IndusInd Bank may raise $300 million from overseas investors

IndusInd Bank, the fourth biggest private sector lender, may raise as much as $300 million from overseas investors, exploiting the Reserve Bank of India's window of attractive swap options.

The easing of rates in the dollar market after the Federal Reserve made a U-turn on tapering of bond purchases earlier this month, has made borrowings in overseas market attractive.

Furthermore, the flexibility to raise even one-year funds to avail the swap options has made banks believe that the risk is lower as a minimum three-year borrowing as stipulated has been done away with. "Now the tenure of the borrowing and the hedge will match," said Romesh Sobti, MD and CEO, IndusInd Bank. "Earlier, the norms specified that while the borrowing was for three years, the hedge would be available only in the first year."

The Reserve Bank of India on Wednesday reduced the minimum tenor of fund raising to one year since banks were reluctant to take funds for a longer tenor when the demand for funds remain uncertain. Also, the fall in yields of 20 to 40 bps since May 18 when Fed decided not to taper, has boosted sentiment.

RBI governor Raghuram Rajan had doubled banks' limit to borrow overseas as he attempted to shore up reserves to prevent a currency crisis. The rupee was on a free fall as foreign investors pulled out 68,738 crore from Indian bonds and stocks.

Borrowing overseas makes a lot more sense since the yields in the local market have shot up after Rajan raised the repo rate, the rate at which RBI lends to banks, by 25 basis points on September 20. One-year money in the domestic market comes at 9.50% while the all inclusive cost of borrowing under this window is around 8.50%.

Other banks, including ICICI Bank, HDFC Bank and Axis Bank, are also talking to investment bankers to finalise fund raising, which is expected to raise at least $5 billion. HDFC Bank may raise as much as $750 million, said a person familiar with the negotiations. The confluence of falling yields in the international market, and rising yields in the Indian markets are making borrowing overseas attractive.

"We have already borrowed around $800 million of debt. We don't mind raising as much as $300 million. We are in talks with banks. There is a clear cost advantage of about 100 to 150 basis points,'' said Sobti.

Source: Economic Times

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Raghuram Rajan awarded Deutsche Bank Prize

The Reserve Bank of India Governor, Raghuram G. Rajan, has been awarded the Fifth Deutsche Bank Prize for Financial Economics 2013, in recognition of his ground-breaking research work which influenced financial and macro-economic policies around the world.

The academic prize is sponsored by the Deutsche Bank Donation Fund and carries an endowment of euro 50,000. The Centre for Financial Studies (CFS) awards the prize bi-annually in partnership with Goethe University Frankfurt.

Presenting the prize to Rajan, Deutsche Bank co-chairman Juergen Fitschen has said that it would have been hard to find a more deserving winner for this year’s award.

Rajan’s career “is not only marked by path-breaking, empirically-based research, but he never shied away from the real world of complex policy issues and special interests. He never shied away from speaking inconvenient truths,” Fitschen said.

He noted that Rajan had in 2005 warned about the dangers of building up “unsustainable imbalances in the financial system,” three years ahead of global financial crisis.

“Prof. Rajan’s work revealed that the relationship between the financial sector and the rest of the economy is so complex that it is not good enough to simply look at the size of the financial sector in relation to the gross domestic product, as is done so often at present,” Fitschen said.

He had also “warned us about the dangers of using or rather misusing” financial regulations and financial systems for purposes other than their original objectives, for example, for safeguarding stability or fostering growth, the Deutsche Bank co—CEO said.

The housing bubble in the United States, which triggered the financial crisis in 2008, had highlighted the danger of using the financial system to make up for the failures in social policies.

Jury chairman and director of the Centre for Financial Studies Michael Heliassos said the organisers are quite pleased to welcome Rajan in his new capacity as the RBI governor.

Rajan was picked for the prize from more than 260 nominations from top universities, central banks and research centres in 37 countries. More than half the nominations came from the US.

Source: thehindubusinessline

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Insurers can invest in India Infra debt NCD issue: IRDA

Insurers can invest in the Rs 500-crore non-convertible debenture (NCD) issue of India Infradebt Ltd.

The Insurance Regulatory and Development Authority (IRDA) on Thursday said this issue could be reckoned as an investment in the infrastructure sector.

The decision of the regulator came after an application by India Infradebt seeking approval of the former to recognise the NCD issue as investment in the infra sector.

IRDA, in the amendment to the IRDA (Investment) Regulation, 2000, notified in February this year, stipulated that investments in infrastructure debt funds backed by the Central Government shall be reckoned as infrastructure investment on a case-to-case basis.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Vijaya Bank opens 10 branches in Mandya

As a step to strengthen financial inclusion (FI) in Mandya district, Vijaya Bank has opened 10 FI branches by upgrading the ultra small branches.

