Union Bank plans kiosk banking in Kerala

Union Bank of India, the lead bank for Ernakulam and Idukki, has proposed to start kiosk banking in the State. The bank will begin the process in Ernakulam district.

In view of the direct benefit transfer rolled out in 11 districts of Kerala from July 1, the bank is in the process of providing extensive reach of banking services through these kiosks.

The bank has already tied up with Akshaya for making Akshaya kendras as banking kiosks.

Through these kiosks, people can open accounts, make remittances and withdrawals, transfer funds from one account to another etc.

Source: thehindubusinessline

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Sidbi wants Govt to convert debt into equity

Small Industries Development Bank of India, Sidbi, approached Government seeking conversion of the latter’s existing debt exposure into equity, said the organisation’s Chairman & Managing Director, Sushil Muhnot. The proposal seeks the conversion of Government debt exposure of about Rs 2,500 crore in Sidbi into equity, Muhnot said.

If the Government agrees to the conversion, it would enable Sidbi to do more equity financing, he told Business Line here. This is because a higher equity would imply increased net worth. This, in turn, would ensure higher quantum of equity financing to medium, small and micro enterprises, he pointed out.

The paid-up capital of Sidbi, which is a Government-owned entity at present, is Rs 450 crore.

To raise funds

Sidbi also plans to raise Rs 13,500 crore during the current fiscal through a mix of bonds and other instruments to fund its business activities. The financial institution is likely to disburse over Rs 40,000 crore this fiscal.

In fiscal 2012-13, Sidbi had reported a net profit of Rs 837 crore. This reflected a 47.6 per cent increase over the net profit of Rs 567 crore in the previous year.

Sidbi’s total income grew 17.23 per cent in 2012-13 to Rs 5,401 crore (Rs 4,607 crore).

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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BoB employees' contribution

Employees of Bank of Baroda have contributed Rs 5 crore to the Prime Minister’s National Relief Fund. This amount was given for providing assistance to the victims of cloud burst and flash floods in Uttarakhand. It was collected through contribution of one-day salary by the employees.

Source: thehindubusinessline

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Canara Bank cuts base rate to 9.95%

Canara Bank has pared its minimum benchmark lending rate (also known as the base rate) from 10.25 per cent to 9.95 per cent. The public sector bank has also cut deposit rates by up to 50 basis points.

Banks usually give loans at a mark-up to the base rate. All interest rate changes by the bank are effective from July 8.

One basis point is equal to one-hundredth of a percentage point.

On the term deposits (of less than Rs 1 crore) side, the bank has effected a 50-basis points cut in interest on deposits of 270 days to less than one year maturity to eight per cent (from 8.50 per cent), the bank said in a notice to the stock exchange.

The new interest rates on term deposits in the 180 days to 269 days, and one year to less than two years maturity slabs are seven per cent (7.25 per cent earlier) and 8.75 per cent (9 per cent), respectively.

The new interest rate on term deposits in two maturity buckets — two years to less than three years, and three years to less than five years — will be 8.80 per cent (nine per cent).

Interest rates cut

The bank has also cut interest rates on non-resident (external) deposits (of less than Rs 1 crore) by up to 25 basis points.

The new interest rate on NRE term deposits in the one year to less than two years maturity bucket is 8.75 per cent (nine per cent).

The new interest rate on NRE term deposits in two maturity buckets — two years to less than three years, and three years to less than five years — will be 8.80 per cent (nine per cent).

After Union Finance Minister P. Chidambaram urged public sector bank chiefs to cut their lending rates at a meeting on Wednesday, banks have started taking action. Bank of India was the first to get off the block, cutting its base rate to 10 per cent from 10.25 per cent.

Source: thehindubusinessline

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Bank licences for corporates in national interest: RBI

Even as 26 applicants wait with a hope to get a banking licence, Reserve Bank of India (RBI) governor D Subbarao said that the decision to allow corporates to apply for new licences was taken after much debate.


"We debated extensively on the matter and the decision to allow corporates to apply for bank licences was done in the national interest," Subbarao said. "As Indian banks go out and open branches abroad and foreign banks come and set up operations inside the country, there is no way we cannot implement Basel III," the governor said on the need to implement global norms.

The RBI had asked banks to implement Basel III norms from the first of April this year. On the policy front, the focus of the monetary policy of the last three years was one of management post crisis.

"We now have to learn to manage policy in a globalized world. In the last five years, the world has gone through a financial crisis which has hit every country. This has shown the ferocious power of globalization," he said.

He said there is a debate around the world on the accountability and responsibility of central banks. "At RBI, we jealously guard and protect out our autonomy. But we can't demand autonomy unless we are accountable. I have suggested that the RBI governor can render accountability to a select committee from Parliament. And until then, we should render it voluntarily," he said.


Source: TimesOfIndia

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Central Bank of India launches ‘Wonder Card’

The Central Bank of India on Wednesday rolled out a new debit-cum-credit card, called ‘Wonder Card’, for the benefit of salaried customers in Bihar.

