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Wednesday, September 17, 2014

IndusInd Bank cuts interest rate on savings accounts to 4.5%

IndusInd Bank reduced its interest rates on savings accounts to 4.5 per cent from earlier 5.5 per cent per annum on daily balance of up to Rs 1 lakh.

For balance of above Rs 1 lakh, the interest rates continue to be at 6 per cent.

“The revised interest rates are applicable with effect from September 1, 2014 till further notice. The bank has the right to change the rate at its discretion,” IndusInd Bank said on its website.

The interest will be calculated on daily basis, at the end of day ledger balance in the account and paid at every calendar quarter on 30th June, 30th September, 31st December and 31st March.

After the interest rate on savings was deregulated by the Reserve Bank of India in 2011, banks including IndusInd Bank, Kotak Mahindra Bank and YES Bank were among the first few banks to increase rate above the earlier mandate of 4 per cent.

This aided banks to add more savings bank accounts and thereby expanding their retail client base. However, a higher interest rate also increases cost to banks.

YES Bank continues to offer an interest rate of 7 per cent per annum on savings bank account balance of Rs 1 lakh and above while 6 per cent per annum for balance below Rs 1 lakh. While, Kotak Mahindra Bank offers 6 per cent interest per annum on savings bank account balance over Rs 1 lakh and 5.5 per cent per annum on balance up to Rs 1 lakh.

Following them, old private sector lender, Lakshmi Vilas Bank, recently increased its savings bank interest rate to 5 per cent for accounts with a balance of Rs 1 lakh and above.

All public sector banks and big private banks offer interest rate of 4 per cent on savings bank accounts.

Source : The Hindu
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RBI may limit card issuance by banks due to dearth of PoS terminals

With the expansion of point of sales (PoS) machines not keeping pace with the number of cards in the market, the Reserve Bank of India may limit the issuance of cards by banks.

RBI Deputy Governor HR Khan on Tuesday raised concerns, saying that there is “huge number of cards but where is the payments ecosystem to use them”? He said card acceptance infrastructure needs to be created.

“Banks have to take some lead...We are looking at the possibility of opening White Label PoS machines like White Label ATMs and that any further issuance of cards will be linked to the setting up of the machines.

“It is not a final view but just a thought,” said Khan, adding that this is required particularly in rural and semi-urban areas where more  Kisan Credit Cards are becoming plastic.

According to him, India has just 1.1 million PoS terminals and that only few banks are putting up these machines.

Some PoS terminals do not accept certain kinds of cards and this is not acceptable, he added.

Speaking on rising cases of unhedged forex exposures by corporates, Khan said, “One thing we have said is that the unhedged exposure has to be factored in the credit risk assessment of the banks….we have asked (corporates) to see how this will affect their balance sheets in case of turbulence and volatility….”

“Secondly, we have been telling corporates that they should hedge when the times are good. You should not go for insurance when you are sick but when you are healthy so that you pay less premium,” Khan added.

Further, “Since there is a mismatch between revenue, which is in local currency, and your repayment obligation is in foreign currency, so we have a controlled regime for borrowing abroad. We don’t allow unlimited borrowing and we have a ceiling and there are restrictions,” Khan explained.

He added that India is at lesser risk compared to other countries but still there are quite a few corporates which are exposed to foreign currency volatility.

Source : The Hindu
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Bank of Maharashtra to raise Rs 500-1,000 cr this fiscal

Public sector lender Bank of Maharashtra plans to mop up Rs 500-1,000 crore by issuing Tier-I bonds this year, according to Chairman and Managing Director S Muhnot.

“We will look at raising Basel III-compliant additional Tier-1 capital, instead of taking up further equity right now.

“We may raise Rs 500-1,000 crore during this financial year,” Muhnot told newspersons here on the sidelines of a banking conclave organised by FICCI and the Indian Banks’ Association.

Currently, the bank’s capital adequacy ratio stands at around 11.

Muhnot said the bank sees its credit growth moderating to 12-15 per cent in FY15.

Source : The Hindu
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Tuesday, September 16, 2014

SBI revises deposit rates by 0.25% in two buckets

Country's largest lender State Bank of India today cut its interest rate offering for medium-term deposits by 0.25 per cent to 8.75 per cent, citing slower-than -expected pick up in advances.

However, it increased rates for shorter tenor deposits of 180-210 days by 0.25 per cent to 7.25 per cent per annum.

"In view of abundant liquidity coupled with slower-than- anticipated credit pick up, State Bank of India ( SBI) has decided to cut the deposit rates by 0.25 per cent to 8.75 per cent," the bank said in a statement.

