Reserve Bank of India sees inflation risks, limited room to ease policy

The RBI chief struck a hawkish note on Saturday and said there are upside risks to inflation from food and commodity prices, while room for monetary easing is limited.

Headline inflation slowed to its lowest level in more than three years in January, but some analysts say the Reserve Bank of India (RBI) will watch the fiscal and current account gap and inflation risks before easing again.

"There are upside risks for inflation. In particular, food prices are going up as result of cyclical factors ... Then there is pressure on inflation from global commodity prices," Duvvuri Subbarao told reporters in Moscow.

The RBI cut its key policy rate for the first time in nine months in January, but struck a cautious note on further easing as it waits to see how the government's budget aims to bring a bloated fiscal deficit under control.

"At this moment there is room for monetary easing, but that room is limited ans we have to make a careful judgement on how to use that limited room," Subbarao said on the fringes of a meeting of Group of 20 finance ministers and central bankers.

India's high fiscal and current account deficits, in addition to inflation risks, are deterrents for further monetary easing, which is seen necessary to support sagging GDP growth.

The current account deficit widened to a record high of 5.4 percent of GDP in the September quarter, and Subbarao recently said it is likely to be at an all-time high in the fiscal year that ends in March.

In October, strained finances forced the Indian government to revise its fiscal deficit target for the fiscal year ending in March to 5.3 percent from 5.1 percent.

Source: Economic Times

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Sebi allows mutual funds to lend idle gold

Gold demand will soften a little and returns on gold mutual funds will inch up with the capital market regulator allowing fund houses to invest their idle gold.

Gold mutual funds can now invest in gold deposit schemes of banks provided they limit their investments to 20% of the total asset base of the scheme, said a Sebi release.

This will enable the funds to earn a return on the gold they deposit and allow banks to lend gold to jewellers. Tapping a slice of this idle asset will lower demand and therefore gold import. "This will help gold ETFs to reduce their expense ration and benefit investors...It's a welcome move," said former Benchmark ETF head Rajan Mehta, who had first suggested the proposal as the govt looked for ways to curb gold import.

At present, MFs hold physical gold. "But now mutual funds will be allowed to invest 20% with banks, with this the gold so far which was held by mutual funds in physical custody will come back into circulation through banks. As a country it will help us to reduce gold imports," said Sundeep Sikka, CEO, Reliance Capital Asset Management.

Spiralling gold has pushed up India's current account, prompting the government to raise import duty on gold.

"Investors will also benefit as what ever interest rates banks give to the mutual fund scheme will go back to the investors as returns," Sikka said.

Only 20% of the gold is being allowed to be deposited with banks to make sure that funds are in a position to meet investor demand if there is a sudden redemption.

Total gold demand in India in 2012 was around 864.2 tonnes, according to World Gold Council. Of this, jewellery demand stood at 552 tonnes and investment demand at 312 tonnes.

Till now gold ETF schemes were allowed to invest in gold and gold-related instruments-- instruments that have gold as underlying. As on January 31, gold exchange-traded funds logged investments worth Rs 12,057 crore -- about 2% of the overall industry assets under management.

Before investing in gold deposit schemes (GDS) of banks, fund houses should put in place a written policy with regard to investment in GDS after getting it approved from their boards and trustees.

"The policy should have provision to make it necessary for the mutual funds to obtain prior approval of their trustees for each investment proposal in GDS of any Bank," Sebi said in a circular.

The policy shall be reviewed by mutual funds, at least once a year," Sebi said in a circular. Fund houses will have to hold the gold certificates issued by banks in a dematerialised form.

Source: Economic Times

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Corporation Bank conducts roadshow

Corporation Bank on Friday organised a roadshow to market its new savings account variants — ‘Corp Super’ and ‘Corp Signature’ — in Mangalore.

A press release said here that the bank launched a door-to-door campaign for the newly launched savings account variants.

Through this drive, the staff members reach out to customers in residential areas, business establishments, government organisations, corporates, etc.

Participation by individual staff member will inculcate the habit of pursuing and seeking business opportunities outside the branch to accelerate the business growth rate, the release said.


