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Saturday, March 22, 2014

Bharatiya Mahila Bank to open 55-60 new branches in next financial year

Bharatiya Mahila Bank (BMB), the first all-women bank, which opened its 19th branch here today, will open 55-60 new branches in 2014-15 fiscal, a top official said.

"By March 31 this year, 23-24 branches will be opened and BMB will have 55-60 more branches in next financial year scattered across the country.

"As per RBI guidelines, 20 branches out of the proposed around 80 will be opened in the rural areas," Usha Ananthasubramanian, chairperson and managing director (CMD) of Bharatiya Mahila Bank told reporters.

BMB which opened its first branch in November last year, needs to have a brand, she said.

"We need to establish a brand. The bank is designed to cater to the needs of women and offers the entire banking and financial services. It will cater to every segment of women from SHGs to lower middle class women to high net worth individuals with the basket of various products to ensure inclusive and sustainable growth," she said.

The bank has designed a special loan product for setting up day care centres.

BMB also offers total collateral free loans of upto Rs 1 crore by covering it under CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises).

"We will reach to the rural women by having tie-ups with NGOs," she said.

The government approved Rs 1,000 crore seed capital for the women-focused public sector bank, announced by Finance Minister P Chidambaram in his budget speech.

One of the key objectives of the bank is to focus on the banking needs of women and promote economic empowerment.

Source: Economic Times
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SBI to sell bad loans of Rs 3000 crore this fiscal

Country's largest lender the State Bank of India will sell bad loans amounting to Rs 3,000 crore in the last quarter of the ongoing fiscal, the top official of the bank said here today.

"We will sell bad loans of around Rs 3,000 crore in the last quarter of the fiscal," company chairman chairman Arundhati Bhattacharya told reporters after inaugurating the e-lobby in the premises of SBI's main branch here.

"We will sell the bad loans to the highest bidder among the 18 Asset Reconstruction Companies," she said while advocating for right steps to control Non-performing Assets (NPA).

"NPA koi gunah nahi hai (NPA is not any crime)... but needed to be identified...", she said, adding corrective measures would have to be initiated to control it.

Bhattacharya, the first woman chairman of the public sector bank, expressed confidence that NPA will be under control once the economic scenario start looking up.

The NPA was obvious when there was a slowdown in economy and decrease in GDP, she said, emphasising the need for reform measures to face the challenge.

Source: Economic Times
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RBI sends bank licence applicant list to EC; IDFC, L&T Finance, LIC Housing top contenders

Infrastructure Development Finance Co, L&T Finance Holdings and LIC Housing Finance could be in the running for new banking licences along with Reliance Capital, JM Financial and even India Post. That's according to a list of applicants' names that qualify for licences which has been sent to the Election Commission by the Reserve Bank of India.

IDFC, L&T Finance, LIC Housing Finance and India Post are among the top-ranked contenders for a licence, according to the report. Although neither the central bank nor the Bimal Jalan committee, which appraised the applications, have spelled out their preferences, this is being interpreted to mean that they are the frontrunners.

"The committee has not eliminated any applicants, nor has it given any preference," said an official aware of developments. "However, it has ranked the applicants based on their compliance to the guidelines. This has been presented to the Election Commission. The final decision will be that of the Reserve Bank of India governor Raghuram Rajan." Corporates and broking firms have not been eliminated from the list but have been ranked lower, the person said.

RBI sends bank licence applicant list to EC; IDFC, L&T Finance, LIC Housing top contenders"Entities like JM Financial, Edelweiss Financial Services, Reliance Capital have been ranked below the microfinance companies like Janalakshmi Financial Services and Bandhan Financial Services," said the official. One of the aims of the exercise is financial inclusion or widening access to the banking system, especially in rural areas.

Based on an analysis of eligibility prepared by the Jalan committee, the non-deletion of any applicant has caused surprise, especially in the light of reports that entities under any sort of cloud didn't stand much of a chance in the selection process. To be sure, this analysis doesn't necessarily reflect which applicant will eventually get a licence.