Vijaya Bank has been active in FI, especially in direct benefit transfer and electronic benefit transfer programmes of the Centre. The bank has so far covered 3,319 villages in the country under the above programmes through 330 rural brick-and-mortar branches and 669 business correspondent and ultra small branches.

Speaking at the financial inclusion outreach programme organised by Vijaya Bank in Adichunchanagiri in Mandya district, RBI Deputy Governor K.C. Chakrabarty stressed on the need for the rural people to move towards formal financial mainstream so that the excluded sections of society could get the benefits of banking services.

He also emphasised the need for inculcating the habit of savings among the rural people and called upon them to get credit facilities from banks to improve their living standards. He also lauded the efforts of Vijaya Bank in bringing the hitherto deprived sections of society into banking fold.

In his inaugural address, H.S. Upendra Kamath, Chairman & Managing Director, Vijaya Bank, said, “With this, the bank has now 45 branches in the district. The bank at present covers 1,369 FI / electronic benefit transfer villages through 245 business correspondent agents in the district.”

The bank has been disbursing every month, social security pensions – widow pension, old age pension and physically handicapped pension – to the tune of Rs 4 crore a month to around one lakh beneficiaries through business correspondent agents / smart cards in the villages. The bank is continuously spreading financial literacy in the district through its FI Resource Centre and FI Literacy Centres, he added.

As a part of the outreach programme, the bank has also rolled out Aam Admi Bima Yojana, a social security micro-insurance scheme for the weaker section beneficiaries under tie-up with LIC of India covering 2,437 beneficiaries. Vijaya Bank has also rolled out micro recurring deposit scheme for the FI beneficiaries wherein monthly instalments are collected through the business correspondent agents of the bank.

anil.u@thehindu.co.in

Source: thehindubusinessline

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Ramachandra Rao reappointed MD & CEO of SKS Micro

The board of directors of SKS Microfinance reappointed M. Ramachandra Rao as the Managing Director and Chief Executive Officer for a further period of five years, the company said in a notice to the BSE.

The appointment, which is effective from October 4, 2013, is subject to review after three years.

The market is agog with speculation that Vikram Akula, the founder and ex-chairman of SKS Microfinance, would stage a comeback with the help of five mutual benefit trusts.

In response to SKS Trust Advisors Pvt Ltd and five mutual benefit trusts’ bid to seek a board seat, SKS Microfinance on Tuesday said that no shareholder has any right to nominate a director.

Hyderabad-based SKS Microfinance, in a notice to the BSE, said it has received a request for a seat on the board of directors from SKS Trust Advisors and five mutual benefit trusts.

Source: thehindubusinessline

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ICICI Bank Doha branch licence upgraded

The licence of ICICI Bank’s Doha branch has been upgraded to Category I by the Qatar Financial Centre Regulatory Authority (QFCRA).

With the upgraded licence, the branch, which has been operating since 2007, can now accept deposits and provide credit to business customers as per the QFCRA rules.

Treasury and Forex related activities are also permissible under the new licence, the bank said in a statement.

The above services are in addition to arranging of deals in investment for private banking clients which is currently offered under the Category IV licence.

Source: thehindubusinessline

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Circular on primary cooperatives was no directive, says Nabard

Decision on primary agricultural cooperatives functioning as business correspondents will be taken by cooperative banks, the State governments, primary societies themselves and stakeholders.

Neither a related Reserve Bank ‘permission’ nor a circular from National Bank for Agriculture and Rural Development (Nabard) need be viewed as a ‘directive’ in this context.

NEW OPPORTUNITY

Cooperative banks and primary societies should instead see the circular as an opportunity, according to latest Nabard circular dated September 6.

The circular is clarificatory in nature and a follow-up on the contentious predecessor of July 22 on the future role of primary agriculture cooperatives.

It had suggested that they become business correspondents of central cooperative banks or the State Cooperative Bank.

Assets arising out of all lending operations would stand transferred to the books of Central/State cooperative banks along with their related liabilities.

UNREST IN SECTOR

All deposits collected would be transferred too. Primary cooperatives shall not accept deposits on their own account and would not do any financial operations of any kind on its behalf.

In this manner, they would be gradually eased out from business as the bottom-most layer of the short-term cooperative credit structure.

The circular had stirred up the cooperative sector, more forcefully in Kerala where it has an entrenched base, with activists fearing closure of thousands of primary societies.

