Yes Bank chief Rana Kapoor takes over as Assocham president

Rana Kapoor, managing director and CEO of Yes Bank, took over as the president of the Associated Chambers of Commerce and Industry of India (Assocham) at the end of the industry body's 92nd annual general meeting (AGM) in Delhi on Saturday.

An alumni of Rutgers' University (New Jersey), he succeeds Rajkumar Dhoot, who is the managing director of Videocon Group.

During his one-year tenure, Mr Kapoor, 56, would promote a five-point agenda on securing sustainable growth for India which includes economic security, livelihood security, national security and energy security, a statement said.

SREI Infrastructure Finance vice chairman Sunil Kanoria became the senior vice-president of the chamber.

Source: ndtv

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UCO Bank Q1 profit gets 41% ‘other income’ boost

Riding on the back of a rise in non-interest income and lower cost of funds, UCO Bank posted 41 per cent growth in net profit to Rs 511 crore for the quarter ended June 30, 2013.

The net profit stood at Rs 362 crore during the same period last year.

On a sequential basis, profits during Q1 FY14 zoomed ten-fold from around Rs 50 crore during the January-March 2013 quarter. The drop in profit during Q4 FY13 was due to higher provisioning for stressed assets.

According to Arun Kaul, Chairman and Managing Director of UCO Bank, cost of deposits during the quarter under review came down to 6.16 per cent (7.16 per cent). Yield on advances also came down to 9.77 per cent (11.32 per cent) following a reduction in the base rate.

“We have been able to reduce our cost of funds by mobilising more CASA (current account, savings account) deposits and by shedding high-cost bulk deposits,” Kaul said at a press meet.

CASA deposits, which grew by 57 per cent, currently account for 35 per cent of its total deposits against 25.6 per cent during the year-ago period.

Other income grew by 98 per cent to Rs 462 crore. Of this, nearly Rs 234 crore came from treasury trading profits, Kaul said.

Loan Quality

There has been an improvement in the bank’s asset quality during the first quarter. Slippages were lower at Rs 629 crore during the current quarter, against the average slippage of Rs 1,300-1,400 crore during the last three quarters of FY13.

The bank expects its asset quality to improve this fiscal.

Gross non-performing assets (NPA), as a percentage of advances, increased to 5.58 per cent (3.88 per cent) while net NPAs increased to 3.15 per cent (2.23 per cent).

The bank recognised minimum alternative tax (MAT) credit to the extent of Rs 147.42 crore for the April-June quarter.

Net interest margin (NIM) declined to 2.42 per cent (2.58 per cent). The bank aims to achieve NIM of 3 per cent by the end of this fiscal.

Capital adequacy ratio stood at 13.72 per cent (12.33 per cent). The bank has approached the Union Government for funds to the tune of Rs 2,000 crore.

Shares of UCO Bank closed at Rs 69.40, down 5.64 per cent on the BSE on Friday.

shobha.roy@thehindu.co.in

Source: thehindubusinessline

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OBC puts on hold base rate cut

Oriental Bank of Commerce (OBC) has decided to put on hold its earlier decision to cut the base rate by 25 basis points to 10 per cent from July 22.

The implementation date for reduction in the base rate has been put on hold, OBC said in a filing with the stock exchanges.

The public sector lender had, on July 9, announced that it would reduce base rate by 25 basis points from 10.25 per cent to 10 per cent with effect from July 22.

While the bank did not give any reason to put on hold the announced cut in base rate, the recent measures by the Reserve Bank of India to arrest the slide in rupee may have prompted this move, say economy watchers.

Reversing its monetary easing stance, RBI had recently taken strong steps to tighten liquidity. The central bank adjusted the interest rate on marginal standing facility (MSF) to 10.25 per cent from 8.25 per cent earlier.

The bank rate, which is linked to MSF, was also hiked to 10.25 per cent.

Source: thehindubusinessline

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Punjab & Sind Bank cuts lending rate by 0.26%

Punjab & Sind Bank on Thursday announced a cut of 0.26 per cent in minimum lending rate to 9.99 per cent, a move which will lower EMIs.

The bank has reduced its base rate to 9.99 per cent from 10.25 per cent, Punjab & Sind Bank said in a statement.

All loans linked to base rate would become cheaper by at least 0.25 per cent. Base rate is the minimum lending rate below which banks cannot lend. The new rate would be effective from August 1, it added.

The change in the base rate shall immensely benefit the borrowing clientele of the bank, Punjab & Sind Bank Chairman and Managing Director D P Singh said.

Pursuant to decrease in base rate of the bank, the EMI on housing loans has come down to Rs 877 per lakh for a loan of 30 years and for auto loans the EMI has dropped to Rs 1686 per lakh for a loan of 7 years, he said.

Following Finance Minister P Chidambaram’s advice earlier this month, some banks, including Canara Bank, Union Bank of India and Bank of India reduced base rate by up to 0.3 per cent.

During the meeting with heads of public sector banks, the finance minister had asked banks to 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 had said.

A cut in the base rate would be a powerful booster for the economy and a powerful stimulus to credit growth, he had said.

Source: thehindubusinessline

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Biz plan in the works for first women’s bank

This could be another instance of women power on display.

The proposed ‘Women Only’ bank, announced by Finance Minister P. Chidambaram in his Budget speech of 2013, may not pose a serious competitive threat to other public sector banks, but it could nevertheless wean away women customers, both existing and new comers.

The business plan of the new bank, which is in the making, envisages a steady ramp up of its branch and ATM networks across the country.

From 39 branches (including mobile and satellite branches) and 127 ATMs by the end of the first year of its operations, the bank is expected to bolster its physical network to 778 branches and 2,088 ATMs by the end of the seventh year of operations.

