KFA lenders to meet in 15 days, says SBI

With the revival plan of grounded Kingfisher Airlines getting nowhere, its lead lender State Bank today said the creditors will meet in a fortnight to decide the future course of action to secure their money even as the airline chairman Vijay Mallya met employees to reassure them of the plan.

“Bankers are going to meet within 15 days. Consensus (on liquidation or whatever action that bankers take) can emerge only when the company comes up with a credible plan,” said Pratip Chaudhuri, Chairman of State Bank of India having an exposure of Rs 1,600 crore not serviced since last January, to the troubled company.

He was speaking on the sidelines of a function attended by the Finance Minister P Chidambaram where he launched an infra debt fund from being run by IL&FS here this evening.

“They (KFA) made a presentation last time but we did not find that adequate,” Chaudhuri said.

Source: thehindubusinessline

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IDBI Bank crosses Rs 1 lakh cr in tax collection

IDBI Bank said that it has collected Rs One lakh crore in central taxes in the current financial year so far.

R M Malla, Chairman and Managing Director said that the bank will collect 25 per cent more in central taxes by end of March 2013.

The central government, in its 2012 budget, estimated a total gross tax receipt of Rs 10,77,612 crore in the current fiscal.



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Canara Bank Q3 net drops 19% as provisioning for bad loans rises

Canara Bank’s net profit has decreased 18.85 per cent to Rs 710.51 crore for the third quarter of the current fiscal mainly because of higher provisioning for bad loans.

Announcing the results, the bank’s Chairman and Managing Director R. K. Dubey said in a statement that the total income rose 9.5 per cent to Rs 9,390 crore on a year-on-year basis, which includes Rs 5,958 crore income from loans and advances.

The state-owned bank saw its interest income rise 9.37 per cent to Rs 8,544.48 crore. Non-interest income also went up, by 11 per cent to Rs 846 crore.

Net interest income for the quarter stood at Rs 1,988 crore and net interest margin sustained at 2.36 per cent as of December 31, 2012. Cash recovery amounted to Rs 998 crore in the quarter.

Provisioning for bad loans, at Rs 625.90 crore, was 29 per cent higher than in the same period last year.

CASA (current account savings account) deposits improved to Rs 8,1162 crore with the domestic CASA ratio working out to 26 per cent.

The bank’s net NPA (non-performing assets) ratio stood at 2.35 per cent (Rs 5,134 crore) compared with 1.49 per cent (Rs 3,265 crore) in the same period of the previous year. “Continuing stress levels at the industry is reflected in the rise in NPAs,” the bank statement said.

The total expenditure increased 12.3 per cent to Rs 7,874 crore while operating expenses was up 17.5 per cent to Rs 1,317 crore.

Segmental revenues

Segment-wise, revenues from treasury operations rose 37.16 per cent to Rs 2,815.78 crore, while that of retail banking operations was nearly flat at Rs 2,312.87 crore. Revenues from wholesale banking operations was Rs 4,173.70 crore, almost the same compared with the previous period.

On a sequential basis, the return on average assets improved to 0.82 per cent from 0.71 per cent. Agricultural credit increased 27 per cent to Rs 3,5365 crore covering 38 lakh farmers.

The statement said the bank’s financial inclusion plan has already covered all the 1,621 allotted villages under the more than 2,000 population category in 24 States.

It is also participating in the pilot project for direct benefit transfer of government benefits in 43 districts across the country under the Aadhaar Payment Bridge.

Canara bank has added 112 branches and 616 ATMs on a year-on-year basis.

Giriprakash.k@thehindu.co.in

Source: thehindubusinessline

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Union Bank, Dena Bank reduce base rates

Following most banks, public sector lenders Union Bank of India and Dena Bank reduced their base rates thereby making loan borrowing cheaper for customers.

The base rate is the minimum lending interest rate below which banks cannot lend.

Major banks including State Bank of India, Bank of Baroda, IDBI Bank Ltd and Punjab National Bank among others have already slashed their base rates.

Union Bank revised its base rate downwardly by 25 basis points (bps) to 10.25 per cent from the existing 10.50 per cent, while, Dena Bank decreased its base rate by 20 bps to 10.25 per cent from 10.45 per cent.

A basis point is equal to one hundredth of a percentage point.

The revised rates for both public sector banks will be effective from February 09.

On January 29, Reserve Bank of India in its third monetary policy review cut repo rate (rate at which RBI lends short-term money to banks) and cash reserve ratio (the share of bank deposits parked with the RBI) by 25 bps each. The 25 bps cut in CRR will release Rs 18,000 crore into the system.

