Sushil Muhnot is new CMD of BoM

Bank of Maharashtra has a new Chairman and Managing Director in Sushil Muhnot.

Prior to this appointment, Muhnot was Chairman of Small Industries Development Bank of India since April 2012.

Muhnot will assume charge as CMD of Bank of Maharashtra in Mumbai on Saturday. He will be taking charge at a challenging time for the bank, which recently saw huge increase in non-performing assets and sharp reduction in bottom-line.

Source: thehindubusinessline

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Canara Bank hikes deposit rates by 0.50%

Taking cue from other lenders, state-run Canara Bank hiked interest rates on fixed deposits by up to 0.50 per cent.

Fixed deposits in the maturity bracket of 46 days to 60 days and 61 days to 90 days would now fetch interest rates of 7.50 per cent, up from 7 per cent earlier, effective today, Canara Bank said in a filing to the BSE.

For deposits above one year to less than two years, the interest rates would now be 9.05 per cent, up from 8.75 per cent. For those of five years and above to less than 8 years would now be 9.05 per cent, up from 8.75 per cent.

Additional interest rate of 0.50 per cent would be given to senior citizens for domestic term deposits, Canara Bank said.

With revision in deposit rate, the peak rate has gone up to 9.05 per cent. Term deposit for one year to up to 10 years would earn interest rate of 9.05 per cent.

Besides, state-run Punjab National Bank (PNB) has hiked interest rates on select maturities by up to 0.50 per cent effective from November 11.

Fixed deposits for less than Rs 1 crore between 271 days to less than one year would yield interest rate of 8 per cent, up from 7.50 per cent earlier, PNB said.

In case of maturity period of one year and above up to 10 years, uniform interest rates of 9 per cent shall be applicable, PNB said.

Earlier this week, private sector Axis Bank had revised the interest rates on select maturities for fixed deposits of less than Rs 1 crore. In two buckets there was an upward revision of 0.25 per cent and in 9 buckets a downward revision of 0.25 per cent by the bank.

The rate revision by various lenders comes after the Reserve Bank hiked interest rates by 0.25 per cent in its monetary policy on October 29.

Following this, country’s largest lender State Bank of India (SBI) and HDFC Bank hiked their base rate or the minimum lending rate by 0.20 per cent to 10 per cent.

Source: thehindubusinessline

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Dewan Housing gets $85-m IFC loan

Dewan Housing Finance Ltd (DHFL) said that it has received $85-million loan from International Finance Corporation.

IFC, a member of the World Bank Group, has given this loan to DHFL to expand finance for affordable and energy-efficient housing in India.

“Of the total loan, IFC will provide $70 million through external commercial borrowings and it has committed an additional $15 million to finance green mortgages under the IFC-Canada Climate Change Program,” DHFL said in a statement.

Source: thehindubusinessline

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Exim Bank, SME Chamber tie-up for export promotion

Exim Bank and SME Chamber of India have signed Memorandum of Cooperation for promotion of exports.

They will also focus on how to channelise export finance, identify export potential market, carry on research and survey on various products in demand in different countries and to provide training and education on market, export formalities as well as to resolve issues.

Exim Bank Chairman and Managing Director TCA Ranganathan and Chamber President Chandrakant Salunkhe signed the memorandum on Thursday.

Salunkhe pointed out that this partnership will be useful to provide support and assistance to small and medium entrepreneurs (SMEs) from manufacturing sector to identify opportunities for technology transfer, joint ventures, new project exports, acquiring new technologies and to understand new market with quality and competitiveness.

Ranganathan said that the SMEs can take advantage of foreign exchange loans at low rate of interest and connect with potential market through Exim Bank’s regional branches in various countries. Exim Bank has product-wise and country-wise market surveys which will be useful for SMEs to enter into specific market with knowledge of demand and suppliers, price, quality and competition.

Besides guiding and supporting SMEs for export promotion, Exim Bank will also help them in the import of capital goods for production of quality products for domestic and international markets, he added.

Source: thehindubusinessline

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UCO Bank sees near 4-fold rise in Q2 net

State-owned UCO Bank’s net profit in the second quarter jumped almost four-fold to Rs 400.20 crore from Rs 103.71 crore in corresponding year-ago period. Arun Kaul, Chairman and Managing Director of the bank, said the growth trends in all parameters, including interest income and net interest margin, were likely to be maintained in the second half of this fiscal, too.

Apart from credit growth, the bank saw reduction in costs as well as upward trend in recoveries in the second quarter ended September 30. “During the quarter, NPAs worth Rs 778 crore were reduced,” Kaul told media persons here on Friday.

Also, much of the bank’s corporate debt restructuring proposals have been approved. “There are a few left in the pipeline,” he added.

Capital infusion

The bank expects the Government to infuse Rs 200 crore equity capital in it during the January-March quarter.

Kaul said the infusion, among the smallest for public sector banks, will help meet the capital adequacy norms.