Source: thehindubusinessline

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SBI to offer loans for buying micro-irrigation systems

The country’s largest lender State Bank of India (SBI) has entered into a partnership with Mahindra group company, EPC Industrie Ltd, to provide loans to farmers who wish to use EPC’s micro-irrigation systems.

“EPC will assist the bank in identifying eligible farmers with a requirement for micro-irrigation systems, crop management services and agriculture pumps,” SBI said in a release.

The bank said that it expects that a large number of farmers will be financed through this tie-up in the coming months as the use of water-saving methods like drip and sprinkler irrigation method is being encouraged by various state governments.

It did not mention the quantum of loans, the eligibility criterion and the rate at which it will lend.

satyanarayan.iyer@thehindu.com

Source: thehindubusinessline

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RBI tweaks gold deposit scheme of banks

Seeking to unfreeze idle gold, the RBI made the gold deposit scheme of banks more attractive by lowering the investment time period and allowing mutual funds to participate in the scheme.

“It had now been decided to change the maturity period, of gold deposit schemes, ranging from six months to seven years,” the RBI said in a circular.

Earlier the maturity period for the said scheme was between three and seven years.

As per the estimates of an RBI committee, about 20,000 tonnes of idle gold is lying with the people.

The central bank wants to channel the idle gold for productive purposes and also check the demand for imports. Further, SEBI registered mutual funds and exchange traded funds may deposit under the scheme, the RBI said.

It further said the banks would not be required to obtain prior approval of the RBI for introducing the scheme.

However, they would be required to inform the details of the scheme, including name of branches operating the scheme, to the central bank.


Source: thehindubusinessline

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SBI net profit up 4% at Rs 3,396 cr in Q3

The country’s largest lender State Bank of India has reported a 4 per cent rise in net profit at Rs 3,396 crore for the October-December quarter this fiscal, according to a release filed with the Bombay Stock Exchange.

The profit was muted on the back of higher provisions and bad loans.

The public sector bank had posted a net profit of Rs 3,263 crore in the year-ago period.

Net interest income (difference between interest earned and interest expended) grew 6 per cent to Rs 1,215 crore from Rs 1,152 crore in Q3FY12.

During the quarter, provisions increased 11 per cent to Rs 2,668 crore from Rs 2,407 crore in the year-ago quarter. Sequentially, it jumped 64 per cent.

Percentage of gross non-performing assets (NPAs) jumped to 5.3 per cent from 4.61 per cent, while percentage of net NPAs increased to 2.59 per cent from 2.22 per cent.

Capital adequacy ratio stood at 12.21 per cent from 11.60 per cent.


beena.parmar@thehindu.co.in


Source: thehindubusinessline

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LIC Housing Fin Q3 net drops 23% on higher finance costs

LIC Housing Finance’s third-quarter net profit fell 23 per cent to Rs 236.24 crore (Rs 305.63 crore, a year ago) as the home loan provider made higher provisions to cover loan losses and finance costs increased.

In the October-December period, the housing finance arm of Life Insurance Corporation of India set aside Rs 31.56 crore to cover potential loan losses.

In the corresponding quarter last year, the company had realised Rs 80 crore due to reversal in provisions.

Finance costs increased 27 per cent to Rs 1,535 crore (Rs 1,213 crore).

Total income from operations for the Mumbai-based housing finance company increased 23 per cent to Rs 1,935 crore.

Total loan disbursement during the quarter was up 27 per cent to Rs 6,005 crore.

Bulk of this growth came from the individual loan segment, where disbursements grew 21 per cent to Rs 5,508 crore.

The company had an outstanding loan portfolio of Rs 72,704 crore as on December 31, 2012.

Shares of LIC Housing Finance closed at Rs 252.15 a share, down 5.88 per cent on the Bombay Stock Exchange.

satyanarayan.iyer@thehindu.co.in



Source: thehindubusinessline

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Syndicate Bank to open specialised branches in AP

Syndicate Bank is planning to expand its branch network in Andhra Pradesh by 150-200, and it would focus on opening specialised branches in the north-coastal Andhra region, including for agriculture, MSME and personal banking, according to Executive Director Anjaneya Prasad. At present, the bank has 411 branches in the State.