In view of the reduction in base rate, the interest rate on home loans and car loans stands reduced to 10.25 per cent and 10.70 per cent per annum respectively, Union Bank said in a statement.

Beena.parmar@thehindu.co.in


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Kerala LIC agents to go on strike today

LIC agents in the State will go on a one-day strike on Friday against industry reforms ‘that affect not just them but also policyholders.’

Kerala LIC Agents’ Organisation of India and All-India LIC Agents’ Federation will observe strike to provide moral support to the industry strike on February 20 and 21, said P.G. Dileep and K. Ramachandran, conveners, LIC Agents Coordination Committee.

Trade union leaders will address a sit-in in front of LIC branches in the State. Agents will not transact any business on Friday.

Agents are demanding withdrawal of the Insurance Bill and the move for hike in foreign direct investment in insurance sector. Service charge on policy and commission should be scrapped and packaged as bonus to policyholders instead.

INTEREST CUT

Agents also demand reduction in interest on policy loans and reinstatement of cash mode for payment of interest and loan. Direct marketing concept should be dispensed with as also direct sales executives. Bankers should not be allowed to become brokers.

Agents have also demanded a raise in gratuity and cancellation of amendments to Agents’ Regulation, 1972. Dileep and Ramachandran appealed to all agents to participate in the strike called to ‘protect the interests of policyholders and LIC at large.’

vinson.kurian@thehindu.co.in

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RBI for change in laws to deal with fake currency menace

The Reserve Bank said it is in talks with the Government to amend the relevant laws to ensure that persons generating fake currency are punished and not those who possess such notes innocently.

“We are in negotiations with the Government of India on how this law can be reviewed and changed so that the responsibility for the fake currency is actually on the people who are responsible for generating the fake currency,” RBI Governor D Subbarao told newspersons after the board meeting here.

“But at the moment, regrettably, the holder of fake currency is responsible for that and if a branch manager says that he (the person with the notes) is accountable for it then he is right,” he said.


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HDFC raises up to Rs 500 cr via debentures

Mortgage lender HDFC today raised up to Rs 500 crore through issue of debentures for general corporate requirements.

Debenture is a type of debt instrument that is not secured by physical assets or collateral.

According to sources, the debentures issue closed for Rs 300 crore with a green-shoe option of Rs 200 crore.

Investors were being offered an annualised interest of 9.18 per cent through the debentures that had a maturity of five years.

The funds were raised to meet general corporate needs, sources said.

Private sector lender Axis Bank was the sole arranger of the issue.

Last month, HDFC had raised Rs 500 crore through non-convertible debentures (NCDs), which are loan-linked bonds that cannot be converted into stock and usually offer higher interest rate than convertible debentures.

The funds were raised through five-year bonds at an annualised rate of 9.05 per cent.

HDFC is the country’s largest home loan provider with cumulative disbursements of over Rs 3.74 lakh crore as at March 31, 2012.


Mortgage lender HDFC today raised up to Rs 500 crore through issue of debentures for general corporate requirements.

Debenture is a type of debt instrument that is not secured by physical assets or collateral.

According to sources, the debentures issue closed for Rs 300 crore with a green-shoe option of Rs 200 crore.

Investors were being offered an annualised interest of 9.18 per cent through the debentures that had a maturity of five years.

The funds were raised to meet general corporate needs, sources said.

Private sector lender Axis Bank was the sole arranger of the issue.

Last month, HDFC had raised Rs 500 crore through non-convertible debentures (NCDs), which are loan-linked bonds that cannot be converted into stock and usually offer higher interest rate than convertible debentures.

The funds were raised through five-year bonds at an annualised rate of 9.05 per cent.

HDFC is the country’s largest home loan provider with cumulative disbursements of over Rs 3.74 lakh crore as at March 31, 2012.


Source: thehindubusinessline

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Dewan Housing enters education loan space

Non-banking finance company, Dewan Housing Finance Ltd (DHFL), entered into the education loan segment with 'Avanse' where it aims to have a portfolio of Rs 200 crore in the first year of operations.

Avanse will be a subsidiary of DHFL with a capital base of Rs 50 crore, of which the World Bank-promoted International Finance Corporation (IFC) has agreed in-principle to pick up a 20 per cent stake for about Rs 10 crore. The promoters of DHFL will own 51.1 per cent stake” said Kapil Wadhawan, Chairman and Managing Director, DHFL.