But Nabard now says the idea was to merely convey the approval of Reserve Bank and clarifications based on its permission for facilitation of primary societies and various cooperative banks.

FINANCIAL INCLUSION

Wherever central/State cooperative banks are fully computerised and are entirely on core banking, they may be allowed to use primary societies as business correspondents. This would help drive the larger financial inclusion programme.

It also recalled that Reserve Bank had already permitted commercial banks/regional rural banks to use the primary societies as business correspondents.

Transactions were to be done through information and communication technology devices integrated to the core banking solution of the bank and accounted on real-time basis.

The Reserve Bank permission is an opportunity for primary societies to play an enhanced role in the rural areas, which will help cooperatives to restore their predominant role in providing agricultural loans.

It will also help them meet the increased demand for agricultural credit and also related services, which will boost the rural economy, the circular added.

vinson.kurian@thehindu.co.in

Source: thehindubusinessline

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IRDA slaps fine on Punjab & Sind Bank

The Insurance Regulatory and Development Authority (IRDA) has imposed Rs 5 lakh penalty on Punjab & Sind Bank for violating the norms for corporate agencies.

In an order, the regulator said that the bank has received payments from Aviva Life Insurance Company Ltd as its corporate agent over and above the permissible level of commission in the form of rent for infrastructure and advertisement and publicity expenses, among others.

This was in violation of the regulation and hence the penalty was imposed, the order said.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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HDFC Bank raises rate on credit cards amid slump

HDFC Bank will charge 3.25% interest rate on credit cards from October, up from the current 3.05% and 3.15%, besides going slow on sourcing new customers in a tough macroeconomic environment.

"On certain cards, we were charging lower interest rates than the rest of the industry. Hence we have brought the rates on a par with the industry," said a senior official of HDFC Bank, India's leading issuer of credit cards and the country's second-largest private sector bank.

The bank has reduced its monthly sourcing of new customers from a peak of 100,000 to 65,000-70,000, the official added.

At June-end, HDFC Bank had a portfolio of 5.94 million credit cards, down from 6.56 million in May. Yet, it retained its position as the leading issuer of credit cards in the country, ahead of its rivals, including ICICI Bank, Citibank and Axis Bank.

"We decided to reduce the number of inactive cards. This is an ongoing process where banks churn their portfolio. We are being prudent and cherry-picking customers.

We continue to source good credit and get market share among the high net worth customers," said the official, who did not wish to be named, adding that the bank's portfolio was skewed towards middle and upper income individuals.

Most banks began shrinking their credit card portfolio in late 2008 after customers started defaulting on payments in the wake of the global credit crisis.

"There is a slowdown in the economy. This could lead to job losses in some sectors.

However, there is no evidence of it so far. In the medium term, there is a chance that credit card spends and outstanding on cards go up. We have to be watchful of the unsecured lending book," said the bank official.

The percentage of non-performing assets in the credit card portfolio of banks in the country almost tripled to 15-20% in 2009-10 from 5-8% in 2008-09. However, defaults are now down to below 5%. After the 2008 crisis, Deutsche Bank, Royal Bank of Scotland and Barclays exited the credit card business.

Source: EconomicTimes

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Citi raises 2014 Brent price outlook on supply worries

Citi Research raised its 2014 Brent price forecast to $108 per barrel from $99, citing the geopolitical turmoil in the Middle East and North Africa.

The research division of Citigroup said the geopolitics of the region will always matter for oil as the region is the source of 40 per cent of global oil supplies.

"Despite the bearishness of new crude capacity coming online and continued US supply growth, Citi expects the deteriorating state of much of the Middle East and the persistence of current supply disruptions to keep prices supported," Citi analysts said in a note.

"The state of affairs in the (Middle East and North Africa) region continues to worsen."

Current disruptions in Libya, Iran and Nigeria require complex structural change in order to permanently bring back offline barrels, according to the analysts.

The restarting of western Libyan oil fields might help the country's output reach 700,000 barrels per day (bpd) in the near term, but the deeply politicized strikes in the East show few signs of abating, keeping more than 800,000 bpd of crude capacity offline.

"A lack of military presence further inhibits political stability and absent a quick resolution, the situation could further deteriorate," analysts said.

The research division of Citigroup expects secular trends of international shale production, fuel conservation measures and natural gas-for-oil substitution to continue and likely be accelerated by higher oil prices.

Source: EconomicTimes

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RBI: Will take action including OMOs to ensure liquidity

The Reserve Bank of India on Wednesday assured the markets that it will take actions, including open market operations, to ensure adequate liquidity support in the system.

