UCO Bank to seek capital from government

Public sector UCO Bank would approach the government for fresh infusion of capital to meet Basel-III norms.

"We will write to the government seeking capital for the bank," chairman of UCO Bank Arun Kaul said on friday.

"We are taking adequate steps for getting Tier-I, Tier-II capital. We have options to go to the market or approach the government," Kaul told shareholders at the bank's 10th AGM here today.

He said that the bank was already having branches in Hong Kong and Singapore. "We are now looking at South East Asia," Kaul said.

Kaul said that the bank had restructured accounts worth Rs 8,500 crore.

He said that bank had adopted a strategy to diversify portfolio from large corporates to MSME, retail and agriculture.

Source: EconomicTimes

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Banks should have separate wealth management unit: RBI draft

The Reserve Bank of India (RBI) has proposed tough norms for banks involved in wealth and portfolio management services (W/PMS), mandating them to segregate sales and advisory activity, and threatened to bar them from money markets for violation of guidelines.

It plans to put a blanket ban on the practice of bank staff earning incentives for selling third-party products, since it promoted mis-selling and encourages structuring transactions to help customers evade tax, and fraudulent transfer of funds.

Cash transaction for third-party insurance and mutual fund investments will be capped at Rs 50,000 and the payment should be directly debited from the customers account and not with cheques from another bank.

"Conflict of interest arises mainly from the juxtaposition of the marketing, distribution function and the advisory or funds management function,'' says the draft guidelines on wealth management. "To address the issue of conflict of interest arising from the single entity conducting both the activities of advisory, fund management as well as marketing, it is proposed to segregate the two functions.''

RBI's draft comes after a series of fraud charges in banks by clients and a sting operation by online portal Cobrapost.com which revealed bankers' eager to facilitate cash transactions and compromise on Know Your Customer (KYC) norms. Customers at Citigroup, HSBC and Standard Chartered have accused the bank staff of cheating them and the central bank had penalised some after a probe.

"Banks offering wealth management services are exposed to reputational risks on account of mis-selling of products, conflict of interest, lack of knowledge and clarity about products and frauds,'' the proposal said. "As observed from the recent allegations, WMS activities as well as marketing third party products can expose banks to serious reputational risks.''

In December 2010, a Citibank employee, Shivraj Puri, was accused of luring 40 high net-worth individuals including the Munjals of Hero Motocorp to invest in a bogus investment scheme on the pretext of high returns. Staff at HSBC and Standard Chartered also faced similar charges. RBI has also emphasised on training on bank personnel before getting engaged into third-party product marketing.

It told banks to put grievance redressal machinery and compensation policy related to mis-selling, agency services and service defaults. RBI has been concerned over violation of KYC guidelines, mis-selling of products that are unsuitable for the client, conflict of interest between the marketing and advisory/financial management function, and lack of robust risk management systems and procedures leading to frauds.

Source: EconomicTimes

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YES Bank appoints 3 top management executives as whole-time directors

Private sector lender YES Bank has appointed three of its senior management executives as whole-time directors on its board, according to a release filed with the Bombay Stock Exchange.

The board of directors at its meeting held on June 27, 2013, has given its approval to submit applications to the Reserve Bank of India for the appointment of top management executives — Rajat Monga, Sanjay Palve and Pralay Mondal — of the bank as whole-time directors, subject to RBI and shareholders’ approval, the bank said in the release.

Rajat Monga is Executive Director & CFO, Sanjay Palve is Executive Director - Wholesale Banking and Pralay Mondal is Executive Director - Branch & Retail Banking.

“This development is in line with the bank’s objective to further build and strengthen the institutional and professional character of YES Bank as the ‘Professionals Bank of India’,’’ it said.

Source: thehindubusinessline

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New norms for life products: IRDA extends deadline

The Insurance Regulatory and Development Authority (IRDA) on Friday extended the deadline for implementation of new norms for group products of traditional life insurance.

All the existing group and individual products not in conformity with the new regulations shall be withdrawn from August 1, 2013, and October 1, 2013, respectively, T. S. Vijayan, Chairman, IRDA said in a circular.

As per the earlier notification, all existing group products had to be aligned with the new rules before June 30, while individual products had time till September-end.

The deadline for group products was extended in response to the representations received from the industry, he said.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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SIDBI launches microfinance platform

The Small Industries Development Bank of India (SIDBI) on Friday launched an ‘India Microfinance Platform’, a portal on microfinance activities in the country.

