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Saturday, July 27, 2013

Axis Bank enters 100 cr property lease deal through HDFC Realty

In one of the biggest office rental transactions in recent times, private lender Axis Bank is believed to have entered into a property lease deal worth about Rs 100 crore for housing its back office operations.

The property is being taken on a nine-year lease from Raheja Group and the deal has been arranged by HDFC Realty, sources said.

The deal was finalised at a rate of Rs 39 per square feet a month for an office space having area of over two lakh square feet. Axis Bank has agreed to pay a rent of Rs 82.4 lakh per month and applicable taxes for the property situated in a building at Airoli in Navi Mumbai area.

This is one of the biggest office property rental deals in this area as also in the entire Mumbai region.

Axis Bank has taken this property on a nine-year lease from K Raheja Corp for housing its back office operations.

Both the parties were represented by HDFC Realty in the deal.

HDFC Realty, a real estate advisory services company, is a 100 per cent subsidiary of financial services giant HDFC Ltd and is present in more than 23 cities across the country.

It offers advisory services in residential properties, commercial spaces and land to individuals, landlords, developers, occupiers, MNCs and financiers.

The deal comes at a time when the office rental business in India has been in mostly a stagnant mode.

According to a latest report by real estate consultancy Jones Lang LaSalle, the office rents “held generally flat” in India during the first quarter of 2013, and slow expansion by MNCs was partly offset by steady demand from IT/ITES firms.

Source: thehindubusinessline
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IRDA bancassurance norms may be delayed

The Insurance Regulatory and Development Authority (IRDA) guidelines for tie-ups of insurance companies with banks for distribution of products may be delayed as the feedback to the regulator reflects divergent views from various stakeholders, said industry experts.

Some insurance companies that do not have tie-ups with banks have recommended to the Life Insurance Council that a bank should be allowed to strike deals with five insurance companies, at a limit of 25 per cent an insurer. However, bank promoted insurance companies are opposing this proposition. “Many banks that have promoted insurance companies are opposed to becoming brokers. We have opposed the recommendation of a bank necessarily tying up with five insurance companies under the current broking regulations,” said the CEO of a bank-promoted life insurer.

IRDA was expected to come out with the guidelines by end of July. Under the current bancassurance model, a bank acts a corporate agent where it can tie up with a life, a non-life and a standalone health insurance company.

In the Budget, the Finance Minister had allowed banks to become insurance brokers, selling the policies of several insurance companies.

IRDA Chairman T.S. Vijayan recently said he favours banks acting as brokers as they will represent the customer rather than an insurance company. Also, as brokers, banks will have a fiduciary responsibility that is likely to reduce miss-selling through the channel.

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

The IRDA is in the process of dialogue with various stakeholders including banks, insurance companies and the government to release the final guidelines.

Source: thehindubusinessline
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Fraud on banks, more by the rich, says RBI’s K. C. Chakrabarty

“When the times are good, the rich steal. When the times are bad, the poor people also steal. But this means rich people are stealing more,” said K. C. Chakrabarty, RBI Deputy Governor.

An analysis of the frauds reported in the banking system over the last two decade shows that the number of frauds had not gone up significantly, but the quantum has increased manifold.

Loan-related frauds are a major concern for the central bank, Chakrabarty said.

The number of reported frauds in the banking system over the last 10 years was 1,76,547, and valued at Rs 31,400 crore, he added. In the last 25 years, a mere 61 fraud cases (involving Rs 50 crore or more in each case) accounted for a whopping Rs 13,000 crore, through 208 bank accounts.

It is not transaction-related frauds (like credit/debit card, and so on) that are a worry, but loans-related ones, rued Chakrabarty at an Assocham conference on ‘Financial Frauds’ in the Capital on Friday.

“Majority of the frauds are wrong sanctions at the highest level of the banks. The problem is we are not able to take definite action in definite timeframe.”

The Deputy Governor expressed disappointment that banks were indifferent to monitoring large frauds and whatever fraud reporting was happening, was in silos.

Some of the reporting of frauds in large transactions happened only after they had been recognised as non-performing assets, he said.

Chakrabarty also stressed the need for a proper definition of ‘fraud’ in the banking system. At the same time, he said banks should not get confused between “loss” and “fraud”.

Source: thehindubusinessline
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Robust loan offtake lifts Bank of India Q1 net 9%

Bank of India posted 9 per cent growth in first quarter net profit, aided by a higher net interest income and robust retail loan offtake.

In the quarter ended June 30, 2013, the net profit increased to Rs 964 crore from Rs 887 crore a year ago.

Net interest income, the difference between interest earned and interest paid, rose 24 per cent to Rs 2,537 crore. The net interest margin improved to 2.5 per cent in the April-June period, from 2.27 per cent, a year ago and from 2.46 per cent in the preceding similar quarter.

Retail credit for the bank was up 16.5 per cent to Rs 22,972 crore. Micro, small and medium enterprises and agriculture contributed about 28 per cent and 20 per cent to overall domestic loan growth, respectively.

Retail focus

V.R. Iyer, Chairperson and Managing Director, Bank of India, said: “The bank will continue to focus on extending more retail credit. Deposits will grow by 18 per cent and advances by 16 per cent for the full year.”

However, the profit margin was capped by the higher provisioning made to cover rising bad loans.

Total non-performing loans for the bank shot up 39 per cent to Rs 9,413 crore (Rs 6,752 crore a year ago). Textiles, steel and metals contributed the lion’s share to the Rs 1,986 crore of loans slipping into NPA during the quarter.

Terming the RBI’s liquidity tightening measures as temporary, Iyer said: “As of now, the question of raising deposit or lending rates does not arise. We will closely watch the (liquidity and interest rate) movements.”

Capital raising plans

Iyer said the bank, after taking into account profit plough-back in the second quarter and the government’s equity contribution, will raise about Rs 2,000 crore in the second half of the year. It will do so through qualified institutional placements, bond offers, among other options.

Shares of the Mumbai-based bank, closed at Rs 183.50, down 4.55 per cent on the Bombay Stock Exchange.

Source: thehindubusinessline
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IndusInd Bank opens 2 new branches in Patna

Private sector lender IndusInd Bank opened two new branches here, taking the total number of branches in the city to five.

According to a bank statement, the two branches are located in Kanker Bagh and Rajendra Nagar.

With this, the total number of IndusInd Bank branches in Bihar has gone up to eight.

