Loans for home buyers, builders to get cheap

In order to give a fillip to the housing sector at a time when the economy is facing a slowdown, the Reserve Bank of India on Friday announced two measures that will increase flow of bank credit to builders/developers and individuals buyers.

Further, loans to the these entities could become a tad cheaper and the prices of housing units could come down.

According to the RBI, builders/developers of residential housing projects will now be classified under the commercial real estate-residential housing (CRE-RH) category, attracting lower risk weight and lower standard asset provisioning.

Depending on the risk involved, banks are required to attach weights to loans to arrive at the capital they will have to apportion for making a loan.

They are also required to set aside funds for making provision for standard loans (or performing loans).

Builders/developers coming under the CRE-RH category will attract lower risk weight of 75 per cent (as against 100 per cent for CRE projects) and lower standard asset provisioning of 0.75 per cent (1 per cent for CRE projects).

As banks will get capital relief on account of lower risk weight and standard asset provisioning, they will be able to offer loans to builders/ developers at slightly lower rates. In turn, the builders/developers are expected to pare the selling price of the homes they build.

Home loan rates

Interest rates on housing loans could come down marginally as the central bank has revised risk-weights downwards.

As property prices in metros and their extended suburbs are ruling high, the central bank has brought down the risk weight on home loans above Rs 75 lakh to 75 per cent from 125 per cent. Lower risk weight translates into lesser capital that a bank has to set aside for making a home loan.

For example, if a borrower took a Rs 1-crore loan, earlier the bank would have had to set aside Rs 11.25 lakh (at a risk weight of 125 per cent and capital adequacy of 9 per cent) capital to make the loan. Following the downward revision, the bank will need to set aside only Rs 6.75 lakh.

NHB to follow suit

The regulator of housing finance companies, the National Housing Bank, plans to follow in the RBI’s footsteps and issue a similar notification within a week.

NHB Chairman and Managing Director R.V. Verma said the RBI measures recognise the fact that quality of loans (assets) in the housing sector is quite good.

“With cheaper loans, builders/developers will be encouraged to bring down the unit price. Individual borrowers will also get some relief on the interest-rate front. The latest RBI measures will give a boost to the economy,” said Verma.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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J&K Bank announces Rs 50 dividend

Jammu & Kashmir Bank today announced a dividend of Rs 50 per share or 500 per cent to its shareholders.

The dividend of 500 per cent on a share of face value Rs 10 was approved at the annual general meeting of shareholders which was held here, a spokesman of the bank said.

Shares of J&K Bank had closed at Rs 1,178.60 on BSE yesterday.

Bank’s Chairman and CEO Mushtaq Ahmad expressed satisfaction on achieving targets for 2012—13 fiscal.

“We have not only achieved, but even surpassed our Rs 1 lakh crore business target and Rs 1,000 crore profit in the Platinum Jubilee year,” he said.

The bank had reported a profit of Rs 1,055.10 crore and revenue of Rs 6,136.80 crore for 2012—13 fiscal.

“While these achievements enhance our confidence in our abilities, the core guiding philosophy remains the same: creating opportunities and touching lives in more ways than one,” Ahmad said.

Source: thehindubusinessline

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BoB opens agri loan factory in Gujarat

Bank of Baroda Chairman and Managing Director S.S. Mundra on Friday inaugurated the bank’s national pilot agri loan factory at Himatnagar in Gujarat

He said that Gujarat had been selected for the project as the farmers of the state were dedicated and hard-working.

BoB has sanctioned Rs 53 crore advances to farm sector and the cheques were also distributed to top borrowers. This specialised loan factory would process all types of loans related to agriculture sector under one roof.

Source: thehindubusinessline

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Oriental Bank of Commerce to halt sale of gold coins

Oriental Bank of Commerce (OBC) has decided to discontinue sale of gold coins, it's Chairman & Managing Director S.L. Bansal has said.

The decision will be implemented across all OBC branches with effect from Monday, it is learnt.

OBC is the first public sector bank to discontinue sale of gold coins following the Government expressing concern over increased gold imports affecting the health of the economy.

This move is in keeping with the Government’s objective of curbing gold imports.

Finance Minister P. Chidambaram had urged people to resist the temptation of buying gold. Gold buying should be brought down for the sake of the health of the economy, Chidambaram had said.

On its part, the RBI has taken several measures to discourage banks and nominated agencies from resorting to gold imports.

UTTARAKHAND RELIEF

Bansal said the entire staff of Oriental Bank of Commerce has decided to donate one day's salary to the Prime Minister’s relief fund towards victims of flood-hit Uttarakhand.

Also, the bank has decided not to charge any fees for contributions made by people to the Prime Minister's Relief Fund through its branch network.

As part of its CSR initiative, OBC has set up camps at Gadwal and Rudraprayag to distribute food and medicines to flood-affected victims, Bansal said.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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SBI needs capital up to Rs 3,000 cr for subsidiary’s merger

State Bank of India (SBI) said it will require up to Rs 3,000 crore capital to merge one of its associate banks.

SBI will need Rs 1,000-3,000 crore in capital if it were to merge one of its subsidiaries with itself, its Chairman Pratip Chaudhuri said.

He was speaking to shareholders at the bank’s annual general meeting here.

The bank has appointed a committee headed by Managing Director S Vishwanath to look into the aspect of merging one of the five subsidiaries, he said.

The subsidiary to be merged with SBI has not been identified yet.