Speaking at a function here after launching the Wonder Card, Central Bank of India Executive Director Malay Mukherjee said the new card will enable a customer to withdraw a fixed amount in excess of his salary to be adjusted against deposit under salary head in the next month.

A Wonder Card holder with a salary of up to Rs 25,000 per month can withdraw an excess amount of Rs 10,000 against his salary amount, while one with Rs 60,000 salary could withdraw Rs 25,000 excess amount, he said, adding, such a card holder with salary of more than Rs 60,000 per month could withdraw up to Rs 60,000.

Mukherji said withdrawal of excess amount against salary will be adjusted from the next month’s salary with interest at the bank’s base rate at 10.25 per cent, in addition to four per cent interest.

He added Bihar has become only the second state after Maharashtra where the Wonder Cards have been launched for the salaried account holders.

Mukherjee distributed ten Wonder Cards and Rs 12 crore loan among 80 people on the occasion.

Source: thehindubusinessline

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Corp Bank pays dividend to LIC

Corporation Bank has paid a dividend of Rs 71.73 crore to Life Insurance Corporation of India.
A statement by the bank said here on Wednesday that Ajai Kumar, the then Chairman and Managing Director of Corporation Bank, handed over the cheque to Thomas Mathew T., the then Chairman of LIC of India.

Source: thehindubusinessline

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Karnataka Bank to offer online money transfer service

Karnataka Bank has tied up with Times of Money to offer an Internet-based online money transfer solution to non-resident Indians (NRIs).

Quoting P. Jayarama Bhat, Managing Director and Chief Executive Officer of Karnataka Bank, a press statement said here that India is the top receiver of remittances worldwide. In the recent past, bulging trade deficit along with significant decline in invisible earnings caused widening of current account deficit resulting in stress on balance of payments.

“In this scenario, it is felt appropriate to tap the NRI market and channelise the inflows by tying up for online remittance facilities. Karnataka Bank enjoys a great confidence among NRIs and it is our endeavour to offer them the very best of services and present tie-up with ‘Times of Money’ for online money transfer,” he said.

With this partnership, NRIs can use the Karnataka Bank Web site to transfer money online from 23 countries leveraging Times of Money’s expertise in cross-border remittances, the release said.

Quoting Avijit Nanda, Chief Executive Officer of Times of Money, the release said:  “With the significant increase in inward remittances, more and more people are shifting to online ways of transferring money. With the comfort of time and place, online money transfer service has clearly come out as a winner.”

Source: thehindubusinessline

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Canara Bank CMD meets Karnataka CM

R.K. Dubey, chairman and managing director, Canara Bank, called on Karnataka Chief Minister Siddaramaiah on Tuesday.

Canara Bank, which has its roots in the State and wide geographical spread, has initiated multifarious socio-economic programmes apart from carrying out its traditional banking.

Dubey congratulated the Chief Minister on his assuming the office and briefed him on the bank’s contribution in the socio-economic development of the State.

The bank has 713 branches in the State of which 291 are in rural areas.

Source: thehindubusinessline

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Citibank India net up 41.4% to Rs 2,718 cr

Citibank India on Wednesday reported a 41.4 percent increase in net profit for the financial year 2012-13 at Rs 2,718 crore (Rs 1,922 crore).

The bottomline growth of this foreign commercial bank is higher than the 35 percent increase in net profit recorded in 2011-12.

An all round performance in commercial, retail and treasury segments contributed to the robust financial results in 2012-13.

Both topline growth and improved operating efficiency led to this bottomline growth. The operating expenses-income ratio improved significantly from 44.5 percent last year to 40 percent this year.

Simply put, Citibank India not only earned more, it also saved more, leading to robust net profit growth.

"We are pleased to have delivered another set of high quality earnings in a challenging environment, consistent with our performance over the years and maintained a healthy portfolio", Abhijit Sen, Chief Financial Officer, Citibank India said.

Citibank India has sustained expansion in the commercial banking segment, high off-take of trade loans by global banking customers and growth in mortgage business, Sen said.

As of March 31, 2013, Citibank India’s mortgage book stood at Rs 9,949 crore, a 16.7 percent increase over Rs 8,525 crore as at end March 2012.

Srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Bank of India cuts base rate by 25 bps to 10%

Bank of India reduced its base rate by 25 basis points to 10 per cent, according to a release filed with the Bombay Stock Exchange. Earlier, the base rate of the bank was 10.25 per cent per annum.

The revised rate will be effective from July 8, the release said.

This move comes after the Finance Ministry on Wednesday advised banks to cut their base rates. A base rate cut will pave the way for reducing lending rates, thereby reviving projects and revving up economic growth.

The Reserve Bank of India in its mid-quarter monetary policy review on June 17 left the repo rate and cash reserve ratio (CRR) unchanged at 7.25 per cent and 4 per cent respectively.

Repo rate is the rate at which the RBI lends short-term funds to banks. CRR is the share of bank deposits parked with the RBI.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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SBI rules out cut in minimum lending rate

The country’s largest lender, State Bank of India (SBI), ruled out the possibility of cutting its minimum lending rate or base rate, saying it was the lowest in the market.

