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Saturday, February 2, 2013

SEBI to introduce product labelling for MFs soon

Capital market regulator SEBI will soon introduce product labelling for mutual funds to make investors aware of any risks associated with them.

“Product labelling is an important investor education agenda for SEBI. The scheme profile will be given shortly and finally it will be with colour codes,” S. V. Muralidhar Rao, Executive Director of SEBI (Securities and Exchange Board of India), said today.

Rao said another important agenda for SEBI was to spell out a long-term policy on mutual funds.

SEBI will shortly bring out a long-term policy on mutual funds. That will be basically a taxation issue. The board of SEBI had approved the idea of a long-term policy last year.

“We are going to deliberate on it at the mutual fund advisory committee,” Rao told presspersons on the sidelines of an ICC seminar here.

On infra-financing MF products, Rao said SEBI would bring about an amendment since no such schemes were found to be floating last year.

He said the total assets under management of the MF industry till December 2012 grew by 12.7 per cent.

SEBI is also working with the Association of Mutual Funds of India to make the Rajiv Gandhi Equity Savings Schemes popular among the investing community.

Source: thehindubusinessline
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India to be No 1 market for US Exim Bank this year

The US Exim Bank said India will overtake Mexico to emerge as the biggest market by its fund commitments this year.

"If I had to guess, this year ... sometime this year, if we use the new ICICI Bank credit-line swiftly, then even sooner (India will become the biggest market for us in terms of fund commitment)," US Exim Bank Chairman and President Fred P Hoghberg told reporters here.

The US Exim Bank, which supports importers in foreign countries typically through credit lines to support job growth at home, already has USD 8.5 billion in commitments towards India, Hoghberg said.

In commitments, India stands second only to Mexico's USD 8.7 billion currently, he said, adding the allocation towards India has more than doubled in the past five years.

The export development finance bank today signed an agreement for a USD 500-million credit-line with ICICI Bank, which will have a focus on lending to small and medium businesses and infrastructure needs.

The bank is looking to fund projects in the air transportation, infrastructure and power sectors for growth in India and also analysing the potential presented by other sectors like freight locomotives, the chairman said.

Getting to the operational specifics and reservations, Hoghberg said the bank wants to be treated at par with any other Indian lender in making recoveries.

"There is a local law called Sarfesi Act, but we are not coming under its ambit and that is a concern. We have been working with the government here for quite some time to get covered under the Sarfesi Act so that we are on the same platform as other banks but we have still not received that," Hoghberg rued.

The bank has been liaising with the finance ministry and the sector regulator Reserve Bank for a movement on the request, he added.

Hoghberg, however, stressed that the asset quality here is good and that it currently has other recourses of recovery.

Globally, the US Exim Bank operates below the mandated 2 per cent delinquencies level, he added.

Source: Economic Times
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Indian Bank Q3 net down 37% on provisioning

Indian Bank today reported a 37.1 per cent decline in net profit at Rs 330.58 crore for the third quarter ending December 31, 2012.

The city-based public sector bank registered a net profit of Rs 525.92 crore in year-ago period.

Total income for the third quarter rose to Rs 3,786.68 crore from Rs 3,505.25 crore in the year-ago period.

Attributing the decline in net profit to provision of Rs 40 crore towards the pension corpus option given to VRS optees, the bank’s Chairman and Managing Director T. M. Bhasin told presspersons here that the bank has made another provision of Rs 15 crore during November and December towards wage revision of employees and officers.

He said in the third quarter ending last year, the bank had two exceptional income items comprising reversal of provision amounting to Rs 52 crore towards deferred tax liability, and a Rs 51-crore one-time income from the foreign exchange portfolio.

To a query on RBI cutting its key interest rates by 0.25 per cent and releasing Rs 18,000 crore additional liquidity into the system, Bhasin said: “Rs 130 crore of funds is what has been released (by Reserve Bank to us). It will generate an additional income of 33 per cent”.

“We have decided to pass on the advantage (to our customers) and we have decided to reduce the base rate by 30 basis points (0.30 per cent) to 10.20 per cent from February 9, from the present 10.50 per cent,” he said.

Detailing the bank’s performance, he said the total business in December 31, 2012, rose to Rs 2,35,060 crore from Rs 2,07,014 crore registered in December 2011.

Total deposits grew to Rs 1,35,077 crore as compared to Rs 1,18,970 crore in the year-ago period.

The CASA (current account savings account) deposits improved to Rs 38,268 crore in December 2012 from Rs 35,919 crore in December 2011.

On asset quality, Bhasin said the gross NPA to gross advances ratio and net NPA to net advances ratio stood at 3.18 per cent and 2.17 per cent, respectively.

During the nine-month period ending December 31, 2012, the bank made an NPA recovery of Rs 442 crore in addition to upgradation of NPAs to standard accounts to the tune of Rs 360 crore.

Till December 31, 2012, the bank’s exposure to the educational loan portfolio was Rs 3,648.17 crore and in the third quarter the bank disbursed Rs 403.52 crore as educational loan to 6,61,96 students.

To a query on implementing the Cash Transfer Scheme launched by the Centre from January 1, 2013, he said the bank has implemented it in Puducherry and Chittoor.

“All (our) banks have been linked to the Aadhaar scheme. It is totally glitchless and successfully implemented. Even in Chittoor it has been 100 per cent successful,” he said, adding, the bank has about 15,000 beneficiaries in Puducherry, and one lakh in Chittoor district.