“The committee headed by Vishwanath is looking into all the aspects (of merger). That committee would report to the Board and then we will finalise the name (of associate to be merged),” Chaudhuri said after the meeting.

Asked which of the five — State Bank of Patiala, State Bank of Hyderabad (both unlisted), State Bank of Travancore, State Bank of Bikaner and Jaipur and State Bank of Mysore — will be merged in this round, Chaudhuri declined to give an answer, saying the Board will take a call based on the committee’s recommendation.

He also did not say whether a listed or an unlisted associate would be preferred for merger.

On SBI’s own capital raising plans, he said a decision in this regard will be firmed up by next month.

About the recent depreciation of rupee against the dollar, he said the slide in Indian currency was because of a global trend of money heading back to the US.

“I think it is not a reaction to India, it’s a reaction overseas everywhere. Some of the money is headed back to US. All the markets, including those of Britain and Germany, have lost substantially,” he said, adding it affects Indian market more because of our dependence on capital inflows.

Source: thehindubusinessline

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Allahabad Bank, LIC tie up

Allahabad Bank has signed an agreement with the Life Insurance Corporation of India for selling micro-insurance products. According to a release, these insurance schemes are aimed at providing “appropriate” financial products and services to the weaker sections and low-income groups at an affordable cost. These schemes will be sold through the bank’s network of business correspondents.

Source: thehindubusinessline

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Karnataka Bank’s 555 th branch

Karnataka Bank opened its 555 th branch at Peenya in Bangalore on Friday.

A bank release said here that P. Ramadas, Managing Director of ACE Manufacturing Systems Pvt Ltd, Bangalore, inaugurated the branch in the presence of P. Jayarama Bhat, Managing Director and Chief Executive Officer of the bank.

The bank’s 554th branch was opened at Challakere in Chitradurga district on June 20. The Challakere MLA, T. Raghumurthy, inaugurated the branch, the release added.

Source: thehindubusinessline

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Mandatory opening of offices in rural areas will hurt insurers: IRDA

The provision of mandatory opening up of offices in towns and cities for state-owned public insurers will act as a strain on them, said a top official from the life insurance industry.

In the union budget Finance Minister asked the state-owned insurance companies including Life Insurance Corporation to open offices in towns with population with over 10, 000.

While addressing a seminar on insurance in Mumbai, said S B Mathur, part-time member, Insurance Regulatory and Development Authority, "While there has been a 7 per cent decline in new premium collection, there has been a 7 per cent increase in the expenses of life insurers to adjust to changes in the regulatory regime."

"In this scenario, the mandatory opening up offices will add to the expenses and act as a strain to the industry.

According to Mathur, the new lenghty and detailed standard proposal form for sale of life insurance policies will remain a challenge as it is suitable for complex products sold to high net worth individuals while the average premium per person annually is under Rs 13, 000 per annum for the industry.

Mathur said the new product guidelines by the regulator under which life insurers will have to refile and redesign their group products by July and individual products by October this year. This will impact 85 per cent of the products currently sold by insurers and will significantly affect sales of life insurers in FY'14.

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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National Payments Corpn unveils online service

Retail payments service provider National Payments Corporation of India on Friday launched its e-commerce solution ‘RuPay PaySecure’ to facilitate online payments by customers.

 The customers can utilise this service for, among others, ticketing, shopping and paying utility bills via the Internet and mobile.

“NPCI has tied up with over 100 merchant Web sites across multiple categories that would accept the RuPay card for online payment services. NPCI aims to cover 100 per cent of the e-commerce market by this year-end,” the company said in a statement.

RBI Deputy Governor H. R. Khan, who was present at the event, said banks must build a sustainable solution with the right pricing and security measures and also create awareness among the consumers.

Khan further said the whole product system should evolve together as the cash-delivery system is still prevalent and must be done away with as it does not serve the purpose of e-commerce.

NPCI has invested about Rs 15 crore on this facility and also tied up with US-based online security firm Acculynk to address Internet-based frauds targeted at banks and customers.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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RBI monitoring rupee movement: Deputy Governor

In the wake of the Indian rupee touching the 60-mark on Thursday, the Reserve Bank of India has said it is monitoring the movement and that steps are being taken to contain the situation given the steep fall in the currency.

H.R. Khan, Deputy Governor of RBI, said: “We are watching and monitoring the situation. All short-term and long-term measures are being taken,” he said here today on the sidelines of a National Payments Corporation of India (NPCI) event.

The Deputy Governor also said that the central bank is in talks with the Finance Ministry as far as the rupee is concerned.

The domestic unit touched a historic intra-day low of 60 against the dollar after the US Federal Reserve Chairman indicated slowing of its monetary stimulus via bond-buying programme.

On Friday, the rupee recovered its losses to trade at 59.27 per dollar in the evening trade.

The Fed chief had said on Wednesday that it would begin slowing the pace of its $85-billion monthly purchases of US Treasuries and mortgage-backed securities later this year as the US economy is recovering in line with forecasts, with the goal of ending it in mid-2014.

This triggered a fear of capital outflows from global markets especially among emerging economies thereby impacting the rupee.

According to Kuntal Sur – Director, KPMG, “The rupee has been under pressure since last month and has lost around 10 per cent during this period on the back of heavy foreign currency outflows as foreign investors withdrew heavily from debt market and also from equity market.

