UCO Bank launches ‘Veer Shakti’

Kolkata-based UCO Bank has launched a special savings account scheme for in-service and retired personnel of the Indian Armed Forces and paramilitary force.

The scheme, called ‘UCO Veer Shakti’, includes facilities such as zero balance and overdraft. The savings account scheme was launched on August 14.

abhishek.l@thehindu.co.in
Source: thehindubusinessline

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Axis Bank sheds over 9% on MSCI omission, RBI curb

Shares of Axis Bank on Friday plummeted by over 9 per cent after the MSCI said it would exclude the bank from its standard and large cap indices, and the RBI restricting foreign institutional investors from purchasing shares in the bank.

The bank scrip fell 8.69 per cent to Rs 1,050 and closed at Rs 1,055.40, down 8.23 per cent on the BSE.

At the NSE, it tumbled 9.36 per cent to Rs 1,042.05.

Led by the massive sell—off, the market value of the bank scrip slipped Rs 4,426 crore to Rs 49,494 crore.

“Axis Bank fell close to 9 per cent on MSCI exclusion as well as RBI’s restriction. The RBI has restricted overseas investors from purchasing additional shares given the foreign shareholding limit has been breached,” said Nagji K Rita, Chairman & MD, Inventure Growth and Securities.

The MSCI (Morgan Stanley Capital International) Global Standard Indices will see the deletion of Axis Bank with effect from September 2, 2013.

Besides, the Reserve Bank on Wednesday restricted FIIs from purchasing shares in Axis Bank as the overall foreign share holding has crossed the limit of 49 per cent.

Therefore, no further purchases of share of this bank would be allowed through stock exchanges in India on behalf of these entities, it said.

Source: thehindubusinessline

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Andhra Bank raises base rate by 0.25%

Public sector lender Andhra Bank announced an increase of 0.25 per cent (25 basis points) in its base rate effective from Monday next week.

The base rate has been increased to 10.25 per cent from 10 per cent, while BPLR has been raised to 14.50 per cent from 14.25 per cent, the bank said in a filing to the BSE.

Both the revised rates will come to effect from Monday, August 19, it said.

Earlier, Yes Bank and HDFC Bank have increased their base rates after the status quo monetary policy review of RBI last month.

The hike in base rate or the minimum lending rate will make auto, corporate and other loans costlier for the consumers.

Source: thehindubusinessline

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Bank of Baroda seeks Rs 1,800-cr capital infusion from Govt

Bank of Baroda (BoB) has sought Rs 1,800-crore capital infusion from the Government for the current fiscal (2013-14).

The Government has a stake of 55.4 per cent in BoB, which is currently the third largest public sector lender in the country.

“We have sought a capital infusion of Rs 1,800 crore. It is likely to be through preference shares,” S.S. Mundra, Chairman and Managing Director, BoB, told newspersons on the sidelines of the Federation of Indian Chambers of Commerce and Industry (FICCI) Banking Conclave.

Other available options for capital infusion include rights issue, Mundra said.

As on end-June, BoB had a capital adequacy ratio (which is a measure of a bank’s capacity to meet its time liabilities and other risks) of 12.70 per cent.

Although there is “enough room available” for raising Tier II capital, the bank would do so only after the market stabilises, he said.

Following a slowdown in loan demand from corporates and decline in new investments, the bank is eyeing retail, agriculture and micro, small and medium enterprise (MSME) sectors as growth areas. In retail, the bank will focus on home and auto loans.

Retail comprises 16-17 per cent of its total loan portfolio. And, agriculture and MSMEs, 14 per cent and 23 per cent, respectively.

According to him, the corporate portfolio is expected to grow at only 2-3 per cent.

Overseas foray

Ruling out an immediate foray into new markets overseas, Mundra said the bank’s primary focus would be to strengthen its presence in the existing markets where he sees enough business opportunities that BoB can tap.

Present in 24 countries, nearly 30 per cent of BoB’s business and around 28 per cent of its revenues come from overseas operations.

“In many countries, the entry level capital requirements are increasing, and the regulatory environment is challenging. So, the emphasis will be to grow in countries where we are already there and have satisfactory operations,” he added.

According to Mundra, there are no plans for closure of foreign branches and repatriation of capital.

abhishek.l@thehindu.co.in

Source: thehindubusinessline

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PNB raises NRI deposits rates by 1%

Punjab National Bank (PNB) raised interest rates on NRI deposits of over 3 years by 1 per cent, days after the Reserve Bank deregulated interest rates on such deposits.

The increased interest rates would be applicable on fixed deposits Foreign Currency Non—Resident Bank [FCNR (B)] by NRI in the US dollar, pounds, euro, Japanese yen, Canadian dollar and Australian dollar.

The new rates would be applicable from close of the business on August 14, PNB said in a statement.

The fixed deposits between 3-4 years in US dollar would attract 4.78 per cent as compared to 3.78 per cent. Similarly, 4-5 years term deposit would earn 5.17 per cent against 4.17 per cent, it said.

For 5 years, term deposit the new interest rate would be 5.56 per cent as against 4.56 per cent, it added.

Similar one per cent hike has been made in case of term deposits in other currencies like pounds, euro, Japanese yen, Canadian dollar and Australian dollar.