“We are already at the lowest. We are at 9.7 per cent (base rate). Other banks have been asked (by Finance Minister P Chidambaram) to come to SBI level,” bank Chairman Pratip Chaudhuri said here.

“Our home loan rates are at 9.95 per cent, everybody is at 10.2. We are ahead of the curve,” he said.

Earlier , after a meeting with heads of public sector lenders, Chidambaram said he had suggested the banks consider reducing lending rates to stimulate credit growth.

“We have advised banks to take a look at the base rate. The base rate of SBI is 9.7 per cent. The average of the base rate of other banks is 10.2 or 10.25,” he said.

“I have impressed upon the bankers...the Reserve Bank of India has cut its policy rates by 125 basis points and some part of this must indeed be passed on to the borrowers,” Chidambaram said.

SBI is very comfortable on the liquidity situation, Chaudhuri said.

“I am having 50,000 crore of excess liquidity,” he said.

Source: thehindubusinessline

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SBI celebrates 58th bank day

State Bank of India celebrated its 58th bank day in Chennai on Monday.

It was on this day, July 1, 1955, the Imperial Bank of India was reconstituted by an Act of Parliament to to create State Bank of India to perform the functions of a commercial bank. This marked the start of a new era in banking in the country, said a press release from SBI.

At launch of the day’s events, Varsha Purandare, Chief General Manager, SBI, delivering the presidential address, emphasised the importance of ‘prompt and positive response’ by the staff to every opportunity that helps grow the bank and maintain its leadership. She urged the staff to take personal responsibility for sustaining the bank’s position as the leader and pioneer in financial services. General Managers, S. Krithivasan and Sanjiv Chadha, were present on the occasion.

Cultural events

As a part of the celebrations, a melange of cultural events was organised, with active participation of staff members.

Three outstanding social workers – Padma Venkataraman, Chairman, Women’s Indian Association; C. Ramasubramanian, Founder of Chellamuthu Trust and Research Foundation, Madurai; and James E. Kimpton, President, Reaching the Unreached, Madurai — were honoured with shield and cash award. The bank also honoured three State toppers in the recently held Plus Two examinations.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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Corporation Bank presents dividend cheque to Govt

Corporation Bank has presented a dividend warrant of Rs 173.80 crore to the Union Finance Minister in New Delhi recently.

A press release by the bank said here on Tuesday that Ajai Kumar, the then Chairman and Managing Director of Corporation Bank, presented the cheque to P. Chidambaram, Union Finance Minister, in the presence of Namo Narain Meena, Union Minister of State for Finance, Snehlata Shrivastava, Additional Secretary, Department of Financial Services.

The amount pertains to the dividend declared by the bank for 2012-13 at Rs 19 on a paid-up equity share of Rs10 each.

Amar Lal Daultani, Executive Director of the bank, and Anna Roy, Government of India nominee director on the board of the bank, were present on the occasion.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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Karnataka Bank targets fresh export credit of Rs 1,460 cr

Karnataka Bank Ltd is targeting fresh disbursement of Rs 1,460 crore under export credit during 2013-14.

P. Jayarama Bhat, Managing Director, said this while delivering the keynote address at the ‘Foreign Exchange Business Review Conference 2013’ of the bank here on Tuesday.

With this fresh disbursement, the bank is targeting a total export credit of Rs 3,160 crore by the end of 2013-14.

At present the bank has 20 designated branches, including three overseas branches, for forex business. Added to this, 56 branches act as feeders to these designated branches.

Meera Aranha, General Manager, said the bank registered a growth of Rs 248 crore in export credit during 2012-13.

The General Managers — P. Jairama Hande, N. Upendra Prabhu and Mahabaleshwara M. S. — were present.

Regional heads of the bank, the branch heads from forex designated branches, and executives from the international division in Mumbai and the Forex Support Group attended the conference.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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RBI gives in-principle nod for an all-women bank

The Reserve Bank of India (RBI) has given its in-principle approval for the Central Government to set up the country’s first all-women bank.

The proposed all-women bank will be the first ever commercial bank to be floated by the Central Government.

It is expected to have a pan-India presence with six branches to start-with. The headquarters for the all-women bank is likely to come up at New Delhi.

The Central Government will initially pump in Rs 1,000 crore as paid-up capital of the bank.

The name of the all-women bank is yet to be firmed up even as a committee formed to prepare a blueprint for the bank has submitted its report.

None of the existing public sector banks were actually floated by the Central Government. They were all acquired by the Central Government when these banks were nationalised.

The all-women bank is expected to start operations from November 2013, Finance Minister P Chidambaram had said recently.

Chidambaram had in his 2013-14 budget speech proposed the setting up of country’s first all-women bank.

Initially, the all-women bank is likely to start with at least one branch in each major region of this country – North, South, West, East, Centre and the North-east.

The proposed bank will lend mostly to women and women-run businesses besides providing support to women Self Help Groups (SHGs).

It will predominately employ women and take deposits from both men and women.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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RBI gets 26 applications for bank licence

The Reserve Bank of India has received 26 applications for new banking licences until Monday, the deadline for making a pitch, with a mix of big corporate houses led by the Tatas, the Aditya Birla group, the Rahul Bajaj group, Videocon, the Anil Ambani group and Larsen & Toubro in the race to set up a commercial bank.

