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Tuesday, December 30, 2014

Andhra Bank recovers Rs200-cr bad loans

Andhra Bank has recovered about Rs200 crore non-performing assets (NPAs) in the last three months.

“Both recovery and upgradation of stressed assets have been high during the current quarter,” CVR Rajendran, Chairman and Managing Director of Andhra Bank, told BusinessLine here.

With this, the total recoveries for the bank stood at
Rs2,200 crore. At the end of September 2014, the recovered amount was Rs2,000 crore.

Slippages also high

However, things are not entirely rosy. “Slippages have also been high,” Rajendran said. This is mainly on account of non-performance of previously restructured loans and increased stress in infrastructure segment. “We are likely to have some more restructuring,” the CMD said.

The crop loan waiver scheme in Andhra Pradesh and Telangana also hit the primary sector performance.

“The recovery has not happened on expected lines. In Andhra Pradesh it is almost nil while in Telangana it is better at 70 per cent,” he added.

Though Andhra Bank continues to focus on retail lending, which grew robustly in the second quarter, there is a general slowdown in the home loan segment. On the corporate credit front, there has been no improvement.

“There has not been a single project in the manufacturing and small and medium enterprises,” Rajendran said.

ATM charges

From December 1, Andhra Bank has started imposing charges on ATM transactions, in line with the RBI’s recent permission in this regard.

This is expected to give some relief as Andhra Bank is paying
Rs3 crore to other banks by way of ATM user charges.

Last week, Andhra Bank completed raising
Rs500-crore in tier I capital by way perpetual bonds.

It has plans to mobilise another tranche of
Rs500 crore in February after the RBI’s monetary policy review as interest rates are expected to come down, according to Rajendran.

Source : Thehindubusinessline
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Monday, December 29, 2014

RBI expresses concern over restructured assets in banking sector

The extent of restructured assets in the banking sector, especially public sector banks (PSBs), is a cause of serious concern and an end to regulatory forbearance maybe the right step, according to the central bank.

“An early end to regulatory forbearance may be the right step. In addition, governance reforms along the lines suggested by the P.J. Nayak Committee will build in inherent checks and balances on the risks and returns of the credit portfolio thereby leading to more informed risk taking,” RBI said in the Financial Stability report released on Monday.

Many state-owned bank chiefs and indebted companies are lobbying to extend the window of regulatory forbearance that allows them to maintain low provisions against impaired or stressed assets.

In September 2014, PSBs continued to record the highest level of stressed advances at 12.9 per cent of their total advances, while for private sector banks the stressed advances stood at 4.4 per cent.

The relatively higher possibility of slippages in restructured standard advances is required to be factored in by banks from the capital adequacy perspective.

According to RBI, “While it may be somewhat legitimate to justify regulatory forbearance in times of major crises, forbearance for extended periods and as a cover to compensate for lenders/borrowers’ inadequacies engenders moral hazard.

“Furthermore, going forward, with the initiation of risk based supervision as well as implementation of Basel II advanced norms for credit, accounting discretions such as restructuring will have no impact on capital requirements since such processes incorporate capital provisioning based on expected losses and would largely align regulatory capital with economic capital rendering discretionary accounting forbearance of little consequence.”

Even under no-stress condition, any restructured advance (generally categorised as sub investment grade by a rating agency) is more likely to turn into a non-performing asset (NPA).

Also, since banks, traditionally have been short term working capital providers, their appreciation of particular risks in infrastructure projects seems to have been inadequate.

Hence, it is necessary that the banks strive for a more detailed understanding of the risk-return profile of the underlying projects before committing funds, whenever project appraisal is outsourced, RBI said.

Source : Thehindubusinessline
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PMJDY may be replicated in insurance, pension sector

Prime Minister’s Jan Dhan Yojna (PMJDY) is likely to be replicated in the insurance and pension sector to extend the financial services to the hinterland.

“Given the low levels of penetration of insurance and pension, there is a case for subsequently extending or replicating a project on the lines of PMJDY, to include the provision of insurance and pension services for the common man,” RBI said in the Financial Stability Report released on Monday.

At present, penetration of the insurance and pension in India is very low. Insurance penetration (premiums measured as percentage of GDP) is just about 4 per cent.

Under the Financial Inclusion Plan, banks will have to revise their targets so as to match with the targets allocated to them by the government under PMJDY, the central bank said.

With revised targets for opening of basic bank accounts in place, banks will have to ensure opening of at least one bank account in each household by January 26, 2015. As on December 24 2014, banks have achieved the 10 crore account opening mark under Pradhan Mantri Jan Dhan Yojana (PMJDY) and have issued 7.75 crore RuPay Cards.

RBI also said, “The timeline for providing banking services in villages with populations below 2,000 under the roadmap may be advanced from March 2016 to August 2015.”

Source : Thehindubusinessline
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More transparency needed in audit of big ticket CDR cases: RBI

There is a need for greater transparency to find out the economic impact and audit of big ticket CDR (corporate debt restructuring) cases, according to RBI.

“With increased regulatory focus on segregating cases of wilful defaults and ensuring adequate equity participation of promoter(s) in the losses leading to defaults, there is a need for greater transparency in carrying out a net economic value impact assessment and audit of big ticket CDR cases,” RBI said in the Financial Stability Report released on Monday.

There is also a need to review and strengthen the accountability mechanism in the entire process of reference, approval and implementation or exit under CDR. Adequate disclosures on the eventual cost-benefit profile of approved CDR cases (for successful as well as failed cases) will help in forming policy and aid proper use of scarce resources.

CDR is a process when banks provide support through restructuring of genuine cases of corporates in financial difficulties because of factors beyond their control. The CDR mechanism is meant to revive such cases as well as for the safety of the money lent by the banks and financial institutions.

Out of the total number of cases referred to/ approved under CDR, 49 per cent have been successfully implemented till date, according to RBI.

As per data by the CDR cell, 75 cases were exited successfully amounting to an aggregate debt of Rs. 58,205 crore as on September end.

The cell received over 638 cases with a total debt of Rs. 4,46,156 crore since inception. Of this, 121 cases have been rejected before admission or approval amounting to Rs. 65,581 crore, while 505 cases worth Rs. 3,67,607 crore have been approved.

However, RBI observed that the number of cases referred to the CDR cell has come down in the recent past.

One of the reasons for this reduction could be the Reserve Bank’s move to allow banks to restructure their large credits with aggregate exposure of Rs. 100 crore and above outside CDR under the Joint Lenders’ Forum (JLF) constituted under the provisions of the ‘Framework to Revitalise the Distressed Assets in the Economy’ which became effective from April 1, 2014.

Source : Thehindubusinessline
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Jan Dhan life cover: Banks, LIC told to make claim forms available on website

The Finance Ministry has asked banks and Life Insurance Corporation to make available claim forms on their websites for the Rs. 30,000 life cover promised under the Pradhan Mantri Jan Dhan Yojana (PMJDY).

LIC has been asked to settle the claim within 15 days of the receipt of the claim form.

This was conveyed to the banks at a video conference meeting held by Joint Secretary Anurag Jain with executive directors of public and private sector banks to review the progress of PMJDY.

Till December 22, banks have opened 9.83 crore bank accounts under the PMJDY and issued 7.28 crore RuPay cards.

At this meeting, banks were asked to issue passbooks to all accountholders and activate RuPay cards.

Banks have agreed to complete this task by January 15 next year.

