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Saturday, August 31, 2013

RBI plans to request Tirupati, Shirdi shrines to sell their gold pile to rescue Re fall

With all efforts to arrest the rupee's slide coming to a naught, policymakers now plan to knock on the doors of temples — from Tirupati to Shirdi — seeking a boon to feed Indians' fetish for gold without importing it.

The Reserve Bank of India, which has been making gold imports more difficult through a series of restrictions, is discussing with banks on how to convince temple trusts to deposit their hoard of idle jewellery that could be converted into bullion, said two bankers familiar with the matter.

They refused to be identified because of the sensitive nature of the issue. The Tirupati temple in Andhra Pradesh, Shirdi Sai Baba temple in Maharashtra, Siddhivinayak at Mumbai and Padmanabhaswamy temple in Thiruvananthapuram are among the richest in India with huge reserves of gold and precious metals.

In fact, the roofs of many temples, such as the Nataraja temple in Chidambaram, Tamil Nadu, and Tirupati are covered with gold. RBI is counting on banks handling the accounts of these temple trusts to convince them to convert their huge gold deposits into cash, the bankers said.

No certainty of any deal

But there is no certainty of any deal with the temple trusts, given the diverse nature of these trusts and the local politics involved. "The idea is that a designated bank may buy gold from a temple trust and the ornaments will be converted into bullion. These may be bought by RBI by selling rupees," said one of the bankers quoted above. RBI did not respond to an email seeking comment.

Gold imports worth $53.6 billion last year are blamed for the rupee's slide, accounting for 61% of the current account deficit in fiscal 2013. Although the government and RBI acknowledged that high inflation provoked investors to chase gold, both have of late been trying to discourage imports of the precious metal. The rupee lost nearly a quarter of its value this year, but has since recovered.

"The finance minister and RBI governor should jointly — and immediately — approach the trustees of Tirumala Tirupati Devasthanams (TTD)," said Jamal Mecklai, chief executive of Mecklai Financial. "Three of these (trustees) are state government appointees, and given the current political dispensation this is a distinct advantage. They should, of course, offer prayers. That will be an opportunity for the hugely rich trusts to make additional amounts of money."

Tirupati is among the world's richest temples with an estimated gold hoard of about 1,000 tonnes, nearly double of India's estimated imports this year. The country, as a whole, is estimated to have a gold stock of 18,000-30,000 tonnes. The temple trusts, however, do not seem inclined towards such a plan, at least for now.

"There are no plans to do such a thing. There have no discussions with RBI," said a spokesman at TTD. Some banks run gold deposit schemes where individuals deposit the yellow metal for 3-7 years.

Source: EconomicTimes
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Friday, August 30, 2013

IRDA has complete autonomy to supervise insurers: Vijayan

The Insurance Regulatory and Development Authority has dismissed an observation made in a World Bank-International Monetary Fund study that the regulator was not adequately independent.

IRDA would like to assert that there is complete autonomy with regard to supervision and regulation of insurance sector in general and insurance companies and intermediaries in particular,” IRDA chief T.S. Vijayan said in a statement.

The enforcement powers are being strengthened in the proposed Insurance Laws (Amendment) Bill, he added.

He expressed satisfaction on the present risk-mitigation system given the high-level of solvency at 150 per cent required to be maintained by insurers at all times.

However, with a view to facilitating a risk-based oversight, IRDA is looking at putting in place an early warning system (EWS) for the systemically important insurance groups, and is working closely with other regulators in the financial sector, Vijayan said. Similarly, there was dilution on the regulatory oversight of the Life Insurance Corporation as claimed by the report, he added. His statement came in response to a report by the global financial entities, which said the insurance regulator in India does not have modern risk-based EWSs in place to ensure the health of the insurance industry. In a detailed assessment report on core principles of the Indian insurance sector, the two financial entities have made many adverse comments. The ratios that were being measured (pertaining to solvency margins, etc.) appear to be largely generic rather than based on emerging experience, the report said, adding, “It is of a concern that IRDA does not have a direct role when insurers engage in capital management, such as buy-backs. This should be rectified…”

The enforcement actions and sanctions open to IRDA tend to be at the extremes — relatively light or very heavy. Incidentally, IRDA has recently stepped up its inspections and has been imposing a spate of penalties for violations. But, these financial sanctions available to the regulator in particular were outdated and needed to be more relevant to the modern scale of insurers and impact of inflation. Further, work needs to be done on the monitoring of operational and general risks in insurance, it said.


