Every bank branch to have ATM by March this year: Minister

Describing UPA-II government's focus on inclusive growth in the banking sector as a mission, Union Minister of State for Finance Namo Narayan Meena today said every old bank branch should have ATM facility by the end of current fiscal.

Every new bank was now providing ATM facility while opening its branches despite some problem in availability of these machines, Meena said after inaugurating the regional office of Dena Bank here.

Not only on site, but also off site the ATM should be opened at the busy places like colleges, universities, malls, and markets so that people can be connected with banking facilities, Meena said.

Comparing telephony density with banking, the Minister said: "While there are about 90 crore cellular phone users now, 50 per cent of people in the country do not have bank accounts. But ....payment of every penny from the government is being made through banks to beneficiaries".

Financial empowerment, infrastructure development and expansion of banking sector would enable control poverty and knit India, he said adding there were 8500 branches in 1969 when former Prime Minister Indira Gandhi had nationalised the banks.

The number of branches in the country has now gone up to one lakh, he said.

As per UPA-II plans, one out of nine Mahila Bank branches would be opened in Jaipur by March 31, 2014, and if the state government provides a building, Mahila Bank can be opened even in two days, Meena added.

UPA-II's policy is "Gaon ko joriye, gaon mein bank kholiye (knit village, open banks in village), he said.

Speaking on the occasion, Dena Bank CMD Ashwani Kumar said ten new branches would be opened in Rajasthan during 2013-14 and 15 in the next fiscal including 25 per cent in rural areas.

Dena Bank in Rajasthan made a business growth of 20 per cent so far with a business of Rs 2,400 crore in current financial year and aims to reach Rs 3,300 crore in next fiscal.

Kumar said he would hold meetings with management to raise this business to Rs 5,000 crore in the coming years in the state.

As on December 31, 2013, Dena Bank's combined (mixed) business was at Rs 1,65,976 crore. This included Rs 96,081 crore deposits and Rs 69,895 crore advances, he said.

He said Dena Bank had recently opened its branch in London.


Source: Economic Times

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SBI declares war on NPAs as bad loans spurt

Faced with rising bad loan problems, the country's largest lender State Bank announced a new roadmap which will limit slippages and also give early warning on stressed assets.

The bank also announced slew of initiatives in the areas of cost control, productivity improvement, better incentives and overhauling of HR policies.

"We have decided to move stressed assets recovery branches that were reporting to the national banking group (NBG) so as to have better focus and outcomes," SBI chairperson Arundhati Bhattacharya said while announcing third quarter numbers.

"With that in mind, we have now changed the structure and created four general managers in all the four zones--North, South, East and West--who will be reporting to the stress management group and will actually be owning these stress asset recovery branches in the circles," she added.

The bank's gross non-performing assets (NPA) ratio deteriorated to 5.73 per cent in the reporting quarter as against 5.30 per cent a year ago.

The bank also made it easier for corporate account group (CAG) and mid-corporate group (MCG) to migrate all of their accounts, which need hard recovery measures, into CAG.

"With this we hope, the CAG will be much more focused and will be able to bring about faster resolution," she said.

The bank also formed various committees which will monitor loans that are showing early signs of weakness. "The other thing which we have done is we have created various committees which will look into not only the stressed assets but those accounts which are beginning to display weakness," she said.

The largest of the committees which look at loans above Rs 500 crore will be headed by Bhattacharya herself, while the committee which will track loans in the Rs 100-500 crore range will be headed by Pradeep Kumar, managing director (corporate banking).

Those in Rs 50-100 crore range will be headed by Soundara Kumar, deputy managing director (stress asset management group), Bhattacharya said.

The committees which will monitor loans between Rs 25 and 50 crore will be headed by CGMs of the circle and CGMs of the verticals. Loans of Rs 5-25 crore ticket size will be looked by general managers at circles while those in the Rs 1-5 crore will be tracked by deputy general managers, she said.

These committees will help the bank to do a weekly review of the accounts, conduct analysis, take immediate steps and follow up action so as to ensure that weak accounts get immediate attention and their chances of becoming NPAs are minimised.

"In these reviews, we also try to come up with whatever solution necessary such as restructuring, sale of assets and other innovative measures. With this, we hope we will be in a better position to control the kind of slippages that we have been seeing," the chairperson said.