Source : Thehindubusinessline
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ING Vysya staff demand job safety post merger, to strike on Jan 7

Employee unions of ING Vysya Bank demanded safeguarding of their interests post-merger with Kotak Bank and threatened to go on strike on January 7 —— the day on which the Bengaluru—headquartered lender will seek shareholders’ nod to approve the Rs. 15,000-crore merger deal.

To ensure that interests of all the stakeholders are ’protected’, S A Sridhar from the ING Vysya Bank officers’ association said a “tripartite agreement” between Kotak Mahindra Bank (KMB), ING Vysya Bank, and employees and officers, be signed which will lay out all points in detail.

The All India ING Vysya Bank Employees Union and All India ING Vysya Bank Officers Association, which together represent 35 per cent of the Bangalore-headquartered lender’s over 10,000 employees as members, however, said they are not opposing the merger but want their interests to be protected.

“We have an apprehension as the new management at KMB does not have an Union and believes in outsourcing its work. What will be the fate of our employees after the merger?” Ramkrishna Reddy, general secretary of the employees union told reporters here.

He added that recently KMB wrote to all the ING Vysya Bank employees to allay the concerns but ‘bypassed’ the unions.

Reddy emphasised that the Uday Kotak-led bank should go through the union if it is “sincere” about its efforts.

ING Vysya Bank spokesperson could not be immediately reached for comment. However, a representative for ING Vysya Bank referred to legal opinion of advisors to the deal, which said such a tripartite agreement is “infructuous”.

There is no precedent of such an agreement in previous bank mergers, the legal opinion said, alleging that such a demand “seems to be red herring i.e. something that misleads or distracts from relevant issues“.

ING employees and officers want internal MoUs to continue post-merger, and also stressed that perks and benefits decided by industry body IBA be continued, Sridhar said.

Kotak Mahindra Bank
spokesperson Rohit Rao said: “The merger process entails as per the Banking Regulation Act, approval of the shareholders and thereafter approval from the RBI in addition to CCI’s approval.

“All protection related to employees have already been captured in the scheme of amalgamation which upon approval by RBI, Kotak Mahindra Bank shall fully standby and are obligated to comply with including sections relation to employees job security, wages, pension, gratuity etc.”

As is evident we would like to start with good faith constructive approach that secures all employees and creates growth for all stakeholders including employees after the RBI order, Rao added.

In a letter, KMB’s Joint Managing Director Dipak Gupta has written to ING Vysya Bank’s Chief Executive designate Uday Sareen saying that KMB will be honouring all IBA settlements and bi-partite agreements.

In one of the biggest deals of 2014, KMB had announced an all-stock deal to acquire ING Vysya Bank late last month.

Source : Thehindubusinessline
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Clearly mention conditions, benefits of insurance products: IRDA

To help consumers guard against bogus claims being made by insurers, sector regulator IRDA has said the companies will have to clearly define conditions along with benefits and riders of products to customers.

Insurance Regulatory and Development Authority (IRDA), in its revised draft regulations on consumer protection, has also said that insurance companies must place all the product information in public domain. The regulator has also sought comments from the public and all stakeholders on the draft regulations on or before January 19, 2015.

“A prospectus of any insurance product shall clearly state the scope of benefits, the extent of insurance cover and in an explicit manner explain the warranties, exceptions and conditions of the insurance cover.

“Every insurer shall place in public domain complete details of product particulars of each and every product that was offered for sale by the insurer as it was filed and approved by IRDA,” said the draft regulations.

In case of life insurance products, they should clearly mention if it comes with profit or without profits and the riders on products shall be clearly spelt out with regard to scope of benefits, as per the draft norms.

Among others, it said the insurers should formulate an insurance awareness policy to educate customers, constitute a policyholder protection committee ensuring its proper functioning as well as formulate a grievance redressal policy for speedy resolution of grievances.

The draft has also suggested comprehensive, dispassionate and true information about products by the companies.

“The insurers shall ensure that the benefit/returns of the policy are not mis-stated/mis-represented or the prospect is not forced to buy a policy.

“Insurers shall disclose restrictions/conditions of all aspects of benefits that are material,” it added.

The draft norms further said that the products should suit policyholders with respect to income, personal and family circumstances, life stage, financial goals and risk appetite as the customer has the right to service of the proper kind.

It said that name and address of agent/insurance intermediary should also be mentioned in the policy document and premium receipts or any such communication.

The insurers, agents and intermediaries shall strictly adhere to IRDA advertisement regulations and shall not issue any misleading or unfair advertisement,” it added.

“Violations of any provisions of Advertisement Regulations and guidelines...shall be dealt with as per provisions of the relevant regulations/provisions of the Act,” it added.

IRDA said the revised regulations may be known as IRDA (Protection of Policyholder’s Interests) Regulations 2014 as and when they come to force.

Source : Thehindubusinessline
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Tuesday, December 23, 2014

SLBC confirms 100% Jan Dhan coverage in Dakshina Kannada

The State-level bankers’ committee (SLBC) of Karnataka has permitted the lead bank of Dakshina Kannada district for confirmation of 100 per cent coverage of households under the Prime Minister’s Jan Dhan Yojana (PMJDY).

This was revealed at the Dakshina Kannada district-level review committee meeting of bankers in Mangaluru on Tuesday.

Amarnath Hegde, Chief Manager of the Lead Bank of the district, informed the meeting that the district-level PMJDY implementation committee in its meeting on November 7 had decided to send a proposal to the SLBC for officially declaring the district as fully covered in opening of basic savings bank accounts for all households. The proposal was submitted to the SLBC and state administration on November 10.

The December 1 SLBC meeting in Bengaluru, which appreciated the efforts of Dakshina Kannada district, had permitted the lead bank for confirmation of 100 per cent saturation, he said.

Thulasi Maddineni, Chief Executive Officer of Dakshina Kannada Zilla Panchayat, who presided over the meeting, said that the bankers have completed the task of opening of accounts under the PMJDY. Now they have the important task of making all these new accounts operational. The banking habit has to be inculcated among those who have opened the accounts, she said.

Hegde urged the bankers to speed up the Aadhar seeding process and to issue RuPay cards to the new account holders.

He said that the banks may also create awareness among the RuPay card holders to keep their cards active through regular transaction. Cards become inactive if not operated within 45 days to get the benefit of personal accident insurance coverage up to Rs1 lakh, he said.

Source : Thehindubusinessline
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YES Bank raises $200-mn loan from ADB

YES Bank has raised $200-million unsecured loan from the Asian Development Bank to finance working capital and investment loans for small farm households and rural women in self-help groups.

Additionally, ADB will also provide a capacity development technical assistance grant of up to $1 million to YES Bank, the private sector bank said in a statement.

The grant will be used by the private sector bank for capacity building, improving the financial literacy of women borrowers, and for leveraging the YES livelihood enhancement action programme, which provides financial services to SHGs, for agriculture value chain integration.

Source : Thehindubusinessline
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Allahabad Bank gets nod to raise funds via QIP

Allahabad Bank obtained board approval for raising capital from various means including Qualified Institutional Placement (QIP).

The board at its meeting held Monday have discussed and approved in principle the raising of capital of the bank through preferential or QIP issue, Allahabad Bank said in a statement.

Funds would be raised in such a manner that the equity shareholding of the Government of India will not go below 52 per cent.

The government holding in the Kolkata-based banks stood at 58.90 per cent at the end of September 2014.

