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Saturday, February 23, 2013

India Post to enter banking space

The Indian postal department plans to enter the banking business with RBI deciding to grant new bank licences to entities with credible track-record.

Sources said the Department of Posts, which a strong foot print in rural areas, has appointed Ernst and Young as consultant for proposed 'Post Bank'.

"Ernst and Young is expected to submit detailed project report by April 2013, after which all necessary measures will taken up to apply for banking licence,"a source at Ministry of Communications and Information Technology told PTI.

Sources added that Department of Post (DoP) may need Cabinet approval for setting Post Bank of India.

The Reserve Bank of India today issued the much-awaited guidelines for new banking licences. Among other terms, new banks should open at least 25 per cent of branches in unbanked rural centres.

Of the 1.55 lakh post offices, around 24,000 district offices may be ready to offer banking services in next two years. Post offices are being enabled by core banking solution's connecting nationwide branches as part of an transformative IT project.

DoP is in process of setting up 1,000 ATMs. The country has around 90,000 bank branches at present. "Post Bank shall not only take care of the banking needs of the rural poor but shall also converge with micro-insurance and micro-remittance services of the Department of Posts," the source said.

The head offices chosen for setting up ATMs covers all the states, with Andhra Pradesh leading the tally at 100 ATMs, followed by Tamil Nadu (92) and Uttar Pradesh (73).

As many as 61 ATMs would be set up in Maharashtra, 60 ATMs in Karnataka, 51 ATMs each in Kerala and Rajasthan.

As per data shared with Parliament, there were over 26 crore operational small savings accounts in the post offices as on March 31, 2012 having deposits worth Rs 1.9 lakh crore.

Source: Economictimes
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Education loans benefit women more than men: Study

Education loans help women more than men in graduating from college, a new US study has found.

The research findings showed that, on average, taking out loans actually makes graduation more likely for all students.

But at a certain point – which is about $2,000 lower for men than for women – debt has diminishing returns and becomes less effective at boosting chances of graduation.

One reason loans help women more may be tied to job prospects for college dropouts – which are much better for men than for women, researchers said.

“At least early in their careers, women suffer more than men if they don’t have a college degree,” said Rachel Dwyer, co-author of the study and associate professor of sociology at Ohio State University.

“Women will go deeper in debt to finance college because they need the degree more than men if they want to earn a good living. Men will drop out at lower levels of debt,” Dwyer said in a statement.

Dwyer conducted the study with Randy Hodson, professor of sociology at Ohio State University, and Laura McCloud, assistant professor of sociology at Pacific Lutheran University. Their study was published in the journal Gender and Society.

Data for the study came from 3,676 young Americans who participated in the National Longitudinal Survey of Youth 1997. The NLSY97 interviewed people between the ages of 13 and 17 in 1997 and then talked to the same people each year up to 2010-2011. At that time, the young adults in this study were 25 to 31 years old.

For this study, the researchers examined student loans taken out each year the participants were enrolled in college, and how much they still owed overall on their loans.

Women were more likely to take out loans than men, with 40 percent of women and 34 percent of men taking out loans on average each year.

“Clearly, educational debt was part of the college experience for many students in the 2000s,” Dwyer said.

Source: thehindubusinessline
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Friday, February 22, 2013

RBI releases final guidelines for new bank license

The Reserve Bank on Friday released the final guidelines for issuing of new banking licences, allowing entities in the private and the public sector as well as non-banking financial companies to enter the fray.

"Entities/groups in the private sector, entities in the public sector and non-banking financial companies (NBFCs) shall be eligible to set up a bank through a wholly-owned non-operative financial holding company (NOFHC)," RBI said in a notification.

The document, however, does not mention how many licences will be issued.

July 1 is the last date for making the applications. New banks will have to set up 25 per cent of its branches in unbanked rural areas. The final guidelines sets 49 per cent cap on foreign holding in new banks and minimum paid-up equity capital is Rs 500 crore.

