Canara Bank to expand overseas over next 2 years

Canara Bank is expanding its overseas presence and plans to add around 14 new branches in overseas locations over the next two years.

It also wants to increase the share of overseas business from about six per cent currently to 15-20 per cent over the next two to three years.

New branches

The bank, which currently has five branches and three representative offices overseas, is opening a branch in Johannesburg in the next three months, followed by those in New York, Dubai and Frankfurt by September 2014.

Another ten branches in Sao Paolo, Dar-es-Salaam, Tokyo, Abuja, Jeddah, Qatar, Sydney, Ontario, Wellington and Singapore are awaiting regulatory approvals, Canara Bank Chairman-cum-Managing Director R.K. Dubey said.

He added that after they all become operational, the bank’s target is to achieve 15-20 per cent share of the overseas business.

New circles

Speaking on their expansion plans within the country, he said that Canara Bank is adding eight new circles (34 at present) in Jalandhar, Gurgaon, Indore, Varanasi, Raipur, Kochi, Tirupati, and Salem by April 2014, and plans to increase the branch-network from the current 4,500 to 5,500-6,000 in the next two years.

A significant number of these branches will be in rural, semi-urban and un-banked areas, including in the regions of Naxalites or terrorist activity like in J&K, Gadchiroli and some parts of the North-East, he said.

In West Bengal, the panchayats have allotted 35 centres for branches at a rent of Re 1, while the Orissa Government is giving them 500 sq ft of space free of rent for 100 branches.

To cater to the expansion, as well as replace employees who will retire, the bank had recruited 8,000 people this year and will hire another 8,000 people next year.

e-lounge in Pune

Launching its second e-lounge in Pune circle, Dubey said that the bank has chalked out a plan to adopt over 60 villages across the country for integrated development.

“We want to develop a model village in each of our circles and 26 lead districts,” he said, adding that the initiative would include developing infrastructure like roads, solar lights and drinking water schemes in addition to promoting financial inclusion, and training youth for earning a livelihood.

In Pune circle, it has adopted village Ghangaldare, situated 102 km from the city. Dubey today handed over a demand draft of Rs 5 lakh to the village development committee as the bank's initial contribution to the scheme.

Source: thehindubusinessline

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Arun Tiwari is new CMD of Union Bank

Public sector lender Union Bank of India said Arun Tiwari assumed charge as its new Chairman & Managing Director.

Tiwari, who has over 30 years of experience, started his banking career with Bank of Baroda and was an executive director at Allahabad Bank prior to his new job.

An MSc in chemistry, Tiwari set up the operations of Bank of Baroda in Kuala Lumpur and Singapore and played a key role in the bank’s Project Navnirman and Project Sparsh initiatives.

As an executive director at Allahabad Bank, Tiwari was a member of audit, customer service, IT, management and risk management committees.

Source: thehindubusinessline

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Corp Bank to open 10 branches in North-East

Corporation Bank will open 10 branches in the Northeastern part of the country by March. Of this, four branches will be opened in Guwahati.

S.R. Bansal, Chairman and Managing Director of the bank, said this while inaugurating a branch of the bank at Nalbari in Assam recently. Quoting Bansal, a bank statement said that the bank is also considering of opening its zonal office in Guwahati in the next year.

He appealed to the people of Nalbari to support the branch.

Vibhash Modi, Additional Deputy Commissioner of Nalbari, was the chief guest on the occasion. D. Purnachandra Rao, Circle General Manager, and N. Ramesh Kamath, Deputy General Manager and Zonal head of Kolkata Zone of the bank, were present on the occasion.

Bansal also visited ‘Nabanir – Home for Aged’ at Chetla in Kolkata and distributed clothes to the inmates of the old age home. He celebrated Christmas with the senior citizens of Nabanir by cutting the Christmas cake and hosting a lunch for the inmates.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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No shortage of life insurance products from January 1: IRDA

There will be no shortage of life insurance products from January 1 when new norms come into effect, according to T. S. Vijayan, Chairman, Insurance Regulatory and Development Authority (IRDA).

“Every life insurer has a minimum 10 to 15 products ready to be launched or already launched. We have cleared about 500 products so far,” Vijayan told newspersons on the sidelines of an interactive session organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry here on Friday.