Amid the heat generated by the election campaign, the award of new banking licences has taken on an intriguingly political colour. Not surprisingly, Reserve Bank of India governor Rajan wants everything done by the book, that is, make sure that any action taken is in accordance with the model code of conduct currently in place. Hence the referral of the issue to the Election Commission. This may mean that the process gets delayed until after the polls.

"It has become a hot potato and nobody wants to take a decision on it. The process of granting licence seems to be delayed. We could see some action post elections," said Shinjini Kumar, leader, banking and capital markets, PwC India.

The committee said that Aditya Birla Nuvo could move up the rankings if there was a satisfactory closure to the controversial naming of group chief Kumar Mangalam Birla in a case involving the allocation of a coal mine to Hindalco, a unit of the business house.

The central bank has written to the commission asking whether the issue of new bank licences will violate the code of conduct ahead of the April-May election. Media reports suggest that the Election Commission could ask RBI to wait until the election process is complete. The RBI governor has clarified that he has not received any communication from the poll panel so far.

"Even after the Bimal Jalan committee submitted its report, the executive committee of deputy governors was wary of making any announcement," said another official aware of developments.

One suggestion that came up for discussion at the executive committee meeting was awarding licences to public sector entities to begin with as a way of avoiding controversy and litigation in an election year, the person said. The recommendations of the Jalan committee regarding IDFC and India Post were also discussed.

Since the RBI proposes to eventually start giving licences on tap, rather than seeking applications intermittently, the committee also discussed whether the applications by non-state entities could be considered in a second round. No decision was arrived at during the meeting. Jalan could not be reached for comment. The RBI spokesperson didn't respond to queries.

The process for awarding new bank licences began in February 2011 when the then finance minister Pranab Mukherjee announced it in his budget for FY11. It was speeded up last July when 26 companies applied for licences. The Tata Group withdrew from the race, implying that the central bank's conditions were restrictive and conforming with them would affect its other businesses besides having to ensure that more than 1,000 group units were compliant with requirements.

The finance arm of another big industrial group, Mahindra & Mahindra, dropped its plans to apply for a licence even before the application deadline.

Source: Economic Times
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Friday, March 21, 2014

IBA says banks prepared on Windows XP discontinuation

The Indian Banks Association (IBA) downplayed concerns arising from discontinuation of the Windows XP operating system on banks and functioning of ATMs, saying neither branches nor cash vending machines will be shut down once Microsoft stops support to the system from April 8.

"Banks are definitely well prepared and the industry is seized of the matter. I am very sure that you will not see a problem where ATMs or bank counters are shut because of this," the industry lobby's chief executive MV Tanksale told reporters on the sidelines of an event here.

Microsoft, the maker of the Windows XP operating system, has announced that it would be withdrawing support for the operating system from April 8, over 12 years after introducing the system.

Tanksale said only the old ATMs may face some problem as all the newer machines are run on newer platforms.

Tanksale, however, said he does not have the data of such machines which are still running on Windows XP offhand.

The Reserve Bank had flagged the issue saying banking operations may be hit once the Windows XP gets phased out starting April 8.

"The probability of attacks on such a system may increase and it may be difficult to defend such attacks in the absence of Microsoft support," RBI had said in a circular to banks.

According to the IBA, there are over 1.40 lakh operational ATMs across the country at present and the number is only going up given the low penetration of the machines.

Meanwhile, to arrest the growing instances of wilful loan defaults, the IBA has issued a circular to member banks to access data from a credit information bureau before opening a current account. This will help reduce instances of wilful defaults as the current accounts will not be opened itself, Tanksale said.

For a bank, opening a current account does not cost any money but gives it access to funds for free. Therefore, one may hasten to open an account but at the same time, some known corporate defaulters may take advantage of this and use transactions in the account to raise a loan, Tanksale explained.

Source: Economic Times
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IDFC Alternatives raises Rs 750-crore realty fund

IDFC Alternatives, a wholly-owned subsidiary of IDFC Ltd, raised its first fund of Rs 750 crore focused on the residential sector in India.