Earlier this week, the Reserve Bank deregulated interest rates on NRI fixed deposit schemes and exempted such term deposits from CRR and SLR requirement to attract foreign currency.

These instructions are valid up to November 30, 2013, subject to review.

Besides, banks were also advised incremental FCNR (B) deposits as also NRE deposits with reference base date of July 26, 2013, and having maturity of three years and above, mobilised by banks will be exempt from maintenance of CRR and SLR.

Cash Reserve Ratio (CRR) is the portion of total deposits of banks to be kept with RBI while Statutory Liquidity Ratio (SLR) is the portion of total deposit invested in government securities.

Currently, CRR requirement is 4 per cent and SLR is at 23 per cent.

Source: thehindubusinessline

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UCO Bank scheme for Armed Forces

On the eve of Independence Day, UCO Bank launched an exclusive product for the Indian Armed Forces, including paramilitary forces.

The product, meant for in-service as also retired armed personnel, will offer a zero-balance savings account with overdraft facility.

Source: thehindubusinessline

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Bank of India plans to open 50 all-women branches

The Bank of India plans to open 50 all-women branches — one in each of its 50 zones — to facilitate the empowerment of women, according to Vijayalakshmi R. Iyer, Chairperson and Managing Director of the bank.

She was speaking here on Friday after inaugurating an all-women branch at Seethammadhara in the Visakhapatnam zone.

“The idea, of course, behind opening such branches, is to put women at ease and encourage them to transact with the bank. These branches will function like all other branches, but with more emphasis on financing schemes beneficial to women and encouraging entrepreneurship among them. Micro finance is a very important area and self-help groups of women (SHGs) are doing well in Andhra Pradesh. These branches will focus on such areas,” she said.

She said the location would have to be carefully chosen for the success of such branches. “The Union Government is thinking of setting up a bank exclusively for women. We have drawn inspiration from the idea and we are certain these branches will be successful,” she said.

She said the Seethammadhara branch has already transacted business of Rs 25 crore. Referring to the performance of the bank during the current financial year, she said the first quarter was quite satisfactorywith business of Rs 49,000 crore.

“There may be a slight lull in the second quarter, but we will make all efforts to maintain the momentum and we are sure of achieving our targets by the end of the financial year,” she said.

More branches

The CMD said the bank had decided to open 250 branches more in the country, in addition to the existing 4,322 and 49 branches have been established in the first quarter.

The bank will also add a thousand ATMs during the current fiscal, in addition to the existing 2,500. Referring to the Visakhapatnam zone, she said there were 103 branches in the zone, with business of Rs 4,700 crore, and seven-eight branches would be added in the current year.

Ch.Ramakotaiah, the President of the Visakhapatnam branch of the Builders’ Association of India, opened an account in the branch in the name of his wife. M. Sree Lakshmi, branch manager, also spoke.

sarma.rs@thehindu.co.in

Source: thehindubusinessline

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Moody’s downgrades BoB, Canara Bank, PNB

Slower economic growth, deteriorating asset quality and declining margins have prompted Moody’s Investors Service to downgrade the ratings and credit assessments of three major public sector banks — Bank of Baroda, Canara Bank and Punjab National Bank.

The global credit rating agency also changed the financial strength ratings of Union Bank of India to negative.

“The downgrades for Bank of Baroda, Canara Bank and Punjab National Bank, and the negative outlook to Union Bank of India primarily reflect the challenges of the current macroeconomic environment, which have been exacerbated by the depreciating rupee and high levels of inflation,” Moody’s said.

According to the rating agency, the Reserve Bank of India’s measures to support the currency have not reversed its depreciation, implying that interest rates may remain elevated for a longer time.

The deteriorating macroeconomic situation apart, Moody’s pointed to the worsening asset quality at Indian banks, with total non-performing assets and restructured loans rising above 8 per cent of their loan book and loan loss reserves coverage for these impaired loans under 25 per cent as of end-March 2013.

“These problem assets indicate a risk that capital ratios will remain under pressure; a situation which is compounded by the relatively low capacity of the banks for internal capital generation.

“Therefore, given their weak financial performances, several public sector banks have received repeated capital injections from the government in past years,” Moody’s said.

Shares of the four banks fell sharply on Friday. Canara Bank shares ended at Rs 224.15 per share on the BSE, down 9.96 per cent from the previous close, while Bank of Baroda fell 8.5 per cent at Rs 479.10.

Union Bank of India shares fell 5.98 per cent to Rs 112.35 and Punjab National Bank declined 7 per cent to Rs 500.05. The BSE Bankex fell 5.55 per cent to 10,800.62 points.

The benchmark Sensex dropped 3.97 per cent to 18,598.18 points.

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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SBI suggests setting up bourse for spectrum trading

State Bank of India has mooted the idea of setting up a spectrum exchange where operators will be able to trade radio frequencies.

SBI has said that the exchange can also be utilised by the Government for release of additional spectrum as is the case in offers of sale for equity shares.

In a communication to the telecom regulator, SBI said, “The Government should consider permitting trading of spectrum that has been granted by way of auction at a market determined price (i.e. liberalised spectrum) on a common trading platform. The trading can be by way of outright sale as well as on a short/long-term lease basis and standardised products may be created in this regard. This shall ensure that unutilised spectrum with various players shall be better used by operators who are facing a shortage of the same.”