It is projected that the new bank will have 33,299 customer accounts by the end of the first year of operations and 55,32,912 customer accounts by the end of the seventh year.

To begin with, the bank will have a branch each in eight cities — Kolkata, Guwahati, Chennai, Bengaluru, Jaipur, Lucknow, Mysore and Indore.

It will be headquartered in Delhi and is expected to be operational by November 2013.

The bank, whose key objective is to focus on the banking needs of women and promote economic empowerment, received in-principle approval from RBI on June 27, 2013.

Business strategy

The business strategy of the ‘women only’ bank has been drawn up by a core management team led by M.B.N Rao, former Chairman and Managing Director of Canara Bank.

The critical theme of the business strategy is to establish a bank, which focuses on the needs of women, besides becoming the principal vehicle for propagation of financial inclusion in the hitherto unbanked areas of the country.

According to the strategy, the bank’s business would be customer-focussedrather than account-focused.

It would set up new channels for distribution of products and services to customers, and aim for high operational efficiency and better resource and performance management.

Usha Ananthasubramanian, Executive Director, Punjab National Bank, who is also part of the core management team, is expected to take charge as the first chief of the new bank.

A provision of Rs 1,000 crore as initial capital has been made for the same.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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IOB hands over dividend cheque to Finance Minister

Indian Overseas Bank has paid a dividend of Rs 136.39 crore to the Central Government for financial year 2012-13.

The dividend warrant cheque was handed out to the Union Finance Minister P Chidambaram by IOB Chairman and Managing Director, M. Narendra, in the Capital on Thursday.

The Centre currently holds 73.80 per cent stake in IOB.

The board of directors of IOB had in April this year recommended 20 per cent dividend (Rs 2 on equity shares of Rs 10 each) on equity shares of the company for the financial year 2012-13.

IOB had not paid any interim dividend for 2012-13.

srivats.kr@thehindu.co.in.

Source: thehindubusinessline

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LIC Housing mulls rate cut

LIC Housing Finance will prefer keeping interest rates down and maybe reduce them in the coming quarter, according to V. K. Sharma, Managing Director and Chief Executive Officer.

Addressing the media at the inauguration of a property fair by the company, he said if interest rates do not come down it will affect the economy and dampen growth and employment. Interest rates will definitely have to be stable, if not fall, he said.

The housing market in major cities, such as Mumbai and Delhi, are saddled with unsold stocks because of high prices, interest rates and the depreciating rupee, he said.

Attractive loan packages and competitive interest rates ensure LIC Housing sustains a double-digit growth, he said.

The company has offered a range of fixed rates, which are attracting the risk-averse customers under the current market conditions. With rates ruling at 10-11 per cent now, it is the time to opt for fixed rates, as interest rates are unlikely to fall significantly even as the risk of an upswing prevails, he felt.

Its ‘Bhagyalakshmi’ schemes, targeting women, have attracted much attention. Nearly, a fourth of the the company’s business comes from these schemes, he said.

balaji.ar@thehindu.co.in

Source: thehindubusinessline

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Syndicate Bank appoints new officer employee director

Manjrekar Sanjay Anant has been appointed as officer employee director on the board of directors of Syndicate Bank.

His appointment is for a period of three years from July 17 or until he ceases to be an officer of the bank or until further orders, whichever is the earliest.

anil.u@thehindu.co.in

Source: thehindubusinessline

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IDBI Bank net dips 28% in Q1 as provisioning for bad debts rises

IDBI Bank has reported 28.1 per cent decline in net profit at Rs 306.95 crore for the first quarter ended June 30, 2014.

IDBI Bank on Thursday reported a 28 per cent decline in net profit for the first quarter ended June 30 at Rs 307 crore (Rs 427 crore).

The bottomline performance was largely pulled down by a sharp jump in provisioning for bad debts, which increased in the quarter under review to Rs 739 crore (Rs 377 crore).

Total income grew 9.6 per cent to Rs 7,445 crore (Rs 6,790 crore). The net profit was also bolstered by sharp increase in treasury gains to Rs 147 crore (Rs 16 crore)

“We experienced sizeable slippages this quarter. But we do not expect much of this strain to continue this year. I am confident that we will not only maintain last year’s bottomline performance, but will do better than that,” M. S. Raghavan, Chairman and Managing Director, IDBI Bank, told a press conference here.

The bank had recorded a net profit of Rs 1,882 crore for the financial year ended March 31, 2013. To support business growth, IDBI Bank has sought capital support of Rs 3,000 crore from the Government, Raghavan said.

Raghavan said that the bank was targeting a deposit growth of 12 per cent and credit growth of 12 per cent this fiscal. IDBI Bank is keen on improving its retail deposits and plans are afoot to add at least 300 new branches this fiscal.

This public sector lender’s Tier-I capital is slightly below 8 per cent.

Raghavan also said that the bank was yet to take a call on whether to reduce the base rate further or not. The base rate currently stands at 10.25 per cent.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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HDFC Bank re-appoints Vasudev as non-exec chairman

The country’s second largest private sector lender HDFC Bank on Thursday re-appointed C. M. Vasudev as Non-Executive Chairman of the bank for two years up to August 26, 2015, the bank informed the Bombay Stock Exchange. The re-appointment will be subject to the approval of the RBI and the shareholders of the bank.

Source: thehindubusinessline

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Interest income lifts Kotak Bank Q1 net 43%

Kotak Mahindra Bank has posted a 43 per cent jump in net profit at Rs 403 crore during April-June quarter of this fiscal against Rs 282 crore in the year-ago quarter. The profit was driven by a spike in interest income and robust loan growth.