He said in an interview that the bank had a limited presence in the region. The number of branches in the port city would go up to 10 by the end of this fiscal. “The four districts together have 28 branches and the plan is to take it to 30. Given the high potential in this area, the bank had appointed an Assistant General Manager for business development here,” he said.

He said the bank intended to set up a special MSME branch in Gajuwaka area and was also exploring the possibility of an agri branch in Madhurawada.

He said the bank was considering opening an e-lounge in the State, similar to the one launched in Bangalore. The e-lounge or SyndYuva NextGen branch would offer facilities such as Internet banking, mobile banking, cheque deposit kiosks, coin dispensing facilities and an ATM.

To strengthen its IT-enabled network, the bank was setting up a back office centre for each State, which would handle the documentation processes. The bank was keen on setting up such an operation in the city as it was likely to be cost-effective, he said.

Prasad said the bank was willing to extend finance to enterprises for setting up small size captive power plants using renewable and non-conventional sources such as solar energy and wind.

With no major recruitment in recent times, the bank was facing an HR challenge, he said. In the past two years, it was unable to attract adequate numbers for its officer vacancies though almost all clerical vacancies were filled, Prasad added.

sarma.rs@thehindu.co.in

Source: thehindubusinessline

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SBI opens e-corners in Kolkata

State Bank of India, Kolkata Circle opened five e-corners in various parts of the city on Thursday. The e-corners will have various facilities including ATM, cash deposit machines, self-service kiosk (for passbook printing, fund transfer, NEFT, account statement, cheque book request, bill payments) and coin vending machine, said a bank statement.

These e-corners would help cater to the day-to-day banking needs of the customers 24x7.

The bank also plans to set up such e-corner outlets in various districts of West Bengal, Sikkim and Andaman and Nicobar Islands.


Source: thehindubusinessline

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Market regulator Sebi freezes assets of Subrata Roy and two Sahara Group companies

The Securities and Exchange Board of India, or Sebi, on Wednesday seized bank accounts and properties of two Sahara Group companies and its promoter - the enigmatic and colourful Subrata Roy - a move that could make it difficult for the Lucknow-based group to carry out normal business.

In an order issued late Wednesday evening, the capital market regulator ordered the attachment of the bank accounts and properties of Roy and a few other directors; assets of two Sahara Group companies that had forayed into real estate; development rights on thousands of acres of land in Aamby Valley; prime locations near Gurgaon, Versova (Mumbai) and Lucknow; and stakes in several special purpose vehicles floated to set up townships and realty projects.

The companies in question have been barred from redeeming mutual funds and operating bank and demat accounts. Also, they have been directed to recover investments in other Sahara Group companies.

Banks holding accounts of the companies and individuals concerned have been told to move funds to a prescribed account opened to refund investors who had purchased the convertible debentures floated by the Sahara entities to raise close to Rs 20,000 crore. The orders will come into effect immediately.

In a statement issued late Wednesday evening, Sahara Group reiterated that it owed only Rs 5,120 crore to investors. It said an application seeking interim relief would come up in the Supreme Court.

The company claimed that Sebi's order was based on outdated information. "Today's order of Sebi for attachment of the assets is based on old facts and details of assets as of January 2012. Since then, facts have changed in view of redemptions made by Sahara from time to time. This fact of redemption was known to Sebi. Hence, today's order does not take into account the changed facts and circumstances," it said.

Sahara also expressed concern that accounts of individuals had been frozen since it was the company that was liable to repay the money.

Sandeep Parekh, founder of Finsec Law Advisors, said, "The only option for them now is to pray, and perhaps seek more time from Supreme Court to delay any freeze of assets. This could probably be the first time that Sebi has attached properties and bank accounts."

The market regulator's powers are largely confined to freezing bank accounts for three months. But in this case, Sebi has gone beyond its usual powers because of the final ruling of the Supreme Court and the oral directions from the court.

