Federal Bank to recruit 3,000 in next three years

Federal Bank plans to recruit about 3,000 employees and add 300 branches in the next three years, a top official today said.

The bank presently has about 10,126 employees on its rolls.

Since the last three years, around 3,000 employees have been recruited and plans are on to employ another 3,000 in the next three years, Federal Bank Managing Director and CEO Shyam Srinivasan told reporters here.

In the last three years, 340 branches were added across the country. “We could like to repeat it. However, if economic environment is not robust, we will have to be careful. The aim is to add 80—100 branches every year,” he said.

On proposals to levy charges for ATM transactions, he said the private lender was allowing its customers unlimited usage of ATMs, however, maintenance costs is going up.

“We are reviewing the cost. We will see how industry goes and decide accordingly,” he said.

The bank has so far launched 26 technology products for its customers. Within two weeks, a new product which would enable easy cash transactions between customers and merchant establishments would be launched, General Manager (HR) Thampy Kurian said.

The bank’s technology product ‘Fed book’, which enables a customer to view transactions for the past several years, was a big hit with customers.

The bank also offers a facility through which devotees can provide offerings to temples, churches and mosques through their federal bank accounts.

The bank has also tied up with white line ATM facilities of Tata group, Muthoot Finance and Bank Tech, he added.

Source: Thehindubusinessline

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BoM launches savings bank deposit scheme

Bank of Maharashtra has launched a savings bank deposit scheme — Mahabank Royal Savings Account — exclusively for high net worth Individuals having a minimum monthly average balance (MAB) of Rs 1 lakh in their account.

The slew of benefits offered to the accountholder under the product includes assistance of a relationship manager, free accident death insurance cover (Rs 50 lakh personal air accident death insurance and Rs 10 lakh personal accidental death insurance), higher transaction limit on ATM-cum-debit card on merchant point of sale terminals, and free national electronic funds transfer/real time gross system transactions through Internet banking, the bank said in a statement.

Other benefits to the account holders include 50 per cent concession in the processing fees of all retail loans, 100 free personalised cheque leaves per annum, 50 per cent concession on annual maintenance charge of BoM-SBI co-branded Gold Credit Card, and free demat account facility for the first year.

S. Bharatkumar, General Manager, Bank of Maharashtra, said the scheme has been launched to attract new affluent customers besides deepening relationship with the existing savings bank customers.

Source: Thehindubusinessline

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Overseas loans dent margins of HDFC Bank

At first glance, the strong loan growth of 23 per cent in HDFC Bank in the December quarter is heartening; as it is almost eight percentage points higher than the overall credit growth in the banking sector. But there are many weak links in the chain.

One, HDFC Bank raised $3.4 billion through FCNR deposits under the special swap facility offered by the RBI.

This is almost 10 per cent of the entire amount raised by all banks through this facility.

To sweeten the deal for the depositor, banks offered a leveraged product under this scheme.

This meant extending an overdraft to the NRI depositor, with a lien on his deposit.

This leveraged product drove HDFC Bank’s growth in overseas loans. Excluding this, the total loan growth is actually four percentage points lower, at 18 per cent for the December quarter.

As the yields on such loans are lower than that earned on domestic loans, the net interest margin has come down by 10 basis points sequentially.

The net interest income, which in the past has tracked the growth in loans, grew by a lower 16 per cent.

Retail loans sluggish

Two, growth in high yielding retail loans have slowed down significantly in the last two quarters.

From 25-27 per cent a few quarters back, the retail loan growth has slowed to 13.6 per cent in the December quarter; Axis Bank has, however, continued to deliver stellar growth.

The slowdown in auto loans has impacted most players, and is reflective of the underlying sluggish volumes.

For HDFC Bank, muted growth in home loans has been another dampener. Under the arrangement with HDFC, the bank has the option of purchasing the home loans originated by it.

In the December quarter, the bank bought back only a small amount of home loans from HDFC. Hence the home loan book grew only by 1 per cent.

This is well below the bank’s 18-20 per cent growth in home loans in the past.

Three, it was the spurt in corporate loans that drove the overall loan growth for the bank.

The 22 per cent growth in corporate lending was mainly for working capital financing. This being short term in nature may not be sustainable.

Industry leading growth, steady margins and very low delinquency have justified HDFC Bank’s premium valuation in the past.

Its slowing retail growth and pressure on margins will thus need watching in the coming quarters.

radhika.merwin@thehindu.co.in

Source: Thehindubusinessline

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Unions want banks to go slow on ATM expansion

Bank trade unions want banks to go slow on ATM network expansion and encourage customers to return to bank branches for transactions and use the ATM sparingly. This, according to them, is good for the customers, employees and banks’ bottomlines.

“The current furious expansion of the ATM network is not good for the banking industry’s health,” says M.V. Murali, convenor of the United Forum of Bank Unions, which is a collective of nine major all-India bank trade unions. “ATMs enormously increase the cost of operation of banks, particularly in view of the demand for mandatory 24-hour security at ATMs following the attack on a woman at a Bangalore ATM a few months ago.”