Others in the fray include a government department, state-owned firms, a handful of non-banking financial companies and a couple of microfinance institutions. Among those who have decided to give it a miss are Reliance Industries (RIL) and the Mahindra and Mahindra group.

The applicants, a list released by the RBI said, include Tata Sons — the holding company of the $100 billion Tata group, Aditya Birla Nuvo Ltd, Bajaj Finserv of the Rahul Bajaj group, the Anil Ambani-controlled Reliance Capital, L&T Finance, Indiabulls Housing, Shriram Finance and Value Industries of the Videocon group.

The list also includes entities owned by the government or government-owned institutions such as the Department of Posts, LIC Housing Finance, IFCI and Tourism Finance Corporation of India.

Leading finance and investment firms India Infoline, JM Financial, Magma Fincorp, Religare, Srei Infra, Suryamani Financing, UAE Exchange and Financial, Muthoot Finance and IDFC have also applied.

Microfinance companies such as Kolkata-based Bandhan Financial and Janalakshmi Financial run by Ramesh Ramanathan are also in the race. INMACS Management Services, a management consultancy firm, is also seeking a banking licence.

The RBI had already indicated that it may not be possible to issue licences to all applicants meeting the eligibility criteria. "There is no predetermined number. RBI will be very selective while considering the applications for new bank licences. It will look for very high quality applications," the RBI had said in a statement in June.

Source: IndianExpress

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India to seek aid from World Bank, ADB to rebuild Uttarakhand

Government will seek financial aid from multilateral bodies like World Bank and Asian Development Bank for reconstruction and rehabilitation in flood-ravaged Uttarakhand, finance minister P Chidambaram said on Monday.

He said funds will not be a constraint for rebuilding the mountainous state which had witnessed the worst ever floods last month that killed several hundreds and destroyed properties worth crores.

"We are trying to develop a (financial) package for rehabilitation and reconstruction for which we will go to multilateral bodies, like we did in Tsunami case," Chidambaram told .

"Prime Minister has already announced Rs 1,000 crore. Different ministries are using their own funds. Tourism has announced Rs 100 crore. Funds will not be a constraint. I have said it on the first day," the minister said

Besides seeking aid from these multilateral agencies, the government will soon sent a joint team of finance ministry and home ministry to discuss with Uttarakhand state officials the redevelopment plan for the calamity-hit state.

"What I have approved is that a team from the finance ministry and home ministry will go to Uttarakhand to sit (and discuss) with Uttarakhand government officers," Chidambaram said.

In view of the gravity of the situation, Prime Minister Manmohan Singh had last month announced financial support of Rs 1,000 crore to Uttarakhand for disaster relief, of which Rs 145 crore was released immediately.

Singh had also announced ex-gratia assistance of Rs 2 lakh each to families of those who had lost their lives and Rs 50,000 each to the injured, from the Prime Minister's National Relief Fund (PMNRF).

The government had also decided to provide from the PMNRF, an ex-gratia assistance of Rs 1 lakh each to those whose houses have been completely destroyed and Rs 50,000 each to those whose houses have been damaged.

Source: Timesofindia

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Syndicate Bank’s 3000th branch

Syndicate Bank opened its 3000th branch at Dodda Kammanahalli, Bangalore, recently.

M.G. Sanghvi, Chairman and Managing Director of the bank, inaugurated the branch.

He said the bank opened it 3001st branch at Imphal, Manipur, and with this, the bank has presence in all the States of India.

Source: thehindubusinessline

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Vijaya Bank all-woman branch

Karnataka Minister for Women & Child Development Umashree inaugurated Vijaya Bank’s all-woman branch at Ramamurthy Nagar, Bangalore. It is the bank’s second all-woman branch and first in Bangalore.

Basavaraj Byrathy, Member of the Legislative Assembly and K.R Shenoy, the Bank’s Executive Director were present on the occasion.

As a responsive corporate social citizen, the Bank extended several Corporate Social Responsibility initiatives at Ramamurthy Nagar.

The Bank adopted a girl child to support her education till her graduation.

Source: thehindubusinessline

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4 bank insurance staff held for swindling Rs. 1.6 cr.

In a classic case of fence eating the crop, four employees of ICICI Bank’s insurance wing Lombard in charge of scrutinising medical insurance claims allegedly embezzled Rs. 1.6 crore by presenting fake hospital bills. Malla Reddy, Srinivas Reddy, Prabhakar and Raghu were arrested by the Raidurg police on Monday. Among the beneficiaries of the illegal and false claims were 34 employees of the Lombard and 20 outsiders, Raidurg Inspector A. Balakoti said. “Since their job was to process the applications of medical insurance, the accused were familiar as to what documents and bills should be submitted,” the Inspector. They make generated fake bills, medical test and treatment reports in the name of reputed hospital and submitted the same in the bank.

