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Saturday, December 7, 2013

Corporation Bank inks deal with Bajaj Auto

Corporation Bank has signed a memorandum of understanding with Bajaj Auto Ltd for financing its three-wheelers across the country.

The MoU was signed here by V.S. Karthikeyan, General Manager, Corporation Bank, and C.K. Rao, Vice-President, Commercial Vehicles, Bajaj Auto.

With the tie-up, Corporation Bank will be the preferred financier for financing Bajaj three-wheelers.

“The bank is in the forefront of offering value-added and innovative retail products and services to its customers. The tie-up with Bajaj Auto Ltd is one more step in this direction,” Karthikeyan said, adding that their turnaround time for processing and sanctioning of loan was among the best.

Source: thehindubusinessline
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Corporation Bank opens SME loan centre in Mumbai

S.R. Bansal, Chairman and Managing Director of Corporation Bank, inaugurated the bank's SME Loan Centre in Mumbai on Friday.

A bank statement said here on Saturday B.B. Tejappa, Circle General Manager, and S. Prakash Nayak, Deputy General Manager and Zonal Head of Mumbai, were present on the occasion.

SME loan centres have dedicated relationship managers, backed by an exclusive processing team, to render timely and hassle-free credit to SME customers. The Mumbai centre will focus on industrial estates in the city and cater to the needs of SME units, it added.

Source: thehindubusinessline
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Urban co-op banks allowed to act as PAN service agents

The Reserve Bank of India has given permission to financially sound and well managed urban co-operative banks (UCBs) to act as PAN (permanent account number) service agents or PSAs.

UCBs can become PSAs by entering into a tie-up with UTI Infrastructure and Technology Services Ltd (UTIITSL), with prior approval from the RBI.

PAN is a 10-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department.

It is mandatory to quote PAN on tax returns, all documents pertaining to financial transactions notified from time to time by the Central Board of Direct Taxes and all correspondence with any income tax authority.

The move to allow UCBs to act as PSAs is probably to ensure that more individuals have PAN as it will enable the I-T Department to link all transactions of the individuals. There are about 1,600 UCBs in the country.

Due care advised

The RBI said UCBs undertaking PSA activity should, however, exercise due care as violations, such as delay in forwarding the applications to UTIITSL processing centres, incomplete applications, discrepancy in enclosed documentary proof/applications, and so on, may result in UTIITSL levying a penalty.

Transactions where PAN is required include sale and purchase of immovable property, motor vehicle, or payments in cash of amounts exceeding Rs 25,000 to hotels and restaurants or in connection with travel to any foreign country.

It is also mandatory to mention PAN for obtaining a telephone or cellular telephone connection.

Likewise, PAN has to be mentioned for making a time deposit exceeding Rs 50,000 with a bank or post office or depositing cash of Rs 50,000 or more in a bank.

Source: thehindubusinessline
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RBI hits the jackpot with dollar deposit scheme

The Reserve Bank of India (RBI)’s out-of-the-box move to woo dollar deposits by protecting banks from currency risks has been a big hit.

Banks have managed to mobilise $34 billion in foreign currency deposits since the special swap scheme was flagged off in September.

This is much higher than the sums raised by the Resurgent India Bonds (RIBs) of 1998 ($4.2 billion) and the India Millennium Bonds ($5.5 billion). The inflows have given the rupee a much-needed breather from its steady slide over the past year.

Win-win for banks

But since banks have always had the option of raising FCNR (B) deposits, what has made them so attractive now? The low cost of this option was the major reason. Usually, an interest rate of 400 basis points over Libor is paid on dollar deposits to NRIs. To service the deposit, the bank would have to buy a currency hedge, paying about 7 per cent a year.

Effectively the bank ended up footing an interest cost upwards of 12 per cent on each deposit.

But with the RBI subsidising the hedging cost at a fixed 3.5 per cent, the effective cost of funds for FCNR deposits has plummeted to 8.75- 9 per cent. This made it an attractive option, similar to raising domestic deposits.

