Corp Bank tops in loans to small units

The Ministry of Micro, Small and Medium Enterprises has assigned Corporation Bank No. 1 rank under the ‘National Awards for Excellence in MSE (micro and small enterprises) Lending’ for 2012-13. According to a press statement by the bank, the ranking was acknowledged at the 18th meeting of the Standing Committee for National Awards to Public Sector Banks recently. Corporation Bank has been ranked based on its performance in contributing to the MSE lending for 2012-13, it said.

Source: thehindubusinessline

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ICICI Bank Q2 net up 20% on strong interest income, margins

Despite setting aside money for depreciation on investments, ICICI Bank reported a 20 per cent increase in net profit in the July-September quarter on the back of healthy growth in margins.

In the reporting quarter, India’s largest private sector bank posted a net profit of Rs 2,352 crore against Rs 1,956 crore, a year ago.

Net interest income, the difference between interest earned and expended, grew 20 per cent to Rs 4,044 crore.

Chanda Kochhar, Managing Director and CEO, ICICI Bank, said good growth in interest income and margins, and a tight control on costs helped the bank post growth even in the challenging economic environment.

Net interest margin, a measure of profitability for banks, expanded to 3.31 per cent during the quarter from 3 per cent a year earlier. “We would end the year with a similar net interest margin,” Kochhar said. The bank has fully provided for depreciation on its investment portfolio (Rs 279 crore), and has not made use of the option permitted by the RBI to recognise the same over three quarters.

Total income grew 7.5 per cent to Rs 12,979 crore, while total expenditure was up 2.4 per cent at Rs 9,092 crore.

ICICI Bank went slow on corporate loan growth as the weak economic environment could lead to higher non-performing assets.

DEPOSIT, LOAN GROWTH

Overall deposit growth, in the three months ended September, was just about 10 per cent due to slow corporate deposit growth. However, Kochhar said the bank’s low-cost current account, savings account (CASA) deposits grew 17 per cent during the quarter.

Of the total deposits of Rs 3,09,046 crore, less than 30 per cent are corporate deposits and the rest, retail.

On the credit front, the bank’s retail loan book grew 20 per cent aided by strong demand for home and auto loans.

The corporate loan book growth slowed to 11 per cent (from 20 per cent, a year ago) as the bank said that it is following a “calibrated” corporate loan growth strategy.

For the full year, the bank expects its retail credit to grow at 23 per cent and corporate credit, at 14-15 per cent.

Restructured loans

The bank restructured loans worth Rs 1,076 crore during the quarter. Another Rs 2,000 crore worth of loans, Kochhar said, are in the restructuring pipeline. “All of these or a similar amount of loans could go into restructuring in the next quarter or two,” she said.

While the bank’s gross non-performing loans declined a tad to Rs 10,028 crore during the quarter, its net non-performing assets (after adjusting for provisions) rose to Rs 2,698 crore from Rs 2,462 crore in the preceding quarter.

The bank has set aside Rs 625 crore (Rs 508 crore, a year ago) as cover for potential loan losses.

During the quarter, the bank’s peers, HDFC Bank and Axis Bank, posted 27 per cent and 22 per cent growth in net profit, respectively.

Shares of ICICI Bank ended flat at Rs 1,021.65 on the BSE on Friday.

satyanarayan.iyer@thehindu.co.in

Source: thehindubusinessline

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Canara Bank campaign for new accounts gathers pace

The Manager of Canara Bank, Kerala Circle, himself took to the street as he led a team of staff for soliciting new current and savings accounts as part of a campaign.

Called CASA (current and savings accounts) Carnival, it had been launched all-India earlier on October 14, a bank spokesman said here.

G.Sreeram, General Manager, Kerala, led the team whose members were drawn from various city branches, to the Saphalyam Shopping Complex nearby.

The campaign will conclude by October 31 and is aimed at making available the bank services to the community at large, the spokesman said.

The campaign also reached out to leading business establishments, schools, colleges, Government establishments and corporate.

The last lap is slated for Saturday and Sunday when campaign teams at all locations in the State would fan out to what the spokesman described as ‘strategic centres’.

Elaborating, he said that the bank has formulated an attractive housing loan scheme for farmers at low rates of interest and attractive terms and conditions.

This is in addition to the scheme recently formulated for non-residents and high-networth individuals.

It has also recently given shape to housing and personal loan schemes exclusively for the benefit of the State Government and Kerala State Electricity Board employees.

In addition to the existing facility for opening of savings accounts online for individuals, a similar scheme for pension accounts of senior citizens is also in the anvil.

This is expected to be of relief to pensioners as it saves considerable time and also the labour of going personally to bank branches for opening such accounts.

vinson.kurian@thehindu.co.in

Source: thehindubusinessline

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Now, open an Axis Bank account using Aadhaar card

The Unique Identification Authority of India (UIDAI) is going ahead and launching new services even as the decision on whether the Aadhaar card is mandatory for getting government subsidies is pending before the Supreme Court.