As the accused were in-charge of scrutinising the forms, they readily cleared the claims presented on behalf of 34 colleagues and 20 others. With each accused candidate claimed an average sum of Rs. 3 lakh, more than Rs. 1.6 crore was fraudulently pocketed by them.

On learning about the fraud during an internal audit, the bank manager approached the police who registered a criminal case. and caught four of the employees. The remaining employees of the bank and 20 others are still at large.

Source: thehindu

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Muthoot Finance files application for banking licence

Gold loan company Muthoot Finance Ltd filed an application with the Reserve Bank of India for a banking licence.

Confirming that the non-banking finance company has filed its application, K.P.Padmakumar, Executive Director, said that Muthoot Finance would set up a non-operative financial holding company to conform to the RBI guidelines.

While MFL would hold 90 per cent stake in the holding company, the balance 10 per cent will be held by the promoters.

Padmakumar said that Muthoot Finance knew the "rural heartland " very well and that most of its 4400 branches were located in Tier 2 and Tier 3 cities.

"Our application should be eminently considerable given our existing focus on rural india", Padmakumar said.

He also said that Muthoot Finance had an 18-month period to change its legal structure in line with the RBI requirements, if an in-inprinciple approval is granted by the central bank for the banking foray.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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IRDA plans cap on sales by bank-promoted insurers

Insurance companies promoted by non-banks may soon be on a level playing field with bank-promoted insurers.

According to the guidelines being planned by Insurance Regulatory and Development Authority (IRDA), banks, which opt to be insurance brokers, will have to cap business from their own group companies at 25 per cent.

This simply means banks cannot push for products from their own group companies beyond 25 per cent of the total annual sales. For example, if State Bank of India becomes a broker, its total insurance sales from SBI Life Insurance will be restricted to 25 per cent. There will be a similar cap for general insurance business.

Most major banks such as ICICI Bank, HDFC, SBI, IDBI Bank, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, and Andhra Bank have promoted insurance companies.

With many banks starting their own insurance ventures, newer, non-bank promoted insurers have been finding it difficult to find distribution partners with a wide network.

Under the current existing norms for distribution, a bank can become only a corporate agent, which allows it to sell products of one life insurance company and one non-life company and one standalone health insurance company.

In his budget speech, Finance Minister P. Chidambaram had said that banks would be allowed to act as brokers to sell insurance to help improve penetration through the extensive national bank network.

“These steps will ensure there will be no selective selling by banks and provide a good platform for products of all insurance companies,” said a CEO of a private insurance company.
To specify norms

Also, to prevent mis-selling of policies through the bank channel, the insurance regulator will specify norms which require extensive training of the bank personnel selling insurance products, besides a strict compliance with KYC norms.

The regulator is expected to come out with the final norms soon under which banks will be able to sell insurance products of different companies.

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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Tata, Birla, India Post among 26 applicants for bank licence

Tata Sons, IDFC, India Post and Suryamani Financing are among the 26 entities seeking a bank licence which the Reserve Bank of India said will be granted only to a few even if everyone meets the guidelines.

The aspirants include the Aditya Birla Group, which has interests ranging from telecom to aluminium, and Reliance Capital of Anil Ambani - which has presence in power and roads, besides financial services.

Lesser-known names such as Suryamani Financing Co from Kolkata (owned by Dunlop Tyres' Pawan Ruia), auditing firm INMACS Management Services and Smart Global Ventures, Noida, have also thrown their hats in the ring, applicant names published on the RBI website show.

"Of the 26 applications, the RBI can easily eliminate 17-18 and of the 7-8 considered, the central bank will give out 4-5 licences," said Ashwin Parekh at consultants Ernst & Young. "Guidelines were very onerous to apply and under the current structure, scope for niche or specialised banking is restricted."

Submission of applications ends a 10-year drama of permitting more banks in a country where more than half the population has not walked into a bank despite nationalisation four decades ago.

The list of applicants saw surprising additions and dropouts.

10 NBFCs also eye licences

Mahindra & Mahindra Financial, which has been pitching on its rural presence to carryout the financial inclusion agenda of the government, pulled back citing inflexible guidelines from the RBI. There have been additions such as Value Industries Ltd, Aurangabad, backed by Videocon Industries, which realised a windfall from the sale of its stake in Mozambique oilfields.

"The current set of guidelines, as clarified, has an adverse economic and operational impact on the business of larger non-banking finance companies," said Mahindra.

"A time-bound co-existence of a NBFC and a bank in the same group would help set up a sustainable model and address the concerns of all stakeholders."

Around 10 non-banking finance companies, including L&T Finance, LIC Housing Finance, Shriram Capital, Aditya Birla Nuvo and Bajaj Finserv are seeking to own a bank despite what some describe as onerous reserve requirements.

"There is no predetermined number. The RBI will be very selective while considering applications for new bank licences. It will look for very high-quality applications. It may, therefore, not be possible to issue licences to all the applicants meeting the eligibility criteria," the RBI said in its clarifications issued on June 3.

Indeed, the applicants face yet another obstacle in the form of a key objective of the policymakers - financial inclusion, which may disturb their returns calculations.

