual currencies are not created by or traded through any authorised central registry or agency, the loss of the e-wallet could result in permanent loss of the currencies held in them.

The RBI said payments by virtual currencies take place on a peer-to-peer basis without an authorised central agency regulating such exchanges. There is no established framework for recourse to customer problems/disputes, etc.

Source: thehindubusinessline

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Paresh Sukthankar elevated as Deputy MD of HDFC Bank

Possibly preparing the ground for him to take on the mantle of leadership from the doughty Aditya Puri, HDFC Bank has elevated its current Executive Director, Paresh Sukthankar to the position of Deputy Managing Director.

Sukthankar has been with the bank since its inception in 1994. He has direct or supervisory responsibilities for the bank’s credit and risk management, finance and human resources functions and for various strategic initiatives of the bank. Adity Puri has been the MD of India’s second largest private sector bank since 1994.

Sukthankar’s appointment will be valid for a period of three years till December 23, 2016. The bank, in a notification to the BSE, said that the appointment is subject to the approval of the shareholders of the bank.

Source: thehindubusinessline

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LIC Housing looking to raise $300 m from overseas market

LIC Housing Finance Company is awaiting the Reserve Bank of India’s nod to raise $300 million from overseas markets for lending to customers wanting to buy affordable houses.

Sunita Sharma, Managing Director and CEO, LIC Housing Finance, said: “We applied to the RBI about two months back.”

The housing finance arm of the state-run insurance major, Life Insurance Corporation of India, said it will raise the money through external commercial borrowing (ECB).

Money borrowed from overseas is usually cheaper as the interest rates in countries such as the US are much lower than interest rates in India.

The proceeds from the borrowing will be used by the company to lend to buyers under the affordable housing segment. This means that the buyers of affordable houses will get loans at a cheaper rate.

If the company gets RBI nod, it will have to ensure that the money raised through the ECB is given to individuals buying houses where the cost of each unit is Rs 30 lakh or less. The loan amount in such cases cannot exceed Rs 25 lakh, according to the

RBI norms

Further, the RBI defines affordable houses as having a maximum carpet area of 645 square feet (60 square metres).

In June, the RBI said that housing finance companies (HFCs) together can borrow a maximum of $1 billion every year under the scheme till FY 2014-15.

Only those HFCs that have had net-owned funds of Rs 300 crore for the past three years are eligible to borrow under this scheme.

In Budget 2012-13, the Government had announced that HFCs and builders/developers will be allowed to raise money under the ECB scheme. Certain slum-rehabilitation projects are also eligible to get funds under the scheme.

Source: thehindubusinessline

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UBI to get Rs 700-cr capital infusion

The Centre will provide Rs 700 crore to the United Bank of India (UBI) as a part of its capital infusion programme for FY14. UBI on its part will allot 18 crore shares.

The Centre’s capital infusion is expected to be to the tune of Rs 14,500 crore across all state-run banks.

The capital infusion will help UBI pursue its growth strategies and comply with the Basel-III norms, Archana Bhargava, CMD of the bank, said in press release

Source: thehindubusinessline

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Canara Bank rolls out ATM cards for joint account holders

Canara Bank has launched a payment product, whereby each joint accountholder will be issued an ATM-cum-debit card. The new service, launched by R.K. Dubey, Chairman and Managing Director, Canara Bank, is enabled for all accounts operated by two joint accountholders.

While one accountholder is designated as ‘primary’, the other will be ‘secondary’.

A transaction is initiated by the primary cardholder by inserting the card in the ATM and keying in the PIN. The transaction is authorised only after validation by the secondary cardholder, using the card and PIN issued.

The ATM-cum-debit cards can be used only for ATM cash withdrawal. The card is valid for domestic use on Canara Bank ATMs only.

The bank has also launched ‘Kiosk Banking through Akshaya Centres’ in Kerala.

As mandated by the Department of Financial Services (Government of India), every sub-service area of 1,500 households has to be covered by a banking channel.