This portal is another major step toward SIDBI’s ‘responsible financing agenda’ and would help establish more transparency in the microfinance sector, said Sushil Muhnot, Chairman and Managing Director, SIDBI.

Launched with World Bank assistance, the platform would provide data on every microfinance firm right up to the district level, Muhnot said.

The portal will provide annual financial and operational performance data of Indian microfinance institutions, market growth and portfolio quality data on a quarterly basis.

Muhnot said the microfinance sector had to adapt itself to the expectations of the public, especially with regard to the prescribed code of conduct and spread of microfinance in under-served areas such as the North-East.

At present, SIDBI, which has been a player in microfinance sector for almost two decades now, has an exposure of about Rs 1,800 crore in this sector.

Muhnot said that microfinance institutions had shown lot of resilience despite the turbulent environment in the recent years.

At the same time, he also indicated that commercial banks may go in for write-offs on certain exposure to this sector this year.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Rural banking can trigger economic revolution, says K. C. Chakrabarty

The launch of a rural bank branch often marks the start of an economic revolution in a village and its surroundings, RBI Deputy Governor K. C. Chakrabarty said.

Speaking after inaugurating the 3,742nd branch of Canara Bank at Gungralchatra, a hamlet on the outskirts of Mysore, he said new technology initiatives such as Aadhaar (UID), RuPay and Kisan cards will help bring about an economic revolution. Urging customers to use these facilities, he pointed out that banking is a business where money has to rotate and, thereby, provide a multiplier effect.

Speaking to Business Line on the sidelines, Canara Bank Chairman and Managing Director R. K. Dubey, said the bank would consciously be increasing its rural and semi-urban presence.
Branches, recruitment

The bank, he said, hopes to open about 1,300 branches over the next two years. This would enable the bank to increase its CASA ratio from 25 per cent to 30 per cent of deposits in the next two years, he added.

On recruitment, Dubey said the bank had hired about 7,500 persons last year and would recruit about 7,000 more this year. He added that with this, the bank would practically be replacing a third of its existing workforce in just two years.

Source: thehindubusinessline

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IDFC bags General Counsel’s Gold award

Leading infrastructure finance player IDFC has bagged an award at the International Legal Alliance Summit 2013.

It won the "General Counsel’s Gold Award” for the best legal department in Asia and South Pacific region, the firm said in a statement.

Over 400 in-house counsels and law firms across the world participated in the summit, which recognises the best legal department of companies.

Source: thehindubusinessline

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Dept of Post applies for banking licence

The Department of Post today submitted application before the Reserve Bank for a licence to offer full-fledged banking services.

“We have approached RBI today and hopefully having met all the conditions of RBI, an in-principle approval might be given. If it is given, I think, it will be a revolutionary step because it will bring banking, subject to Cabinet approval, to the doorstep of the ordinary man in this country,” Telecom and IT Minister Kapil Sibal told PTI.

The RBI is in the process of granting fresh banking licences and has set July 1 as the deadline for applying.

The India postal network has 1,54,822 post offices in the country. Of these, 1,39,086 are in rural areas and 15,736 are in urban regions.

There are around 90,000 bank branches in the country and provision of real-time banking services through postal network is estimated to triple the current banking network.

The The Department of Post (DoP) has plans to start 50 bank branches in the first year and scale it to a total of 150 branched in 5 years.

The Minister said after RBI’s in-principle approval the Department of Posts will require the Cabinet approval to go ahead with its plan.

“If RBI agrees that this (banking licence for DoP) is the proposition that must move forward because most of the Aam Aadmi (common man) does not have access to banking facilities. Post bank is ideal way to bring banking facility to the doorstep of aam aadmi,” Sibal said.

Department of Posts has started inter-ministerial consultations for seeking Cabinet approval on around Rs 1,900 crore fund requirement to start Post Banks. The total amount includes Rs 500 crore paid-up capital required under new banking licence guidelines.

The Post Banks are proposed to be owned by DoP but with a completely independent board, governance structure and operations. It will have representation from Ministries of Finance and Communication & IT.

Source: thehindubusinessline

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Corp Bank's Rs 1-cr aid to Uttarakhand

Corporation Bank has donated Rs 1 crore to the Prime Minister’s Relief Fund for Uttarakhand.