In a new initiative, Axis Bank entered into a tieup with the UIDAI that will enable the bank to open accounts by using the 12-digit Aadhaar number of the customer.

The bank will fulfil the Reserve Bank of India’s norms on know-your-customer verification electronically (e-KYC) by using the biometric data of the customer. The fingerprints, once scanned at the bank’s biometric device, will enable the bank to collect data such as name, address and telephone number of the customer electronically from the UIDAI.

Data privacy

“The data will be sent to the bank’s server in an encrypted, digitally signed form,” said Nandan Nilekani, Chairman, UIDAI, ruling out the possibility of compromise of the customer’s private data. “It is far safer than using a paper-based KYC.”

Shikha Sharma, Managing Director and CEO of Axis Bank, did not reveal how much the bank has spent in putting the technology together.

“It is not a huge amount. We are working with VISA on this, so it is on a variable cost model,” she said.

Earlier, this month, six banks — State Bank of India, ICICI Bank, Bank of Baroda, Union Bank of India, Punjab and Maharashtra Co-operative Bank and Mehsana Urban Co-operative Bank — signed up for a Aadhaar-based remittance system.

Source: thehindubusinessline

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Equity investments may exceed Rs 40,000-cr target this year: LIC

Life Insurance Corporation will exceed the Rs 40,000-crore target for investment in equities in the current financial year, said Chairman S. K. Roy.

In the current financial year so far, the public sector life insurer has made around Rs 32,000-crore worth new equity investments, he told newspersons on the sidelines of a FICCI summit.

“Investment is not a target. It is an estimate made in the beginning of the year. So far this year, we got more opportunity to buy than we had anticipated. If there is similar opportunity in the second half of the year, then in all likelihood we will cross the target of Rs 40,000 crore by some margin.” Roy said.

“If the market is high, we will see how much we can sell for profit-booking. If the market dips, that gives us a buying opportunity. In that sense, we have got both opportunities in abundant measure this fiscal,” Roy said.

Debt segment

The LIC chief said sectors such as banking, pharma auto and select infrastructure look attractive for investment. He also said the company is seeing good opportunity in the debt space.

“There is an improvement in this (debt) segment also. We are getting good proposals which are under consideration. I am sure this segment will look up by the end of the year,” he said.

On premium collection, Roy said the second quarter has been excellent for the company.

“Q2 has been an outstanding quarter for us... July was a good month with decent growth. In August, we have seen outstanding growth. I am confident of achieving Rs 33,000 crore of new premium collection this fiscal. Up to October 15, we have achieved Rs 15,000 crore,” Roy said.

Training agents

The state-run insurer, he said, is faced with a Herculean task of training its 12 lakh agents for selling revamped life insurance products that are compliant with the new product guidelines.

According to Roy, the new guidelines, which will be implemented from 2014, will not hit the insurer’s businessin the fourth quarter, wherein it typically sees the highest sales.

He said LIC has set a target of recruiting 2 lakh agents this year, of which, 85,000 has already been hired.
Presence on boards

Also, Roy said a conscious effort is being made to increase LIC’s representation on the boards of companies where it has substantial holdings.

“In the case of companies where we have significant holding and don’t have nominees on the board, I can say that since the beginning of this financial year, we have been engaging with those companies and we have been getting a positive response from them. I am sure our representation in these companies will start increasing in the near future,” Roy said

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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Syndicate Bank’s new Field General Manager takes over

P. Raja Reddy has taken over as Field General Manager of Syndicate Bank for Andhra Pradesh. It includes six regions — Hyderabad city, Hyderabad Rural, Anantapur, Nellore, Vijayawada and Ongole.

As a part of the organisational re-structuring and with a view to give thrust on Business Development, Syndicate Bank has started a nation-wide re-organisation. In another development, M. Mohan Reddy, Deputy General Manager, has assumed charge as the Regional Manager of Hyderabad (City) Regional Office with immediate effect.

Source: thehindubusinessline

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Kotak Bank Q2 net rises 26% on improved margins

Higher margins and stable interest income helped Kotak Mahindra Bank post 26 per cent rise in standalone net profit at Rs 353 crore in the July-September quarter of fiscal 2013-14.

The mid-sized private sector lender reported a net profit of Rs 280 crore in the year-ago period.

During the quarter, the net interest margin improved to 4.9 per cent (4.6 per cent in Q2 FY13) due to capital infusion in Q1 and reduction in proportion of investments.

Net interest income (the difference between interest earned and expended) grew 22 per cent to Rs 924 crore. Other income grew 18 per cent to Rs 297 crore from Rs 251 crore in Q2 FY13.

Gross NPA ratio as on September 30, 2013, increased to 1.97 per cent from 1.61 per cent in the year-ago period.

“The deterioration in asset quality was largely due to the commercial equipment and commercial vehicle segment. We cautiously slowed down in this segment. The delinquency in this segment is reducing and it seems to be stabilising,” said Dipak Gupta, Joint Managing Director, Kotak Mahindra Bank.