Net interest income (difference between interest earned and expended) rose 27 per cent to Rs 917 crore from Rs 721 crore in Q1FY’13. Other income increased over 90 per cent to Rs 462 crore in Q1FY’14 from Rs 241 crore in Q1FY’13.

During the quarter, provisions towards loans increased 155 per cent to Rs 134 crore from Rs 52 crore in the year-ago period.

Percentage of gross non-performing assets (NPAs) increased to 1.95 per cent from 1.6 per cent, while net NPAs were up at 0.98 per cent against 0.8 per cent. Net interest margin increased to 4.8 per cent from 4.7 per cent.

As on June 30, 2013, year-on year advances grew 19 per cent to Rs 50,539 crore from Rs 42,318 crore in Q1FY’13. Deposits increased 26 per cent to Rs 52,454 crore from Rs 41,632 crore.

Consolidated results

The bank has reported a consolidated net profit of Rs 627 crore, up 42 per cent from Rs 443 crore in the corresponding quarter last year.

Consolidated profit comes from its subsidiaries — Kotak Mahindra Prime, Kotak Securities, Kotak Mahindra Capital, Kotak Mahindra Old Mutual Life Insurance, among others.

At 1.45 p.m., the shares of Kotak Bank were trading lower by 2.2 per cent at Rs 694.60 per share on the Bombay Stock Exchange.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Axis Bank Q1 profit rises 22% as retail loan growth improves

Higher interest income and retail loan growth helped Axis Bank post a 22 per cent rise in net profit at Rs 1,409 crore in the first quarter ended June 30, 2013.

The çountry’s third largest private bank had reported a net profit of Rs 1,154 crore in the year-ago period.

Net interest income (the difference between interest earned and expended) grew 31 per cent to Rs 2,865 crore, while other income was up 32 per cent to Rs 1,761 crore.

The percentage of gross non-performing assets (NPAs) edged up marginally to 1.10 per cent from 1.06 per cent in the same quarter last year. Net NPAs increased to 0.35 per cent from 0.31 per cent.

Following a 19 per cent year-on-year increase in bad loans, the bank’s provisions towards NPAs jumped to Rs 572 crore, compared with Rs 261 crore in the same quarter last year.

Total advances grew 16 per cent YoY to Rs 1.98 lakh crore, while deposits grew at a slower pace of 7 per cent to Rs 2.38 lakh crore as on June 30, 2013.

The retail loan segment, which accounts for 29 per cent of the total loan book, grew 40 per cent YoY, driven by growth in mortgage and home loans. However, corporate loan growth was below 10 per cent.

“The environment is still challenging and hence, the restructuring pipeline will continue to grow at the current pace,” said Somnath Sengupta, Executive Director of the bank.

During the quarter, restructured assets stood at Rs 686 crore, compared with Rs 372 crore in the year-ago period.

With higher-than-expected profit figures, the Axis Bank scrip ended 3.83 per cent higher at Rs 1,238.40 on the Bombay Stock Exchange.

Cobrapost fallout

On the recent allegations of money laundering by online magazine Cobrapost, the bank has restricted for a year the redemption benefits entitled to some employees identified in the undercover investigation.

The bank issued warnings to some employees after the Reserve Bank of India fined 25 banks, including Axis Bank, for violating certain know-your-customer and anti-money laundering norms.

Source: thehindubusinessline

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Sebi gets more powers to curb Ponzi schemes

The Cabinet on Wednesday approved amendment to the Sebi Act, which is expected to arm the stock market regulator to crack down on collective investment schemes such as the Saradha scam in West Bengal.

Senior government sources told TOI that the Cabinet had shown the green light to the proposal to provide more powers to Sebi to help investigate and punish fly-by night operators of Ponzi schemes. Sebi will be able to summon any person or entity to assist in an investigation into a chit fund or a para-banking operation. It also provide powers to the stock market regulator to undertake "search and seizure" operations and help them access call records. "This will enhance regulation of collective investment schemes," said a senior government official. The changes in the Act is also likely to plug regulatory loopholes and clearly detail the jurisdiction of the stock market regulator on such schemes. As reported by TOI Sebi will be able to impose "disgorgement orders" on a company that defaults on its commitments or makes illegal gains. The regulator will use its "inherent powers" to recover ill-gotten gains that will then be utilized to promote "investor protection and education".

Sebi will be able to impose "disgorgement orders" on a company that defaults on its commitments or makes illegal gains. The regulator will use its "inherent powers" to recover ill-gotten gains that will be utilized to promote "investor protection and education".

The regulator will be able to issue consent orders in case the concerned entity fails to report changes in its holding pattern or rules governing its operations. The proposal also aims to increase Sebi's powers to impose monetary penalties.

Source: TimesofIndia

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NRI businessman M. A. Yousuf Ali picks up stake in Federal Bank

NRI businessman M. A. Yousuf Ali has picked up a 4.47 per cent stake in Federal Bank, thereby becoming the biggest individual shareholder in the Kerala-based lender.

Ali purchased a 4.47 per cent stake in Federal Bank from Dubai-based Emirates Financial Services, a subsidiary of Emirates NBD, newsportal ‘Emirates 24|7’ said in a report.

Speaking to Emirates 24|7, M. A. Yousuf Ali said the transaction was completed last week.

Pursuant to the transaction, Yousuf Ali has become the single largest individual shareholder in Federal Bank, which has a strong deposit base of non-resident Indians from Kerala.

M. A. Yousuf Ali is the Founder and Managing Director of EMKE Group which owns Lulu Hypermarket chain in West Asia.

“Emirates Financial Services was looking for an opportunity to sell the shares and we found a new opportunity in Kerala’s banking sector,” an Emke Group official told Emirates 24|7.