S. Srinivasaraghavan, Head of Treasury at Dhanlaxmi Bank, said, “We saw very high collections because of aggressive campaigning by banks and the added incentive of raising funds at 1 per cent less than market rates. Also, it provided a cheaper cost of funding to banks compared to funding through domestic deposits which were around 10 per cent at that time.”

Concerns too

Abheek Barua, Chief Economist, HDFC Bank, points out that deposits being in the nature of debt, “we must be prepared to handle large outflows at a future date”.

“While NRI deposits have been sticky in the past, there is no guarantee that they will rollover when these deposits mature.”

But market experts are pinning their hope on new foreign portfolio flows into the bond market with the inclusion of Indian gilts in the global indices. According to Bank of America Merrill Lynch, inclusion of Indian gilts in the emerging market bond index can help in raising $20-25 billion from the global debt funds.

Besides, the RBI has also incurred a cost to raise these deposits as the central bank bears any currency risk above the 3.5 per cent paid by the banks. “If the total FCNR (B) deposit mobilised is $10 billion, the RBI swap subsidy may result in a subvention at $1.9 billion based on the short- term rate of 9 per cent.” says Soumya Kanti Ghosh, Chief Economic Adviser, SBI.

Wonders of leverage

Some banks have FCNR deposits to offer attractive leveraged products to NRIs, which have multiplied the flows through this route.

Here is how the leverage works. An NRI who deposits dollars in an overseas branch gets an overdraft on the deposit which, in turn, is brought as an FCNR (B) deposit into the Indian branch.

If an NRI deposits $1,000 in an overseas branch and gets an overdraft of say $9,000 as lien on the deposit, $10,000 gets deposited into the Indian branch as FCNR (B).

Now here’s the math. The bank pays the depositor interest on the $10,000 deposit at Libor plus 400 basis points for three years. On the other hand, the bank earns interest on the amount it lends in India ($10,000) as well as on the overdraft ($9,000) given to the NRI.

Hence, both the bank and the depositor benefit from such returns. “In effect, the annualised profit rate of the overdraft amount invested in India by the bank may be close to 10 per cent. Additionally, the NRI investor earns an annualised return up to 17-18 per cent on his initial investment. This is attractive both for the bank and the depositor,” says Soumya Kanti Ghosh, Chief Economic Adviser, SBI.

Also, he says, “Banks need not maintain cash reserve ratio or statutory liquidity ratio on such deposits.”

Source: thehindubusinessline
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SBI graft case: Loan given in ‘ordinary course of business’, says internal report

State Bank of India’s two-member internal enquiry committee seems to have exonerated Deputy Managing Director Shyamal Acharya of the allegations of wrongdoing in the sanction of a Rs 75-crore loan to a Delhi-based company.

The internal enquiry committee, comprising Managing Directors Hemant Contractor and A. Krishna Kumar, concluded that sanction for the loan by the credit committee headed by Acharya “appears to have been given in the ordinary course of business”.

The bank has submitted the internal enquiry report to the Department of Financial Services, said a bank spokesperson.

The committee was set up immediately after the Central Bureau of Investigation (CBI) on November 25 registered a case of alleged graft against SBI Deputy Managing Director, Mid-Corporate Group, Shyamal Acharya, Chairman of a New Delhi-based private company and others.

CBI, in its press release last month said the DMD allegedly influenced his office to process the loan application of the private company and got the loan of Rs 75 crore sanctioned.

CBI’s allegations

“After sanction of the said loan, the Chairman of the said private company allegedly paid Rs 25 lakh to his Advisor (a former SBI official) as reward and also paid Rs 15 lakh to him for further giving it to the DMD as reward.

“After receipt of the said amount of Rs 15 lakh, Advisor (former AGM, SBI) allegedly purchased one Rolex and one Omega wrist watch worth Rs 7.75 lakh (approximately) and visited the office of the SBI DMD at Mumbai and delivered the said two wrist watches to him,” said the CBI.

According to the Bureau, upon delivery of the wrist watches, the Advisor (former SBI official) was apprehended by the CBI.