The downward revision of rates is for deposits between one and three years and is applicable from September 18, it said.

The bank added that with the inflation trending down -- consumer price inflation for August eased to 7.80 per cent -- the rate adjustment will continue to ensure that the depositors are compensated "adequately with a positive real rate on their deposits."

It can be noted that banks have been complaining about issues in credit offtake, even as the sentiment has improved following the formation of a stable government at the Centre.

The system's year-on-year increase in credit stood at 10.94 per cent for the fortnight ended August 22, which is almost at par with the 10.61 per cent observed in 2009 in the aftermath of the financial crisis.

Source : Economic Times
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Allahabad Bank seeks Rs 900 crore capital from government

State-run Allahabad Bank said here today that it has sought a Rs900-crore capital infusion from the government during the current financial year.

"We have asked for Rs 900 crore from the government. Usually it comes after September," Allahabad Bank's Chairman and Managing Director Rakesh Sethi told reporters on the sidelines of an annual banking event organised by FICCI and IBA here today.

The government has budgeted only Rs 11,200 for capital infusion in public sector banks during this fiscal.

Sethi further said the bank has board approval to raise Rs 320 crore from the government and a decision would be taken only if there is higher demand for credit.

"We have permission for a Rs 320 crore QIP, but (since) there is no demand for credit now, what do I do with that money," he asked.

When asked whether the bank plans to cut its lending rates, Sethi said that the decision would be taken by the asset liability committee.

The largest bank, State Bank of India cut the deposit rate today by 25 basis points to 8.75 per cent in the one to three years category, effective from September 18.

SBI has also increased its deposit rate by 25 basis points in the 180 days to 210 days category.

When asked whether Allahabad Bank plans a festive season offer on loans, Sethi said, "Our base rate is already at 10.25 per cent. So, how much lower can we go".

Source : Economic Times
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Canara Bank bags award, Allahabad Bank gets second prize in Indira Gandhi Rajbhasha Shield Scheme

Rajeev Kishore Dubey, CMD of Canara Bank, received the 1st Prize under the Indira Gandhi Rajbhasha Puraskar Yojana from the President of India, Pranab Mukherji, at the Rashtrapathi Bhavan Auditorium in New Delhi, the bank said in a statement.

Kolkata-based Allahabad Bank was awarded the second prize in “region ‘C’” banks for the year 2012-13 under the Indira Gandhi Rajbhasha Shield Scheme of Department of Official Language, Ministry of Home Affairs.

According to a release issued by Allahabad Bank, its Chairman and Managing Director, Rakesh Sethi, received the shield from the President, Pranab Mukherjee, at a function help in the Rashtrapati Bhavan on September 14.

Union Home Minister Rajnath Singh also graced the occasion.

Allahabad Bank is celebrating the month of September as Hindi month, the bank said in a release.

Source : The Hindu
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J& K flood relief: Oriental Bank staff donates 1-day salary to PMNRF

Oriental Bank of Commerce (OBC) staff numbering 20,157 have contributed their one-day salary to Prime Minister's National Relief Fund (PMNRF) for the ongoing relief work in Jammu & Kashmir, which has been devastated by floods.

An amount of Rs 2.15 crore has been contributed to PMNRF on this count, a release issued by the bank said.

Source : The Hindu
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Bank of Maharashtra plans to raise Rs 1,000 cr this year

State-run Bank of Maharashtra today said that it plans to raise around Rs 500-1,000 crore by issuing Basel III-compliant Tier-I bonds this year.

“We will look at raising Basel III-compliant additional Tier-1 capital instead of taking up further equity right now. We may raise around Rs 500 crore to Rs 1,000 crore during this financial year,” bank Chairman and Managing Director S Muhnot told reporters here on the sidelines of an event organised jointly by FICCI and the Indian Banks’ Association (IBA).

Currently, the city-based bank’s capital adequacy ratio is around 11.

The bank sees its credit growth to moderate to around 12 per cent to 15 per cent this fiscal.

“We are looking at around 12 per cent to 15 per cent growth this financial year as compared to 18 per cent to 20 per cent last year,” Muhnot said.

He said there are some signs of improvement in the manufacturing sector, adding that it would take one or two quarters for it to translate into growth in the banking system.

Source : The Hindu
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RBI: Final norms for on-tap bank licences this fiscal

Final guidelines for on-tap universal banking licences will be issued in the current fiscal, Reserve Bank Deputy Governor R Gandhi said here today.