The report said IRDA is not completely independent as a supervisory authority in view of the current uncertainty regarding control of its funding and budget, its incomplete oversight of Life Insurance Corporation of India and the reserve powers of the central government “potentially detract from the supervisors’ powers and independence.” A maximum timeframe should be specified for the regulator to respond to various applications, it added.

The report is the first of its kind by independent assessors and is aimed at examining adherence to the Insurance Core Principles of the International Association of Insurance Supervisors.

Source: thehindubusinessline
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Syndicate Bank workmen employee director

Syndicate Bank has appointed Sankaran Bhaskar Iyer as workmen employee director on the board of directors for three years from the date of his taking over charge of the post on or after August 31.

Source: thehindubusinessline
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With Federal Bank’s e-passbook, see transaction details on smartphones

Federal Bank has launched an electronic passbook that allows customers to view their transaction details on the smart phone.

Said to be the first by a bank, FedBook is an electronic edition of the conventional bank passbook. The app is for free and is available on the android platform.

“The Windows and IOS versions will be available in October,” A. Surendran, head of retail and international operations of Federal Bank, told a news conference here on Friday.

FedBook will make banking handier for our customers,” he said. “It’s a value addition to the mobile-based banking.”

The password-protected facility would allow customers to view all their transactions real time — both online and offline. The account holder can customise it too — for instance, if he wants to view the updates of transactions every hour, he can set it that way. As of now, the transaction history of three months is available on FedBook.

However, Surendran said, unlike in Net banking, the customer cannot make any transactions. FedBook provides several customer-friendly utilities such as filtering specific transactions. With the FedBook in place, a customer need not visit his bank branch to check his transactions and the facility is highly useful for NRI customers.


Surendran said the fall in the value of the rupee has increased foreign remittances through the Federal Bank remittance engine, by more than 25 per cent. Already, in just five months, remittances have grossed about 75 per cent of the remittances in the year 2012-13. Last year’s total remittances through the bank totalled Rs 28,000 crore, he said.

Surendran claimed that 25 per cent of foreign remittances to Kerala were through Federal Bank.

Source: thehindubusinessline
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Thursday, August 29, 2013

Kotak Mahindra Bank to hire 2,000 this fiscal

Kotak Mahindra Bank would hire about 1,500-2,000 people this fiscal.

“This is in keeping with the bank’s branch expansion proposal. We intend to add 100 new branches to our network to take the tally to 550 by the end of this fiscal. We will hire 12-15 candidates a branch,” said Virat Diwanji, Executive Vice-President and Head – Branch Banking, Kotak Mahindra Bank.

“We recruit freshers off-campus and also experienced ones from the industry,” he added.

To a query on attrition, he conceded that it was quite high at 20-25 per cent at the entry level or front-end staff. “The initial six months is a testing period. If they overcome this period, they manage quite comfortably. The attrition rate at the higher level is only in single digit.”

The bank primarily focuses on expanding its presence in the semi-urban and urban locations. “We do have branches in rural pockets. The challenge is in establishing our presence in unbanked locations,” he said.

He conceded that KMB always targeted the mass affluent customers

Source: thehindubusinessline
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New CGM for Karnataka Bank

Karnataka Bank Ltd has promoted its General Manager, M. S. Mahabaleshwara Bhat, as its Chief General Manager.

According to a press release here on Thursday, Bhat, a post-graduate in agricultural sciences, has over 29 years of banking experience both at the operational and administrative levels.

It said Bhat has experience in administration of agriculture and rural credit, retail, MSME and corporate finance, forex business, corporate planning and development and business process reengineering.

Bhat, who did his masters in Agricultural Sciences (M.Sc. Agri) from the University of Agricultural Sciences, Bangalore, is also a Certified Associate of the Indian Institute of Bankers (CAIIB), the release added.

Source: thehindubusinessline
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IRDA may allow health policies to run for 5 years

To improve the health portfolio of insurance companies as well as to ease the process of renewal of these policies, insurance regulator IRDA is considering a proposal to allow five-year policies.