The two wrist watches were recovered from the DMD’s office cabin.

CBI said searches at residential and office premises of the accused were conducted.

Source: thehindubusinessline
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All-India bank strike on Dec 18

The United Forum of Bank Unions, an umbrella organisation of bank officers’ and employees’ unions, will go on an all-India strike on December 18 to press for a halt to the ongoing banking reforms and immediate wage revision in the banking sector.

In a press statement, State Banks’ Staff Union (Kerala Circle) said that the last five-yearly bipartite wage settlement had run out more than a year back but the Indian Banks’ Association had not taken steps for the overdue settlement.

The union pointed out that the workload of bank staffers had gone up enormously across the industry and the cost of living too had risen, necessitating substantial increase in pay and allowances.

It also noted that the Government had recently introduced a series of reforms in public sector banks many of which were aimed at privatising them. The banking regulations, it said, had safeguarded the banking system from collapse even as several major banks in other countries folded up during the global economic crisis.

The Government was now trying to water down these regulations. The December 18 strike is part of the unions’ resistance to the reforms.

Source: thehindubusinessline
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Coimbatore: Corp Bank SME centre

Corporation Bank opened a loan centre for SME (small and medium enterprises) advances in Coimbatore on Thursday.

A press statement by the bank said here on Friday that B. K. Srivastav, Executive Director of the bank, inaugurated the SME loan centre in Coimbatore, in the presence of V. Thangaraju, General Manager, and R. Natarajan, Circle General Manager, Chennai.

The bank has got a major share of finance under textile segment in Tirupur, Coimbatore and other tier II and III centres in Tamil Nadu, the statement said.

Source: thehindubusinessline
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Coimbatore: Corp Bank SME centre

Corporation Bank opened a loan centre for SME (small and medium enterprises) advances in Coimbatore on Thursday.

A press statement by the bank said here on Friday that B. K. Srivastav, Executive Director of the bank, inaugurated the SME loan centre in Coimbatore, in the presence of V. Thangaraju, General Manager, and R. Natarajan, Circle General Manager, Chennai.

The bank has got a major share of finance under textile segment in Tirupur, Coimbatore and other tier II and III centres in Tamil Nadu, the statement said.

Source: thehindubusinessline
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M.S. Bhaskar nominated on Canara Bank board

The Central Government has nominated Mocherla Sairam Bhaskar as part-time non-official director on the Canara Bank board.

In a release to exchanges, Canara Bank said Bhaskar’s appointment is for a period of three years from the date of notification of his appointment or until further orders.

Source: thehindubusinessline
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Monday, December 2, 2013

Cyber criminals try to steal passwords of PNB customers

Cyber criminals tried to steal passwords of corporate and individual customers of Punjab National Bank (PNB) last week, global cyber security firm Websense said.

California-based Websense, which provides protection against cyber attacks and data theft, said it was able to block the intrusion, which involved a phishing attack.

Phishing involves sending emails purporting to be from reputable firms to unsuspecting individuals and also corporate entities to induce then in revealing personal and financial information like passwords, credit card numbers, etc.

“Last week, Websense Security Labs came across a phishing email targeting PNB customers. The phishing attack was aimed to obtain password of corporate and individual customers,” Websense Regional Director India Surendra Singh told PTI.

PNB is not the client of the company, but these phishing mails were sent to several individuals and some corporate who are clients of Websense, he added.

PNB officials were not immediately available for comments.

Singh said this phishing campaign requires the recipient to open an email attachment and fill in the required fields, including user ID, password, transaction password and mobile number.

Once completed the form redirects customers to a legitimate bank site, while their personal information including password credentials are sent to a server under the attacker’s control, he added.

“This information is often sold by cyber criminals to the Internet underworld or they use it themselves, Singh said.

There has been an increase in the intensity and number of phishing and other cyber attacks trying to steal financial information from individuals as well as corporate and Websense expects such acts to grow in the future, he added.

The firms security predictions for 2014 projects that cyber criminals will rely less on high-volume advanced malware because over time it runs a higher risk of detection.