The loans will be provided at an interest rate over and above the base rate, which is at 11.5 per cent. “We aim to grow at a margin of about 2.5 to 3 per cent targeting a portfolio of Rs 4,000 crore in the next five years,” Wadhawan said.

The new entity will focus towards providing loans for higher studies in engineering, business, management and new age courses like Aquaculture, Photo Journalism, among others.

According to Wadhawan, education loans business is still untapped by the non-banking entities which provides a large business opportunity with around 3 million students pursuing higher studies annually.

Avanse will cover complete cost of education including living and other expenses. The company offers educational loans with minimum loan value being Rs 50,000 up with repayment tenure of up to 10 years.

beena.parmar@thehindu.co.in


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Axis Bank rolls out 500 cash deposit machines

Axis Bank has deployed 500 cash deposit machines at its branches in over 300 cities.

The cash deposit machines will give customers the convenience of depositing cash, with funds getting credited instantly to their accounts for all successful transactions without filling deposit slips, provides mini statement and account balance for all the card-based transactions.

The machine segregates the notes as per each denomination, counts and displays them for the customer’s confirmation before crediting the account.

This reduces the customers’ time to deposit cash from an average of 30 minutes to less than a minute, the bank said in a statement.

Beena.parmar@thehindu.co.in


Source: thehindubusinessline

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NHB tax-free bond issue likely to hit market soon

National Housing Bank (NHB) plans to come out with a public issue of tax-free bonds for retail investors during the third week of this month, it’s Chairman and Managing Director, R. V. Verma, said.

Of the Rs 5,000 crore for which Government approval is already available, NHB is looking to mop up as much as Rs 2,500 crore from retail investors.

“We will definitely be in the market. We are making every possible effort to come to the market as soon as possible,” Verma said.

He was responding to a query on whether NHB had dropped plans for public issue of tax-free bonds this fiscal, given the difficult market conditions.

Already, NHB had raised Rs 500 crore through private placement of tax-free bonds. “We will step up private placement of tax-free bonds also,” he added.

srivats.kr@thehindu.co.in


Source: thehindubusinessline

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Royal Bank of Scotland fined $610 mn; settles Libor probe

State-rescued Royal Bank of Scotland said it will pay fines totalling $612 million to US and British regulators to settle allegations of Libor (London Interbank Offered Rate) interest rate rigging.

RBS, which is 81-per cent owned by the British Government, said it has agreed to pay the equivalent of GBP 391 million to regulators, becoming the third bank to admit its part in the Libor affair after Barclays and UBS.

The investigations uncovered “wrongdoing” by 21 employees, predominantly in relation to the setting of the bank’s yen and Swiss franc Libor submissions between October 2006 to November 2010, the bank said.

RBS added it had been fined $325 million by the US Commodity Futures Trading Commission, $150 million by the US Department of Justice (DoJ) and GBP 87.5 million by Britain’s Financial Services Authority.

The bank has also entered into a deferred prosecution agreement with the DoJ, in relation to one count of wire fraud relating to Swiss franc Libor and one count for an anti-trust violation relating to yen Libor.

RBS Securities Japan Limited has agreed to enter a plea of guilty to one count of wire-fraud relating to Yen Libor, it added in the statement.

Japan’s Financial Services Agency said the Securities and Exchange Surveillance Commission has been investigating the local arm since mid-November for involvement in LIBOR manipulation.

British Finance Minister George Osborne condemned the “totally unacceptable” behaviour at the bailed-out bank and insisted the taxpayer would not pick up the bill.

“Those responsible will face the full force of the law,” Osborne told reporters.

The Edinburgh-based lender, which was rescued with taxpayers’ cash at the height of the global financial crisis, said that it would recoup about GBP 300 million from its staff bonus pool and by clawing back previous pay awards.

John Hourican, Chief Executive of the bank’s Markets and International Banking division, is meanwhile to leave RBS and will forfeit his 2012 bonus and long-term incentive shares.

“This is a sad day for RBS, but also an important one in continuing to put right the mistakes of the past,” Royal Bank of Scotland Chairman Philip Hampton said in the statement.

“That is why those responsible have left the organisation or been subject to disciplinary action.”

RBS said its derivative traders sought to influence the bank’s yen and Swiss franc Libor setters over the four-year period.

“Two RBS traders based in London colluded with other banks and brokers in making and receiving requests for higher and lower” rates, it said.