The central bank's assurance follows hardening of yields on government securities after governor Raghuram Rajan increased the repo rate, or the rate at which banks borrow from the RBI, by 25 basis points on Friday.

"Liquidity conditions have been tightening as reflected in the hardening of yields in the government securities market due to uncertainties around the government borrowing programme for the second half of 2013-14 as well as the prospective effects of banks' half-yearly account closure, the seasonal pick-up in credit demand, festival-related demand and sluggish deposit growth," the RBI said.

On Wednesday, the yield on the 10-year benchmark government bond 7.16% 2023 ended at 8.79% compared with previous close of 8.84%. The overnight call rate ended the day at 9.5% compared to its previous close of 9.48%.

The treasury head of a private sector bank said the RBI is not comfortable with the sudden spike in yields and hence its assurance to market.

"The increase in the reporate has not been well received by the market," the person said. "The central bank is also scheduled to conduct two government bond auctions. They want to soothe nervous."

Experts said the partial devolvement of the auction conducted by the central bank on Monday may have also triggered this move.

On Friday, the RBI will auction government bonds worth Rs 14,000 crore.

Beginning with the midquarter review of monetary policy held on Friday, the central bank began a calibrated unwinding of the exceptional measures undertaken since July so as to restore normalcy to financial flows. Currently, the RBI injectsabout Rs 1,50,000 crore into the system daily.

Source: EconomicTimes

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Lakshmi Vilas Bank hikes deposit rates by 50 bps

Lakshmi Vilas Bank has increased interest rates on retail term deposits in four maturity slabs by up to 50 basis points.

The old generation private sector bank has upped the interest rate on 1 year deposits by 50 basis points to 10 per cent from 9.50 per cent earlier. One basis point is equal to one-hundredth of a percentage point.

Deposits above one year but less than two years will earn 9.50 per cent interest against 9.25 per cent earlier, the bank said in a statement.

The new interest rate on deposits in the two years to less than three years and three years to five years maturity slabs will be 9.25 per cent each (9 per cent earlier).

The revised rates will take effect from September 25, 2013.

As at June-end 2013, the Karur (Tamil Nadu) headquartered bank had total deposits and gross advances aggregating Rs 15,689 crore and Rs 11,849 crore, respectively. It has 299 branches and 684 ATMs spread across 15 States and one Union Territory.

Source: thehindubusinessline

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SBI eyes 22% growth in home loans in Bangalore

State Bank of India (SBI) Bangalore Circle plans to grow its home loan portfolio by about 22 per cent to Rs 2,200 crore this fiscal.

“Looking at the potential, we have taken a slew of initiatives in the housing sector, which continues to attract lot of interest in Bangalore. The city is next to Mumbai and Delhi’s NCR region in terms of volume,” said Ashwini Mehra, Chief General Manager of SBI Bangalore Circle.

To achieve the Rs 2,200-crore target, the bank has strengthened its processing centre and is planning to add a few more in Bangalore.

“After Kormangala, Banaswadi, and Basavanagudi, we are thinking of opening it either in Peenya or at Hebbal, Yelehanka side,” he said.

In the terms of presence and business in Karnataka, SBI has been far ahead of other nationalised banks. Mehra said, “Particularly in the home loan sector, we’ve taken a clear lead over almost everybody. We have been growing very well.”

Tier II cities

In addition to Bangalore, the bank is strong in tier II cities as well. “In Karnataka, we are seeing some traction in Mangalore and in Mysore. We were expecting a similar trend in Belgaum, but it is has not happened,” Mehra said.

“We are trying to see if we can work around Belgaum, Hubli and Gulbarga. Here we have not really seen much of traction. Ninety per cent of our home loan portfolio basically comes from Bangalore, because even the people who are staying outside Bangalore are always looking for setting up a home in the city,” he added.

SME/Agriculture

SBI’s exposure to SME segment has seen a setback. The setback is primarily with a few industries and also due to the dull overall investment climate, because of the side effects of whatever is happening in the Bellary-Hospet belt.

Mehra said, “There is a similar effect on the services as well on the trading activity. But therefore the major growth has come essentially from what we call the personal segment. That has grown quite robustly and we had actually setbacks in SME and in agriculture. Especially in agriculture because of drought during the last three years in the State.”

anil.u@thehindu.co.in

Source: thehindubusinessline

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Muthoot NCDs oversubscribed; gets offers worth Rs 325 cr

Leading gold finance company Muthoot Finance said its non-convertible debenture (NCD) issue has been oversubscribed by 1.084 times.

The issue has received total subscription of Rs 325.20 crore, Muthoot Finance said in a statement.