In 2012-13, the bank had received Rs 681 crore from the Government by way of equity infusion. The total capital of the bank as on March 31, 2013 stood at Rs 2,575.63 crore. The reserves and surplus stood at Rs 7,106.78 crore at the end of FY13.

The UCO Bank stock of face value Rs 10 closed at Rs 74.75, up 5.28 per cent, on the BSE on Friday.

jayanta.mallick@thehindu.co.in

Source: thehindubusinessline

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PNB hikes FD rates by 0.5%

State-run Punjab National Bank has hiked the interest rates on select maturities by up to 0.5 per cent with effect from November 11.

Fixed deposits for less than Rs one crore between 271 days to less than one year would yield an interest rate of 8 per cent against 7.5 per cent earlier, PNB said in a filing to the BSE.

Further, term deposits in the maturity bucket of 91 days to 179 days would attract an interest rate of 7 per cent against 6.75 per cent.

In case of maturity period of one year and above up to 10 years, uniform interest rates of 9 per cent shall be applicable, PNB said.

For NRE term deposits, between one year and less than three years, the interest rate has been revised to 9 per cent from 8.75 per cent.

However, for domestic term deposits between Rs 1 and Rs 10 crore, the interest rate has been lowered to 8 per cent from 8.25 per cent for a maturity period of 180-270 days.

Earlier this week, private sector Axis Bank had revised the interest rates on select maturities for fixed deposits of less than Rs 1 crore.

The rate revision by lenders comes after the Reserve Bank hiked the interest rates by 0.25 per cent in its monetary policy on October 29.

Following this, State Bank of India and HDFC Bank have hiked their base rate or the minimum lending rate by 0.2 per cent to 10 per cent.

Source: thehindubusinessline

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Moody’s affirms 'stable' outlook on Axis Bank, HDFC Bank, ICICI Bank

Global ratings agency Moody’s Investors Service affirmed the ratings of three large private banks — ICICI Bank, HDFC Bank and Axis Bank — but warned that they expect these banks to experience marginal weakness in their corporate exposures due to the ongoing slowdown in the economy.

Though strong profitability and capital buffers will help the three banks sustain credit quality through the current business cycle, Moody’s added in its statement.

The rating agency affirmed its ratings for the senior unsecured debt and local currency deposits of these three private sector banks at Baa2 with a ‘stable’ outlook.

Moody’s decision to affirm the ratings reflects the banks’ “relatively strong asset quality, which benefits from diversification into the retail sector”, it said.

“Asset quality in the retail segment has not weakened during the recent economic stresses since Axis Bank, HDFC Bank and ICICI Bank tightened underwriting standards after losses during 2008-10,’’ it noted.

Moody’s also pointed out that they have sufficient cushion to absorb higher credit costs if their asset quality weakens and they can generate sufficient internal capital to sustain the current levels of capitalisation.

Diversity in operations

The diversity in operations of the three banks has resulted in lower stock of bad loans and restructured loans compared to public sector banks.

As of June 2013, the ratio of bad loans for these three private banks ranged from 1 per cent to 3.2 per cent compared to a weighted average of 3.8 per cent for other rated banks.

Also, restructured loans for the three private lenders ranged from 0.2 per cent to 2.1 per cent compared to a weighted average of 5.3 per cent for the banks rated by Moody’s.

In addition, the restructured loans for the three banks were spread across a wider range of sectors than those of public banks.

Moody’s also said that unlike public sector banks, Axis Bank, HDFC Bank and ICICI Bank have had better credit selection and monitoring of their exposures to mid-sized corporates. They also have better asset quality experience compared to public sector banks.

Shares of Axis Bank and HDFC Bank were trading down by 2 per cent and 1 per cent, respectively, while the shares of ICICI Bank were trading marginally up at 0.5 per cent on the Bombay Stock Exchange.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Life insurers back on growth path after 3 years: IRDA

After three years of decline, life insurance business is back on the growth path, according to the Insurance Regulatory and Development Authority (IRDA).

“After September 2013, all companies have shown positive growth. The feel-good factor has come back, driven by the new product regime,” Sudhin Roy Choudhury, Member (Life), told Business Line on the sidelines of the convocation at the Institute of Insurance and Risk Management (IIRM) here on Thursday.

The new product design norms for traditional products, which are being implemented, are more ‘customer-friendly’ and helping in the revival of new business. They also provide for death benefit of at least ten times of the premium.

“There is greater business being done by agents as we have relaxed some of the norms for agents’ appointments. Bancassurance is also doing well,” he said, explaining the drivers of growth.

The industry witnessed a steep fall in business after the introduction of new guidelines in September 2010 for unit-linked insurance plans, stipulating, among others, lower commission for agents and higher lock-in periods .