Under the present health insurance regulations, general insurance companies can offer renewals only up to three years. Most policies, however, are for a year. General and standalone health insurance companies have been asking IRDA for permission to offer longer-term products.

This is especially because these policies are small-ticket items, with premiums ranging between Rs 5,000 and Rs 20,000 a policy.

A senior official of the Insurance Regulatory and Development Authority said a sub-group was formed to work on the proposal. “We are working on the underwriting and pricing parameters for it,” he said.

A long-term policy is beneficial for customers because the renewal will be guaranteed and less cumbersome for customers, said industry experts. For insurance companies, customer acquisition, printing and issuing of policies are big one-time costs. For customers, long-term policies offer better value as insurers propose to price them lower by factoring in the no-claims discount into the premiums. Also, a long-term policy reduces the possibility of it lapsing.

Rising costs

According to V. Jagannathan, Chairman and Managing Director, Star Health Insurance, “The advantage in having a longer term policy is that the commitment of the insurer is locked in for five years. However, for health insurance companies most claims come in the third or fourth year, so we will have to study the pricing mechanism before coming out with such policies.”

General insurance companies are not very enthusiastic about offering the same premium rate for five years, considering the rising medical costs. There are some practical difficulties, too.

Antony Jacob, CEO of Apollo Munich Health Insurance Company, points out that an amendment to Section 80D of the Income Tax Act would be required for such policies to be rolled out. Currently, the exemption given is only for the premium paid annually from the current year’s income.

Source: thehindubusinessline
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IOB seeks Rs 2,100 cr capital infusion from Centre

Indian Overseas Bank (IOB) has sought capital support of Rs 2,100 crore from the government for enhancing its capital base.

“We have requested government to infuse Rs 2,100 crore so that our Tier-I capital reaches 8 per cent,” IOB Chairman and Managing Director M Narendra told PTI.

Tier-I capital or the equity capital of the bank stood at 7.80 per cent at the end of March 2013.

As of March 2013, the total capital funds of the bank stood at Rs 18,366 crore due to allotment of preferential shares to the government of India.

The bank got Rs 1,000 crore from the government last fiscal as part of recapitalisation package.

Earlier this year, Finance Minister P Chidambaram had said all public sector banks are meeting Basel III requirements for capitalisation, though four of them - Indian Overseas Bank, IDBI Bank, Bank of Maharashtra and Dena Bank - have Tier-1 capital below 8 per cent.

The government will take steps to ensure that these banks have 8 per cent Tier-1 capital by the end of the current fiscal year, Chidambaram had said.

Other lenders like Punjab National Bank have sought Rs 1,500 crore capital infusion by the government while Chennai-based Canara Bank has sought Rs 1,000 crore during the current fiscal.

Source: thehindubusinessline
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Tuesday, August 27, 2013

Kotak Bank plans more branches

Kotak Mahindra Bank, which has six branches in Kerala, will open more branches in the State in the near future, says its Executive Vice-President Virat Diwanji.

He told a news conference, where the bank’s new product – Kotak Junior aimed at teenagers – was launched, that NRIs made up a huge chunk of its customer base in Kerala.

“About 40 to 45 per cent of our business here involves NRIs,” he said. More branches would mean better service to them too, he said. He said Kotak Junior would foster the savings habit of children below 18 years.

Child customers above 10 years could opt for debit cards, but there would be a ceiling of Rs 5,000 on withdrawals.

There is also a 10-year recurring deposit for children.

Source: thehindubusinessline
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Federal Bank seeks FIPB nod to raise shareholding limit

After Axis Bank, Kerala-based old private lender Federal Bank has approached the Foreign Investment Promotion Board (FIPB) to increase its foreign shareholding limit to 65 per cent.

The bank had crossed its limit of 49 per cent foreign shareholding and received a notice from the Reserve Bank of India.

“This is with reference to the press release issued by RBI on August 20, 2013 notifying that the foreign shareholding through FII/ NRI/ PIO/ FDI/ ADR/ GDRs in Federal Bank has crossed the overall limit of 49 per cent of its paid-up capital and that no further purchase of shares of the bank would be allowed in the bank on behalf of FII/ NRI/ PIOs,” Federal Bank said in a statement.

Axis Bank had last week filed an application with the FIPB to increase its limit to 62 per cent after the RBI issued a similar notice to the bank earlier this month.