The company came out with NCD issue earlier this month worth Rs 150 crore with an option to retain over-subscription up to Rs 150 crore, aggregating to Rs 300 crore.

It said the funds raised through this issue will be utilised by for various financing activities including lending and investments, to repay existing loans and towards business operations.

Source: thehindubusinessline

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Oriental Bank hikes rates of select NRE deposits

Oriental Bank of Commerce (OBC) has hiked the interest rate on certain non-resident external (NRE) deposits with effect from Monday.

Term deposits of less than Rs 1 crore with maturity of 3-5 years will now earn 9.25 per cent per annum — 50 basis points higher than the earlier 8.75 per cent.

OBC is offering higher interest rate in the 3-5 year bucket to attract long-term funds from NRIs, V. Kannan, Executive Director, OBC, told Business Line.

The Reserve Bank of India had allowed banks to offer differential interest rates to NRIs and also at longer maturities.

Public sector banks are wooing NRIs in a big way to attract long-term funds into the country.

This is being done at a time when deposit growth in the banking system is seeing a slowdown.

With busy season for credit round the corner, many banks are looking up to NRI funds to augment liquidity.

The interest rates offered to NRIs under the NRE deposits are higher than those applicable to domestic deposits, Kannan added.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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ICICI Bank launches new Facebook app Pockets

ICICI Bank has launched a new Facebook app that will enable its customers to transact directly from the social networking site.

Primarily targeted at young customers, the new app 'Pockets' will enable customers of the bank to transfer money, recharge mobile phones and book movie tickets from their Facebook pages.

There will be no additional charge for using the application, the bank said.

The "split and share" app on the platform will allow customers to split and track group expenses and share them with friends on Facebook. The app also gives the customer the option of sending messages to remind friends about pending payments.

For every new transaction, the bank will send a one-time password to the customer. This will ensure safety of the transaction.

"The app will enable young consumers who spend a lot of time on Facebook to carry out a wide set of transactions without having to leave the social media site," said Chanda Kochhar, Managing Director and Chief Executive Officer, ICICI Bank.

Kochhar said one-third of the bank's customers are under the age of 30.

According to a Comscore report, Facebook users in India spend about three-and-a-half hours on the social networking site daily.

satyanarayan.iyer@thehindu.co.in

Source: thehindubusinessline

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RBI now against 0% EMIs for consumer goods, banks withdraw finance schemes; festive sales likely to be hit

Planning to buy a phone or a television during the upcoming festive season? Don't bet on paying off the bill in interest-free instalments. These schemes are being withdrawn as the Reserve Bank has frowned on the practice of banks tempting consumers to make big-ticket purchases by offering to break up credit card payments into EMIs.

RBI feels consumers have been fooled by zero per cent or discounted interest rate schemes into believing that bank funding comes for free, and wants them stopped. Consumer durable manufacturers offer the zero per cent facility mostly on high-value products such as smartphones, LED TVs and premium home appliances.

"Such schemes only serve the purpose of (luring) and exploiting vulnerable customers," the central bank said in a confidential note to banks on September 17. "These were found to be impinging on customer protection, accounting integrity and thereby the fair market practices which banks should epitomise."

ET has a copy of the note. There was no response from the central bank to queries regarding the note.

Festive Sales Likely to be Hit Due to EMI Move

The move by the central bank has panicked companies and retailers ahead of the festive season as nearly 20-30% sales depend on EMI schemes. They're worried that consumers will refrain from indulging in Diwali shopping sprees, especially after the surprise interest rate increase by RBI on Friday heightened concerns over home and auto loans becoming costlier. Looming over all of this is the growth slump that has got prospective buyers spooked anyway.

"The way forward for the measures suggested by RBI is justified, but the notice given is so short ahead of the festive season and in the middle of a dull economy, that sales are likely to take an instant blow," said Himanshu Chakrawarti, CEO at The Mobile Store, the country's largest cellphone retail chain with more than 700 stores.

What may have prompted RBI to examine the finer details of such schemes is the 34% jump in bank loans for buying consumer durables between July 2012 and July 2013 compared with a 12% rise in the year-ago period.

RBI said the interest component in a zero per cent scheme is often camouflaged and passed on to consumers in the form of a processing fee. The concept of zero per cent interest is non-existent and fair practice demands that the processing charges and rate of interest charged should be kept uniform across products and segments, it said.

The central bank has also barred banks from charging discriminatory interest rates on loans for all product categories that don't attract the zero per cent facility. It wants to stop the current practice where financing takes place on the maximum retail price of the product and not the market price, and wants banks to pass on benefits they get from retailers and brands to consumers.