This is the second time that Yousuf Ali has acquired shares in leading Kerala banks. A few months ago, he had purchased around 4.99 per cent stake in Catholic Syrian Bank.

Source: thehindubusinessline

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StanChart puts office for sale

Standard Chartered Bank has invited bids for the sale of its 2.46 lakh sq ft office property located in Goregaon, Mumbai. According to reports, the idea is to consolidate the bank’s operations and relocate its staff to the bank’s two offices in Mumbai’s Fort area and Bandra Kurla Complex.

An advertisement issued by Jones Lang LaSalle, the property consultant roped in by the bank, said the standalone commercial building located on the Western Express Highway in Goregaon East comprises ground plus six floors. It also includes two basements and an independent club house. “The property to be sold is on an as-is-where-is basis along with furniture, fittings and equipment,” the ad added.

The last date for the bids is September 2. ccording to reports, the floor price of the property has been set at Rs 325 crore, valuing the property at Rs 13,207 per sq ft.

Source: thehindubusinessline

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Allahabad Bank not to hike lending rates

Public sector lender Allahabad Bank on Wednesday said it is not going to hike lending rates despite RBI raising rates and tightening liquidity to stem rupee volatility.

The RBI stance would not put any pressure on the funding cost and there is no need for an upward correction of the base rate, the bank said in a statement.

Earlier this week, the RBI made cost of fund expensive by announcing a slew of measures including hiking the lending rates for banks and sucking up of Rs 12,000 crore, to make the currency dearer.


Source: thehindubusinessline

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Interest income lifts HDFC Bank Q1 net 30%

HDFC Bank maintained its 30 per cent quarterly net profit growth performance in the April-June quarter helped by robust loan growth and higher interest income.

The second largest private sector bank reported a net profit of Rs 1,844 crore in the first quarter ended June 30, 2013, against Rs 1,417 crore in the corresponding quarter last year.

The bank has been logging 30 per cent quarterly growth rates consistently over the last few years.

Net interest income (difference between interest earned and expended) increased 21 per cent to Rs 4,419 crore. Other income was up 17 per cent.

Net non-performing assets (NPAs) increased to 0.3 per cent from 0.2 per cent in the same quarter last year. Gross NPAs remained flat at 1 per cent. Stress was witnessed in the commercial vehicle and equipment segments.

According to Paresh Sukthankar, Executive Director, HDFC Bank, “The rate of growth has moderated in the corporate sector and specific provisions have increased substantially.... Also, there was more pressure in the June quarter as compared to March.”

Unless there is a sharp recovery in capital expenditure by companies, retail loan growth will outpace wholesale lending, he said.

As on June 30, year-on year advances grew by 21 per cent to Rs 2.59-lakh crore with retail loans accounting for 54 per cent of the total and wholesale loans the rest. Deposits rose to Rs 3.04-lakh crore, up 18 per cent.

During the quarter, retail loans grew by 25.5 per cent and wholesale loans by 16.5 per cent.

Net interest margin was at 4.6 per cent, similar to that in the preceding and corresponding year-ago quarters.

Sukthankar said the steps taken by the Reserve Bank of India to address rupee volatility are unlikely to have a significant impact on the bank’s performance.

“There will probably be some mark-to-market impact on our bond portfolio. But beyond that we do not see any major impact. We are largely deposit funded. So, we are fine,” he said.

However, the measures clearly exacerbate the liquidity concerns which already existed in the system, he added.

HDFC Bank scrip declined 2.3 per cent to close at Rs 662.25/share on the Bombay Stock Exchange.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Govt cue: PSU banks won't hike rates

You need not worry about an increase in your equated monthly installments after RBI's late night action on Monday. The finance ministry has leaned on public sector banks that control around 70% of the business against raising rates to keep a large constituency of middle class and corporate borrowers pacified ahead of key elections.

After all, for over a year now, the finance ministry has been prodding RBI to cut rates, while the central bank has refused to toe the government line. Instead, on Monday it signaled a reversal in policy to offset the impact of the weakening rupee by announcing several measures that will push up the cost of funds for banks.

While there were expectations of banks responding with hikes in the coming days, the finance ministry swung into action and impressed upon banks to maintain status quo. By evening the impact was visible as banks started issuing statements, saying rates were not increasing.

"The measures taken by RBI are designed to curb speculation in the market and are not seen by SBI as indicative of any systemic problem or deeper malaise. It is, therefore, expected that the position in the market will stabilize shortly. Hence neither the management nor the board of SBI that met today in Mumbai felt that this requires any adjustment of lending," State Bank of India said in a statement. Taking a cue from the largest lender, others including Punjab National Bank, Bank of Baroda and IDBI Bank followed suit.

Earlier on Tuesday, finance minister P Chidambaram seemed to lay down the ground rule. While kicking off a pre-election campaign on government schemes, Chidambaram said he did not expect banks to raise interest rates. "These measures are intended to quell excessive speculation in the forex market, reduce volatility and stabilize rupee. They should not be read as a prelude to any policy rate changes," he said.

Admitting that the high current account deficit has made the rupee weaker, the finance minister said, "Given the current account deficit and the inflation, some depreciation of the rupee is expected. But sometimes there is excessive speculation in the foreign exchange market and the role of RBI is to ensure that volatility is reduced."

The tight liquidity situation due to the recent measures raised concerns of growth being impacted. But the finance minister allayed such fears. "These measures will in no way affect our commitment to growth. We must increase credit delivery and stimulate growth."