A press release from the bank says that the employees have also donated one day’s salary to the fund to support relief and rescue operations the flood-ravaged State.

Source: thehindubusinessline

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YES Bank to inform court about decision on Gogia

Private sector lender Yes Bank on Thursday said the decision relating to inducting Shagun Gogia on the board will be directly conveyed to the court on Monday, July 1.

“As the matter is sub judice, the final decision of the board of directors of Yes Bank on the subject will be submitted to the Bombay High Court at its scheduled hearing on July 1, 2013 as per the court order,” the bank said in a statement.

Gogia said that no decision on the board meeting was conveyed to her.

The board meeting, which was earlier scheduled for July 24, was advanced to June 27 to consider the nomination of Shagun Gogia, daughter of the late co-founder of the bank, Ashok Kapur. Shagun’s mother Madhu Kapur has claimed that the bank has denied the family its right to be consulted on the nomination of its three directors — Diwan Arun Nanda, Ravish Chopra and M.R. Srinivasan — on the board.

The Kapur family, which holds 11.7 per cent of Yes Bank’s shares, also wanted the private sector bank to consider the nomination of Shagun Gogia on the bank’s board.

Shagun’s nomination on the board was rejected in 2009 after Yes Bank claimed her nomination did not meet the Reserve Bank of India's “fit and proper” criteria.

Yes Bank’s shares ended 0.94 per cent lower at Rs 443.90 on the Bombay Stock Exchange.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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IRDA may soon get Member-Actuary

The Insurance Regulatory Development Authority (IRDA) is likely to get a new Member Actuary with the Finance Ministry recommending a candidate in an interview held in Delhi on Wednesday.

“There were three candidates interviewed for the position — two from IRDA and one from the industry. We have made our recommendation to the Government,” said Financial Services Secretary, Rajiv Takru.

The position, which is of the rank of Additional Secretary at the Centre, has been vacant since May 2011 when the former Member-Actuary at IRDA, R. Kannan, retired.

Though the IRDA had advertised for the position on two earlier occasions, they were unable to finalise a candidate.

The three applicants who were interviewed are: Shyama Prasad Chakraborty, Deputy Director, and Meenakumari J., Joint Director, both in the actuarial department of the insurance regulator; and Pournima Gupte, is an actuary at Reliance Life.

Product approvals

The insurance industry has been complaining about delays in clearance of products as the Member-Actuary position, which is responsible for approval of products, was vacant.

The position assumes significance as currently life insurers are in the process of re-filing all their existing productsfor fresh approval.

The IRDA guideline for traditional life insurance products entails changes in the structure of these products. Any product not complying with these guidelines will have to be withdrawn by July 1, which is the deadline for group products, and October 1, in the case of individual products.

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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Markets are over-reacting, says HDFC Bank chief

Amid weakening markets and falling rupee after the US Federal Reserve last week indicated of slowing down its monetary easing programme, HDFC Bank chief said the markets have overreacted.

“Markets are definitely over-reacting. It is unfair and not productive to keep asking what is happening to the rupee as it (the weakening markets and rupee fall) is because of the external circumstances,” said Aditya Puri, Managing Director, HDFC Bank.

“Also, the Fed has made optimistic projections as to what will happen and have said that if these things happen, it would withdraw it (quantitative easing).

“The markets have taken that as a given. So they tend to stabilise over a period of time and in the interim they overshoot,” Puri said.

According to him, India is fundamentally strong and that it “will continue to grow by about 5-6 per cent depending on what happens globally. The temporary ups and down nobody can explain.”

Further, he mentioned that gold imports and commodity prices should come down.

On the recent Cobrapost expose, Puri said, the RBI in its investigation has not found any case of money laundering. “No KYC (Know-Your-Customer) norms violations other than in some insurance products were found.”

On the new banking licences, he said, “The RBI has been very fair and transparent (in the licensing guidelines) and nobody has the right to second guess over it.”

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Basel III norms may restrict banks from extending long-term infra loans: RBI report

Banks may face some constraints in extending long-term finance to infrastructure projects once the Basel III bank liquidity norms are implemented, according to the Reserve Bank of India.

In the absence of alternative arrangements (such as securitisation, take-out finance), banks may not be able to undertake long-term project financing, said the RBI in its 7{+t}{+h} Financial Stability Report.

Basel III is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk. It requires banks to source more and better quality capital and address and capture risks not adequately recognised previously.