Source: thehindubusinessline
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Canara Bank sees 17-18% growth in loan

Canara Bank is confident of seeing better credit off-take than the national average during the current fiscal.

R.K. Dubey, CMD of Canara Bank, told Business Line that the bank may see 17-18 per cent growth in its total loan book this fiscal against the current national average of 16 per cent. In the previous fiscal, the bank's credit growth was at 16.4 per cent while the industry average was at 14.9 per cent.

Agriculture, MSME sector and retail loan portfolio of the bank is likely to increase significantly, at around 35 per cent, he said. Dubey was here for the FICCI organised Banking Conclave.

However, he indicated loans to infrastructure sector would be selective and continue to be subjected to the rigorous due diligence.

The infrastructure loan book of the bank is unlikely to grow beyond 10 per cent. Corporate sector loans too may grow at a relatively slower pace at 12-15 per cent.

Good monsoon

“This year’s good monsoon has given a comfort level to lend and recover. Since April, we have seen credit growth to agriculture sector of 42 per cent. Through the year, we expect to reach an overall growth of around 35 per cent,” he said. The bank, which has 54 per cent of its branch network in the southern region, is specially focussing on villages and small towns as well as agriculture and MSME sectors.

Bank’s NRI/NRE deposits, particularly in Kerala, have been growing at a faster clip at 30 per cent in the past four months, Dubey said. He said the bank decided to raise the interest rate for NRI accounts.

Dubey said the experiment with “relationship banking” in the past few quarters has yielded substantial recovery from NPAs, which stand at 3 per cent. “The recovery in Q1FY14 (Rs 888 crore) reconfirmed the belief that borrowers, particularly retail borrowers, do not intend to default. Understanding the situation, minimum sacrifice and adjustments has been the key to our recovery effort. We are restructuring or rescheduling education loans. This portfolio NPA worth Rs 362 crore was expected to come down to Rs 100 crore this year through negotiations with students or parents,” he explained.

Source: thehindubusinessline
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Syndicate Bank branch shifted

Syndicate Bank’s Marine House branch in Kolkata has shifted to a new spacious premise in the same building on Monday. According to a press release, the new premise of the branch was inaugurated by Ravi Chatterjee, Executive Director, and M. P. Nagpal, Regional Manager. On the occasion, Chatterjee highlighted the bank’s performance in the eastern region and talked about the customer friendly retail deposits and loan schemes launched by the bank.

Source: thehindubusinessline
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Post-offices in makeover mode to woo youth

“This almost looks like a plush branch of a private bank.” This is how Yellapragada Rajasekhar, a 24-year-old techie with TCS, reacted on entering a new-generation post-office inaugurated recently here.

This is not an isolated case any longer.

After banks, age-old post-offices are now racing to attract the younger generation with a modern ambience.

Across the country, many offices that have not even been whitewashed for decades are now being refurbished.

“We have renovated 2,515 post-offices as on date, spending Rs 314 crore. The objective behind revamping is to connect with the younger generation,” a top executive at India Post headquarters in New Delhi told Business Line over the phone.

More space for customers and staff, single-window counters and modernised mail sorting counters at the back-office are some of the upgrades you will find.

The postal department has drawn up a plan to give another 2,500 post-offices a facelift; 20 per cent of these will be in rural areas.

The department has already got Rs 210 crore approved for this. Launched earlier under ‘Project Arrow’, the upgradation is now gaining momentum in different States.

Not just looks but the process too is being modernised.

Like the core banking solution in banks, 18,600 post-offices are being brought under a central server.

“Apart from ATMs, we will soon be rolling out online booking of speed post/ parcel,” the official said, and added that Rs 4,800 crore has been earmarked for computerisation. Recently, an external audit commissioned by the department has shown 98 per cent customer satisfaction following the upgradations, the official said.

The senior citizens too are happy. “I have been visiting the same office for 30 years now and only saw a post-master endlessly updating passbooks and stamping. The makeover should have come long back,” said V. Venkatachari, a retired bank official.

Given the vast network of post-offices, the task appears to be Herculean. Introduced by the British, there are 1,54,822 post-offices in the country, the largest network in the world. It remains to be seen how this makeover can be undertaken in all the offices.