Keeping the huge capital requirement in the mind, the Union Cabinet earlier this month, allowed public sector banks to raise up to Rs. 1.60 lakh crore from markets by diluting government holding to 52 per cent in phases so as to meet Basel III capital adequacy norms.

Finance Minister Arun Jaitley in the first Budget speech had said: “To be in line with Basel-III norms there is a requirement to infuse Rs. 2.40 lakh crore as equity by 2018 in our banks. To meet this huge capital requirement we need to raise additional resources to fulfil this obligation.”

While preserving the public ownership, the capital of these banks will be raised by increasing the shareholding of the people in a phased manner through the sale of shares largely through retail to common citizens of this country, he had said.

Source : Thehindubusinessline
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RBI staff to join banking sector strike on Jan 7

Reserve Bank employees have decided to observe a strike on January 7, 2015, in solidarity with the cause of the United Forum of Bank Unions in the commercial banking sector.

The All-India Reserve Bank Employees Association and the All-India Reserve Bank Workers’ Federation have urged the RBI Governor to intervene to bring peace in the banking sector, stating that the RBI cannot remain a mute spectator.

The Association and Federation advised units to observe peaceful and organised action in all RBI offices and liaise with units of the United Forum in the run-up to the strike.

“We have got an important stake in bank employees’ success and achievements. Their settlement has provided us the basis of our wage negotiations, which are pending,” said Samir Ghosh and SV Mahadik, RBI employee union leaders.

“Indian Banks’ Association has created a desperate situation for bank employees whose patience has run out. The Government is silent, unconcerned about the turmoil in this sensitive sector and the plight of millions of customers.”

Bankers have made huge profits in 2012, 2013 and 2014 from the toil and sweat of employees. But they refuse to give them a modest wage increase forcing them to strike work off and on, the leaders noted.

Source : Thehindubusinessline
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Thursday, December 18, 2014

Violation of KYC norms: RBI slaps Rs 50 lakh penalty on ICICI Bank, Rs 25 lakh on Bank of Baroda

The Reserve Bank of India (RBI) on December 17 imposed penalties on ICICI Bank and Bank of Baroda for violating 'Know Your Customer' (KYC) as well as anti money-laundering norms (ALM). The central bank fined ICICI Bank Rs 50 lakh, BoB Rs 25 lakh, and cautioned State Bank of India, Axis Bank and State Bank of Patiala that they should review and comply with KYC norms.

In a statement, RBI said, "Failure on the part of these banks (ICICI Bank and BoB) to take timely remedial measures had aggravated the seriousness of the contraventions and their impact."

RBI reviewed the KYC and ALM processes of these banks after it received a complaint from a reputed statutory organisation in August 2013. This complaint included details of a fraud perpetrated in the five banks censured, with the connivance of certain officials of the statutory organisation.

"The fraudsters had managed to open fictitious accounts in the name of the statutory organisation in the above five banks and operated the accounts, mainly for encashing cheques/ demand drafts/ postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks," the RBI statement read, without naming the organisation. The central bank conducted a scrutiny of these five banks in January 2014.

The scrutiny revealed "non-adherence to certain aspects of Know Your Customer or KYC norms and non-adherence to instructions on monitoring of transactions in customer accounts", RBI said. The central bank decided to impose a monetary penalty on ICICI Bank and BoB after issuing a show-cause notice and reviewing their response. State Bank of India, Axis Bank and State Bank of Patiala were not fined "as the banks' explanations regarding the circumstances which led to the fictitious accounts getting opened and operated without detection, were judged to be reasonable".

This is not the first time private sector banks like ICICI Bank and Axis Bank have been pulled up by the central bank for violation of KYC norms. In 2013, RBI had imposed a penalty of Rs 1 crore and Rs 5 crore on ICICI Bank and Axis Bank, respectively, after an expose by the website, CobraPost, in which undercover reporters sought bank staff 's assistance in legitimising black money. Those fines were also for non-adherence to KYC, antimoney laundering and filing of Cash Transaction Reports (CRTs).

Most recently, in July 2014, the central bank had imposed a combined fine of Rs 1.5 crore on 12 banks, for not conducting adequate due diligence on loans granted to Deccan Chronicle Holdings, which led to a loss of Rs 4,000 crore to the banking sector.

Source : Economic Times
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Vijaya Bank event at Pollachi

Vijaya Bank organised the Pradhan Mantri Jan Dhan Yojana programme at Pollachi. KR Shenoy, Executive Director of Vijaya Bank, distributed Rupay Cards and Pass Books to the beneficiaries. The programme was attended by over 200 beneficiaries and large number of people from nearby villages, said a Vijaya Bank statement. Shenoy explained various important features of the scheme to beneficiaries. A short film on Pradhan Mantri Jan Dhan Yojana Scheme in the local language was screened to create awareness.

Source : Thehindubusinessline
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Diluting government stake is credit positive for banks: Moody’s

The Cabinet decision to allow private capital by diluting government stake in public sector banks is credit positive for undercapitalised banks, according to Moody’s Investor Service.

“The ability to raise private capital that dilutes the government’s stake is credit positive for the undercapitalised public sector banks because government resources to recapitalise banks are limited,” Moody’s said in a statement.

On December 10, the Cabinet said that it would allow government ownership in public sector banks to fall to 52 per cent as banks raise capital to meet Basel-III requirements, which will steadily rise until 2019.

“In the 11 public sector banks we rate, the Indian Government’s stakes range from 56 per cent to 84 per cent. Public sector banks account for about 70 per cent of the Indian banking system in terms of loans, deposits and branches.

The Cabinet stopped short of allowing public sector banks to reduce their government stakes below 51 per cent, a level that would jeopardize government control of the banks,” Moody’s said.

Phased reduction

The Cabinet said a phased reduction in the government’s stakes in public sector banks to 52 per cent would help raise up to ₹1.61 lakh crore from the market.

Source : Thehindubusinessline
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IRDA slaps Rs. 31 lakh penalty on Canara HSBC Oriental Life Insurance

The Insurance Regulatory and Development Authority (IRDA) has imposed Rs. 31 lakh penalty on Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd for setting policies in favour of master policy holders under non-employee/employer groups.

``The practice of issuing claim payments in favour of Master Policy Holders (Self Help Groups in this case) but not in favour of the beneficiary of the group insurance policy has a potential of jeopardising the financial interests of the dependents of the deceased policyholder,’’ the regulator said in a circular issued here on Thursday.

The regulatory had also warned the company citing many other lapses in adhering to the norms in many cases.

Source : Thehindubusinessline
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Syndicate Bank launches new scheme for women entrepreneurs

Syndicate Bank is targeting to reach out to over 20,000 women entrpreneurs across the country through a new scheme 'SyndMahilaShakti', an initiative for women empowerment.

The bank is observing 'SyndMahilaShakthi' week currently till December 20 across the country and aims to extend loans to over 20,000 women entrepreneurs to take up various self-employment activities under micro, small and medium enterprises, a press release said.

Since December 15, the bank has sanctioned loans worth Rs. 68 crore to about 5,415 women entrepreneurs till Wednesday, officials said.

Concessional interest rates

Under the scheme, the bank is extending finance up to Rs. 5 crore per woman beneficiaries at concessional interest rates.

The rate of interest for loans up to Rs. 10 lakh is at the base rate of 10.25 per cent, while for loans exceeding Rs. 10 lakh, a concession of 0.25 per cent is being provided on applicable interest rate.