Canara Bank has tied up with Akshaya State Mission to launch this service in about 92 Akshaya Centres, State-wide. Using this facility, customers can open an account, deposit and withdraw cash at Akshaya Centres itself and need not visit the bank branch.

anil.u@thehindu.co.in

Source: thehindubusinessline

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Kotak Bank slashes home loan rates by 0.25%

Private sector lender Kotak Mahindra today followed State Bank of India and mortgage major HDFC by announcing a rate cut of up to 0.25 per cent on their housing loans for a limited period.

Accordingly, new home loans under Rs 75 lakh will be available at 10.25 per cent per annum, down from the earlier 10.50 per cent, while ones above Rs 75 lakh will cost 10.75 per cent as against the earlier 10.90 per cent.

The reduced interest rates will be applicable till January 31.

“The rate cut is driven largely by the scenario in the market place, a reduction in our cost of funds and our expectations from the future,” its executive vice president and head of retail assets, Sumit Bali, said announcing the rate cut.

The move follows similar ones announced by the country’s largest lender State Bank of India and mortgage major HDFC over the past week, ever since the RBI decided on a status quo in its mid quarter policy review.

When asked about the impact on margins as a result of this move, he said the rise in volumes will help the bank hold on to the current margins.

Source: thehindubusinessline

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M.S.Sahoo nominated to Oriental Bank of Commerce board

The Finance Ministry has nominated M.S.Sahoo as a part-time non-official director in Oriental Bank of Commerce.

Sahoo, who is currently Secretary of the Company Secretaries Institute, will have a tenure of three years as a Board member of this public sector lender.

A Fellow Member of the Institute of Company Secretaries of India, Sahoo has over three decades of work experience including the role of SEBI wholetime member from 2008-11.

The Centre currently holds 58 per cent stake in OBC.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Bank staff plan to strike work on Jan 20-21

Upset over the offer of a mere 5 per cent increase in salary and delay in wage settlement, employee unions of public sector banks have decided to strike work for two days next month.

They have been demanding about 30 per cent increase in wages; in the last revision in 2007, the hike was around 17 per cent.

“At a meeting with all nine major bank staff unions here today, we have decided to call for strike on January 20-21, 2014,” A. K. Ramesh Babu, President, Bank Employees Federation of India (BEFI), told Business Line.

Given the increasing per employee productivity in banks, the offered hike was too “less” and “humiliating”, he said. So far, some five rounds of negotiations have been held between bank employee unions and the Indian Banks’ Association (IBA).

The wages were last revised in 2007 and the term of revision expired in 2012. “It is almost one year since the expiry of the previous settlement and we want speedy resolution,” he added.

According to Pradip Biswas, General-Secretary, BEFI, another cause of concern for the unions was the “deviation” from the age-old practice of wage settlement.

“For the first time, they are proposing that employees up to scale III level will only be included in the general wage settlement, but this is just aimed at creating divisions without transparency,” he said.

Effectively, this proposal means that the wage hikes of officers above senior branch manager category will be linked to performance and could vary from person to person.

In 2007, employee wages, on an average, accounted for 20 per cent of banks’ total costs. This will now come down to 16 per cent, which means a reduction in salaries if inflation is factored in, he added.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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HDFC Mutual to acquire all 8 schemes of Morgan Stanley

India’s largest mutual fund by assets, HDFC Mutual Fund, has decided to acquire all the eight schemes of Morgan Stanley Mutual Fund in India.

However, HDFC Mutual Fund did not disclose the deal size.

“We are pleased to announce the signing of a definitive agreement for HDFC Mutual Fund to acquire all the eight schemes of Morgan Stanley Mutual Fund in India,” HDFC Mutual said in a statement.

The agreement is subject to regulatory approvals as required, it added.

The average combined assets under management of the eight schemes for the quarter ended September 30, was Rs 3,290 crore, while HDFC Mutual commands an asset base of Rs 1.01 lakh crore.