“Bihar is a very important market for IndusInd Bank and Patna is considered to be among the 15 most promising cities in India.

“Considering the vast potential of banking requirements yet to be explored, IndusInd Bank has planned further branch expansion in Bihar,” Soumitra Sen, Head-Branch Banking, IndusInd Bank, said.

With the opening of these new branches, customers in the city would be able to avail themselves of services such as savings and current account, loan products, wealth management and credit cards.

“Innovative facilities such as My Account, My Number, Quick Redeem Service, Cash on Mobile, among others, would be available to customers from day one,” the bank said.

As on June 30, 2013, the bank has 530 branches and 1,003 ATMs across 380 locations in the country. It also has representative offices in London and Dubai.

Source: thehindubusinessline
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PNB net flat in Q1 despite surge in trading profits

Aided by a sharp rise in trading profits on investments, Punjab National Bank (PNB) on Friday reported a 2.3 per cent increase in net profit for the April-June quarter at Rs 1,275 crore (Rs 1,246 crore).

Reflecting the listless economic environment, however, the bank’s total income grew marginally by 0.2 per cent to Rs 11,747 crore (Rs 11,721 crore).

The lacklustre first quarter results dragged the bank’s shares to a 52-week low of Rs 583 at the National Stock Exchange. The stock later closed at Rs 590.75.

Trading profit for the quarter under review zoomed to Rs 284 crore (Rs 88 crore). This was possible because of the significant drop in yields on 10-year Government securities during the most part of Q1.

The provision for non-performing loans (net of recovery) stood at Rs 675 crore (Rs 890 crore).

A large account —Winsome Diamonds — turned into a non-performing asset (NPA), leading to a provision of nearly Rs 400 crore on this count during this quarter, it is learnt. This added to the bank’s existing NPA woes.

“We have made all regulatory provisions (for our NPAs) and, in fact, a little more than what is required in some cases,” K.R. Kamath, Chairman and Managing Director, PNB, said. The bank is prudent when it comes to recognising bad loans and providing for it, senior officials said.

A marginal increase in net profit was possible despite the write-off of bad loans amounting to Rs 799 crore in April-June 2013. This write-off has been adjusted against cash recoveries of Rs 803 crore for the quarter under review.

The bank did not resort to write-offs in seven of the last eight quarters (in the last two fiscal years). In the March quarter, it had written off loans worth Rs 997 crore.

On the bank rate and domestic deposit rates, Kamath said there was no proposal to change these.
Capital infusion

Kamath said that PNB has sought capital support of Rs 1,500 crore from the Central Government. He also said that PNB would focus more on savings bank and retail term deposits in the coming days.

Source: thehindubusinessline
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Friday, July 26, 2013

SKS Microfinance posts Rs 5-cr profit in Q1

SKS Microfinance Ltd has posted a profit of Rs 5 crore in the first quarter ended June 30, 2013.

The country’s only listed micro-finance institution had incurred a Rs 39-crore loss in the corresponding quarter of the previous financial year.

This was the third consecutive quarter of profit for the company, which turned around after having been hit by losses after the microfinance crisis in Andhra Pradesh some years ago.

Rise in revenue

Revenues increased to Rs 117 crore (Rs 74.5 crore). Due to the increase in loan disbursements outside Andhra Pradesh, net interest income was higher, the company said in a release on Thursday.

In the last few quarters, the company’s turnaround strategy of fully providing for the Andhra Pradesh exposure, managing supply-side shocks, cost structure optimisation and recapitalisation led to profits, its Chief Financial Officer, S. Dilli Raj told Business Line.

The non-AP portfolio as on June 30, 2013 stood at Rs 2,003 crore.

“By the year-end, this will go up to Rs 2,800-3,000 crore, with a projected disbursal of about Rs 4,800 crore.

The profit after tax for the current financial year could be around Rs 60 crore,” he added.

Fresh provioning

During the quarter, SKS made an additional provision of Rs 11.7 crore towards its joint liability group loan portfolio in States other than AP. This entire provision related to just standard assets.

The SKS scrip gained marginally to end at Rs 99.45 on the Bombay Stock Exchange on Thursday.

Source: thehindubusinessline
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Muthoot Finance net drops 21%

Muthoot Finance has registered a 21 per cent drop in net profit, at Rs 194 crore, in the first quarter, compared with Rs 246 crore in Q1 of FY-13. Total income also fell 1 per cent to Rs 1,286 crore (Rs 1,294 crore).

The YoY decline in profit during the quarter was because of stagnation in loan growth and lower yield on liquidated loan accounts. Expenses remained high on account of lenders continuing to charge higher interest and administrative expenses going up, with the addition of branches in the last year, Chairman M.G.George Muthoot said.

Stable show

Speaking to reporters on Thursday, he said the company has delivered a stable performance in the quarter ended June 30 in an atmosphere marked by the sharp fall in gold prices and adverse perception about the gold loan sector.

The quarter saw the company taking sustained steps to address the fallout of sliding gold prices by restructuring the product portfolio and reinforcing risk management practices. The results do reflect the proactive steps taken by the company, he said.

Though there was a decline in loan portfolio by about two per cent, the gold holding increased from 134 tonnes as of March 2013 to 137 tonnes as of June this year. This indicates that there is a continued strong interest in the product in spite of the fall in prices, the Chairman said.

The outstanding loan accounts increased from 63 lakh accounts as at March 31 to 65 lakh loan accounts as at June 30. We feel demand is still robust, he added.

On the banking licence application, the Chairman said the company is best positioned to deliver the last mile connectivity considering its network in the rural and semi-urban areas and the experienced gained there.

“We are ideally looking at going for the next stage of growth through the banking model which has its own advantages and disadvantages. Since the advantages outweigh the disadvantages, we are looking at strongly presenting our case before the regulators”, he said.

Source: thehindubusinessline
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IOB net profit slides 46% on higher provisioning

Indian Overseas Bank has posted a 46 per cent drop in net profit at Rs 126 crore for the first quarter ended June 30, 2013, against Rs 233 crore in the first quarter of 2012-13. “This is mainly due to a 50 per cent spike in provisions compared with last year,” said M. Narendra, Chairman and Managing Director of the bank.

According to him, there was an additional provision of Rs 49 crore towards restructured accounts, and close to Rs 400-crore additional provision towards non-performing assets made during the quarter. This has taken the total provision for the period to Rs 929 crore (from Rs 613 crore in the comparable previous year quarter).