When it comes to non-zero per cent schemes, retailers said banks charge consumers 4-7% interest, depending on the product value and tenor. That's much below the base rate, supposedly the minimum lending rate. "This vitiates the transparency in pricing mechanism, which is very important to take (an) informed decision," RBI said.

Senior officials at two leading retail chains said lenders, including SBI, Axis Bank and Kotak Mahindra Bank, withdrew the zero per cent facility late last week after RBI's note. Emails sent to ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank did not elicit any response.

Data available from retail chains shows State Bank of India charges 4.25% interest per year for a six-month tenor and 6.35% for nine months. HDFC Bank charges around 5.2% interest on six-month EMI schemes and 7.25% for nine months. For ICICI Bank, it is 4% for six months and 6-6.15% for nine months.

A leading Japanese electronics company has decided to put a complete stop to zero per cent EMI schemes, a senior executive said, adding this is likely to hurt sales badly. "There will be a big impact on sales since the contribution of such schemes to our sales had doubled to 20% in the last one year," he said, requesting anonymity. RBI has directed banks to make pricing transparent and inform consumers about the financial benefits they get from retailers and brands for offering zero per cent interest on credit cards or interest rate discounts.

"It is the responsibility of the banks, who are/ may be using their good offices to get the better bargain, to make the customers fully aware of these benefits and also pass on the benefits to them fully and indiscriminately. More importantly, this has to be done without tampering with the applicable rate of interest of the product," the note said.

Still, zero per cent schemes could make a comeback, just not in time for Diwali. It will take at least two months for banks to revive the plan since they have to make amendments to such offers in their own system as well as at the brand and retailer end, said the CEO of a leading multi-brand consumer electronics retail chain.

Meanwhile, RBI has also asked banks to terminate their relationships with merchants and retailers who charge an extra fee on debit card payments as this isn't allowed under bilateral agreements between banks and retail outlets.

Source: Economic Times

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Moody’s lowers SBI’s debt rating

Moody’s Investors Service has downgraded the senior unsecured debt and local currency deposit ratings of State Bank of India (SBI).

According to Moody’s, SBI’s new rating for both the debt as well as deposit is ‘Baa3’ against ‘Baa2’ earlier. The new ratings are on a par with the Government of India’s foreign currency bond rating. Senior unsecured debt means these securities have priority ahead of all other unsecured debt if a bank/company goes out of business.

Moody’s decision to lower SBI’s senior unsecured debt rating is a reflection of the fact that the bank’s standalone credit profile continues to face negative pressures in the context of a slowdown of the Indian economy and the bank is likely to seek another capital injection from the Government at the end of the current fiscal year.

Even as Moody’s affirmed the ‘D+’ financial strength rating of India’s largest bank, it changed the outlook on this rating to negative from stable.

Source: thehindubusinessline

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Vijaya Bank FI Outreach

Dr K. C. Chakrabarty, Deputy Governor of Reserve Bank of India (RBI), will inaugurate Vijaya Bank’s Financial Inclusion Outreach Programme at 10 a.m. on September 24 at Adichunchanagiri in Mandya district.

His Holiness Sri Nirmalanandanatha Swamiji, Mathadhipathi of Adichunchanagiri Mahasamsthana Math, will be the chief guest.

Source: thehindubusinessline

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Canara Bank rolls out new home loan schemes for NRIs, HNIs

Canara Bank has launched two housing loan schemes targeting Non-Resident Indians and high net worth individuals (HNIs) in the country.

R. K. Dubey, Chairman and Managing Director of the bank, launched the two schemes here on Monday.

Dubey said demand for dwelling units from NRIs is on the rise and depreciation of the rupee vis-à-vis the US dollar has prompted them to invest more in the housing sector.

Also, demand from HNIs for large housing loans has increased, he added.

For NRIs, Canara Bank will offer home loans of up to Rs 30 lakh at the base rate of 9.95 per cent.

In the case of home loans above Rs 30 lakh and up to Rs 75 lakh, the interest rate would be 9.95 per cent plus 0.05 per cent. For loans above Rs 75 lakh, the interest rate is the base rate plus 0.25 per cent.

The maximum home loan for NRIs will be four times their annual gross income, a bank official said.

The premium housing loan scheme targets HNIs with gross annual income of Rs 25 lakh and above, and with the minimum loan amount being Rs 1 crore.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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SKS Micro ropes in Jack Trout for re-branding exercise

Encouraged by the turnaround in the last three quarters, SKS Microfinance Ltd has decided on a brand makeover. For this, the Hyderabad-based microfinance major has signed up global marketing strategist Jack Trout, president of Trout & Partners, to help in re-branding and repositioning its operations.