“As a matter of principle, we did not transfer any government security to the held-to-maturity category and decided to amortise the mark-to-market loss (worth Rs 264 crore) on held-for-trading/available-for-sale portfolio equally over three quarters, beginning the July-September quarter,” Gupta said.

On a consolidated basis, the bank’s net profit increased 16 per cent to Rs 583 crore (Rs 502 crore in Q2 FY13). This included profits made by Kotak Mahindra Prime (up 10 per cent y-o-y at Rs 125 crore), Kotak Securities (flat at Rs 40 crore), Kotak Life Insurance (a tad lower at Rs 44 crore from Rs 47 crore).



beena.parmar@thehindu.co.in

Source: thehindubusinessline

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RBI forms panel to implement new bill payment system

The Reserve Bank of India has constituted a GIRO Advisory Group (GAG) to implement a national Indian Bill Payment System so that households will be able to use bank accounts to pay school fees, utilities, medical bills and make remittances electronically.

The terms of reference of GAG, which is headed by Prof. Umesh Bellur, Professor, Indian Institute of Technology, Bombay, include suggesting the nature of organisation to undertake the GIRO-based bill payments and framing guidelines for setting up and operating the GIRO-based bill payments.

The group will also recommend the criteria (financial, governance, ownership, technical, operational, etc.) for the entity to seek authorisation for setting up bill payments system in the country under the Payment & Settlement System Act 2007.

If GAG is of the opinion that a new organisation be created on the lines of entity like National Payments Corporation of India (NPCI), then it will have to make recommendations, among others, on the nature of the organisation (whether Section 25 company or profit making entity, etc.); membership composition; capital structure & contributions by stakeholders.

The GIRO Advisory Group would submit its report by the end of December.

Source: thehindubusinessline

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Tatas to roll out 15,000 ATMs in 3 years

Tata Communications Payment Solutions Ltd plans to roll out 15,000 Indicash white-label ATMs across the country over the next three years. Of these, 100 will be operationalised in Kerala by the end of this year.

This is in keeping with the RBI’s vision to accelerate growth and improve ATM penetration across the country, Sanjeev Patel, CEO, TCPSL said.

There is a huge scope for opening more ATMs in Kerala, he said, as 74 per cent households in the State have access to banking services, compared with the national average of 58 per cent.

TCPSL, which rolled out its first WLA in Thane in June, has 350 units now in place. The objective is to make ATM services available across urban, semi-urban and rural locations that have negligible or minimal banking infrastructure, he said.

The company has a cash supply arrangement with Federal Bank. Discussions are on with other banks for similar tie-ups to extend the service to other parts.

sajeevkumar.v@thehindu.co.in

Source: thehindubusinessline

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SBI gets Rs 2,000 cr, IDBI Bank Rs 1,800 cr in capital infusion

The Centre on Wednesday said it has allocated Rs 2,000 crore to State Bank of India and Rs 1,800 crore to IDBI Bank as part of its plan to infuse Rs 14,000 crore in fresh capital to 20 public sector banks.

“The capital infusion is done with the twin objective of adequately meeting the credit requirement of the productive sectors of the economy as well as to maintain regulatory capital adequacy ratios,” a Finance Ministry statement said.

This infusion will help banks raise more money from the market. “Banks can raise Rs 10,000 crore from the market against the Government’s Rs 14,000-crore infusion,” Rajiv Takru, Financial Services Secretary, told newspersons here. The Centre’s capital infusion plan covers almost all PSBs, with SBI getting the largest share.

The capital infusion will ensure that banks have 8 per cent Tier-1 capital (core capital consisting of equity capital and disclosed reserves) by the end of the current fiscal. Banks will allot preferential shares to the Centre in lieu of the capital infusion. Post-infusion, banks will be allowed to raise Tier-1 capital from the markets in proportion to the amount infused by the Centre. This will help maintain the Centre’s level of shareholding. Banks can take the Qualified Institutional Placement (QIP) or rights issue routes to do so.
Additional capital

Since capital infusion will help expand the capital base, banks can use the expanded base to allocate fresh shares to qualified institutions and existing shareholders under the rights issue mechanism.

SBI has already said it would take a decision on raising funds through the QIP route within a month. Though it did not announce the amount to be raised, the capital infusion can help it raise Rs 1,500-1,700 crore.

The Finance Ministry also made it clear that any additional capital infusion would be done on the basis of banks’ performance under the concessional rate scheme.

It had announced last month that additional amount of capital will be provided to banks to enable them to lend to borrowers in sectors such as two-wheelers and consumer durables at lower rates in order to stimulate demand.

With the additional capital, the Ministry also expects higher profits which, in turn, will result in higher dividend payouts to the Government. Public sector banks together recorded around Rs 35,000 crore as profit last year.

shishir.s@thehindu.co.in

Source: thehindubusinessline

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HDFC Bank launches overseas bond sale

The country’s second largest private sector lender HDFC Bank hit the foreign bond market with benchmark US dollar issue as part of the bank’s $2-billion medium-term bond sale programme.