“The ballooning current account deficit (CAD) and cloudy outlook of reforms have added to the local currency’s woes. Outlook of the currency is expected to remain weak till the structural measures are taken to improve CAD and the sentiments of foreign investors,” Sur said.

Source: thehindubusinessline

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United Bank to stop lending to infra, real estate sectors

United Bank of India has decided to stop fresh lending to infrastructure, steel and iron, airlines and real estate and textile sectors.

According to Archana Bhargava, Chairperson and Managing Director of the PSU bank, non-performing assets in these sectors have been going up and the recovery has also been poor.

”We have stopped lending to infrastructure, steel and iron, airlines and real estate sectors,” Bhargava said at the 4th annual general meeting of the bank.

She, however, clarified that the bank would continue to lend to public sector companies in these sectors.

According to a senior official of the bank, some of the existing long-term loan accounts in these sectors are being restructured. The bank's fund-based exposure to infrastructure power and iron and steel stood at 13 per cent and 6.91 per cent of the total respectively.

UBI's net NPA stood at Rs 1,970 crore as on March 31, 2013.

ayan.pramanik@thehindu.co.in

Source: thehindubusinessline

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No plan to cut savings account rate: Kotak Bank

Private sector lender Kotak Mahindra Bank is unlikely to reduce its savings bank deposit rate this fiscal, a top official said.

“We will maintain the 6 per cent rate for some time. We have no plans to change the rate this fiscal,” president for consumer banking KVS Manian told reporters on the sidelines of a bank event here.

He said the bank has more than doubled its savings account base over the last 18 months, ever since the Reserve Bank deregulated interest rates on the product helping it tap into the market with an aggressive offering.

The savings account deposits have grown to Rs 7,500 crore as against Rs 3,500 crore at the time of the RBI move, he said, adding the base is showing a growth of up to 50 per cent on a yearly basis.

Kotak Bank and its rival Yes Bank, among the last bank licencees to start operations in 2003 and having a low base of the low—cost current and saving deposits, are two of the most aggressive banks on the savings accounts front.

As against the 4 per cent given by the most others, Kotak offers 6 per cent per annum on a savings account with a balance of over Rs 1 lakh and 5.5 per cent for deposits under Rs 1 lakh, Manian said.

The bank’s total current account and savings accounts deposit base had stood at 29 per cent as of end of the last fiscal, as against over 40 per cent seen in bigger banks.

With a view to augmenting the CASA base, the bank launched a special account for children to be operated by parents. The account can be linked to a recurring deposit account or a systematic investment plan offered by Kotak’s asset management company.

Account holders will have to maintain a balance of Rs 5,000 in the account, which is waived if they opt for a deposit of Rs 1,000 per month in either the RD or SIP scheme.

Manian said the bank is targeting to open at least 4,000—5,000 such accounts per month and added that this will help grow the “stickiness” of saving bank deposits.

Kids above 12 years will be given a debit card even though the parents will continue to operate the account, he said, adding once the child attains the age of 18 years, the rights over the account will automatically get transferred in his/her name.

Source: thehindubusinessline

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SBI gesture for special children

State Bank of India (SBI), Hyderabad Circle has donated a Tata Winger worth Rs 5.68 lakh to Sri Vidhya’s Centre for the Special Children, East Marredpally here on Wednesday as part of its corporate social responsibility efforts.

Speaking on the occasion, Rakesh Sarma, Chief General Manager, SBI-Hyderabad said during the year 2012-13, his bank donated necessary equipment worth Rs 6 crore to various schools, according to a release.

Source: thehindubusinessline

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ICICI Bank UK launches online remittance account

ICICI Bank UK launched an online savings account specifically for money transfers to India.

The ‘HiSAVE’ remittance account will provide account holders the opportunity to earn 1.50 per cent interest on the balance maintained in the account after the money transfer.

The customers also have the option to set a minimum exchange rate at which they transfer their money and the bank will ensure that the money is sent only at that exchange rate or higher, the bank said.

The account can be opened and managed online and does not require a minimum balance to be maintained.

The bank also assures money transfer within 24 hours to 55,000 other bank branches in India. On defaulting on the above, the bank will pay 5 pence for every 10 pounds transferred by way of credit to the account, from a minimum of 1 pound to a maximum of 50 pounds.

Customers can also open a fixed deposit account under the same product with a minimum balance of 1,000 pounds.

Source: thehindubusinessline

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Kotak Bank rolls out new ‘Junior’, RD accounts

Private sector lender, Kotak Mahindra Bank on Thursday launched a savings account for children up to 18 years of age. It has also started a 10-year recurring deposit (RD) for long term financial planning.

The interest rates on savings accounts for children and on the RD would be same as being currently offered on general savings bank accounts and fixed deposits, respectively.

Currently, the bank offers 5.5 per cent interest on savings account balances of up to Rs 1 lakh and 6 per cent on balances above Rs 1 lakh.

The bank’s FD rates are: 8.50 per cent for three years and less than four years, 8.25 per cent for 4-7 years and 8 per cent for above seven years and up to 10 years.

“We had a gap in our overall offering which kept us away from the RD product. Also, RD holders do not benefit when interest rates are low,” said K. V. S. Manian, President - Consumer Banking, Kotak Mahindra Bank.

Moreover, it is beneficial to lock in one’s money under high interest rates. At present, the interest rate regime is attractive enough to open an RD account, he added.