The borrower has to contribute 15 per cent margin on the loan, while the processing and documentation charges are fully waived on these loans. No collateral security and no guarantee is insisted for loans up to Rs. 10 lakh.

Available facilities

The beneficiaries can avail themselves of credit card facility without any admission fee and they can also avail themselves of various facilities such as instant global debit cards/ATM cards, SMS banking, mobile banking, Internet banking, any branch banking, SyndSuraksha insurance policy and SyndArogya health insurance cover, the statement said.

All micro enterprises will get a rebate of 0.5 per cent in rate of interest for prompt repayment to be reimbursed at the time of closing the loan account. The loans can be repaid in a maximum period of 7 to 10 years, including repayment holiday.

The bank shall be covering all eligible borrowers under Credit Guarantee Fund Trust for Micro and Small Enterprises scheme.

Eligible borrowers can also be sponsored by district industries centre, NGOs, women and child development department and self help groups, among others. The beneficiaries will be given free skill development training across the country, it said.

Source : Thehindubusinessline
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Dhanlaxmi Bank push to recover bad loans showing results: MD

Dhanlaxmi Bank, named in the Rajya Sabha as having the highest NPA (non-performing assets) ratio among private sector banks (at 7.27 per cent), has taken strong measures to tackle the problem.

These include identifying wilful defaulters, enforcing the SARFAESI Act (which allows banks to auction properties of loan defaulters), one-time settlements, sale of assets to Asset Reconstruction Companies and filing cases with the Police and Services Fraud and Investigation Department of India.

Seeking help

PG Jayakumar, Managing Director and CEO, told BusinessLine over phone from Chennai that the bank also plans to seek help from Indian embassies overseas where the money is stashed away  and is approaching the central banks of those countries for recovery of the money. In the next couple of years, he said the [loan] advance book would get better as accretion to NPAs get arrested, lending is done carefully with strong underwriting standards and credit monitoring is stepped up.

According to Jayakumar, Delhi Police recently helped the bank recover
Rs33 crore from fraudsters.

He expected the gross NPA ratio to come down to 4-5 per cent and net NPA ratio to 2.5 per cent in the next few years. This would be further reduced by enhanced credit sanctions in the retail and SME (small and medium enterprises) segments.

The gross NPA of the bank now stands at Rs550 crore and the net NPA at ₹360 crore, he added.

Reasons for default

Speaking on the reasons that led to the surge in loan defaults, Jayakumar said the management from 2009 to 2012 oversaw loan advances growing to
Rs10,200 crore from Rs3,200 crore. The huge increase, particularly in 2011-12, was made ignoring basic protocols in credit approval. As a result, NPAs went up to Rs1,214 crore.


In 2012, the present CEO took charge and NPA recovery of
Rs652 crore took effect. The high NPA ratio is also a reflection of the reduction in advances, a conscious decision taken to rationalise the advances book and free it from low-yielding corporate advances, huge retail advances, loans for construction equipment and commercial vehicles, among others, he said.

Source : Thehindubusinessline
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Tuesday, December 16, 2014

HDFC Bank launches mobile branch in Varanasi

In Prime Minister Narendra Modi's Lok Sabha constituency, country's second-largest private lender, HDFC Bank today launched mobile banking initiative to offer round-the-clock banking facility.

"Part of the bank's digital banking offering... 'Bank Aap Ki Muththi Mein' is technology agnostic and runs on all mobile devices popular technology platforms support," said Nitin Chugh, Head-Digital Banking, HDFC Bank.

'Bank Aap Ki Muththi Mein' works on both smartphones as well as the basic phones that support Internet browsing.

It is another offering from the bank's platform to provide further convenience to customers, eliminating need for accessing branch or ATM, he added.

It would also help in financial inclusion as the mobile app would help rural population connect to bank with the basic handset as villagers don't have smartphones, he said.

"For phones that do not support Internet browsing, there's sms-banking and missed-call banking... a customer needs to send a text or call a toll free number to know his account balance, get a mini statement, request a check book or detailed account statement," he added.

As of September 2014, India had over 90 crore mobile users in the country but only 4 crore mobile banking customers.

Besides fixed and recurring deposits, bill and tax payments, buying insurance and mutual funds transactions, the offering will also allow customers to buy all kinds of loans instantly.

It also offers customers location-specific promotions, offers/deals on shopping, dining, movies and entertainment.

About 55 per cent of all transactions at HDFC Bank are conducted through digital channels.

Source : Economic Times
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Axis bank opens all women branch, focuses digital

Axis Bank, India’s third largest private sector Bank, has opened its first All Women Branch in Patna, Bihar.

“Women play an important role in managing household savings and we believe that this all Women Branch will help increase the participation of this segment in the banking industry,” said Rajiv Anand, Group Executive – Retail Banking, Axis Bank.

Axis Bank
also offers its mobile app ‘Axis Mobile 2.0’ with high level of personalisation, allowing users to customise their mobile banking experience, depending on the user segment (Youth, Premium& Prime segments).

“To increase customer security, the bank has recently introduced ‘e-surveillance’ facility, a service that allows a 24x7, 365 days Centrally Monitored Automated Security of ATMs. This initiative underscores the bank’s objective of providing advanced security and simplified service to its customers, the bank said.

“The innovative, personalized multi-channel banking experience like Self Service ATMs, Internet banking, Mobile app and social media interface would henceforth be the driving force in our Bank’s Digital strategy,” Anand added.

The bank highlighted there is growth in ownership of mobile and other electronic devices, driving digital banking and over 80 per cent of the transactions to happen through digital channels in FY15.

Axis Bank’s overall market share in mobile transactions stands at 13%, as on September, 2014, the bank statement said.

Source : Thehindubusinessline
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DCB Bank plans doubling business in three years

The private sector lender, DCB Bank is planning to double its business in the next three years by focusing on retail advances. The bank aims to increase its lending to the self-employed persons at tier-2 to tier-6 towns (having population less than 5000).

"Retail is our main focus area. Our balancesheet size is Rs. 13,000 crore at present and we are aiming to double the same in the next 3-3.5 years. We will open about 250 branches in the next three years and 50 per cent of that will come in tier-2 to 6 towns," said Murali M. Natrajan, Managing Director and Chief Executive Officer, DCB Bank in a media interaction here.

In its balancesheet, the bank has about Rs. 9,000 crore worth of advances and 40 per cent of that is mortgage loans. The company makes advances mostly to the self-employed persons in smaller towns. These include small traders, grocers, fast-food joints among others.

In the bank's total loan portfolio, Gujarat has 10-11 per cent share with Rs. 900 crore worth of loans.

Natrajan maintained that recently, the bank had raised Rs. 250 crore, thereby strengthening its capital adequacy. However, the bank may raise further funds after three years when need arises.

Source : Thehindubusinessline
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HDFC Bank launches branch banking on mobile

HDFC Bank launched its mobile banking facility that offers to turn a mobile phone into a bank branch.

“With over 75 transactions -- all a touch away - ‘Bank Aap Ki Muththi Mein’ offers the customer the widest range of transactions conceivable. These are both financial and non-financial transactions that he needs in his daily life for which he would have to visit a branch, or an ATM,” HDFC Bank said in a statement.

Besides essential transactions such as booking fixed- and recurring deposits, bill and tax payments, buying insurance and mutual funds, the offering will also allow customers-- for the first time in the country-- to buy instantly all kind of loans. It also offers them fully customized, location-specific promotions, offers/deals on shopping, dining, movies and entertainment.