There are two liquidity norms under Basel III — liquidity-coverage ratio (LCR) and net stable funding ratio (NSFR) — that banks have to adhere to.

LCR is aimed at ensuring that banks have enough high-quality liquid assets on hand to overcome short-term liquidity disruptions. Under NFSR, the available amount of stable funding should exceed the required amount of stable funding over a one-year period of extended stress.

The report said “it is interesting to note that elsewhere massive public works have been financed seamlessly by governments (for example, Japan and China) and not through bond markets.

“In India, banks predominantly provide for funding requirements and the debt market has catered mainly to the Government. Banks hold government bonds in their portfolio because of statutory requirement and also due to the sovereign status of bonds.”

Credit enhancement

The RBI said there are concerns over the provision of credit enhancements/guarantee by banks to corporate bond issuances.

Credit enhancements will hamper the development of a corporate bond market on corporates’ own financial strength and could possibly distort the pricing mechanism.

In addition, reliance on credit enhancements provided by banks will keep most of the risks in the banking system.

Countries such as China, Korea and Egypt attempted to develop corporate bonds markets by encouraging banks to offer bank guarantees, but couldn’t achieve much success.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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UBI raises Rs 500 cr via bond issue

United Bank of India on Tuesday said that it has raised Rs 500 crore Tier-II bonds complying with Basel-III guidelines.

The issue was entirely subscribed by the Life Insurance Corporation.

The non-convertible bonds have a tenure of 10 years and can be traded in the wholesale debt market segment of the BSE, a release issued by UBI said.

Source: thehindubusinessline

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Bank jobs: Over 60,000 yet to get call letters

The fate of over 60,000 bank job aspirants who qualified for the posts of officers and clerks hangs in balance due to uncertainty over their appointments.

“I wrote the test for probationary officer posts in public sector banks conducted by the Institute of Banking Personnel Selection last year and have been declared qualified after the interview. Since then I have been waiting for a call from banks,” M. Bhavika from Lucknow told Business Line.

While a total of 45,000 candidates were declared qualified, only 22,000 were given appointment letters by different banks in the first allotment.

“We are told to wait for the second list of allotment but there has been no formal word from IBPS,” said Rahul from Delhi, who is among the 23,000 candidates desperately waiting for call letters.

The problem is lack of any confirmation or timeline on the second selection list. “Should I keep my hopes alive till the next round of allotment? Every single minute is like a year to me,” says Anand Das, another aspirant.

The plight of the aspirants for clerical jobs is also the same. If they fail to get jobs before March 2014, the qualification would be invalidated and they will have to appear for the exam again. This is their biggest worry.

When contacted, IBPS Director A. S. Bhattacharya told Business Line that it was for the banks to notify the second round of vacancies.

“The allotment of jobs can only be done after we receive information on existing vacancies from banks as IBPS is only an agency for selection. But we hope to complete the second allotment by December this year,” he said.

The second list vacancies could be around 10 per cent of first allotment, he said. Though not a final figure, this translates to about 2,300 officers and 3,100 clerks in the order of merit.

The remaining candidates who qualified will have no option but to wait for next year’s recruitment.

The total recruitment by 20 banks for the year 2013-14 now stands at 53,000 officers and clerks.

With the second list, this may touch 60,000, Bhattacharya said.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Weakening rupee will push up inflation, fiscal deficit: StanChart

The rupee fall, which has slipped below the 60/dollar level, could worsen inflation and fiscal deficit concerns, according to a report by Standard Chartered.

The Indian currency has depreciated by about 7 per cent against the US dollar so far in June. It declined by more than 3 per cent since the US Fed announcement of tapering its quantitative easing programme on June 19.

“Our estimates show that a weaker rupee can add to inflationary pressure, widen the fiscal deficit and slow capital inflows, without having a positive effect on the current account deficit. Rapid rupee depreciation also affects business sentiment negatively as uncertainty rises, and worries about a possible financial crisis set in. We see a need to stem currency depreciation, but scope for short-term fixes might be limited,” the report said.

While the Reserve Bank of India has enough reserves to bridge a temporary balance-of-payments mismatch, the focus should be on medium- to long-term measures to improve the current account deficit and encourage stable foreign inflows.

According to the report, an additional oil subsidy burden of 0.15-0.2 per cent of GDP is an inevitable result of a weaker rupee. Every one-rupee depreciation increases oil companies’ losses by Rs 9,000 crore.