Drop in interest income

There was also a drop in net interest income at Rs 1,316 crore (Rs 1,328 crore). However, this was more than made up by increased non-interest income. Including profit from sale of investments, non-interest income of the bank, for the quarter under consideration, stood at Rs 785 crore (Rs 377 crore).

During the quarter, the bank consciously brought down high-cost bulk deposits to 11.2 per cent during the quarter from 15.50 per cent in the previous quarter. It reported an overall growth of 6 per cent in deposits to Rs 1.96 lakh crore (Rs 1.84 lakh crore. Advances too grew by over 12 per cent to Rs 1.66 lakh crore (Rs 1.48 lakh crore).

Gross NPA went up to 4.45 per cent (Rs 7,432 crore) as on June 30, 2013, from 2.97 per cent (Rs 4,410 crore) in 2012. The bank’s restructured loan portfolio stood at Rs 18,356 (Rs 18,049). The addition of Rs 307 crore came from 17 accounts, of which five were CDR accounts, with the steel and paper industries being the major contributors to this, he said. Provision coverage ratio was at 58.69 per cent at the end of the quarter.

Cash recovery

Cash recovery during the quarter was at Rs 198 crore against Rs 106 crore in the year-ago period. In the following quarters, the bank will focus on recovery and increasing the ratio of current account and savings account.

If the bank’s business grows by 14-16 per cent, it may require Rs 2,100 crore of additional capital to meet adequacy norms.

Source: thehindubusinessline
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Thursday, July 25, 2013

RBI directs banks to collect EMIs through electronic transfers

Auto and home loan borrowers need not pay post-dated cheques towards EMIs as RBI has directed banks to collect monthly instalments through electronic mode wherever the facility for such fund transfer is available.

Banks are advised that no fresh or additional post-dated cheques (PDC) or equated monthly instalment (EMI) cheques shall be accepted at locations where electronic clearance service (ECS) is available, RBI said in a notification.

"The existing cheques in such locations may be converted into ECS by obtaining fresh ECS (Debit) mandates," it said.

The move is aimed at cutting usage of cheques and promoting electronic transfer. It will also save borrowers the efforts of going to branch for collection of cheque books.

The notification also said that ECS also accords the same rights and remedies to the payee against dishonour of electronic funds transfer instructions under insufficiency of funds as are available under Section 138 of the Negotiable Instruments Act, 1881.

"Considering the protection available, there is no need for banks to take additional cheques, if any, from customers in addition to ECS (Debit) mandates," it said.

Cheques complying with CTS-2010 standard formats shall alone be obtained in locations, where the facility of ECS is not available, it added.

Source: NDTV
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IndusInd Bank opens new branch in Noida

Private sector lender IndusInd Bank has opened a new branch in Greater Noida taking the total number of branches in Uttar Pradesh to 41. The mid-sized bank now has four branches in Noida.

Sumant Kathpalia, Head-Consumer Banking, IndusInd Bank, said: “The opening of a new branch in Greater Noida further consolidates our plans for growth and expansion in National Capital Region as well as Uttar Pradesh. The new branch in Greater Noida aims at helping customers manage and grow their wealth while availing the responsive and innovative products and services of the bank.”

Other than Noida, IndusInd Bank is focusing on expanding its reach across promising regions which include Patna, Lucknow, Gurgaon, Nagpur and Baroda.

The new branches will allow the customers to avail themselves of IndusInd Bank’s unique customer propositions along with full range of services ranging from saving & current accounts, loan products to wealth management and credit cards.

Innovative facilities such as ‘My Account, My Number’, ‘Choice Money ATM’ and ‘Cash on Mobile’ would be available to the customers from day one, the bank said.

Source: thehindubusinessline
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HDFC Bank opens 3 rural branches in Bengal

HDFC Bank opened three rural branches in West Bengal. One of these is at Kankabati village in Paschim Medinipur district, and two others at Dihibatpur Panchanantala and Gopinagar in Hooghly district, the bank said on Wednesday.

HDFC Bank is to reach out to these unbanked villages with 2-person micro branches. The bank now has 9 branches in Hooghly and 3 branches in Paschim Midnapore districts, taking the total to 134 branches in the State.

Navin Puri, Country Head, (Branch Banking) of HDFC Bank, said 53 per cent of the bank’s branches are now located in semi-urban and rural areas.

Source: thehindubusinessline
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Syndicate Bank Regional Manager

M. P. Nagpal has assumed charge as the Regional Manager of Syndicate Bank, Kolkata region.

According to a press statement issued by the bank, prior to joining as Regional Manager in Kolkata, Nagpal was the Regional Head of Meerut region.

Nagpal has been involved in several key positions including heading the IT division at Delhi, regional head of Nagpur region and also Deputy General Manager of Human Resources at the head office at Manipal in Karnataka, the release said.

Source: thehindubusinessline
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OBC hikes some deposit rates

Oriental Bank of Commerce (OBC) has hiked interest rate on certain domestic term deposits.

The interest rate hike is for term deposits of less than Rs 1 crore under various maturities from 91 days to less than a year.

For term deposits of 91-179 days, the interest rate has been raised from 7.75 per cent to 8.5 per cent. For deposits with a maturity of 180 days to 269 days, the revised interest stands at 8.5 per cent, from 8 per cent earlier. In the case of term deposits of 270 days to less than one year, the interest rate has been revised to 8.5 per cent from 8.25 per cent earlier.

This move comes close on the heels of the RBI taking further measures to reduce liquidity in the banking system after the steep fall of the rupee against the dollar.

Source: thehindubusinessline
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New General Manager for Union Bank

Pankaj Sharma has taken charge as General Manager of Chennai Zone of Union Bank of India. This zone comprises Tamil Nadu and Kerala.

As General Manager, he will be in charge of four regional offices each in Tamil Nadu and Kerala, including a branch in Port Blair.

In all, the zone has 422 branches. Prior to the elevation, he was heading the Hong Kong operation of the bank.

Earlier, he has worked in various regions and at the bank’s corporate office, in areas such as Credit, Foreign Exchange and Treasury.

Source: thehindubusinessline
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Tata Comm plans 200 white-label ATMs in Maharashtra

Tata Communications Payment Solutions Ltd (TCPSL), a wholly-owned subsidiary of Tata Communications, plans to launch 200 white ATMs under the Indicash label across Maharashtra by September-end.