If the regulator succeeds in monetising the assets after it attaches them, it would be possible to refund a sizeable part of the liability of Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation (SHICL) -- the firms that had issued OFCDs to close to 3 crore investors between April 2008 and 2011.

Along with Roy, the other directors whose movable and immovable properties would be attached are Vandana Bhargava,Ravi Shanker Dubey and Ashok Roy Choudhary.

All of them have been told to furnish details of all properties standing in their names within 21 days.

One of the former Sahara employees said while it was possible for Sahara to have parked assets in other companies, it could be difficult for the group to raise funds from the market. Sahara moved into real estate after the Reserve Bank ordered it to wind up its para-banking outfit, which was the group's original money spinner. At present, it is in the process of opening a retail chain, called Q-Shop.

The Sebi-Sahara battle has its origin in a Sebi order issued two years ago, stating that the Sahara companies were not authorised to raise funds without regulatory permission and completing the formalities of a public issue. In August 2012, the Supreme Court directed the Sahara firms to refund, with interest, all the money raised. A few weeks ago, the apex court issued notice to Sahara on a Sebi petition alleging that the companies should be held in contempt as it had failed to deposit Rs 24,000 crore collected from millions of investors. It asked Sahara to file an affidavit to explain its actions within two weeks.

Till now, Sahara has deposited Rs 5,160 crore to Sebi. The company, which alleges that Sebi refused to accept its documents, claims that most of the money has been repaid to investors. But according to Prashant Saran, the Sebi wholetime member who signed the order, "more than Rs 15,000 crore was not capable of being redeemed at all".






Source: Economic Times

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Syndicate Bank plans regional office in Vizag

Syndicate Bank is planning to open a regional office here after strengthening the branch network, according to Executive Director M. Anjaneya Prasad.

He was speaking to presspersons here on Wednesday after the inauguration of the bank’s ninth branch in the city on Sankaramatham Road (Madhuranagar) on Wednesday. It was the 2,777 branch of the bank and 411 branch in Andhra Pradesh. The branch was opened by Dredging Corporation of India CMD D.K. Mohanty.

Prasad said the bank had a good network in Karnataka and other parts of the country. The bank had now decided to focus on improving network in Visakhapatnam, he said.

The bank opened four branches in the city in 10 months and another branch will be set up at Naiduthota during the current fiscal. He said they had set the target of 3,000 branches by March 31.

Syndicate Bank branches from Srikakulam to Guntur have a business of Rs 4,000 crore, of which the advances account for Rs 2,400 crore. He said the bank had the highest number of branches in Andhra Pradesh after Karnataka and they had the third best network after Andhra Bank and State Bank of India in the State.

Bank’s Deputy General Manager P. Raja Reddy and Assistant General Manager R. Jayaprakash also participated in the function.

sarma.rs@thehindu.co.in

Source: thehindubusinessline

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United Bank enters into pact with Piaggio

United Bank of India has entered into an agreement with Piaggio Vehicles Ltd for financing light commercial vehicles manufactured by the company.

The bank has recently signed a Memorandum of Understanding (MoU) with Piaggio, which manufactures three and four-wheeler light commercial vehicles under the brands Ape, Porter and Cargo.

The MoU will facilitate the bank to increase its exposure in the micro sector. The bank aims to bring more than 30,000 micro entrepreneurs into its fold during the next fiscal, a bank statement said.

MSME portfolio

With a view to growing its MSME portfolio, United Bank has done away with collateral security and third party guarantees for eligible MSE loans which are eligible for CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) guarantee cover.

The bank is already providing a 50 basis points concession to the accounts availing CGTMSE cover.

shobha.roy@thehindu.co.in

Source: thehindubusinessline

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YES Bank looking to boost lending to small units

Private sector lender YES Bank plans to grow its micro, small and medium enterprise (MSME) portfolio by Rs 500 crore in the January-March quarter.

Due to pressure on the bad loans front across the banking sector, the private sector lender will end the financial year with a MSME loan portfolio of Rs 7,000 crore (Rs 6,500 crore as at December-end 2012) against the target of Rs 7,500 crore.