Difficult decisions

The Government will either have to reduce other expenditures or raise diesel prices more sharply to contain the fiscal deficit in a weak rupee environment. These are difficult political decisions with elections nearing.

High import intensity of exports, lack of a globally-recognised brand, and similar depreciation in other currencies are likely to limit any positive impact on exports, it said.

beena.parmar@theindu.co.in

Source: thehindubusinessline

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Vijaya Bank opens 1,377th branch

Vijaya Bank’s 1,377th branch was inaugurated by Nirmalananda Natha Swamiji of Adichunchunagiri Mutt at Chunchunahalli, Nagamangala Taluk, in Mandya district. Inaugurating the branch, Swamiji requested the villagers to save more and develop banking habits; he requested them to take full advantage of the banking facilities being provided by Vijaya Bank in villages. He also complimented the bank for their pro-active initiatives under the Financial Inclusion programme. K. R. Shenoy, the Executive Director of Vijaya Bank, presided over the function. “In order to provide the banking services continuously to the Financial Inclusion villages, the bank is upgrading 40 Ultra Small Branches into regular brick and mortar branches and Chunchunahalli is one such branch,” he added.

Source: thehindubusinessline

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Bank licence: Aditya Birla Nuvo, three others join the queue

With only four working days remaining for approaching the Reserve Bank of India with an application for banking license, four listed companies, including three financial services firms, decided to take the plunge.

Diversified conglomerate Aditya Birla Nuvo’s board on Wednesday decided to approach the RBI for a banking license. Reliance Capital and Magma Fincorp too made similar announcements. The promoters of Religare Enterprises Ltd announced disinvestment of shares, including to a US based bank (Customers Bancorp Inc.) in a bid to align their shareholding with the new bank licensing norm.

Reliance Capital

The Anil Ambani-controlled Reliance Capital will be the promoter of the proposed bank.

Two financial behemoths from Japan — Nippon Life Insurance and Sumitomo Mitsui Trust Bank — have agreed to take 4-5 per cent stake each in the proposed bank, Reliance Capital said in a filing to the stock exchanges on Wednesday.

The two Japanese firms taking minority stake each in the proposed bank is, however, subject to regulatory approvals.

“Reliance Capital is delighted to partner with two of Japan’s largest firms — Sumitomo Mitsui Trust Bank and Nippon Life Insurance — for our proposed new bank,” Sam Ghosh, Chief Executive Officer, Reliance Capital, said in a statement.

The company’s shares closed at Rs 320 on the National Stock Exchange, gaining Rs 6 over the previous day’s close of Rs 314.

Hitoshi Tsunekage, CEO, Sumitomo Mitsui Trust Bank, said the company was “pleased to start a partnership with Reliance Capital. We hope to contribute toward the development of the Indian financial industry through our collaboration, which we believe will be a successful one.”

For Nippon Life, this will be third investment in the Anil Ambani Group of companies. In March 2011, Nippon Life Insurance acquired 26 per cent stake in Reliance Life Insurance for Rs 3,062 crore. In January 2012, it acquired 26 per cent stake in Reliance Asset Management Company for Rs 1,450 crore.

Aditya Birla Nuvo

Aditya Birla Nuvo has five lines of business — financial services (Aditya Birla Financial Services); telecom (Idea Cellular); manufacturing (cement, aluminium, copper and viscose staple fibre); fashion and lifestyle (Madura, Pantaloons and textiles); and IT-ITeS (BPO).

The financial services strategic business unit, among others, has presence in the asset management, life insurance, non-banking finance, and broking space. In FY2013, Aditya Birla Financial Services logged revenue of Rs 6,390 crore and a net profit of Rs 672 crore.

Magma Fin Corp

Magma Fincorp Ltd, the Kolkata-headquartered non-deposit taking NBFC is registered with the RBI as an asset finance company.

The NBFC had total loan assets of Rs 16,240 crore under management as on March 31, 2013. It has 278 branches across the country and employs about 75,00 people.

Earlier this year, Magma, through a postal ballot, obtained shareholders’ nod for a capital-raising plan of Rs 500 crore through issue of securities. It has also proposed to increase the borrowing limit of the company from existing Rs 15,000 crore to Rs 25,000 crore. Its AGM is scheduled for July 18.