Source: thehindubusinessline
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Friday, February 1, 2013

Central Bank, BoI cut base rates

Central Bank of India and Bank of India today slashed their base rate by 25 basis points each. The base rate for both public sector banks now stands at 10.25 per cent. Base rate is the rate below which banks cannot lend. All floating rate loans linked to the base rate will turn a tad cheaper. The banks that have cut their base rate so far include IDBI Bank, State Bank of India, Punjab National Bank, Union Bank of India, and Royal Bank of Scotland. On Tuesday, the central bank lowered the repo rate (the interest rate at which RBI lends short-term funds to banks) and cash reserve ratio (the slice of deposits that banks have to park with RBI) by 25 basis points each.

Source : thehindubusinessline
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BoB cuts lending, deposit rates

Bank of Baroda has cut its base rate and benchmark prime lending rate by 25 basis points each to 10.25 per cent and 14.50 per cent, respectively.

All loans, including retail and corporate, linked to these two lending rate benchmarks will become cheaper to that extent. The lending rate cuts are with effect from February 9.

The public sector lender has also pared deposit rates in shorter maturities by 15-20 basis points.

The lending and deposit rate cuts follows the Reserve Bank of India cutting the repo rate (the interest rate at which banks borrow short-term funds from the central bank) and cash reserve ratio (the slice of deposits that banks have to park with the central bank) on January 29 by 25 basis points each to 7.75 per cent and 4 per cent, respectively.

Source : thehindubusinessline
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Karur Vysya Bank net dips 9.5% in Q3

Karur Vysya Bank’s net profit for the quarter ended December 2012 fell 9.51 per cent to Rs 113.04 crore compared with Rs 124.92 crore during the corresponding quarter of the previous fiscal.

“This is due to higher provision of around Rs 101 crore for taxation, increase in NPA (non-performing asset) provision (of around Rs 30 crore) and decline in provision for depreciation on investment,” said K. Venkataraman, Managing Director, KVB.

The bank’s total income during this period however rose 24.51 per cent to Rs 1177.59 crore against Rs 945.77 crore during the corresponding period of the earlier year.

Net interest income grew 31.43 per cent to Rs 308.44 crore (Rs 234.67 crore) and other income up 17.94 per cent to Rs 105.49 crore (Rs 89.44 crore).

Net interest margin rose to 3.20 per cent (3.04 per cent).

Gross NPA fell to 1.29 per cent (1.45 per cent) while the net NPA increased marginally to 0.38 per cent from 0.29 per cent during the corresponding period of the earlier fiscal.

The total business of the bank stood at Rs 62,811 crore, a 19.89 per cent increase from Rs 52,390 crore a year ago. While deposits grew 17.89 per cent, advances growth rate was higher at 22.59 per cent.

Venkataraman further said that the cost to income ratio has remained high because of KVB’s expansion plans.

Source : thehindubusinessline
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OBC hikes certain term deposit rates

Oriental Bank of Commerce (OBC) has increased the interest rates on term deposits of less than Rs 1 crore.

The hike has been effected across different maturity buckets of less than 1 year. The quantum of rate hike ranges between 25 and 50 basis points.

OBC has also merged the existing slabs of “term deposits of less than Rs 15 lakh’’ and “term deposits of Rs 15 lakh and above but less than Rs 1 crore’’ into a single slab of “term deposits of less than Rs 1 crore’’.

Similarly, the existing slab of “term deposits of Rs 1crore and above but less than Rs 5 crore’’ and “term deposit of Rs 5 crore and above’’ has been merged into a single slab of term deposit of Rs 1 crore and above.

Effective February 1, there will only be two slabs-term deposits of less than Rs 1 crore and term deposits of Rs 1 crore and above.

Source : thehindubusinessline
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Corporation Bank net down 24.6% at Rs 303 cr

Corporation Bank has recorded a 24.62 per cent decline in net profit during the third quarter of 2012-13 fiscal.

The bank has recorded a net profit of Rs 303.17 crore during the third quarter of this fiscal against Rs 402.21 crore in the corresponding period of the previous fiscal.

There was an increase of 48.57 per cent in provisions and contingencies during the period. Provisions (other than tax) and contingencies stood at Rs 406.05 crore (Rs 273.30 crore).

Net interest income stood at Rs 883.39 crore (Rs 861.81 crore), while other income at Rs 386.86 crore (Rs 413.46 crore). Gross NPAs (non-performing assets) stood at 2.18 per cent (1.35 per cent) and net NPAs at 1.63 per cent (0.96 per cent).

The bank recorded a net profit of Rs 1,079.14 crore in the first nine months of 2012-13 fiscal against Rs 1154.78 crore in the corresponding period of the previous fiscal, registering a decline of 6.55 per cent.

Source : thehindubusinessline
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SKS Micro implements six sigma initiative

SKS Microfinance is implementing a lean six sigma enterprise initiative. It started a few months ago. The aim of this initiative is to reduce costs, increase efficiencies and offer better services for customers, SKS CEO M.R. Rao said.

He said: “We had seven million customers (in Andhra Pradesh two million) two years ago. Now it is down to three million, post the Andhra Pradesh MFI crisis. Although our customer base has come down, the number of locations (villages), where we are delivering neighbourhood credit, has gone up in non-AP states. We want more efficiency.’’

Elaborating, he said, these initiatives would help his company officials to retrieve documents faster, save time besides offering staggered timings for field staff (sangam managers) to ensure uninterrupted use of computer at its branches.