Accessing of the overseas bond market by domestic companies and financial institutions had almost dried up completely since May and the HDFC Bank’s programme indicates revival of this cheap source of funds.

Confirming the development, HDFC Bank’s treasurer Ashish Parthasarathy told PTI that the bank has not set a quantum of the money it is planning to raise.

“We hit the overseas bond market today with a benchmark (anything between $300 million and $500 million) three-year money under the Regulation S bonds (senior unsecured bonds). The final amount raised will depend on the pricing. This is the second issue from us this year after already mopping up $500 million earlier this year,” Parthasarathy said.

He also clarified that this is not being raised through the special swap window that the RBI opened last month to raise cheap funds for banks.

So far this calendar year, corporate India had lapped up more than $13 billion from overseas bond sales between January and mid-May, since then the appetite died as cost of funds jumped in overseas markets following the US Fed’s indication in late May to wind down its $85 billion monthly bond buying programme earlier than expected.

Regulation S bonds or RegS bonds are those offered to non-US residents and qualified institutional buyers (under an exception to US securities laws enacted in 1990) and do not enjoy the same legal protection as other issues enjoy.

On March 3, the bank had raise $500 million at 3 per cent coupon in a five-year bond sale. This was the cheapest money the bank had raised so far as it had got 10 times the demand.

The shares of HDFC Bank, which missed for the first time over 30 per cent rise in net profit in the September quarter with a 27 per cent jump in net income, command the highest premium amongst the global banking stocks.

The issue got a BBB— rating from S&P.

Source: thehindubusinessline

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Syndicate Bank cuts interest rate on vehicle, consumer durable loans

Syndicate Bank has slashed the interest rate on vehicle loans, consumer durable loans and light and heavy commercial vehicle loans.

To commemorate its Foundation Day, the bank is offering home loans at 10.25 per cent (base rate) for both the existing and new borrowers irrespective of the loan amount.

Interest rate on two-wheeler loans for home loan borrowers has been reduced from 12.25 per cent to 11.5 per cent (base rate + 1.25 per cent). For others, it is 12 per cent (base rate + 1.75 per cent).

Interest rate on four-wheeler loans for home loan borrowers has been brought down from 10.9 per cent to 10.4 per cent (base rate + 0.15 per cent). Other borrowers will be charged at 10.75 per cent (base rate + 0.50 per cent).

Interest rate on loans to consumer durables has been brought down from 15 per cent to 11.75 per cent (base rate + 1.5 per cent) for home loan borrowers. For others, it is 12.75 per cent (base rate + 2.50 per cent).

Interest rate on loans to light and heavy commercial vehicles has also been brought down from 12.75 per cent to 11.5 per cent.

anil.u@thehindu.co.in

Source: thehindubusinessline

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ING Vysya Bank profits up 17.35%

ING Vysya Bank’s net profit for the second quarter ended September 30, 2013 rose 17.35 per cent to Rs 176.28 crore compared with Rs 150.21 crore in the same period last year.

The bank’s total income also rose 9.91 per cent to Rs 1,501.96 crore during Q2 this fiscal (Rs 1,366.49 crore). EPS (basic) stood at Rs 9.47 (Rs 9.96).

anil.u@thehindu.co.in

Source: thehindubusinessline

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ICICI Bank’s special festive offers for NRIs

ICICI Bank, India’s largest private sector bank, is offering flat processing fees on home loan to its Non-Resident Indian (NRIs) customers for the festive season.

The bank will charge a processing fee of Rs 5,000 on home loans up to Rs 75 lakh and Rs 10,000 on home loans above Rs 75 lakh, this up to October 31, 2013.

On loans below Rs 10 lakh, ICICI bank will charge a processing fee of 0.5 per cent on the loan amount. The bank also has a referral arrangement with ICICI Home Finance Co Ltd which provides property search facility in India.

Further, the private lender has also partnered with Thyrocare Technologies to give discounts on health check-ups offering 77 medical tests worth Rs 5,000 for Rs 1,500 for its NRI customers and their family members, the bank said.

Moreover, the bank's NRI customers will get preferential rates on foreign currency conversion and a ‘no minimum balance savings accounts’ to resident family members of NRI customers

Rajiv Sabharwal, Executive Director, ICICI Bank, said, “These offers have been designed based on customer insights derived from serving 1.5 million NRI customers across more than 150 countries and processing over 2 lakh NRI transactions monthly.”

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Union Bank buys 2.47-acre plot

The Union Bank of India has purchased a 2.47-acre plot at the Financial Hub in New Town, Rajarhat, on the north-eastern fringes of the city. The plot will house its zonal administrative office, regional office, and zonal audit office, among others.

The land was purchased from the State Government owned Housing Infrastructure Development Corporation Ltd (HIDCO).