SMS and missed-call banking

The offering is technology agnostic and runs on both smart phone and basic phone that supports internet browsing. For phones that do not support internet browsing, there's sms-banking and missed-call banking. All that a customer needs to do is send a text to or call a toll free number to know his account balance, get a mini statement, request a check book or detailed account statement, the bank said.

As of September 2014, India had over 900 million mobile users in the country but only 40 million mobile banking customers. Today, 55 per cent of all transactions at HDFC Bank are conducted through digital channels.

Source : Thehindubusinessline
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Harihar Mishra appointed as additional director of Dhanlaxmi Bank

The Reserve Bank of India (RBI) has appointed Harihar Mishra, General Manager, RBI, Bengaluru, as Additional Director of Dhanlaxmi Bank Ltd.

In a notice to the BSE, the South-based old generation private sector bank said Mishra comes in the place of Raja Selvaraj, General Manager, Reserve Bank of India, Chennai.

Mishra's appointment is for a period of two years with effect from December 9, 2014 to December 8, 2016 or till further orders, whichever is earlier.

Source : Thehindubusinessline
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Axis Bank, Tigerair offer on Singapore flights

Axis Bank, India’s third largest private sector bank in association with Singapore’s no-frill airline Tigerair, announced a special offer ‘Fly out to Singapore for free on round trip’ for Axis Bank’s esteemed Credit and Debit cardholders.

“From 17 December 2014 till 04 January 2015, Axis Bank customers who book a round trip to visit Singapore will only have to pay for their return ticket. Their flight to Singapore will be complimentary (airport taxes and add-on charges will still apply),” Axis Bank said in a statement.

The ‘Fly to Singapore for free on round trip’ promotion will be applicable for travel periods from 19 January 2015 to 31 March 2015 and from 6 July 2015 to 24 October 2015. All-in return fares to Singapore from Bangalore, Chennai, Hyderabad, Kochi and Tiruchirappalli start from Rs. 6,999 during the promotional period.

Tigerair operates total 36 weekly flights to Singapore from six Indian destinations. The airline also connects to Bali, Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Manila, Perth, Taipei via Singapore, the gateway to amazing destinations in Asia Pacific. Connect to Sydney, Gold Coast and 11 more destinations with 50 weekly flights via Singapore in collaboration with Scoot.

Jairam Sridharan, President – Retail Lending & Payments, Axis Bank said: “…This is yet another step, by providing an exciting product to customers in the travel space. This unique offer will further enhance customer experience and will make air travel more rewarding.”

Source : Thehindubusinessline
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SBI to increase branch network in Karnataka

State Bank of India (SBI) is planning to close the financial year of 2014-15 with a branch network of 750 in Karnataka.

In an informal chat with presspersons on the sidelines of the inauguration of an e-corner of the bank at Mangaluru main branch on Tuesday, Rajni Mishra, Chief General Manager of SBI, Bengaluru circle, said that the bank has a dominant presence in the State with 690 branches.

The bank is planning to add another 60 branches in Karnataka by the end of the current financial year.

“We are planning to open more branches in the remotest part of Karnataka and planning to reach smallest of farmers,” Mishra said.


The bank has around 30 e-corners in most of the major centres in the State. In e-corners, customers can use ATMs, cash deposit machines, cheque deposit machines, and self-service kiosks for passbook printing, among others. With this, customers do not have to wait in a queue at the branch.

Tie-up with KMF

Mishra said that the bank has entered into a tie-up with the Karnataka Milk Federation (KMF). Under this, the bank has financed more than 1,000 dairy farmers in various parts of the State.

In usual scenario, KMF makes payments to farmers at the end of the month for the milk they supply to the federation. Under this tie-up, farmers get cash instantly from the bank. It is to facilitate farmers to have ready cash without having to wait for KMF to settle their bills, she said.

In Karnataka, the bank has achieved a deposit of Rs59,000 crore and advances of Rs34,000 crore, she added.

Source : Thehindubusinessline
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IDBI Bank launches electronic insurance account

IDBI Bank in association with NSDL Database Management Ltd (NDML) has launched 'Electronic-Insurance Account (e-IA)’.

e-IA is the portfolio of insurance policies of a policy holder held in electronic form with an insurance repository.

Under this facility, customers can buy and keep insurance policies in electronic form, rather than as a paper document.

Existing policies in physical mode too can be dematerialised and held in e-IA.

This facility will not only provide policy holders a facility to keep insurance policies in electronic form but also enable them to undertake changes, modifications and revisions in the insurance policies.

"This would also be useful as the client would not have to undergo for fresh KYC verification in order to purchase new policies," the bank said in a statement.

Source : Thehindubusinessline
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Monday, December 15, 2014

RBI advances timing for RTGS business hours

Now, get more time to make your online fund transfer through RTGS as in another boost to online banking, the Reserve Bank of India has decided to advance the working hours starting from 8 am to 8 pm.

 “It has hence been decided to advance RTGS business hours to 8:00 hours from 9.00 hours and extend closing time of RTGS to 20.00 hours on week days. RTGS business window will be open from 8.00 hours to 15.30 hours on Saturdays,” RBI said in a notification.

The new working hours will be with effect from December 29, 2014.

Currently, the RTGS service window for customer's transactions is available to banks from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 14:00 hours on Saturdays for settlement at the RBI end.

RTGS (Real Time Gross Settlement)
is an electronic real-time fund transfer settlement individually, primarily meant for large value transactions. The minimum amount to be remitted through RTGS is Rs. 2 lakh with no upper limit.

The launch of the new RTGS system in October 2013 was one of the steps taken by the Bank for catering to the growing volume and to provide liquidity saving and other features of the new system to the members, RBI said.

It added, “Of late there has been a market demand for extending business hours of the RTGS system to facilitate customer and inter-bank transactions as also to facilitate other market obligations to settle in the RTGS system. Accordingly, the RTGS business hours are being revised to meet the market expectation.”

Source : Thehindubusinessline
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Lack of ATMs could derail Jan Dhan Yojana

Despite the rising need for more ATM machines across the country, the government’s financial inclusion scheme Pradhan Mantri Jan Dhan Yojana (PMJDY) is yet to see an uptake in ATM deployments.

Banks and ATM operators say that low interchange fee and cap on the number of free ATM transactions are making it an unviable proposition.

Slack deployment

CATMi (Confederation of ATM Industry), an association of companies that deploy ATMs for banks, has warned that accounts being opened under the PMJDY would end up being dormant if there are not enough ATMs to service them.

According to the latest data, under PMJDY, banks have opened 8.83 crore accounts and issued 5.85 crore RuPay cards. Logically, an increased number of cards should also result in an increase in ATMs. However, ATM deployment has been running out of steam. New machines are seeing daily transactions of less than 100 — way below the 120 transactions that are required for break-even.

ATM operators and banks are worried that the existing interchange fee is too low for them to sustain the business model making it difficult to deploy more ATMs. Annual growth in the banks’ ATM network slowed down to a meagre 1 per cent in April to June quarter compared to the corresponding quarter in 2013. As of June 2014, the total number of ATMs in the country stood at 1.67 lakh and Point-of-Sale terminals at 1.08 crore.

Cap on transactions

“Lot of good work has been done in terms of opening accounts and issuing cards. However, not much is done to make use of those cards and accounts. In a way, we are issuing a lot of cards but there is no place to use it as a lot of players have slowed down ATM deployment,” said Sanjeev Patel, CEO, Tata Communications Payment Solutions, an ATM service provider.