Dilli Raj, CFO, SKS Microfinance, said that the company has turned around and now it has new priorities. He said: “Our new priorities are compliance-oriented growth, governance, risk management and audit rigour.’’

Source: thehindubusinessline
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Punjab National Bank net rises 13% on better loan recoveries

A lower provisioning and better efforts on the bad loan recoveries front helped Punjab National Bank (PNB) report a 13.53 percent increase in net profit for the third quarter ended December 2012 at Rs 1306 crore (Rs 1150 crore).

The country’s second largest public sector lender by assets had reported a net profit of Rs 1,066 crore in second quarter.

Buoyed by the strong third quarter performance, PNB’s shares closed 10.24 per cent higher on Thursday at Rs 919 on the National Stock Exchange.

K.R. Kamath, Chairman and Managing Director, PNB, expressed confidence of surpassing last year’s net profit of Rs 4,884 crore during the current fiscal given the growth trend in net profits so far.

For the nine-month period ended December 31, PNB has recorded a net profit of Rs 3,617 crore (Rs 3,460 crore).

On lower provisions for the quarter under review, Kamath said that the reduction in provision has come on account of the bank’s ability to contain incremental slippage.

The banks’ restructured book, however, grew by about 2,500 crore during the third quarter.

Usha Ananthasubramanian, Executive Director, PNB, later attributed the better all-round performance in the December quarter to improved activities at the field level, especially in terms of increased focus on recoveries

Meanwhile, the asset liability committee of PNB today decided to reduce the base rate (the rate below which lending will not be done) to 10.25 per cent from 10.50 per cent earlier.

Source: thehindubusinessline
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Axis Bank closes QIP, pref issue

In one of the biggest share issuances in recent times, Axis Bank has announced the closure of its Rs 5,537 crore fund raising programme on 31.01.2013.

As a part of fund raising, the third largest private sector lender launched a qualified institutional placement (QIP) programme to raise over Rs 4,726 crore at Rs 1,390 per share and a preferential allotment offer amounting over Rs 810 crore to certain promoters of Axis Bank.

“This offering has led to a redistribution of the bank’s shares with the weight of long only institutions rising significantly. Subsequent to this offering, the shareholding of the promoters will stand at 33.5 per cent, other resident shareholders at 19.3 per cent and global institutions (including GDRs) at 47.2 per cent,” the bank said in a statement.

Shikha Sharma, MD and CEO, Axis Bank said, “We are delighted that large global houses and long term institutions like pension funds, insurance companies and mutual funds have reposed their faith in the bank. We believe that the success of our fund-raise signals the belief in the India promise and the renewed interest global investors have in high quality companies and issuers from India”

The QIP programme, which was launched by the bank late on Monday, was managed by Axis Capital, Citi and JP Morgan. The allotment date for the QIP is February 1, and the credit date, February 4.

Source: thehindubusinessline
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Thursday, January 31, 2013

Allahabad Bank net dips on higher provisioning for bad debts

Public sector lender Allahabad Bank on Thursday said that it intends to open 250 branches during the fiscal. Of these, 148 have already been opened and the bank has obtained authorisation for opening 140 more.

The bank currently has 2,664 branches.

According to Subhalakshmi Panse, Chairman and Managing Director, Allahabad Bank, the bank has also sought capital infusion of nearly Rs 1,500 crore. “We have applied to the government for capital infusion,” she told reporters at a press conference.

Net profit dips

The bank, meanwhile, reported a near 45 per cent dip in net profit to Rs 311 crore for the quarter ending December. Its net profit stood at Rs 560 crore for the corresponding quarter last fiscal.

The net non-performing assets (NPA) or bad loans increased to 2.06 per cent (0.79 per cent).

During the quarter, total income stood at Rs 4,735 crore (Rs 3,912 crore).

According to Panse, a higher provisioning for bad debt and non-performing assets, standard restructuring and provisions for wage revision of employees impacted net profit.

“Apart from higher provisioning for NPAs, the RBI has recently mandated higher provisioning for standard restructuring for which we have to set aside an additional Rs 93 crore in the third quarter,” she said.

Provisions against bad loans stood at Rs 432 crore (Rs 421 crore). Operating expenses increased 16 per cent to Rs 811 crore.

On Thursday, Allahabad Bank stock was trading at around Rs 163.50, down 2.15 per cent on the BSE.

Source: thehindubusinessline
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Central Bank unveils limited period deposit scheme

Central Bank of India has launched a new limited period deposit scheme – Cent 101, to mobilise up to Rs 3,000 crore, for a short-term requirement of the bank.

Announcing the launch here, B. Akbaraly, Zonal Manager (South Zone), Central Bank of India, said in the last couple of days of soft launch, the bank managed to mobilise Rs 58 crore. “Our target is to collect at least Rs 560 crore before the end of March 31, from the Tamil Nadu and Kerala markets alone,” he said.

Elaborating on the scheme, R. Thiagarajan, Deputy General Manager of the bank, said the bank will pay 8.55 per cent interest, which is the highest in the industry. For senior citizens, it offers 9.05 per cent.

Minimum amount that can be deposited is Rs 1,000, thereafter in multiples of Rs 1,000 and the maximum limit is Rs 10 crore.

Earlier, the bank came out with a similar plan for 555 days – Cent 555, which was a great success, said Akbaraly.

Hybrid card

The bank is also proposing to come out with a hybrid card, which will work as an usual debit card as long as the individual has balance in his bank account. Once the credit balance is exhausted by the individual, the card will automatically turn to be a credit card, he explained.