“MSME lending will be evergreen. We take care of pricing when it comes to NPAs. Our target on MSME loan portfolio was to touch Rs 7,500 crore this fiscal. But we will achieve about Rs 7,000 crore,” Sanjay Agrawal, Senior President, Business Banking, YES Bank.

Currently, the mid-sized bank’s MSME portfolio accounts for around 15 per cent of the total loan book. The total loan book stood at Rs 43,856 crore as on December 31, 2012.

Capacity expansion

Agrawal pointed out that the overall demand for loans is not much in the MSME sector as capacity expansion is not happening. He said MSMEs are being conservative in taking loans as they are largely dependent on the large corporates (for orders) which have not been performing well.

Further, as the bank writes off a loan account the moment it turns bad, the NPAs have been contained at around 0.5 per cent, he added. The automobiles, services and white goods segments are the focus areas for lending for the bank.

“Automobile loans are growing at 16-17 per cent. Services such as hospitals, healthcare, sports, IT and media, among others, are growing very fast at about 30 per cent,” Agrawal said.

YES Bank is focusing on services segment as it is less leveraged and this sector looks very promising in India. Also, tours and travel and logistics (including shipping, transport, etc) are the segments that look bullish,” he added.

beena.parmar@thehindu.co.in


Source: thehindubusinessline

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Syndicate Bank targets Rs 3,50,000-cr biz by March-end: ED

Syndicate Bank is aiming at Rs 3,50,000 crore business by the end of March and to take the number of branches to 3,000, said M. Anjaneya Prasad, Executive Director.

He was speaking while inaugurating the Akkayyapalem branch, Vizag, the ninth branch in the city and 411 in Andhra Pradesh.

Prasad said the bank had at present 2,777 branches (including one in London), with a total business of Rs 3,00,723 crore (deposits amounting to Rs 1,64,075 crore and the rest advances). He added that one more branch would be opened shortly at Vepagunta in the city, taking the total to 10, and three more would be established in East Godavari district.

He said the net NPA went down to 0.85 per cent and the employee productivity rose to Rs 11.56 crore from Rs 9.58 crore.

sarma.rs@thehindu.co.in

Source: thehindubusinessline

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Karnataka Bank to sell Reliance Cap MF products

Karnataka Bank has entered into distribution agreement to sell mutual fund products of Reliance Capital Asset Management Ltd.

A bank release said here on Tuesday that these products will be sold through the branches of the bank. The exchange of agreements took place in the presence of P. Jayarama Bhat, Managing Director of Karnataka Bank, and Himanshu Vyapak, Deputy Chief Executive Officer of Reliance Capital Asset Management Company Ltd, in Mangalore on Tuesday.

Quoting Bhat, the release said that the tie-up is an initiative to provide customers a wider range of investment options other than the regular banking products.



Source: thehindubusinessline

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IOB expects credit growth of 18 per cent in FY13

State-owned Indian Overseas Bank (IOB) today said it expects loan growth of about 18 per cent in the current fiscal.

"In the current fiscal (2012-13), we may be growing by at least 16-18 per cent," IOB Chairman and Managing Director M Narendra said during an event at Hansraj College here.

The Chennai-based bank recorded a 7 per cent growth in net profit at Rs 116.50 crore during the third quarter ended December 2012.

The Reserve Bank of India has projected 16 per cent credit growth for the banking sector for the current fiscal.

Speaking on the budget wish-list of the banking sector, Narendra said the banking sector favours treatment of the non-performing assets (NPAs) as a kind of expenditure.

"Budget expectations that we are having from the banking sector is that these NPAs, which we are having, should be treated as one type of expenditure and we should get income tax benefit to the full extent," he said.

Besides, banks should be allowed to issue long-term bonds with some tax benefits to counter asset-liability mismatch.

"We should be allowed to go for the long-term bonds with a little tax benefit, just like other institutions since there is a lot asset-liability mismatch," he said.