The total fines slapped on RBS are more than those handed last year to Barclays for attempted Libor rate-rigging, but less than the amount paid by UBS for similar offences.

Libor is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.


Source: thehindubusinessline

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PAN must for high value gold buys: RBI panel

Seeking to check demand for gold, an RBI committee today proposed a slew of measures like mandatory quoting of PAN numbers for high-value purchases, restriction on gold loans and check on NBFC branches dealing with gold loans.

The Reserve Bank committee also suggested cheque payment for gold purchase beyond a threshold, introduction of other savings products to discourage investment in physical gold, prohibition of bank finance for buying gold and revival of the two-decade-old proposal to set up a Bullion Corporation.

“There is a need to moderate the demand for gold imports considering its impact on the current account deficit,” it said, adding that the RBI may impose limits on volume and value of gold import by banks under “extreme situation“.

Currently, banks account for about 60 per cent of the total gold import.

It suggested that NBFCs may obtain a copy of PAN Card in all the loan proposals exceeding Rs 5 lakh per borrower to strengthen mechanism of KYC. Currently, PAN card is mandatory for jewellery purchases beyond Rs 5 lakh.

The committee underlined the need for continuous monitoring of rapid growth of assets, borrowings and branch network of gold loan NBFCs, while making a case for reviewing fund raising by them.

The recommendations include making use of idle gold reserves, which is about 20,000 tonnes, by setting up a gold bank and using the reserves of exchange—traded funds to productive use, but said there was no case for granting gold loan NBFCs a status at par with banks.

Giving its rationale for setting up a gold bank, the report said, “the proposed gold bank may be given powers to import, export, trade, lend and borrow gold and deal in gold derivatives.”


Source: thehindubusinessline

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Syndicate Bank hopes to bring down share of bulk deposits to 15% this fiscal

Syndicate Bank is confident of bringing the share of bulk deposits to total deposits to 15 per cent by March 2013.

Addressing newspersons , Anjaneya Prasad, Executive Director, said the bank could shed around Rs 7,169-crore high-cost bulk deposits in the first nine months of the current fiscal.

As a percentage of total deposits, bulk deposits have come down to 16 per cent; at the end of March 2012, it was around 22 per cent. He said the bank can bring it to 15 per cent anytime.

(Bulk deposits are usually term deposits of above Rs 1 crore. Banks offer higher rates of interest on such deposits.)

On CASA (current account savings account) deposits, Prasad said these now form 32 per cent of the total deposits. “We have to improve CASA further. With the increase in deposits, CASA should also increase. During the current fiscal we want to maintain them at 32.5 per cent,” he said. The bank is targeting a CASA of 33 per cent for the next year.

The bank has been able to settle around Rs 300 crore of small-size NPAs (non-performing assets) in 30,000 accounts under ‘Brihat Synd Adalats’. In the last two quarters, the bank conducted two such adalats across the country. Similar adalats will be conducted on February 12, he said.

Prasad said the bank’s total business crossed Rs 3-lakh crore in December, and is eyeing Rs 3.5-lakh crore by March 2013.

vinayak.aj@thehindu.co.in


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Kotak Bank buys Barclays’ loan portfolio for Rs 700 crore

Kotak Mahindra Bank has acquired the business loans portfolio aggregating Rs 700 crore from Barclays Bank (India Branch) and Barclays Investment and Loan (India) Ltd.

Kotak Bank will gain access to around 6,000 business loan customers from the foreign bank, said Paul Parambi, Head - Group Strategy, Kotak Mahindra Bank.

The bank official, however, did not disclose the financial details of the deal.

Kotak Mahindra had last year acquired a part of the UK-based lender’s local credit-card portfolio.

According to Parambi, “The business loan portfolio comprises unsecured loans. All these loans are classified as standard loans as per current RBI guidelines.

“We are sitting on surplus cash and are on the look out for more asset portfolios that makes business sense for our bank.”

Barclays has been trimming its operations in India over the past couple of years.

Beena.parmar@thehindu.co.in


Source: thehindubusinessline

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HDFC cuts retail prime lending rate by 10 bps to 16.4%

Housing finance major, HDFC has reduced its retail prime lending rate (RPLR) by 10 basis points. With effect from February 6, the RPLR will be 16.40 per cent against 16.50 per cent earlier. HDFC gives home loans at a discount, ranging from 6-6.25 percentage points, to the RPLR.

Following the reduction in RPLR, HDFC will offer home loans up to Rs 30 lakhs, and above Rs 30 lakhs at 10.15 per cent (10.25 per cent earlier) and 10.40 per cent (10.50 per cent), respectively.