Source: Economic Times

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RBI tightens gold import norms under 80:20 scheme

Seeking to restrict gold imports, the Reserve Bank today said nominated banks and agencies will not be allowed to import the precious metal in excess of their entitlements in first or second lot under the 80:20 scheme.

"Import of gold in the third lot onwards will be lesser of the two-- five times the export for which proof has been submitted or quantity of gold permitted to a nominated agency in the first or second lot," RBI said in a notification.

The government under the 80:20 scheme had in August 14, 2013, allowed nominated agencies to import gold on the condition that 20 per cent of the inward shipment will be exported. The permission to import the next lot would be given on fulfilment of export obligation.

In view of the representation being received by the RBI and the Finance Ministry, the central bank has said that the quantum of the third lot import would be five times the export from the previous lot subject to the condition that it would not exceed previous entitlements.

In case of advance authorisation (AA) and duty free authorisation (DFIA) for gold import issued before August 14, 2013, RBI said the 80:20 rule will not apply for units in Special Economic Zones (SEZs), Export Oriented Units (EoUs), Premier and Star Trading Houses.

"The imports made as part of the AA/DFIA scheme will be outside the purview of the 80:20 scheme. Such Imports will be accounted for separately and will not entitle the nominated agency/banks/entities for any further import," RBI said.

To contain rising gold import, which was 162 tonnes in May, the government had hiked import duty on gold thrice in 2013 taking it 10 per cent. Besides, the RBI also came out with certain restrictions, including the 80:20 scheme for imports. The gold imports came down to 19 tonnes in November.


Source: Economic Times

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State Bank of India vows to tackle bad loans after Q3 profit miss

State Bank of India (SBI) said on Friday it would boost vigilance of bad loans after the country's largest lender disappointed analysts and posted a fourth consecutive quarterly drop in net income.

Like state-run peers Punjab National Bank, Canara Bank and Bank of India, SBI's profits have been clipped by an increase in defaults by companies battling reduced cash flows, high inflation and delays in government approvals for projects.

To avoid a further worsening in its asset quality, SBI will conduct weekly reviews, and install new technology, to quickly identify loan accounts showing signs of stress, Chairwoman Arundhati Bhattacharya told reporters.

"We will do a better management of what we have and have much better processes in place to pick and choose. We will have much better early warning signals," she said.

SBI posted a 34 per cent drop in third quarter net profits to Rs 2,234 crore ($358.21 million) in the quarter ended December, lagging analysts' estimate of Rs 2,530 crore.

Net interest margins, a key gauge of profitability, were largely unchanged at 3.51 per cent from 3.49 per cent in the preceding quarter.

Gross non-performing loans as a per centage of total assets rose to 5.7 per cent from 5.6 per cent in the previous quarter.

"Revenue and loan growth numbers have come in-line but nobody is talking about growth anymore. The entire focus is on asset quality," said Manish Ostwal, banking analyst at KR Choksey Shares & Securities.

SBI, which accounts for a quarter of India's loans and deposits, saw a tepid response from foreign investors for a $1.28 billion share issue last month largely because of concerns about its asset quality and earnings growth in a slowing economy.

NO RECOVERY IN SIGHT

SBI chairwoman Bhattacharya, who took office last October, is under pressure to tame non-performing loans and reverse weakening profit growth while helping to reassure investors who have dragged down the bank's shares by almost half from their peak in November 2010.

Bhattacharya said the bank had restructured outstanding loans worth Rs 561as of the end of December, about 61 per cent higher from a year ago.

Bad debts, however are likely to rise. Last month, India's top private sector lender ICICI Bank warned that corporate defaults would rise in the next few quarters. ICICI posted its slowest profit growth in four years in the December quarter.

SBI Chief Financial Officer R.K. Saraf also said he expected the banking sector's loan problems to linger as India's economy grows at its slowest pace in a decade.

"Mid corporates neither have the resources nor the management bandwidth nor the wherewithal to face a prolonged slowdown like this," Saraf told reporters. "We feel, going forward, this stress will continue for some time."

Ratings agency Fitch expects stressed assets at Indian banks, as well as bad and restructured debt, to total 14 per cent of loans by March 2015, up from 9 per cent in March 2013.

SBI shares, valued at about $17 billion, closed down 1.7 per cent at Rs 1,475.10 in a Mumbai market that closed 0.9 per cent higher.