They will instead use lower volume, more targeted attacks to secure a foothold, steal user credentials and move unilaterally throughout infiltrated networks.

Source: thehindubusinessline
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Sunday, December 1, 2013

Bank unions demand 5-day week

When the Government and many companies, both in the public and private sectors, follow a five-day week work regimen, why not banks?

Trade unions in the banking sector have raised this demand as part of their bipartite wage negotiations with the Indian Banks’ Association.

With alternative channels such as ATMs, Internet and mobile banking in place, the unions feel that the time is ripe for moving to a five-day week.

The loss of one working day could be made up by extending the business hours from Monday to Friday.

Divided view

However, during the wage revision negotiations between trade unions and the IBA’s wage negotiation committee led by Indian Bank Chief T. M. Bhasin, bankers were divided in their opinion on going for a five-day week.

One section of the bankers held the view that when electronic banking channels are available for customers to transact business and when the domestic financial markets — bond, money, foreign exchange and stock — as well as the banking regulator observe a five-day week, why not banks. Another section of bankers were of the opinion that five-day week was not advisable as it would come in the way of efforts towards financial inclusion.

The United Forum of Bank Unions (UFBU), in its memorandum to the Finance Minister, said not only Central and State Government ministries/departments but even the Reserve Bank of India follow the five-day work schedule.

“Already in the banking sector, with the advent of technology-based services, proliferation of ATMs, Internet banking, etc., the delivery channels for customer services in the banks have multiplied manifold. Hence, it is possible to introduce five-day banking.”

Wage pact

UFBU said the last wage pact in the banking sector expired in October 2012 and it has submitted a fresh charter of demands for revision of wages and service conditions to the IBA.

“More than a year has elapsed but except for some preliminary discussions, no serious negotiations have been held by the IBA on our demands.

“This is causing lot of concern and anxiety amongst the banking staff and, hence, there is need to expedite the negotiations with more meaningful and serious discussions on our demands to enable early conclusion of the revised wage settlement.”

As and when it is concluded, the 10th bipartite wage settlement between trade unions and bank managements will be applicable to employees of all public sector banks and some old-generation private sector banks.

Source: thehindubusinessline
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Bank officers’ body calls for better security at ATMs

The All-India Bank Officers’ Association (AIBOA) has appealed to its affiliated units and State committees to urge the respective bank managements to provide security and safety to customers transacting through ATMs.

Hailing the Karnataka Government’s swift action in ordering closure of unmanned ATMs in the State and ensuring a secure life for its citizens, the AIBOA General-Secretary S. Nagarajan said “this alternative delivery channel is a definite disconnect between the branch and ATM outfit in all respects.” The ATM channel brought into the banking system during the first decade of reforms in India can be a convenient delivery channel, but is proving to be quite unsafe, he said, referring to the recent attack of a female bank staff inside an ATM in Bangalore.

Source: thehindubusinessline
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Mohan Tanksale elected new IBA chief executive

Apex banking lobby Indian Banks’ Association (IBA) has appointed Mohan V Tanksale as its chief executive.

“Tanksale, who retired from Central Bank earlier this year, will take over as the IBA chief executive from today, that is December 1, 2013,” Indian Banking Association said in a statement.

The appointment follows the incumbent K Ramakrishnan retiring on Saturday after a five-year tenure.

Source: thehindubusinessline
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RBI may allow up to 74% FDI in credit information cos

The RBI may allow up to 74 per cent foreign direct investment in credit information companies.

“The Reserve Bank may consider allowing higher FDI (foreign direct investment) limits to entities which have an established track record of running a credit information bureau in a well-regulated environment,” RBI said in a notification.

The limit can be allowed to be increased up to 49 per cent if their ownership is not well-diversified, which means if one or more shareholders each hold more than 10 per cent voting rights in the company. And the limit can be raised to 74 per cent if the ownership is well-diversified, RBI said.