“Over the past couple of months we have seen a drop in the cash reserve ratio and a cut in repo rate. This has brought down our costs of funds at a portfolio level.

“Hence, we are passing on the benefit to existing customers by way of a reduction in RPLR,” said Renu Sud Karnad, Managing Director, HDFC, said in a statement.



Source: thehindubusinessline

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UCO Bank Q3 net drops 69% on steep rise in provisioning

An over 70 per cent increase in provisioning dragged down UCO Bank’s net profit 69 per cent, to Rs 102 crore, for the quarter ended December 31, 2012.

Provisioning for non-performing assets and other employee liabilities swelled to Rs 728 crore against Rs 420 crore in the year-ago period.

On a sequential basis, profits remained almost flat, from Rs 104 crore during the quarter ended September 30, 2012.

According to S. Chandrasekharan, Executive Director, UCO Bank set aside nearly Rs 417 crore as provisioning towards NPA (non-performing assets) during the period under review.

Gross NPAs as a percentage of advances increased to 5.53 per cent (3.49 per cent), while net NPAs increased to 3.32 per cent (2.04 per cent). On a sequential basis also, net NPAs were up, compared with 2.94 per cent during the July-September quarter.

The bank witnessed fresh slippages amounting to Rs 1,200 crore during the quarter primarily driven by smaller accounts, Chandrasekharan said. The rise in bad loans affected the bank’s profitability dragging down the net interest margin to 2.3 per cent (2.89 per cent).

“Moving forward margins will improve as we expect fresh slippages to come down and recovery from bad assets to boost our bottomline,” he said.

The bank aims to achieve NIM of close to three per cent by the end of this fiscal.

Capital infusion

Capital adequacy ratio stood at 13.19 per cent (12.33 per cent) as on December 31, 2012.

The bank is hopeful of getting Rs 681 crore worth capital from the Government as preferential equity within the next one month.

The bank has called for an extra-ordinary general meeting of shareholders on March 4 to seek approval for preferential share allotment to the Government.

UCO Bank’s share closed at Rs 67.80, down 5.11 per cent on the BSE on Tuesday.

shobha.roy@thehindu.co.in


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Bank employees' strike on Feb 20 & 21

As many as a million bank employees and officers are to strike work on February 20 and 21.

The strike call has been given by the United Forum of Bank Unions, a representative body of the nine bank unions of the country.

The employees are demanding that the Government should desist from banking reforms and outsourcing of banking related work.

The demands include early wage revision besides settling of pending issues like compassionate appointment scheme, according to C.H. Venkatachalam, General Secretary, All India Bank Employees Association.

srivats.kr@thehindu.co.in


Source: thehindubusinessline

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Indian Bank cuts lending rate by 0.30%

Indian Bank on Monday announced that it will cut its lending rate by 0.30 per cent to 10.20 per cent with effect from February 9, 2013.

The bank has decided to reduce its base rate by 0.30 per cent from the existing 10.50 per cent. It has also decided to cut its benchmark prime lending rate by 0.25 per cent.

"The Benchmark Prime Lending Rate of Indian Bank is reduced by 0.25 per cent from the existing 14.75 per cent to 14.50 per cent per annum with effect from February 9, 2013," it added.

This comes a week after the Reserve bank of India cut its repo rate (the rate at which the RBI lends short-term money to banks) and cash reserve ratio (the slice of bank deposits parked with the RBI) by 25 basis points.


Source: thehindubusinessline

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Citi Bank reduces base rate by 25 bps

Foreign lender Citi Bank cut its base rate by 25 basis points to 9.50 per cent.The new rate is effective from January 10, 2013.

Base rate is the rate below which a bank cannot lend money to its borrowers.

The base rate cut was done prior to the central bank's policy rate cut in its third quarter monetary policy review on January 29.


Source: thehindubusinessline

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Axis Bank raises Rs 811 cr through preference issue

Private sector Axis Bank today said it has alloted 58.37 lakh shares on preferential basis to promoters raising Rs 811.4 crore.

The board has decided to allot 58,37,945 lakh shares of face value Rs 10 at a price of Rs 1,390 on preferential basis to promoters, including LIC and General Insurance Corporation, Axis Bank said in a BSE filing.

Of the total, about 42.40 lakh shares were alloted to Life Insurance Corporation, it said.