Unit-linked plans, at that time, accounted for over 80 per cent of business of private life insurers. The overall premium income declined from Rs 2.91-lakh crore in 2010-11 to Rs 2.87-lakh crore in 2011-12, mainly due to a fall in Ulip sales, which are yet to recover.

The first year premium underwritten by life insurers declined 6.32 per cent to Rs 1,07,013 crore in the financial year ended March 31, 2013, from Rs 1,14,234 crore in the previous year.

This resulted in substantial downsizing of the industry, including a reduction in workforce and closure of branches.

“We have cleared about 400 new life products as per the new design norms, and only a few are pending,’’ Choudhury said, adding that sales would go up in the remaining quarters.

SUSTAINABLE?

But will the growth trend sustain? Industry seems confident it would.

“What is important is the underlying mood of the market which is positive,” said Sandeep Bakshi, Managing Director, ICICI Prudential Life Insurance Company. The better understanding of Ulip products and attractive traditional products now being offered would boost business,” he said.

Manoj Kumar Jain, Chief Executive Officer, Shriram Life Insurance, also believes that the industry is set to grow. “We are also expecting 10 per cent growth in business this year,” he added.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Central Bank opens liaison office in Hong Kong

The third largest public sector lender by branches Central Bank of India  said it has opened a representative office in Hong Kong.

The representative office will facilitate the bank to tap the huge business potential in the thriving island city by providing marketing and liaisoning, its chairman and managing director Rajeev Rishi said in a statement.

He said the office will not engage in core banking but will use its local presence to explore business opportunities with the aim of establishing a long—term presence and penetrate the markets.

Source: thehindubusinessline

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Vijaya Bank mulling pref issue

Vijaya Bank’s board of directors will meet on November 11 to consider preferential issue and allotment of equity shares aggregating Rs 250 crore to the Government. The board is also to decide on an extraordinary general meeting of the shareholders to obtain their permission. In a release to exchanges, the bank said it has received a letter from the Government conveying its approval to subscribe to additional equity capital of the bank.

Source: thehindubusinessline

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YES Bank plans to raise $125 m from IFC

YES Bank will raise $125 million in debt funding from International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, to lend more to micro and small and medium enterprises.

The fund raising involves a 5-7-year senior loan of $60 million from IFC’s own account and a syndicated loan of $65 million.

IFC’s loan will support the bank in providing access to finance to the SME portfolio, accessing long-term funding and diversifying its funding base franchise, improving its maturity mismatch position and growing its assets, increasing its reach and improving its market share, especially in the SME space.

Source: thehindubusinessline

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HDFC Bank to hike lending rate by 20 bps

HDFC Bank has become the first bank post policy to raise its lending rate by 20 basis points (bps) to 10 per cent, a move other banks are likely to follow soon.

The base rate (minimum interest rate on loans) of the second largest private sector bank is now at 10 per cent with effect from November 2, 2013, the bank’s Web site said.

The increase in base rate by banks will push up the equated monthly instalments (EMIs) of borrowers.

The bank had last raised its base rate by 20 bps in August to 9.8 per cent. A basis point is one hundredth of a percentage point.

The upward revision in the base rate comes after RBI hiked the key policy rate (repo rate) by 25 bps to 7.75 per cent in its second quarter monetary policy review on October 29.

The hike in repo rate increases banks’ cost of borrowing from RBI, thereby impacting their net interest margins. Repo rate is the rate at which banks borrow short-term funds from RBI.

HDFC Bank’s benchmark prime lending rate (BPLR) also increased to 18.5 per cent per annum from November 2.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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HSBC investigated in currency probe, announces hike in Q3 profits

A worldwide probe into suspected rigging of foreign exchange trading has reached HSBC, Europe’s biggest bank revealed yesterday as it announced also a jump in quarterly profits.

The London-based bank revealed that global regulators are investigating a number of firms, including HSBC, “relating to trading on the foreign exchange market”.

HSBC added that it was “cooperating with the investigations which are at an early stage”.

It comes as the British bank announced a 28 per cent increase in net profit to $3.2 billion (2.37 billion euros) during the three months to the end to September on major cost-cutting and lower bad debt charges.

HSBC had posted profit after tax of $2.5 billion in the third quarter of 2012.

“Revenue was stable in the third quarter (of 2013), influenced by the mixed global macroeconomic picture,” HSBC chief executive Stuart Gulliver said in a statement.

“Our home markets of the UK and Hong Kong contributed more than half of the group’s underlying profit before tax.”

Gulliver added: “Hong Kong continues to benefit from its close economic relationship with mainland China. We remain well positioned to capitalise on improving economic conditions in these markets.”

HSBC said it would continue to focus on reducing its cost base after savings of $400 million over the third quarter and total cuts since the start of 2011 of $4.5 billion.

“This is well in excess of the target we set out to achieve by the end of 2013. We re-invested part of these savings in risk and compliance, increasing headcount by 1,600 since December 2012,” Gulliver said.