The maiden real-estate fund, called the IDFC Real Estate Yield Fund, will invest Rs 60-80 crore and will target gross returns of 22%. The four-year (extendable by one year) close-ended private equity fund will invest in projects across six cities. "This is our first real estate fund and we feel confident about its performance," said MK Sinha, managing partner & chief executive officer, IDFC Alternatives.

IDFC Alternatives raised the money from domestic investors within a span of 10 weeks.

Source: Economic Times
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Uco Bank sells bad loans worth Rs 1500 crore to clean up books

State run Uco Bank said it has sold bad loans worth Rs 1,500 crore to an asset reconstruction company to clean up its balance sheet before the end of the fiscal.

This is nearly five-folds than what Uco had sold in the third quarter -- Rs 330 crore.

Banks are rushing to sell off bad loans to protect themselves against the higher loan loss provision rule that take effect in March 2015.

"High non performing assets is a concern area for banks," Uco chairman and managing director Arun Kaul said. "Banks are proxy to the economy. So, there is stress in banks' asset quality as the economy is facing slow growth," he said at an event in Kolkata, organised by MCC Chamber of Commerce & Industry.

Earlier, the Kolkata-headquartered lender announced that it was looking to sell Rs 1900 crore of bad loans during the fourth quarter.

"We expect the NPA ratios to improve in the fourth quarter," Kaul said.

Its gross NPA ratio was 5.20% as on December, compared with 5.53% a year back while net NPA ratio fell to 3.06% from 3.32%.

Kaul said he expects net interest margin to be a little less than 3% for the quarter.

Source: Economic Times
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Sunday, March 16, 2014

West Bengal’s savings scheme for poor in limbo as SBI demands higher fees

West Bengal chief minister Mamata Banerjee's flagship savings scheme for the state's poor depositors is yet to gain momentum with State Bank of India, the country's largest bank, demanding a higher fee for services. The plan is aimed at protecting the poor from falling prey to pyramid schemes such as those offered by the now-defunct Saradha Group.

The state has invited banks to take part in the programme to act as a payment gateway, but only United Bank of India has signed up thus far. State-owned SBI wants Rs 63 for every transaction but that's not acceptable to West Bengal Infrastructure Development Finance Corporation, the agency implementing the scheme, said people aware of the developments.

United Bank, coincidentally struggling with a mountain of bad debt, gets Rs 25 per transaction. "We are neither confirming nor denying it," SBI chief general manager Sunil Srivastava said when asked for comment. A senior WBIDFC official said the scheme would not be viable if banks charge more than Rs 25 per transaction. Both SBI and WBIDFC are still negotiating the rate.

State finance department officials have asked SBI chairman Arundhati Bhattacharya to look into the issue, sources said. The state's wholly owned subsidiary launched the safe savings scheme, or 3S, in November last year to offer an alternative investment avenue to small depositors and protect them from being deceived by the spuriously high returns offered by pyramid schemes.

Saradha went bust last year affecting 17-lakh depositors who had deposited an estimatedRs 2,000-3,000 crore expecting their money to multiply. WBIDFC, a non-banking company registered with the Reserve Bank of India, has engaged 30,000 agents to mobilise deposits. Depositors are supposed to visit a designated bank's branch and open nofrills accounts with minimum customer identification formalities.

At the same time, the depositors will submit a request to the bank to transfer the amount to WBIDFC. WBIDFC has mobilised about Rs 2 crore so far of the Rs 250 crore it needs to make the scheme viable, officials said. Depositors are paid 9 per cent-9.25 per cent interest on their money.

The scheme also has a financial inclusion angle — it aims to improve banking access in the state, where branches cater to nearly 14,000 people each on average against RBI's prescribed limit of 10,000.

Kolkata-based Allahabad Bank and Uco Bank refused to participate in the plan. However, several other banks have shown interest in joining the savings scheme to boost fee income from a state where loan growth remains modest in the absence of large industries.

Source: Economic Times
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SBI country’s first bank to set up payment gateway

E-commerce in India is set to get a big boost with the country's largest lender State Bank of India setting up its payment gateway - SBI ePay — with the objective of enrolling government entities and municipal corporations as well as small traders in the online marketplace.