Existing NBFCs, if considered eligible, may be permitted to promote new banks or convert themselves into banks. Unlike the draft guidelines wherein the RBI had expressed reservations about allowing realty players, brokerages and state-run enterprises into the fray, there is no such explicit mention in the final guidelines.

"Entities/groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years," the final guidelines said. The paid-up equity capital should be Rs 500 crore and they will have to get listed within three years of operations, the guidelines added.

The RBI, which allowed private banks in 1993, had issued the last set of licences in 2001 to two entities-- Kotak Mahindra Bank and Yes Bank. The Reserve Bank said the aggregate non-resident shareholding (foreign shareholding) in the new bank will be up to 49 per cent for the first five years, after which it will be as per the existing policy.

Referring to the corporate structure of the proposed banks, it said NOFHC shall be wholly owned by the promoter or promoter group, which will hold the bank as well as all the other financial services entities of the group.

The RBI, however, clarified that "the NOFHC and the bank shall not have any exposure to the promoter group. The bank shall not invest in the equity or debt capital instruments of any financial entities held by the NOFHC".

To ally fears regarding conflict of interest that may arise if a corporate entity opens up a bank, the notification said: "The RBI will have to be satisfied that the corporate structure does not impede the financial services entities held by the NOFHC from being ring-fenced, that it would be able to supervise the bank, the NOFHC, and its subsidiaries/joint ventures/associates on a consolidated basis....".

According to the notification, the primary supervision of the entities held by the NOFHC will be done by the sectoral regulators. Referring to business plan of the proposed entities, the notification pointed out that at least 25 per cent of the branches should be located in rural areas.

"The new banks shall open at least 25 per cent of their branches in unbanked rural centres (population up to 9,999 as per the latest Census)", the report said, adding that all priority sector norms would be applied to the new entities as well.

RBI, however, said those banks promoted by groups having 40 per cent or more assets or income from non-financial business will require its approval for raising paid-up eqity capital beyond Rs 1,000 crore for every block of Rs 500 crore.

Source: EconomicTimes
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Punjab & Sind Bank, United Bank lower lending rates

Punjab & Sind Bank and United Bank of India today announced reduction of minimum lending rate, or base rate, by 0.25 per cent and 0.20 per cent respectively.

“The Bank has revised its ‘base rate’ from existing 10.50 per cent per annum to 10.25 per cent per annum with effective from March 1, 2013,” Punjab & Sind Bank said in a filing to the BSE.

Base rate is the minimum rate at which banks lend to customers.

United Bank of India...has revised its base rate i.e., the benchmark rate for pricing its loan products, from existing 10.45 per cent to 10.25 per cent w.e.f. February 25, 2013,” United Bank of India said in a filing to the BSE.

Banks have been passing the benefit to the customers by cutting their lending rates post RBI’s decision to cut the repo rate in its monetary policy review in last month.

Country’s largest lender, SBI and others such as IDBI Bank, Royal Bank of Scotland, Punjab National Bank, Union Bank of India and Oriental Bank of Commerce, Syndicate Bank, Allahabad Bank, Federal Bank have already cut their lending rates.

Shares of Punjab & Sind Bank today closed at Rs 64.85 apiece on BSE, up 0.08 per cent from their previous close while shares of United Bank of India closed at Rs 67.25 apiece on BSE, down 0.22 per cent from their previous close.

Source: thehindubusinessline
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IDBI Bank ties up with EXIM Bank for loans to export units

IDBI Bank has tied up with Export Import Bank of India to facilitate loans to export-oriented small and medium scale enterprises.

“The two banks would co-finance, co-arrange, syndicate rupee and foreign currency loans, provide refinance facility in Indian rupees and foreign currency for extending short term export credit and long term capex loans to eligible export-oriented companies, particularly in the SME sector,” IDBI Bank said in a release.

Both the banks said they would also co-operate in promotional activities and provide advisory services to assist each other’s clients.