Murali’s comments come in the wake of Indian Banks’ Association suggesting banks charge customer for using ATMs beyond a certain number of free transactions. Murali said the banks were indiscriminately opening ATMs even where people were mostly illiterate. Outsourcing of ATM services, through the ‘white-label ATMs’, was a wrong step as it would lead to exploiting illiterate customers and breed corruption and malpractices. He said managements were dumping quotas on bank branches to increase mobile and Internet banking accounts.

FAIR MIX NEEDED

“Banking has lost the human touch,” Murali added. Customers no longer felt a sense of belonging to their banks and the employees were also losing touch with their customers as interactions were shrinking.

basheer.kpm@thehindu.co.in

Source: Thehindubusinessline

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Average age of IOB staff will fall further: CMD

At Indian Overseas Bank, promotions are happening thick and fast. Officers can become managers in less than two years. Apart from a conscious attempt at fast-tracking talent, the rapid expansion of its branch network is helping youngsters grow fast.

Speaking to Business Line, M. Narendra, Chairman and Managing Director of the bank, said the bank has opened more than 1,200 branches and recruited some 11,000 people in the last three years.

The bank recruited around 4,500 people in the current fiscal alone. Of them, around 2,600 are officers. The attrition level is minimal, he added.

Narendra said the new recruits become managers within one-and-a-half years because of the opportunities thrown up by expansion.

“The average age of employees is 46 now. Earlier it was 52-55. Ideally, my endeavour is to take it to 35 years,” he said, adding that the age profile will come down further in the next three years.

On training, he said: “Around 60-70 per cent of my focus is on human resource development.” Steps have been taken to mentor them at regional offices and also undertake a competence mapping of the employees.

Apart from using its own training establishment the bank is also planning to take the help of external training institutes, he said.

Highlighting the branch expansion over the last three years, he said it was not restricted to the South alone. The bank has expanded in all the States, and the number of regional offices has gone up from 43 to 59 now.

vinayak.aj@thehindu.co.in

Source: Thehindubusinessline

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‘Merchanting’ eligible for short-term credit: RBI

The Reserve Bank of India on Friday said short-term credit either by way of suppliers’ credit or buyers’ credit will be available for intermediary trade transactions or merchanting.

Merchanting or intermediary trade transaction involves purchase of goods by Indian residents from non-residents and then reselling them to another non-resident directly without the goods touching Indian ports. The merchanting transactions will include the discounting of export leg Letter of Credit by a bank authorised to deal in foreign exchange, as in the case of import transactions, the central bank said.

Norms revised

According to the revised guidelines on merchanting transactions, the RBI said the entire process of intermediary trade transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months.

The commencement of merchanting would be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last.

Goods involved in merchanting transactions would be the ones that are permitted for exports / imports under the prevailing Foreign Trade Policy (FTP) of India.

The RBI said both the legs of a merchanting transaction (purchase of goods by Indian residents from non-residents and reselling these to another non-resident) should be routed through the same bank authorised to deal in foreign exchange (AD bank).

The bank should verify the documents, such as invoice, packing list, transport documents and insurance documents and satisfy itself about the genuineness of the trade.

The AD bank should ensure one-to-one matching in case of each merchanting and report defaults in any leg by the traders to the RBI on half-yearly basis.

ramkumar.k@thehindu.co.in

Source: Thehindubusinessline

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Vijaya Bank EGM to be held on Feb 19

The board of directors of Vijaya Bank at its meeting held on January 17, 2014 has approved that an extraordinary general meeting (EGM) of the shareholders of the bank will be held on February 19, 2014.

The EGM is being held to seek approval for conversion of perpetual non cumulative preference shares held by the Government of India into equity shares.

The board has fixed January 20, 2014 as ‘Relevant Date’ for the purpose of pricing of issue of equity shares to the Government of India in terms of SEBI (ICDR) Regulations, 2009.

Further, it has declared an interim dividend of 10 per cent (Re 1) per equity share for the financial year 2013-14.

anil.u@thehindu.co.in


Source: Thehindubusinessline

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Syndicate Bank allots 2.26 cr shares to Govt

Syndicate Bank upon receipt of funds from the Government today has allotted 2.26 crore equity shares of face value of Rs 10 each for cash at a premium of Rs 78.36.

The bank recently received Rs 200 crore from the Centre.

The bank’s note to the exchanges said the allotment has been determined in accordance with Regulation 76 (1) of the SEBI (ICDR) Regulations aggregating to Rs 199,99,99,971.36 on preferential basis to Government of India.


Source: Thehindubusinessline

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BoB gets excellence award

Bank of Baroda (BOB) was conferred with the best bank award for the MSME sector. This award was instituted by the chamber of Indian micro small and medium enterprises. D. K. Garg, General Manager, BOB received this award from Montek Singh Ahluwalia, Deputy Chairman of Planning Commission at an event in the Capital.


Source: Thehindubusinessline

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IRDA fines 12 insurance cos in 2012-13

IRDA slapped a fine of nearly Rs 5 crore during 2012-13 on 12 insurance companies, including market leaders HDFC Life and ICICI Prudential Life.