Source: thehindubusinessline

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Top 30 NPA accounts of PSU banks under govt scanner: Chidambaram

Concerned over defaults by big borrowers, Finance Minister P. Chidambaram today said that the Government is monitoring the top 30 NPA accounts in each PSU bank and asked the lenders to set up separate verticals to recover the money from written-off accounts.

Talking to reporters after meeting the heads of PSU banks, the Minister said he hoped that non-performing assets (NPAs) are a “function of economy” and would improve with the recovery in economic growth.

“We are monitoring the top 30 NPA accounts in each bank, each zone. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting,” Chidambaram said.

The Minister said the situation was not as bad as it was in 2000, when gross NPAs touched a high of 14 per cent. NPAs, which plateaued over the years at about 2 per cent, have started creeping up with the deceleration in growth in the past few years.

As of June, the gross NPA of nationalised banks was 3.89 per cent and State Bank Group at 5.5 per cent.

Chidambaram said like State Bank of India, other PSU banks should set up separate verticals to recover as much as possible from the accounts that were written off.

Credit growth

The Minister, however, expressed satisfaction over credit growth by PSU banks in the first and second quarters of the current financial year and expressed hope that it will remain “satisfactory” in the remaining part of the fiscal.

Chidambaram said housing loans recorded a healthy growth in the first and second quarters and rose 42 per cent and 61 per cent, respectively.

Education loans also registered growth, he said, adding that banks have been asked to meet the lending target with regard to minorities.

The Minister said PSU banks will open 10,000 new branches and set up 34,668 onsite ATMs during the course of the current financial year.

Current account deficit

Referring to the current account deficit (CAD), Chidambaram said that the Government does not intend to lift the ban on gold coins and medallions.

The Government had imposed restrictions on import of gold with a view to contain CAD, which widened to an all-time high of 4.8 per cent of GDP in 2012-13. During the current fiscal, CAD is expected to narrow to below 3.7 per cent of GDP.

Source: thehindubusinessline

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Extension for Andhra Bank director

The Finance Ministry, through a notification, has re-nominated Nagi Reddy Venkata Ramana Reddy as the part-time non-official director on the board of Andhra Bank.

The appointment is for a period of three years with effect from October 15, according to a statement from the bank.

Source: thehindubusinessline

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Dewan Housing Q2 net up 7% at Rs 129 cr

Dewan Housing Finance Ltd (DHFL) posted single digit growth in its second quarter net profit on a sequential basis as income remained muted due to a sluggish economy.

In the July-September quarter, the company posted a net profit of Rs 129 crore, a 7.5 per cent increase over the preceding quarter.

The housing finance company had merged First Blue Housing Finance Ltd earlier this year. So, the figures of corresponding quarter last year only reflects the profit of DHFL, which was at Rs 82 crore in the three months ended September 30, 2012.

Its revenue grew by a mere 3.6 per cent (or by Rs 41 crore) sequentially to Rs 1,166 crore.

At the end of September quarter this year, the company’s gross non-performing assets stood at 0.75 per cent of its total advances.

The company said that it has provided fully for potential losses in these loans.

DHFL expects to disburse loans worth Rs 15,000 crore in the full year.

So far, it has disbursed loans worth Rs 6,874 crore.

Much of the demand for home loans, the company spokesperson said, is coming from the outskirts of tier-I cities and from tier-II and tier-III cities.

The company declared its financial results after close of market hours on Monday.

However, during the course of trading, as reports came in that ace-investor Rakesh Jhunjunwala had picked up shares worth Rs 34 crore in the company, the scrip ended up 4.15 per cent at Rs 153.20 on the Bombay Stock Exchange.

satyanarayan.iyer@thehindu.co.in

Source: thehindubusinessline

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Federal Bank net up 5% on improved lending

Private sector lender Federal Bank posted a five per cent increase in net profit at Rs 226 crore in the July to September quarter on the back of healthy loan growth and stable credit costs.

The Kerala-based bank had reported a net profit of Rs 215 crore in the second quarter last year.

Healthy current and savings account (CASA), stability in credit costs and lower slippages helped our profits,” said Shyam Srinivasan, MD and CEO of Federal bank.

Net interest income was up 8 per cent to Rs 548 crore during the second quarter (from Rs 506 crore in Q2FY13). Other income was marginally up by 3 per cent to Rs 143 crore.

Net Interest Margin (NIM) grew to 3.30 per cent from 3.13 per cent in the first quarter. Year-on-year, the margins declined from 3.58 per cent.

“We will maintain our NIM in the 3.30 per cent levels going forward,” Srinivasan said.

Gross non-performing asset (NPAs) ratio improved to 3.39 per cent from 3.83 per cent in the corresponding quarter a year ago. On the other hand, net NPA ratio worsened to 0.98 per cent from 0.68 per cent.

Total advances increased 16 per cent year-on-year to Rs 42,220 crore as on September 30, 2013 (Rs 36,299 crore in Q2FY13). Total deposits were up 15 per cent to Rs 56,794 crore from Rs 49,518 crore in the same quarter last year. We continue to expect our retail and small and medium sector enterprises to grow over 24 per cent in the fiscal year,” Srinivasan said.