The remaining shares were alloted to other promoters namely General Insurance Corporation, National Insurance Company, New India Assurance Company and United India Insurance Company.

Last month, the bank raised about Rs 4,726 crore through Qualified Institutional Placement to investors which witnessed participation from pension funds, insurers and domestic mutual funds.

The capital raising has led to a redistribution of the bank’s shares with the weight of long-term institutions rising significantly, thereby bringing down the promoters’ holding to 33.5 per cent, other resident shareholders to 19.3 per cent and global institutions, including GDRs, to 47.2 per cent.


Source: thehindubusinessline

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Corporation Bank unveils new products

Corporation Bank has launched two new savings account variants — SB Super and SB Signature.

According to a bank release, Ajai Kumar, Chairman and Managing Director, launched the new products at an NRI meet at Dubai on Saturday.

A customer should maintain a minimum quarterly average balance (QAB) of Rs 15,000 for SB Super and Rs 1 lakh for SB Signature.

For both SB Super and SB Signature, preferential loan processing will be offered by affixing ‘priority’ seal by the branch while forwarding loan applications.

Bundled demat and trading account is offered for both the variants including a waiver of annual maintenance charges for the first year.

Offers and concessions in service charges for both the variants include free NEFT, SMS banking, and 25 per cent concession in bank charges for gold coins, the release added.

vinayak.aj@thehindu.co.in


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Jammu and Kashmir Bank Q3 net up 36% at Rs 289 cr

Jammu and Kashmir Bank today reported a 36 per cent increase in net profit at Rs 289.4 crore for the third quarter ended December 31, 2012.

The bank had posted a net profit of Rs 213.19 crore for the corresponding quarter last fiscal, Jammu and Kashmir Bank said in a filing to the BSE.

Total income increased to Rs 1,623.77 crore during the October-December quarter from Rs 1,340.16 crore in the same period last year.

During the first nine months of 2012-13, the bank’s profit rose by 35 per cent to Rs 805.02 crore from Rs 595.13 crore in the same period a year ago.

The bank’s total income rose to Rs 4,784.82 crore in the first three quarters, compared to Rs 3,689.89 crore in the same period of the last financial year.

Shares of the bank were trading at Rs 1,399.50 per unit, up 1.63 per cent on the BSE.


Source: thehindubusinessline

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Security protocol for net-banking, Facebook has serious weaknesses

The protocol that provides security for online banking, credit card data and social networking site Facebook has “major weaknesses” which may lead to interception of sensitive personal data, UK scientists warn.

The Transport Layer Security (TLS) protocol is used by millions of people on a daily basis. It provides security for online banking, as well as for credit card data when shopping on the Internet.

In addition, many email systems in the workplace use it, as well as a number of big companies including Facebook and Google.

Professor Kenny Paterson from the Information Security Group at Royal Holloway University and researcher Nadhem AlFardan found that a so-called ‘Man-in-the Middle’ attack can be launched against TLS and sensitive personal data can be intercepted in this way.

They have identified a flaw in the way in which the protocol terminates TLS sessions. This leaks a small amount of information to the attacker, who can use it to gradually build up a complete picture of the data being sent.

“While these attacks do not pose a significant threat to ordinary users in its current form, attacks only get better with time. Given TLS’s extremely widespread use, it is crucial to tackle this issue now,” Paterson said in a statement.

“Luckily we have discovered a number of counter-measures that can be used. We have been working with a number of companies and organisations, including Google, Oracle and OpenSSL, to test their systems against attack and put the appropriate defences in place,” Paterson added.


Source: thehindubusinessline

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Bank of Baroda Q3 net profit falls 21.5%; stock drops 5.7%

Bank of Baroda has reported a sharp drop of 21.5 per cent in net profit for the third quarter ended December 31, 2012.

The stock dropped 5.7 per cent or Rs 49 and was trading at Rs 818 at noon today.

The bank has posted a net profit of Rs 1,011.62 crore for the quarter under review as compared to Rs 1,289.85 crore for the same quarter last fiscal. Total income has increased to Rs 9,685.51 crore (Rs 8,821.32 crore).

Bank of Baroda's board of directors has approved issue of equity shares of face value of Rs 10 each, for cash at a premium to be determined in accordance with SEBI (ICDR) Regulations aggregating up to Rs 860 crore, on preferential basis to Government of lndia. The bank will be holding an extraordinary general meeting to be held at Vadodara on March 11, 2013, for the purpose.