Milind Barve, Managing Director of HDFC Asset Management Co, said, “HDFC Mutual Fund has acquired a portfolio of strong performing domestic mutual fund schemes from Morgan Stanley and this acquisition is another step towards expanding our mutual fund customer base. We look forward to welcoming the investors in the eight schemes of Morgan Stanley Mutual Fund into the HDFC family.”

Two decades ago, in 1993, Morgan Stanley had received SEBI’s approval to run mutual fund business in India. Its first scheme was launched in 1994.

Fierce competition and slowdown in the asset management industry have since forced many to quit the business.

Earlier this year, SBI Mutual Fund had acquired Daiwa Mutual Fund while last year L&T Mutual Fund bought Fidelity Mutual Fund.

According to SEBI data, the number of folios (individual investor accounts) with 44 fund houses fell to around 4.07 crore at the end of October, from 4.28 crore in fiscal 2012-13.

Source: thehindubusinessline

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New IRDA norms promise challenging year for life insurers

The new year promises to be a challenging one for life insurers. They will need to phase out various old products in keeping with new norms.

From January 1, only products that conform to the new guidelines announced by the Insurance Regulatory and Development Authority (IRDA) in the first half of 2013 are allowed for sale.

This means insurers need to re-file all their products for approval.

“We have cleared over 500 products in line with the new design norms which are being introduced by the insurers in a progressive manner,” IRDA Chairman T.S. Vijayan told Business Line. Most insurers have already redesigned their products and also obtained approvals. While some have already been launched, the rest will be rolled out in the new year.

Reliance Life Insurance CEO Anup Rau told Business Line his company has lined up over 25 products for launch from next month.

It is largely believed that the regulatory changes will pave the way for the sustainable growth of the industry in the long term. However, they may pose immediate challenges to insurers, it is feared.

The life insurance industry is just recovering from drastic regulatory changes introduced in 2010 in unit-linked insurance products, which were then the most popular products. Since then, the first year premium (new business) has declined. It was only in the quarter ended September 30, 2013 that growth was revived.

But the new norms for traditional life products might pose a fresh challenge from next month. “The industry may see some business disruption in the short term while they are engaged in retraining their distribution force. Therefore, the changes will result in short-term pains due to lower commissions by the advisors,’’ Rau said.

Training agents

According to Alok Roongta, CFO of Bharti AXA Life Insurance, training a large number of agents in selling new products will be another challenge for the industry.

The business impact of the new norms has much to be watched. “Till now, most of the regulatory changes impacted only private insurers. This is the first time that Life Insurance Corporation will also be impacted by these norms. The impact could be different,” Roongta added.

Whether or not life insurance firms will sustain the growth posted after nearly there years remains to be seen.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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United Bank of India opens 50 branches in Assam

United Bank of India has recently inaugurated 50 branches in Assam. The branches were inaugurated by Chief Minister Tarun Gogoi.

UBI was also looking to add six more branches in the region to take its branch tally there to 250, Archana Bhargava, the Bank’s Chairperson and Managing Director, was quoted as saying in a press release. Its current branch strength in Assam stands at 244.

According to her, the bank would open one more regional office at Tezpur in addition to the five existing ones at Guwahati, Nagaon, Sibsagar, Dibrugarh and Cachar.

abhishek.l@thehindu.co.in

Source: thehindubusinessline

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ICICI bank cuts home loan rates to 10.25%

ICICI Bank, India’s largest private lender reduced interest on home loans by 15 basis points at 10.25 per cent.

The bank has introduced a 'special scheme' that will offer home loans up to Rs 75 lakh at 10.25 per cent rate. The rates for home loans above Rs 75 lakh will be at 10.50 per cent, an ICICI official said confirming the news.

For existing ICICI bank customers, interest rates remain at 10.40 per cent for upto Rs 75 lakh and 10.65 per cent for loan above Rs 75 lakh.

The offer will be available till January 31, 2014 with immediate effect.

The base rate of ICICI Bank is at 10 per cent.