Efficient utilisation

SBI said that this shall not only ensure efficient utilisation but also provide liquidity for the resource with players not having to wait for auctions which take place only periodically. Better liquidity will in turn provide the authorities more relevant and accurate benchmarks for setting reserve prices for future spectrum auctions.

“Further, steady availability of spectrum through exchange shall encourage competition and ensure that niche players requiring smaller quantities of spectrum are also able to compete in the market,” the bank said in its response to TRAI’s consultation paper on spectrum pricing and allocation.

A tangible asset

SBI has also pushed for making spectrum a tangible asset that can be mortgaged by the operators while taking loan. Spectrum is considered as an intangible asset in the books of the licensees and for security cover calculations as per RBI instructions.

“Since spectrum is classified as intangible asset, when banks provide funds for roll-out of business plan or for meeting entry fee/ BG requirement, the loans to that extent have to be treated as unsecured loans, even though the licenses are assigned in favour of the lenders. Holding unsecured assets on the banks books have in turn several implications in terms of lower ratings, higher provisioning, etc,” SBI said. The bank said that TRAI may initiate a consultation process with RBI for treating the spectrum as a tangible asset that can be mortgaged for the purpose of lending by banks. In case of default by the operators, lenders can recover their dues by selling the spectrum on the trading exchange.

“The valuation of spectrum can be expected to increase if the spectrum is made mortgageable. The spectrum holders on the other hand shall need to mark the value of spectrum to the market value as is happening in case of its other assets,” it said.

This is not the first time SBI has written to TRAI expressing its concerns on the way spectrum was being priced and allocated. SBI Capital Markets Ltd has earlier written to the regulator with a six-point action plan to the regulator, including allowing the operators to mortgage spectrum as collateral for the loan.

SBI Capital has also suggested that it should be allowed to take over the assets and infrastructure of the 2G operators whose licences have been cancelled by the Supreme Court. The apex court in February asked the Government to cancel 122 licences given in 2008. Those affected include Etisalat DB, Uninor, Sistema Shyam, Videocon, STel and Loop.

This has made the banking sector nervous as most of these companies had taken huge loans for investing in the business. SBI , for instance, had a total exposure of Rs 23,000 crore in the telecom segment, of which, Rs 15,000 crore is direct funding and the balance is non-fund based (guarantees, and so on).

thomas.thomas@thehindu.co.in

Source: thehindubusinessline

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Corporation Bank celebrates Independence Day

Corporation Bank celebrated 67th Independence Day at its corporate office in Mangalore on Thursday. B.K. Srivastav, Executive Director of the bank, unfurled the National Flag in the presence of executives and employees of the bank.

Speaking on the occasion, he said: “As bankers our effort should be to provide banking and financial services to every section of society, particularly in unbanked and rural areas of the country.” On the occasion, Srivastav also inaugurated a hall — ‘Annapoorna’ — at the corporate office.

Source: thehindubusinessline

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More measures needed to overcome BoP challenges: HSBC

More measures from RBI and Government are needed to overcome the balance of payment challenges and rupee depreciation, says a report by HSBC.

To contain the sharp depreciation in the rupee, which has plunged 13 per cent since May, and contain the current account deficit, the Reserve Bank of India resorted to currency stabilisation measures and the Government took steps such as making gold imports costlier.

Moreover, a new set of measures focusing on curbing oil, gold and non-essential imports and opening up external fund raising were taken. The rupee slipped to 61.80 to a dollar earlier in the month.

“Will this be enough to fix the leaks? We do not think so,” HSBC Chief Economist for India and ASEAN Leif Lybecker Eskesen said in a research note.

Eskesen further noted that “ultimately structural reform implementation is the solution, but short term there is a need to rely on RBI and more plumbing measures.”

These recent steps would certainly help narrow the current account deficit and the June/July trade numbers already suggest that some of the previous steps taken to curb gold imports are helping, but these measures likely need to be complemented by additional policy steps, HSBC said.

CAD, the difference between inflow and outflow of foreign currency, was $ 88.2 billion, or 4.8 per cent of GDP, in 2012-13. A high CAD impacts the value of the currency, which in turn makes imports expensive and adds to the fiscal deficit.

According to HSBC, it will now be important to step up implementation of the measures announced, including getting actual FDI in and breaking ground on investment projects expedited through CCI.

“This would help lift investments, supply-led growth, contain the CAD and help raise confidence domestically and abroad. Moreover, if the Government is able to push through bigger reform measures such as the pending insurance and GST bill, that would also help lift confidence,” it said.

HSBC said, “Unfortunately, the impact from structural reforms is not likely to kick in near term and the chances of getting big bang reforms through on this side of the elections are small. The policy makers will, therefore, have to rely on short-term measures for the time being.”

Source: thehindubusinessline

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IOB on network expansion spree

Indian Overseas Bank is aggressively expanding its network. The bank has added nearly 1,000 branches to its network in the last three years.

The 3,000th branch of the bank is to be inaugurated on August 17 at Vaniankudi by Union Finance Minister P. Chidambaram. This is to be followed by another at Kothakottai in Pudukottai District on August 18.