Promoters currently hold 33.7 per cent of the paid-up capital of the company of Rs 37.99 crore. IFC, Macquarie Bank and FIIs, such as CLSA Mauritius, Deutsche Securities Mauritius, KKR Mauritius, hold 43.55 per cent in Magma.

Religare Enterprises

In the run-up to making an application to the RBI for getting a banking licence, promoters of Religare Enterprises Ltd (REL) will sell shares to US-headquartered Customers Bancorp Inc. (CUBI). The foreign bank has agreed to invest $51 million in REL through a combination of primary and secondary market investments.

On Monday (June 24) Kolkata-based Srei Infrastructure Finance and Edelweiss Financial Services also decided to seek a banking licence from the RBI. And, last week, IDFC Ltd board too approved a resolution to apply for bank licence.

Source: thehindubusinessline

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Muthoot Finance gets RBI nod to set up White Label ATMs

Gold loan company Muthoot Finance said it has got in-principle approval from the Reserve Bank to set up White-Label ATMs in the country.

White-Label ATMs are to be set up by non-banking entities on behalf of ‘sponsor banks’ but they would not carry the brand label of any bank, and would be accessible to card-holders of all the banks for a fee.

In a BSE filing, Muthoot Finance said the RBI has “granted in-principle authorisation to the company for setting up White Label ATMs in India...”.

The Chief General Manager of Muthoot Finance, K R Bijimon said the company would be setting up 1,000 such ATMs in the first year of operation and another 8,000 in the following two years. He also informed that the company was in discussions with three banks in this regard.

The company had taken approval of shareholders in December last year through postal ballot for carrying out the business of setting up such ATMs.

The RBI in February last year permitted the non-banking entities to operate and own such ATMs with the objective of enhancing the spread of ATMs in semi-urban and rural areas where bank owned ATM penetration was not growing.

Earlier this month, private sector lender Federal Bank said it has tied up with Tata Communications to install 15,000 White-Label ATMs (WLAs) across the country.

Source: thehindubusinessline

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SBI to get tough on loan defaulters

Faced with a Rs 51,000-crore bad loans pile, State Bank of India has decided to tighten the screw on defaulting borrowers.

How? It is taking recovery action, such as filing winding-up petitions against defaulting companies and their guarantors.

SBI wants its field staff dealing with recoveries to go after loan defaulters and wring out as much of the outstanding loan as possible.

A secured creditor files a winding-up petition in a High Court when the borrower fails to repay debt.

Winding up of a company is a process whereby its normal activities are brought to a standstill. The company’s property is administered by a court-appointed liquidator for the benefit of its members and creditors.
On record

To keep tabs on the pledged security, bank staff have been asked to take photographs of the properties during inspectionand keep them in the records, said a senior bank official.

SBI will take physical possession of the assets charged to it by the defaulters to preserve their value and realise the maximum amount from their auction.

Earlier, the bank used to just take symbolic possession of a pledged asset by pasting a notice that the property belongs to it. Defaulting borrowers sometimes take advantage of symbolic possession to sell off plant and machinery and other pledged assets.

The official said, the bank may consider acquiring some properties at the reserve price for its own use when their auction fails.

In the case of loan accounts classified as doubtful, up-to-date valuation of such accounts will have to be done so that they can be showcased to asset reconstruction companies (ARCs).

A loan account is classified as doubtful if it has remained non-performing for more than 12 months. ARCs are in the business of resolving non-performing loans bought from banks and financial institutions.

Due to economic slowdown, which has affected its borrowers’ ability to repay loans, SBI’s bad loans increased by Rs 11,513 crore in FY13 to Rs 51,189 crore as at March-end 2013.

In FY13, the bank saw a gross reduction of Rs 20,480 crore in bad loans. Fresh slippages amounted to Rs 31,993 crore.

Break-up

A break-up of SBI’s bad loans portfolio shows that as on March-end 2013, mid-corporate segment accounted for 36 per cent of the total bad loans; small and medium enterprises (28.4 per cent); agriculture (19.8 per cent); retail (8.3 per cent); international (5.5 per cent); and large corporate (2 per cent).

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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To curb defaults, Canara Bank offers to reschedule education loans

State-run Canara Bank has come up with a ‘one-time settlement’ to help student borrowers reschedule their education loan.

The bank’s Chairman and Managing Director R. K. Dubey told newspersons here on Tuesday that while the bank is interested in lending more, lest a student is deprived of education (for want of funds), poor recovery has been a matter of concern.