As on December 31, 2012, the bank has crossed 3.5 million debit card base. It has plans to launch co-branded debit, credit and pre-paid cards with several corporates.

The bank, being a late entrant to the ATM system segment, had only around 1,000 ATMs across the country by the end of 2011-12. In the current financial year, so far, it crossed the 2,000-mark. “In the next two months, we are planning to install another 500 ATMs across cities, to take the total to 2,500 by the end of the current financial year,” said Akbaraly.

Source: thehindubusinessline
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Vijaya Bank’s new credit cards target high net-worth individuals

Vijaya Bank has launched two credit cards ‘V-Platinum’ and ‘V-Privilege’ targeted at high net worth individuals (HNIs) and term deposit holders.

Launching the credit cards, H.S. Upendra Kamath, Chairman and Managing Director, said “We have set a target to issue 10,000 ‘V-Platinum’ cards and 5000 ‘V-Privilege’ by the end of this calendar year”

“The bank has issued around one lakh ordinary credit cards and has exposure of Rs 29 crore. But due to debit card, credit cards were not popular, hence today we have launched a variant of credit card targeted at HNIs and term deposit holders,” he added.

Vijaya Bank has drawn up a plan to issue both the credit cards by utilising the services of its 12,000 employee based and through its 1333 branches.


atheesha A.S., General Manager (credit cards), explaining the credit card features said “‘V-Platinum’ comes with minimum limit of Rs 2 lakh and no bar on maximum limit. The main criteria for issuing this card is net worth and income of the borrower in addition to KYC norms.”

This card has revolving credit limit with a minimum of 25 per cent of billing available.

For the ‘V-Privilege’ card, Satheesha said “Term deposit with the bank is the eligibility and not much importance will be given on due diligence.”

Source: thehindubusinessline
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ICICI Bank profit soars 30% on rise in interest income

The country’s largest private sector lender ICICI Bank today reported a 30 per cent jump in net profit for the October to December quarter at Rs 2,250 crore.

The profit was backed by strong advances and higher interest income.

The bank had posted a net profit of Rs 1,728 crore in the same quarter last fiscal.

ICICI Bank shares were trading down 1.30 per cent at Rs 1,198.50 on the BSE at 1.20 p.m.

Net interest income (difference between interest earned and expended) rose 29 per cent to Rs 3,499 crore (from Rs 2,712 crore in Q3FY12). Non-interest income increased 17 per cent to Rs 2,215 crore (from Rs 1,892 crore).

Net interest margins improved by 37 basis points to 3.07 per cent from 2.70 per cent in Q3FY12.

As on December 31, 2012, total advances grew by 16 per cent year-on-year to Rs 2.86 lakh crore.

During the quarter, provisions increased by 8 per cent to Rs 369 crore compared to Rs 341 crore in the third quarter last year. While, sequentially it declined from Rs 508 crore in the June to September quarter.

Net non-performing asset ratio stood at 0.64 per cent as compared with 0.70 per cent in the corresponding quarter a year ago. Net restructured loans at December 31, 2012, were almost flat at Rs 4,169 crore.

Capital adequacy ratio as on December end, 2012 stood at 19.53 per cent. Current account savings account (CASA) ratio was at 37.4 per cent.

Consolidated results

Net profit on a consolidated basis increased by 22 per cent year-on-year to Rs 2,645 crore for the quarter from Rs 2,174 crore in the same quarter last year.

Source: thehindubusinessline
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Yes Bank eyes acquisitions for business expansion

Looking to expand its business and grow its financial metrics going forward, new-generation private sector banking major Yes Bank has said it is open to possible acquisitions in banking, broking and asset management businesses, even as its organic growth plans are sufficient to meet its near-term targets.

Yes Bank's planning continues to be organic in terms of its 'Version 2.0' target, but it is open to possible acquisitions in banking, broking and asset management businesses, its founder and CEO Rana Kapoor told PTI in an interview.

Kapoor, who was here to attend the World Economic Forum Annual Meeting, said that Yes Bank has received RBI's approval to set up a retail broking business.

"We are in the process of establishing the subsidiary and building an organic business, primarily to complement our savings account offering to our retail customers. We will largely depend on the powerful ongoing retail customer acquisition of the Bank to leverage our broking business," Kapoor said.

"However, we will be open to looking at attractive opportunities in the retail broking space which will cut down the time to market our offerings and will attract high quality management talent," he added.

"We are also open to acquisition across banking, broking and asset management business. We now have a very strong top and senior management to execute organic and inorganic opportunities," he said.

Kapoor, however, added that the bank's planning continues to be organic in terms of execution of Version 2.0 goals of 12,750 employees, 2,000 ATMs, 900 branches, deposit base of Rs 1,25,000 crore, advances of Rs 1,00,000 crore and balance sheet size of Rs 1,50,000 crore.

Yes Bank had first announced its 'Version 2.0' goal in April 2010, wherein it set a target of 2015 to achieve 750 branches, 3,000 ATMs, 12,000 employees, Rs 1,25,000 crore deposit base, Rs 1,00,000 crore of loan book and Rs 1,50,000 crore of balance sheet. However, it revised the numbers in April 2012 to 900 branches, 2,000 ATMs and 12,750 employees.

At the close of last fiscal ended March 31, 2012, the bank had over 5,600 employees, loan book of about Rs 38,000 crore and deposits of close to Rs 49,000 crore. The bank currently has more than 400 branches and well above 650 ATMs, as per the information available on its website.