With traders focusing on the strong earnings, shares in HSBC rallied 3.01 per cent to 708 pence in late afternoon deals on London’s benchmark FTSE 100 index, which was up by 0.56 per cent at 6,772.47 points.

HSBC meanwhile joins British banks Barclays and Royal Bank of Scotland (RBS) in saying that they are part of the foreign exchange market investigations.

Deutsche Bank, Swiss lender UBS and US pair Citi and JPMorgan Chase have also come forward to say that they are co-operating with regulators over the affair.

Source: thehindubusinessline

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Rs 1,170-cr Canara Bank loan for Kochi Metro

Kochi Metro Rail Ltd has approved a proposal to get a long-term loan of Rs 1,170 crore from Canara Bank.

A decision in this regard was taken at the 15{+t}{+h} meeting of the Board of Directors held in New Delhi on Monday. The meeting was presided over by KMRL Chairman Sudhir Krishna.

The bank loan is for a term of 20 years with a moratorium of seven years. The rate of interest will be 10.8 per cent floating. This is the first time a nationalised bank is funding a metro rail project for such a long tenure on sole banking basis.

The Board also reviewed the progress of the project in terms of civil work, tendering and other aspects.

Pact signed

A tripartite agreement was also signed between the Union Government, Kerala Government and KMRL defining their roles and responsibilities in the project.

The Board took note of the appointment of consultants for social impact assessment and R&R study and also for the environmental impact study.

Aarvee Associates from Hyderabad will do design a comprehensive rehabilitation and resettlement policy and a compensation package for whose livelihoods are affected by the project and Senes Consultants Pvt Ltd, Noida, will prepare the environment impact assessment for the project.

The Board of Directors took note of the action taken regarding facilities to be provided for differently abled persons and senior citizens in the metro system.

The Board also approved the induction of V. Somasundaran, Additional Chief Secretary, Finance, in place of V.P. Joy as Director and notification regarding implementation of Central Metro Acts.

sajeevkumar.v@thehindu.co.in

Source: thehindubusinessline

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Vigilance awareness week at Syndicate Bank

Syndicate Bank, Kolkata, observed a vigilance awareness week between October 28 and November 1. The Chief Guest, Muhammad Salim Khan, Superintendent of Police, CBI, was present during the concluding ceremony.

During the ceremony, discussions took place on promoting good governance.

Also emphasized was the role of information technology in preventing corruption.

Source: thehindubusinessline

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OBC not planning to raise capital this fiscal: CMD

Oriental Bank of Commerce (OBC) is not looking to raise any equity capital this fiscal in addition to the Centre’s proposed Rs 150 crore capital infusion into the bank.

Although the Centre has allowed banks to raise capital in addition to the promised capital infusion, OBC will not go in for any qualified institutional placement (QIP) this fiscal, S. L. Bansal, Chairman and Managing Director, OBC, said.

Finance Ministry had allowed banks to raise additional capital through the QIP route.

The board of directors of OBC will meet in the first week of December to allot shares on a preferential basis to the Government for a capital infusion of Rs 150 crore. Given that the trading price of the bank’s shares were much lower than the book value, OBC had recently conveyed to the Government that it was not keen on any capital infusion.

However, the Government had allocated Rs 150 crore to be pumped into OBC. This was much lower than the Rs 1,000-crore capital infusion sought early this year. Bansal also ruled out any reduction in lending rates for the next 45 days (to be counted from October 30).

DEPOSIT RATES

OBC has increased interest rates on term deposits under different maturity buckets for term deposits of less than Rs 1 crore.

For term deposits of 91 days to 179 days, the rate has been hiked by 25 basis points to 8.75 per cent. For depositsof ‘180 days to 269 days’ and ‘270 days to less than one year’, the rates have been revised upwards to 9 per cent from 8.5 per cent.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Muthoot Finance looking to become a ‘financial supermarket’

Muthoot Finance Ltd, which hopes to secure a banking licence from the Reserve Bank soon, is going in for an image makeover — from a gold loan company to a ‘financial supermarket’.

“We are moving forward from being just a gold finance company to a financial supermarket where all kinds of financial services provided by major banks could be offered,” says K. P. Padmakumar, Executive Director of the company.

Padmakumar, a former chairman of Federal Bank, told Business Line that the financial services would include wealth management, insurance, foreign exchange and securities businesses.

Already, its recently-launched insurance initiative and foreign remittances business had made impressive performances. “We are no longer a single-product company.”

Muthoot Finance is one of the 26 companies that have applied to the RBI for banking licence.

The RBI shortlist is expected in a couple of months.

Rural focus

Padmakumar, who conceded that the image makeover move was part of its banking project, pointed out that around 70 per cent of Muthoot’s financing was in the rural areas.

About two-thirds of the 4,229 branches were in the rural regions.

“We are ahead of all the NBFCs in pushing financial inclusion by providing loans to the rural people,” he said.

“We are taking our financial products to the last mile.”