IOB, according to its Chairman and Managing Director Narendra, has risen to become the seventh largest bank in the country.

Source: thehindubusinessline

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United Bank adds more facilities

United Bank of India has inaugurated a number of specialised banking counters and an e-lounge at its headquarters in the city.

The specialised banking counters would help in having centralised account opening facilities, payment of taxes and other citizen centric services. It will also have e-lounge facilities that include free Internet for online banking.

The facilities were inaugurated by the West Bengal Governor, M.K. Narayanan.

Source: thehindubusinessline

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LIC Housing Finance Q1 profit up 36% at Rs 310 cr

LIC Housing Finance, a subsidiary of LIC, posted 36 per cent increase in net profit at Rs 310.50 crore for the first quarter ended June 30, 2013.

The company had posted net profit of Rs 227.75 crore in the April-June quarter of 2012-13 fiscal, LIC Housing Finance said in a filing on the BSE.

The company’s Q1, 2013-14, income from operations rose by 23 per cent to Rs 2,149 crore, from Rs 1,767.3 crore in the year-ago period, it said.

The net interest margin of improved to 2.30 per cent, as against 2.18 per cent for the quarter ended June 2012.

Gross NPAs in the individual segment were 0.51 per cent as on June 30, 2013 as against 0.74 per cent as on June 30, 2012.

Source: thehindubusinessline

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IDBI, Oriental Bank raise deposit rates

State-run lenders IDBI Bank and Oriental Bank of Commerce (OBC)  hiked deposit rates by up to 1.50 per cent in select maturities on Wednesday.

A hike in the deposit rate is generally seen as precursor to upping the lending rate.

IDBI Bank, which also modified its maturity offering, will now pay 8.50 per cent for a deposit of 46 days to 200 days, which is higher than the earlier rate of 7 per cent for the 46—90 days basket and 7.25 per cent for the 91 days to less than six months basket, it said in a statement. The bank also hiked its interest rate offering in two other baskets by 0.25 per cent.

Oriental Bank of Commerce hiked its offering by 0.25 per cent in the one-year to-less-than two-year maturity bucket, it said in a filing with the stock exchanges.

IDBI Bank’s interest rate revision is effective August 16, while the same for OBC is from August 12.

Through a series of measures aimed at reducing the speculation on the rupee, the Reserve Bank has tightened liquidity starting July 15. This has hardened short term rates.

Source: thehindubusinessline

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Corporation Bank to open 9 loan centres for SMEs

Corporation Bank will open nine more SME (small and medium enterprise) loan centres by the end of the current financial year.

B. K. Srivastav, Executive Director of the bank, said the bank currently has 16 SME loan centres across the country. The aim, he said, is to take the total number of such centres to 25 by March 2014.

The bank is expecting not less than 30 per cent growth from these SME loan centres during the fiscal, he added.

V.S. Kartikeyan, General Manager, said that the bank is expecting Rs 250 crore of business from the MSME sector in the Mangalore zone alone during the current financial year.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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Publishing photographs of defaulters in newspapers illegal: Kerala High Court

The Kerala High Court has held as arbitrary and illegal the decision of the State Bank of India to publish the photographs of loan defaulters in newspapers.

Allowing writ petitions filed by two defaulters against the SBI notice, the court on Tuesday observed that the threat held out by banks to publish the photographs of defaulters in newspapers lacked legislative sanction.

Justice V. Chitambaresh said: “The practice of exhibiting a photograph of a person and shamming him in public for the sin of being in an impecunious condition cannot be encouraged in civilised societies like ours.”

The judge further observed that there was nothing immoral in their failure to repay the loans owing to a floundering business or other unavoidable reasons.

The court added that some of the borrowers might even be driven to commit suicide fearing ignominy on account of their photographs being published in newspapers. “It will remain a permanent taboo for their family,” the court observed.

The move was clearly an “affront to the right to live with dignity and honour as well as the right to privacy of the loanees”.

Such publication of photographs therefore, violates the rights guaranteed to the loanees under Article 21 of the Constitution of India, the court held.

SBI’s stand

However, the SBI justified its stand saying the terms and conditions of the loan agreements allowed them to publish defaulters’ photographs in newspapers.

But the court pointed out that the clause in the agreement at best empowered the bank to reveal only the names of borrowers in the print media or to disclose the information and details relating to the credit facility.

Even if there was such a permissive clause, the loanees would “not (be) stopped” from challenging the action of a bank “on the ground of violation of fundamental rights of loanees”, the court said.

The court also pointed out that there was no provision in the Security Interest (Enforcement) Rules (SARFAESI) that enables banks to threaten to publish photograph of defaulters.

gopakumar.kc@thehindu.co.in

Source: thehindubusinessline

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Need for SLR, CRR to come down further: RBI

There was 'perhaps' need for further reduction in reserves set aside by banks through cash reserve ratio or statutory liquidity ratio, said the Reserve Bank of India Governor, Duvvuri Subbarao, said at a banking conference organised by FICCI in Mumbai.

The cash reserve ratio, or the slice of bank deposits parked with the RBI, stands at a record low of 4 per cent. Meanwhile, SLR, which includes securities such as government bonds, stands at 23 per cent.