White label ATM

In the Indian context, a white label ATM is owned and operated by a non-banking entity, and can be used for financial transactions by customers of any bank.

The rollout is part of a plan to set up 15,000 such machines across India in the next three years, and follows the launch of the flagship white label ATM in India at Chandrapada village in the Thane district of Maharashtra on June 27.

Maharashtra has 127 ATMs/million people against 172 ATMs/million in Tamil Nadu. The launch of the 200 ATMs in Maharashtra will cover districts such as Pune, Kolhapur, Thane, Nasik, Nagpur and Ahmednagar , and includes over 50 ATMs in the Pune district. The ATMs have been customised for Maharashtra with menu instructions in Marathi. At the launch of the first Indicash in Pune, Sanjeev Patel, CEO, TCPCL said, “Given Maharashtra’s strengths in the industrial, educational and commercial zones, it is a key focus area for banking activity in the country. ‘Indicash’ will open up transaction possibilities in areas where there were previously none or which have previously had very minimal movement. We have designed Indicash with an intuitive consumer interface that will make banking simple for the end user.”

Other services

Along with regular cash and non-cash services such as cash withdrawals, balance enquiries, mini-statements and PIN changes, Indicash plans to offer value-added and utility services to customers with offers and third party promotions in the second phase of its rollout.

5 transactions free

According to RBI regulations for use of ‘Other Bank ATMs,’ Indicash will accept all domestic debit cards with the first five transactions per month being free.

Source: thehindubusinessline
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Strong loan growth boosts YES Bank net 38%

Higher interest income and robust loan growth helped Yes Bank report a 38 per cent jump in net profit at Rs 401 crore in the April-June quarter.

The private sector bank had posted a profit of Rs 290 crore in the year-ago quarter.

Net interest income (difference between interest earned and spent) increased 40 per cent at Rs 659 crore on the back of higher margins and advances growth. Other income rose 53 per cent to Rs 442 crore

During the quarter, the net interest margin increased to 3 per cent, against 2.8 per cent in the corresponding quarter last fiscal. As on June 30, 2013, total advances grew 24 per cent year-on-year to Rs 47,898 crore. Deposit growth was higher by 30 per cent at Rs 65,245 crore.

Gross non-performing assets (NPAs), or bad loans, dipped marginally to 0.22 per cent (0.28 per cent). Net NPAs also fell to 0.03 per cent (from 0.06 per cent).

However, provisioning during the quarter trebled to Rs 97 crore (Rs 30 crore).

Capital adequacy ratio, as per Basel III norms, declined to 15.4 per cent (17 per cent).

Despite strong first quarter results, the RBI measures announced on Tuesday impacted the bank’s scrip, which fell sharply by 12.63 per cent to close at Rs 383.35 per share on the Bombay Stock Exchange.


The bank appointed Brahm Dutt, a retired IAS officer, as additional independent director on the Board with effect from July 24.

Source: thehindubusinessline
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Andhra Bank unveils GenNext branches

How about going to a bank without worrying about the timings and being able to carry out various transactions by yourself?

Andhra Bank customers can now look forward to such facilities at the new generation branches being opened under an initiative christened ‘Project Navashakti’.

“This is not only a business transformation exercise but also a human resource transformation drive to popularise a sales/service culture with speed,” B.A. Prabhakar, Chairman and Managing Director, Andhra Bank. told Business Line here on Wednesday.

Andhra Bank has just opened its fifth new generation branch here. “But in about a year, we will have 250-300 branches covered under this project,” the CMD said.

The branch is designed both for the tech-savvy customers, who can carry out transactions on their own in a spaciously designed 24/7 e-banking enclosure, as well as others who prefer to be guided.

On entry, customers are guided to different to different sections, depending on the nature of their transaction.

“Apart from back-office staff, we are stationing an out-bound marketing team to acquire new business on the spot,” he said.

The objective of the project is to win young customers who are well-versed with technology and prefer a decongested and modern ambience.

“There has been a perception that public sector banks are old and outdated and we want to change this perception with advanced services in urban, tier-I and tier-II locations,’’ Prabhakar said.

Andhra Bank is also working on designing an exclusive model branch that caters to the specific needs of rural customers.

Source: thehindubusinessline
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Central Bank Q1 net plummets 94% on higher provisioning, depreciation

A sharp jump in provisions towards bad loans and depreciation in investments dragged down Central Bank of India’s net profit in the April-June quarter. Net profit dropped 94 per cent to Rs 22 crore in the April-June quarter against Rs 336 crore in the year-ago period.

In the reporting quarter, the public sector bank made bad loan provisions of Rs 825 crore, including Rs 189 crore towards restructured assets, against Rs 382 crore (including Rs 196 crore towards restructured assets) in the year-ago period.

Provision towards investment depreciation was at Rs 170 crore against a write-back of Rs 39 crore.

The incremental increase in bad loans and restructured loans during the quarter was at Rs 2,073 crore and Rs 3,024 crore, respectively.

Doubtful advances

As per the notes to the bank’s accounts, it had to make provisions for the standby letters of credit extended to certain merchant exporters and manufacturers of diamond jewellery, including Winsome Diamonds and Jewellery, getting devolved as funded exposure aggregating Rs 956.33 crore. Further, an outstanding advance of Rs 370 crore to a marketing federation under the Agriculture Ministry became doubtful and provision had to be made.

The bank’s net interest income (difference between interest earned and interest paid) increased by 11.54 per cent to Rs 1,537 crore (Rs 1,378 crore in Q1FY2013). Non-interest income grew 86 per cent at Rs 598 crore (Rs 322 crore).

Net interest margin (net interest income/ average total assets) improved a tad to 2.68 per cent in the reporting April-June quarter against 2.64 per cent in the year-ago period.

According to Chairman and Managing Director M.V. Tanksale, the bank will increase the spread (over the base rate) on large corporate loans to protect the net interest margin.

Given the downturn in the economy, the bank will revise downwards the projected credit growth target of 17-18 per cent for FY2014, he said. However, the deposit growth target of 16 per cent remains.

Tanksale said once the economic environment improves, the bank’s inherent strengths will show up.

Central Bank of India will aim to bring down gross non-performing assets and net non-performing assets in percentage terms to 5 per cent (6.03 per cent as at June-end 2013) and 3 per cent (3.85 per cent) by March-end 2014.