Padmakumar said the tough restrictions imposed by the regulators had hit gold loan financing.

Only 60 per cent of the value of the pledged gold could be advanced. “These regulations are a big setback to the gold financing sector,” he said. However, the rural penetration had helped the company weather the challenges in the market.

He said that in just three months, the company’s insurance initiative could secure three lakh people, mostly rural ones. The international remittances wing was now making about two lakh transfers every month — mostly from the Gulf countries to mainly Kerala and Andhra Pradesh.

Padmakumar claimed that Muthoot was best placed to set up a bank considering its branch network, the share of rural credit and the various financial services now being offered.

basheer.kpm@thehindu.co.in

Source: thehindubusinesslinea

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Two MDs appointed in LIC

Life Insurance Corporation (LIC) has announced the appointment of two managing directors – V.K.Sharma and Usha Sangwan.

Vijay Kumar Sharma has been Managing Director & CEO, LIC Housing Finance Ltd (LIC HFL), a premier housing finance provider in the country with loan portfolio exceeding Rs 83, 000 crore. His key areas of expertise have been Business Strategy, Business Development, Processes and Systems, Leadership Development, Branding and Product Development and Risk Mitigation and Compliance. He has held important positions as Zonal Manager In-charge of Southern Zone (Tamilnadu, Kerala), Executive Director of Pension & Group Schemes.

Usha Sangwan joined LIC in 1981 as a Direct Recruit Officer. She holds a Master’s Degree in Economics and a Post Graduate Diploma in Human Resource Management. Prior to taking charge as MD, she was Executive Director, Corporate Communications, LIC of India. In LIC she has worked in almost all core areas of life Insurance including Marketing, Operations, Personnel, Housing Finance, Group Business, Direct Marketing, International Operations and Corporate Communications. Prior to being Executive Director, Corporate Communications she was Executive Director (Direct Marketing).

Source: thehindubusinessline

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SBI opens branch at Kukatpally

State Bank of India has opened a new branch at Kukatpally Housing Board Colony here. With this, SBI now has 1,352 branches in Andhra Pradesh.

“The branch is opened as part of a drive to open more branches in metro and urban areas. It will cater to the needs of all types of customers,’’ SBI said in a release.

C.S. Sasikumar, Chief General Manager, SBI-Hyderabad circle, formally inaugurated the branch.

Source: thehindubusinessline

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Bank of Baroda: Stabilising loans portfolio lends comfort

Bank of Baroda threw a pleasant surprise in its September quarter results by managing to contain the deterioration in its asset quality.

The smart rally in the stock after the earnings announcement reflects the relief of investors that the bank’s performance has now stabilised after three quarters of increasing non-performing assets and restructured loans.

With most private banks having delivered steady asset quality, the spotlight is now on public sector banks. Increasing bad loans, slower loan growth and declining profitability has been an overhang on most public sector banks in the past one year. It is, therefore, not surprising that Bank of Baroda soared on delivering improved loan growth, stable margins and lower slippages.

On the profitability front, the bank’s core net interest income had been dwindling in the last three quarters, owing to slowing loan growth and declining margins. While the net interest income for the September quarter has also grown by a modest one per cent, the fall in the domestic net interest margin (NIM) since the third quarter of last year, has been arrested. This has been due to correction in certain imbalances in the loan-deposit mix during the quarter.

A relatively higher deposit growth, led to lower loan to deposit ratio of 66 per cent in the past few quarters. This lower deployment of funds weighed on the bank’s margins. The bank managed to improve its loan growth during the September quarter to 16 per cent, from 10-11 per cent in the previous quarters by focussing on the retail segment

The bank has been shedding its high cost deposits to reduce its cost of funds. In the first half of this year, it shed close to Rs 25,742 crore of such deposits. The share of domestic current account savings account (CASA) improved from 30 per cent as of March 2013 to 32.6 per cent.

With the management expecting the worst to be over as far as deterioration in asset quality goes, retail focus and stable margins should drive better operational performance in the ensuing quarters.

Source: thehindubusinessline

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Allahabad Bank seeks clarity on safe savings scheme

Allahabad Bank said on Thursday that it has sought a clarification from the RBI on whether it can collect public deposits on behalf of the West Bengal Government-promoted Safe Savings Scheme.

The bank had on Wednesday issued a statement claiming that the West Bengal Infrastructure Development Finance Corporation, a financial services company promoted by the State Government, had included its name as one of the bankers for accepting under the Safe Savings Scheme without its consent.

“Such schemes have to be in accordance with RBI’s guidelines. Moreover, we need consent from RBI to know if we can participate in such a programme or not. Clarifications have been sought from the RBI. We are awaiting a response (from them),” Shubhalakshmi Panse, CMD, Allahabad Bank said.