This move comes after State Bank of India and HDFC also reduced their base rates a day after the RBI maintained a status quo on key policy rates.

Public sector lender, SBI also pared interest rate on home loans by 15-20 basis points.

Even as it cut the home loan rates, SBI raised the slabs for home loans in view of the rising property prices, especially in metros. The new slabs are – up to Rs 75 lakhs (up to Rs 30 lakh earlier) and above Rs 75 lakh (above Rs 30 lakh earlier).

Henceforth, a uniform interest rate of 10.15 per cent will be charged on home loans up to Rs 75 lakh (against the current rate of 10.30 per cent for loans up to Rs 30 lakh).

SBI will charge 10.30 per cent interest on home loans above Rs 75 lakh (against the current rate of 10.50 per cent for loans above Rs 30 lakh).

HDFC reduced rates by 25 bps for home loans availed before January 31, 2013. The interest rate charged is 10.25 per cent for loans up to Rs 75 lakh.

"HDFC has announced a special winter bonanza for its home loan customers effective Friday, December 20. This is a limited period offer and is valid for all new applications submitted before January 31, 2014 and first disbursement taken by February 28, 2014," HDFC said in a statement earlier this week.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Govt ups stake in Corporation Bank

The Central Government has increased its stake in Corporation Bank to 63.33 per cent.

The bank informed BSE on Friday that the Securities Allotment Committee of the board of the bank at its meeting on December 20 has allotted 1,46,27,486 equity shares of Rs 10 each at a premium of Rs 297.64 a share to Government of India on a preferential basis.

With this, the bank’s issued and subscribed capital has expanded to 16,75,41,877 equity shares, and Government’s holding in the lender moved up from 59.82 per cent to 63.33 per cent.

The allotment was made following the consent given by the bank’s shareholders at its extraordinary general meeting on December 16, the bank said.

Source: thehindubusinessline

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Vijaya Bank bonds fully subscribed

Public sector lender Vijaya Bank’s Tier-II bond issue has been fully subscribed.

The bank raised Rs 250 crore through private placement of bonds.

The issue opened on December 17 and closed on December 20.

Brickwork Rating had assigned a stable outlook (AA+) for the bank’s bond issue.

Source: thehindubusinessline

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E-lounge at Canara Bank

The first Canara Bank Pune Circle’s e-lounge was recently inaugurated by V.S. Krishna Kumar, Executive Director of the Bank, at Deccan Gymkhana. This is among 50 e-lounges across India, and many more will be opened shortly, he said.

Observing that the Bank provides advanced technological facilities for its clientele, Krishna Kumar requested the customers to make best use of the technology products including online opening of SB accounts.

The security guarded e-lounge is provided with Cash Deposit machine, Cash withdrawal machine, Cheque deposit machine, Passbook Printing Machine, Internet Banking and Online Trading facilities which are available to customers 24 X 7.

Source: thehindubusinessline

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NHB tax-free bonds issue to open on Dec 30

National Housing Bank’s tax free bonds issue will open on December 30, R.V. Verma, Chairman & Managing Director, has said.

The issue size including greenshoe option will be Rs 2,100 crore, Verma told Business Line adding that the formal prospectus is likely to be filed with SEBI on Monday.

The coupon rates that will be offered for these tax-free bonds will be decided soon, Verma added.

NHB has already mobilised Rs 900 crore through private placement of tax free bonds this fiscal.

The proposed issue will be the first public issue of tax-free bonds by NHB this fiscal.

The Central Board of Direct Taxes had allowed NHB to mobilise Rs 3,000 crore through tax-free bonds during the current fiscal.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Canara Bank to open New York branch

Canara Bank has received licence to open a branch in New York. According to R. K. Dubey, Chairman and Managing Director, Canara Bank, the Board of Governors of the US Federal Reserve has approved the proposal of the bank to open a branch. The bank, he said, could get the approval of US regulators in a record 20 months from date of filing the application. The bank is taking steps to hasten the process of opening the branch in New York and commence operations, he added.