Source: Economic Times

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United Bank of India may get fresh capital infusion from government

The United Bank of India may get some fresh capital infusion from the government, financial circles felt on Wednesday. That, however, isn't confirmed yet, even though the speculation has brought cheers to employees of the beleaguered bank.

Fact is that even if the government wishes to do so, it will perhaps have to seek support from other institutional investors since the scope of direct capital infusion is very limited. For the records, the government holds 88% in the Kolkata-based lender and it cannot hike its stake beyond 90%, according to equity market rules.

The Securities & Exchange Board of India rules say that a minimum 10% public shareholding is an absolute must in government companies, while for private sector companies, the threshold is 25%.

"The government may have to bring in non-equity investors to shore up the capital adequacy ratio and seek support from institutional shareholders to jack up Tier-I capital," said Robin Roy, associate director at PwC India.

"On the supply side, the Reserve Bank of India may need to provide regulatory forbearance on NPA provisioning and capital adequacy front for the time being, looking at UBI's longterm capital utilisation plan." Apparently, the capital infusion theory had its genesis in Financial Services Secretary Rajiv Takru being quoted on a TV channel as saying that the government might consider infusing fresh capital into UBI.

Experts feel that the government may ask investors like Life Insurance Corporation of India (LIC) to chip in and bail out UBI, as it always turns to LIC whenever crisis arises and since it has limited headroom itself for making a fresh capital injection.

The government has pumped in . 180 crore in UBI only in December 2013 and any further infusion would put strain on its fiscal deficit. At a UBI officers' conference in Kolkata on Saturday, senior directors said that the possibility of raising fresh capital looks bleak as the government is close to the 90% mark and raising public equity would be difficult at this time of crisis.

The government has pumped in . 180 crore in UBI only in December 2013 and any further infusion would put strain on its fiscal deficit. At a UBI officers' conference in Kolkata on Saturday, senior directors said that the possibility of raising fresh capital looks bleak as the government is close to the 90% mark and raising public equity would be difficult at this time of crisis.

Institutions hold 5.54% in UBI, including Life Insurance Corporation of India's 3.1%, as on December last year. Dubious lending practices and spike in bad loans have put UBI's capital ratios under tremendous strain as capital is linked to risk weightage of assets.

Its CAR at the end of the December quarter fell to a bare minimum of 9.01% under Basel III framework from 9.48% a quarter back with the lender grossing Rs 3,200 crore of fresh bad loans during the quarter! As a result , gross non-performing assets (NPA) ratio slipped to 10.82% — the highest in the industry.


The bank's Tier-I capital or core capital fell to 5.6% as against the RBI prescribed 6% minimum, forcing the bank to freeze its lending activity. Another option before UBI could be raising capital in Basel III-compliant bonds. Incidentally, UBI was the first Indian lender to raise Rs 500 crore in June in Basel III bonds which was fully subscribed by LIC.


The Basel III bond is a hybrid instrument wherein the investor bears the risk if the bank faces liquidation , although bonds normally demand higher repayment obligation from issuers. Under the new capital rule, no fresh Tier-II subordinated bond issue can be considered as capital.

Banks which had issued Tier-II bonds earlier have to devalue it by 10% every year, leading to erosion of capital. Takru was also quoted as saying that there was no systemic risk to Indian banks from Kolkata-based UBI.

Global rating company Fitch Ratings said on Wednesday that the losses incurred by UBI could see its capital ratios fall below the regulatory minimum, and test the authorities' approach to bank regulatory capital instruments in the present Basel III era.


Source: Economic Times

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Reverse repo borrowing falls to Rs 7.70 billion: RBI

The Reserve Bank of India said on Tuesday it accepted all 2 bids for Rs 7.70 billion at its 1-day reverse repo auction on Monday, through which it absorbs liquidity from the banking system.

On Monday, it accepted all 56 bids for Rs 350.37 billion at its one-day repo auction, through which it injects liquidity into the banking system.


Source: Economic Times

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Banking services paralysed on Monday as employees begin 2-day strike

Banking services were crippled on Monday as bank employees across regions begun a two day strike rejecting Indian Banks' Associations 10% hike offer.

Wage revision in public sector banks is due since November 2012. At the last tripartite wage settlement in 2007 which expired in October 2012, bank employees received a 17.5% hike.

