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Saturday, May 25, 2013

RBS India to shut 7 branches and restructure retail, commercial banking business

Royal Bank of Scotland on Friday said it will shut seven bank branches to consolidate its retail and commercial banking business in the country. The winding down of the bank's retail and small and medium enterprises business was announced in November 2012.

The bank's retail and commercial banking assets could be to the tune of Rs3,000 crore. As a apart of the restructuring exercise the bank is also considering sale of these assets to some domestic and foreign banks. Romesh Sobti-led IndusInd Bank, Standard Chartered Bank and Axis Bank are among suitors. However, RBS has not offered any comment on the possible sale of assets.

``RBS Group will maintain a predominantly deposit-led general banking presence alongside its international banking business. From the present 31 branches, the branch network will be consolidated into 8 major business hubs-- Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad and Vadodara,'' said the bank in a statement. ``In the first phase, RBS will close the following 7 branches, namely, Agra, Jodhpur, Jalandhar, Kolhapur, Mangalore, Shastri Park (Delhi) and Udaipur,'' said the bank.

The restructuring could lead to job losses as well. RBS has not offered any estimate of the possible job loss. According to senior bank officials the bank employs about 500 executives.

RBS got the Indian assets of ABN as part of a three-way split of the Dutch bank after it was acquired along with Santander of Spain and Fortis of Belgium. India represents a small part of RBS' global business, accounting for just 0.02% of group assets and about half-a-percent of its non-core business

The British bank had sought to divest its retail and commercial banking business in 2010 at a regional level following a restructuring of the bank's business internationally after the global financial crisis. The decision to restructure the business follows HSBC's decision to scrap a deal to buy RBS' India assets after the central bank put a spoke in the transaction. Prior to that, Australia and New Zealand Banking Corp, which bought its assets in rest of Asia, opted out of the India deal, citing regulatory obstacles.

The central bank, which had given a conditional clearance to HSBC, was hesitant to approve transfer all the branch licences to the acquiring bank, since it is also bound by the World Trade Organisation (WTO) limit of 12 branches a year for international banks.

The bank will continue to run its corporate and institutional business or its private banking businesses in India.

Source: Economictimes
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SBI ties up with Spanish bank

State Bank of India has entered into a tie up with Spanish bank Banco Bilbao Vizcaya Argentaria, SA (BBVA) to develop business operations in Latin America and Spain.

BBVA is the second largest bank in Spain. Present in India since 2007, the foreign bank has major franchises in South America and Mexico.

At present, the India’s largest bank has no physical presence in Latin America and Spain.

The memorandum of understanding signed between the two banks covers investment banking products such as transaction banking, trade finance, bonds, foreign exchange and derivatives, SBI said in a statement.

Source: thehindubusinessline
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IFC to extend credit guarantees to YES Bank

Private sector lender YES Bank has ties up with the International Finance Corporation (IFC), a member of the World Bank Group, to boost international trade opportunities.

Through this programme, IFC will extend credit guarantees to YES Bank to cover its payment risks under trade instruments issued by the bank in favour of participating correspondent banks.

Moreover with a wider access to a global network, the programme will enable YES Bank to facilitate transactions in challenging markets, promoting competitive financing and building correspondent bank relationships with new institutions, the bank said in a statement.

Rana Kapoor, Managing Director and CEO, YES Bank, said: “Through this programme, we plan to further improve our credit availability and also take advantage of competitive pricing and longer tenor transactions from correspondent banks, on account of risk sharing with IFC. Moreover, we will be able to offer our esteemed clients a wider base of foreign currency trade finance products at competitive rates, which will facilitate further expansion of our trade business.”

Global trade finance program

Launched in September 2005, IFC’s Global Trade Finance Program offers correspondent banks partial or full guarantees covering payment risks on participating banks for trade related transactions.

These guarantees cover a variety of underlying trade instruments such as letters of credit, trade-related promissory notes, accepted drafts, bills of exchange, guarantees, bid and performance bonds and advance payment guarantees.

Global Trade Finance Program seeks to promote trade flows between emerging markets and increase the developing countries’ share of global trade. Under the programme, IFC has provided $23 billion in credit guarantees for more than 26,000 trade transactions bringing together over 500 banks in 150 countries.

Source: thehindubusinessline
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Karur Vysya Bank net up 8% in Q4

Karur Vysya Bank Ltd has reported 8 per cent growth in net profit at Rs 158.58 crore for the fourth quarter ended March 31, 2013, against Rs 146.79 crore in the comparable previous year quarter.

The total business during the quarter grew a little over 21 per cent to Rs 1,284 crore from Rs 1,059 crore last year.

Gross non-performing assets stands at 0.96 per cent against 1.33 per cent last year, and net non-performing assets were at 0.37 per cent (0.33 per cent). The company’s earnings per share at the end of the quarter under consideration moved up to Rs 14.80 from Rs 13.69 last year. Capital adequacy ratio was at 14.41 per cent.

For the full year, the bank posted a net profit of Rs 550 crore, against Rs 501 crore for the year 2011-12. The total business grew to Rs 4,694 crore from Rs 3,620 crore in the previous year.