NRE deposits grew by 56 per cent to reach Rs 16,717 crore. Further, the bank raised about $70 million at an interest rate of about 8.75 per cent through the swap window facility provided by the Reserve bank of India. “We plan to raise about $30-40 million by November end,” Srinivasan added.


beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Robust loan growth lifts HDFC net 10% in Q2

Housing Development Finance Corporation (HDFC) reported a 10 per cent increase in net profit at Rs 1,266 crore in the July-September quarter on the back of robust growth in individual loans.

In the year-ago period, India’s largest standalone housing finance company reported a net profit of Rs 1,151 crore.

In the reporting period, HDFC’s income from operations rose 13 per cent to Rs 5,859 crore (Rs 5,175 crore in the year-ago period) while the profit on sale of investment was down 8 per cent at Rs 87 crore (Rs 94 crore).

“The loan book in the individual segment grew by 29 per cent, while the non-individual segment (includes loans given to corporates and developers) grew at 8 per cent. Both segments combined grew by 22 per cent,” said Keki Mistry, Vice-Chairman and Chief Executive Officer of HDFC.

“Our lending is more to middle-income and salaried people, more on the outskirts of big cities, and in smaller cities where the growth is still reasonably good. We don’t see a big reduction in the housing prices in the near future,” Mistry said.

Residential focus

HDFC’s focus largely has been on the residential segment in the past 18 months, he observed. India’s growing middle-class population, he said, has been driving the demand for homes, while the demand for luxury homes and commercial segments has been slow.

“HDFC’s average loan size remains at Rs 21.90 lakh in the residential segment. We expect 18-20 per cent growth rate going forward,” said the HDFC chief. A break-up of the expenditure shows that interest and other charges increased by 13 per cent at Rs 4,046 crore (Rs 3,541 crore) and other expenses rose by 19 per cent at Rs 95 crore (Rs 80 crore).

However, provision for contingencies (which is a part of expenditure) was sharply lower at Rs 15 crore (Rs 40 crore) as the National Housing Bank reduced the provisioning for standard loans for ‘commercial real estate-residential housing’.

Year-on-year, HDFC’s loan book increased 19 per cent to Rs 1,84,886 crore (as at September-end 2013) against Rs 1,55,128 crore (as at September-end 2012).

HDFC witnessed a marginal increase in gross NPA ratio at 0.79 per cent as against the year ago’s 0.77 per cent.

Mistry said a good part of increase is attributable to a single account, the Rs 460-crore exposure to realty company Hirco’s two projects near Mumbai and Chennai which have gone bad.

Calling it a “technical default”, he said there is an adequate security against the exposure and the cost of the land parcel alone is over Rs 2,000 crore. HDFC will enforce provisions of the Sarfesi Act and auction the securities, he said, hinting that realty firm Hiranandani Constructions is likely to take over the project.

Independent directors

Meanwhile, the company informed BSE that Keshub Mahindra, Vice-Chairman, and Shirish B. Patel, Independent Director of the corporation, have resigned as directors with immediate effect.

Both Mahindra and Patel were directors of the corporation since its inception. They were also members of the Nomination and Compensation Committee of Directors of the Corporation.

Shares of HDFC ended marginally higher by 0.23 per cent at Rs 820.45 a share on the Bombay Stock Exchange.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Tarun Chugh appointed MD of PNB Metlife

Private life insurer PNB MetLife said that it has appointed Tarun Chugh as Managing Director of the company.

Chugh joins PNB MetLife from ICICI Prudential Life Insurance where he served as their Chief of Distribution, Operations and Marketing for India and was responsible for day-to-day management of all the business functions.

In this new role, Chugh will oversee all of MetLife's business and operations in India and will be a part of MetLife's Asia leadership team and will report to MetLife's President of Asia, Christopher Townsend and to the PNB MetLife Board.

Chugh will start with MetLife as soon as he has fulfilled his obligations to his current employer and his appointment is subject to regulatory approval, said the company in a release.

Rajesh Relan, the present MD, will be appointed as Head of Bank Distribution for the Asia region. Relan will now be responsible for overseeing MetLife’s strategic engagement with bank partners in Asia, assisting its local teams in building sales and service models, broadening sales and distribution channels, and strengthening MetLife’s business partnerships.

Under Relan’s seven year leadership, PNB MetLife has become one of the fastest growing life insurance companies in the country. The cessation of Relan’s current role is also subject to regulatory approval.

Christopher Townsend, MetLife's President of Asia said, “These two key appointments will help spearhead the next phase of growth for MetLife in Asia and advance our quest to deliver greater shareholder returns."

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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Syndicate Bank rolls out 5 new products

Syndicate Bank’s business has touched Rs 3.46-lakh crore as at the end of the second quarter of this fiscal (2013-14).

Speaking at the bank’s 88th founders day celebrations, Sudhir Kumar Jain, Chairman and Managing Director, said: “We have initiated reorganisation of regions for better results and to serve customers better.”