Source: thehindubusinessline

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Bank strike hits financial transactions in Punjab, Haryana and Chandigarh

Financial transactions came to a halt in banks in Punjab, Haryana and Chandigarh as employees of public sector banks went on a day-long strike to press for various demands including wage revision.

Much to the inconvenience of harried customers, protesting bank employees under the banner of United Forum of Bank Unions (UFBU) even locked some branches from outside here in UT Chandigarh and Punjab not to allow any banking transaction to take place.

Due to strike, cheques worth several crore of rupees remained uncleared while transactions like cash withdrawal, cash and cheque deposits were affected.

Industrial sector including MSME and large enterprises in Punjab and Haryana said their business transactions were hampered due to the strike.

Protesting bank employees carried out protest rallies and demonstrations at several places including Ludhiana to press for their demands.

"Our intention is not to harass customers by observing the strike. But we are left with no option except to go on strike as our demands like wage hike have not been met for long," Punjab Bank Employees' Federation, Secretary, Naresh Gaur said.


Source: EconomicTimes

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HDFC Bank seeks change in criteria for giving ranks in Punjab

Expressing displeasure over not being in Punjab government's top 10 banks list, private lender HDFC Bank sought tweaking in criteria for giving ranks to banks for alloting government business.

"The state (Punjab) government should bring competition among banks (for ranking purpose) which will help the state... we want those parameters which should encourage banks to focus on the state," HDFC Bank Branch Banking Head (North) Govind Pandey told reporters here.

HDFC Bank, which has 400 branches in Punjab, will seek from state government consideraion of the bank's network or branch strength and size of business in the state while ranking any bank for allocating business.

"Bank's network or branches in the state, size of business in the state...these things should also be taken into consideration," he added.


The bank also sought to differentiate large or commercial banks with cooperative or small banks while working out rank for any bank as later normally have less presence or branch strength. "Cooperative banks should be put in separate category (for ranking purpose)," he said.

He said that the matter would soon be taken up with the appropriate authority for bringing change in the parameters.

The Punjab government had decided that it would allocate government business, including placement of deposits to banks as per ranking done by the state.

As per latest ranking done by the Punjab government, Punjab State Cooperative Bank has replaced HDFC bank by acquiring first rank among the list of top 10 banks in the state. HDFC bank is not in the new list of top 10 banks.

During last ranking done by the state six months back, HDFC Bank had secured first position in the ranking list.

The state government, currently, considers achievement of national goals set by RBI towards lending to priority sector, agriculture, weaker section and credit deposit ratio by banks in Punjab to give ranks.

Banks vie hard among themselves for acquiring sizeable government business, including heavy deposits, advances, salaries, etc.

HDFC Bank at present handles about Punjab government's business to the tune of Rs 1,000 crore including one lakh accounts of state police department.

The bank, which today opened its 400 branch at Jhanjheri in Mohali district, plans to ramp up branch strength in the state by adding 150 more branches in next one year.

"Our focus will be to further penetrate in semi-urban and rural areas to cover unbank and underbank areas in Punjab," Pandey said.


HDFC, which has about 81 per cent of its network dedicated to semi-urban and rural areas, has deposits and advances to the tune of Rs 11,210 crore and Rs 10,535 crore, respectively in Punjab as on September 30, 2013.

Source: EconomicTimes

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One-day strike criples banking operation

Banking operation was crippled on Wednesday as bank employees observed a one-day strike demanding early wage settlement and opposing banking sector reforms.

The impact of the strike was more prominent in the eastern and southern sectors. ATMs remained closed in Assam, Bihar, Jharkhand and West Bengal.
The bank unions called the strike after rejecting Indian Banks' Association's offer of a 5% salary hike and they would chalk out future plans on December 23 in Hyderabad to intensify pressure on the managements' body. The wage revision for government bank employees is due since November 2012.

At the last tripartite wage settlement in 2007 which expired in October 2012, bank employees received a 18% hike in salaries.