‘Nevertheless, we are willing to reach out to all the parents to understand their difficulty in repaying their dues. We are willing to extend the loan tenure and facilitate easy repayment,’ he added.

Canara Bank’s educational loan NPA (non-performing asset) is around 9 per cent, Dubey said.

The demand for student loans is said to be high in States such as Tamil Nadu and Kerala compared with those in the North.

While the bank’s total educational loan exposure is around Rs 4,200 crore, the quantum advanced in Tamil Nadu is around Rs 430 crore, and in Kerala, marginally higher.

But over Rs 100 crore of the Rs 430 crore student loan given in Tamil Nadu has been categorised as NPAs. “This is quite high and is a cause of concern for us,” he added.

The bank, meanwhile, is getting aggressive on education loans.

“We will not shy away. Instead, we will look to advance more and be aggressive on the recovery front too.

“By rescheduling the loan and facilitating easy repayment of dues, we are confident of bringing the NPA down to 2 per cent in 18 months time,’ the bank’s chief said.

Asked if he expected a loan waiver, Dubey said, ‘No, not on education loan.’

Canara Bank is also looking to boost lending to micro industries and the retail segment.

revathy.lakshminarasimhan@thehindu.co.in

Source: thehindubusinessline

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Exim Bank chief urges more investment in high-tech goods

With the entire global economy going through a churn now, “this is the right time to weed out inefficiencies in our system and gear up our manufacturing capacity to emerge successful in the global economic scenario”, said T.C.A. Ranganathan, Chairman and Managing Director of Export-Import Bank of India.

Indian manpower

Technology manufacturing in particular is something Indian manufacturers should focus on, he said. India has the necessary manpower for that. State and Union Governments too should encourage investment in this sector, and one must seize this opportunity to produce high-tech capital goods, he said.

Delivering his special address at the 177th annual general meeting of the Madras Chamber of Commerce and Industry here today, he said India’s total manufacturing is valued at $300 billion, while it imports $90-billion worth of high-tech capital goods alone. It would be much cheaper to manufacture them in India. “We must produce what we import more,” he said.

Pointing out that over 25 per cent of the world’s total export is made up of high-tech capital goods, and India’s participation in that is very negligible, he said it is crucial to raise the country’s contribution in the global high-tech goods export. This would enable Indian companies to gain product competitiveness in the international markets, he insisted.

India’s global merchandise exports recorded a compound annual growth rate of 10 per cent during the decade following the reforms (1990-2000), which more than doubled to 21.5 per cent in the following decade, as against 8.5 per cent growth witnessed in the decade preceding the reforms, 1980-90.

Talking about the country’s growth potential, Ranganathan, quoting Jim O’Neill, former chief economist and Chairman of Goldman Sachs Asset Management, said even with unspectacular growth of a little more than six per cent a year, India’s economy could be 40 times bigger by 2050 than it was in 2000 – about as big as the US economy will probably be by then (though not as big as China).

But it could do much better than that. Growth of 8.5 per cent over the entire period is possible - with growth of more than 10 per cent over the next 15 to 20 years not out of the question - provided it makes some changes.

“If industrialists choose to ride this growth wave, they can emerge successful; and if they choose not to, they may perish. But the country’s economy will certainly grow,” he said.

He also assured federations of Indian industry and chambers of commerce of the support of Exim Bank.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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Corporation Bank to open 300 branches this fiscal

Corporation Bank will open around 300 branches this fiscal, according to its Chairman and Managing Director, Ajai Kumar.

The bank opened 207 branches in 2012-13, and is planning to open around 300 more this fiscal and another 900-1000 in the next three years, he said at the 16{+t}{+h} annual general meeting (AGM) here on Tuesday. Currently, the bank has 1,707 branches.

He said the number of ATMs would be increased from the present 1,400 to 5,000 in the next three years. Every branch would have an ATM, he said.

KYC, NPA

As regards fulfilling know-your-customer (KYC) norms, Ajai Kumar said that this is a regulatory requirement and the even old customers have to adhere to them.

On non-performing assets (NPAs), the chairman said despite the economic slowdown, the bank managed to recover/upgrade loans worth Rs 1,509 crore in 2012-13 against Rs 758 crore in the previous fiscal.

The bank, he said, is among the top five public sector banks in almost 13 parameters.

The shareholders approved a resolution to pay a dividend of Rs 19 per equity share of Rs 10 each for 2012-13.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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