“We are working towards issuing guidelines for full-service banks on tap. I cannot give you a timeline, but it will be in this financial year,” Gandhi told presspersons on the sidelines of an annual banking event organised by FICCI and the Indian Banks’ Association (IBA) here.

The Reserve Bank had earlier issued draft guidelines for payment and small banks and is in the process of finalising the final norms.

“Now the public comments (on small and payment banks) have been received and we are factoring them in. Soon we will come out with final guidelines on these two,” Gandhi said.

On corporate governance reforms in the public sector banks, he said the central bank has already recommended certain suggestions to the Government.

“Based on various committees, including the P J Nayak Committee recommendations, we have made certain suggestions to the Government such as segregation of the Chairman and Managing Director posts and a separate committee for appointment of directors on the board of PSU banks, and they are taking up the final decision,” Gandhi said.

Replying to a query on lowering the Government’s holding in public sector banks below 50 per cent as recommended by the P J Nayak committee report, Gandhi said the Government has to take a view on how much they want to invest in these banks.

On the liquidity coverage ratio norms which RBI announced in June this year, he said the banks as of now are in compliance with the norms and will be able to achieve the target.

“Banks are compliant as of now on LCR norms till 60 per cent as they hold excess Government securities. They are comfortable in reaching the target,” he said.

The RBI had said the LCR will be introduced in a phased manner, starting with a minimum requirement of 60 per cent from January 1, 2015, and reaching minimum 100 per cent on January 1, 2019.

Source : The Hindu
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Axis Bank launches e-surveillance facility for ATMs

Private sector Axis Bank launched e-surveillance facility for its ATMs for better monitoring and detection of any unauthorised activity at the site on real time basis.

Under the e-surveillance facility, the ATM premises will be monitored 24x7 from a centralised security operation centre and an immediate alert will be activated in case of detection of any unauthorised activity at the site, Axis Bank Head (Retail) Rajiv Anand said.

In the event of any unauthorised activity at the ATM location, an immediate hooter alert will instantaneously propel a two way communication between the officials at the security operation center and the alleged intruders, through mike, speakers and CCTV system, he said.

Simultaneously, he said, the system would also alert the local Police station and nearby on road Patrolling Officer about the incident.

This facility is currently available at 2,000 ATMs out of 13,000 and more would come under this in the future, he said.

Source : Economic Times
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Monday, September 15, 2014

Jan Dhan benefits for existing bank account holders too

The Finance Ministry has clarified that those who already have a bank account do not need to open a fresh account under the Pradhan Mantri Jan Dhan Yojana (PMJDY) to get the scheme’s benefits.

The benefits include an insurance cover of Rs1 lakh and life insurance cover of Rs30,000.

“Because of the incentives announced, many existing account holders have also opened new accounts under PMJDY.  The benefits announced under PMJDY can be extended to existing account holders … and a new account need not be opened for this,” a Finance Ministry statement said.
New scheme

The Jan Dhan Yojana is the NDA government’s new scheme for financial inclusion, launched on August 28. It aims to open 7.5 crore bank accounts by January 26, 2015.

The Union Cabinet, in its meeting on September 10, reviewed the current progress of the scheme.

As on September 8, a total of 3.02 crore accounts had been opened — of which 1.89 crore are in rural areas and 1.13 crore in urban areas.

Banks have also been instructed to organise special camps every Saturday between 8 am-8pm to facilitate the opening of new bank accounts.

However, there has been slow progress on issuance of RuPay debit cards.

As against 3.02 crore accounts opened, banks have been able to issue only 33.6 lakh cards. The backlog is expected to be cleared in the next four weeks.

Life cover

The statement also said that a draft scheme for life insurance of ₹30,000 announced by the Prime Minister during the launch has been worked out.

An incentive scheme for bankers and district collectors is also under preparation.

Rising deposits

Meanwhile, new accounts have given a good amount of cheaper deposits to banks. The statement said that banks have collected deposits of Rs1,496.51 crore (Rs495 per account) under the scheme, so far. At the same time, the new mobile banking facility on any kind of handset (not necessarily smartphones) is also getting popular with around 400 transactions taking place every day.

Now, to make the scheme effective, the Centre has initiated a survey to identify un-banked households, by October 15.

Source : The Hindu
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No free lunch; banks free to charge ATM users: RBI

The RBI Governor Raghuram Rajan on Monday said there was “no free lunch” alluding to the usage of ATM services of other banks for free as it is a cost to home banks.