Source: Economic Times

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All India bank officers to strike on Feb 20, 21

Banking services across the country are likely to be affected following a two-day strike call given by All India Bank Officers’ Association (AIBOA) from February 20, in support of their charter of demands.

Over 50,000 officers would participate in the strike, which is likely to affect cheque transactions to the tune of Rs 35,000 crore, S Nagarajan, General Secretary of AIBOA, the second largest officers’ union in the banking industry, said.

He said that the strike in the banking sector would synchronise with the central trade unions’ strike.

Their demands include opposition to bank mergers, regulated working hours, pay parity, restoration of compassionate ground appointments, extension of pension option in IDBI workforce and five-day banking.

He said that the banking industry also supported the 10-point charter of demands of the central bank unions.


Source: thehindubusinessline

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Allahabad Bank cuts base rate by 30 bps

Allahabad Bank plans to reduce its base rate and benchmark prime lending rate (BPLR) by 30 basis points effective February 18.

Post revision, the base rate would stand at 10.20 per cent (10.50 per cent) while BPLR will be 14.45 per cent (14.75 per cent), said a bank press statement.

shobha.roy@thehindu.co.in


Source: thehindubusinessline

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Axis Bank, Nabard form farmers’ club

Axis Bank, India’s third largest private sector bank, has formed Farmers’ Club across 12 States in association with the National Bank for Agriculture and Rural Development (Nabard) to develop rural areas through credit, technology transfer, awareness and capacity building.

Under this club, 106 farmers were promoted through 16 agri business centres of Axis Bank over the last one year, the private lender said in a statement.

Farmers’ Club is a grass-root level informal association comprising 10-15 farmers of the same or nearby villages promoted by rural/semi-urban branches.

M.V. Subramanian, President-Rural and Inclusive Banking, Axis Bank, said: “One major benefit has been quality agriculture business generation through these clubs. We are confident of timely repayment of these loans, owing to the increase in farm productivity to be achieved through concerted efforts with scientific cultivation practices.”

Introduced to bridge the gap between rural customers and banks, Farmers’ Club has undertaken activities ranging from base-level orientation training programme, capacity building exercise and ‘meet the expert’ programme that encouraged the culture of better credit usage.

Along with regular training and nurturing of clubs by Nabard along with regular interaction with various stakeholders like state government departments, input agencies build the required confidence and the knowledge-level of members.

Trained members are encouraged to pass on the technologies they have learnt to their fellow farmers in the villages thus making the Farmers Club a tool in the overall development of village.

Farmers Clubs are in 12 States of Tamil Nadu, Chhattisgarh, Karnataka, Andhra Pradesh, West Bengal, Madhya Pradesh, Maharashtra, Rajasthan, Utharakand, Kerala, Punjab and Gujarat.

Beena.parmar@thehindu.co.in


Source: thehindubusinessline

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SKS concludes securitisation of two loans worth Rs 390 crore

SKSMicrofinance said it has concluded securitisation of two loans given to small borrowers aggregating to Rs 390 crore.

With this, SKS Microfinance has completed seven securitization transactions aggregating to Rs 803 crore in FY13, SKS said in a statement.

SKS Chief Financial Officer S Dilli Raj said the present transactions generate liquidity of Rs 370 crore for SKS Microfinance Ltd, country's only listed micro-lender, and also bring in the concomitant capital relief.

"Notably, 26 per cent of the pool is from Scheduled Caste and Scheduled Tribe entrepreneurs, 18 per cent from minorities, 34 per cent from Backward Castes and the remaining 22 per cent from women belonging to other castes," the statement said.

"The transactions have helped us provide working capital access to 5,00,000 women rural entrepreneurs while enabling the purchasing banks to achieve their priority sector loan obligations," Dilli Raj said.

The two pools are rated A1+(SO) signifying 'Highest Safety' by one of the leading rating agencies, SKS said.

The pools comprise receivables from 14 states (excluding Andhra Pradesh), it said.

SKS has completed 22 assignments/ securitization transactions worth Rs 2,481 crore since October 2010, when Andhra Pradesh promulgated its Andhra Pradesh Micro Finance Institutions (Regulation of Money-lending) Ordinance, 2010 (which became an Act in December 2010).