Source: thehindubusinessline
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Thursday, February 21, 2013

I-T forces HSBC A/c holders to provide details, surrender secrecy rights under Swiss law

This could well be a last-ditch attempt by tax authorities to finish the messy job of bringing to book individuals having undisclosed accounts with HSBC Geneva.
In the past few days, men and women whose names appear in the now-famous list of account holders with the Swiss private banking arm of the British bank have been asked by income-tax officials to sign on a two-page letter spelling out their account details and, more significantly, surrendering their rights under the Swiss secrecy law.

The individuals concerned have been told by tax officials to mail the signed letter to two in-house lawyers of the bank - David Garrido, general counsel-Switzerland, HSBC Private Bank (Suisse) SA, and Christine Knight-Maunder, general counsel-global private bank. The individuals have also been asked to submit a copy to the Income-Tax Department.

Till now, HSBC has refused to share the information with the Indian government without the approval of its clients. Among other things, the bank has resisted on the grounds that the data was stolen by a former employee of the bank and later handed over to the French government in return for an asylum in France.

Under the circumstances, a letter from account holders - authorising the bank to share account records - will pave the way for the Indian tax office to access transaction details and raise tax claims on undisclosed income.

Sense of Panic Among Individuals

"There is a sense of panic as many don't know how to handle the situation. Some prefer to ignore it and pay a penalty. But if the department seeks information under Section 133, ignoring it could mean trouble later," said a senior chartered account familiar with the development. Some have signed while others are trying to find ways to buy time as the tax department has to complete the assessment by mid-2014, two years since the raids were conducted.

"There are account holders who may give an incorrect signature that may not match with the one with HSBC. Also, signatures of beneficiaries of trusts with accounts in HSBC may not help the department as only trustees are empowered to give such an authorisation," said a tax lawyer.

According to sources in the tax department, those willing to give their consent to the bank may be doing it to avoid a hefty demand later. "In a particular case, a lady gave consent as she was unaware of the account that her husband, who is now dead, had opened years ago. She is willing to pay tax and settle the matter...There are similar cases," said a tax officer.

The pre-formatted letter calls for disclosure of all relevant information: account number, master number (which is a single account encompassing individuals, companies and trusts), beneficiaries and settlers of trusts, personal details such as address, date of birth and contact number. Besides, it carries the following declarations: "...I am/we are co-operating with the Income-Tax department, Government of India", "I/we hereby instruct and authorise HSBC Private Bank (Suisse) SA to provide me any and all account records" in the bank's "possession", and finally, "With this instruction, I/we hereby waive all protections provided under the data protection, privacy and/or bank secrecy laws of Switzerland".

Account records, in banking parlance, include documents identifying the account holder, beneficial owner and authorised persons, documents pertaining to foreign entities established or operated on behalf of the Indian taxpayer, account opening documents, correspondence between the bank and the customer or any third party in relation to the account, account statements and statements of assets.

The department's decision to seek account holders' consent is probably aimed at saving time. Invoking the information-sharing agreement between the two countries, which came into effect on Jan 1, 2012, in Switzerland and on April 1, 2012, in India, could have been a more time-consuming process. The I-T department has already launched prosecution proceedings against persons named in the list of Indian account holders with LGT Bank in Liechtenstein, a tax haven near Germany.

Source: EconomicTimes
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ICICI Bank to discontinue Kingfisher co-branded credit card

ICICI Bank has decided to discontinue its co-branded credit card with Kingfisher Airlines in the wake of the continued grounding of the debt-laden air carrier.

ICICI Bank and Kingfisher Airlines’ co-branded credit card programme has been discontinued due to discontinuation of Kingfisher Airlines services,” the bank said in a communication to its customers.

“As a result, the ICICI Bank Kingfisher Airlines Credit Card will be valid till March 31, 2013,” it said, while asking card users to opt for another credit card from the bank.

The bank further said it would issue an ‘ICICI Bank Platinum Visa Credit Card’ to users of the ICICI-Kingfisher card without any annual fees from March 15 onwards with the same interest rate and credit limit as that on the existing card.

The customers would, however, be free to opt for any other card available with the bank in line with their requirements.