HDFC Life paid a fine of Rs 1.47 crore, while ICICI Prudential Life had to shell out Rs 1.18 crore for failure to comply with various provisions of the Insurance Act 1938.

The insurance regulator had imposed a fine of Rs 76 lakh on PNB Metlife for violation of various guidelines. Tata AIA had to pay a penalty of Rs 49 lakh during 2012-13.

In all, penalties were levied on 10 life insurance companies and two non-life insurance companies for non-compliance with various regulatory stipulation, IRDA said in annual report 2012-13.

Apart from monetary penalty levied on insurers, penal actions were also initiated on various non-compliant intermediaries as well, it said.

The annual report also noted that insurance penetration in India, which surged till 2009-10, has slipped since 2010-11 on account of slowdown in life insurance premium as compared to the growth rate of India economy.

During the first decade of insurance sector liberalisation, the sector has reported consistent increase in insurance penetration from 2.71 per cent in 2001 to 5.20 per cent in 2009, the report said. However, since then, the level of penetration has been declining and reached 3.96 per cent in 2012, it added.

Life insurance penetration had consistently gone up from 2.15 per cent in 2001 to 4.60 in 2009, before slipping to 4.40 per cent in 2010, 3.40 per cent 2011 and further slipping to 3.17 per cent in 2012.

The insurance penetration of the non-life insurance sector in the country has remained near constant in the range of 0.55-0.71 per cent over the last 11 years, however the penetration rose to 0.78 in 2012.


Source: Thehindubusinessline

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RBI to look into limiting free ATM transactions

The Reserve Bank will consider reducing the number of free ATM withdrawals, as recommended by the Indian Banks’ Association, in an effort to cut down on cash transactions in the economy.

“We will examine that (IBA recommendation of cutting down number of free ATM transaction to 5 per month). Many other proposals have come. The whole idea is that people are using too much of cash and adding to the costs. We will examine all those issues,” RBI Deputy Governor, H.R. Khan, told PTI.

The RBI has been taking measures to cut down on cash transactions in the economy in a bid to minimise the risk of money laundering in the system.

IBA recently recommended a change to include all the ATM transactions, including the own-bank ones, to 5 per month in view of rise in costs due to additional security measures being put in place following the Bangalore incident wherein a person was brutally attacked at the ATM.

Following the incident — where a woman employee of Corporation Bank was attacked by an intruder with a machete in November — security arrangements of 1.40 lakh ATMs of banks were reviewed leading to additional costs for manning ATMs.

IBA has suggested to the RBI to maintain the current practice of making an account holder pay Rs 20 per transaction for the ones beyond the limit it has proposed.

Right now, holders of savings accounts enjoy five free transactions per month at the ATMs of banks other than their own, while there is no such limit for use of own-bank ATMs.

Banks net off transactions at the end of the month between themselves and pay Rs 15 per transactions plus taxes to each other irrespective of whether a withdrawal was within the limit in case of customers involved.

Public sector banks had a combined 72,340 branches, of which 37,672 had onsite ATMs, as of March 2013.

Managing Director of cash management company SIS Prosegur Rituraj Sinha said there is need for uniform and comprehensive guidelines for ATM transaction and security.

The RBI needs to come out with specific guidelines in this regard, he said.

According to IBA estimates, securing every ATM with an armed guard and installing CCTV camera will increase the cost roughly by Rs 40,000 per ATM.

Banks have also been asked to install Aadhaar-card enabled ATMs, which would again involve more costs.


Source: Thehindubusinessline

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SBI chief says ATMs in losses, can’t subsidise forever

Stating that its ATM operations are making losses, the nation’s largest bank SBI has said it is all for charging customers for transactions.

It also said a commercially viable model is needed for ATM network expansion.

“Whatever services we give, ultimately it has to be a win-win situation.... We just want a commercially viable model, I cannot afford to lose month after month,” State Bank of India Chairperson, Arundhati Bhattacharya, told PTI in an interview.

SBI has the largest network of ATMs.

Bhattacharya also said barring in a few States, the ATM operations are making losses. She did not name the States where the ATM segment is making money.

She said SBI cannot subsidise ATMs forever.

“The loss from ATMs is very concerning. I would like to roll out many more ATMs. I am ready to do that, but I need to explain also how I am going to sustain this,” she said.

Asked about the industry demand that customers be charged for ATM services, especially after the push in costs of ATMs after the Bangalore incident wherein a woman was attacked inside the ATM kiosk, she said SBI supports the idea of charging even its own customers.

“If you are looking at extending the ATM network and making it available to more and more people, there has to be a commercially viable model,” she said.

SBI had an ATM network of 32,777 as of September 2013 and has announced aggressive plans of expansion. The Finance Ministry had mandated that each state-run bank would have an adjoining ATM in place by the end of the current fiscal.

At present, banks allow customers five free transactions per month at other banks’ ATMs and unlimited at own bank’s. However, the home bank has to pay the other bank Rs 15 per transaction, even though the transaction may be for free to customers.


Source: Thehindubusinessline

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