"If there is no positive response from IBA and the government, employees may resoirt to further agitation including strikes," said Rajen Nagar, president of All India Bank Employees Association, the largest bank union representing almost half of 10 lakh bank employees including officers and subordinated staff.

Reserve Bank of India employees and officers organized huge rallies before all RBI offices including central office at Mumbai in support of the United Forum of Bank Unions or UFBU, the umbrella body for nine major bank unions and refuting the Financial Sector Legislative Reforms Commission recommendations of taking away some functions of RBI.

"The rallies strongly repudiated Finance Minister's public announcement in Mumbai on December 14th on Government's decision to implement the recommendations of FSLRC of March 2013 and take away immediately several important functions and powers of the country's central bank and vest those functions with the government and/or separate agencies," said Samir Ghosh, general secretary of RBI's employees association.

Source: EconomicTimes

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Oriental Bank welcomes policy announcement

Oriental Bank of Commerce (OBC) has hailed the RBI’s mid-quarter policy announcement on Wednesday, stating that keeping the policy rates unchanged was a “positive surprise’’.

This public sector lender has no immediate plan to revise both the lending and deposit rates, S.L. Bansal, Chairman & Managing Director, OBC, told Business Line.

“Our rates will be stable for sometime.’’

Bansal pointed out that food and vegetable prices had nothing to do with monetary policy and it was from the perspective of core inflation (which is about 7 per cent) that markets had mainly expected a repo rate hike.

But with RBI seemingly comfortable about the current core inflation level, it had opted not to change the policy rates.

“The policy rates have remained unchanged and that is why the markets have positively reacted. It is a positive development for the markets,’’ Bansal said.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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RBI for removal of restrictions on gold import

Advocating removal of restriction on gold import as it encourages smuggling, Reserve Bank today said efforts should be made to maintain the present level of Current Account Deficit (CAD) without any significant curbs on inward shipments.

"I would be much happier if we had the kind of CAD we have without significant curbs on anything, including gold. We should aim to have a CAD without any distortions, removing the incentives for smuggling, that is what we will be working for,” he told a press conference here.

CAD, which is the difference between the inflow and outflow of foreign currency, had touched a record high of $88.2 billion or 4.8 per cent of GDP last fiscal.

The Government hiked import duty on gold to 10 per cent and the RBI also imposed curbs on its imports by linking it with exports.

With this, the CAD was brought down to 1.2 per cent in the July-September quarter, from 4.9 per cent in Q1.

In the first half, the CAD stood at $26.9 billion (3.1 per cent of GDP), down from $37.9 billion (4.5 per cent of GDP) in H1 of 2012-13.

"At this point, I feel very comfortable with where we are on CAD," Rajan said.

The Government and the RBI expect to contain CAD at $56 billion.

On an earlier occasion, the Governor had expressed concern that there was spurt in gold smuggling and was being paid for through the hawala channel.

Government expects gold imports to drop to 500 tonnes in the current fiscal as against 845 tonnes last year on account of measures taken by it along with the RBI.

Source: thehindubusinessline

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Kotak Bank rolls out financial inclusion plan for Amul workers

Mumbai-headquartered Kotak Mahindra Bank Ltd on Tuesday rolled out a financial inclusion programme for 75 milk co-operatives of Amul in the Burdwan and Hooghly districts of West Bengal. The programme called ‘Kotak Samriddhi’, will help ensure farmers getting paid for their daily produce through direct transfer of money on the same day. At present, it takes three days for farmers to get paid for their produce.

Amul is a brand owned by Gujarat Cooperative Milk Marketing Federation Ltd.

“Approximately, 8,000 farmers supplying milk to Amul through these cooperatives will benefit through the programme,” Tushar Trivedi, Executive Vice-President, Kotak Mahindra Bank, said.

Kotak has tied up with the National Payment Corporation of India for using their RuPay platform for issuing pre-paid cards.