The ‘Kotak Junior’ account can be linked to the RD as well as a Systematic Investment Plan with a minimum investment of Rs 5,000 into mutual funds. The account will provide a membership-cum-debit card.

ICICI Bank

ICICI Bank UK on Thursday launched an online savings account — HiSAVE — specifically for money transfers to India. Remittance accountholders will earn 1.50 per cent interest on any balance maintained in the account.

The customers also have the option to set a minimum exchange rate at which they can transfer their money and the bank will ensure that the money is sent only at that exchange rate or higher,” the bank said.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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At Central Bank, CCTVs to help monitor ‘fishy’ deals too

Central Bank of India has found one more use for the CCTVs in its branches. Besides security, the bank will scan the video recordings for fishy dealings, if any, in the sale of financial products and services.

This move follows an undercover sting operation by online magazine Cobrapost at some of the branches of 30 banks and insurance companies, where officials allegedly offered to convert tax-evaded money into legitimate money.

According to R.K. Goyal, Executive Director, Central Bank of India, “Our bank’s chief security officer will call for video recordings of different branches on sample basis. Almost all our branches have CCTVs (closed circuit TVs).

“After going through the recordings, if the officer finds that something fishy is going on in any of the branches, the matter will be escalated to the top management.

“So, we are taking all steps (to prevent regulatory violations).”

In this regard, the public sector bank will select one branch under the jurisdiction of each of its 77 regional offices for the investigation. As of March-end 2013, it had 4,294 branches.

“This (investigation) will also send a message to the field staff that they should comply with know-your-customer (KYC) norms. Only then they should open accounts and allow transactions,” said Goyal.

Central Bank conducted an internal investigation at its large corporate branch in Delhi to check if violation of KYC norms, as alleged by the online magazine, had taken place.

KYC is a customer identification process.

It involves making reasonable efforts by banks to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, and reasonableness of operations in the account in relation to the customer’s business which in turn helps the banks to manage their risks prudently.

The objective of the Reserve Bank of India’s KYC guidelines is to prevent banks being used, intentionally or unintentionally, by criminal elements for money laundering.

“Our investigation report is on our records now. There is not even a single transaction where KYC norms have not been complied with….

“When we investigated all accounts opened in that branch (large corporate branch, Delhi) and all transactions, we found that they have all been done exactly as per regulatory requirements. So, there is nothing wrong,” said Goyal.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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Hearing again on July 1 on National Pension Scheme in SBI

The Kerala High Court has posted the ‘part-heard’ writ petition challenging the implementation of the National Pension Scheme in State Bank of India (SBI) to July 1.

The case was filed by A. Jayakumar, General Secretary of State Banks’ Staff Union, Kerala Circle, in February.

IMPORT OF ACT

Hearing in the case resumed on Monday, and had come for final argument on Wednesday.

Counsels Vaidyanathan S., H. Ganapathy and Jimmy George appeared for the union while George Thomas Mevada represented SBI.

Sources told Business Line that the counsels argued at length on the import of various provisions of the SBI Act, 1955, for three days from Monday.

The counsel appearing for the Union Government was directed to file a statement within two weeks on whether procedures enunciated under Sections 50 (1), 50 (2)(o) and 50 (4) of the Act have been followed by SBI while notifying the pension scheme.

THRESHOLD DATE

The writ had originally prayed for directions to revert those recruited on or after August 1, 2010, the threshold date fixed by the bank, back to existing pension scheme.

An interim order issued by the court had directed that amounts contributed by employees towards the pension fund be kept in a separate account and maintained with the trustee bank.

The petitioner had pointed out that the scheme was being implemented as part of the industry-level bipartite wage settlement.

As per this, Defined Contribution Pension Scheme (DCPS)/NPS would apply to those joining services on or after April 1, 2010.

But this settlement between Indian Banks’ Association and unions of other banks would not apply to SBI. It was not party to this settlement insofar as pension-related matters were concerned.

The Act did not empower the central board to amend pension fund rules, and that too with retrospective effect. Any regulation framed in this manner will have to be laid before Parliament.

It will take effect in the existing or modified form as decided by both the Houses of Parliament only.

In the present case, the central board of the bank had taken a unilateral decision to modify the pension scheme.

Legal recourse was also being sought on grounds that the pension scheme once framed could be modified without issuing notice.

vinson.kurian@thehindu.co.in

Source: thehindubusinessline

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Andhra Bank opens branch in Vijayawada

The Chairman and Managing Director, Andhra Bank, B.A. Prabhakar today inaugurated a new spacious premises of their Ring Road Branch at Vijayawada under its ‘Navshakti Project’.

This includes 24 hours/365 days anytime-banking centre with ATMs, self pass- book printing kiosk, Internet banking kiosk and cheque depositing machine.

The bank branch is specially designed to serve customers in separate zones for regular transaction customers and customers with special needs where interaction is required with the personal bank officers.

It has a jumbo size safe deposit locker room with a capacity of 2,500 lockers. Prabhakar said the branch is established in Vijayawada as a pilot project after two branches in Hyderabad.

He also said that the staff were specially trained to provide best service to customers. The plan is to transform nearly 250 branches of the bank like this in a period of 15 months.

G. Ravi Kumar, Deputy General Manager, Andhra Bank and Zonal Manager, Vijayawada Zone, has presided over the meeting.

Industrialists M. Rajaiah and D. Ramakrishna also participated in the meeting which was attended by about 300 customers of the bank, a press release said.

somasekhar.m@thehindu.co.in

Source: thehindubusinessline

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Axis Bank opens branch in rural Punjab

Axis Bank, India’s third largest private sector bank, has opened its 2,000th branch at Ahmedgarh in rural Punjab.

