IDBI Bank to raise Rs 1,200 cr fresh capital through QIP

State-run IDBI Bank plans to raise up to Rs 1,200 crore through qualified institutional placement in FY14, said a top official.

The bank needs an additional Rs 3,000 crore this fiscal, of which Rs 1,800 crore will come from the Government and the rest will have to be raised via qualified institutional placement route, IDBI Bank Chairman and Managing Director, M.S. Raghavan, at the sidelines of annual banking conference Bancon.

“We want to augment our tier one capital. Rs 3,000 crore is the amount we foresaw, of which Rs 1,800 crore has been allotted by the government. So, Rs 1,200 crore is the rough estimate which will come through QIP,” said Raghavan.

The bank has been allotted Rs 1,800 crore in support from the government, as part of the Centre’s Rs 14,000-crore capital infusion programme for banks during this fiscal.

On raising tier-II capital, Raghavan said it was very comfortable in that front and will not be doing any debt raising for the next two years. He also said his main objective is to improve the banks lending to the priority sector.

“We have been in the commercial banking space only for the last 10 years. So in our priority sector lending, we are substantially less and are yet to catch up to the RBI norms,” said Raghavan.

deepa.nair@thehindu.co.in

Source: thehindubusinessline

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Differential licensing may leave less lucrative business out: SBI chief

After the Finance Minister P. Chidambaram spoke about adopting innovative methods to follow differential licensing in India, the SBI chief was quick to say that we should ensure there is no regulatory arbitrage.

According to Arundhati Bhattacharya, “Otherwise, the more lucrative part of the business will get a lot of flair and for universal bankers like us, some amount of business is cross-subsidised by other players, but if we get a lot of competition in the lucrative business, then it would be difficult to maintain the other business.”

“Other than that if somebody wants to do a business in a particular area after having met all the regulatory requirements, it is fine… their call,” Bhattacharya added.

Bank aspirants with differentiated models of banking will be preferred while issuing new banking licences, said Finance Minister P. Chidambaram at the annual banking conference BANCON.

“I appreciate the need for different models of banking. I am happy that some of the applicants for licences have different models. We need different kinds of banks to cater to different segments of Indian society,” said Chidambaram.

The regulatory requirements include maintaining adequate SLR securities, priority sector lending and CRR, among others.

ICICI Bank chief Chanda Kochhar, in a bankers’ meet post-monetary policy in October, had also said differential licensing could lead to regulatory arbitrage.

Beena.parmar@thehindu.co.in

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Loan recast has gone “out of control,” says RBI official

Stating that the overall asset restructuring in the banking system has touched Rs 3.25 lakh crore as of June, RBI Executive Director B Mahapatra today said loan recast has gone “out of control” and all stakeholders need to tackle the problem jointly.

“Till March 2011, things were manageable. We had around Rs 1.1 lakh crore in recast loans, but now if you see, things are quite out of control. It has gone up to Rs 2.7 lakh crore. This is only CDR (corporate debt restructuring) and if you put both (CDR and bilateral restructuring cases between banks and companies) together, may be it might exceed Rs 3.25 lakh crore,” he said at the annual Bancon here.

Mahapatra said the Reserve Bank of India was willing to “tolerate a bit of restructuring,” but he exhorted banks to provide more against potential asset quality troubles and promoters to get more equity and personal guarantees.

“We’ll tolerate a bit of restructuring, we will give the regulatory forbearance, offer more time —— that is the loss or the sacrifice that we as regulators are willing to make. But you as bankers should also be willing to make more provisions...and the borrowers should also sacrifice, he should bring in more equity,” he said.

“It is a loss—sharing arrangement. In a system, when there is a problem, all the stakeholders should share the loss,” the executive director said.

Mahapatra pointed out that the RBI has increased the provisioning requirements for banks from 2 per cent earlier to up to 5 per cent in some cases.

Seeking to allay concerns, Mahapatra said things are not as bad as they are made out to be. He said the total stress in the system, including non-performing assets (NPAs) and restructured assets, is under 10 per cent, which is less than the 16 per cent level in the aftermath of the 1997 Asian financial crisis.

The situation is not “panicky,” he said.

Source: thehindubusinessline

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KVB net down 37.5% on higher provision

Higher provision for depreciation on investments, bad loans and terminal benefits on wage revision dragged Karur Vysya Bank’s net profit down 37.5 per cent to Rs 82.89 crore in the second quarter of the current fiscal.