Last month, the RBI tightened monetary conditions by raising short-term interest rates and squeezed cash in a bid to defend the rupee volatility. However, the currency has weakened further, citing concerns the central bank would need to either raise the CRR or raise the key repo rate.

The rupee fell to 61.31 against the dollar post the governor's comments. The yield on benchmark 7.16 per cent Government security rallied to 8.33 per cent. While, the price of the security fell to 92.17.

A treasury official of a private bank however, said, "The RBI must wait for rupee to stabilise before reducing the CRR or SLR."

Source: thehindubusinessline

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ICICI Bank to sell Mumbai's Prabhadevi property for 100 crore

ICICI Bank is set to sell one of its residential buildings in central Mumbai's Prabhadevi for about 100 crore, in line with the strategy of India's second-largest bank to offer its executives compensation for rent instead of accommodation as part of their annual package.

The bank has already identified a prospective buyer and the deal is likely to be concluded within two weeks, persons familiar with the matter told ET.

The six-storey building, known as ICICI Apartments, is spread over nearly half an acre on Cadell Road, barely 100 metres from the seashore, and offers a clear view of the sea from the third floor upwards. An email query sent by ET to ICICI Bank did not elicit any response.

Several firms have discontinued the practice of offering accommodation to their senior executives as part of the compensation and started paying them a component for rent.

ICICI Bank had about three years ago sold a prime 13-storey residential building in Prabhadevi that housed its top executives. Earlier this year, Citibank and GlaxoSmithKline sold their jointly owned residential building next to Mukesh Ambani's 27-storey house Antilla on south Mumbai's Altamount Road for 128 crore.

Multinational banks such as HSBC and Standard Chartered Bank also sold their jointly owned residential building, Bishopsgate, on south Mumbai's Breach Candy in 2011.

Senior executives of both banks used to reside in Bishopsgate until it was put on the block.

On Monday, shares of ICICI Bank closed at 866.25 a piece on the Bombay Stock Exchange, down 1% over Thursday's close.

Source: EconomicTimes

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Muthoot Finance files draft paper for Rs 300 cr NCDs

Muthoot Finance has filed the draft prospectus with market regulator SEBI for public issuance of secured non—convertible debentures (NCDs) of up to Rs 300 crore.

The NCD issue aims at aggregating up to Rs 150 crore with an option to retain over—subscription of up to Rs 150 crore, as per draft prospectus filed with SEBI showed.

“Public issue by our company of NCDs aggregates up to Rs 1,500 million with an option to retain over—subscription up to Rs 1,500 million for issuance of additional NCDs aggregating to a total of up to Rs 3,000 million,” it added.

Funds raised through this issue would be used for financing activities, including lending and investments, besides utilising them to repay existing loans, capital expenditure plans and to meet working capital requirements.

ICICI Securities is the lead managers to the issue, while Link Intime India is registrar to the issue.

Muthoot Finance, is one of the largest gold financing company in India, with a market share of over 20 per cent as of March 31, 2012.

Source: thehindubusinessline

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Kotak Bank ups base rate by 25 bps to 10%

Kotak Mahindra Bank increased its base rate or the minimum lending rate by 25 basis points to 10 per cent. This revision will be effective from August 13, 2013.

All categories of loans (other than exceptions permitted by RBI) will henceforth be priced with reference to the revised base rate, the bank informed the Bombay Stock Exchange.

After Yes bank and HDFC Bank, Kotak is the third bank to hike its lending rates after the Reserve Bank of India announced liquidity tightening measures last month.

In July end, indicating a likely hike in the base rate, Dipak Gupta, Joint Managing Director, Kotak Mahindra Bank, had said, “The RBI measures will definitely impact our margins. I would be lying to say they are not significant. However, our asset liability committee will meet in the next week or so and decide. If other banks raise rates we cannot be the only one not to go in for a hike.”

Banks have moved to hike lending and short term deposit rates after they felt their margins would come under pressure due to the RBI measures.

Source: thehindubusinessline

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ICICI Bank opens 140 rural branches

ICICI Bank today announced the launch of 140 branches in the last one week as part of its financial inclusion plan to provide banking services in unbanked villages.

Open six days a week, these banks will offer basic banking services such as farmer finance through Kisan Credit Card (KCC) and Agri-term Loan (ATL) for the cultivation and development of agricultural land, working capital and term loan requirements of business entities in rural and semi- urban areas, overdraft against fixed deposits.

The branches are opened across the state of Punjab, Rajasthan, Madhya Pradesh, Tamil Nadu, Gujarat and Maharashtra. In Maharashtra, 23 were opened across seven districts -- Buldhana, Jalgaon, Kolhapur, Nagpur, Pune, Sangli and Solapur – making the total number of branches to 562 in the state.

ICICI Bank has a total of 3,377 branches and over 11,000 ATMs across the country.

Source: thehindubusinessline

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United Bank Q1 net skids 74%

United Bank of India net profit dropped 74 per cent to Rs 44.73 crore in the first quarter of 2013-14 from Rs 173.89 crore in the corresponding year-ago quarter.

The total income stood at Rs 2,869 crore (Rs 2,499 crore), up 14.79 per cent year-on-year.

Net interest margin was down to 2.28 per cent (3.05 per cent). The bank’s capital adequacy ratio dropped to 10.82 per cent (12.5 per cent).