According to recently-released report by Deloitte and CII, more than 20,000 new ATMs would be required in the first phase of the Yojana (from August 15, 2014 to August 14, 2015).

Banks such as State Bank of India, ICICI Bank, HDFC Bank and Axis Bank have limited the number of free transactions on ATMs. SBI and a few other banks have waived off fees to customers with a decent balance while those with less balance will be charged.

Additional costs

According to Patel, “Aren’t those with less or no balance, the ones who need financial inclusion more than anyone? Also, these people will anyways need less money to withdraw and these include urban poor.”

Experts fear that additional costs to customers while accessing their small value amounts can drive them away from the formal banking routes.

Vibha Batra, Co-Head Financial Sector Ratings, ICRA, said, “The ATM expansion is dense in the urban areas so the number of transactions per ATM may be less. In the rural areas, the per account deposits average around ₹3,000-5,000 and also the number of transactions per ATM is less along with low value transactions.”

Things could, however, change with two new banks – IDFC and Bandhan Financial Services – due to be set up next year. The upcoming payment and small banks will also require adequate cash transfer and payment infrastructure in place in the next 2-3 years. This will also create the need for more alternative channel of banking services.

Source : Thehindubusinessline
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Vijaya Bank’s equity capital mop-up plan on track: CMD

Vijaya Bank is confident of raising core equity capital of Rs600 crore before the end of the current fiscal, its Chairman and Managing Director V Kannan said.

There is no plan to enhance this capital mop-up during this fiscal although the Centre was open to bring down its stake in public sector banks to 52 per cent.

“As planned earlier, we will only go in for a qualified institutional placement issue so as to mop up about Rs600 crore before end March,” Kannan told BusinessLine. This could bring down the Centre’s stake to 68 per cent from the current level of 74 per cent.

Source : Thehindubusinessline
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Thursday, December 11, 2014

Falling bank rates make corporate fixed deposits attractive

With banks slashing deposit rates, savers could take comfort from the higher rates offered by companies such as HDFC, Shriram Transport, Mahindra Finance and Dewan Housing. The average spread, or gap, between bank and corporate deposits has widened about 90-100 basis points compared with the usual 50-70 bps. A depositor with slightly higher risk appetite can now earn interest rates of up to 10.50% with three-year maturity.

"Investors with a higher risk appetite can invest in fixed deposits issued by companies," said Sandeep Nayak, executive director & CEO, Centrum Broking. "The spread between a bank FD and a corporate fixed deposit has widened due to falling bank rates making it attractive for a discerning retail investor," he said.

Shriram Unnati Deposit offered by Shriram Transport Finance rated AA+ can earn you 10.50%, 9.75% and 9.25% interest rates with maturities of one, two and three years, respectively. Triple-A rated Dewan Housing, or DHFL, sells fixed deposit scheme christened Aashray Deposit Single at 9.75% with 14-month maturity.

India's largest lender State Bank of India is offering 8.50% with maturities ranging from one to five years. A few days ago, it cut deposit rates by 25 bps.

Mahindra & Mahindra Finance — triple-A rated nonbanking finance company — too offers 9.75% and 9.50% in their deposit schemes with 24 and 36 month maturities.

"A traditional saver in bank fixed deposits can optimise his returns by investing in company fixed deposits," said Suresh Sadagopan, founder of Ladder 7Financial Advisories.

"He can earmark a part of the debt asset allocation for it. But you have to have a slightly higher risk appetite." India's largest housing finance company, triple-A rated HDFC, sells deposit schemes at 9.40% with one-three year maturities, while HDFC Bank offers 8.75% for similar maturities but below Rs 1 crore.

Bank fixed deposits are normally meant for the highly conservative investor. Even after lenders reduced deposit rates, no major rate cuts happened in the corporate schemes and it is unlikely to happen anytime soon either.

"We will revise (reduce deposit) rates only when the Reserve Bank cuts the policy rate," said Umesh Revankar, managing director and CEO, Shriram Transport Finance Company. His company has never defaulted on repayment.

Source : Economic Times
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United Bank signs pact with Bajaj Allianz

United Bank of India has signed a memorandum of understanding (MoU) with Bajaj Allianz Life Insurance, wherein Bajaj Allianz will act as a channel partner for loan protection of the bank’s borrowers.

The MoU was entered into on December 9.

The MoU was signed in the presence of Ramchandra Pandit, Senior Vice-President, Bajaj Allianz Life Insurance Company Ltd, Sanjay Arya, Executive Director of the bank, and other senior executives.

Interestingly, the Kolkata-based lender will be the sixth public sector bank with which the private insurer has tied-up for loan protection of the bank’s borrowers.

Source : Thehindubusinessline
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SBI chief: Leave it to banks to decide on mergers

The Centre must leave it to the public sector banks themselves to decide on the consolidation candidates, SBI Chairperson Arundhati Bhattacharya has said.

“It is important to start conversations among banks as to who should merge with whom," she said at the Delhi Economics Conclave 2014 here on Thursday.

There is need for India to work towards 3-4 large banks through consolidation, she added.

This remark is in line with the earlier UPA regime’s policy stance of allowing banks on their own to come up with proposals for consolidation among themselves.

As on date, the Modi-led Government has no stated policy on consolidation of banks.

Indications are that upcoming Budget in February may spell out the new dispensation’s policy stance on bank consolidation and may even come up with some “big ticket” announcements on likely mergers.

Source : Thehindubusinessline
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Bank of Maharashtra cuts minimum lending rate to 10.25%

State—run Bank of Maharashtra today announced a cut of 0.15 percentage point in its minimum lending rate or base rate to 10.25 per cent, a move which will make its housing and auto loans cheaper.

“The bank has decided to revise the bank’s base rate from 10.40 per cent per annum to 10.25 per cent per annum with effect from December 15, 2014,” Bank of Maharashtra (BoM) said in a filing to the BSE.

BoM is the first bank that has lowered lending rates after RBI Governor Raghuram Rajan made a case for lowering lending rates by banks earlier this month.

“Some easing of monetary conditions has already taken place... However, these interest rate impulses have yet to be transmitted by banks into lower lending rates,” Rajan had said during the monetary policy review.

Helped by softening prices of food items, retail or consumer price index (CPI) based inflation declined to 5.52 per cent in October.

The wholesale price index (WPI) based inflation fell to 1.77 per cent during the month.

Shares of Bank of Maharashtra were trading at Rs. 43.20 per piece on the BSE, up 1.29 per cent from previous close.

Source : Thehindubusinessline
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RBI to review priority sector lending norms for foreign banks

The Reserve Bank of India (RBI) will soon be reviewing the priority sector lending norms for foreign banks; after which it will nudge them convert their Indian branches into wholly-owned subsidiaries, the Governor, Raghuram Rajan said here on Thursday.

Rajan was in the city to attend RBI board meeting.

According to him, the foreign banks have expressed (to the central bank) their concerns and the obligations they will have if they have to convert their branches into wholly-owned subsidiaries.

The primary concerns raised by these foreign banks have been on the priority sector lending and achieve the mandated norms.

“We are in the process of reviewing the priority sector norms. When that process is finished, after consultation with the Government, we will be able to communicate those norms. Once we do that, at that point we can nudge the foreign banks into adopting those structures,” he told reporters during a press conference.