The bank’s net profit during the corresponding quarter of the previous fiscal stood at Rs 132.76 crore. Its net interest income increased 4.41 per cent to Rs 298.38 crore (against Rs 285.77 crore).

Net interest margin fell to 2.51 per cent (3.06 per cent).

Total business at the end of the first six months of the current fiscal, however, increased 27.3 per cent to Rs 75,281 crore (Rs 59,121 crore). Deposits were up 29.7 per cent while advances grew 24.27 per cent. Both gross and net NPAs increased to 1.55 per cent (1.26 per cent) and 0.51 per cent (0.32 per cent), respectively.

Source: thehindubusinessline

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SBI to raise Rs 5,000 cr via tier II bonds

The country’s largest bank State Bank of India plans to raise tier-II capital in the range of about Rs 5,000 crore before March.

“We will be raising funds through the tier-II bonds before March hopefully. It should be in the range of about Rs 5,000 crore. There is no time frame but definitely before March,” said SBI chief, Arundhati Bhattacharya. She was speaking at the annual Bancon summit here.

Earlier this week, Bhattacharya had said SBI planned to raise over Rs 9,000 crore in tier-I capital through the qualified institutional placement route to strengthen its core capital.

Besides, the Government has also promised to infuse Rs 2,000 crore through a preferential allotment of shares.

Bhattacharya, who took over as the head of the state-run lender in October, said the bank will lend to all the sectors where it sees viability but added that it will focus more on growing the retail book.

FCNR and Swap window

On the extension of the FCNR (B) deposits and swap window, which comes to an end on November 30, she said the RBI has not conveyed anything on this regard.

“It should not be an issue. Our funds will go up by the end of the month…About half a billion dollars ($500 million) have been raised (so far under the facility),” Bhattacharya said.

The RBI Governor, Raghuram Rajan, on Wednesday, said that the banks have got in up to $18 billion through the scheme but some experts are of the view that it may be extended in order to take up the number to up to $30 billion.

The FCNR and swap window was opened by the RBI in July to get NRI inflows to stabilise the rupee.

Growth and margins

On asking about the net interest margins, Bhattacharya maintained her cautious stance saying, “Times are very volatile hence there is no guidance on the margins.”

In spite of the problems on the economic front, she said SBI is maintaining its credit growth target at 16-18 per cent.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Karnataka Bank CASA drive

Karnataka Bank Ltd has launched a campaign to mobilise CASA (current account savings account) deposits.

Under the nationwide campaign from November 15 to February 28, the bank intends to open more than five lakh accounts under the CASA category by undertaking door-to-door canvass by the work force, according to a bank statement here.

At present, the bank has more than 53 lakh accounts under CASA category. The bank is aiming to cross a customer base of 60 lakh in CASA by March 2014.

M.S. Mahabaleshwar Bhat, Chief General Manager of the bank, launched the campaign in the presence of the General Manager, Meera Aranha, and other executives from the head office.

The statement said that the bank would extend free of charge add-on facilities such as VISA debit card, internet banking and mobile banking. The SMS alert facilities will be extended free of charge.

The current account customers such as traders and entrepreneurs under micro, small and medium enterprises sectors can get the services of the point-of-sales services to enhance their business opportunities, it said.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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Corp Bank pays tribute to Nehru

Corporation Bank paid tribute to Pandit Jawaharlal Nehru in Mangalore on Thursday. S.R. Bansal, Chairman and Managing Director of the bank, paid floral tributes to Nehru’s statue in front of the corporate office in Mangalore.

Bansal said on the occasion that children should get good education. Amar Lal Daultani and B.K. Srivastav, Executive Directors of the bank, were present.

Children and teachers from many schools and the members of Bharat Seva Dal took part in the programme.

Source: thehindubusinessline

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Karur Vysya Bank net profit falls 37.5%

Higher provisions towards depreciation on investments, bad loans and towards terminal benefits on wage revision have dragged Karur Vysya Bank's net profit during the second quarter by 37.5 per cent to Rs 82.89 crore.

The bank's net profit during the corresponding quarter of the previous fiscal stood at Rs 132.76 crore.

Its net interest income increased 4.41 per cent to Rs 298.38 crore (Rs 285.77 crore). Net interest margin fell to 2.51 per cent from 3.06 per cent.

Total business at the end of the first six months of the current fiscal, however, increased 27.3 per cent to Rs 75,281 crore (Rs 59,121 crore). Deposits were up 29.7 per cent and advances grew 24.27 per cent.