“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?” Rajan said at FICCI’s banking conclave.

He said that since this increases your bank’s costs, it is passed back to the customer in some form. Ultimately, those who transact more are subsidised by those who transact less.

The RBI has reduced the number of free transactions per month at any non-home bank ATM to 3 from 5 earlier. This will be effective from November in the six metro cities of Mumbai, Delhi, Kolkata, Chennai, Bangalore and Hyderabad. Banks are also allowed to charge their own customers for more than five transactions at their own ATMs.

Rajan clarified that RBI has allowed banks to charge customers but that does not mean that banks have to do so. “If you (banks) like your customers to use free ATMs you can subsidise the transactions. What we have done essentially is (to) let large banks make better business decisions and reduce the hidden cross-subsidy and make it more transparent,” he said.

2-factor authentication

The central bank chief also said RBI is looking at whether the two-factor authentication can be done away with for small payments. “May be we can think about reducing the need for second authentication for low-value payments provided the card provider has systems to protect against misuse and can bear their cost beyond a certain point if the card is misused,” Rajan said.

RBI warned companies against breaking the two-step authentication rule for credit-card transactions.

“It has come to our notice that some firms are bypassing this and clearing transactions abroad breaking the rules. We said don’t break the rules and sent out the circular with this effect and the immediate pushback was that the RBI is against slowing the process. Whatever the innovation, breaking the rule is not done. You have to follow the rules,” Rajan said.

A two-factor authentication can be either a personal identification number or a one-time password for transactions done over the internet.

In a notification last month, RBI insisted on a second authentication for all card transactions done on the internet. The notification came after some overseas service companies including much-talked about cab-service provider Uber, which used offshore payment gateways for transactions done in India to sidestep the RBI’s authentication rules.

Rajan said RBI rules were there because they enhanced the security of transactions. “If there is a rule on the book, we don’t allow breaking rules simply because the innovation is cool. We are not against innovation. We very much want the kind of innovation that we are talking about. We just have to make sure that we work our way through it,” he said.

Source : The Hindu
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RBI may issue final norms on small, payments banks in 2-3 months

The Reserve Bank is likely to issue final guidelines on small and payments banks within two-three months, paving the way for corporates to enter these two segments.

The final guidelines on small and payments banks are expected in the next two-three months, sources said.

Draft guidelines for small and payments banks were issued by the RBI in July and comments were invited till August 28.

It is examining the suggestions received and is in the process of finalising the norms for such banks, sources said.

The final norms will allow micro finance institutions, telecom players, non-banking finance companies (NBFCs) and public sector companies eligible to apply for bank licences once RBI invites applications for the same.

The proposed small banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation.

On the other hand, payments banks will offer a limited range of products such as acceptance of demand deposits and remittances of funds. They will have a widespread network of access points particularly in remote areas, either through their own branch network or through Business Correspondents (BCs) or through networks provided by others.

“Both payments banks and small banks are ‘niche’ or ‘differentiated’ banks, with the common objective of furthering financial inclusion,” the RBI had said while issuing the draft guidelines for licensing these banks.

Small banks can collect deposits and disburse small-ticket loans to farmers and small and medium businesses, the unorganised sector through high technology, low-cost operations, according to the draft norms.

Payment banks will cater to marginalised sections of society, including migrant labourers, for collecting deposits and remitting funds. They would, however, not be allowed to indulge in lending operations.

Such banks can be set up with a minimum capital of Rs. 100 crore as against Rs. 500 crore required for normal commercial banks, according to the draft norms.

Source : The Hindu
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HDFC Bank to send debit card PINs via SMS

As part of its ‘go-green’ initiative, HDFC Bank has started sending PIN, unique code number, for debit card holders through SMS instead of the practice of sending it by post.

It is not just environment friendly but also convenient and saves time of both customers and the bank, HDFC Bank Senior Vice President and business head (Cards Payment Products) Parag Rao said.

“With the launch of the Green PIN we offer our customers the flexibility to generate a new pin number at a time and location most convenient to them, while simultaneously giving them the opportunity to take a step to save our planet’s vital natural resources,” he said.

Green PIN is One Time Password sent to the customer’s mobile number registered with bank. Using the OTP, customer can set debit card PIN at the bank’s ATM, Rao said. Customers will get OTP within 48 hours of applying for it.

HDFC Bank has nearly 1.75 crore debit card holders and about 16.5 lakh cards on an average is issued annually by the bank.

This facility is for all states except for Jammu and Kashmir due to restrictions on bulk SMS delivery for the state, Rao said.