ICICI Bank used to be a major lender for the ailing airline, but later sold off its entire Kingfisher debt of Rs 430 crore loans to a debt fund managed by SREI Infra Finance in July 2012.

Engulfed in a major crisis involving huge debts of over Rs 7,500 crore and non-payment of staff salaries, Kingfisher Airlines had to ground its services last year and the carrier is still struggling to revive its operations.

The airline has never posted a full-year profit and it has accumulated losses of about Rs 8,000 crore.

A host of lenders, including public sector giant SBI, recently decided to start the process of recalling their loans to Kingfisher after months of discussions with the airline management for recovery of their debt and revival of the carrier’s flight operations failed to yield desired results.

Source: thehindubusinessline
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IRDA slaps Rs 50-lakh fine on SKS Microfinance

The Insurance Regulatory and Development Authority (IRDA) has slapped a Rs 50-lakh penalty on SKS Microfinance Ltd, in perhaps the highest-ever penalty imposed so far.

The only-listed microfinance institution in the country was fined for making unauthorised changes in the benefits of policies of its clients while acting as a group policyholder or administrator.

The company had recovered advances extended towards funeral costs to the nominee of the deceased member which was later recovered illegally from the claim amounts paid by the insurer.

“The MFI has (also) levied a charge higher than the premium in violation of rules,” IRDA Chairman J. Hari Narayan said in the order hosted on its Web site on Wednesday.

SKS had generated ‘substantial’ amount of income under group insurance administrative charges by levying higher charges than usual, IRDA said.

The MFI, which was hit hard by AP Microfinance crisis, had illegally recovered outstanding loans from the death claim benefits of clients which were to be received by their nominees.

There was undue delay of at least 45 days between the actual date of collection of the premium and its conversion into group insurance policy.

This allowed SKS to use the money for short-term liquidity/investment needs while causing loss of coverage to the clients. The lapses were found in SKS’ insurance dealings for clients with LIC of India, Bajaj Allianz Life Insurance and ING Vysya during 2009-10 and 2010-11.

Source: thehindubusinessline
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Trade unions’ strike hits banking, transport services

Key services, including banking and transport, were affected as the two-day general strike by 11 central trade unions and several independent federations began on Wednesday.

While States such as Kerala, Bihar and Tripura were completely shut, the response was mixed in other States. There were reports of sporadic violence and lathi-charge in some areas, leading to the death of two workers in Haryana and Noida.

Meanwhile, production is likely to be affected in the auto hub of Gurgaon, as 50 unions will stay off work on Thursday, including in Maruti, Suzuki Motorcyle and Hero Motocorp, trade union leaders said at a press conference at the INTUC headquarters here.

“We had a meeting with representatives of different unions in the region and we have agreed to go on a one-day strike tomorrow in support of the central unions. There will not be any production tomorrow both at Maruti’s Gurgaon and Manesar plants,” Maruti Udyog Kamgar Union General Secretary, Kuldeep Jhangu, told a news agency.

CPI leader and AITUC General-Secretary Gurudas Dasgupta said the response to the strike was “unprecedented”, specifying that it was not a ‘bandh’.

Referring to the Government’s claim that it had tried to reach out, Daspgupta said, it was a “made-up show”. He said it was ‘“shameful’ that four Ministers were directed by the Prime Minister to meet us only on February 13, of which, the most important one, Finance Minister P. Chidambaram was “conspicuously absent”.

Meanwhile, industry chamber Assocham said the losses from the ‘bandh’ could go up to Rs 26,000 crore, as it had a ‘damaging effect’ on industrial activity and the services sector.

“In most of the industrial States and enclaves the attendance was poor leading to curtailing of productions shifts. With city transport being affected adversely, the footfalls in the retail trading markets also considerably declined, even though some of the markets remained opened,” it added.

Our Mumbai Bureau adds: Banking services across the country were severely affected as nearly 10 lakh bank employees and officers struck work on the first day of a two-day strike called by central trade unions.

With employees and officers not reporting at branches and administrative offices, operations in public sector banks, regional rural banks and co-operative banks were impacted. Many branches did not open for customers.