Both gross and net NPAs increased to 1.55 per cent (1.26 per cent) and 0.51 per cent (0.32 per cent), respectively.

Source: thehindubusinessline

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SBI not to merge any associate bank this fiscal

State Bank of India has gone back on its plan to bring one of its associate bank’s under its fold in the current fiscal.

“For the time being, the associate bank merger is on the backburner. Nothing is going to happen till March 31, 2014,” said S. Vishvanathan, Managing Director, Associates and Subsidiaries.

In August, the then chairman of the bank, Pratip Chaudhuri, had said that SBI will merge one of its associate bank with itself by end of September.

He had further added that it could be a bank with a weak retail base leading to widespread speculation that the bank to be absorbed could be State Bank of Patiala.

SBI has five associate banks — State Bank of Hyderabad, State Bank of Mysore, State Bank of Travancore, State Bank of Bikaner and Jaipur and State Bank of Patiala.

Arundhati Bhattacharya, the incumbent SBI chief, said, “We need to do a little more consolidation on our side before we take that (another bank) on. It is not off the table, but at this point we need to pay attention to what we are doing in a better manner.”

A top executive at the SBI said that there is a new chief at the helm and priorities change when a new person assumes charge.

Another reason why the associate bank merger has been delayed could be because the country’s largest lender is grappling with higher staff expenses. Staff expenses at SBI rose 36 per cent in the latest reporting quarter to Rs 5,819 crore. The bank will also have to pay higher salaries for employees of the merged bank. SBI is the highest paymaster among public sector banks.

satyanarayan.iyer@thehindu.co.in

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Lakshmi Vilas Bank Q2 net down 67% on higher provisions

Lakshmi Vilas Bank reported 67.4 per cent decline in net profit for the second quarter ended September 30 at Rs 5.85 crore on account of higher provision for bad loans.

The private sector bank had posted net profit of Rs 17.93 crore during the same quarter (July-September) of the previous fiscal.

Total income of the bank in the second quarter of the current fiscal stood at Rs 536.76 crore, up from Rs 477.01 crore a year ago, it said in a filing to the BSE.

Net non-performing assets (NPAs) or bad loans of the bank rose to 3.77 per cent during the quarter, from 2.95 per cent a year ago.

The bank made provisioning of Rs 74.63 crore during the quarter under review, up from Rs 28.60 crore in the corresponding period of 2012-13.


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Corporation Bank signs MoU with warehousing and collateral management company

Corporation Bank has entered into a Memorandum of Understanding (MoU) with Star Agri Warehousing and Collateral Management Ltd, Mumbai, for providing finance against warehouse receipts.

A press statement by the bank said here that the MoU was exchanged between Lakshminatha Reddy, General Manager of Corporation Bank, and Jimmy John, Vice-President of Star Agri Warehousing and Collateral Management Ltd, in the presence of B.K. Shrivastav, Executive Director of the bank in Mangalore on Tuesday.

Banks are entering into tie-up arrangement with specialised warehousing and collateral management agencies wherein the pledge of negotiable warehouse receipt of the agencies with the banks facilitate farmers to get better agriculture credit facilities and prevent distress sale of the agricultural produce while mitigating risks of volatility in prices, the statement said.

Star Agri Warehousing and Collateral Management Ltd has its registered office in Jaipur. It has more than 200 warehouses across in India with the total warehousing capacity of 10 lakh tonnes, it added.

vinayak.aj@thehindu.co.in

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Andhra Bank Q2 net plummets to Rs 71 cr on higher provisions, NPAs

Andhra Bank’s net profit decreased significantly to Rs 71 crore in the second quarter ended September 30, 2013, against Rs 326 crore in the corresponding quarter of the previous year on higher provisions.

The total income of the Hyderabad-based bank, however, increased to Rs 3,817 crore from Rs 3,416 crore in the same period last year.

The provisions (other than tax) and contingencies increased to Rs 502 crore (Rs 139 crore) while the net non-performing assets had gone up to 3.54 per cent (2.16 per cent).

The earnings per share stood at Rs 1.26 (Rs 5.82), the Bombay Stock Exchange was informed on Wednesday.

Andhra Bank’s scrip lost 4.90 per cent on the Bombay Stock Exchange on Friday and was trading at Rs 59.25 after the lunch hour.

naga.gunturi@thehindu.co.in

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Karnataka Bank appoints new additional director

Karnataka Bank Ltd has appointed Rammohan Rao Belle, former Managing Director and Chief Executive Officer of SBI General Insurance Co Ltd, as an additional director.