Asked about the bank's expansion plans, Kapoor said: "As our branch network expands, retail lending products are being offered from the branches which include a complete suite of products (auto loans, gold loans, home loans and credit cards).

Source: Economic Times
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Wednesday, January 30, 2013

SBI cuts base rate by 0.05%

Country’s largest lender State Bank of India (SBI) today cut lending rate by 0.05 per cent, a day after the Reserve Bank of India (RBI) cut its key policy rates.

After this marginal reduction, SBI’s base rate, or the minimum rate of lending, will come down to 9.70 per cent from 9.75 per cent effective February 4.

“Through this reduction, we are passing on a little more than what we gain through the rate cut by the Reserve Bank,” a senior SBI official said this evening, after a meeting of the bank’s Asset Liability Committee (ALCO).

The old benchmark prime lending rate will also go down by a similar 0.05 per cent, he said.

The bank has not cut deposit rates as the ALCO felt its offering is among the lowest in the market at present, the official said.

SBI, which has one of the most aggressive offerings among domestic banks, had last cut its base rate by 0.25 per cent in September, 2012.

The official said SBI is gaining “around Rs 275 crore and passing around Rs 350 crore... this will have a very negligible impact on our margins”.

The bank will earn around Rs 225 crore by deploying the additional Rs 2,780 crore funds which get released due to the 0.25 per cent CRR cut.

The Reserve Bank yesterday cut its short-term lending rate by 0.25 per cent and also reduced the CRR by a similar amount to ease the strained liquidity conditions.

Source: thehindubusinessline
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South Indian Bank’s new deposit scheme launched

The new deposit scheme of South Indian Bank – SIB 750 – has been introduced in the market by film star Mammootty, the bank’s brand ambassador. The product was launched to commemorate the 750th branch opening.

Assuring interest rates of up to 10.10 per cent, the SIB 750 is envisaged as a limited period deposit scheme.

The function held in connection with the inauguration of South Indian Bank’s 750th Branch and 787th ATM at Pallikkara in Ernakulam District, was presided over by V. A. Joseph – Managing Director and CEO of the bank.

SIB Travel Card, another innovative offering from the bank was also launched at the function.

A real boon for frequent travelers, the travel card enables its users to withdraw money while abroad and in the particular currency of that particular country. Besides, if necessary, the card holder’s account can be topped up from any branch of the bank.

South Indian Bank executive directors Abraham Thariyan and Cheryan Varkey, Bobby M. Jacob, Managing Director, Anna Group of companies and Shyla Noushad, President, Kunnathunadu Grama Panchayath were the other dignitaries who spoke at the function.

Source: thehindubusinessline
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Exim Bank extends $22.5 m credit to Burkina Faso Govt

Export-Import Bank of India (Exim Bank) has, at the behest of the Government of India, extended a Line of Credit (LOC) of $22.50 million to the Government of Burkina Faso, for financing a low cost housing and economical buildings’ project.

This is the third LOC extended by Exim Bank to Burkina Faso. The first LOC of $30 million was extended for financing the acquisition of tractors, harvesters and agriculture processing equipment, while the second LOC of $25 million is being utilised for financing rural electrification project in Burkina Faso. Burkina Faso is a landlocked country in West Africa.

Source: thehindubusinessline
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Tech upgrade to enable SBI double ATM network

State Bank of India can now double its automated teller machines (ATMs) with the Chennai-based Financial Software and Systems (FSS) upgrading the back-end technology to run these machines. FSS, which is a payment systems integrator, is a solution provider and technology partner of SBI.

Tech upgradation will help SBI increase its ATM network from 30,000 to over 60,000 ATMs in the next two to three years, said Nagaraj Mylandla, Managing Director, FSS.

Through this upgrade, SBI’s ATM expansion plans will actively support the government’s mission to increase ATM penetration in the country, he said.

FSS has been associated with SBI since 2000 when the company was selected by the bank as its ‘Switch System Integrator through a global tender for setting up the transaction switch.

Source: thehindubusinessline
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Federal Bank launches auto loan hub

Federal Bank has launched a national auto loan hub at Marine Drive, Kochi, as a single window for processing and sanctioning of auto loans on fast track.

The bank also slashed the interest rates on car loans to 10.45 per cent.

The auto loan hub is committed to speedy processing and will enable the bank to reduce turn-around-time to less than a day.

The central hub has started operations and is currently handling all applications from Kerala.

The bank proposes to spread its operations countrywide.

Source: thehindubusinessline
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Dewan Housing net up 22% on higher revenue

Dewan Housing Finance Corp (DHFL) reported a 22 per cent jump in its third-quarter net profit as the non-banking finance company earned higher revenue from its core business of lending for home loans.

For October-December quarter, the Mumbai-based DHFL’s net profit rose to Rs 91 crore from Rs 75 crore, a year ago.

Total income increased 27 per cent to Rs 840.64 crore.

The company sanctioned loans worth Rs 3,922 crore (up 23 per cent) in the quarter ended December 31, 2012. In the same period, disbursements increased 31 per cent to Rs 2,983 crore (Rs 2,279, a year earlier) reflecting the robust demand for housing.


In a meeting held today, the board approved borrowings by way of private placement of secured debentures up to an amount not exceeding Rs 3,000 crore, in one or more tranches.

The board also approved borrowing by way of issue of unsecured redeemable non-convertible subordinated debentures (Tier-II) upto an aggregate value of Rs 1,000 crore on private placement basis.