According to Panse, the bank was not sure if a non-banking finance company (NBFC) such as WBIDFC can raise public deposits through banks. “We do not know what happens to the deposit because it will not remain with us,” she said. WBIDFC had come out with an advertisement inviting application money from the general public requesting them to deposit it at any branch of these four banks in West Bengal.

The Safe Deposit scheme was proposed by West Bengal Chief Minister Mamamta Banerjee, after several people were duped in the Saradha scam.

abhishek.l@thehindu.co.in

Source: thehindubusinessline

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Vijaya Bank launches products for farmers, tiny units, youth

Vijaya Bank has launched three new products – for farmers, tiny units and for the mobile-savvy generation — to better serve their requirements.

Vijaya Kisan Home Loan will cater to the housing needs of agriculturists.

This loan scheme is targeted at farmers who have no income-tax returns to show as a proof of income, which all banks generally insist upon.

H. S. Upendra Kamath, Chairman and Managing Director, said: “The loan can be repaid in quarterly/half-yearly or yearly instalments coinciding with the harvesting season when the farmer will have liquidity.”

The rate of interest is 10.20 per cent at present and repayment period is fixed at a maximum of 30 years.

MSE Vijay is a loan product targeted at the medium and small enterprises sector.

To cater to the specific needs of this sector, bank has come out with features like no collaterals , no third-party guarantee, and coverage of all loans under Credit Guarantee Scheme .

Kamath said, the “maximum loan amount of Rs 1 crore — either term loan or working capital, and no margin is required up to loan amount of Rs 10,000. Only 15 per cent margin for loans up to Rs 10 lakh, and 20 per cent margin for loans above Rs 10 lakh.”

As for the rate of interest, it is the base rate plus 0.80 per cent ( 11 per cent) for loans up to Rs 10 lakh and 11.50 per cent for loans above Rs 10 lakh.

To provide a pass book facility on mobile devices, the bank has launched V-ePassBook+, a mobile application that can have details of the passbook on mobile devices with a lot of other attractive features also packed into it.

Kamath said: “This unique facility has the capability to maintain passbooks of multiple accounts, make personal notes on each passbook entry, maintain personal accounts and tag transactions of passbooks to it, record transactions occurring outside the bank in these personal accounts, and has a mini version of bank’s Web site with links to the main site.”

anil.u@thehindu.co.in

Source: thehindubusinessline

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Oriental Bank raises fixed deposit rates by up to 0.50%

State-owned Oriental Bank of Commerce (OBC) raised fixed deposits rate on select maturities by up to 0.5 per cent.

Term deposit with maturity 91-179 days would earn 0.25 per cent higher interest rate at 8.75 per cent, OBC said in a statement.

With the revision, term deposit between 180 days to 1 year would earn 9 per cent against existing 8.50 per cent, it said.

The new rates would be effective from November 4, it added.

Also, State Bank of India (SBI) raised fixed deposit rate by 0.2 per cent on select maturity.

Term deposit between 180-210 days attracts interest rate of 7 per cent against earlier rate 6.80 per cent.

However, there is no change in the interest rates for other maturities in less than Rs 1 crore bracket.

Earlier this week, RBI raised short-term lending (repo) rate by 0.25 per cent to 7.75 per cent making cost of fund expensive for the banks.

At the same time, the RBI lowered marginal standing facility (MSF) rate by a similar margin to 8.75 per cent.

Accordingly, the bank rate is reduced to 8.75 per cent with immediate effect. Consequently, the reverse repo rate is adjusted upward to 6.75 per cent.

Source: thehindubusinessline

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Muthoot Finance Q2 net declines 21%

Muthoot Finance on Thursday reported a 21 per cent decline in net profit for the second quarter ended September 30, 2013 at Rs 211 crore (Rs 268 crore).

Total income from operations for the quarter under review dipped marginally to Rs 1,296 crore (Rs 1,306 crore).

The board of directors has declared an interim dividend of Rs 3 per share for 2013-14, the company said in a filing with the stock exchange, Mumbai.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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BoI shares spurt as Q2 net profit more than doubles

Bank of India's net profit doubles to Rs 622 crore in the July to September quarter, 2013, driven by lower bad loans and improved margins and interest income.

The public sector bank’s net profit was at Rs 302 crore in the year-ago period.

Net interest income (difference between interest earned and expended) grew 15 per cent to Rs 2,527 crore from Rs 2,196 crore. Non-interest income rose 23 per cent to Rs 1,100 crore during the quarter from Rs 894 crore in the second quarter last year.

Shares jump 20%

The shares of Bank of India soared over 20 per cent to close at Rs 209.90 per share on the Bombay Stock Exchange.

The bank absorbed treasury losses worth Rs 646 crore during the quarter providing two-third upfront on the losses.

Total advances jumped 29 per cent to Rs 3.37 lakh crore as on September 30, 2013, from Rs 2.60 lakh crore, while total deposits increased 30 per cent to Rs 4.32 lakh crore from Rs 3.33 lakh crore as on September last year.