To mark its foundation day, the bank launched five new products: SyndDoctor, SyndGranite, SyndTextile, SyndCashew and SyndTransport.

The bank also opened 88 branches in different States. With this, the total number of branches stands at 3,135.

anil.u@thehindu.co.in

Source: thehindubusinessline

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Canara Bank launches CASA Carnival

Canara Bank, Pune Circle has launched a CASA Carnival in all its branches in Pune and in 14 districts of Maharashtra, to mobilise Savings and Current Accounts through door-to-door and shop-to-shop campaign.

The Pune Circle of the Bank has a target of mobilizing 10,000 SB accounts and 500 Current Accounts during this fortnight long CASA Carnival which was flagged off by K Bhaskar, Deputy General Manager, Pune Circle, on October 19.

Source: thehindubusinessline

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YES Bank Q2 net up 21% at Rs 371 cr

Private sector YES Bank today reported a 21 per cent growth in net profit at Rs 371.13 crore for the second quarter ended September 30, 2013.

The net profit stood at Rs 306.08 crore in the July-September quarter of 2012-13 fiscal.

Total income rose to Rs 2,947.39 crore from Rs 2,263.13 crore, YES Bank said in a filing to the BSE.

Shares of the bank were trading at Rs 365.55 on the BSE, up 2.01 per cent from their previous close.

Source: thehindubusinessline

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Dept of Posts cuts banking fund proposal to Rs 623 cr

The Department of Posts (DoP) has lowered its estimate of funds that it needs to start banking operations to about Rs 623 crore from its earlier projection of about Rs 1,900 crore, sources said.

The proposal for Rs 623 crore includes Rs 500 crore that is required as paid-up capital under the RBI’s new banking licence norms. The remaining amount is for infrastructure that is needed to comply with the new norms.

The DoP has applied for a banking licence. The Reserve Bank of India is expected to issue licences to shortlisted entities in January 2014.

“The DoP has lowered the proposal for funds it needs to start banking operations from about Rs 1,900 crore estimated earlier to about Rs 623 crore,” a government official told PTI.

The Government has sent the DoP’s fund proposal to the Expenditure Finance Committee. Once cleared by EFC, the proposal will be placed before the Cabinet for final approval.

The DoP plans to start 50 bank branches in the first year and scale it up to 150 branches in five years.

There are around 90,000 bank branches in the country and provision of real-time banking services through postal network is estimated to triple the current banking network.

Finance Minister, P. Chidambaram, in this year’s Budget proposals had said post offices would become part of the core banking solution (CBS) and offer real time banking services.

He had proposed a provision of Rs 532 crore for the project in 2013-14.

The Post Banks are proposed to be owned by DoP but with a completely independent board, governance structure and operations. It will have representation from Ministries of Finance and Communication & IT.

Source: thehindubusinessline

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RBI adds more features to large-value funds transfer system

The Reserve Bank of India on Saturday launched the new Real Time Gross Settlement (RTGS) system for large-value funds transfer.

The new system has several new functionalities including advanced liquidity and queue management features, gridlock resolution mechanism, hybrid settlement facility, facility to accept future value dated transactions, and options to process multi-currency transactions. The RTGS system is a large-value funds transfer system that banks use to settle inter-bank transfers for their own account as well as for their customers.

‘Real Time’ means the processing of instructions at the time they are received rather than at some later time.

Gross Settlement’ means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis).

The minimum amount to be remitted through RTGS is Rs 2 lakh. There is no upper ceiling for RTGS transactions.

More options

The new system provides three access options to participants, whereby they can decide the mode of participation in the system based on the volume of transactions and the cost of setting up the infrastructure.

According to RBI Governor Raghuram Rajan, payment systems, like plumbing, have to be efficient and ahead of the financial markets to be able to take care of the future developments in the financial markets.

Efficiency

“With its advanced liquidity and queue management features, the new RTGS system is expected to significantly improve the efficiency of financial markets,” said Rajan.

The RBI first implemented the RTGS in March 2004 as a major technology based electronic funds transfer system across the country.

The RTGS infrastructure is critical in facilitating the orderly settlement of payment obligations.

In August 2013, the RTGS saw 62.10 lakh transactions (including customer transactions, inter-bank transactions and inter-bank clearing) aggregating to Rs 67,55,735 crore.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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Central Bank signs MoU with NCDEX

Central Bank of India has entered into a memorandum of understanding with NCDEX Spot Exchange (NSPOT), the e-market place for farmers. The objective is to cater to the needs of the farmers, agri processors and market participants.

A tri-partite agreement was signed by Central Bank of India, NSPOT and two collateral managers viz. Navjyoti Commodities and Origo Commodities in AP and Karnataka States.

Central Bank of India is the first Bank to provide this type of facility to the farmers in these two States.