With only private sector banks and foreign banks working, just one-fourth of the daily average volume of about 36 lakh cheques across the country would have been presented for clearing due to the strike. Similarly, even in value terms, only a fourth of the average daily value of transactions amounting to about Rs 26,000 crore would have come up for clearing, say bankers.

Goods transport on trunk routes unaffected

Goods transportation on inter-State trunk roads across the country was fairly smooth except in port cities of Kerala, Maharashtra and Bengal, said Indian Foundation of Transport Research and Training (IFTRT), based on its track of 70 trunk routes.

The Road Transport Unions and Railway Union have supported the strike “in principle” but have not stopped operations.

IFTRT, a transport sector tracking agency, pointed out that workers in truck transport – drivers, helpers and loaders – are not organised under unions despite low wages and lack of social protection. The transport union comprises fleet-owners and transport firms.

Shivgopal Mishra, General Secretary, All India Railwaymen’ Federation, explained that for Railways to participate in a strike, the call has to on for at least 72 hours or indefinitely.

“Our running staff work on shifts or rotation. So, for strike calls of below 72 hours, only partial staff can take part in a strike.”

In National Capital Region, Noida witnessed violence as some trucks were burnt, said IFTRT.

Otherwise, the industrial areas in Delhi, neighbouring Haryana, Rajasthan and UP were peaceful as over 27 truck unions worked during the day to supply to industrial units, agricultural produce marketing committees, milk producing units and wholesale markets, it added.

“Loading/unloading and booking/ delivery of cargo was fairly normal, although the transport operators had cautioned their truck crew to remain on alert in event of any untoward incident feared by them on account of trade union strike call.”

The trucks at rail pitheads across the country brought consignments for dispatches through railways and carried return cargo from the rail stations to the delivery points, it said.

The booking and despatches of parcels by the courier firms were not disturbed by the strike call, though courier companies warned customers of potential delay in deliveries if there was any escalation on Thursday, the second day of agitation.


Source: thehindubusinessline

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Wednesday, February 20, 2013

PSU bank employees go on 2-day strike

Normal banking operations were hit today as the employees of public sector banks went on a two-day strike in response to a call given by the Central Trade Unions to press for wage hike in the backdrop of rising inflation.

The nationwide strike call has been given by the United Forum of Bank Unions (UFBU) consisting of nine national-level unions, including AIBEA, NCBE, BEFI, INBEF, NOBW and AIBOC.

Apprehending disruption in their normal banking operations, many banks had already informed their customers about the proposed strike.

Meanwhile, sources said that banks have taken steps to ensure that public do not face problems at least on the cash front during the strike period. Banks have fed additional cash in ATMs to meet the cash needs of their customers.

Wage revision

The bank unions are pressing for early wage revision of employees, which they said is due from November 2012. They are also opposing banking sector reforms and any plan for merger of banks.

There are 26 public sector banks with an employee strength of around 10 lakh.

In December 2012 also, four bank unions went on strike opposing the amendments carried out in the Banking Regulation Act and Banking Companies Act, enabling foreign equity in public sector banks.

The bank strike is part of a general strike call given by 11 CTUs including the Indian National Trade Union Congress (INTUC), All India Trade Union Congress (AITUC), Bharatiya Mazdoor Sangh (BMS), Centre of Indian Trade Unions (CITU) and All India United Trade Union Centre.

Source: thehindubusinessline
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Tuesday, February 19, 2013

IRDA relaunches 'File and Use' procedure for life products

To fast track the approval mechanism, insurance sector regulator IRDA today re-introduced the process of automatic clearance to life insurance products.

The IRDA said in a circular that the process…” requires the insurers to submit a copy of policy document with policy schedule under File and Use respect of all products filed from April 1, 2013 onwards”.

The IRDA had dispensed with the submission of policy document under File and Use or automatic clearance procedure in 2007.

The regulator said it has re-introduced the approval of policy bond under File and Use procedure as various stakeholders of the life insurance industry approached it on the issue.