United Forum of Bank Unions said over 10 lakh employees have joined the strike in 27 public sector banks and 48 regional rural banks.

However, Finance Minister P Chidambaram said the profit of banks cannot be used only to enhance salaries because there are other obligations.

IBA which represents bank managements in wage settlement talks with unions is reported to have said that banks can not afford more than 10% salary hike due to steep growth in non-performing assets putting pressure on profitability. A 10% hike would cost banks an additional Rs 3,150 crore a year cumulatively.

Union members in turn said offer was not in line with rising inflation. Their demands include regulated working hours for officers, five days a week and re-introduction of compassionate ground appointment.

"Some Rs 1.41 lakh crore has been written off in the last five years and the banks are sitting on over Rs 6 lakh crore bad loans because of managements' negligence. But they are not ready to pay staffs a reasonable hike," said Rajen Nagar, president of All India Bank Employees Association, the largest bank union representing almost half of 10 lakh bank employees including officers and subordinated staff.

The Finance Minister said that a significant part of retained earnings must be used to infuse additional capital, otherwise banks will not find the amount of capital that is required over the next five, 10 and 20 years.

"I will appeal to employees and officers of banks to recognise that banks profits, banks earnings have other claims. While claims of officers, staff and employees must be duly acknowledged, and a fair and just (wage) settlement is arrived at, there are other claimants to banks' profit," Chidambaram was quoted saying in a PTI report.


Source: Economic Times

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Public sector bank staff start two-day strike; operations hit

Cheque clearances and cash withdrawals and deposits in public sector bank branches across the country were hit as employees started a two-day strike from Monday to press for a revision in wages.

However, private sector banks such as ICICI Bank, HDFC Bank and Axis Bank were functioning normally because their staff are not on strike.

Employees are compelled to take this route as the Indian Banks' Association (IBA) did not come up with an improved wage offer, United Forum of Bank Unions (UFBU) Convener M V Murali said. The IBA represents bank managements.

Banks, including the State Bank of India, the country's largest, had informed customers in advance about the likely inconvenience they would face during the strike.

The unions had rejected the IBA's offer of a 10 per cent wage hike during a conciliation meeting held on February 6 with the Chief Labour Commissioner.

The offer made by bank managements was not in line with rising inflation, General Secretary of National Organisation of Bank Workers Ashwini Rana said.

The staff of public sector banks had gone on a nationwide strike for a day on December 18 after discussions with the IBA on wages on December 14 failed. The wage revision of public sector bank employees has been due since November 2012.

UFBU is an umbrella organisation of nine bank employee and officer unions.

There are 27 public sector banks in the country with a combined employee strength of about 8 lakh. There are about 50,000 branches of these banks across the country.


Source: Economic Times

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SBI offers lower interest rates to rivals’ customers

In a fresh twist to the rate war in home loans, the country's largest lender State Bank of India is pitching its low interest rates to lure buyers who have already availed mortgages from rivals. The bank has sent out emails to prospective customers where it is marketing a balance transfer scheme in addition to selling fresh loans.

SBI offer loans up to Rs 75 lakh at an interest rate of 10.15 per cent or 15 basis points above its base rate of 10 per cent. The base rate is the benchmark rate on which its floating rate loans are re-priced. The other highlights of its home loan include: absence of charges on foreclosures or pre-payments and a balance transfer fee of Rs 1,000. In addition, the bank also promises a maximum tenure of 30 years. Mortgage major HDFC is currently offering an interest rate of 10.25 per cent for loans up to Rs 75 lakh. Other lenders are in the same range.

"The takeover campaign has been launched with a view to provide an option to switch over to our home loans, which have the lowest interest rate," senior officials from the bank said (see box for interest rate comparison on home loans). During the third quarter of FY14, home loans acquired from other lenders accounted for 11 per cent of the bank's home loan book.

But even as SBI pitches its low rates to customers of rivals, some of the bank's own customers are paying higher rates. "Consumers need to be watchful. In the current scenario, such rate cuts are only for new borrowers. When such schemes are announced, old borrowers should take the opportunity to refinance their existing loans with their existing banks or home finance companies. Otherwise, only a base rate cut entails benefits across the board," Adhil Shetty, said chief executive officer of Bank Bazaar.com.