Shares of DHFL closed unchanged from its previous close at Rs 206.25 on the Bombay Stock Exchange.
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Dena Bank profit rises 11% on growth in advances

Dena Bank reported 11 per cent increase in net profit at Rs 206 crore during the October-December quarter of the current fiscal on the back of robust growth in advances.

The public sector lender had reported a net profit of Rs 187 crore in the year-ago period.

Profit growth in the reporting period was tempered due to increase in non-performing assets (NPAs) and higher provisioning.

Net interest income (difference between interest earned and expended) increased 14 per cent to Rs 615 crore in Q3FY13. Non-interest income grew by 8 per cent to Rs 144 crore.

Net advances grew 32 per cent year-on-year to Rs 63,041 crore due to higher loan growth in the agriculture and micro and small enterprise segments. Total deposits increased 24 per cent to Rs 84,882 crore.

Provisions during the quarter were up 26 per cent to Rs 157 crore (Rs 124 crore). Fresh slippages during the quarter were Rs 237 crore, these include majorly from the cotton, power and real estate sector.

Net interest margins declined to 2.88 per cent from 3.33 per cent in the year-ago quarter due to higher cost to income ratio and rationalisation of interest rates especially in the SME sector, said Ashwani Kumar, Chairman and Managing Director, Dena Bank.

NIMs will remain under pressure due to RBI’s rate cut. Further, immediate reduction in the deposit rates looks difficult, Kumar added. The bank’s asset liability committee will decide on the rate cuts in the next 10 days.

Capital adequacy ratio declined to 11.47 per cent from 11.58. The bank has asked the government for a capital infusion of Rs 1,600 crore which is likely to be approved.

Shares of Dena bank ended at Rs 110.45 per share, lower by 1.78 per cent on the Bombay Stock Exchange on Wednesday.
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SBI cash deposit machine

The first cash deposit machine (CDM) of State Bank of India (SBI) was inaugurated in Mangalore city on Wednesday.

Krishna Mohan Trivedi, General Manager, SBI, Bangalore, who inaugurated the facility, said that customers are now no longer required to wait in the long queue at branches for depositing cash.

They can remit cash to their account with SBI at any of its branches in the country using their ATM cards. This CDM is functional round the clock, he said.

Source: thehindubusinessline
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HDFC Bank cuts auto loan rates by up to 0.5%

Taking a cue from the RBI’s rate cut yesterday, private sector HDFC Bank has decided to slash auto loan rates by up to 0.5 per cent.

The interest rate on car loans will be lower by 0.25 per cent, while two-wheeler loans will be cheaper by 0.5 per cent, a senior bank official confirmed when contacted.

As far as the commercial vehicle segment is concerned, the reduction in rates will be 0.25 per cent.

The new rates would be effective from February 1, the official added.

Last month, the bank had reduced its base rate by 0.1 per cent to 9.7 per cent, the lowest in the market.

At the same time, the benchmark prime lending rate (BPLR) of the bank was also slashed by a similar margin to 18.20 per cent.

The revision in the benchmark lending rate was in anticipation of rate cut by the central bank in its January policy.

Yesterday, the RBI decided to reduce its short-term lending rate by 0.25 per cent and slash its Cash Reserve Ration (CRR) by the same margin to inject Rs 18,000 crore of liquidity into the system.

Following the announcement, IDBI Bank reduced both its deposit and lending rates by 0.25 per cent while other banks, including State Bank of India, hinted at cutting their interest rates within the next few days.

The Mumbai-based HDFC Bank currently offers car loans between 10.75 per cent and 11.75 per cent. Post-rate cut, the range would be 10.5-11.5 per cent for a repayment period between 36 and 60 months.

Accordingly, the interest rate on two-wheeler loans would be adjusted to between 19.25 and 22.25 per cent.

With regard to commercial vehicles, the rate on heavy commercial vehicles will be down by 0.25 per cent to 11 per cent, while light commercial vehicles will get reduced to 13.75 per cent from the existing 14 per cent.

The auto loan portfolio of the bank currently stands at about Rs 33,000 crore. Its auto loan advances have been witnessing 12 per cent growth.

Source: thehindubusinessline
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Increased income lifts IOB net 7% in Q3

Indian Overseas Bank reported a 7 per cent growth in net profit at Rs 116 crore for the quarter ended December 31, 2012, against Rs 108 crore for the comparable previous year quarter. Net interest income during the quarter went up to Rs 1,381 crore from Rs 1,221 crore last year.

The growth in profit was predominantly attributed to high-cost bulk deposits that matured during the quarter and increased non-interest income. M. Narendra, Chairman and Managing Director of the bank, said the deposit cost had come down substantially as a portion of high-cost bulk deposits matured during the period. According to him, bulk deposits currently stand at 21 per cent as against over 30 per cent last year. Other income grew 25 per cent to Rs 514 crore from Rs 411 crore last year.

Net interest margin stood at 2.51 per cent at the end of the third quarter against 2.61 per cent. The bank has made a provision of Rs 436.37 crore (Rs 252.8 crore). However, in terms of percentage, it is lower at 59 per cent against 72 per cent made in the comparable previous year quarter.

The bank’s gross NPA (non-performing assets) increased to Rs 3,595.14 crore from Rs 1,599.74 crore, a year ago. It recovered Rs 199 crore in third quarter as against Rs 173 crore, a year ago.

Commenting on the trend, Narendra said with more such high-cost bulk deposits are due for retirement in the next quarter and the provisioning too likely to be moderate, “we are likely to post profits as good as last year”. For 2011-12, it reported a profit of Rs 1,050 crore.