He reeled off a number of reforms and initiatives taken by the government in the last four months to revive growth and reverse the policy paralysis that has stalled projects approvals. "In the last three-four months, the Cabinet Committee on Investments has cleared projects worth Rs 1.61 lakh crore. Environment clearance for 106 projects has been awarded. A number of steps have been taken to boost exports, improve coal and gas production," said Chidambaram.

Source: TimesofIndia

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Now, donate to the Gods on the go

The Gods are now primed to receive your offerings 24 hours a day, seven days a week and 365 days a year via mobile phones. Are you ready?

You may be hard pressed for time to go on a pilgrimage and make an offering or there may be times when on the spur of the moment you want to make an offering.

Realising the latent demand for making on-the-spot donations, banks, in association with the National Payments Corporation of India Ltd (NPCI), have launched immediate payment service (IMPS) based donations.

Devotees can now make instant offerings to their favourite gods at eight temples, including Shri Shirdi Saibaba Sansthan Trust, Siddhivinayak Ganapati Mandir (Mumbai) and Dharmasthala Manjunatha Swamy Temple (Karnataka), and two churches in Kerala (Vallarpadom Church and St. Anthony’s Shrine), said a senior NPCI official.

While the sentiment associated with depositing the offering physically in the hundi/daan peti/donation box cannot be replaced, the IMPS-based donation may sate the desire of those wanting to make an offering without any delay.

The 10 religious places that have joined the ‘donation through IMPS’ bandwagon have a mobile number and a seven-digit mobile money identifier (MMID) each for receiving funds.

Punch and pay

All that a donor, whose mobile number is registered with his bank to enable IMPS access, needs to do to remit his offering is punch in details of the beneficiary’s mobile number, MMID, amount, and his own MPIN (mobile personal identification number). The donor and the receiver will get SMS confirmations regarding the IMPS transaction.

IMPS is currently being used for funds transfer -- mobile to mobile and mobile to account, utility bill payments, airline and movie ticketing. Unlike internet banking, in mobile banking there is no fear of a hacker breaking into a bank account and siphoning off money, said a banker.

Many banks permit remittances of up to Rs 50,000/day via mobile phones if the remitter uses application-based mobile banking service. If a bank customer uses USSD (Unstructured Supplementary Service Data) or SMS for mobile banking, then the upper limit for transactions has been set at Rs 5,000.

“There is lack of awareness about mobile banking. Some people think mobile banking means use of Internet banking on mobile phone. So, clearly, there is a need for banks to handhold their customers and sensitise them about the utility of this service,” said the NPCI official.

Bankers say the pace of growth of mobile banking so far has been slow. As per NPCI data, in June, the banking system as a whole recorded 5,21,774 transactions (against 75,236 in July 2012) and the total value of the transactions was at Rs 245.34 crore (Rs 15.13 crore).

NPCI was originally conceived by the Reserve Bank of India and the Indian Banks’ Association as a single entity to handle all retail payment systems. At present, it has 10 core promoters — State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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RBI steps in to shore up rupee, but economy could take a hit

In its toughest move to defend the rupee after the Lehman Brothers crisis in 2008, the Reserve Bank of India (RBI) has moved to push up short-term rates in the money markets which will choke speculators and attract dollars to India. But these measures will cause collateral damage to the economy by pushing up short-term borrowing for companies by a couple of percentage points and cause huge losses for bond investors.

In a late-evening statement on Monday, RBI said that it would limit its lending of overnight funds to banks to Rs 75,000 crore. If banks need more they will have to pay a higher interest rate of 10.25%. Bankers say that an immediate outcome of this would be that the cost of overnight funds would cross 10% as their current overnight borrowing is over Rs 93,000 crore. This, in turn, would translate into higher short-term borrowing for companies. The sensex which crossed 20,000 on Monday on hopes of a rate cut triggered by lower inflation could lose its gains as hopes of a rate cut have vanished.

The measures were announced after the RBI governor rushed to Delhi on a day when the Prime Minister and finance minister held meetings, ostensibly to address the exchange rate amid dwindling foreign exchange reserves. On Monday, despite stringent trading restrictions by RBI the rupee lost 27 paise to close at 59.90 after touching over 61-levels last week.

"The market perception of a likely tapering of US quantitative easing has triggered outflows of portfolio investment. Consequently, the rupee has depreciated markedly in the last six weeks. Countries with large current account deficits, such as India, have been particularly affected despite their relatively promising economic fundamentals," the RBI said in a statement.

The exchange rate pressure also evidences that the demand for foreign currency has increased vis-a-vis that of the rupee in part because of the improving domestic liquidity situation," the RBI said in a statement.

"In the short-term liquidity will be at a premium. Banks may have to cut the cash drawing limits for corporates. Some banks may come out with measures to shore up short-term money. Stock markets will be affected as well as some investors may have to liquidate assets," Pratip Chaudhuri, chairman of SBI, told TOI.

According to Harihar Krishnamurthy, head of trading at First Rand Bank, the measures will have wider implications on the economy as cost of funds would go up. But the measures are likely to be relaxed if the rupee stabilizes. Bankers said that RBI's observation show that it is convinced that some of the pressure on the rupee is because of speculators building positions in dollars in hope that it will appreciate further. "The main motivation appears to be to make the rupee more attractive vis-a-vis investments in the dollar. The measures will benefit the rupee which will gain as foreign institutional investors see an opportunity to invest in short-term debt. But at the same time this could have longer-term ramifications for the Indian economy," said Ashish Vaidya, head of fixed income currency and commodities trading at UBS.