Shikha Sharma, MD and CEO, Axis Bank, said: “We have been one of the early banks in the very ambitious and innovative Pungrain Project undertaken by the Punjab Government for electronification of payments to farmers. We are excited about the potential to work closely with the government initiatives in finding banking solutions.”

The bank’s branch network includes 146 branches operating in rural unbanked centres, 135 branches in rural centres, 641 in semi-urban centres and the balance 1,078 branches operating in urban and metro centres.

Source: thehindubusinessline

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Exim Bank gets licence to open representative office in Myanmar

Export-Import Bank of India (Exim Bank) has received a banking licence to open a representative office at Yangon in Myanmar.

Exim Bank has extended seven lines of credit (LoCs) worth $247.43 million to the Myanmar Foreign Trade Bank for projects or contracts such as upgradation of the railway system, setting up refinery projects, a manufacturing plant for assembly and manufacture of Tata vehicles in Myanmar and setting up of three transmission lines in Myanmar, among others.

A memorandum of understanding (MOU) for LoCs worth $500 million was signed between Exim Bank and Myanmar Foreign Trade Bank. Under the MoU, 16 ongoing irrigation schemes, two irrigation projects, a project for procurement of rolling stock, equipment and upgradation of three major railway workshops in Myanmar are covered.

Exim Bank also offers medium and long-term buyers’ credit for project exports to Myanmar, thus enabling Indian project exporters to secure business while avoiding risk.

Source: thehindubusinessline

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RBI ED Bhaskar, IAS officer Krishnan join FPSB Board

The Financial Planning Standards Board India (FPSB) today appointed IAS officer K P Krishnan and Reserve Bank executive director P Vijaya Bhaskar on its board of directors.

The city-based FPSB, which is a public-private enterprise and a professional standards setting body, said the appointment will be till March 2015.

Krishnan, who is serving as Principal Secretary with Government of Karnataka, was earlier the secretary of the Prime Minister’s Economic Advisory Council, while Bhaskar oversees Central Security Cell, Department of Banking Supervision and Department of Non-Banking Supervision at RBI.

Both of them join others like lawyer Cyril Shroff, professionals from mutual fund industry like Deepak Chatterjee (SBI MF), Milind Barve (HDFC AMC) and Rajan Ghotgalkar (Principal PNB), and journalists Monika Halan and Vivek Law.

Source: thehindubusinessline

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Weak rupee indication of falling competitiveness: Uday Kotak

Terming rupee depreciation as a sign of falling competitiveness of the domestic economy, Vice-Chairman and Managing Director of Kotak Mahindra Bank, Uday Kotak today said efforts should be made to increase productivity rather than only relying on short-term measures.

He said rupee movement in short term will depend upon the announcement to be made tonight by Federal Reserve Chairman Ben Bernanke regarding the future of the third round of the quantitative easing (QE3).

“Over last five years, the currency has depreciated by 45 per cent. It shows that there is a lack of competitiveness and the currency is adjusting to this lack of competitiveness. I think, up to a point, the currency will take care of this...,” Kotak said addressing an event organised by Indian Merchants’ Chamber (IMC) here.

He further said that in the long-term, the country has to find sustainable solution to current account deficit (CAD) by increasing productivity and competitiveness than only focusing on how to bridge the deficit.

Referring to short-term trajectory of the domestic currency, Kotak said it would depend on the scheduled announcement late tonight by Federal Reserve Chairman, Ben Bernanke on economic stimulus given to the US economy.

Domestic currency has lost over 7 per cent since the first week of May on the back of pulling out of foreign flows, which was around $3.9 billion from the debt market, on apprehensions regarding tapering of the US stimulus programme.

On the government’s proposal to raise foreign direct investment (FDI) limit in various sectors as a measure to increase foreign fund inflows, Kotak said that it would only acts as a short-term measure.

He, however, said that recent rupee depreciation would be helpful for domestic producers with making their produce competitive in the global market.

Source: thehindubusinessline

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NPA problems due to slowdown in economy: Andhra Bank CMD

State-run Andhra Bank’s chairman and managing director B A Prabhakar on Wednesday attributed the stress on banks’ asset quality to gloom on the economic front and said it would improve only when growth revives.

“The entire banking sector in the country is now facing non performing assets (NPA)-related problems due to the slowdown in the economy for the last 3-4 years,” Prabhakar said at a bank function here. He specifically cited infrastructure as a trouble spot which he said is hurting the banking sector. Andhra Bank’s gross non performing assets for the quarter ended March 31 stood at 3.71 per cent.

Prabhakar, who was in the city for a bank function, said the banking sector’s NPA issues will be sorted out only with a revival on the economic front.

Indian banks’ gross non performing assets climbed up to 3.3 per cent in March 2013, according to the rating agency ICRA. The private banks were better performers on the NPA-management front as compared to the state-run ones with a wider reach.

Prabhakar inaugurated a renovated branch on the city’s Ring Road, offering the latest technological platforms to customers.

This is the third branch under the bank’s newly launched branding christened ‘Nav Shakti’, after two similar branches were opened in Hyderabad.

The bank offers services like 24-hour cash and cheque deposits and a coin dispensing machine, among others at the ’Nav Shakti’ branches.