"One of the criteria for evaluating the applications that we get in due course of time will indeed be their business plan for financial inclusion," RBI Governor D Subbarao had said. "Banks consider this as an obligation and not an opportunity."

Some high-profile firms are also among the candidates. JM Financial, the investment banking and financial services franchise run by Nimesh Kampani, has roped in former Citigroup chief executive Vikram Pandit to bolster its chances.

Other requirements such as priority sector targets and 25% branches in unbanked rural areas could be some of the big challenges for these new banks.

Brokerage firms such as Edelweiss, India Infoline and Religare are also in the fray. New banks may find it difficult to build low-cost accounts when new-generation private sector banks are offering 6-7%.

The RBI has clarified that it will not give any form of dispensation to applicants. Stocks of many aspirants were up during the day. But some are expecting the central bank to relax the norms given their current structure.

The Shriram Group is seeking exemption from transferring its transport funding business into a new bank since it may dilute the business prospects due to cultural issues.

Shares of Reliance Capital rose 7.31% to Rs 361 while L&T Finance gained 2.1% to Rs 80.15. The Aditya Birla Nuvo stock was up 3% at Rs 1,095.

Source: TimesOfIndia

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YES Bank Row: No end in sight, Madhu Kapur, Shagun Gogia looking for more than just a board position

YES Bank's four-year-old family feud that spilled over to streets may play out in courts for a long time as Madhu Kapur prepares for a prolonged battle to establish her claim as an equal business partner to Managing Director and Chief Executive Rana Kapoor.

"This will be a long drawn court battle,'' said a legal advisor to Madhu Kapur after her daughter's nomination was rejected. "Madhu and the family are aware of it. They are fighting for joint nomination rights along with Rana, and not just a board seat for Shagun,'' said the person who did not want to be identified because of the legal issues involved.

Madhu is the widow of bank co-promoter Ashok Kapur who was killed during 2008 Mumbai terrorists attack on Oberoi Hotel.

YES Bank last week dismissed Madhu Kapur's daughter Shagun Gogia's nomination to the board of directors as the legal heir of one of the two founders. It said it was not in line with practice at other institutions such as ICICI Bank, HDFC Bank, and family-promoted Kotak Mahindra Bank. The Bombay High Court directed the bank to consider Kapur's nomination after the family challenged the nomination of two directors by co-founder Rana Kapoor.

The late Ashok Kapur family also sought the stay of the appointment of the third director. The court will be informed today of the board's decision and Madhu could file an affidavit challenging the validity of the nominations of Ravish Chopra, a former HSBC banker and former Reserve Bank of India staffer MR Srinivasan on the board of the private lender by Kapoor.

The articles of association of the bank provides for joint nomination by Rana and his late partner Ashok Kapur. "The Board evaluated the submissions considering the past and current composition and profile of the Board of the bank, the current composition of the boards peer banks Kotak Mahindra Bank and the three largest private sector bank,'' Yes Bank's company secretary wrote to Madhu Kapur.

"Based on the above and after extensive deliberations, the board of directors has unanimously agreed to that the recommendation of Mrs Shagun Gogia made by you should not be accepted.'' The bank will formally announce its decision, taken with Rana Kapoor abstaining from the deliberations on Thursday's meeting, to the Bombay High Court on Monday. The Kapurs moved the court on June 6 against the appointment of Diwan Arun Nanda of advertising company Rediffusion. The court then directed the bank to advance its board meeting by a month to discuss Ms Gogia's candidature.

Source: EconomicTimes

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RBI's new bank license norms: Now, corporates may vie for takeovers in banking sector

The deadline is 24 hours away. By the end of day on July 1, some 40 applications of corporations seeking a banking licence are expected to reach the doorstep of the Reserve Bank of India (RBI). Only four or five are likely to get the go-ahead.

The applicants still in the fray — after the apex bank did its bit to clear ambiguities with 124 pages of answers to 422 questions in the first week of June — are hopeful. A few, like Mahindra Financial Services and Sundaram Finance, decided to walk away after they felt the regulations were not suited to their aspirations.

Among the clarifications, the RBI made it clear that it wants clean promoters and it will do a background check. For instance, it will seek information from the Central Bureau of Investigation, the Income Tax department and the Enforcement Directorate before it grants licences.

Of course that's not what kept away the ones who have turned their backs on banking. Rather, analysts point out that tight priority sector lending norms and doubts about meeting requirements in terms of CRR ( cash reserve ratio, or the amount banks are expected to park with the RBI) and SLR ( statutory liquidity ratio, or the amount banks are expected to maintain before providing credit) would have persuaded them to stay away.

"The goals of the regulator are very clear," says Akeel Master, head of financial services at KPMG. "The RBI wants to take banking to the unbanked and the rules are same for everyone. If a particular sector feels it is tough for them, they should talk to the RBI," he adds. Master says that there is no merit in pointing out that this time around the norms are tougher; they had to be considering that the last two times the RBI gave out licences was in the early '90s and 2004. "Policies have evolved since then," he adds.