Announcing the measures, RBI said that it has raised the interest rate under its marginal standing facility by two percentage points. The MSF is an emergency lending mechanism by which banks get funds when they exhaust their regular limits which have now been collectively capped at Rs 75,000 crore. On Monday banks had borrowed Rs 92,320 crore from RBI. From Wednesday their borrowing stands limited to Rs 75,000 crore—a move which will set them scrambling to raise the Rs 18,000-crore shortfall. The shortage of funds could increase if the RBI chooses to price the Rs 12,000-crore bonds at rock-bottom level in Thursday's auction.

"RBI has stuck with a hammer. Bond and equity markets are sacrificed to protect rupee and its adverse impact on the economy; short- term pain for long-term gain," said J Moses Harding, head of economics and market research, in a tweet. The RBI statement said that it will continue to closely monitor the markets, the liquidity situation and the macroeconomic developments and will take such other measures as may be necessary, consistent with the growth-inflation dynamics and macroeconomic stability.

Source: TimesOfIndia

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Himachal targets 800 new bank branches by 2016

Himachal Pradesh has set a target of opening 800 new bank branches in rural and remote areas of the state by 2016 as per a comprehensive financial inclusion plan. The hill state already has 1,666 bank branches, besides 861 ATMs.

Addressing the 128th state level bankers committee meeting, convened by Uco Bank in Shimla on Monday, state chief secretary Sudripta Roy said that a record number of 31 new branches were opened during the last quarter till March 2013. Of these, 25 were located in rural areas.

Roy said that under the annual credit plan 2012-13, the banks had provided fresh loans amounting to Rs 8,824 crore during the last fiscal ended March 2013. They plan to lend Rs 11,548 crore in the current financial year, by increasing the financial outlay to about 24%. The rural development department had finalised selection of five blocks, namely Nurpur, Sadar Mandi, Kandaghat, Basantpur and Haroli, for implementation of National Rural Livelihood Mission (NRLM) in the state on a pilot basis.

Roy said that due to excessive rains last month, the state suffered heavy losses, especially in the tribal district of Kinnaur and other parts. The state government had sought financial assistance of Rs 1,000 crore from the Union government for providing relief and rehabilitation and to speed up re-building of infrastructure.

Source: TimesOfIndia

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Vijaya Bank promotes RuPay-branded debit cards in Gujarat

Vijaya Bank has enabled its merchant terminals for usage of RuPay-branded debit cards in Gujarat, urging customers to make use of the new indigenous payment facility.

A function was held at its Regional Head Office here to enable merchant terminals in the use of RuPay-branded debit cards.

Ajay Kumar Khurana, Regional Manager, said with the enabling of the bank’s ATMs and POS terminals for the RuPay brand, Vijaya Bank has joined the league of banks whose payment and settlement systems for domestic card transactions are settled within the country.

RuPay is an indigenous payment and settlement system that was developed by the National Payments Corporation of India (NPCI) in October.

So far, Vijaya Bank has issued two variants of the card, i.e. RuPay debit card for financial inclusion projects and general customers and Kisan debit cards for the farming community.

Till now, the usage of RuPay cards was restricted to ATMs. With the activation of the bank’s POS terminals with the RuPay brand, RuPay card usage has been extended to ME terminals. Apart from payment services on the card, NPCI is supporting banks in India for other alternate delivery channels such as mobile banking, IMPS, cheque truncation and NEFT/RTGS services.

Vijaya Bank Chairman and Managing Director H. S. Upendra Kamath launched the RuPay debit card in Bangalore last week in the presence of NPCI CEO A. P. Hota, the release added.

Source: thehindubusinessline

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OBC cuts term deposit rates by 0.25%

Oriental Bank of Commerce has slashed the interest rates on term deposits of Rs 5 crore and above on select maturities by 0.25 per cent.

The bank has slashed the interest rates on maturities of 180-269 days to 8 per cent from 8.25 per cent earlier.

For maturities of 1 year to less than 2 years and between 2 years to less than 3 years, the new deposit rates will be 8.50 per cent each, the bank said in a statement on monday.

Shares of the bank were trading at Rs 201.10 apiece on the BSE, up 2.26 per cent from the previous close.

Source: thehindubusinessline

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No target in mind on number of bank licences: RBI

The Reserve Bank of India does not have any target in mind on the number of banking licences to be issued in this round, a senior official of the central bank has said.

“As of now, we have received 26 applications. Financial inclusion has to be a pre-condition for such banks to come. How many banks will come, that depends upon their complete plan and analysis of their proposals,” RBI Executive Director R.Gandhi said at an event here today.

“We will have to wait for few months before we decide how many banks will be given licence. There is no target number,” he added.

The number would depend on the proposal and business plans of applicants. “It depends upon the proposal and business plans including their proposed efforts on financial inclusion. We cannot predict how many applicants will pass through these requirements,” he added.

About 26 players have applied for banking licences, including the likes of India Post, LIC Housing Finance, Reliance Capital, Aditya Birla Nuvo, and L&T Finance.

In the guidelines for issuing new banking licences, the central bank has put in a string of requirements to further its financial inclusion agenda, including making it mandatory for the proposed banks to open at least 25 per cent of branches in unbanked areas.

On the issue of financial inclusion, Gandhi said there are enormous challenges that lie ahead in achieving it.

“Post independence, we had a resolution to give attention to poverty alleviation. Our economic planning had poverty alleviation as a key plank...Still, these 40 odd years, efforts have not made serious dent. This indicates the enormous challenges that lie ahead for us in achieving financial inclusion,” he said.

He also said that several new ideas and innovative approaches were required to achieve this goal.

RBI Governor D. Subbarao was originally supposed to address the gathering at a central Mumbai college today, but Gandhi had to step-in as a last minute arrangement as the Governor rushed to New Delhi. He was also not able to make it to another engagement at a college in the city.