The Central Bank of India share closed at Rs 62.05, down 3.8 per cent on the BSE.

Winsome Diamonds CDR

The corporate debt restructuring cell will consider the banking system’s Rs 4,000-crore exposure to Winsome Diamonds for possible restructuring on Thursday, said Tanksale.

The outcome of the forensic audit conducted by banks on Winsome will decide whether the loan can be restructured.

Source: thehindubusinessline
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Wednesday, July 24, 2013

Dena Bank pays Rs 90-cr dividend

Dena Bank has paid a dividend of Rs 90.89 crore to the Union Government towards dividend for financial year 2012-13.

This public sector lender had declared a dividend of 47 per cent (Rs 4.70 per share of Rs 10 each) for the financial year 2012-13.

The dividend warrant of Rs 90.89 crore was handed to the Finance Minister P. Chidambaram by the bank’s Chairman and Managing Director Ashwani Kumar at the North Block on Tuesday.

Namo Narain Meena, Minister of State for Finance, was present on the occasion.

Dena Bank had paid dividend of Rs 58 crore (Rs 3 per share of Rs 10 each) to the Centre for the financial year 2011-12.

Source: thehindubusinessline
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Exim Bank expects 18% topline growth in FY14

Export Import Bank of India (Exim Bank) on Tuesday said it is expecting 17-18 per cent growth in topline and maintain the last fiscal’s profitability in the current financial year.

“The performance of the institution is so far good. It is in line with the RBI guidelines. We expect to have 17-18 per cent growth in topline and hope that the profitability would also remain consistent at what is was last year,” Exim Bank Chairman and Managing Director, T C A Ranganathan said on the sidelines of a conference here.

The Government-owned bank had posted topline growth of 18 per cent and profit showed 17 per cent expansion in FY13.

“We hope to maintain that,” Ranganathan said.

In the prevailing scenario of falling rupee and high current account deficit, our focus will be how to increase exports from the country, he said.

Exim Bank is now promoting the concept of financing foreign Governments by way of long-term buyer’s credit for Indian projects.

Commenting on new products, Ranganathan, “we are now providing long term finance to domestic drug makers to help them set up manufacturing plants compliant with standards specified by the US Food and Drug Administration (USFDA).

Export-oriented companies can avail of finance from the bank for a maximum repayment period of 10 years with a moratorium of up to three years on interest component. The financial institution is also talking to handloom cooperatives on how to promote exports from the sector, he said.

The handloom sector employs 65 lakh people directly or indirectly which is next only to agricultural sector in the country.

Source: thehindubusinessline
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Dewan Housing posts 54% jump in Q1 net

In line with the financial performance of other housing finance companies, Dewan Housing Finance Limited’s (DHFL) first quarter net profit soared 54 per cent, pushed up by strong demand for home loans from individual customers.

In the April-June period, the Mumbai-based company posted a net profit of Rs 120 crore, against Rs 78 crore a year ago. Total income increased 53 per cent to Rs 1,127 crore. The housing finance company’s total disbursements increased 35 per cent at Rs 3,615 crore during the quarter ended June 30.

Last week, the company’s larger peers — HDFC and Indiabulls Housing Finance — posted a 17 per cent and 31 per cent increase in first quarter net profit, respectively.

The housing finance companies have been seeing good demand for loans in tier-II and tier-III cities. Also, a higher loan amount disbursed by banks and home finance entities because of rising project costs is contributing to rising disbursements.

Shares of DHFL closed at Rs 160.10 per share, up 4.37 per cent, on the Bombay Stock Exchange.

Source: thehindubusinessline
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OBC pays Rs 155 cr dividend to Govt

Oriental Bank of Commerce (OBC) has paid Rs 155.68 crore to the Union Government towards dividend for financial year 2012-13.

The public sector lender had declared a dividend of 92 per cent (Rs 9.2 per share of Rs 10 each).

The dividend RTGS amount for Rs 155.68 crore was presented to the Union Finance Minister P. Chidambaram by the bank’s Chairman and Managing Director S.L. Bansal at North Block today.

Both the Executive Directors V. Kannan and Bhupinder Nayyar were present on the occasion.

Source: thehindubusinessline
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KVB implements instant remittance service for NRIs

Karur Vysya Bank has implemented Oman-based Bahwan CyberTek’s ‘Cuecent eRemit’, a global remittance solution, to provide instant remittance service for its NRI customers.

BCT said the new remittance solution has helped KVB launch an ‘instant cross-border remittances service’ for non-resident Indians, which offers the remitter the facility to instantly credit funds into the beneficiary account in any bank in India.

BCT is a global provider of innovative software products and solutions.

Under the service, the funds would be instantly remitted and the beneficiary would be able to withdraw the money within a matter of minutes. Both the beneficiary and remitter receive free mobile and email alerts instantaneously on receipt of money.

The bank believes that their NRI customers would be delighted at the speed with which money gets credited to their dependents in India and would also derive comfort from the fact that their dear ones would be able to withdraw money from any ATM within minutes of their making a telephonic request.

The bank is in the process of providing more value-added services to their customers and is looking forward to building them on the Cuecent technology platform from BCT.

Commenting on the deal, S. Durgaprasad, Director and Chief Executive Officer for BCT, said: “India being the top remittance receiver with inflow of $69 billion in 2012 and a large diaspora of Indian migrants in oil-rich Gulf and high income countries like the US, we thought it imperative to provide a convenient, efficient and speedy mechanism to remit money to India.”

Source: thehindubusinessline
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Kumar Mangalam Birla resigns from RBI central board

Aditya Birla Nuvo Chairman Kumar Mangalam Birla has submitted his resignation from the Reserve Bank of India’s Central Board. The resignation is to avoid any conflict of interest as Aditya Birla Nuvo has applied to the RBI for a bank licence. The company is one of the 26 firms that have applied for a banking licence.

Birla has been on the RBI’s central board for the past six years. The RBI’s updated list of Directors of the Central Board does not mention Birla’s name, according to the RBI Web site.

Earlier this month, RBI Governor D. Subbarao said the central bank would consult the government on the same.

Source: thehindubusinessline
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Tuesday, July 23, 2013

ING Vysya Bank’s Q1 profits up 34.58%

ING Vysya Bank’s net profit for the first quarter (Q1) ending June 30, 2013 increased significantly by 34.58 per cent to Rs 175.12 crore, compared with Rs 130.12 crore in the same period the previous year.