Speaking on the occasion, N. K. Balakrishnan, Field General Manager said the bank’s association with NSPOT will promote easy finance to farmers against their stock and will also bring in transparency and efficiency in lending operations benefiting farmers, traders, SMEs etc.

Under this agreement, the customers desirous of storing their produce for better price realisation can avail this facility of loan. They would deposit their goods in NSPOT accredited warehouses and the banks would provide loans against the deposited goods. When the goods are sold, the proceeds directly go to the banks.

Central Bank has 309 branches in these two states with a total business of Rs 29,300 crore.

NSPOT is a wholly owned subsidy of NCDEX – a leading commodities exchange in agri. commodities, ferrous metals and steel in India. This platform is now accessed by more than 40,000 farmers on daily basis under this e-mandi programme.

Somasekhar.m@thehindu.co.in

Source: thehindubusinessline

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Financial inclusion can be better achieved through self-help groups: Nabard

The two-decade-old self-help group-bank linkage programme for the economic betterment of rural poor is not receiving bankers’ attention, says Nabard.

This observation comes in the backdrop of the Government pushing banks to step up their financial inclusion (FI) drive through intermediaries such as business correspondents (BCs) and business facilitators (BFs) in the last three years

The FI drive, whereby financial services are sought to be extended to the hitherto large un-served population of the country, envisaged by the Government and the Reserve Bank of India entails banks engaging the services of BCs and BFs.

According to a Nabard (National Bank for Agriculture and Rural Development) report, though the SHG-BLP (self-help group-bank linkage programme) is a step towards bringing the ‘unbanked’ poor into the mainstream banking channel, its formal acceptance as a financial inclusion channel by the central bank is still awaited.

An SHG is a homogeneous group, comprising 15-20 members (mostly women), where members first pool in their savings and give out small loans to needy members. Once the SHG successfully undertakes savings and credit operations from its own resources, it can borrow from a bank (SHG-BLP) to enhance its pool of resources.

Scope of activities

The scope of activities undertaken by the BCs include disbursal of small-value credit; recovery of principal / collection of interest; collection of small-value deposits; sale of micro insurance, mutual fund plans, pension and other third-party products; and receipt/ delivery of small-value remittances and other payment instruments.

BFs provide services such as identification of borrowers; collection and preliminary processing of loan applications; creating awareness about savings and other products; post-sanction monitoring and follow-up for recovery.

Nabard said “though several initiatives were taken by the Government, the central bank, Nabard and banks to bring the poor into the fold of formal financial service providers, no serious attempt was made to leverage the SHG-BLP to achieve the financial inclusion goals.”

The ‘Status of Microfinance in India’ report observed that a successful programme such as the SHG-BLP, which could link millions of rural poor to the formal banking system, could have been the main instrument for financial literacy and financial inclusion in the country.

“There are a number of plausible ways by which matured SHGs could have been participants in the financial inclusion initiative, including being agents of providing direct banking services to the poor at their doorsteps, as a low-cost and efficient alternative.

“This model is certainly a more cost effective and reliable alternative to the existing inclusion agenda and millions of households, now members of SHG-BLP, would have been the immediate beneficiaries,” said Nabard.

Strong linkage

As on March-end 2013, the total number of SHGs linked with banks stood at 73.18 lakh, with savings aggregating Rs 8,217 crore. Further, 44.51 lakh SHGs had loans outstanding aggregating Rs 39,375 crore.

The Government and the RBI hold 99.50 per cent and 0.50 per cent stake, respectively, in Nabard. The institution was promoted in 1982 for ensuring sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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DHFL’s education loan arm Avanse eyes Rs 100-crore turnover

Avanse, a recent entrant in education finance market, is eyeing Rs 100 crore turnover milestone this fiscal—the first full year of its operations.

This non-banking finance company, which is a DHFL Group company, has set for itself a business target of Rs 3,000 crore-Rs 4,000 crore in five years, it’s Chief Executive Officer Neeraj Saxena told BusinessLine here.

Avanse Financial Services, which will provide only higher education loans, has opened its first brick-and-mortar branch in Delhi to cater to the growing demand for such loans in the National Capital Region.

Besides Dewan Housing Finance Ltd (DHFL), Avanse Financial Services also has IFC, which is part of the World Bank group, as an equity investor.

Notable private sector players in the education loan market include Credilla Ltd, a HDFC Ltd venture.

Public sector banks too had delved deep into the education loan market, largely on the prodding of the Government.

The total education loan portfolio for the banking sector stood at about Rs 53,000 crore (for 25 lakh accounts) as at end March 2013.

Saxena said that Avanse already had a tie-up with DHFL whereby it could use the latter’s office space in various parts of the country to sell educational loans.

Besides a corporate office at Mumbai, Avanse has a branch each at Pune and Delhi and may open another branch at Bengaluru.

Education loans from Avanse come at interest rates of 12.25 percent-13.5 percent, Saxena said.

Avanse provide 100 percent education finance without any margin money and cover studies both within India and abroad, he said.

Srivats.kr@thehindu.co.in

Source: thehindubusinessline

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