Subbarao will be meeting Finance Minister P. Chidambaram and they are likely to discuss the challenges on the macroeconomic front.

Source: thehindubusinessline

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High Court reserves ruling on New Pension Scheme at SBI

The Kerala High Court has reserved judgment on a writ petition challenging New Pension Scheme made applicable to recruits joining State Bank of India on or after August 1, 2010.

Justice C. T. Ravikumar heard the case, filed by A. Jayakumar, General Secretary, State Banks’ Staff Union (Kerala Circle), which came up for hearing on Monday.

Sources told Business Line that the Centre did not file any statement as directed by the court saying the scheme was placed before both Houses of Parliament and notified in the Gazette of India.

Counsels merely produced a reply from the Centre that the latter had instructed the bank to take care of its interests.

Counsels for the bank argued that the New Pension Scheme had been introduced under Section 43 of the SBI Act 1955. There was neither the need for laying it before Parliament nor for notification in this regard, sources quoted the counsels as saying.

DISPUTES ACT

Counsels for the staff union, however, submitted that Sections 43 and 50 of the SBI Act cannot run parallel. Any pension scheme formed, amended or altered had got to be in terms of the Industrial Disputes Act 1947.

The bank, counsels for the union argued, had given appointment orders to new recruits stating that they were governed by various awards of tribunals and settlements modified from time to time.

EXISTING SCHEME

Given this, new recruits automatically enjoyed rights to the existing pension scheme on and from the date when they were confirmed in service.

Counsels S. Vaidyanathan and George Thomas Mevada appeared for the staff union and SBI, respectively, sources said.

Meanwhile, union sources observed that the Finance Secretary had gone on record before the Standing Committee of Parliament saying that any return under the New Pension Scheme was a market-related one.

There was no guarantee for a specified quantum of pension.

vinson.kurian@thehindu.co.in

Source: thehindubusinessline

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YES Bank case: Court accepts draft amendments filed by Madhu Kapur next hearing on July 29

The next hearing in the Madhu Kapur versus YES Bank case in the Bombay High Court is scheduled for July 29.

The court on Monday accepted the draft amendments filed by Madhu Kapur on July 8.

YES Bank did not oppose the amendments and a senior bank official, on the condition of anonymity, said: “We will take up each clause in the amendment and either accept or oppose it on merit basis in the next hearing.”

The draft amendment relates to the reasoning given by the Madhu Kapur camp as to why they should also have a say in the appointment of three directors on the bank’s board.

YES Bank has been opposed to such a “right,” citing that the privilege to appoint directors solely rests with the Indian partners — the bank’s CEO and Managing Director Rana Kapoor and late co-founder Ashok Kapur.

After the demise of Ashok Kapur, the privilege now rests solely with Rana Kapoor, according to YES Bank.

Also, on the request of Madhu Kapur’s counsel, Darius Khambata, for complete notes of the Annual General Meeting (AGM) as well as the video recording for more detailed inspection, the court asked them to write a letter to the bank today. It directed the bank to respond to the letter by Tuesday.

“The bank will consider this request on merit, after referring to the Companies Act,” the aforementioned official said.

Till now, YES Bank has only shared the minutes of the AGM with the Madhu Kapur camp.

satyanarayan.iyer@thehindu.co.in

Source: thehindubusinessline

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Deutsche Bank offers incentives for online banking

Foreign lender Deutsche Bank on monday launched a loyalty programme through which account holders stand to get cash-backs into their bank accounts for conducting transactions.

Under ‘Express Rewards’, customers will earn reward points for conducting transactions like online utility bill payments, purchases made using debit cards and also auto debit transactions for home loan or personal loan EMIs, the bank said in a statement.

The reward points can be later redeemed into cash in the customer’s account, it added.

“This programme has been launched to encourage bank account usage, especially e-banking,” it said.

Customers will also be able to track, view and redeem their earned points, it said.

Source: thehindubusinessline

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To curb mis-selling, IRDA favours banks marketing insurance policies

The Insurance Regulatory and Development Authority may favour allowing insurance companies to use the network of bank branches to sell policies, if banks opt to take on the role of insurance brokers.

According to current IRDA guidelines, a broker has to set up a separate subsidiary with a separate share capital for distribution of insurance products. However, the insurance regulator is considering amending this regulation to allow banks to distribute insurance through their existing branches without setting up a separate subsidiary, said a senior IRDA official.

However, the Reserve Bank of India in its Financial Stability Report (FSR) said that banks assuming the role of insurance brokers may lead to conflict of interests. Where the bank has promoted an insurance company, it may also expose the bank to reputational risks.

According to T.S. Vijayan, Chairman, IRDA, banks which have a fiduciary responsibility under broking guidelines will represent the customer rather than the insurance company under the present corporate agent set-up. So, it is expected to bring down any chances of mis-selling.

Under the current bancassurance (distribution of insurance products through banks) model, a bank is allowed to become corporate agent of only one insurer — it can sell insurance products of one life, one general insurer and a standalone health insurer. But after becoming a broker, banks can sell products of multiple insurance companies.

The life insurance industry has made a representation to the insurance regulator, stating that a bank should be allowed to sell policies of five companies, with not more than 25 per cent share per insurer.

For major banks, insurance distribution is an important component of its fee-based income. According to a recent report by SBICAP Securities, bancassurance contributes to around 40 per cent of the new business premium collection by private life insurance companies.