Life insurers have been barred from hawking old products starting next month. They can only sell products that are compliant with the new product design norms brought in by the insurance regulator early this year.

“As all products have gone to the shelves of the insurers (from IRDA after approval), their exact launch would depend on their market strategies,” he added.

SERVICE TAX

Earlier, while addressing participants at the meeting, the IRDA chief said the imposition of service tax or its removal was not in the purview of the insurance regulator.

The premium on life insurance products, especially those by the Life Insurance Corporation, is likely to go up from January 1 as the market leader would collect service tax separately. Several private insurers have already started doing so.

BANCASSURANCE

Referring to the permission being given to banks to act as insurance brokers , Vijayan said: “Banks should represent the customers. We want banks to sell the best policies of 24 life insurance companies. We are pushing for it.”

The Finance Ministry had issued a circular last week asking banks to turn into brokers of multiple insurance companies.

As of now, banks are only permitted to act as corporate agents of insurers.

Growth

On the state of industry, he said total business in the life and non-life sector should touch Rs 4 lakh crore this year, a 10 per cent growth over last year.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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Canara Bank to raise Rs 1,500 cr through bonds

Canara Bank said it plans to raise Rs 1,500 crore from bonds to augment its capital base.

The bank has decided to raise additional capital of Rs 1,500 crore through the issue of Basel-III complaint Tier-II bonds, Canara Bank said in a filing to the BSE.

This capital raising would be over and above Rs 500 crore that the Government has decided to infuse in the bank before March 2014.

To take shareholders approval for issuance of preference shares to the government, the bank will hold an extraordinary general meeting on December 30.

Capital infusion by the Government has been done with the twin objective of adequately meeting the credit requirement of the productive sectors as well as to maintain regulatory capital adequacy ratios in public sector banks (PSBs).

The government’s infusion in PSBs is in addition to their internally generated capital to enable the banks to maintain a comfortable level of Tier-I, or equity, capital.

An amount of Rs 12,517 crore was infused in 13 PSBs during 2012-13. This fiscal’s infusion by the Government is pegged at Rs 14,000 crore.

Source: thehindubusinessline

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Banks look to ‘ad’ to ATM security

Banks are looking at advertising of insurance, mutual fund, and bond products in ATMs to pay for making the booths secure.

After the brutal attack on a woman inside an ATM in Bangalore last month, States, including Karnataka, Andhra Pradesh and Maharashtra, have told banks to beef up the security infrastructure or face closure of booths.

As at November-end 2013, there were about 1.40 lakh ATMs connected to the National Payments Corporation of India’s National Financial Switch. Banks have been asked to place surveillance cameras, both inside and outside ATMs, and connect an alarm in the ATM booth to the nearest police station, said a senior Bank of Baroda official.

To provide all this and well-trained security guards and other equipment at the ATMs, as mandated by State authorities, banks, according to a senior SBI official, are looking at revenue generation options, including display of advertisements of non-banking products either on the inner walls of the booths or as standing displays.

They also plan to limit the number of free transactions, both at own-bank and other-bank ATMs, to five a month.

More transactions

Also coming are an increase in the service charge (from Rs 15 now to about Rs 18 per cash withdrawal) beyond the fifth ATM transaction, and a hike in the annual maintenance fee for ATM-cum-debit cards.

Currently, bank customers enjoy unlimited free transactions, including cash withdrawal (subject to the daily withdrawal limit set by their bank) and balance enquiry, at their own bank’s ATMs.

Further, they are allowed a maximum of five free transactions per month at other banks ATMs.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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Allahabad Bank gets shareholders' nod for preferential issue, QIP

City-based nationalised Allahabad Bank has got the shareholders’ approval for a preferential issue of Rs 400 crore and a Qualified Institutional Placement (QIP) of Rs 320 crore for shoring up the equity base of the lender.

At an extra-ordinary general meeting of the bank held here yesterday, the shareholders approved the preferential issue of Rs 400 crore to government against capital infusion.

The bank also sought nod of the shareholders to access the market for issue of equity shares through Qualified Institutional Placement (QIP) aggregating up to Rs 320 crore in such a manner that government’s holding will continue to be at 55.24 per cent of the total paid-up capital.

Allahabad Bank would issue and allot 4,45,83,147 equity shares of face value of Rs 10 each at an issue price of Rs 89.72 (including premium of Rs 79.72) per equity share on preferential basis to government.