A bank statement said here on Tuesday that Belle started his banking career in 1974 in SBI. During a span of 38 years with SBI, he held several important banking and information technology (IT) assignments in India and the UK.

He has experience in retail, corporate and international banking, banking operations, credit, risk management and IT. He was also involved in the setting up of CIBIL, the first Credit Information Bureau in India, it said.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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Canara Bank Q2 profits down 5.29% on higher provisioning

Higher provisioning for non-performing assets has hit Canara Bank’s bottom line. The bank’s net profit fell 5.29 per cent to Rs 625.94 crore for the second quarter (Q2) of the current fiscal, compared with Rs 660.97 crore in the same period last year.

Total income of the bank grew 13.29 per cent, to Rs 10,427.48 crore compared with Rs 9,203.61 crore recorded in the same quarter last year. EPS stood at 14.13 as against 14.92 last year.

Announcing the bank’s results, R. K. Dubey, CMD, Canara Bank, said profits were hit due to low recovery in government securities (bonds) and higher provisioning for NPAs.

“The quarter also saw record cash recovery at Rs 1,923 crore while the low base rate was able to see good growth in credit off-take,” he added.

Provisions (other than tax) and contingencies increased to Rs 674.03 crore from Rs 421.12 crore in the corresponding quarter of the previous year.

Net interest income

Operating profit was up 11.15 per cent at Rs 1,425 crore as against Rs 1,282 crore recorded in the same period last year. Bank’s non-interest income grew by 54.57 per cent to Rs 2,011 crore compared to Rs 1,301 crore .

Net Interest Income (NII) for the quarter increased by 11.96 per cent to Rs 2,191 crore from Rs 1,957 crore . Net Interest Margin (NIM) was at 2.22 per cent compared to 2.35 per cent in the corresponding quarter of the previous year.

Gross NPA was Rs 7,475.07 crore (Rs 5,609.53 crore). Net NPA was at Rs 6,459.30 crore (Rs 4,568.57 crore). Total deposits touched Rs 391,613 crore, with 16.3 per cent year-on-year growth compared to Rs 336,762 crore as at September 2012. Canara Bank’s Board of Directors at its meeting today approved a proposal regarding raising of capital by way of preferential allotment of equity shares amounting to Rs 500 crore to the Government .

anil.u@thehindu.co.in

Source: thehindubusinessline

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Punjab & Sind Bank Q2 net down 63% at Rs 43 cr

Punjab & Sind Bank (PSB) has reported a 63 per cent decline in net profit for the quarter ended September 30 at Rs 43 crore (Rs 117 crore).

Total income for the quarter under review increased by 5 per cent to Rs 1,980 crore (Rs 1,886 crore).

For the six months ended September 30, PSB has reported a 17 per cent increase in net profit at Rs 165 crore (Rs 141 crore).

Total income in the first half of the current fiscal increased 7 per cent to Rs 3,981 crore (Rs 3,730 crore), PSB said in a filing with the stock exchanges.

Srivats.kr@thehindu.co.in

Source: thehindubusinessline

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IOB to raise Rs 1,626 cr via preferential shares

The board of directors of Indian Overseas Bank has cleared the bank’s proposal to raise Rs 1,626 crore from the Government and Life Insurance Corporation through preferential allotment of equity shares, the Bank said in a regulatory filing.

IOB will issue equity shares of face value of Rs 10 with premium on preferential basis to the Government and LIC up to an amount of Rs 1,626 crore. It decided to issue perpetual bonds to the extent of Rs 2,497 crore and to authorise its Chairman and Managing Director to fix the size of the issue and finalise the terms and conditions, including fixation of coupon rate depending upon the market conditions.

The chairman may further be authorised to take actions in connection with issue of perpetual bonds, either domestically or overseas, according to the announcement.

The board meeting was held in the wake of the Government’s decision to infuse capital to the extent of Rs 1,200 crore to IOB.

The Government will be allotted shares to the tune of Rs 1,200 crore while LIC will be getting shares to the extent of Rs 426 crore. The government’s stake in IOB currently stands at 78.2 per cent.

IOB recently said it would require up to Rs 2,100 crore capital for the current financial year, and it was planning to raise around Rs 900 crore through QIP or private placement.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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Dena Bank Q2 net down 55% to Rs 107 cr on higher provisions

Public sector lender Dena Bank reported a 55.19 per cent decline in net profit at Rs 107.38 crore for the quarter ended September 30, 2013 on account of higher provisions. The bank’s profit after tax stood at Rs 239.64 crore in the corresponding quarter last year.