In the Fray

There are large conglomerate-backed entities like Aditya Birla Nuvo, L&T Finance and Reliance Capital in the fray. The last named has roped in two Japanese partners in Mistui Trust Bank and Nippon Life Insurance. Financial services players like India Infoline, Edelweiss Capital and Religare have also thrown their hats into the ring. There is also India Post, with its huge countrywide network of post offices and deposit mobilisation machinery which, in many ways, places it ideally to roll out banking services.

Once the winners are announced, it may not be as if the failed applicants will throw in the towel. In fact, they may well pursue a go-ahead from the central bank for an alternative entry into the banking — via the inorganic route. Sudip Bandyopadhyay, who heads Destimoney Securities, feels that many of the private players who will not be allowed will later petition the RBI to allow them to acquire existing banks. "If the RBI allows new banks, there can't be justification for not allowing takeovers. Taking over an old existing bank may be a better strategy," he says.

Bandyopadhyay points out that the condition of having a fourth of one's branches in rural areas will slow down the road to profitability; breakeven will take at least a decade. "Promoters will have to dilute their equity at a time when their entities will not be fully profitable. The RBI should have allowed 15 years for promoters to dilute their stakes," he says.

One of the RBI's conditions is that applicants should promote the bank through companies in which there is a 51% public shareholding. These companies will have to promote a non-operative financial holding company, which in turn will hold the bank. That is the reason why the Singh brothers have chosen to bring down their stake to 49% in Religare Enterprises. The guidelines state that the banks have to be listed within three years.

Tough Going

Non-banking finance companies ( NBFCs) may find the norms particularly challenging, with the RBI in no mood to give them more time to meet the CRR and SLR conditions. The banks have to meet the CRR and SLR conditions at the time of starting operations. Theoretically, those angling for licences have two years to meet CRR and SLR norms as the licensing process will take six months; and an in-principle approval to start within 18 months. The current CRR is 4% and SLR is 23%.

Ashvin Parekh, Ernst & Young's national leader for global financial services, points out that the CRR and SLR norms will force new banking licensees to find new funds to park with the RBI (CRR) and in gold or government securities (for SLR) from day one. Benefits of having a bank will come from the 2% lower cost of funds that will accrue when a bank will raise low-cost deposits from its customers.

Parekh reckons that a Rs 30,000-crore NBFC will be able to offset the initial cost of meeting the norms only once it succeeds in raising at least Rs 12,000 crore of low-cost deposits. That won't happen in a hurry, particularly when a fourth of your branches are in rural areas.

However, one large NBFC happy to play with these rules is Srei Infrastructure Finance Ltd. Says Srei chairman Hemant Kanoria: "We submitted our application on June 27. Now it is in the hands of the RBI." Srei has drawn up a business plan to have 60-70% of its branches in rural areas starting with eastern and northeastern India before moving in for a pan-India footprint. Kanoria refutes Bandyopadhyay's assertion that rural branches can be a drag. "We have studied the viability of these branches very well. There is a lot of money in rural India — otherwise how do so many chit funds survive," he asks.

"We have been working in the rural areas for the past 24 years and we are the specialists. We have the Sahaj project in rural areas where many of our partners are already banking correspondents and sell financial products," adds Kanoria.

One of the biggest fears revolving around corporations foraying into banking is that group companies would be putting their hands into the till. The RBI decidedly nixed that opportunity earlier. As the CEO of the financial services business of a widely diversified group puts it: "I am not disappointed at all [that lending to group companies will not be allowed]. This is good." He's got his eyes fixed on another opportunity that he considers more lucrative: selling the conglomerate's financial products and related services to the bank's customers. That indeed makes strategic sense.

Source: EconomicTimes

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Canara Bank driving weavers credit card scheme

Canara Bank is aggressively pushing the weavers’ credit card scheme.

This loan scheme for handloom weavers, formulated by the Development Commissioner (Handlooms), Ministry of Textiles in consultation with the Ministry of Finance (Banking Division), aims to provide adequate and timely finance – both for investment purpose and working capital needs – to this unorganised sector of the textile industry.

Canara Bank sources told Business Line that the existing handloom weavers, including those that had utilised credit under other schemes of the bank were also eligible to avail themselves of finance support under this scheme, provided they cleared their existing liabilities with the bank.

The weavers can avail themselves of support up to a maximum of Rs 2 lakh. The loan is for a period of three years and no margin money is required for loans up to Rs 25,000, the official said.

The Government supports this scheme by providing margin money subsidy of Rs 4,200 per weaver (which is claimed by the respective banks) and a three per cent interest subvention for prompt repayment.

“The awareness level about the scheme appears to be pretty low. We have therefore commenced this awareness drive, as the funds available are remaining unutilised,” said U. Ramesh Kumar, General Manager, Canara Bank (Coimbatore Circle).

The Coimbatore Circle of this state-run bank has in the last couple of months sanctioned over 2,200 weavers’ credit cards and disbursed amounts totalling Rs 5.88 crore.

“As a result of this, the subsidy that will flow in would be Rs 92.86 lakh, apart from interest subsidy of three per cent,” said Ramesh Kumar, adding “there are a number of subsidy schemes which need to be pushed”.