SBI is the first bank in India to start its own online aggregator services. Besides the payment gateway, which will enable merchants accept payment by net banking, credit card, debit card and mobile banking, SBIePay is also in the process rolling out an electronic bill presentment and payment platform (EBPP) and IVRS phone payment. EBPP enables a payment provider to generate the bill and receive payments while IVRS is an interactive voice response system that enables merchant receive credit card payments over the phone.

"We will be brining in new merchant categories with a special focus on government merchants such as, central, state departments and municipal corporations," said a senior official with the bank's payment services vertical. He added that the payment gateway service will come with a dashboard site which will provide analytics for banks and merchants to help them boost their business.

SBI is a relative late entrant in the payment gateway space. Existing players include: Times of Money, IndiaIdeas (BillDesk), CCAvenues, TechProcess Solutions, E-Billing Solutions (EBS), Atom Technologies, and new aggregators like PayU, Citrus, Emvantage.

Source: Economic Times
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IBA wants free use of other-bank ATMs to end in metros

Industry lobby Indian Banks Association (IBA) said it has requested RBI to allow banks to charge customers in the metros to pay for accessing ATMs of other banks but continue with the current cap of five free transactions a month for rural customers.

"We have made our recommendations to the RBI that at least in the metros, the current five free usage of other bank ATMs be withdrawn so that every transaction on other bank ATM is chargeable. At the same time, the present set up be continued in rural areas," chief executive MV Tanksale told reporters here.

The issue of charging customers for ATM usage has become into a very vexed one, ever since banks were asked by state governments to place armed guards at all the ATMs after a brutal attack on a customer in Bangalore last November.

According to banks, the overheads will make operations of ATMs unfeasible and hence, they have been struggling to come up with a solution for over three months now, without much of success.

The IBA says banks are losing Rs 400 crore a month because of the excess security requirements at 1.4 lakh ATMs.

A slew of measures, including raising the inter-bank charges and limiting the number of all free transactions at five per month, have been mooted.

Currently, a customer can enjoy unlimited free transactions at his own bank's ATMs and is allowed five free transactions a month in other banks' machines.

Irrespective of it being a free transaction for the customer or not, a bank has to pay the other a fee of around Rs 15 for every transaction done at the other bank's ATM.

Meanwhile, when asked if banks have written to the Reserve Bank to extend the mark to market loss amortization by two more quarters, Tanksale said replied in the affirmative but did not confirm the time period for which the relief has been sought.

"We have certainly requested. It is being examined," he said. Fearing the heavy losses booked by the banks after the July liquidity sucking measures, the RBI had allowed the banks to book their losses spread across four quarters in order to protect the bottomlines.

On the wage revision issue, Tanksale said the IBA is scheduled to hold a core committee group meeting with the bank unions.

He, however, reiterated that there is no change in the stance of the banks and they continue to offer a 10 per cent hike as against the demand for 15 per cent.

Source: Economic Times
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SBI launches SBIePay to facilitate electronic transactions

State Bank of India has launched a payment intermediary christened as 'SBIePay', which will facilitate e-commerce or m-commerce transactions among merchants, customers and various financial institutions for all kinds of payments with electronic connectivity.

India's largest lender is the first bank in India to start its own online aggregator services. The new service will go a long way in providing payment facilities to a large number of customers performing online transactions, the bank said in a release.

During the last couple of years electronic payments in India have grown at a rate of around 32% (2008-2012) i.e., from INR 15,400 crores to 47,349 crores.

SBIePay is also in the process rolling out Electronic Bill Presentment and Payment platform (EBPP) and IVRS for making payment over phones.

Apart from online travel industry, E-tailing is gathering substantial momentum. The share of the multiple channels of online payment industry is also moving rapidly.

Though debit card and internet banking (direct account debit) together form around 45% of the transactions, 43% of transactions are still processed through credit cards. Cash on Delivery (COD) comprises around 40-60 % of transactions within e-Tailing. IVRS market mainly consists of teleshopping network, travel and Insurance segments.

Source: Economic Times
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