Chairperson and Managing Director of Allahabad Bank Shubhalakshmi Panse said at the EGM that the money was needed to shore up the capital base of the bank to maintain future growth and Capital Adequacy Ratio under the BASEL-III regime.

Source: thehindubusinessline

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IRFC tax-free bond issue to open on Jan 6

Indian Railway Finance Corp will hit the market on January 6 to raise more than Rs 8,660 crore through tax-free bonds.

The issue of tax-free and secured non-convertible bonds, worth around Rs 8,663 crore, will close on January 20, IRFC said in the prospectus filed with market regulator SEBI.

“Public issue by Indian Railway Finance Corporation of tax-free, secured, redeemable, non-convertible bonds of face value of Rs 1,000 each in the nature of debentures having tax benefits...for an amount of Rs 1,50,000 lakh with an option to retain oversubscription up to Rs 7,16,300 lakh aggregating Rs 8,66,300 lakh in the fiscal 2014,” the company said.

The funds raised through this issue will be utilised by IRFC towards financing the acquisition of rolling stock which will be leased to the Ministry of Railways in line with present business activities.

IRFC is a dedicated financing arm of the Ministry of Railways. Its sole objective is to raise money from the market to part finance the plan outlay of Indian Railways.

SBI Capital Markets, A K Capital Services, Axis Capital, ICICI Securities and Kotak Mahindra Capital Company are the lead managers to the issue.

Karvy Computershare is the registrar to the issue.

The bonds are proposed to be listed on the National Stock Exchange and BSE.

Source: thehindubusinessline

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RBI red-flags use of Bitcoins

If virtual currencies such as bitcoins and litecoins have caught your fancy, beware. Here’s note of a caution from the Reserve Bank of India.

The central bank has warned users, holders and traders of virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks they are exposing themselves to.

In its advice, the RBI said it has been looking at the developments relating to “Decentralised Digital Currency” or VCs, such as Bitcoins, litecoins, bbqcoins, and dogecoins, their usage or trading in the country and the various media reports on them.

The RBI said it is looking at issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations. The creation, trading or usage of VCs, including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority, the RBI said and added that such currencies may pose several risks to their users.

Since such currencies are in the digital form and stored in digital/electronic media that are called electronic wallets, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack, etc. As these virtual currencies are not created by or traded through any authorised central registry or agency, the loss of the e-wallet could result in permanent loss of the currencies held in them.

The RBI said payments by virtual currencies take place on a peer-to-peer basis without an authorised central agency regulating such exchanges. There is no established framework for recourse to customer problems/disputes, etc.

Source: thehindubusinessline

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Paresh Sukthankar elevated as Deputy MD of HDFC Bank

Possibly preparing the ground for him to take on the mantle of leadership from the doughty Aditya Puri, HDFC Bank has elevated its current Executive Director, Paresh Sukthankar to the position of Deputy Managing Director.

Sukthankar has been with the bank since its inception in 1994. He has direct or supervisory responsibilities for the bank’s credit and risk management, finance and human resources functions and for various strategic initiatives of the bank. Adity Puri has been the MD of India’s second largest private sector bank since 1994.

Sukthankar’s appointment will be valid for a period of three years till December 23, 2016. The bank, in a notification to the BSE, said that the appointment is subject to the approval of the shareholders of the bank.

Source: thehindubusinessline

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LIC Housing looking to raise $300 m from overseas market

LIC Housing Finance Company is awaiting the Reserve Bank of India’s nod to raise $300 million from overseas markets for lending to customers wanting to buy affordable houses.

Sunita Sharma, Managing Director and CEO, LIC Housing Finance, said: “We applied to the RBI about two months back.”

The housing finance arm of the state-run insurance major, Life Insurance Corporation of India, said it will raise the money through external commercial borrowing (ECB).

Money borrowed from overseas is usually cheaper as the interest rates in countries such as the US are much lower than interest rates in India.

The proceeds from the borrowing will be used by the company to lend to buyers under the affordable housing segment. This means that the buyers of affordable houses will get loans at a cheaper rate.

If the company gets RBI nod, it will have to ensure that the money raised through the ECB is given to individuals buying houses where the cost of each unit is Rs 30 lakh or less. The loan amount in such cases cannot exceed Rs 25 lakh, according to the

RBI norms

Further, the RBI defines affordable houses as having a maximum carpet area of 645 square feet (60 square metres).