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UBI seeks permission from China to upgrade its Shanghai office

Union Bank of India has applied for permission to Chinese government to upgrade its representative office in Shanghai to a full-fledged branch, sources said.

Currently, UBI has its representative offices in Shanghai and Beijing and permission has been sought to upgrade Shanghai office into full-fledged branch.

UBI opened Shanghai office in 2007 and is looking to convert it into branch as it has already completed the two year mandatory period required to open a branch in China, UBI sources told PTI here.

UBI is the latest among India-government owned banks looking to cash in on the burgeoning India-China bilateral trade.

A host of Indian banks have representative offices in various cities China. State Bank of India, (SBI) and Canara Bank have already upgraded their representative offices into branches in Shanghai. Bank of India has opened branch in Shenzhen while Bank of Baroda has a branch in Guangzhou.

SBI this month will be opening its second branch in the port city of Tianjin about 140 km from Beijing.

There is clamour among the Indian banks to expand their network in China to take advantage of the growing trade which touched USD 74.9 billion in 2011. The figure stood at USD 66.47 billion last year.

Official sources say Indian banks are looking to cash in on the opportunity in China mainly through trade finance.


Source: Economic Times

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LIC cuts stake in 27 Nifty firms; sells shares worth Rs 8,000 crore

State-run insurance giant LIC has lowered its holdings in as many as 27 of the 50 blue-chip firms forming the market benchmark index Nifty, while selling shares worth an estimated Rs 8,000 crore.

Amid stepped-up share purchase by FIIs and an uptrend in the stock market, the Life Insurance Corporation of India (LIC) appears to have booked profits in many blue-chip stocks, shows an analysis of shareholding data of Nifty companies for the three-month period ended December 31, 2012.

LIC holds shares worth about Rs 2.33 lakh crore in all the Nifty companies put together, but it lowered its holding in a total of 27 Nifty companies during the quarter.

The cumulative value of LIC holding in these 27 companies fell by little over Rs 8,000 crore during the quarter, shows the analysis of changes in their shareholding patterns.

Individually, LIC is estimated to have sold shares worth Rs 500-1,000 crore in each of Mahindra & Mahindra, HDFC Bank, ICICI Bank, Tata Motors, L&T, HDFC, Wipro, SBI, Maruti Suzuki, Dr Reddys and Bajaj Auto.

The insurance behemoth also trimmed holdings in Ambuja Cements, Cipla, TCS, Lupin and Asian Paints. A marginal decline was also witnessed in its stakes in companies such as IDFC, Hindustan Unilever, Grasim, ACC, BPCL, Bank of Baroda, Punjab National Bank, Sun Pharma and Tata Power.

On the other hand, LIC further ramped up its stake in a total of 14 Nifty constituents with purchase of shares worth an estimated Rs 4,000 crore.

The major companies where LIC has raised its stake include Infosys, RIL and Cairn India. Other such companies are ITC, Power Grid Corp, NTPC, Siemens, Bharti Airtel and Hero MotoCorp.

The state-run insurer also marginally hiked its exposure in Ultratech, Gail India, Ranbaxy, Kotak Mahindra Bank and HCL Technologies, while its shareholding remained almost unchanged in companies like ONGC, Tata Steel, BHEL and Reliance Infra.

Among the Nifty companies, LIC's holding in terms of value is estimated to be highest in ITC (Rs 27,326 crore), followed by RIL (Rs 21,659 crore), ONGC (Rs 17,764 crore), SBI (Rs 17,058 crore), L&T (Rs 16,800 crore), and ICICI Bank (Rs 10,006 crore).

Nifty is a well-diversified 50-stock index accounting for 22 sectors of the economy. The index represented about three- fourth of the free float market capitalisation of all the stocks listed on NSE as on December 31, 2012.

The insurance major appears to have mainly booked profits in select stocks from sectors like banks, pharma, auto, refineries and metal.



Source: Economic Times

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RBI draft norms for loan restructuring may hit banks’ earnings

RBI’s new draft guidelines for restructured loans are likely to hit earnings of banks by at least 3-8 per cent over the next two years, while some public sector banks are expected to get most impacted, a report by Bank of America Merrill Lynch has said.

Reserve Bank last week issued revised draft policy norms for restructured loans, post the working group (WG) guidelines issued in July, 2012. According to the draft norms, banks would need to step up provisioning on restructured loans by 1 per cent from FY’14 to 3.75 per cent and to 5 per cent by FY’15 on the existing stock of restructured loans.

The norms, if implemented, would be applicable to new restructured accounts with effect from April 1, 2013 and in a phased manner for existing accounts.