“Banks have a huge customer base but that much utilisation has not happened for distribution of insurance products. There have been deliberations on how best to utilise bank branches to improve insurance penetration. Few ideas have come up and we are in constant dialogue with all the various stakeholders,” said Vijayan

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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Muthoot may turn 2,000 gold-loan outlets into bank branches

The largest pure-play gold mortgage player Muthoot Finance , which has applied for banking licence, has said it can easily launch commercial lending business with as many as 2,000 branches.


"We are confident of getting a banking licence from the Reserve Bank, given our reach in rural markets and our over a century of experience. In fact, our experience is the biggest asset and we are better suited than many other applicants in this regard," Muthoot Finance managing director George Alexander Muthoot told PTI from the headquarter in Kochi.

Many of its branches are in tier 2,3 & 4 towns and they can be immediately converted into a full-fledged bank branches. Muthoot said 4,200 branches, large existing customer base and strong brand image makes it an eligible candidate.

With 74 years in gold financing, the company has over 4,200 gold loan outlets across 21 states and four Union territories, and employee strength of over 25,000 with a gold loan portfolio over Rs 26,000 crore as of last fiscal.

"With our last mile connect in to the hinterland, a banking licence will enable us to play a larger role of financial inclusion by taking these services to the unbanked and undeserved population of the country," Muthoot further said, adding that around 60 per cent his existing branch network is spread across tier 2, 3 and 4 markets.

On whether the company will continue with the gold loan business if it gets a banking licence, he said there is no question of shutting that down as there is no regulatory requirement to shut down the existing business.

About meeting the funds requirement for the banking foray, he said arranging Rs 500 crore, which is the RBI prescribed net-worth for bank holding company, will not be difficult.

Muthoot Finance and 25 other companies, including Tatas, Reliance, Birla and India Post, have applied for bank license.

Last month the company got an in-principle go-ahead from the RBI to launch white-label ATMs and it plans to set up at least 9,000 money vending machines over the next three years.

Source: MoneyControl

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Women bankers may get leg-up with Mahila Bank

Women bankers looking for better career prospects, while also boosting financial access for the fairer sex, will soon have the option to move to the Bharatiya Mahila Bank (BMB) that will be ready to commence operations by November.

While the government is yet to finalize the chairperson for the all-women bank, sources said that Punjab National Bank executive director Usha Ananthasubramanian is the frontrunner for the job. If the appointment comes through, she will have a five-year run at the bank and will be able to implement the plan better than someone with a short tenure, sources said.

For the others, the finance ministry has written to public sector banks to allow women employees on deputation - a tough ask given that most state-run lenders are already complaining of staff shortage. But with a new bank in place, bankers expect not just better work conditions for women employees but even faster promotions. Although intake of women employees has gone up in most public sector banks, several drop out after putting in a few years due to difficult postings, often in rural areas or small towns.

Finance minister P Chidambaram had announced plans to set up probably the world's first women-focused bank in his Budget speech and had set a November deadline for the launch. While the original proposal was to get the lead bank in every district to set up a branch dedicated to women customers and all employees, other than the guard, being women. But it was tweaked later on the advice of Congress president Sonia Gandhi and her advisors. The government is looking at BMB to sell the idea as a tool for women empowerment after its image took a severe hit after the Nirbhaya rape case in December.

Government officials told TOI that the bank has received in-principle approval from the Reserve Bank of India, which is vetting the memorandum and articles of association. Simultaneously, it is identifying premises to start operations. While two buildings have been identified in Delhi for the bank's headquarters, other premises would be finalized by August 15.

Source: TimesofIndia

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Andhra Bank donates Rs 1 cr to Uttarakhand

Andhra Bank has donated Rs 1 crore to the Chief Minister’s relief fund, Uttarakhand, to provide relief and rebuilding measures in the wake of recent floods.

All the employees of the bank had also donated one day’s salary to the Prime Minister’s national relief fund, according to a release.

Source: thehindubusinessline

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IndusInd Bank likely to enter gold loan business this quarter

Private sector lender IndusInd Bank is likely to foray into the gold loans business in this quarter, the bank chief Romesh Sobti said.

The bank is likely to set a conservative loan-to-value (LTV) ratio of 50-65 per cent depending on the client profile.

LTV is the amount of loan a borrower gets against the value of the collateral. So, in the case of IndusInd Bank, if a customer pledges gold amounting to Rs 10,000, he will get a loan of Rs 5,000-6,500.

According to Sobti, the industry has learnt its lessons with regard to the LTV ratio.

“These gold loans can be for any end use — either consumption or productive. The demand for gold loans is good and the default rate is very low. Regulatory issues are also very clear now,” said Sobti on the sidelines of his bank’s financial results conference.

The mid-size bank has hired Padmanabhan R., who was earlier with HDFC Bank, to take charge of the gold-loan segment.

According to Sumant Kathpalia, Head- Consumer Banking, said, “To begin with, the growth in yields won’t be very high and would range around 14-17 per cent.” In the Indian context, gold loan is a critical product for many borrowers. It has emerged as a great way to raise short-term capital in an expeditious manner, said Sobti.

With less than 2 per cent of the country’s gold holdings being used as collateral for getting loans, “any gold loan product has huge potential,” he said.

“We are not targeting the bottom of the pyramid. Our aim is to focus on the metros for now and largely we will be looking at self-employed people as customers. Also, we are not necessarily looking at high growth, but at the right clients,” Kathpalia said.

India is one of the largest markets for gold, accounting for about 10 per cent of the total global gold stockpile.

The bank will launch the loan against gold product at select branches as it involves high operational costs due to the high value of the asset involved in the segment.

Despite the presence of established non-banking players such as Mannapuram Finance and Muthoot Finance, the bank feels there is enough space for other financial intermediaries to enter this segment.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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