He also mentioned that the Government is likely to infuse Rs 1,000 crore as capital. The bank, on the other hand, requires Rs 1,500 crore. To mop up the remaining amount, the bank may consider other options such as rights issue or qualified institutional placement, for which it has already got necessary approvals, he said.
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Central Bank Q3 net jumps 59% on tight cost control

Tight leash on operating expenses and reversal in income tax provision helped Central Bank of India report a 59 per cent jump in net profit at Rs 180 crore in the October-December quarter.

The public sector bank had reported a net profit of Rs 113 crore in the year-ago period.

Profitability in the reporting quarter comes despite the bank setting aside Rs 633 crore towards provision for bad loans, including for restructured loan accounts, against Rs 428 crore in the year-ago period.

Net interest income (the difference between interest earned and expended) increased 20 per cent to Rs 1410 crore (Rs 1179 crore in Q4FY2012). Non-interest income was, however, flat at Rs 357 crore.

Operating expenses nudged up 7 per cent at Rs 988 crore (Rs 922 crore) and reversal in income tax provision was Rs 29 crore (against a tax expense of Rs 127 crore in the year-ago period).

During the quarter, the bank saw incremental addition of Rs 431 crore in gross non-performing assets (NPAs) to Rs 8,938 crore. Net NPAs too edged up by Rs 168 crore to Rs 5,864 crore.

Sequentially, total deposits increased 4.25 per cent (or Rs 8,663 crore) to Rs 2,12,201 crore and advances nudged up 3.18 per cent (or Rs 4,893 crore) to Rs 1,58,494 crore.

M.V. Tanksale, Chairman and Managing Director, Central Bank of India, said there is good appetite for credit from the mid-corporate segment. The bank hopes to end the year with a 16-17 per cent credit growth and 13-14 per cent deposit growth.

Net interest margin was a tad higher at 2.60 per cent as of December-end 2012 (2.53 per cent as at December-end 2011).

Preferential allotment

Meanwhile, the bank plans to raise up to Rs 2,406 crore through preferential allotment of equity shares to the Government of India. Tanksale sale the equity infusion will push up the capital adequacy ratio from 10.75 per cent as of December-end 2012 to 12 per cent. Further, the government’s stake in the bank will go up from 79.15 per cent to 84 per cent.

According to R.K. Goyal, Executive Director, the bank will soon be opening its first overseas representative office in Kenya.

Share of the bank closed 2.35 per cent down at Rs 83.05 per share on the BSE.

Source: thehindubusinessline
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Muthoot Capital net grows 52%

Muthoot Capital Services Ltd posted a 52 per cent growth in net profit at Rs 5.16 crore in the third quarter of the current fiscal, against Rs 3.39 crore in the third quarter of last year.

Total income increased to Rs 26.57 crore (Rs 16.68 crore), registering a growth of 59 per cent.

Interest expenditure increased from Rs 4.95 crore during the third quarter of last year to Rs 8.68 crore, recording an increase of 75 per cent.

The profit before tax recorded a jump of 56 per cent from Rs 4.91 crore to Rs 7.65 crore.

Thomas George Muthoot, Managing Director, said that the company continues to deliver excellent results by effective implementation of its loan products, designed to meet the needs of the customers, delivering credit to the unorganised sector in the rural and semi-urban areas.
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RBI to issue inflation-indexed bonds to wean investors off gold

To wean investors away from buying gold, Reserve Bank of India has decided to introduce inflation-indexed bonds (IIBs) in a new avatar.

Gold imports have been a cause of concern for both the Reserve Bank of India as well as the Finance Ministry. Last week, in a bid to restrict gold imports, the Government hiked the import duty on gold to six per cent from four per cent.

“The central bank had introduced IIBs some years ago but it did not take off due to some design flaws,” RBI Governor D. Subbarao said while addressing media persons during the monetary policy conference.

“We have tried to re-design it,” he added.

The most important change is that both principal as well as the coupon rate on the bond will be indexed to inflation.

However, according to bankers, some issues need to be sorted out before the government can go to the market with the IIB.

“Questions like which inflation index to be followed — wholesale price index-based inflation (WPI) or consumer price index-based inflation (CPI) — will have to be addressed,” the governor quoted bankers, who brought up the issue during the policy meeting. While WPI-based inflation was 7.18 per cent in December, CPI-based inflation was 10.56 per cent in the same month. Then there were questions about timing of introduction of IIB. “Can it be introduced when inflation rate is high?” bankers asked.

Few bankers suggested that IIB should be introduced when there is no competition from tax-free bonds.

Bankers have been concerned over flight of savings to non-bank space like substitution of bank savings through purchase of gold.

India is the largest importer of gold in the world as people view it as a hedge against inflation.

Gold imports grew 39 per cent in FY2012 and accounted for almost three-fourths of the current account deficit (CAD). India’s current account deficit was 4.2 per cent of GDP, or $80 billion, in FY 2012.

In first half of FY 2013, the current account deficit grew to 4.7 per cent of GDP. \
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Tuesday, January 29, 2013

A welcome move from RBI: Corporation Bank CMD

Terming the RBI’s decision to cut CRR and repo by 25 bps each as a welcome move, Ajai Kumar, Chairman and Managing Director of Corporation Bank, said that the reduction in repo rate is going to support growth, which is experiencing deceleration.