Source : Thehindubusinessline
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Bharatiya Mahila Bank opens Coimbatore branch

Bharatiya Mahila Bank plans to close the current fiscal with a network of 80 branches.

The year-old bank, according to its Chairperson Usha Anathasubramanian, has started to take baby-steps.

Launched by the UPA Government on November 19, 2013, this 100 per cent Government-owned bank, started its operations with seven branches, added two more to take it to nine before March 31, 2014.

“This is the 36th branch of the bank and the second in the state of Tamil Nadu,” she said, inaugurating the Coimbatore branch at Ramnagar.

New branches

Mahila Bank plans to open a branch in Pune the day after, followed by branches in Bhopal, Haridwar, Jamshedpur and Nagpur.

In Tamil Nadu, the bank plans to establish its presence in Tiruchi and Madurai.

“We intend to double the branch network to 80 before March 2015. The pace of expansion is going to be aggressive,” Usha Anathasubramanian told BusinessLine.

About 20 of these (branches) would be in rural, unbanked pockets, she said.

Total business

In its first year of operation, which was just for four-and-half months (between mid-November 2013 to March 2014), the bank registered a total business of Rs. 190 crore.

Its business at present is around Rs. 870 crore. Usha Anathasubramanian is confident of reaching the business target of Rs. 1,800 crore before the close of the current fiscal. “This is our first full year of operation,” she said.

Source : Thehindubusinessline
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Monday, December 8, 2014

RBI Deputy Governor Khan proposes novel PPP model to drive financial inclusion agenda

India should adopt the model of "PPP (square)" for driving its financial inclusion agenda, the RBI Deputy Governor, H R Khan, has said.

Financial inclusion efforts should be tested against the 'Plan, Pursue and Pause' framework to ensure better outcomes, Khan said at the 'Inclusive Finance India Summit 2014' in the Capital on Monday.

There is need to "plan'' well, pursue what has been planned and ensure there is a "pause'' to see if it is working well.

An iteration of this "PPP'' could result in better results, Khan said.

This PPP model is different from the commonly known 'public private partnership' that the Government is looking to encourage in various economic activities.

Later, Tarun Chugh, Managing Director and Chief Executive Officer, PNB MetLife India Insurance, told BusinessLine that India's financial inclusion efforts are still at a "pilot" stage and more needs to be done on improving access to basic banking facilities, expanding mobile banking and increasing financial capability. .

Financial inclusion is just not about opening bank accounts but providing access to the breadth of financial products needed by all people, he said.

Source : Thehindubusinessline
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ICICI Bank caps free transactions at own ATMs at five

The country’s largest private sector lender ICICI Bank has announced a hike in its ATM charges for savings account holders from January 1.

Under the new method, the number of free transactions in a month is fixed at five using own ATMs, while it has been capped at three for other banks’ machines.

Customers can enjoy only five free transactions, including financial and non-financial, at the bank’s own automated teller machines (ATM), it said in a post on its website.

After exceeding the free transaction limits, customers will have to pay Rs. 20 per financial transaction excluding service tax and Rs. 8.50 for every non-financial transaction, it said.

For transactions at non-ICICI Bank ATMs, the number of free financial and non-financial transactions have been reduced to three per month at six metros of Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad, after which the customer will have to pay Rs. 20 for a financial transaction and Rs. 8.50 per non-financial transaction.

In case of usage in non-metro areas, a customer can enjoy five free transactions per month at non-ICICI Bank ATMs, after which the same charges apply, it said.

The issue of ATM usage has been a very contentious one due to the inter-connect charges a bank has to pay to the other. Additionally, the operating costs have also gone up, following a spate of incidents at the ATMs like the robbery at Bengaluru last year, which started the debate on transaction charges.

After consultations, the RBI last month started a system under which it allowed banks to charge from the fourth transaction onwards at other banks’ ATMs in metros, and also gave the liberty to banks to charge customers for the sixth transaction onwards at own machines.

“The ATM transaction is free to you but not free to the bank. It costs the bank Rs. 75 to Rs. 100 for those five transactions. The bank has to collect that amount from somewhere and it has to be from customers. But there are two distortions that it creates. First, not everybody is doing the same amount of transactions and (also) are we subsidising using of cash by freeing up ATMs?” RBI Governor Raghuram Rajan had said, in defence of the new move.

Many banks have already announced reviews in their ATM charges following the announcement.

Source : Thehindubusinessline
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Kotak Mahindra launches savings account of older customers

Kotak Mahindra Bank launched a savings account product for older customers aged over 55 years to offer priority service with discounted offerings.

Grand is a unique savings bank account, tailored exclusively for customers 55 years and above. Grand has been designed keeping in mind their need for hassle-free banking, financial independence and personal attention, the bank said in a statement.

“Grand offers priority service and first aid card which provides essential customer information and emergency contacts details. It also offers queue privileges at the branch. Further, customers will get a health card from Indian Health Organisation (IHO), offering up to 50 per cent discount on treatments, consultation and procedures. Customers also can avail special lifestyle offers from brands including Lenskart, Zicom, Makemytrip and eBay,” the statement said.

Grand customers will earn 6 per cent per annum on savings balance of over Rs. 1 lakh and 5 per cent on balances up to Rs. 1 lakh.

To earn higher return on their balances, they can sign up for the Kotak ActivMoney facility, which converts savings account balance above a certain amount into Term Deposits.

Grand has also been packed with additional features including up to 35 per cent discount on locker facility and 100 per cent waiver on annual maintenance charge (AMC) for the first year on a Demat Account.

Additionally, customers will get 100 per cent issuance charge waiver on best complimentary cards and 25 per cent issuance charge waiver on a travel card.

Customers can also opt for customised date for cash delivery at their home doing away with any effort on the part of the customer to reach out to the bank every now and then. Instead, the customer contact centre gets in touch with the customer on the pre-selected date to confirm and execute cash delivery.

Further, customers can place a request for a call back by simply sending a SMS, which will be responded to within 30 minutes. They can also transact using net banking and mobile banking.

Grand also enables customers to make bill payments by registering online or at Kotak Mahindra branches.

“We believe in serving our customers better by understanding their preferences, and delivering products and services that meet needs of all segments. Grand is a distinctive offering for customers 55 years and above whose needs and behavioural patterns are different from other customer segments,” said Shanti Ekambaram, President – Consumer Banking, Kotak Mahindra Bank.

Source : Thehindubusinessline
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‘Uber complying with RBI norms for payment system’

The Reserve Bank of India today said that the US-based controversial cab operator Uber is complying with the central bank norms with regard to payment systems.

“My understanding is that they are complying (with the norms),” RBI Deputy Governor H R Khan said when asked whether Uber’s payment system is fully compliant with the Indian norms.

The company has been in the news as its taxi driver is facing rape charges and is currently in police custody. Police has also issued notice to the Indian functionaries of Uber to join investigation in the case.

The company had run into regulatory hurdles with the Reserve Bank raising objections to its payment system as it did not include the authentication process. It was asked to comply with the regulatory norms.

Talking to reporters, Khan said “We had given time (to Uber) up to November 30 to come to wallet system...they wanted some extension. We said it is not possible... they have now fallen in line,” he said.

The company has started using the mobile wallet system.

“Quite a few customers have boarded on mobile wallet system and that is how it is going to work....I think they are now going to (be) more or less what we had told them..,” Khan added.