The bank’s total income also up 15.6 per cent, at Rs 1,553.08 crore for Q1 this fiscal (Rs 1,342.36 crore same period last year). EPS (basic) stood at Rs 11.25 (Rs 8.66).

Operating profit was higher by 50.3 per cent to Rs 326.9 crore and cost to income ratio improved to 51.2 per cent from 57.7 per cent. The bank’s operating cost in Q1 climbed by 15.6 per cent to Rs 343 crore.

Net interest margins

Shailendra Bhandari, Managing Director, said: “We continue to deliver on our core parameters. Our customer assets grew by 18.2 per cent. There was significant improvement in Net Interest Margins (NIM) at 3.56 per cent and return on assets (ROA) at 1.33 per cent for the quarter (3.29 per cent and 1.11 per cent respectively for the similar previous quarter).”

“In particular, the bank’s NIM was strong in what is normally a seasonally weak quarter, and we are well on track to more than match the full-year NIM of 3.52 per cent achieved last year,” he explained.

Net Interest Income (NII) for the quarter increased by 23.9 per cent to Rs 425.4 crore (Rs 343.3 crore).

Overall asset quality continued to be robust, with gross NPAs and net NPAs at 1.75 per cent and 0.19 per cent respectively as on June 30, 2013 (1.97 per cent and 0.19 per cent respectively).

The provisions and contingencies of the bank jumped to Rs 68.1 crore, from Rs 26.7 crore in the corresponding previous quarter.

“The increase in provision is on account of the slippage of two medium sized companies amounting to Rs 115.3 crore in our wholesale banking space. The asset quality in our other businesses, including SME and Consumer Finance remained solid,” said Bhandari.

Total deposits

Bank’s total deposits stood at Rs 40,923 crore at the end of June 2013, up 14.1 per cent from Rs 35,878 crore as at the end of June 2012. Gross advances are up 12.7 per cent to Rs 33,575.2 crore (Rs 29,801.6 crore). Current and savings deposits of the bank grew by 3.2 per cent to Rs 12,340 crore from Rs 11,952 crore as at end of June 2012. The CASA ratio was at 30.2 per cent of total deposits as at the end of June 2013.

The Capital Adequacy Ratio (CAR) of the bank as at June 30, 2013 was 12.59 per cent as per Basel-III requirement.

Source: thehindubusinessline
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IOB branch managers’ meet

Karnataka Health Minister U.T. Khader inaugurated the branch managers’ meeting of Indian Overseas Bank (IOB) in Mangalore on Sunday.

A press release by the bank said here that Khader expressed happiness over the bank’s initiative to provide assistance for oxygen supply at the Government Wenlock Hospital in Mangalore city.

He also lauded the bank’s move to create awareness on dengue and malaria among citizens, the release said. Vasantha Kumar C.S., General Manager of IOB, and K. Anil, Deputy General Manager, were present on the occasion, it said.

Source: thehindubusinessline
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ICICI Bank ties up with Movida for mobile payments

Movida, the mobile payments joint venture between Visa and Monitise, monday said private bank ICICI Bank will utilise its payment services.

“The service will enable ICICI Bank payment card holders to pay bills and recharge prepaid airtime among others,” it said in a release here.

As per the company, the payment solution is designed to operate across all mobile networks using any payment card including non-Visa cards.

The company also said these services can be accessed through all kind of mobiles including the basic handsets.

Source: thehindubusinessline
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Monday, July 22, 2013

Government allots Rs 1,300cr to Post Bank

The expenditure department has decided to sanction Rs 1,300 crore to the proposed Post Bank of India to meet its capital requirements even as the department of financial services (DFS) - the wing in the finance ministry that deals with state-run banks and their policies - chose to stay away from the issue.

The proposal's backing by the expenditure finance commission and its subsequent green light by finance minister P Chidambaram is seen as the official go-ahead by the finance ministry, ignoring the DFS's stance. The DFS position is seen as the first instance of the agency not backing the Post Bank's plan, which officers in the department have privately mocked at.

"They think they can use the postal deposit model for their banking foray. Nothing in their plan seems to be clear. Banking isn't easy," said an officer, who did not wish to be identified.

In fact, a strong Post Bank is seen to be the biggest challenge to existing public sector banks, including State Bank of India, which controls 70% of the banking business in the country. SBI, the largest lender, has a little less than 15,000 branches, while there are over 1.5 lakh post offices across the country.

Although Post Bank does not intend to open a bank branch in each post office, the plan is to use postmen to meet the financial inclusion goal. Secretary (posts) P Gopinath refused to speak to TOI despite several attempts.

According to the plan, Post Bank will have 50 branches in the first year, which will be increased to 150 by the fifth year. The branches will be located in select Head Post Offices in Tier-1-4 centres and select Sub-Post Offices in Tier-5-6 centres.

To meet RBI norms, the postal department proposes to set up a new entity - Post Bank of India - that will have an independent board and separate operations. Apart from independent directors, the board will have representatives from the finance ministry and the postal department. Separate recruitment has been planned to have specialist bankers.

While converting the entire postal network would have meant a capital requirement of over Rs 60,000 crore, by setting up a special entity, the fund requirement has been reduced. This, officers said, will also help create a more focused strategy.

Source: TimesofIndia
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RBI clamps down on private finance companies

The Reserve Bank of India (RBI) is clamping down on private companies engaged in the same business as non-banking finance companies (NBFCs) but not registered with it, as part of the regulator’s efforts to head off situations in which depositors could lose their money.

The central bank wants to curb such unregulated non-banking finance services in the backdrop of the recent collapse of the West Bengal-based, deposit-taking Saradha Group.

In the past three weeks, RBI has sent letters to several such companies undertaking finance activities, seeking balance-sheet details, according to people familiar with the development.
The central bank has been writing to entities registered with the Registrar of Companies under the financial code, or the category related to finance companies.

They have been asked to register with the apex bank, which wants to ensure that they comply with the existing regulations for such companies, the people said.

Even those companies where financial transactions are limited to their own group have been asked to furnish details as the central bank considers some of these tantamount to non-banking finance activities, according to the people, who requested anonymity because of the sensitivity of the matter.

The central bank’s department of non-banking supervision has asked these companies to submit their latest audited annual reports comprising the balance sheet and profit and loss account, along with the names and contact details of directors.