The bank on Monday said income from loans and advances grew to Rs 2463.74 crore from Rs 2283.81 crore in Q1 of FY13. Non-interest income moved up 88 per cent to 405.06 crore.

Net NPA was at Rs 2,699.59 crore and net the NPA ratio was 3.77 per cent. The bank in a statement said it made a cash recovery of Rs 65.38 crore and the outstanding restructured portfolio was placed at Rs 4,781 crore. It constituted 6.68 per cent of the total advances.

During the quarter, the bank opened 1.33 lakh basic savings and deposit accounts. It has also delivered 9.46 lakh smart cards to financial inclusion beneficiaries.

jayanta.mallick@thehindu.co.in

Source: thehindubusinessline

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Manappuram Finance net down 66.5%

Manappuram Finance Ltd recorded a net profit of Rs 52.87 crore in the first quarter of the current fiscal, down 66.5% from the Rs 157.77-crore profit posted in the corresponding period of the previous fiscal.

V.P. Nandakumar, Managing Director and CEO, said this was a significant improvement over the Rs 141.43-crore loss incurred in the fourth quarter of FY2013.

He said the performance during the quarter signals a return to normalcy after the turbulence of the past year. Going forward, the company intends to continue its thrust on consolidation with focus on acquisition of new customers, improvement in asset quality and branch level productivity, he added.

The board of directors has recommended an interim dividend of Re 0.45 per share of face value of Rs 2.

The profit before tax stood at Rs 80.19 crore, compared with Rs 233.59 crore in Q1 of last fiscal, while provision towards income tax stood at Rs 27.32 crore.

A total of eight new branches were added during the quarter taking its national network to 3,303 branches across 26 States and Union Territories.

Source: thehindubusinessline

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IRDA move to allow banks as insurance brokers hailed

Reliance Life Insurance Company has welcomed IRDA’s new regulations allowing banks to become licensed insurance brokers and sell products of multiple life insurance companies.

This is an extremely progressive step taken by the Insurance Regulatory & Development Authority (IRDA) in the best interests of hundreds of millions of consumers across all strata of society, Anup Rao, CEO, RLIC, said in a statement today.

These new regulations will lead to an open bancassurance architecture and will drive banks to align their interest with their customers by offering them a wider choice of products from a larger number of life companies, he said.

This is a better situation instead of the existing conflicted practice of pushing products from a single manufacturer, it was pointed out.

"We expect these new regulations to lead to much deeper penetration and enhanced distribution for the life insurance industry in general" Rau said.

RLIC is in talks with several commercial as well as cooperative banks to enter into a distribution tie-up for its products, it is learnt.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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SBI net dips 14% as bad loans, provisioning rise

A jump in bad loans, provisioning for pension liabilities and a fall in the value of international investments pulled down State Bank of India’s profitability in the April-June quarter.

India’s largest bank reported a 14 per cent drop in net profit to Rs 3,241 crore from Rs 3,752 crore in the year-ago period.

In the reporting quarter, the bank saw a net incremental growth in bad loans (after taking into account cash recoveries, upgradation of loan and write-offs) of Rs 9,702 crore (Rs 7,480 crore in the year-ago period).

Bad loans came mainly from the small and medium enterprises (SME), agriculture and retail (mostly personal loan) segments.

Due to the almost 100 basis points rise in the US treasury yields during the reporting quarter, SBI had to provide Rs 531 crore to cover depreciation in its international investment portfolio, comprising mainly investment in overseas bond issuances of Indian companies and banks. With the average longevity in the country increasing from 76 to 81 years (according to the revised mortality table based on Life Insurance Corporation of India data), the provision towards pension liability for the bank’s employees jumped 109 per cent to Rs 1,003 crore (Rs 481 crore).

SBI reported a marginal increase in net interest income (interest earned on loans and investments less interest paid on deposits) at Rs 11,512 crore (Rs 11,125 crore).

Non-interest income, comprising loan processing charges, commission on letters of credit/bank guarantees and foreign exchange operations, increased by 28 per cent to Rs 4,474 crore (Rs 3,493 crore).

Loan loss provision was lower at Rs 2,266 crore (Rs 2,790 crore).

Pratip Chaudhuri, Chairman, SBI, said: “The results this quarter have been pulled down by two negative features — one is the Rs 500-crore provisioning on our international book due to interest rate movement (the effect of tapering quantitative easing in the US), and the other being about Rs 700 crore additional provisioning required for pension obligation….This quarter, the NPAs, particularly in retail, SMEs and agriculture, surprisingly, have grown sizeably. Of course, we are making efforts to contain them.”

The SBI chief said his bank continues to maintain a good low-cost CASA (current account, savings bank) ratio at 44.67 per cent (46.14 per cent).

“The bank’s cost of funding remains the lowest in the industry and, therefore, it continues to have the ability to attract the best risk on its books. We have also changed tack slightly. We are going in for long-term assets of the highest quality,” he said.

“The bank is currently sitting on extra liquidity of about Rs 60,000-70,000 crore…. Therefore, we are positioning ourselves with this as the USP that we continue to fund the best-rated companies at an optimal rate (interest),” Chaudhuri added.