In June, the RBI said that housing finance companies (HFCs) together can borrow a maximum of $1 billion every year under the scheme till FY 2014-15.

Only those HFCs that have had net-owned funds of Rs 300 crore for the past three years are eligible to borrow under this scheme.

In Budget 2012-13, the Government had announced that HFCs and builders/developers will be allowed to raise money under the ECB scheme. Certain slum-rehabilitation projects are also eligible to get funds under the scheme.

Source: thehindubusinessline

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UBI to get Rs 700-cr capital infusion

The Centre will provide Rs 700 crore to the United Bank of India (UBI) as a part of its capital infusion programme for FY14. UBI on its part will allot 18 crore shares.

The Centre’s capital infusion is expected to be to the tune of Rs 14,500 crore across all state-run banks.

The capital infusion will help UBI pursue its growth strategies and comply with the Basel-III norms, Archana Bhargava, CMD of the bank, said in press release

Source: thehindubusinessline

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Canara Bank rolls out ATM cards for joint account holders

Canara Bank has launched a payment product, whereby each joint accountholder will be issued an ATM-cum-debit card. The new service, launched by R.K. Dubey, Chairman and Managing Director, Canara Bank, is enabled for all accounts operated by two joint accountholders.

While one accountholder is designated as ‘primary’, the other will be ‘secondary’.

A transaction is initiated by the primary cardholder by inserting the card in the ATM and keying in the PIN. The transaction is authorised only after validation by the secondary cardholder, using the card and PIN issued.

The ATM-cum-debit cards can be used only for ATM cash withdrawal. The card is valid for domestic use on Canara Bank ATMs only.

The bank has also launched ‘Kiosk Banking through Akshaya Centres’ in Kerala.

As mandated by the Department of Financial Services (Government of India), every sub-service area of 1,500 households has to be covered by a banking channel.

Canara Bank has tied up with Akshaya State Mission to launch this service in about 92 Akshaya Centres, State-wide. Using this facility, customers can open an account, deposit and withdraw cash at Akshaya Centres itself and need not visit the bank branch.

anil.u@thehindu.co.in

Source: thehindubusinessline

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Kotak Bank slashes home loan rates by 0.25%

Private sector lender Kotak Mahindra today followed State Bank of India and mortgage major HDFC by announcing a rate cut of up to 0.25 per cent on their housing loans for a limited period.

Accordingly, new home loans under Rs 75 lakh will be available at 10.25 per cent per annum, down from the earlier 10.50 per cent, while ones above Rs 75 lakh will cost 10.75 per cent as against the earlier 10.90 per cent.

The reduced interest rates will be applicable till January 31.

“The rate cut is driven largely by the scenario in the market place, a reduction in our cost of funds and our expectations from the future,” its executive vice president and head of retail assets, Sumit Bali, said announcing the rate cut.

The move follows similar ones announced by the country’s largest lender State Bank of India and mortgage major HDFC over the past week, ever since the RBI decided on a status quo in its mid quarter policy review.

When asked about the impact on margins as a result of this move, he said the rise in volumes will help the bank hold on to the current margins.

Source: thehindubusinessline

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M.S.Sahoo nominated to Oriental Bank of Commerce board

The Finance Ministry has nominated M.S.Sahoo as a part-time non-official director in Oriental Bank of Commerce.

Sahoo, who is currently Secretary of the Company Secretaries Institute, will have a tenure of three years as a Board member of this public sector lender.

A Fellow Member of the Institute of Company Secretaries of India, Sahoo has over three decades of work experience including the role of SEBI wholetime member from 2008-11.

The Centre currently holds 58 per cent stake in OBC.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Bank staff plan to strike work on Jan 20-21

Upset over the offer of a mere 5 per cent increase in salary and delay in wage settlement, employee unions of public sector banks have decided to strike work for two days next month.

They have been demanding about 30 per cent increase in wages; in the last revision in 2007, the hike was around 17 per cent.

“At a meeting with all nine major bank staff unions here today, we have decided to call for strike on January 20-21, 2014,” A. K. Ramesh Babu, President, Bank Employees Federation of India (BEFI), told Business Line.