Healthy recoveries

Healthy recoveries and lower bad loans helped gross non-performing asset (NPA) ratio improve to 2.93 per cent in September quarter from 3.42 per cent in September end, 2012. Net NPA ratio also was up at 1.85 per cent as on September end, 2013 from 2.04 per cent in September quarter last year.

“Good rated public sector credit boosted our advances and recoveries,” said V.R. Iyer, Chairperson and Managing Director, Bank of India.

During the quarter, net interest margin also increased to 2.39 per cent from 2.35 per cent.

EPS nearly doubled to Rs 10.43 from Rs 5.26. The operating profit was up 13.43 per cent.

Source: thehindubusinessline

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Union Bank Q2 net profit dives 62%

Union Bank of India’s second quarter net profit more than halved as it made higher provisions to hedge against the rising non-performing assets.

In the July to September quarter, the bank made a net profit of Rs 208 crore against a net profit of Rs 555 crore, a year ago.

The Mumbai-based bank’s provisions increased 92 per cent to Rs 937 crore (Rs 487 crore).

Net interest income, the difference between interest earned and expended, increased 5.62 per cent to Rs 1,954 crore during the quarter.

D. Sarkar, Chairman, Union Bank of India, said the bank had to provide more as slippages increased from the corporate segment. He said that about six to seven corporates have been unable to service their loans as they have been stung by project delays, environmental clearances, among other things.

The bank had Rs 10,937 crore as outstanding restructured loans as on September 30, 2013. Sarkar said that as more banks in loan consortiums agree to restructure more accounts, Union Bank will restructure loans worth Rs 3,800-4,000 crore in the remaining part of the year.

Sarkar, while cautioning that the industry is still suffering, said the bank will maintain its gross non-performing asset levels at 3.5 per cent of total advances for rest of the year. In the reporting quarter, the public sector bank posted a gross NPA level of 3.64 per cent.

The bank expects that it will maintain a net interest margin of 2.6 per cent for the reminder of the year.

satyanarayan.iyer@thehindu.co.in

Source: thehindubusinessline

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Bank of Baroda net dips 10% on bad-loan provisioning

More money set aside towards bad loans and higher operating expenses weighed on Bank of Baroda’s bottom line in the July-September 2013 quarter.

The public sector bank reported a 10 per cent drop in net profit at Rs 1,168 crore in the reporting period against Rs 1,301 crore in the year ago period.

Growth in net interest income (the difference between interest earned and expended) was almost flat at Rs 2,895 crore (Rs 2,862 crore in the year ago period).

The bank set aside Rs 838 crore (Rs 725 crore) towards bad loans. Further, it set aside more (Rs 89 crore vs Rs 41 crore in the year-ago period) by way of provision for standard advances.

Operating expenses, including employee costs, rose 33 per cent at Rs 1,744 crore (Rs 1,308 crore).

During the quarter, bad loans (in gross terms) increased by Rs 1,125 crore to Rs 10,888 crore as on September-end 2013.

Restructured loans increased by Rs 1,485 crore in the reporting quarter to Rs 22,155 crore.

According to BoB Chairman and Managing Director S.S. Mundra, while accretion to the bad loans portfolio is gradually slowing, there is no let up in enterprises seeking loan restructuring.

Given the challenging economic environment, he expects more borrowers to seek loan restructuring in the next two quarters. “(Loan) Restructuring is still a fact of life….,” he said.

So far, 13-14 per cent of the restructured loans have turned non-performing. But going forward, this quantum could go up to 17-18 per cent, said Mundra.

In the reporting quarter, the bank’s net interest income (net interest income divided by average interest bearing assets) or NIM edged lower to 2.32 per cent against 2.71 per cent in the year-ago period.

Five principles

Mundra said the bank’s business focus will continue to be guided by five principles – retail focus, margin protection, adequate provisioning, improvement in asset quality, and capacity building.

Rupa Rege Nitsure, Chief Economist, BoB said, her bank would like to avoid aggression as the economy is still in the recovery mode.

But it will still grow a tad higher than the industry average to maintain its market share.

The bank will improve its NIM to 3 per cent through realignment in the loan book (giving more loans to the retail and micro, small and medium enterprise segments) and increase low-cost current and savings bank deposits.

Mundra said BoB will maintain status quo on deposit and lending rates.

Source: thehindubusinessline

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Muthoot Finance to float Rs 300-cr NCD issue next week

Muthoot Finance will next week tap the market with a Rs 300 crore non-convertible debenture (NCD) issue, its Managing Director George Alexander Muthoot has said.

This NCD issue will be for Rs 150 crore with an option to retain over-subscription of Rs 150 crore. The coupon rate on this debt instrument is likely to be 12 percent, Muthoot told BusinessLine.

For Muthoot Finance, this will be the sixth NCD issue. The company had come up with five listed NCD issues in recent years.