He said the bank will persist with the full-year net interest margin (domestic operations) projection of 3.50-3.60 per cent against 3.44 per cent in the April-June quarter.

SBI shares closed at Rs 1,604.80 per share, down 3.41 per cent, on the BSE.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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Yes Bank case: Madhu Kapur to continue legal battle

Madhu Kapur, co-promoter in Yes Bank, will continue to pursue the legal battle against the bank seeking participatory rights in the nomination of directors on the bank’s board.

Lawyers of Madhu Kapur, widow of Yes Bank co-founder Ashok Kapur, today replied to the Bombay High Court on the possibility of an out-of-court settlement of the over two-month-old legal family dispute.

Madhu Kapur’s sister, Bindu Kapoor, is married to Yes Bank’s current CEO and Managing Director, Rana Kapoor.

Madhu Kapur moved court in June seeking rights to nominate directors as an Indian Partner on the board. Kapur has challenged the appointment of three directors Diwan Arun Nanada, Ravish Chopra and M. R. Srinivasan. However, Yes Bank and its CEO and Managing Director Rana Kapoor have refused to accept her demands citing the Articles of Association of the bank that restrict the rights to the Indian Partner only (and not his/her successors).

The bank had also rejected nomination of Madhu Kapur’s daughter Shagun Gogia as an independent director on the grounds of not meeting the Reserve Bank of India’s guidelines, maintaining the rejection was purely professional. However, Madhu Kapur has contested the rejection.

On July 15, the High Court accepted an amended petition by Madhu Kapur that opposed the appointment of three directors to the Yes Bank board and seeking the right to nominate Shagun Gogia as a director.

Madhu Kapur’s lawyers, on July 29, filed an affidavit that also raised corporate governance issues at Yes Bank in the recent appointment of three more directors on its board. They said the appointment of all six directors is illegal.

However, the bank has maintained that it is professionally run and further under the Banking Regulation’s Act, no court can question a board’s decision.

The case was partly heard today from the Madhu Kapur's side. The next hearing is on Tuesday.

Beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Deutsche Bank aims to double India income

German lender Deutsche Bank plans to double its revenue from India operations by scaling up its transaction and retail banking business in the country. The bank had reported a 25% rise in yearly profits from India operations, helped by increased lending in its retail and wholesale businesses. Its net profit for the year ended March rose to Rs 1,033 crore, driven largely by a 78% growth in loans. During the year, Deutsche Bank increased its capital in India by over Rs 1,060 crore, the sixth infusion since 2007.

"We will significantly scale up our transaction banking businesses by doubling it over the next three years," said Ravneet Gill, chief executive of Deutsche Bank's India operations. "We will continue to invest into our retail bank, which is being built around mortgage and business banking."

Source: EconomicTimes

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Syndicate Bank to open 100 branches in AP

Syndicate Bank will open hundred branches in the State by the end of this year including 10 in the twin cities, according to its Chairman and Managing Director Sudhir Kumar Jain.

Speaking to newspersons here, Jain has said that his bank had 431 branches and 134 ATMs besides 251 ultra small branches in the State.

“We have an ambitious plan of reaching a business of Rs 40,000 crore in this State from Rs 31,613 crore. We are also pioneers in linking of Aadhar numbers with bank accounts,’’ he said.

Out of about 1.08 lakh beneficiaries, 97,816 accounts were already linked with Aadhar, he said.

Source: thehindubusinessline

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Telangana formation hits SBI’s merger plans

The proposed creation of Telangana State has thrown a spanner in State Bank of India’s plans for merger of its largest associate, State Bank of Hyderabad, with itself.

SBI Chairman Pratip Chaudhury had earlier indicated that a decision on merging one of its associate banks would be taken after July.

“An internal committee to evaluate the possible candidate for merger has been appointed and it is expected to submit its report anytime now,” a top executive of SBI told Business Line.

Top performer

The merger of State Bank of Hyderabad (SBH), which tops the five associate banks in performance, with its parent has been under active consideration for long.

As it is 100 per cent owned by SBI along with State Bank of Patiala, the merger process would be easier and would not involve any share acquisition from outside.

“However, Telangana State will change the operational dynamics of SBI in terms of branches and overlapping which needs to be looked into.

“Hence, SBH would miss the chances of merger this time,” the executive said.

Harshavardhan, General Secretary of SBH staff association and Associate Banks’ employee association, also hinted that the merger could be delayed.

When asked on the SBH staff reaction, he said, “There are multiple angles to this. Our support to merger anytime would depend on what SBI is ready to offer to the employees.”

PARAMETERS

The general parameters to be considered for merger are advantage in the branch location/number and higher percentage of controlling stake, among others.

SBI’s stake in five associate banks now ranges from 75 per cent to 100 per cent.

The bank now is likely to consider merger of either State Bank of Patiala (SBP) or State Bank of Bikaner and Jaipur (SBBJ) which has limited shares under public holding, if it puts off SBH merger for now.

A 100 per cent stake in SBP and absence of local head office for SBI in Rajasthan might work in favour of the merger.

Further, according to sources, the Finance Ministry appears to be now tilted towards a merger with SBBJ.