Given the increasing per employee productivity in banks, the offered hike was too “less” and “humiliating”, he said. So far, some five rounds of negotiations have been held between bank employee unions and the Indian Banks’ Association (IBA).

The wages were last revised in 2007 and the term of revision expired in 2012. “It is almost one year since the expiry of the previous settlement and we want speedy resolution,” he added.

According to Pradip Biswas, General-Secretary, BEFI, another cause of concern for the unions was the “deviation” from the age-old practice of wage settlement.

“For the first time, they are proposing that employees up to scale III level will only be included in the general wage settlement, but this is just aimed at creating divisions without transparency,” he said.

Effectively, this proposal means that the wage hikes of officers above senior branch manager category will be linked to performance and could vary from person to person.

In 2007, employee wages, on an average, accounted for 20 per cent of banks’ total costs. This will now come down to 16 per cent, which means a reduction in salaries if inflation is factored in, he added.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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HDFC Mutual to acquire all 8 schemes of Morgan Stanley

India’s largest mutual fund by assets, HDFC Mutual Fund, has decided to acquire all the eight schemes of Morgan Stanley Mutual Fund in India.

However, HDFC Mutual Fund did not disclose the deal size.

“We are pleased to announce the signing of a definitive agreement for HDFC Mutual Fund to acquire all the eight schemes of Morgan Stanley Mutual Fund in India,” HDFC Mutual said in a statement.

The agreement is subject to regulatory approvals as required, it added.

The average combined assets under management of the eight schemes for the quarter ended September 30, was Rs 3,290 crore, while HDFC Mutual commands an asset base of Rs 1.01 lakh crore.

Milind Barve, Managing Director of HDFC Asset Management Co, said, “HDFC Mutual Fund has acquired a portfolio of strong performing domestic mutual fund schemes from Morgan Stanley and this acquisition is another step towards expanding our mutual fund customer base. We look forward to welcoming the investors in the eight schemes of Morgan Stanley Mutual Fund into the HDFC family.”

Two decades ago, in 1993, Morgan Stanley had received SEBI’s approval to run mutual fund business in India. Its first scheme was launched in 1994.

Fierce competition and slowdown in the asset management industry have since forced many to quit the business.

Earlier this year, SBI Mutual Fund had acquired Daiwa Mutual Fund while last year L&T Mutual Fund bought Fidelity Mutual Fund.

According to SEBI data, the number of folios (individual investor accounts) with 44 fund houses fell to around 4.07 crore at the end of October, from 4.28 crore in fiscal 2012-13.

Source: thehindubusinessline

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New IRDA norms promise challenging year for life insurers

The new year promises to be a challenging one for life insurers. They will need to phase out various old products in keeping with new norms.

From January 1, only products that conform to the new guidelines announced by the Insurance Regulatory and Development Authority (IRDA) in the first half of 2013 are allowed for sale.

This means insurers need to re-file all their products for approval.

“We have cleared over 500 products in line with the new design norms which are being introduced by the insurers in a progressive manner,” IRDA Chairman T.S. Vijayan told Business Line. Most insurers have already redesigned their products and also obtained approvals. While some have already been launched, the rest will be rolled out in the new year.

Reliance Life Insurance CEO Anup Rau told Business Line his company has lined up over 25 products for launch from next month.

It is largely believed that the regulatory changes will pave the way for the sustainable growth of the industry in the long term. However, they may pose immediate challenges to insurers, it is feared.

The life insurance industry is just recovering from drastic regulatory changes introduced in 2010 in unit-linked insurance products, which were then the most popular products. Since then, the first year premium (new business) has declined. It was only in the quarter ended September 30, 2013 that growth was revived.

But the new norms for traditional life products might pose a fresh challenge from next month. “The industry may see some business disruption in the short term while they are engaged in retraining their distribution force. Therefore, the changes will result in short-term pains due to lower commissions by the advisors,’’ Rau said.

Training agents

According to Alok Roongta, CFO of Bharti AXA Life Insurance, training a large number of agents in selling new products will be another challenge for the industry.

The business impact of the new norms has much to be watched. “Till now, most of the regulatory changes impacted only private insurers. This is the first time that Life Insurance Corporation will also be impacted by these norms. The impact could be different,” Roongta added.

Whether or not life insurance firms will sustain the growth posted after nearly there years remains to be seen.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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