Prabhakar said 250 branches will be converted into ‘Nav Shakti’ branches in the next 15 months. Deputy General Manager Ravi Kumar was also present on the occasion.

Source: thehindubusinessline

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StanChart, HSBC charged with money laundering

In addition, amid the series of investigations starting March this year, Cobrapost exposed Indian banks of money laundering and Know-Your-Customer norms violation charges.

While the RBI claims to be taking action against the erring banks and their insurance associates, Cobrapost in its fourth investigation report has found two foreign lenders Standard Chartered and HSBC defaulting on similar practices by helping convert black money into white.

Presenting as a politician’s frontman, Cobrapost reporter visited HSBC Bank and Standard Chartered Bank with the same proposition as in the previous investigations and has claimed the two foreign banks being involved in converting unaccounted cash into legitimate money.

While online investigative magazine ‘cobrapost.com’ found some branch officials of 30 banks and insurance companies willing to convert unaccounted money into legitimate money, it has also come across ethical bankers who are unwilling to cross the line.

In a special feature on ethical bankers, Cobrapost said, “Not all is dark and grim in the Indian banking sector.

“Out of hundreds of banking personnel whom Cobrapost reporter interacted with across the country, there are a few bank managers who stood out as redemptive icons of the Indian banking industry. This special feature is dedicated to these 5 bankers who upheld the ethics and principles of banking.”

The bankers belong to Axis Bank (Balsubramaniam), Bank of Baroda (SK Garg), Canara Bank (Anurag Prakash) and two from HSBC (Ashish Agarwal and Akash U).

The magazine said that on approaching the above mentioned bankers with the proposition of converting a fictitious politician’s black money into white, they refused to accept any deposit in cash.

Further, these bankers insisted that every transaction be accompanied by the mandatory PAN card and a declaration of the source of income for all large deposits. They also refused to pay personal visits to the clients’ residence for any consultation and informed the client, right at the outset that any investment advice would happen only after a detailed financial assessment of the client.

“In word and in deed, they honoured the regulations of Reserve Bank of India and the Income Tax department,” the website said.

Source: thehindubusinessline

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IDFC to apply for bank licence

The IDFC board has approved a resolution for making an application to the Reserve Bank of India for obtaining banking licence, based on the Guidelines for Licensing of New Banks in the Private Sector. As on March-end 2013, the non-banking finance company, which is into infrastructure lending, had gross loans aggregating Rs 56,595 crore (Rs 48,887 crore as on March-end 2012). In FY2013, it reported a net profit of Rs 1836 crore (Rs 1554 crore in FY2012).

Source: thehindubusinessline

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A Naturals pact with IOB to fund salons

Groom India Salon & Spa Pvt Ltd, that owns the salon chain brand Naturals, has signed a pact with Indian Overseas Bank to promote women entrepreneurship in the country.

According to C.K. Kumaravelu, co-founder and CEO of Groom India Salon, the bank has come forward to fund up to Rs 25 crore under the ‘Credit Guarantee Fund Trust for Micro and Small Enterprises’ scheme to roughly 100 women franchisees identified by the company.

Each salon will cost anywhere between Rs 25 lakh to Rs 50 lakh per salon, depending on the infrastructure and location of the outlet. While the franchisee would bring in 30 per cent of the required investment, the bank will fund up to 70 per cent without demanding any collateral, he explained.

“All these salons are expected to be up and running before the end of the current financial year,” he said.

Naturals currently has 240 salons predominantly in the South. Of this, 230 salons are franchised out and only 10 are owned and run by the company, says Kumaravelu.

To a question whether the Rs 180-crore company would take in any private equity player, Kumaravelu replied in the negative.

He said though a couple of PE players expressed interest to invest if it was prepared to change the model to a company-owned one.

“However, we have a strong feeling that the franchisee route is the best way to grow the business,” he said.

Naturals is targeting a Rs 350-crore turnover with 3,000 outlets pan-India by 2020. Asked if that isn’t that too ambitious a target, Kumaravelu says, “Five years ago, we had only 13 outlets,” came the reply.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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Kotak Bank looking at ‘affluent’ customers to drive growth

Mumbai-headquartered Kotak Mahindra Bank aims to widen its “affluent customer” base to boost growth. Customers having investments in excess of Rs 25 lakh are described as ‘affluent’.

The bank launched a set of new offerings under the ‘Privy League’ brand here on Tuesday. Categorised under the Prima, Magna and Optima segments, the scheme would offer banking, financial planning and investment solutions.

Kamlesh D. Rao, Executive Vice-President, Kotak Mahindra Bank, said: “We expect the affluent customer count to reach 40,000 from the current 15,000, over the next couple of years.”

According to him, the segment is likely to clock nearly Rs 175 crore in revenues this fiscal and will drive overall growth for the bank.

“The opportunity for growth in this sector is quite higher,” Rao said, adding the bank saw nearly 44 per cent growth in savings account in 2012-13.

Expansion

According to Rao, the bank is planning to add over 100 branches across the country to its 440 branches by the end of this fiscal.

Of the seven branches planned in the eastern region, four will be in Kolkata. The bank, currently, has 29 branches in the eastern region. Application for obtaining the licences and necessary clearances have already been made, Rao added.

ayan.pramanik@thehindu.co.in

Source: thehindubusinessline

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ICICI Bank raises $106 m in Chinese bond market

India’s largest private sector lender, ICICI Bank, on Tuesday raised Chinese Yuan (Renminbi) 650 million ($106 million) via bonds of three years maturity.