Jack Trout is not only the originator of important concepts in marketing strategy but also the author/co-author of many best-sellers such as Positioning: The Battle for Your Mind and Repositioning: Marketing In an Era of Competition, Change and Crisis.

In his reaction, Trout said, “I consider this an interesting assignment as re-branding/repositioning work in the social sector, particularly after a crisis that nearly annihilated a crucial social sector, brings multitudes of challenges.”

In a press release, M. R. Rao, Managing Director and CEO, SKS Micro, said: “It was imperative that we revisit the brand propositions in order to further increase our brand equity among our members and other key stakeholders.”

On the rebranding exercise, the company’s Chief Financial Officer S. Dilli Raj said, “We are back at the threshold of steady growth post our recent turnaround, and require expert counsel in ending the dichotomies/ ambiguities related to branding and positioning.”

The Rs 332-crore SKS Microfinance turned profitable this fiscal after nearly two years of financial and operational troubles, especially in its home State of Andhra Pradesh.

The company, first among MFIs to be listed, began with a bang on the bourses. However, its fortunes plummeted in Andhra Pradesh following a clampdown on its operations by the State. The turn of events led to the quitting of its founder chairman, Vikram Akula.

somasekhar.m@thehindu.co.in

Source: thehindubusinessline

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IDBI Bank on bad loan recovery drive

IDBI Bank wants its managers — at the zonal, regional and branch levels — to focus their energies on making recoveries from the top 20 bad loan accounts in their jurisdiction.

What this means is that the bank does not want its officials to spread themselves too thin by seeking to make recovery from all bad loan accounts at the same time.

To clean up its books, the public sector bank has launched a special ‘Own Your NPA’ (non-performing asset) campaign so that officials give it all they’ve got for faster resolution of bad debts.

According to IDBI Bank Chairman and Managing Director M.S. Raghavan, as part of the campaign, each zonal, regional and branch manager will personally go and meet the customers.

“Hitherto, the focus (recovery) was missing. So, now the focus has returned. It is not 200 accounts but the top 20 (bad loan) accounts that are getting attacked time and again,” he said.

The total number of cases identified under the campaign, which was launched on August 1 and runs up to December 31, is 1522, involving an aggregate principal outstanding of Rs 5,805 crore.

Through the campaign, the bank is trying to settle some 73 per cent of its total NPAs of Rs 7,959 crore as on June-end 2013.

Raghavan said the managers have been told that their achievements on the recovery front under the campaign will be an important factor in their overall performance appraisal.

“We said that ideally these accounts should be closed. However, we all know this is not possible. In any case, there should be substantial progress on the recovery front,” said the IDBI Bank chief.

Year-on-year, IDBI Bank has seen a 45 per cent increase in NPAs, from Rs 5,496 crore as at June-end 2012 to Rs 7,959 crore as at June-end 2013.

Raghavan observed that in any bank’s loan portfolio, about 1 per cent is the normal stress that is built up due to various reasons, including business failure.

But what is more important is the stress arising from external factors, such as slowdown in the economy.

So, the stress from external factors is one major factor that has affected the asset quality of all major banks. This will get minimised only if the economy makes a turnaround.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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Bank of Baroda to grow by 18 per cent: CMD Mundra

Bank of Baroda, India's second largest lender, is expected to grow in the current year by 17 to 18 per cent as against the industry standard of 14 to 15 per cent, its top official said here today.

S S Mundra, Chairman and Managing Director of the bank said the growth of banks depends on the GDP growth rate, told PTI at the Bank of Baroda's branch in Park Avenue, Manhattan, New York.

The growth story will be different if the GDP is at eight to nine per cent than the present five per cent.

However, Bank of Baroda has been growing steadily at two to three percent above the industry growth rate and the management will ensure that it will be maintained, he said.

Mundra, on his first visit to the US after taking over as chairman and managing director of the bank, said US is a very important part of bank's international operations.

"30 per cent of the profits of the bank come from international operations as we are in 24 countries around the globe. Within that there are three important jurisdictions - the US, the UK and the UAE," he said.

He said his visit now is to understand the business, interact with high-profile US investors and clients besides familiarising himself with the US operations.

He said he interacted with local management to understand the bank's operations in the US and met with large investors who regularly invest in Indian entities.

"I have not come with the idea of any selling bonds or other proposals. I feel the investor community should be kept apprised of what's going on India and also the opportunities available to investors.

"My visit is also to remove substantial amount of confusion about India - what will happen to the economy and I clarified concerns and doubts. I told the investors that when we look at any thing from distance things may look more alarming than what they actually are," he said.