If the ownership is not well-diversified, at least half of directors of the investee credit information company (CIC) in India should be Indian nationals or non-resident Indians or persons of Indian origin, subject to the condition that one-third of the directors are Indian nationals resident in India, it added.

“The investor company should preferably be a listed company on a recognised stock exchange,” RBI said. In case investor in a CIC is a wholly-owned subsidiary (directly or indirectly) of an investment holding company, these conditions will be applied to the operating group company that is engaged in credit information business and has undertaken to provide technical know-how to the CIC in India, the regulator said.

A credit information company collects and maintains records of an individual’s payments pertaining to loans and credit cards. These records are submitted to the CIC by banks and other credit institutions, on a monthly basis.

This information is then used to create credit information reports (or credit report) which are provided to credit institutions in order to help evaluate and approve loan applications or any other credit applications.

Source: thehindubusinessline
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LIC to stop selling 34 policies in December

Insurance giant Life Insurance Corporation has decided to stop selling as many as 34 policies, including Jeevan Anand, Jeevan Madhur and Jeevan Saral, to comply with new regulatory guidelines.

These policies are withdrawn in December as they are not in conformity with the provisions of new regulations on non-linked insurance products, linked insurance products and health insurance products, a senior LIC official said.

Of the 34 products, LIC will stop sale of Jeevan Amrit from December 7, Jeevan Surabhi from December 14 while two other schemes from December 21 and December 28 respectively.

Remaining 28 policies will go off LIC’s shelves from December 31.

Last month, LIC had withdrawn 14 policies including Convertible Term Assurance, Children Deferred Endowment Assurance.

These policies are being discontinued as part of regulatory compliance.

The Insurance Regulatory and Development Authority (IRDA) had extended the deadline for implementation of new individual product regulations for the life insurance industry by three months to December 31.

The new guidelines are aimed at making insurance policies more customer-friendly.

“All the existing group policies and all the existing individual products not in conformity with the provisions of this regulation shall be withdrawn from August 1, 2013, and January 1, 2014, respectively,” IRDA had said in a circular.

With regard to group policies, life insurers have been asked not to enrol these policies after the immediate policy anniversary falling due after July 2013.

However, it had said all group policies at the time of renewal of such policy shall be given an option to switch over to the modified version of the group product, if any, once introduced.

LIC has outperformed its peers in the private sector by recording a 7 per cent growth in premium collection during the first half of the current fiscal.

The company witnessed a 7.26 per cent growth in premium income to Rs 37,906 crore during the six-month period ending September.

Source: thehindubusinessline
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Punching PIN must for debit card transactions from 1st December 2013

Debit card holders will from tomorrow be required to punch in their PIN numbers every time they use the card, a move aimed at minimising frauds.

In June, the Reserve Bank had extended the deadline for implementation of mandatory PIN punching at Point-of-Sales (PoS) and merchant outlets till November 30 following representation of banks.

“Our back-end system is in place and we have made changes in all our PoS and merchant outlets to accept PIN (basically ATM PIN) from tomorrow,” said Parag Rao, HDFC Bank’s head card payment products and merchant acquiring service.

“We have around 3 lakh PoS terminals across the country,” he said, adding that the bank has informed all its customers through all channels including SMS and mailers.

As part of awareness drive, SBI has in a notice asked its customers not to handover ATM-cum-Debit card to any person.

It also advised the customers that they should not keep any records of the PIN in physical form.

According to a senior official of Canara Bank, the PIN is another layer of security for the debit card.

First, merchants will swipe the cards at a PIN enabled PoS terminal and punch in the transaction amount. That will be followed by customers entering their PINs to complete the transaction.

As for credit cards, this requirement has been made mandatory for international transactions, including on the Internet. In such cases, users will have to replace their existing credit cards with the EMV Chip card and get a PIN.

Increased use of credit and debit cards has led to rise in frauds, especially in the case of lost or stolen cards.

Also, there have been reports of data on cards being compromised and cards skimmed/counterfeited.

To deal with this the Reserve Bank asked banks to comply with all security features such as EMV (Europay, MasterCard and Visa) chip on cards, real time fraud monitoring system, use of PIN, limit on transactions and the like by November 30.