Companies are required to submit details of group companies as well “in order to enable us to confirm that your company is not carrying on any business which falls under the ambit of non-banking financial activity”, RBI wrote to the companies.

The deadline for responses is seven days from the date of receipt of the communication, failing which promoters would be vulnerable to penal action that could include imprisonment.

Mint has reviewed one such letter. An email sent to RBI on Wednesday seeking its response on the matter remained unanswered.

According to the letter reviewed by Mint, RBI has invoked Section 45-IA of the RBI Act, 1934, under which no company can commence or carry on non-banking finance operations without obtaining a registration from it, to seek details of finance companies, regardless of their asset size.

Experts are sceptical about whether the RBI action will protect vulnerable investors.

“While RBI’s efforts are intended at safeguarding the interest of public by bringing all such companies under the formal regulation, there is ambiguity regarding the definition of an NBFC and the criteria to determine whether a company is an NBFC or not,” said Jayant M. Thakur, a Mumbai-based chartered accountant, who runs his own firm, Jayant M Thakur and Co.
“Since the definition itself is not clear, there are chances of many companies being held to be NBFCs by RBI even if, in a commercial sense, they are not NBFCs,” Thakur said.

This is because RBI’s draft guidelines on NBFCs, issued in December 2012, had exempted all NBFCs with an asset size of less than Rs.25 crore, “whether accepting public funds or not”, from its rules, stating that such NBFCs shouldn’t contribute to any major systemic risks or disruptions in the market.

NBFCs with an asset size below Rs.500 crore and not accepting public funds, directly or indirectly, will also be exempt, the central bank said.

Currently, the central bank regulates all NBFCs, regardless of their size and deposit-taking status. But this time, RBI’s letters have gone even to companies with smaller asset sizes.

Experts see the RBI action as a fallout of the Saradha and Sahara Group episodes.

Saradha, one of eastern India’s biggest deposit-taking companies, collapsed in April and its chairman and managing director (CMD) Sudipta Sen has been held for defaulting on repayments.

Depositors are estimated to have lost about Rs.1,700 crore. Investigations are currently under way.

In the case of Sahara Group, in August 2012, the Supreme Court had asked two group firms—Sahara India Real Estate Corp. Ltd (SIRECL) and Sahara Housing Investment Corp. Ltd (SHICL)—to refund through the Securities and Exchange Board of India (Sebi) more than Rs.24,000 crore to bondholders with interest.

On 5 December, the Supreme Court allowed the group to deposit the money in three installments—Rs.5,120 crore immediately, Rs.10,000 crore within the first week of January 2013 and the remaining by the first week of February. Sahara, however, deposited only Rs.5,120 crore and said this was more than sufficient to meet the outstanding liabilities as it had already refunded more than Rs.20,000 crore to investors directly.

At a 17 July hearing, the Supreme Court pulled up the Sahara group for not refunding the Rs.24,000 crore to investors and said Sahara chief Subrata Roy and directors of its two companies will have to appear before the court if the company didn’t refund the amount.

On its part, market regulator Sebi is gearing up for a closer regulation of companies that collect public funds.

Following a presidential ordinance last week, Sebi will now have powers to regulate any pooling of funds under an investment contract involving a corpus of Rs.100 crore or more and attach assets in case of non-compliance.

This will help Sebi to tighten its hold on companies, which do not fall under any regulated category.

That apart, the chairman of Sebi will have powers to authorize search and seizure operations as part of efforts to crack down on ponzi schemes.

In separate cases, there have been regulatory steps against several other NBFCs.

For instance, early this year, RBI had banned Kerala-based NBFCs, Muthoot Fincorp Ltd and Manappuram Finance Ltd, from accepting public deposits after uncovering irregularities in their operations.

The Indian central bank has been been tightening its grip on NBFCs in the last few years due to the relatively high risk nature of their business, their rapid growth in the last few years and relatively lighter regulations compared with those that govern commercial banks.

More importantly, the central bank is worried about the high exposure of commercial banks to such companies.
On 31 May, banks had lent Rs.2.5 trillion to NBFCs, up from Rs.1.8 trillion in May 2011. But following the regulator’s stance, banks have become cautious about lending to these firms, resulting in a significant decline in the fund flow to the segment.

RBI draft guidelines on the regulation of NBFCs, based on the proposals of a working group headed by former deputy governor Usha Thorat, prohibited NBFCs from accepting deposits unless they are rated.

Existing unrated deposit-taking NBFCs will be given one year to get themselves rated and will not be allowed to accept any fresh deposits or renew existing deposits, unless they are rated by that time.

According to the draft rules, NBFCs with financial entities with an asset size of Rs.1,000 crore or above, holding financial assets that constitute 50% of the total assets or generating at least 50% of financial income as a proportion of gross income, also need to be registered and regulated by RBI, the central bank said. Further, no NBFC shall commence or carry on NBFC business without having net-owned funds of Rs.25 lakh to Rs.2 crore as may be specified by RBI.

The draft rule also required NBFCs to reach a minimum Rs.25 crore of financial assets within a period of two years.

“The idea of RBI is to identify companies which are doing NBFC business but not registered. This is a positive step by the regulator to ensure the safety of the financial system,” said Akeel Master, partner, financial services, KPMG India, an audit and consulting firm.

Sahara has filed a defamation case in a Patna court against Mint’s editor and some reporters over the newspaper’s coverage of the company’s disputes with Sebi. Mint is contesting the case.

Source: LiveMint
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Sunday, July 21, 2013

HDFC plans to buy Lever House in Mumbai

HDFC plans to buy Hindustan Unilever’s former headquarters, Lever House, located at Backbay Reclamation in the southern tip of the megapolis.

“Today, the HUL building is on lease with us and we have the right to buy it and we will buy it,” the Chairman, Deepak Parekh, told the shareholders at the annual general meeting held here over the weekend.

No financial details were immediately available.

HUL was housed at the Lever House for 46 years before it moved to a new campus in Andheri (East) in North Mumbai in January 2010.

The mortgage lender will also shift its general insurance arm, HDFC Ergo General Insurance, and HDFC Mutual Fund to the building. “The group’s requirement is very large. We are also going to move HDFC Ergo and mutual fund,” Parekh said.

Currently, HDFC is headquartered at Ramon House (in the same area in south Mumbai) where it started its operations in 1977. Later, it took over the entire building but chose to retain the name.

On this, Parekh said, “We do not want to change the name Ramon House, where we started, because it is good luck for us.