All transactions have been rated A1+(SO), signifying 'Highest Safety', by one of the leading rating agencies, and Credit enhancement has not been invoked in any of the structures, SKS statement said.


Source: Economic Times

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Punjab & Sind Bank to get Rs 140-cr capital infusion

State-owned Punjab & Sind Bank said it will get Rs 140-crore fund infusion through preferential issue of shares to the Government by end of next month.

The bank proposes preferential allotment of 1.98 crore shares to the Government aggregating about Rs 140 crore, Punjab & Sind Bank said in a statement.

The proposed price for preferential issue is Rs 70.66 a share including premium of Rs 60.66 per unit, it said

Following the infusion, the Government holding in the bank will go up to 79.86 per cent against the existing 78.16 per cent. With the issuance of about 1.98 crore preference shares, the total number of shares with Government will go up to about 20.28 crore.

This fund infusion is subject to shareholders approval, which will be sought on March 11 in an extraordinary general meeting.



Source: thehindubusinessline

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UCO Bank cuts base rate by 30 bps

UCO Bank has reduced its base rate by 30 basis points to 10.20 per cent from the existing 10.50 per cent. The benchmark prime lending rate has also been reduced by 50 basis points to 14.5 per cent.

The revised rates will come into effect from February 11, said a bank statement.


Source: thehindubusinessline

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KVB cuts base rate by 25 bps

Karur Vysya Bank has reduced the base rate by 25 bps and hiked the one to two-year term deposit rate by 50 bps with effect from February 3.

Post this reduction, the base rate now stands at 10.75 per cent and the benchmark prime lending rate (BPLR) at 15.75 per cent.

The rate offered on its domestic and NRE term depositshas been increased by 50 bps to 9.5 per cent for the one to two-year period. Senior citizens would get an additional half-per cent, the bank said in a release.


Source: thehindubusinessline

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Syndicate Bank gets board nod to raise Rs 1,500 cr equity capital

Syndicate Bank’s board has cleared the proposal to raise Rs 1,500 crore equity capital from the market and Rs 2,000 crore via tier-II bonds, the bank’s Chairman and Managing Director M. G. Sanghvi told newspersons here.

“But we will raise it depending on the market condition. We are expecting the Government to infuse some capital. We understand that some announcement on this line will be made in the Budget. We will have to wait and see.

“Meanwhile, the bank’s board had cleared a proposal for raising equity capital from the market. We have applied to the RBI and the Government for approval. Once we get it, we may consider raising capital, albeit partially this year and the rest in the coming fiscal,” the CMD explained.

Cuts base rate

The bank also announced a cut of in its base rate by 25 basis points to 10.25 per cent with effect from February 13. The bank also revised downward its benchmark prime lending rate (BPLR) by similar margin to 14.50 per cent.

Insurance biz

The bank is also looking to enter agency business in life insurance. “We have floated tenders and this is at an advanced stage of finalisation. We should in all probability start marketing insurance products in the next 3-4 months,” he said.

On hiring, he said: “We have already recruited 500 officers and 900 clerks. While the officers have already come on board, orders have been issued to 50 per cent of the clerks. We have also indicated our requirement for 1,500 officers and 1,400 clerks to the IBPS. The process has already started.”

Sanghvi was in the city to inaugurate the 88{+t}{+h} branch of the bank in Coimbatore region at Sathyamangalam this morning. He later launched the Smart card for students of Karunya University.

“This region would have a network of 100 branches by March 2013,” he said.

The 88-year-old bank has a network of 2,775 branches at present. Sanghvi said that another 225 branches would be added to this network soon.

Aggressive plans to expand its ATM network from the present 1,260 to 1,800 before the close of this fiscal is also being considered.

revathy.lakshminarasimhan@thehindu.co.in



Source: thehindubusinessline

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J&K Bank eyes 20% credit growth in FY14

The Jammu and Kashmir Bank is targeting a credit growth of 20 per cent next fiscal and will gradually be increasing the share of advances in its home state, a top official has said.