Farmers need not necessarily have a bank account with Kotak Mahindra to obtain payments. However, co-operative societies need to have accounts with the bank.

Replicating the mode

Kotak, which began the pilot project on financial inclusion in the State, will now roll out a similar scheme for Amul in Gujarat in the next two months.

Over three lakh dairy farmers across 1,200 co-operative societies in the Gujarat will be part of the programme.

“In Gujarat, roll-out will happen in a phased manner,” Trivedi said. Kotak is also talking to other co-operative societies in Haryana and Punjab for extending the initiative to wheat and paddy.

Talks are, however, in a nascent stage.

abhishek.l@thehindu.co.in

Source: thehindubusinessline

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PSU banks themselves responsible for NPAs, not government: FM P Chidambaram

Blaming "tardy" state-run banks for high level of non-performing assets, Finance Minister P Chidambaram said banks' boards and not the government should be held responsible for the situation.

"If the bank boards cannot perform their duty, blame should stop with the bank boards and not with the government," he said at a panel discussion at an event to commemorate NSE's 20th anniversary here.

He acknowledged that the government has a nominee director in every public sector bank, but pointed out the roles of the independent directors, full-time directors, chairmen and managing directors and senior bank management.

During his three stints in the finance ministry, running into eight years, he has never interfered with the working of a bank, Chidambaram said.

"NPAs are high because the recovery measures are soft. Bankers are being tardy and to some extent soft on recovery. We have failing companies and prosperous promoters," he said.

Gross NPAs of banks crossed 4 per cent as of the September quarter at Rs 2.37 trillion and are projected to cross 4.4 per cent or Rs 2.9 trillion by the end of the fiscal, according to a report by rating agency Icra. Most NPAs are being generated by the state-run banks. United Bank of India has an NPA level of over 7 per cent, while SBI has over 5 per cent NPAs.

The minister also said that the RBI and the government have taken serious note of the issue and asked banks to expedite recoveries aggressively. State Bank has set up a separate vertical to tackle NPAs, he noted.

Chidambaram also said it is not fair to compare NPAs in the current context with the levels of the past, as in 2004, when the numbers were lower.

On capital infusion in state-run banks, Chidambaram said the infusion will continue even as bad assets rise because of the rate at which the overall assets of the banks are growing.


Source: Economic Times

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LIC Housing Finance will meet bank licence norms: Sunita Sharma, MD & CEO

LIC Housing Finance's first woman MD & CEO, Sunita Sharma, is confident of the company meeting all of Reserve Bank of India's criteria for a bank licence. According to Sharma, the company is prepared to transfer various businesses under a holding company as required by RBI.

If successful in its bid, LICHF will convert into a bank and come under a holding company which will also own LICHFL Care Homes and LIC Financial Services — a distribution company. Both of these are at present subsidiaries of LICHF.

"LICHF is a separate private company and the application for a bank licence does not involve the Life Insurance Corporation of India," said Sharma . "We do not have any problems in meeting any of the eligibility criteria as we are a highly compliant company."

RBI's screening committee is expected to meet again this month and hand over the list of qualifying candidates to an external committee headed by Bimal Jalan, a former RBI governor . Jalan had said that the committee would be able to come out with its recommendations in three months. Earlier this month, the Tata group withdrew from the race for a bank licence after they found the process of restructuring operations too complex.

Sharma, who took charge last month, was earlier executive director in charge of equity research at LIC. She was appointed CEO of the housing finance company following her predecessor V K Sharma's elevation as MD of LIC.


Source: Economic Times

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IOB to open 400 more branches this fiscal

Indian Overseas Bank is opening branches in Bangkok and Dubai. The bank Chairman and Managing Director M. Narendra told reporters here on Friday that the bank was in an expansion mode and had set itself the target of opening 400 more branches during the current financial year. At present, the bank has 3,059 branches.