RBI had in September, 2011 issued the guidelines for additional security features with a view to guarding card holders against cyber frauds and other misuse.

Source: thehindubusinessline
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Oriental Bank cuts lending rates for MSME advances

Oriental Bank of Commerce (OBC) has slashed its lending rate for MSME advances as part of its efforts to kickstart revival in this sector.

This public sector lender is confident of making good the revenue loss from such a move with expected increase in business volumes, S.L. Bansal, Chairman & Managing Director, OBC, told Business Line.

OBC may take a revenue hit of about Rs 30 crore in the remaining four months, but this could be covered with higher business volumes, Bansal added.

The basic purpose for the rate cut decision is to give a push to the MSME sector in the current times of economic slowdown, Bansal said.

Also, there is not much demand for credit from large corporates. MSME advances account for nearly 15 per cent of the total advances of the bank.

Micro, small enterprises

Lending rates for micro and small enterprises have been reduced from 25 basis points to 75 basis points for advances above Rs 25 lakh and up to Rs 1 crore.

For advances above Rs 1 crore, the reduction in interest rate ranges from 50 basis points to 200 basis points.

Medium enterprises

OBC has slashed the interest rate by 25 basis points to 150 basis points for advances up to Rs 1 crore.

For advances above Rs 1 crore, the lending rate reduction ranges from 50 basis points to 150 basis points.

Effective date

All the revision in lending rates will be effective December 1 and be applicable to all the existing as well as fresh advances sanctioned to MSMEs under manufacturing as well as services sector.

Source: thehindubusinessline
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Recovery hubs help United Bank trim bad loans by Rs 800 crore

The United Bank of India (UBI) on Saturday said it had reduced non-performing assets (NPAs) to the tune of Rs 800 crore. A further Rs 600 crore would be recovered “shortly”.

“Recovery hubs have been formed at strategic centres and the Bank has reduced NPAs by Rs 800 crore and will upgrade another Rs 600 crore, shortly,” it said in a release.

For the quarter ending September 2013, UBI reported a net loss of nearly Rs 490 crore. Increased provisioning (by nearly four-fold) to Rs 987 crore, as compared to Rs 259 crore in July–September 2012 impacted the bottom line.

It also reported increased NPAs. Gross NPA (till September 13) rose by Rs 3,868 crore, to approximately Rs 6,286 crore — a 160 per cent increase from Rs 2,418 crore in September last year.

Net NPAs for the period (July to September 2013) too increased by 270 per cent to approximately Rs 4,385 crore; from Rs 1,188 crore in the corresponding quarter last fiscal.

Increased Business

UBI, according to the release, has crossed Rs 200,000 crore in total business (deposits and advances); witnessing a 30 per cent year-on-year- growth in advances to the SME, agriculture and retail sectors.

Customer base increased by 30 lakh and nearly 150 branches were opened across 14 new states over the last five months.

Capital Infusion

Meanwhile, the Bank pointed out that it was “well capitalised” with capital adequacy of 9.48 per cent. It was the first Bank to raise Tier-II (Basel III compliant) capital of Rs 500 crore during the current fiscal.

UBI will get Rs 700 crore as capital from the Centre.

Source: thehindubusinessline
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Corporation Bank opens SME loan centre at New Delhi

Corporation Bank has sanctioned more than Rs 3,000 crore from April to October through its SME (small and medium enterprises) loan centres in the country.

A press statement by the bank said here that the bank opened its 17th SME loan centre in Delhi on Saturday. It said that the bank accorded a cumulative sanction of Rs 3,006 crore in 2,281 accounts from April to October during the current financial year through its SME loan centres in the country.

With the launch of New Delhi (North) SME loan centre, the total number of SME centres of the bank has increased to 17. The bank has plans to open nine more centres during the current financial year.

S.R. Bansal, Chairman and Managing Director of the bank, inaugurated the SME loan centre in New Delhi.

Source: thehindubusinessline
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