We want to retain the name Ramon House.”

However, the 1.53 lakh sqft HUL building will be named as HDFC House, Parekh added.

Source: thehindubusinessline
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SIDBI identifies niche areas of financing for tiny units

The Small Industries Development Bank of India (SIDBI) is looking at potential areas of financial support to the MSME (Micro Small and Medium Enterprises) sector.

SIDBI’s Deputy Managing Director N. K. Maini, who spoke at the SME CEO Knowledge Forum organised by UTI Mutual Fund in association with The Hindu Business Line at the Codissia Trade Fair Complex here on Friday, said that SIDBI was set up as a refinance institution initially. “We found gaps in financing over time. After undertaking a major re-positioning exercise within the organisation last year, we started looking to fill the gaps by stepping into areas that banks did not look into,” he told representatives of the MSMEs at the event.

“The Small Industries Development Bank had, in the process identified four niche areas where MSMEs need finance support,” Maini continued

“We extend support to such of those units that are into promotion of cleaner production technology and energy efficiency, in the area of receivables management, risk capital and services sector,” he said.

“All banks are comfortable funding the hard-core nut-and-bolt manufacturing companies. But there are quite a number of service sector units. These units have intangible assets and their services are based on cash flows,” he observed, adding that SIDBI has set up a special vertical for the services sector.

SIDBI has specialised transaction products to cater to the SMBs (Small and Medium Businesses), Maini said.

The MSME sector has been growing at 11-12 per cent over the last decade and this is higher than the growth rate of the country. The Credit Guarantee Fund Trust is a game changer for the MSMEs, he added.

Bhareth L. Ghia, Country Head – SME and Distribution Channel, UTI Mutual Fund said that the contribution by the 10-million-plus MSMEs in the country was significant, both on the production side and export front.

The MSMEs’ awareness of treasury management solutions is low, posing a huge dilemma to the entrepreneurs manning such units, he said, highlighting the myths about investments in MFs. He urged the participants to consider money market funds and made a broad comparison of the investment avenues.

Yogesh Dixit, Senior Director, Crisil stressed the benefits of rating enterprises. “Rated units will have access to funds from various sources, will be able to get funds at competitive rates, will help in winning government tenders, orders from both domestic and global players, besides growth and sustainability in business.’

Ratings position companies as ‘trusted’ and ‘credible’ business entities, he added.

While the number of SMEs opting for ratings is on the rise, more than 70 per cent of the rated SMEs are located in non-metro areas, he said.

Prashant Jain, Senior Manager (Tax), KPMG highlighted the tax compliance issues and the benefits that the MSMEs could derive by complying with tax issues.

Parthiban Sivanesan, Head, Vodafone Business Service Solutions, said use of technology would go a long way in improving the operational parameters of the MSMEs.

Aarati Krishnan, Head of Research, Business Line, moderated the event. She highlighted the trends and challenges of the large corporations and left it to the floor to deliberate on the issues concerning the SMEs.

The event was powered by Vodafone and supported by Codissia. Mahindra Geneo DC VX was the co-sponsor and Crisil and SIDBI, knowledge partners to the event.

Source: thehindubusinessline
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Union Bank to approach FinMin with fresh capital-raising plan

Union Bank of India, is planning to submit a fresh capital raising plan to the Ministry of Finance “within a couple of days”.

According to Debabrata Sarkar, CMD, though the bank is currently well capitalised, it might have to raise capital to fund its growth needs beyond 2015.

“Our bank will be in a comfortable position in terms of capital till 2015. For the period post-2015, we will require more funds,” Sarkar said here on Friday. He was addressing an interactive session on bank credit organised by the Kolkata-based MCC Chamber of Commerce and Industry.

Meanwhile, he said, the bank witnessed good demand from the agriculture, retail and SME sectors, but demand from the corporate sector has been subdued.

Sarkar also pointed out that improper management of infrastructure projects in the country was hurting the financial stability of the banks. “For example, average maturity tenure of deposits for UBI is 1.7 years. But, an infrastructure project takes no less than 10 years. How can I match my asset and liability?” he asked.

Sarkar confirmed that the bank would not increase interest rates. “We have recently reduced our base rate to 10 per cent (from 10.25). We are not thinking of tinkering with the base rate now,” he said.

Source: thehindubusinessline
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SBI rejigs Tier-II management; Pradeep Kumar to head large corp group

State Bank has re-jigged its second tier management by moving P. Pradeep Kumar, deputy managing director in-charge of global markets and treasury operations, to head the large corporate group.

The move was following the vacancy created by resignation of Santosh B. Nayar last week, according to bank sources.

Nayar, a Deputy Managing Director in-charge of large corporates, had resigned from the bank on July 13 to join the Delhi-based state-run infra lender IFCI as its managing director and chief executive.

Following this, SBI sources told PTI, that the bank designated K. Venugopal, currently chief general manager at the global markets group, as the head of the department but without a promotion.

Sources said another top deck rejig is on the anvil by the end of the month, as the senior—most managing director Diwakar Gupta, who is currently the chief financial officer and group executive, will retire after nearly four decades at the bank.

Gupta will likely be succeeded by Arundhati Bhattacharya, who was promoted as a managing director by the government last week, sources added.

Bhattacharya currently heads SBI Caps, the bank’s capital markets subsidiary, and is tipped to be a front-runner for the corner office if chairman Pratip Chaudhuri does not get an extension, sources said.

Chaudhuri is slated to retire in September.

The SBI top deck comprises the chairman, four MDs, five deputy MDs and 18 chief general managers.

SBI watchers see Bhattacharya’s age as the biggest factor in her favour, as she has two-and-a-half years to go for retirement.

Pradeep Kumar had also attended the interview for the MD’s position last month, sources said. He also has a little over two years to go for retirement.

The other three MDs—Hemant Contractor, who is group executive in-charge of international banking; A Krishna Kumar in charge of national banking and S Vishwanathan—will also retire by this year and next year.

While Krishna Kumar will retire in November 2014, Contractor is expected to hang up his boots in April 2014.

The Government rules require at least two years of service left before retirement for a candidate to be considered for the SBI chief.

While the finance ministry was reportedly pushing for an extension for Chaudhuri, the PMO is learnt to be against the move.

An MD-level appointment at the SBI has to be endorsed by the appointments committee of the Cabinet headed by the Prime Minister.

Source: thehindubusinessline
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