“We will grow our overall credit by 20 per cent and deposits by around 16-17 per cent in FY14,” the Srinagar headquartered public sector bank’s Chairman and Chief Executive Mushtaq Ahmad told PTI here.

Lending in Jammu and Kashmir, which accounts for a little over 40 per cent of the book at present, will grow by 25 per cent while the same in rest of India will grow slower, he said.

“We wish to go back to our older model of equally spreading of the asset book between J&K and outside the state.

This went down due to some regulatory changes and we shall get it back to 50:50,” he said.

The bank will be surpassing its target of Rs 1,000 crore net profit in FY13, having already achieved Rs 805 crore in the first three quarters, Ahmad said, declining to quantify the incremental profits.

It will also easily meet the guidance of taking the total balance sheet size to over Rs 100,000 crore by the end of the fiscal, having already touched the Rs 93,000 crore mark, he said.

The bank, majority owned by the state government of Jammu and Kashmir, is witnessing a good demand driven by the return of normalcy in the north Indian state, Ahmad said, adding that the tourism activity and the stress on the infrastructure sector helps the system.

On the entry of new banks in J&K state, he said it is a welcome sign and pointed out that his bank’s performance on a majority of the indicators is better than the other lenders’ experiences in J&K.

The bank’s net interest margin widened to 4.07 per cent mark for the third quarter ended December 31, 2012 on its ability to pass on the increase in cost of funds to the borrowers and Ahmad said he would be happy if the number comes in the 3.8 to 4 per cent bracket going ahead.

Its branch network stood at 667 as of December and will touch the 725 mark by the end of the fiscal.

“We have always had 80-85 per cent of the branches in J&K and this will continue,” he said, adding that the total will touch 1,000 in two years.

Apart from that, it may also approach the Reserve Bank for having a presence in Dubai and London in the next two years, he said, noting that the thought is at a very preliminary stage.

It will not require any capital infusion on either the Tier-I and Tier-II front in the next fiscal as its total capital adequacy stood at a comfortable level of over 13.82 per cent in December 2012, he said.


Source: thehindubusinessline

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Entry of new banks will promote healthy competition, says PNB chief

The Reserve Bank of India might soon come out with its final guidelines on new bank licences, said Punjab National Bank Chairman and Managing Director K. R. Kamath.

The entry of new banks into the system would encourage healthy competition, thereby benefiting customers, he said.

In August 2011 the central bank had issued draft guidelines, according to whichfirms with an exposure of 10 per cent or more to real estate and brokerage businesses by revenue or assets might not be eligible for applying for bank licences. The RBI had also fixed the minimum capital requirement for new banks at around Rs 500 crore.

“We expect the final guidelines to be out in the next couple of weeks or by next month. Entry of new banks will promote healthy competition,” Kamath, who is also the Chairman of Indian Banks’ Association, told newspersons on the sidelines of the 24{+t}{+h} Triennial Conference of the All-India Allahabad Bank Officers’ Association.

According to Kamath, credit growth would start picking up starting the first quarter of next fiscal. The asset or loan quality of banks would also start showing signs of improvement early next fiscal, he added.

“Credit growth has been sluggish so far but we should start seeing some improvement in credit demand early next fiscal,”

Asset quality should improve once the economy starts showing signs of improvement, he said.

shobha.roy@thehindu.co.in


Source: thehindubusinessline

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18 EDs in race for CMD posts in 9 banks

As many as eighteen executive directors of various public sector banks are in the fray for the post of Chairman and Managing Director (CMD) in about nine banks.

Interviews for the posts of CMDs, which are likely to fall vacant this year, will be held in the Capital on Monday, sources said.

The selection panel will include Financial Services Secretary Rajiv Takru and RBI Deputy Governor Anand Sinha. There will also be interviews for the posts of executive directors on Tuesday and Wednesday.

As many as 35 general managers in various banks are in the reckoning to fill up about 21 executive director posts, it is learnt.

srivats.kr@thehindu.co.in



Source: thehindubusinessline

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