Cluster of weavers and ancillary workers who joined to form Societies, Self Help Groups, Joint Liability Groups, Produce Companies are also eligible in their individual capacity.

revathy.lakshminarasimhan@thehindu.co.in

Source: thehindubusinessline

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Two Indian Bank ATMs inaugurated at Chennai Airport

Public sector Indian Bank has inaugurated two ATM centres at the Chennai airport.

The 1431 and 1432 centres of the bank were inaugurated by Airport Director H S Suresh in the presence of Bank Chairman and Managing Director, T M Bhasin in the Kamaraj Domestic Terminal, a bank statement said.

Chennai-headquartered Indian Bank serves more than 22 million customers through their ATM network, Bhasin said, adding another ATM would soon be set up at the New International Airport Arrival Terminal.

Source: thehindubusinessline

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Yes Bank board declines to nominate Shagun Gogia as director

Private sector lender Yes Bank’s board has declined to nominate Shagun Gogia as a nominee director, a development that is set to prolong the bitter tussle between the promoter families.

Gogia is the daughter of bank co-founder Ashok Kapur, who was killed in the November 2008 terror attacks on the city.

She was nominated by her mother Madhu Kapur as the legal heir to her deceased husband’s 12 per cent stake in the bank.

The board’s decision was taken at its June 27 meeting, which was convened as per an order of the Bombay High Court.

“The board of directors has unanimously agreed that the recommendation of Shagun Gogia made by you should not be accepted,” the bank said in a letter addressed to Madhu.

When contacted, the bank’s spokesperson refused to comment saying “the matter is subjudice“.

The letter says the submissions made in support of Gogia’s candidature were extensively deliberated by the board “in accordance with the terms of Reserve Bank prescriptions” and after considering the composition of the past and current board of the bank.

“The Board also evaluated the submissions considering the past and current composition and profile of the Board of the Bank, and current composition of the Board’s peer bank (Kotak Mahindra Bank) and the three largest private banks,” the letter said.

Source: thehindubusinessline

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RBI cancels registration of two non-banking FIs

Reserve Bank of India restricted two non—banking financial institutions (NBFIs) from transacting business allegedly for not complying with the operating guidelines and procedures.

The certificate of registration (CoR) of the two NBFI’s —— Tulip Finlease Private Limited & Galaxy Consolidated Finance Limited —— were cancelled by RBI.

The CoR’s of the two companies were cancelled on May 9 and June 6, respectively, according to a public announcement by RBI.

In exercise of powers conferred on it under sub—section (6) of section 45—IA of the Reserve Bank of India has cancelled the CoR of these companies, as these companies have voluntarily cease to be NBFIs, according to the announcement.

Source: thehindubusinessline

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IRDA slaps Rs 20 lakh fine on Aviva Life, Rs 5 lakh on Indusind Bank

The Insurance Regulatory and Development Authority (IRDA) has slapped a Rs 20-lakh penalty on Aviva Life Insurance Co India Ltd.

The fine was imposed for payment of higher commission than what was permitted by the regulations in force, the regulator said in an order issued on Friday.

The company had made higher commissions to its corporate agents, Indusind Bank and Punjab & Sind Bank and Anngram Stock Broking Ltd, the order said.

In a separate order, IRDA also imposed a Rs 5-lakh fine on Indusind Bank for violating norms by accepting higher commissions.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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After private sector lenders, SBI, PNB too start charging for SMS alerts

With private sector banks beginning to charge customers for SMS alerts sent to their mobile phones, public sector State Bank of India and Punjab National Bank too have decided to get on to the bandwagon.

SBI, India’s largest lender, will recover Rs 15 (inclusive of service tax) per quarter as SMS alert charges from its customers with effect from the quarter ending June 2013.

Punjab National Bank, India’s third largest public sector bank, will also charge all new as well as existing customers Rs 15 per quarter for SMS alerts for transactions with effect from July 1.

PNB, however, said senior citizen accounts, staff accounts, retired staff accounts, student accounts and basic savings bank accounts for financial inclusion will be excluded from the SMS charges.

In the last one month or so, private sector banks such as ICICI Bank and Axis Bank have notified their clients that they will be charged for SMS alerts.

With telecom companies increasing the bulk SMS charges by about 10 times, banks have no choice but to pass on the increased costs to the customers, said a senior public sector bank official.

Earlier, the bulk SMS charge used to be around 2-3 paise per SMS. But the same has now been jacked up to 20-25 paise per SMS.

Option to exit

The official said that if a customer does not want to incur the expense on account of SMS, then he or she can ask the bank to discontinue the service.

However, given the rising incidents of frauds, it is unlikely customers will stop the SMS alert service as it enables them to track activity in their account.

If a fraudulent transaction goes through, then the SMS alert can prevent further damage as the customer can notify the bank immediately and prevent more transactions.

Through SMS alerts, customers can keep track of the credit and debit transactions in their account. Further, customers can get information on cheque books issued to them and return of cheques, if any.

With SBI and PNB taking the lead , other public sector banks too are expected to follow suit.

ramkumar.k@thehindu.co.in

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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