Analysing the impact of the new norms, BoA-Merrill Lynch said that the state-owned banks, which have nearly 10 per cent of total loans in the restructured category, would be more impacted by this move than their private-sector peers.

“The impact on earnings may be somewhat less as some of these loans could get upgraded, we establish at least 3-8 per cent of earnings hit for the banks through FY’14-15,” it said.

Banks with higher provision cover, like Bank of Baroda and Union Bank, may have some cushion to offset the earnings hit, while private banks would be least impacted with impact estimated at less than 0.5 per cent, it added.

Restructured loan is a new loan that replaces the outstanding balance on an older loan, and is paid over a longer period, usually with a lower instalment amount.

Loans are commonly restructured to accommodate a borrower in financial difficulty and, thus, to avoid a default.

In the third quarter of the current fiscal ended December 31, 2012, Indian Bank had 10.9 per cent of its loans in restructured category, while the country’s second largest lender PNB had 9.6 per cent and OBC had 9.5 per cent.

However, country’s largest lender State Bank of India, which is also a public sector bank, had only 3.5 per cent restructured loans.

On the contrary, leading private sectors lenders ICICI, HDFC and Axis Bank had 1.5 per cent, 0.3 per cent and 2.4 per cent, respectively.

The report said these guidelines allow banks to upgrade a restructured loan to a ‘standard loan’ in their accounts if the loans have been performing for a specified period (12 months for the credit facility with longest moratorium).

These guidelines, especially relating to upgrading may “partly mitigate” the impact, as in some instances 30-40 per cent of reported restructured loans could be upgraded, it said, adding, they would act as a deterrent to “shallow” restructuring that tends to happen in the banking sector.

The RBI has invited feedback on the draft guidelines by February 28, 2013.

Source: thehindubusinessline

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Why investors don’t bank on tax-saving deposits

In 2006, bank deposits held for five or more years were exempt from tax in the hope that this would draw retail investors to park more long-term money with banks. But seven years on, numbers belie the hope. These deposits have not proved a big hit.

The proportion of five-year plus deposits in the fund base of banks has not changed much in these years. Eleven per cent of total bank deposits was parked in five-year plus deposits in 2006. In 2011, the number was barely changed at 12.3 per cent.

Nor have depositors shown any special preference for these deposits — over the short-term ones — because of the tax-break they offer. Between 2006 and 2011, five-year plus deposits registered a 22.6 per cent annual growth, only slightly higher than the 21 per cent growth in the term deposit base of banks.

Why have tax saving deposits failed to take off? One of the key reasons seems to be the rather unattractive interest rates offered. Looking at the trend of interest rates across various deposits (by tenure), that for deposits with maturity of more than five years have often been similar or even lower than what is offered for lower tenures. In 2011-12 for instance, while five-year deposits offered 8.5 to 9.25 per cent, those for two-five years fetched 9-9.25 per cent. In fact, the rates particularly under the tax- saving schemes range between 8 and 8.5 per cent.

While initial deposits up to Rs 1 lakh are tax-free, interest payments are taxable. This take the shine off this investment relative to other tax-saving options. While tax saver deposits up to Rs 1 lakh are exempt under Section 80 C, interest earned is treated as “Income from other sources” for the purpose of taxation. Hence, banks are required to deduct TDS (tax deducted at source), currently at 10 per cent before crediting the account. Hence, the attractive ‘yields’ of 16-odd per cent that most banks claim to sell this product are usually pre-tax workings.

Financial advisers point out that comparable tax saving options in the fixed income category — National Savings Certificate (NSC) and Public Provident Fund (PPF) — offer higher rates that are also tax free. The five-year NSC offers 8.6 per cent. What makes it attractive is that the interest — compounded half yearly — is treated as reinvestment until the penultimate year. Similarly, PPF interest rate stands at 8.8 per cent and the interest income from PPF is tax free, making this option attractive.

Added to this is the lock-in period of five years. “The tax-saving FD, despite being a bank product, cannot be pledged as security for loan. The illiquid nature and long tenure make it less popular vis-à-vis against equity linked saving schemes (ELSS) and other similar tax-saving instruments” says Adhil Shetty, CEO, Bankbazaar.com.

As part of the pre-Budget discussions, bankers have put forth a request to reduce the lock-in period from five to three years to bring it at par with other tax-saving schemes like ELSS.

radhika.merwin@thehindu.co.in


Source: thehindubusinessline

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