He said international bankers and American investors who are looking at emerging markets such as India keep track of all developments and they are aware of India and the opportunities available to foreign investors.

Mundra told investors that Indian economy has to grow as the country has not reached the stage where there is no demand or in a stage of stagnation or saturation.

"Its a growing economy and demography is very favourable and there is lot of urbanisation all pointing to demand. There were certain policy issues in the last few years that might have slowed down the growth. The GDP growth rate is above five percent and if one were to compare this with other nations, it speaks volume.

"We tend to compare with our own standard of eight to nine percent growth rate which was a record high by any standards as often tend to compare with our own standards. The GDP is inching up slowly with a slew of measures undertaken by the Government of India and the Indian economy is bound to become stronger," he said.

On US retail operations, he said in the US the bank does not have a full-range retail bank and it caters to the requirements of investors and NRIs.

Source: Economic Times

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SEBI sets terms for public offer exemption for NBFCs

Non-banking financial companies will be exempt from making a public offer (leading to a listing on the exchanges) only if they prove that that the securities offered to over 50 entities are subscribed to only by the entities, SEBI has ruled.

This is to ensure that the public does not subscribe to the offer. The order also applies to public finance institutions.

The Companies Act specifies that any offer of securities made to over 50 persons automatically triggers a public offer and listing.

SEBI passed an ex-parte interim order against Alchemist Holdings (AHL) for not complying with the Companies Act.

SEBI said that AHL raised Rs 444.67 crore through redeemable preference shares from 426,676 entities without approval.

SEBI barred AHL and its seven directors from collecting money, disposing of any asset without its permission and from diverting the money.

SEBI said AHL had, in fact, offered its redeemable preference shares to general categories of persons such as individuals, trusts corporate bodies, minors, financial institutions, mutual funds, and cooperatives.

Citing the Supreme Court’s verdict on the Sahara case, SEBI said: “Since AHL has made an offer of securities to the public in terms of the Companies Act, it would be SEBI’s legal mandate to administer the provisions of the Companies Act applicable to the said public offer.”

All the entities have to treat this ex-parte interim order as a show cause notice and have 15 days to respond.

raghavendrarao.k@thehindu.co.in

Source: thehindubusinessline

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SBI opens branch in Moghalpura

State Bank of India has opened a new branch at Moghalpura today. It aims to cater to the growing banking and financial needs of retail customers and SME units in the old city of Hyderabad. The branch was inaugurated by C. R. Sasikumar, Chief General Manager. Speaking on the occasion, he said the branch will provide services and products to clientele in personal and SME segments. 

It will offer loan products at cheaper interest rates like car, housing and education. He emphasised that the branch would also provide ‘one stop’ investment/retirement/payment solutions through Demat accounts and SBI Life Insurance. Technology products such as retail/corporate internet banking, mobile, banking, green channel will also be provided.

Source: thehindubusinessline

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Canara Bank not to hike rates for now

Canara Bank is not looking to increase its lending or deposit rates for now. The RBI had hiked its repo rate — rate at which RBI lends to commercial banks — by 25 basis points on Friday.

“There is no proposal to hike the base rate”, R. K. Dubey, Chairman and Managing Director, Canara Bank told Business Line here on Saturday. Base rate is the rate below which a bank cannot lend. Canara Bank’s base rate is currently at 9.95 per cent. It was brought down from 10.25 per cent to 9.95 per cent in July.

Dubey was in the capital for the inauguration of new lead bank offices at three districts —New Delhi, Central Delhi and West Delhi.

Till recently, districts in metropolitan areas were kept out of the purview of lead bank schemes. Considering the financial exclusion in metropolitan areas, RBI had in July assigned lead bank responsibilities in such areas to various banks. Canara Bank was allotted three districts in Delhi.

Prior to this, Canara Bank had lead bank responsibilities in 26 lead districts spread across 5 States.

RBI’s lead bank scheme was introduced in 1969 to designate banks with responsibility of identifying growth centres, assessing deposit potential and credit gaps and evolving a coordinated approach to credit deployment in each district.

BRANCH EXPANSION

Dubey also said that the bank was looking to expand its network to 4,500 branches by the end of the current fiscal.

As on date, Canara Bank is one of the largest commercial banks in the country with a network of 4,101 branches and an almost equal number of ATMs (3,961). “We have opened 350 branches so far this financial year. We will open another 350 before this fiscal end.”

Dubey expressed confidence over the bank achieving a net interest margin of 2.3 per cent this fiscal. This is despite headwinds such as volatility in G-sec rates and increased provisioning towards stressed assets.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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