He said that the reduction in CRR will enable banks to have lower cost of funds and result in moderation of lending interest rates which will spur investment climate and growth.

The central bank action may release around Rs 18,000-crore liquidity into the system.

Ajai Kumar said that these policy actions may prompt banks to pass on the benefits of rate cut to customers by reducing their lending rates.
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IDBI Bank cuts lending, deposit rates by 0.25%

Within hours of Reserve Bank of India (RBI) reducing the key policy rates, IDBI Bank today slashed its lending and deposit rate by 0.25 per cent.

“The new base rate or minimum lending rate (at 10.25 per cent) will be effective from February 1,” the bank said in a release.

The base rate is the minimum lending rate below which banks cannot offer any loan to customers.

IDBI Bank was the first one to cut lending rates following the announcement of the RBI to reduce short-term lending rate by 0.25 per cent and deciding to slash Cash Reserve Bank (CRR) by same margin to inject Rs 18,000 crore of liquidity into the system.

Mumbai-based IDBI Bank has reduced the benchmark prime lending rate (BPLR) and fixed deposit rates on select maturities by 0.25 per cent.

“IDBI Bank has taken this proactive step keeping in view the policy measures announced by the RBI in its third quarter review of monetary policy today,” it said.

The reduction in interest rate is expected to positively impact loan growth both in retail and corporate segments.

Various other banks including the market leader State Bank of India (SBI) said that they would take a call on reducing interest rates in the coming days.

The National Housing Bank (NHB) has earlier announced cut in lending rates by 0.25 per cent benefiting the home loan borrowers.
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Cut in lending rates likely: State Bank of Hyderabad MD

Following the 25 bps cut in repo rate and cash reserve ratio, loans may become cheaper soon.

“A cut in lending rates is now possible as the repo rate reduction is also coupled with cut in cash reserve ratio,’’ Bhagavantha Rao, Managing Director, State Bank of Hyderabad, told Business Line on Tuesday.

State Bank of Hyderabad
’s asset-liability committee will meet in about a week to take a call on reduction in lending rates.

The cut in key policy rates by the apex bank today, though expected should not be seen in isolation, he said, adding: “I see this as a starting point for further easing of rates in the days to come.’’

He said that the markets have already factored the repo rate cut. The CRR cut could be due to the tight liquidity scenario faced by banks in the last two weeks, Rao added.
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RBI cuts repo rate, CRR by 25 bps each

The RBI has cut its key repo rate by 25 bps today to 7.75 per cent.

This comes nine months after its last cut in April 2012, a period during which it staved off continuous pressure to cut rates.

In a surprise move, the RBI has also reduced the cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.25 per cent to 4.0 per cent of their net demand and time liabilities effective the fortnight beginning February 9, 2013. As a result of this reduction in the CRR, around Rs 18,000 crore of liquidity will be injected into the banking system.

The repo rate cut was in line with market expectations. The case for a cut was strengthened by a slight easing in inflation numbers (still high) during the past few months as well as the measures taken by the Government on the fiscal side.

The RBI had indicated even in its October half yearly policy review that it would look at cutting rates provided inflation came down. It had also said during its mid-quarter review in December that the focus of the monetary policy would now shift to growth.

The RBI said that its policy stance in this review was shaped by two major considerations.

'Critical now to arrest the loss of growth momentum'

First, headline WPI inflation and its momentum edged down in November-December on the back of softening of non-food manufactured products inflation. While conceding that the staggered increase in diesel prices announced earlier this month will percolate through to overall costs and inflation, the RBI said that these price pressures will dissipate over time.

Second, the RBI said, "growth has decelerated significantly below trend through 2011-12 and 2012-13 so far and overall economic activity remains subdued. On the demand side, investment activity has been way below desired levels and consumption demand has started to decelerate. External demand has also weakened due to the slowdown in global growth. On the supply side, constraints in the availability of key raw materials and intermediates are becoming binding.

"In turn, this is being reflected in a widening of the current account deficit (CAD) with adverse implications for external sustainability. While the monetary policy stance has sought to balance the growth-inflation dynamic through calibrated easing, it is critical now to arrest the loss of growth momentum without endangering external stability. The moderation in inflation conditions provides the opportunity for monetary policy to act in conjunction with fiscal and other measures to stem the growth risks."

The next review will be on March 19 while its annual review will be on May 3, 2013, the RBI said.
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Karnataka Bank to focus on CASA deposits, retail loans

Retail loans and current/savings deposits will be the focus areas for Karnataka Bank during the current fiscal.

By the end of 2012-13, the bank wants its CASA (current account savings account) deposits to be 27 per cent of the total deposits.

According to P. Jayarama Bhat, Managing Director and Chief Executive Officer of the bank, the share of CASA in total deposits was 23.4 per cent in the third quarter of 2012-13. CASA deposits of the bank stood at Rs 8,114 crore during the third quarter of 2012-13 as against Rs 7,138 crore in the corresponding period of the previous fiscal, a growth of Rs 976 crore.

“We want to increase the share of CASA deposits to 27 per cent by the end of the current fiscal,” he said.

The bank wants to mobilise 4 lakh CASA accounts, he said. Considering the consistent yield on retail loans , the bank is also focusing on the this segment during the fiscal. He said that the bank is looking to grow housing and auto loans to boost its retail portfolio. Stating that the bank’s gold loan business has done well in the first nine months of the current fiscal, he said this portfolio has increased from Rs 1,165 crore as at end-March 2012 to Rs 1,880 crore in end-December, a growth of Rs 715 crore.
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