Though the final outcome remains to be seen, Telangana State has, for the time being, deprived SBI of an easy target for merger. All indications are that it is going to be on the back-burner for sometime.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Syndicate Bank eyes 16% credit growth this fiscal

Syndicate Bank is expecting credit to grow at 15-16 per cent this fiscal, and a net interest margin of about 2.80 per cent.

“The credit growth situation is not very optimistic for banks. But we will be able to maintain this level of growth,” Sudhir Kumar Jain, Chairman and Managing Director, Syndicate Bank, told newspersons here.

As there has been no demand from corporate sector for loans, the focus would be on the priority sector, micro, small and medium enterprises, and the mid-corporate and retail segments, he added.

To improve the asset quality by recovering non-performing loans, the Bangalore-based bank has formed teams to recover small loans that are under stress. “Most of the NPAs are small and around Rs 10 lakh. It will be easy to recover them. We have activated an entire branch network in this regard,” Jain said. In the first month of the second quarter, bank recovered Rs 300 crore with this special drive.

CAPITAL

To ensure compliance to new capital adequacy under Basel III norms, Syndicate Bank has requested the Government for a capital infusion of Rs 1,830 crore in the current financial year.

“We are largely comfortable, but sought the infusion assuming 20 per cent business growth,” Jain said.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Bank licence: RBI to set up panel for screening of applications

The Reserve Bank will soon set up a high-level panel of eminent experts from the banking and financial sector to screen applications of 26 aspirants for new banking licences.

The High Level Advisory Committee (HLAC) will not have any members from the RBI but will comprise of eminent persons with experience in banking, financial sector and other relevant areas, sources said.

It is expected that the member of this panel would be drawn from the other financial regulators like IIRDA, SEBI, PFRDA. Besides, some top officials from the government may also be invited to join the committee.

In the 2001 round of guidelines for the new licences, the then-HLAC members were C G Somiah former CAG, I G Patel, former RBI Governor and Dipankar Basu former head of State Bank of India.

RBI, sources said, is currently screening the prima facie eligibility of the applicants including ’fit and proper’ criteria and other relevant parameters.

As RBI is continuing its scrutiny process, there will be change of guard at the central bank with Raghuram Rajan taking over as 23rd Governor on September 5. He will succeed the incumbent D Subbarao.

After the screening applications by the RBI they will be referred to the high level panel for their scrutiny. The panel will have its own procedures for screening the applications.

The Committee will reserve the right to call for more information as well as have discussions with any applicants and seek clarification on any issue as may be required by it.

The Committee will submit its recommendations to RBI for consideration.

However, the decision to issue an in-principle approval for setting up of a bank will be taken by RBI.

In the last 20 years, the RBI licensed 12 banks in the private sector. This happened in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993.

The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks, and fresh applications were invited.

Kotak Mahindra Bank and Yes Bank were the last two entities to get banking licenses from RBI in 2003-04.

Tata Sons, India’s biggest business group, and firms controlled by billionaires Anil Ambani and Kumar Mangalam Birla are among the 26 companies applied for a licence to open banks last month.

Among public sector entities, India Post and IFCI have submitted applications for bank licences. Micro finance institutions like Bandhan Financial Services, Janalakshmi Financial too expressed their intention to set up a bank.

The RBI had issued guidelines for ‘Licensing of New Banks in the Private Sector’ on February 22 and came out with clarifications in the first week of June.

Source: thehindubusinessline

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HSBC India profit dips in first half; customer accounts see over $500 m plunge

UK-based global banking giant HSBC has seen its first-half profit from India business falling to $ 414 million in 2013, amid a decline of over $ 500 million in customer accounts since the beginning of this year.

According to the bank’s interim financial report, its customer accounts balance in India fell to $9.85 billion as on June 30, from $10.41 billion at the beginning of 2013.

While the bank did not specify any reason for the decline in customer accounts, it said that the profits from India fell to $414 million in the first half of 2013, from $515 million in the same period last year.

The bank also said it is cooperating with US authorities with respect to a probe into suspected violations of tax laws involving US-based clients of an HSBC company in India.

“In April 2011, HSBC Bank US received a summons from the US Internal Revenue Service directing HSBC Bank USA to produce records with respect to US-based clients of an HSBC company in India.

“HSBC Bank USA has cooperated fully by providing responsive documents in its possession in the US to the US Internal Revenue Service,” the global banking major said.

HSBC’s global banking and markets business contributed more than half of the profits in India at $ 255 million, while retail banking and wealth management segment posted a small loss of $ one million in the first half of 2013.

In the first half of 2012, the bank had posted a profit of $ 35 million in retail banking and wealth management segment, while global banking and markets segment had also registered a higher profit of $ 306 million.

Its loans and advances to customers, however, rose to $ 6.8 billion in the first half of 2013, from $ 6.7 billion in the same period last year.

The bank said it continues to leverage its distinctive international network and business model, through offerings like providing “advisory services to multinational corporates, helping them enhance their stakes in locally-listed subsidiaries in India”.

Overall, HSBC has reported a profit before tax of $ 14.1 billion, an increase of 10 per cent, for the first half of 2013. Its revenue, however, fell by 7 per cent to $ 34.4 billion. London-based HSBC is present across 80 countries including India and has been one of the biggest foreign banks present in the country.

Source: thehindubusinessline

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