Lenders are fighting for home loans in the absence of large loan off take from corporates. Also, banks are now targeting larger loans by offering uniform rates up to Rs 75 lakh as against Rs 30 lakh earlier. But over 80 per cent of home loans in India continue to be below Rs 30 lakh.


Source: Economic Times

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Bank unions to go on two-day strike from Monday

Operations at public sector banks are likely to be impacted as employee unions have decided to go on a two-day nation-wide strike from Monday to press for wage revision.

During the conciliation meeting held on February 6 before the Chief Labour Commissioner, the IBA did not come up with any improvement in the wage offer of 10 per cent hike in the pay package, United Forum of Bank Unions (UFBU) Convener M V Murali told PTI.

As conciliation proceedings remained inconclusive, he said, UFBU has decided to go on two day nation-wide from February 10.

Banks including country's largest lender State Bank of India have informed customers in advance about the likely inconvenience they could face due to the strike.

Private sector players such as ICICI Bank, HDFC Bank and Axis Bank are expected to function normally.

All India State Bank Officers' Federation and All India State Bank of India Staff Federation, being part of UFBU will, also participate in the strike, SBI said in a statement.

General Secretary of National Organisation of Bank Workers, Ashwini Rana said as the offer made by bank management is not in line with the rising inflation, the unions are compelled to protest.

Staff of public sector banks had gone on a day's strike nationwide on December 18, after the discussions with IBA on wage revision had failed on December 14. The wage revision of public sector bank employees has been due since November 2012.

UFBU is an umbrella organisation of nine bank employees and officers unions.

There are 27 public sector banks in the country with employees strength of about 8 lakh. There are about 50,000 branches of these banks across the country.


Source: Economic Times

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Dena Bank Q3 profit down 67 pct to Rs 67.80 cr on higher provisioning

Public sector lender Dena Bank reported a 67 per cent decline in net profit at Rs 67.80 crore for the quarter ended December 31 on account of higher provisioning.

The bank's profit after tax stood at Rs 206 crore in the corresponding quarter last year.

"Profitability is under stress due to higher provisioning," the bank's Chairman and Managing Director Ashwani Kumar told reporters here.

The bank's provisions increased to Rs 382.43 crore in the October-December quarter as against Rs 156.59 crore last year.

The bank's net interest margin (NIM) stood at 2.66 per cent in the quarter as against 2.88 per cent.

"We expect our NIM to be in the range of 2.75-3 per cent by March 2014," Kumar said.

Net Interest Income (NII) for the quarter was Rs 660.89 crore, a growth of 7.48 per cent, compared to Rs 614.90 crore in the same quarter last year.

The bank's asset quality deteriorated in the quarter with gross NPA increasing to 2.96 per cent from 2.09 per cent in the year ago quarter. Net NPA ratio rose to 2 per cent from 1.31 per cent in the same period last year.

In absolute terms, gross NPA has increased from Rs 1,317 crore to Rs 2,066 crore in the third quarter ended December 31, while net NPA increased from Rs 817 crore to Rs 1,379 crore.

Provision coverage ratio for the quarter was at 63.92 per cent. In the quarter under review, the bank's provisioning for non-performing assets was Rs 124 crore while for restructured assets it was Rs 53 crore, Kumar said.

The bank saw fresh slippages of Rs 503 crore during the quarter. One of the large accounts which became NPA was SEL worth Rs 99 crore, Kumar said.

The bank upgraded Rs 400 crore of bad loans in the quarter. The state-owned bank restructured Rs 552 crore of assets in the December quarter and has a pipeline of Rs 600 crore in the current quarter, Kumar said. Total business of the bank stood at Rs 1,65,976 crore as compared to Rs 1,47,922 crore.

While deposits of the bank increased to Rs 96,081 crore as on December 31 from Rs 84,882 crore last year, recording a growth of 13.19 per cent; advances increased to Rs 69,895 crore from Rs 63,041 crore, showing a growth of 10.87 per cent. Credit deposit ratio stood at 72.75 per cent.

The bank expects a credit growth of 17 per cent and deposit growth of 14-15 per cent by March-end.

Meanwhile, the public sector lender today launched a new term deposit 'Dena-444' with maturity of 444 days for retail customers, which will offer an interest rate of 9.15 per cent to general public and 9.65 per cent for senior citizens.


Source: Financial Express

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