Source: thehindubusinessline
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Sunday, August 25, 2013

SBI, PNB among five PSU banks charging customers for SMS alerts

Five public sector banks, including SBI and PNB, charge customers for SMS alerts even though the Reserve Bank of India (RBI) hasn't issued any guidelines in this regard.

"As per information received from public sector banks, IDBI Bank, Punjab National Bank, State Bank of India, State Bank of Patiala and Vijaya Bank are currently charging their customers for SMS alerts," Finance Minister P Chidambaram said in a written reply in the Lok Sabha today.

In March 2011, the RBI had issued guidelines for banks to send online alerts to customers for all types of transactions, irrespective of the amount, involving the usage of cards.

"RBI has reported that it has not issued any guideline on charging by banks for providing these alerts to their customers," the Minister said.

He also said "no proposal is under consideration of the government to withdraw the charges levied by banks, for this purpose."

Chidambaram said it is not compulsory for an account holder to provide a mobile number. If the mobile number is given and the customer wants SMS facility, the bank provides the alerts.

While SBI started charging for SMS alerts in April, PNB and SBP imposed it from July. The other two PSU banks have been levying a fee for alerts for the past few years.

Replying to another query, Minister of State for Finance Namo Narain Meena said eight PSU banks, including SBI, IDBI Bank and Bank of India, were found to have diluted their holding in the Industrial Finance Corporation of India (IFCI).

The organisations were advised to fix responsibility for the stake dilution in IFCI, against the government's directives, Meena said.

IDBI Bank has been asked to seek explanations from all officers involved in the decision to dilute its holding in IFCI, he said.

The shareholding of government institutions in IFCI needs to be maintained at a level above 51 per cent.

Source: EconomicTimes
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United Bank of India to open 1,000 ATMs in FY'14

State-owned United Bank of India said it plans to open 1,000 ATMs and about 250 branches in the current fiscal to increase its delivery channel.

"We intend to open 1,000 ATMs and 270 branches during the financial year," United Bank of India Chairperson and Managing Director Archana Bhargava told PTI.

The bank has CASA (current account and savings account) ratio of 40 per cent, she said, adding it is one of the highest among the banking sector.

With regard to total business, she said, the bank has set a target of Rs 2 lakh crore by the end of the current fiscal.

The business mix has already touched Rs 1.81 lakh crore by the end of June quarter, she added.

Asked about the capital raising plan, she said, the bank has submitted proposal to the government for capital infusion for the current fiscal.

She, however, did not disclose amount which has been sought from the government.

The bank has recently raised Rs 500 crore from Tier II bonds issued to Life Insurance Corporation, she said, adding, this is eligible under Basel III requirement.

Source: EconomicTimes
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Your bank charges you for SMS alerts

Did you know that your bank is debiting money from your account for providing SMS alerts? If you didn't, it's time you checked the last bank statement or the passbook.

Banks, led by State Bank of India, ICICI Bank and Axis Bank, are charging Rs 60 annually to send text messages about cash withdrawals and other facilities. Others such as Canara Bank are charging more than Rs 100, while HDFC Bank said they were levying a Rs 60 fee only for "special alerts" such as bounced cheques, salary credits or the balance going below a specified level. Besides, the service was optional, it said. IDBI Bank and Vijaya Bank have excluded savings bank accounts from the paid SMS alert service.

Finance minister P Chidambaram told Parliament on Friday that there were five public sector banks that were charging for SMS alerts. But enquiries by TOI showed that it isn't just the state-run players, even private banks such as ICICI and HDFC were charging customers.

While most banks have shifted to a paid SMS alert system only this year, others like IDBI and Vijaya Bank passed on the cost to customers as far back as 2010-11. In fact, the finance minister told Parliament that in 2010-11, IDBI Bank collected more than Rs 1 crore through SMS alerts, while Vijaya Bank received nearly Rs 30 lakh last fiscal.

In March 2011, the Reserve Bank of India had asked banks to send online alerts to customers for all transactions, but left it to banks whether or not to charge for it. Chidambaram said the government was not considering a proposal to withdraw the charge.

An executive at a private sector lender said his bank began charging for SMS alerts as mobile operators raised the fee for bulk message from 2 paise per SMS to 20 paise, making a free service "unviable". Banks said they had sent out a message saying that the service would be charged but most consumers either ignored the SMS or did not respond — which was seen as a yes to being charged for alerts.

Source: EconomicTimes
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