Financial inclusion

“Our focus is on opening more rural branches and taking banking to villages. We have covered 3,000 villages under the financial inclusion scheme. There is a lot to be done on that count. Till now all the banks put together have covered only half of the six lakh villages in the country and there is a huge challenge and an opportunity ahead,” he said. He said the bank’s business — currently at Rs 3,89,000 crore — would cross the Rs 4 lakh-crore mark by the end of the current financial year, “but we have set ourselves a stiff target of Rs 4,25,000 crore.” He said the economic downturn was affecting the performance of banks, and inflation was also a cause for worry.

Narendra said the bank had recently recruited 4,562 employees and 6,500 more would be recruited depending on the expansion plans.

In Andhra Pradesh, the bank has 240 branches and 30 more would be added during the current financial year. “Our expansion will go on at the same pace during 2014-15, and we will add 500 branches all over the country, 50 of them in Andhra Pradesh,” he said.

The gross NPA of the bank stands at 4.65 per cent and net NPA at 2.83 per cent. “We want to bring down the gross NPA to below 3 per cent,” he added.

sarma.rs@thehindu.co.in

Source: thehindubusinessline

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RBI on course to issue new bank licences, says Rajan

The Reserve Bank of India will start issuing new banking licences from early next year.

RBI Governor Raghuram Rajan said the apex bank is ‘primarily on course’ to hand over the licences. “We are largely in line with our target date, may be a few weeks this way or that way. We hope to start handing out the licences by early next year,” Rajan told reporters here.

He, however, did not peg on the number of licences that would be handed out. The decision to issue licences would be taken by a committee. “That will be based on what the committee recommends and what the RBI decides. We don’t have a fixed number in mind,” Rajan said.

A total of 26 companies have applied for licences.

Foreign Banks

According to Rajan, foreign banks operating in the country are neither keen on expanding their branches nor are they looking for the wholly owned subsidiary model, proposed by the central bank.

“It is interesting. One section thinks that we have given away too much to the foreign banks and therefore they are protesting against the (wholly owned subsidiary) model. But the foreign banks themselves don’t seem to be interested,” he said.

The wholly owned subsidiary model, he pointed out, is important from the perspective of stability in the banking system. “There are benefits to it (subsidiary model) that foreign banks will see as they study it over (a period of) time. One of the benefits is that they can expand a little more, but they don’t seem to be interested,” he said.

The wholly owned subsidiary model would also help the foreign banks preserve capital.

Increased Liquidity

According to Rajan, as far as government bond yields are concerned, the RBI would look at keeping liquidity in markets. It would look to maintain liquidity at a certain level.

Source: thehindubusinessline

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RBI offers borrowing under MSF on Saturday

In anticipation of liquidity tightening due to outflows on account of advance tax, the Reserve Bank of India has decided to extend borrowing facility under the MSF window on Saturday.

“As the liquidity conditions are expected to tighten on account of advance tax payments commencing from mid-December 2013, Reserve Bank has decided to offer funds to the Banks for two days through Marginal Standing Facility (MSF) on Saturday,” RBI said in a statement.

The MSF window will remain open between 5.00 p.m. and 5.30 p.m. and the due date of repayment will be December 16, 2013 (Monday), the statement said.

Currently, the MSF rate is at 8.75 per cent.

On December 11, banks had borrowed Rs 250 crore through the MSF window, while a day later on December 12, the amount borrowed was limited to Rs 50 crore.

Earlier this week, RBI had had decided to provide additional liquidity of Rs 10,000 crore through the 14-day term repo on Friday. In the auction, the RBI notified allotted Rs 48,506 crore from bids amounting to Rs 76,625 crore. The cut off rate was 8.01 per cent.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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C.V.R. Rajendran appointed CMD of Andhra Bank

After being headless for more than three months, Andhra Bank has a new Chairman and Managing Director in C.V.R. Rajendran.

Prior to this elevation, Rajendran was executive director at Bank of Maharashtra.

Rajendran will be Chairman and Managing Director of Andhra Bank for a period of five years or until superannuation, whichever is earlier. He is due to superannuate in April 2015.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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