“Therefore, the Authority would be placing all the terms and conditions of the products approved on its website.”

At present, IRDA approves all insurance products on File and Use basis.

Source: thehindubusinessline
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YES Bank picks up Microsoft SharePoint

Private sector lender YES Bank has chosen Microsoft SharePoint 2010 to reduce the turnaround time for customers by automating 150 processes thereby improving efficiency.

The mid-sized bank will automate processes, which were previously either manual or semi-automated, to reduce the turnaround time by 40 per cent for its customers, improve efficiency and make real-time business intelligence available for its employees.

This will also increase the decision-making speed by 70 per cent. YES Bank has evaluated multiple platforms with three key criteria — ease of use, consistent user experience and faster time to market, Microsoft said in a statement.

The bank intends to further leverage SharePoint innovatively creating a true two-way collaboration platform across multiple devices.

Amit Sethi, CIO, YES Bank, said: “It is part of our organisational psyche to adapt technological advancements and systems that shrink turnaround timelines, thus, effectively bringing in more efficiency. SharePoint is the new way to work together providing a simplified user experience for our employees, helping them to organise, sync and share content. We have derived numerous benefits from SharePoint helping us serve our customers better than before.”

Source: thehindubusinessline
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ICICI-led infra debt fund launched

Four financial institutions, led by ICICI Bank, today launched a $2 billion (about Rs 10,000 crore) Infrastructure Debt Fund (IDF), which would finance its first project by the end of next month.

“This is the first IDF in the form of NBFC and will commence operations very soon. The capital of Rs 300 crore has been contributed,” ICICI Bank CEO and Managing Director Chanda Kochhar said.

Besides ICICI Bank, the other sponsors of the India Infra Debt Ltd are Bank of Baroda (BoB), Citi and LIC. The ICICI group has 31 per cent, BOB — 30 per cent, Citi — 29 per cent and LIC — 10 per cent.

After the formal launch of the fund by Finance Minister P Chidambaram here, Kochhar told PTI that the company, India Infra Debt Ltd (also known as Infradebt), is looking to raise half the corpus from the domestic market and the other half from foreign sources.

Talking about the fund flow to the IDF, Kochhar said: “The structure is that after Rs 300 crore equity capital, it can then raise tier 2 capital, it can raise further funds in the form of debt and it will look at all those infrastructure projects that have completed implementation.”

Projects have been identified which have completed minimum one year of operation, she said, adding that the first deal will be made by the end of the current fiscal.

This fund can finance projects of up to $2 billion, Kochhar added, exuding confidence that IDFs can emerge as additional channels for infrastructure funding.

Speaking about the IDF, CEO of Citi India Pramit Jhaveri said: “There are large pools of global and domestic capital looking for attractive investment prospects. India Infradebt is a unique platform to match these funds and their appetite for long term and stable investments with the compelling India infrastructure opportunity.”

Concerned over poor infrastructure, the government last fiscal allowed to form IDF to step up investment in the infrastructure sector, which requires $1 trillion in the 12th Plan. Of the total proposed investment, about 50 per cent is expected to come from the private sector and the debt contribution is expected around $350 billion.

“The share of private investment in the total investment in infrastructure has increased significantly from 22 per cent in the 10th Plan to 38 per cent in the 11th Plan and is projected at 47 per cent during the 12th Plan,” the Finance Minister said.

To mobilise the resources of this level, Chidambaram said that many more institutions are required to share this responsibility.

Source: thehindubusinessline
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United Bank of India cuts base rate by 20 bps

United Bank of India has reduced its base rate by 20 basis points to 10.25 per cent from 10.45 per cent. The change will become effective from February 25, said a bank statement.

Source: thehindubusinessline
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Nabard staff to join strike

All India Nabard Employees’ Association (AINBEA) will join the two-day strike called by the central trade unions. This was decided at its ninth annual conference held in Hyderabad.

Prominent parliamentarians Basudeb Acharya and Tapen Sen addressed the 105 delegates from all over the country.