The bank has recommended a dividend of Rs 14 per equity share of Rs 10, for the year 2012-13.

Source: thehindubusinessline
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Good financial health, track record must for insurers setting sights abroad: IRDA

Indian insurance companies can now go global. They require a minimum of three years of operation, among other criteria, to be eligible to apply for opening offices overseas.

According to the guidelines issued by the Insurance Regulatory and Development Authority (IRDA), the life and general insurers should have a net worth of Rs 500 crore and Rs 250 crore respectively.

In the case of reinsurers, the minimum net worth required has been fixed at Rs 750 crore.

They should be in good financial health and should have posted profits for three years in the last five years from the date of application to the regulator, with prescribed solvency ratios.

The applicants “should not suffer from any adverse report of the Authority on its track record of regulatory compliances, for three years out of the last five years,’’ T.S. Vijayan, Chairman, IRDA, said in a circular.

“The Authority has been approached by Indian insurance companies seeking permission to open offices outside India. In order to exploit the foreign market, after due consideration, these guidelines are issued,’’ he said. An insurance company can take up life, non-life and reinsurance business abroad according to its licence.

Insurance companies could also subscribe to the paid-up capital of another insurance company registered outside India or a foreign subsidiary company wherein the Indian insurance company has a holding of more than 50 per cent.

In addition, an investment policy to suit the scale, nature and area of operations of the foreign branch offices, apart from business considerations should be formulated. In framing such a policy, the issues relating to compliance with host regulator’s requirements such as liquidity, prudential norms and exposure should be addressed.


On a quarterly basis, the business mobilised through the foreign branches, expenses incurred, claims performance and other vital data has to be submitted to the IRDA, the circular added.

Source: thehindubusinessline
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Monday, May 20, 2013

How the money is siphoned off

Explaining the modus operandi, a senior bank official said, it all starts with floating of bogus companies and opening current accounts in the name of such companies. “The people who operate in such gangs get hundreds of companies registered with the Registrar of Companies, open current accounts in the name of each such company, and carry on multiple transactions by switching funds from one account to another, thereby leading to circular movement of cash,” he explained.

Once these accounts have a reasonably good transaction history, the company is sold off to the likes of Indrajit Chatterjee who park the money procured by duping various organisations.

Multiple accounts

The amount, thus collected, moves through multiple bank accounts before getting transferred through RTGS into the account of another such gang, which later pays the likes of Indrajit in cash, thereby making it difficult to trace the source of money.

According to Pallab Kanti Ghosh, Joint Commissioner of Police (Crime), a number of such cases of bank frauds have come to light recently. Most of these frauds have at least five-to-six common fraudsters. “We have been holding meetings with bankers to sensitise them on such issues,” he said.

Source: thehindubusinessline
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Sunday, May 19, 2013

To curb frauds, banks plan more checks on e-transfer of funds

Electronic fund transfer from one account to another and opening of current accounts may soon become a little more difficult.

Taking a cue from the recent frauds in West Bengal, bankers are set to introduce a new set of security measures on current account operation. Savings bank accountholders may also face the heat as banks are planning to add a few more security checks on the electronic fund transfer or RTGS (real time gross settlement) channel.

In the second week of March this year, West Bengal Infrastructure Development Finance Corporation (WBIDFC) and West Bengal State Cooperative Bank were defrauded of Rs 120 crore and Rs 40 crore, respectively, through forgery of term-deposit receipts involving several public and private sector banks.

According to a senior official of Allahabad Bank, an informal working group comprising bankers and Kolkata police has been set up to suggest corrective measures.

“Based on our initial observations, we have realised that most of these frauds are being perpetrated using current accounts,” the official told Business Line.

Case Study

The working group is in the process of preparing a case study on the modus operandi of such frauds. The report is likely to be ready by June-end.

Meanwhile, the police have arrested Indrajit Chatterjee, the alleged mastermind of the Rs 120-crore WBIDFC fraud.

“We plan to approach the Reserve Bank of India with our suggestions to make the process of opening of current accounts more stringent,” the official said.

UCO Bank, on its part, has tightened the norms for fund transfer using RTGS mode.

“Earlier fund transfer could be done by tallying the account and IFSC number.

“Now we are also asking for the name of beneficiary,” a senior official of the bank said.

The bank has also put restrictions on the amount that can be transferred through RTGS from branches other than the base branch (where customer actually holds the account).

WBIDFC had transferred Rs 59 crore in August 2012 and Rs 61 crore in January 2013 through RTGS to a current account at UCO Bank’s Circus Avenue branch in Kolkata to start term deposits.

The account, however, belonged to one SA Enterprises. Though the term deposits were never started, WBIDFC was handed over two term deposit certificates.

From SA Enterprises’s account in UCO Bank, money was remitted through RTGS to accounts in Bank of India, Allahabad Bank, IndusInd Bank Ltd, ICICI Bank Ltd, Development Credit Bank Ltd, HDFC Bank Ltd and Punjab National Bank.

In another such instance, fixed-deposit receipts issued to West Bengal State Co-operative Bank, which had deposited Rs 20 crore each in UCO Bank and Indian Overseas Bank, were also found to be “fake”.

Source: thehindubusinessline
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