Source : Thehindubusinessline
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LIC agents to stage dharna in Mumbai on Wed

The LIC Agents’ Organisation of India will hold a massive dharna at Azad Maidan in Mumbai on Wednesday to present a charter of demands to the LIC management.

Agents have not agitated for a raise in their commission since 1956, PG Dileep, General-Secretary of the organisation, told BusinessLine.


This is despite the price of essential commodities and petroleum products having shot up many times over during this period.

“Even now we are not asking for a raise in the commission rate. Our main demand is that the existing commission on policies should not be reduced.”

Dileep said the very existence of agents was now under threat due to a decision to eliminate the agency system.

If an agent were to lose his job, the Government would not be able to provide him alternate employment because of the sheer numbers involved — 12 lakh.

‘Save LIC and protect agents’ is the slogan of the Association, Dileep said.


LIC's service model, represented by its agency force, was a globally acclaimed model.

But various regulations imposed by LIC over the last two decades have been directed at eliminating this very force.

About 17 lakh have been terminated during the last five years. Though recruitment has been attempted through various channels, the total number achieved last year was only 91,052.

If the LIC has successfully withstood competition from the private sector during the last 14 years, credit should go to the cooperation and hard work of the agents, Dileep said.

Multinationals and Indian corporates have realised that they can defeat LIC and eat into its business by destroying the agency force.


LIC record of claims settlement over the past 11 years was the best globally. While other private companies settled 48-80 per cent of the claims every year, LIC has settled 99 per cent.

It has been investing its funds in Government securities and bonds and extending long-term loans to public sector undertakings at low interest. After the entry of private insurance companies, a part of the funds was being invested in the share market.

An amount of Rs. 70,000 crore was lying with the Government without interest as sovereign guarantee.

The service tax on policies was also borne by the LIC. All these have resulted in low returns, affecting the bonus payout to policy-holders.


LIC was forced to purchase shares of companies and banks which were not performing well. It has dispensed with its conventional and other attractive policies with effect from January 1, 2014.

There was only one live policy till January 6. Now it has only nine policies against 56 policies during the same time last year.

Up to 80 per cent of the business was done during January-March. It was at this time that LIC has stopped a number of attractive policies.

About 38 crore people have been covered by these attractive policies and there was no justification in closing them.

Naturally, it would reflect negatively on the quantum of business done. Still, LIC commands 84.4 per cent of the insurance business. But it will need to face the threat of downfall from now on, Dileep said.

Source : Thehindubusinessline
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Friday, December 5, 2014

SBI cuts term deposit rates

Easy liquidity has prompted State Bank of India to cut retail term deposit rates by 25 basis points in select maturities.

The country’s biggest banker State Bank of India (SBI) has cut the retail term deposit rates for deposits below Rs. 1 crore with effect from Monday, December 8.

The bank has revised the rates only for a tenure of one year and above, leaving the short-term deposit rates untouched.

In its filings to the stock exchanges, SBI said that the interest rates for deposits of 1 year and above will be reduced by 25 basis points (0.25 per cent per annum). While the rates for deposits of 1 year to less than 3 years and 3 years to less than 5 years are reduced from 8.75 per cent to 8.50 per cent, for deposits of 5 years and above, the new rate would be 8.25 per cent against 8.5 per cent at present.

However, the interest rates for short-term deposits of 7 days up to 1 year in different terms remain untouched. Rates for deposits of 7 days to 45 days (5 per cent), 46 days to 179 days (7 per cent), 180 days to 210 days (7.25 per cent) and 211 days to less than one year (7.50 per cent) would remain unchanged.

The bank’s action comes in the wake of growing chorus for cut in interest rates as global oil prices are tumbling and as inflation remains under check.

Shares of SBI (face value Rs1) are trading at
Rs319.10, down by Rs1.15, on the BSE.

In the last few days, ICICI Bank and HDFC Bank have cut retail term deposit rates by 25-50 basis points in select maturities. 

Source : Thehindubusinessline
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ICICI Bank sells Russian subsidiary to Sovcombank

The board of country’s largest private sector lender ICICI Bank on Friday approved sale of the bank’s shareholding in its Russian subsidiary ICICI Bank Eurasia, to a third party Sovcombank.

ICICI Bank Ltd has informed BSE that the Board of Directors of the Bank at its meeting held on December 05, 2014, approved a proposal for the sale of ICICI Bank’s shareholding in ICICI Bank Eurasia Limited Liability Company (IBEL), a non-material wholly-owned banking subsidiary in Russia, to Sovcombank, an unrelated third party Russian bank,” ICICI Bank said in a release to the Bombay Stock Exchange.

At September 30, 2014, ICICI Bank Eurasia had total assets of Russian Ruble (RUB) 4.5 billion (about Rs. 500 crore) and paid-up equity capital of RUB 1.6 billion (about Rs. 185 crore). Its profit after tax in the six months ended September 30, 2014 was RUB 28 million (Rs 3.2 crore).

Eurasia accounted for less than 0.1 per cent of ICICI Bank’s consolidated total assets at that date and consolidated profit after tax for the period, the BSE release said.

The sale is subject to execution of definitive agreements and regulatory approvals. The purchase price will be determined on the transaction completion date based on the financial statements of IBEL at that date. The transaction is expected to conclude by the end of the financial year.

Shares of ICICI bank ended at Rs. 359.45 per share, weaker by Rs. 2.40 (0.66 per cent) over the previous close on BSE.

Source : Thehindubusinessline
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HDFC Bank to cut lending rate by March: Aditya Puri

Having cut its deposit offering by up to 0.50 per cent, the country’s second-largest private sector lender HDFC Bank will be cutting its lending rate by March, a top official said today.

“Now I’ve reduced my fixed deposit rates, and you will see by March or so base rate will come down,” the bank’s Managing Director Aditya Puri told PTI after launching a blood donation drive.

Puri said the base rate or the minimum rate of lending is computed on the cost of deposits and the bank cannot cut its lending rate unless the deposit rate comes down.

Once the cost of deposits come down, following the December 1 cut in short-term deposits of up to one year maturities, the bank will pass on the benefit to borrowers, he added.

The bank’s base rate currently stands at 10 per cent and the last movement in it was in November last year, when it was hiked by 0.20 per cent.

The bank cut the deposit rates by 0.25 to 0.50 per cent in various buckets ranging from 49 days to less than a year deposits, attributing it to low credit pick-up, drop in money market rates and competitor’s moves.

On Tuesday, Reserve Bank Governor Raghuram Rajan had rued the fact that banks are not passing the benefits of the declining rates environment to the borrowers, saying the policy measures are not getting transmitted as desired.

Puri today said that policy transmission has happened as the banks have cut rates in different offerings such as car loans, where banks have reduced their spreads, but added that it does not reflect in the base rate due to deposit rates.

“Already interest rates have gone down in the market, whether it is car loans or term loans. Monetary transmission with or without reduction in policy rates has already happened,” he said.

Puri said Rajan’s stance has been dovish, which comforts the banking system and added that the RBI Governor should unleash a 0.50 per cent cut in the next policy.

“His statement is also dovish, saying that once he can see stability in the benignness of inflation, you can expect a cut. Let’s hope that the cut is a meaningful one at 50 basis points since he didn’t do it this time,” Puri said.

HDFC Bank today started a single-day blood donation drive at 2,000 locations across the country simultaneously. Last year, it had collected 67,000 units of blood in a similar drive and is targeting the same to go up to 1 lakh this year, Puri said. 

Source : Thehindubusinessline
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