It elected V. K. Bhosale as general secretary; Jose T. Abraham as president; and Balakrishnan as treasurer of the association.

Trade union leaders Pradeep Biswas, Samir Gosh, P. Venkitaramaiah, and G. Nageswara Rao of fraternal unions were among those who spoke at the conference.

Source: thehindubusinessline
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HDFC Bank sees interest rates softening by 50-75 bps

Interest rates are likely to soften by 50-75 basis points in the year ahead, according to Aditya Puri, Managing Director, HDFC Bank.

When asked about what the Reserve Bank of India’s interest rate policy stance should be after the Union Budget, Puri said, “Interest rate is not the panacea or the cause (for economic growth).

“Yes, it (lower interest rates) can help if inflation comes under control, which to an extent has and we saw some transmission with the 25 basis points cut (in RBI’s key policy rates).”

If the fiscal and current account deficit comes down during the course of the year then there could probably be another 50-75 basis points cut in the policy rates, he said on the sidelines of HDFC Bank’s credit card launch.

In a lighter vein, Puri said “Only the RBI Governor or God would know (when the rate cuts would happen).”

Deposit growth

On the slowdown in deposit growth rate in the banking sector, Puri said deposit growth is linked to inflation.

In the absence of debt market, private equity and venture capitalist culture, the primary burden on financing India’s growth is on banks. So, deposit accretion is crucial.

“To some extent personal savings have gone down and to control inflation, money supply has also been increased only by about 13.5 per cent. Hence, it is unlikely that deposit growth will be very much higher.

“We would like inflation to be under control or little bit more liquidity coming into the system and a level-playing field vis-à-vis mutual funds.”

Source: thehindubusinessline
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IRDA chief does some plain talking

In a rare admission by a financial sector regulator, J. Hari Narayan, Chairman, Insurance Regulatory Development Authority, said the regulator had failed the policyholders when it came to Unit-Linked Insurance plans (ULIPs) and pension products prevalent two years ago . ULIPs and pension products were subsequently revamped by the regulator.

“We failed in the understanding of allowing free market space and design for companies. We failed the policyholders. We allowed largely toxic products to prevail in the market and destroy public confidence in insurance,” the IRDA chief said.

Hari Narayan was addressing the media during the Global Conference of Actuaries in Mumbai, in possibly his last public address ahead of his superannuation on February 20.

The insurance industry has laid the foundation for stable growth with more trust even though it is witnessing a flat growth at present, said the IRDA chief.

The insurance regulator has finalised a standard proposal form for life insurance products which requires insurers, agents and brokers to sign on the recommendations they make to the customers, thereby putting the onus for selling the insurance product on them.

Equity investment

Hari Narayan clarified that the equity investment cap which was recently raised from 10 to 12-15 per cent depending on their assets under management was applicable for all insurance companies, including Life Insurance Corporation (LIC).

“There is a difference in the legal interpretation of the government on LIC and their view of the law is different from IRDA’s view. Even though the government had expressed its intention of permitting LIC to have an exposure of 30 per cent, so far to the best of my knowledge no such notification has been issued,” he said.

Source: thehindubusinessline
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Monday, February 18, 2013

Bank unions to join TUs strike

State Bank of India has said that the United Forum of Bank Unions (UFBU) has decided to support and join the nationwide strike call given by the Central Trade Unions on February 20 and 21.

The All India State Bank Officers’ Federation and the All India State Bank of India Staff Federation, being a part of UFBU, will also participate in the strike, SBI said in a statement to the BSE.

Source: thehindubusinessline
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IDBI chief says SHCIL merger soon; NIM at over 2% this fiscal

Public sector lender IDBI Bank is hopeful of closing the fiscal with a net interest margin (NIM), the core profitability gauge, at over 2 per cent on the back of a 41 bps improvement in December quarter.

The bank is also hoping to close the merger of Stock Holding Corporation shortly as it is expecting the regulatory and government permissions soon.