The coupon rate on these bonds, which will be listed on the Singapore exchange, is 4 per cent. The funds have been raised under the bank’s $5 billion Medium Term Note (MTN) programme.

ICICI Bank is the second domestic lender to sell bonds to offshore Chinese investors. Earlier, IDBI Bank had tapped this fund-raising route. Rating agency S&P has given a ‘BBB-’ rating to the senior unsecured renminbi notes.

Axis Bank to raise $20 m

The third largest private sector lender, Axis Bank, on Tuesday also received board approval to allot Senior Notes aggregating $20 million under the MTN programme through its Dubai International Financial Centre (DIFC) branch.

The board of directors of the bank on June 18 passed a resolution approving the allotment, the bank informed the Bombay Stock Exchange.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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SIDBI FY13 net up 48% on better loan growth

Helped by a one-time tax-related gain and higher disbursal, Small Industries Development Bank of India (SIDBI) has posted a 48 per cent increase in its full-year profit to Rs 837 crore.

The financial institution, which provides loans to Micro, Small and Medium Enterprises (MSMEs), earned a refund of Rs 187 crore from the Income-Tax Department during the financial year.

Excluding this one-time gain, SIDBI’s net profit rose 15 per cent to Rs 652 crore (Rs 567 crore). Total loans outstanding grew 4.2 per cent to Rs 56,060 crore from Rs 53,785 crore.

NPA ratio

Gross non-performing assets (NPA) ratio as a percentage of gross advances increased to 0.98 per cent in the year ended March 31, 2013 from 0.69 per cent a year ago. After accounting for provisions, the net NPA ratio increased to 0.53 per cent from 0.34 per cent.

The bank attributed to the rising bad loans to slowdown in large corporates, which in turn having an impact on the performance of small industries.

“It was a difficult year for MSMEs. Impact of economic downturn on large industries also affected small industries during the year,” said Sushil Muhnot, Chairman & Managing Director.

Total income during the year increased 17 per cent to Rs 5,401 crore.

satyanarayan.iyer@thehindu.co.in

Source: thehindubusinessline

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Dena Bank has discovered untapped potential in the rural and semi-urban economy of the eastern and North-Eastern region.

Chairman Ashwani Kumar told reporters here on Monday that in view of relatively higher growth opportunities, particularly in deposit collection in current and savings accounts, Dena Bank has set a target of opening 13 new branches in the region this financial year. Till last year, East and North-East contributed to two per cent of bank’s business portfolio.

Un-banked pockets

Of these proposed branches, five would be in West Bengal, while the North-East would get three. “Nationally, West Bengal, Haryana and Punjab would be accorded additional focus”, he added. The bank intends to utilise the farm and SME economy for growth.

In West Bengal, Kumar said, there existed “un-banked” pockets, even close to the city.

“To our surprise, we identified such an un-banked area just 30 km southeast of Kolkata and set up a usual and core banking branch there late last month. In ten working days of opening, deposits swelled to Rs 4.71 crore. From a commercial perspective, this reconfirmed our bank’s view on the State and the region’s potential in rural and SME economy,” he observed.

According to the bank, this branch now covers a 134 sq km area of three panchayats in Sonarpur assembly constituency with 1.68 lakh inhabitants, largely lower in the social ladder and mostly engaged in agriculture or horticulture.

The bank has identified another such un-banked pocket in East Medinipur district. Majority of the planned branches in the State are in the interiors.

Currently, the bank has 37 branches in West Bengal and 9 in the North-East. For better administrative benefits, it has planned to curve out a new zone, comprising Bihar and Jharkhand, to be headquartered at Patna.

jayanta.mallick@thehindu.co.in

Source: thehindubusinessline

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RBI holds key rates on concern over rupee, inflation

The Reserve Bank of India today kept the key interest rates unchanged citing elevated food inflation, rupee depreciation and uncertainty over foreign fund inflows.

The repo rate at which the RBI lends to the system has been retained at 7.25 per cent, while the cash reserve ratio will continue to be 4 per cent.

“The monetary policy stance has been informed by the evolving growth-inflation dynamics, the balance of risks as well as recent developments in the external sector,” the RBI Governor, D. Subbarao, said in the mid-quarter policy review.

US Fed decision

He specifically cited the decision of the US Fed to trim the growth stimuli in a phased manner and articulated concern over risks coming “on account of uncertainty over policies of systemic central banks”.

The May 22 announcement has led to fund outflows from emerging markets, including India, and hence, depreciation in the rupee, which is already facing trouble over the high current account deficit, touching an alarming 6.7 per cent in the December quarter.

To reduce the CAD to a sustainable level; the near term challenge is to finance it through stable flows,” the statement said.

Rupee has declined by 5.8 per cent since January 1 and touched a record low of 58.96 to a dollar last week. It was trading at 57.84 during the morning trade.

In its guidance, the RBI, particularly, flagged risks on inflation, saying “it is only a durable receding of inflation that will open up the space for monetary policy to continue to address risks to growth.”

The status quo maintained by RBI has dashed hopes of interest rates cut.

The central bank had reduced key policy rate (repo rate) by 0.75 per cent during the last three monetary policy announcements.

Following the policy announcement, the 30-share BSE Sensex fell by 83 points to 19,095.