The previous NCD issue—which happened in September 2013-- was for Rs 300 crore including the green shoe option of Rs 150 crore. The demand for such NCDs was about Rs 325 crore, it is learnt.

Muthoot sees assets under management (AUM) growth for the current fiscal to be flat.

“I don’t see any growth in the short term—atleast for the next 2-3 quarters. The current negative sentiment has to subside. Growth will finally depend on the policies of the Reserve Bank of India towards gold loan companies”, Muthoot said.

Muthoot Finance on Thursday reported a 21 percent decline in net profit for the second quarter ended September 30 at Rs 211 crore (Rs 268 crore).

This second quarter bottomline performance is however higher than the first quarter net profit of Rs 194 crore.

Srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Allahabad Bank net profit climbs 18% to Rs 276 cr

Kolkata-based Allahabad Bank has reported a 17.77 per cent growth in net profit at Rs 276 crore for the quarter ended September 30, 2013.

The bank's total business stood at Rs 3,14,262 crore, a growth of approximately 15 per cent, over Rs 2,74,116 crore it reported in the corresponding quarter last fiscal.

According to Subhalakshmi Panse, CMD, Allahabad Bank, the Centre has decided to opt for a capital infusion of Rs 400 crore in the bank.

The bank would also opt for Qualified Institutional Placement (QIP) to the tune of Rs 330 crore. Depending on market conditions, QIPs could either be by the end of this fiscal or in 2014-15.

Abhishek.l@thehindu.co.in

Source: thehindubusinessline

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SBI board approves capital infusion

State Bank of India’s board on Wednesday approved infusion of capital funds to the tune of Rs 2,000 crore in the bank by way of preferential allotment of equity shares in favour of the Government of India.

Union Bank of India’s board too approved raising equity capital not exceeding Rs 1,997 crore on preferential/Qualified Institutional Placement /rights basis subject to approval of the Government and RBI.

Source: thehindubusinessline

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IRDA allows insurers more flexibility to invest

Insurance companies will now have more leeway to invest in sectors such as IT and pharma. The Insurance Regulatory and Development Authority has increased the sector specific exposure limit for investments by insurers from 15 per cent to 20 per cent of their total investment.

Hitherto, insurers, both life and non-life, were permitted to take an exposure in a specific sector up to 15 per cent of their investments (which includes debt and equity), with the exception of banking and financial services where the limit is 25 per cent and infrastructure where there is no exposure limit.

According to IRDA investment norms, at any point of time, insurers are permitted to have excess weightage beyond 15 per cent in only one industrial sector (except BFSI and infrastructure sectors).In a circular issued on Wednesday, the regulator observed that the industrial weightage vis-a-vis the benchmark indices is dynamic and at present the IT industry contributes more than 15 per cent to the benchmark indices. As the weightage keeps on changing from time to time, the regulator said it has decided to give general permission to have a further exposure of 5 per cent in one industrial sector (not applicable to BFSI).

“This was a long pending request from the industry. We will be now able to allocate more funds to other sectors such as IT and pharma, which have been performing very well,” said the chief investment officer of a private life insurer.

For raising the investments in a specific sector, insurers are required to take prior permission from their board.

IRDA also relaxed norms for fixed deposit investments in the promoter group of insurance companies.

“Considering the representations from the industry and the Life Insurance Council, we have decided to permit fixed deposits, as stated in the regulations, in promoter group scheduled banks within the 5 per cent limit prescribed for Promoter Group subject to the overall limits,” said the regulator.

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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Syndicate Bank to pay interest on monthly basis

Syndicate Bank has decided to exercise the option of paying interest on a monthly basis from next month, a change from the existing system of quarterly basis.

Reserve Bank of India, in its monetary policy on Tuesday, had decided to give banks the option to paying interest on savings deposits and term deposits at intervals shorter than the existing quarterly intervals, since all banks are on core banking platforms.

Some banks are not keen on this option, as they feel that reducing the interval could hike interest costs.

Modalities

M. Anjaneya Prasad, Executive Director of Syndicate Bank, said the bank’s management will meet next week to work out the modalities for implementation of the monthly interest payment structure. “This will benefit the customers. There will be no change in rates (for the monthly option),” he told media persons here.

Interest rates

The bank does not see any immediate scope for reducing lending rates, after the RBI cut marginal standing facility by 25 basis points and raised repo rate by 25 basis points.

“I do not think there is room for immediate change in interest rates. I think they will remain at existing levels in the next few weeks,” Prasad said.

Credit spurt

The bank, which registered a tame growth of 3-4 per cent in credit in the first half of the fiscal, expects credit growth to spurt in the remaining months. “We hope to end the fiscal with a credit growth of 18 per cent. It will still be lower than last year’s 21 per cent,” he said.

Last fiscal, the bank’s London branch contributed significantly to the credit growth, but this year off-take has been lower there also.

amitmitra@thehindu.co.in

Source: thehindubusinessline

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