"We hope to close the merger of Stock Holding Corporation with the bank very shortly. We have already appointed i-bankers for the deal also as we are awaiting regulatory nod," IDBI Bank Chairman and Managing Director R M Malla told PTI.

This will jack up the customer base of the bank by many lakhs, as the corporation has 7 lakh demat account holders, he said.

On the NIM, Malla said, "We hope to close the fiscal with a NIM of over 2 per cent, despite the 25 bps cut in base rate, as we have also reduced our deposit rates by a similar quantum.

"Also the 25 bps cut in the CRR will release Rs 500 crore of our dud funds, which will result into Rs 60 crore in interest income. Another positive is the overall improvement in the bad assets," he said.

The city-headquartered lender has one of the lowest NIMs in the industry as its assets are project and corporate finances. This is despite the fact that it has the lowest cost per employee as well as cost-to-income ratios amongst the state-run lenders.

The bank registered a 41 bps improvement in the NIM in the December quarter at 2.30 per cent from 1.89 per cent in the year-ago period.

Source: Economic Times
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Sunday, February 17, 2013

PSU bank staff to go on two-day strike from Feb 20

Normal banking operations may be hit as employees unions of public sector banks have decided to join the two-days strike call given by central trade unions beginning February 20 to press for wage hike in the backdrop of rising inflation.

The nation-wide strike call has been given by United Forum of Bank Unions (UFBU) consisting of nine national level unions including AIBEA, NCBE, BEFI, INBEF, NOBW and AIBOC in support of their demand.

Apprehending disruption in their normal banking operation, many banks have already informed their customers about the proposed strike.

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

Delhi State Bank Employees Federation, in a statement said, clearing function of RBI will be affected and other banking operations.

Meanwhile, sources said, banks would be taking steps to ensure that public do not face problem at least on the cash front during the strike period. Banks would be feeding additional cash in ATMs to take care of cash needs of their customers.

Bank unions are pressing for early wage revision of employees, which is due from November 2012, National Organisation of Bank Workers' (NOBW) said.

Also bank unions are opposing banking sector reforms and any plan for merger of banks. There are 26 public sector banks with employees strength of around 10 lakh.

In December 2012 also four bank unions went on strike in opposition to amendments carried out in Banking Regulation Act and Banking Companies Act, enabling foreign equity in public sector banks.

The bank strike is part of general strike call given by all 11 central trade unions including Indian National Trade Union Congress (INTUC), All India Trade Union Congress (AITUC), Bharatiya Mazdoor Sangh (BMS), Centre of Indian Trade Unions (CITU) and All India United Trade Union Centre (AIUTUC) have already threatened to go on strike.

Source: Economic Times
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HSBC Bank directed to pay Rs 25,000 for deficiency in service

The Hongkong and Shanghai Banking Corporation (HSBC) Ltd has been directed by a consumer forum to pay Rs 25,000 as compensation to one of its former credit card holders for not getting his name removed from a defaulters list even after he cleared all his dues.

The New Delhi District Consumer Disputes Redressal Forum observed that once the card holder paid all the dues, the bank should have closed the accounts and informed the Credit Information Bureau (India) Ltd (CIBIL) that nothing was outstanding.

"We hold opposite party (HSBC Bank) deficient in service in not informing CIBIL of settlement of all outstanding dues of complainant...," the bench presided by C K Chaturvedi said.

It directed the bank to issue a no-dues certificate to Delhi-resident Vinay Chola and to reconsider a fresh card for him. The forum also awarded him compensation of Rs 25,000 towards litigation charges and harassment caused to him.

The order came on the complaint of Vinay who had alleged that his credit status with CIBIL showed him as a defaulter despite he having cleared all his dues with the bank.

According to a settlement agreed upon with the bank, Vinay said, he had paid Rs 25,000 in three separate instalments one of which was collected late by the recovery agents and the same was shown as outstanding by HSBC.

The bank, in its defence, had contended that the settlement amount was not paid within the agreed upon time.

The forum, however, rejected the contention saying its recovery agents collected the last payment late.

Source: Economic Times
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