Food inflation still high

Though the headline inflation has come down, the RBI also sounded concerned over the persistently high food inflation, which has been hovering in the region of close to 10 per cent.

“Inflation has moderated as projected. However, upside pressures on the way forward from the pass-through of rupee depreciation, recent increases in administered prices and persisting imbalances, especially relating to food, pose risks of second-round effects,” it said.

Outlook

“Future monetary policy stance will be determined by how growth and inflation trajectories and the balance of payments situation will evolve in the months ahead,” it added.

RBI Governor noted that since the May 3 Annual Policy statement, global economic activity has slowed and risks remain elevated, most recently on account of uncertainty over policies of globally important central banks.

As recent experience has shown, shifts in global market sentiment can trigger sudden stop and reversal of capital from a broad swath of emerging economies, swiftly amplifying risks to the outlook. India is not an exception, it said.

On the domestic front, it said, macroeconomic conditions remain weak, hamstrung by infrastructure bottlenecks, supply constraints, lacklustre domestic demand and subdued investment sentiment.

Source: thehindubusinessline

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SBI training institute coming at Rajarhat

State Bank of India (SBI) has laid the foundation stone for its sixth apex training institute at Rajarhat in the eastern fringes of Kolkata.

Christened the State Bank Institute of Management, the institute would be set up on a 10-acre plot acquired commercially from the West Bengal Housing Infrastructure Development Corporation Ltd, a release said.

According to the release, Pratip Chaudhuri, Chairman, SBI, said one of priorities of the bank would be to train the 5,500 officers and approximately 20,000 clerks recruited in the last couple of years.

SBI “proactively planned for its leadership pipeline” before it decided to set up this institute, Chaudhuri was quoted saying in the release.

Source: thehindubusinessline

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S K Roy appointed as LIC Chairman

The government today appointed S K Roy as the Chairman of Life Insurance Corporation of India (LIC).

The Appointments Committee of the Cabinet (ACC) has already cleared his name. The notification in this regard has been issued, sources said.

Roy, who at present a Managing Director in the organisation, would be succeeding D K Mehrotra, whose term as LIC chief ended on May 31.

Roy would be at the helm of the insurance behemoth for a period of five years, official sources said, adding, he would assume charge on July 1.

The other candidates who were in fray for this top job were Managing Director Sushobhan Sarkar and Executive Director S B Mainak.

Roy joined Life Insurance Corporation of India in 1981.

On May 31, 2013, he assumed charge as Managing Director of LIC along with Thomas Mathew and Sushobhan Sarkar.

Prior to his elevation, he was head of the International Operations division. He was also zonal manager of North Central Zone and Eastern Zone of the insurance firm.

LIC, which manages assets worth around Rs 14 lakh crore of over 20 crore policyholders, has the largest market share among 24 players in the industry.

Source: thehindubusinessline

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Union Bank ATM at Ernakulam

Union Bank of India has opened an ATM at Passport Seva Kendra, Karingachira, Ernakulam. It was inaugurated by Sunil Babu, Regional Passport Officer. T.C. John, DGM, Union Bank of India, Ernakulam, Lead District Manager A.R. Jayaprakash and Passport Seva Kendra Manager Lijo Mannaraprayil were present. Union Bank of India has tied up with passport seva kendras all over the country for installing ATMs.

Source: thehindubusinessline

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Dena Bank plans to spread wings overseas

Public sector lender Dena Bank has chalked out a plan to expand its presence overseas, Chairman and Managing Director Ashwani Kumar said.

“We have already got the approval from the Reserve Bank of India for opening a representative office in the UK. The permission of the Finance Ministry is awaited”, Kumar told reporters here today.

The bank is also planning to open its branches in the US and African countries, he added.

Kumar further said the bank plans to open a full-fledged branch in the UK, which would be through the subsidiary route.

Talking about its presence in India, he said the bank would open nearly 200 branches during the current financial year. Last fiscal, it opened 122 branches across the country.

He said the bank had requested the government for capital infusion of Rs 1,260 crore to boost the Tier-I capital.

During the current fiscal, the bank was expecting 16 per cent rise in deposits and 16 per cent increase in advances.

Source: thehindubusinessline

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19 nationalised banks to have 442 general managers

Bank of Baroda can have maximum number of 43 General Managers (GMs) among the nationalised banks, says a Finance Ministry circular.

Seeking to improve manpower management in the public sector banks, the circular said that the 19 nationalised banks should have a total number of 442 GMs to oversee banking operations.

The list of banks does not include country's largest lender State Bank of India (SBI).

As per the circular, Punjab National Bank can have 41 GMs, followed by Canara Bank and Bank of India (both 38 GMs) and Union Bank of India (29 GMs).

The fresh guidelines, based on business mix of banks, are aimed at streamlining the changed business scenario with public sector banks investing considerable amounts in technological advancement and also as the core banking solution is now in place.

Earlier, the Ministry had said that over the years some mismatch has developed in the number of posts at senior positions and at the immediate feeder channels, which is creating difficulties in proper manpower management.

As per the new guidelines, effective till March 2015, banks with business up to Rs 1.5 lakh crore should have 12 GMs.

Beyond Rs 1.5 lakh crore and less than Rs 4 lakh crore, there should be one additional GM for every Rs 18,000 crore.

Beyond Rs 4 lakh crore crore, there should be one additional GM for every Rs 24,000 crore, the circular added.

Source: thehindubusinessline

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