“The profit has come down mainly on account of higher provisions, which we had to provide for treasury and restructuring and NPA advances,” the bank’s Chairman and Managing Director Ashwani Kumar told reporters here.

The bank’s provisions increased to Rs 266 crore in the second quarter as against Rs 197 crore in the last quarter.

For the half year, it has gone up by Rs 242 crore to Rs 659 crore from Rs 417 crore, Kumar said.

The bank exercised the option of providing the net depreciation on the entire Available for Sale (AFS) and Held for Trade (HFT) categories of government bonds portfolio in three equal instalments.

“Accordingly, provision to the extent of Rs 129 crore has been made against the net depreciation of Rs 387 crore on the entire AFS and HFT investment portfolio as on September 30,” the bank said.

The bank transferred Rs 1,600 crore of SLR securities to Held to Maturity category during the quarter, Kumar said.

The net interest income stood at Rs 625.17 crore as against Rs 597.23 crore in the same period last year.

Gross non performing assets of the bank increased to 3 per cent during the quarter from 1.97 per cent year—ago.

Net NPA rose to 2.02 per cent from 1.74 per cent.

The bank had fresh slippages of Rs 485 crore on three major loan accounts. “There were three large NPA accounts — Rs 200 crore from Delhi Airport Metro Express, Rs 100 crore from an European project and Rs 38 crore from KMP Expressway,” Kumar said.

The state—owned bank restructured Rs 490 crore of loans in the quarter.

Among the major accounts, the bank restructured loan amount of Rs 156 crore of Jyoti Ltd, Rs 100 crore of Bombay Rayon and Rs 35 crore of Rathi Steel and Power.

“We have a restructuring pipeline of Rs 500 crore in the current quarter,” Kumar said.

In the period under review, the bank’s net interest margin (NIM) stood at 2.57 per cent as against 2.86 per cent in the same period last year.

“We expect our NIM to be in the range of 2.75 per cent by March 2014,” Kumar said.

The bank’s total business increased by Rs 16,375 crore with a growth of 11.45 per cent year—on—year basis and stood at Rs 1,59,333 crore as against Rs 1,42,958 core in the year—ago quarter.

The bank’s deposits have increased by 12 per cent to Rs 93,669 crore in the quarter. Total advances in the quarter grew by 11 per cent to Rs 65,664 crore. The credit deposit ratio stood at 70.10 per cent.

Source: thehindubusinessline

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J&K Bank profit up 12% on better net interest margin

At a time when various banks have recorded much lower profit, J&K Bank said that its net profit had gone up by over 12 per cent during the three-month period ended September 30, 2013.

The bank registered a Rs 302.66-crore net profit against Rs 269.53 crore for the corresponding quarter of 2012-13.

The total business is up (year-on-year) by 14.67 per cent compared with the corresponding quarter last year and crossed Rs 1 lakh crore.

“Our focus for the last two quarters has primarily been driven by the twin objectives of sustaining growth and maintaining a quality asset book. So far, we have pulled it through.

“Notably, we have improved our NIM (net interest margin) on account of better liability management,” Chairman and CEO Mushtaq Ahmad said on Saturday.

The bank’s NIM appreciated to 4.33 per cent from 3.94 per cent recorded in the same period last year.

At the same time, gross non-performing assets (NPAs) as a percentage of advances was 1.69 per cent, while net NPA stands at 0.19 per cent.

The bank, he said, would continue to increase its priority sector lending in J&K, which is the mainstay of the local economy, to boost agriculture and allied activities, craft economy, trade and industry.

“Meanwhile, we shall step up our efforts to tap every grower under the Apple Project, which also forms a part of our broader plan on financial inclusion.

“The bank envisions tapping almost all the apple growers across the valley which, in financial terms, would mean credit offtake of at least Rs 5,000-6,000 crore”, he said.

On the bank’s expansion outside the State, Ahmad said: “This year, we have already opened five business units in Bangalore, Delhi and Hyderabad.

“We are prospectively looking at opening 15 more units this fiscal in Maharashtra, Kerala, Karnataka and Delhi.

Our corporate loan-book outside the State shall grow, though on a very selective basis.”

shishir.s@thehindu.co.in

Source: thehindubusinessline

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