The green PIN is one of many ‘go green’ initiatives of HDFC Bank, he said.

Source : The Hindu
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J&K floods: IRDA asks life insurers to settle claims fast

In view of massive floods resulting in loss of lives and belongings in Jammu & Kashmir, the Insurance Regulatory Authority of India (IRDA) has asked life insurers to take immediate steps for the expeditious settlement of claims.

Meanwhile, general insurers including SBI, ICICI and Tata AIG are gearing up to settle fast the deluge of claims from the flood-hit valley.

“In order to extend every possible facilitation in quick and timely settlement of life insurance claims to the affected people of the State of Jammu & Kashmir...initiate immediate action to ensure that all initial claims are registered and eligible claims are settled expeditiously,” said an IRDA communique to CEOs of all life insurers.

“Convey the contact particulars of the nodal officer so nominated to the Chief Secretary and officer concerned of the Government of Jammu & Kashmir who would be overseeing the efforts being made to mitigate the suffering and loss of the victims of the floods,” it said.

The nominated nodal officers may be also advised to contact the chief secretary or officer concerned of the state of Jammu & Kashmir to discuss facilitation measures, it added.

While the general insurance industry is set to take a big hit on their bottom lines considering the massive devastation, none of them is ready to quantify the losses saying it is too early to do and that so far they have not received any claims.

“It’s difficult to say at the moment what kind of claims and how much will come to us. All I can now say is that all the claims will be coming from the calamity and catastrophe categories,” ICICI Lombard chief of underwriting and claims Sanjay Datta told PTI.

“Individual insurance coverage has been provided by us to the people living in the affected regions, basically in sectors such as motor and property. While we are expecting damage repair claims under the motor segment, we also see claims coming in from the property side, which have been either destroyed or washed away in the floods,” he said.

The company, which offers motor, home, health and other insurance products to its customers in the State, has taken a host of initiatives to expedite claim settlement process for the affected people in the region.
SBI General Insurance has put a flag on its official site detailing the claim process.

SBI General Insurance MD and CEO Bhaskar J Sarma said: “We have put a flag on our site detailing the claim process. We are also letting them know what is the process to lodge the claims and we have put a flag on our site to serve the purpose.”

Source : The Hindu
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LIC Housing to cut funding cost

LIC Housing Finance Ltd is keen on reducing its funding cost by going in for NCDs (non-convertible debentures) rather than bank borrowings. “Last year, we brought down our bank borrowings from 29 per cent to 25 per cent, which is expected to improve our net interest margin from the present 2.18 per cent to 2.25 per cent next year,” said Sunita Sharma, Managing Director and CEO, LIC Housing Finance Ltd. She was here to inaugurate the 17th edition of annual property expo. Attributing the growth to increasing demand from the retail segment, she said the company would focus on Loan Against Property ( LAP) generating more business.

Source : The Hindu
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SBI revamps tractor loan product

To overcome the problem of bad loans in the tractor segment, State Bank of India has introduced the equated monthly instalment (EMI) ‘mode of loan repayment for farmers’.

Further, the bank is encouraging the lady of the farm household to become a co-borrower.

Twin benefits

By doing so, SBI, which faced huge non-performing assets in tractor loans in the recent past leading to it retreating from the segment altogether, is trying to kill two birds with one stone.

For one thing, the monthly repayment schedule, which is usually associated with housing and auto loans, kicks in a month after the loan gets disbursed. For another, the co-borrower exerts pressure on the farmer-borrower to repay the loan on time.

According to SBI Chairman Arundhati Bhattacharya, “Earlier, for tractor loans, we would say that we will take the money back after the cropping season is over…

“Now, if I give you a loan and don’t ask for it for two years, do you think after two years you will give me back anything? You will be lost to me.”

In rural areas, tractors are not only used for tilling the land, but also used as a mode of conveyance.

“Actually speaking, tractors are used on a daily basis…So, they start earning from day one,” she said. So, SBI has created “Stree Shakti tractor loans”, whereby the lady of the house is also made a co-borrower. It charges 12 per cent interest on the loan. Minimum margin for the loan is pegged at 15 per cent. For prompt loan repayment, the farmer is given a 1 per cent interest rate concession. Currently, the EMI per ₹1 lakh of loan works out to Rs2,225.

SBI chief said: “Now, if the lady of the house is made a co-borrower and if they (borrower and co-borrower) put in a little more margin by bringing in her gold as well, they get a little advantage on the interest rate. “And it is a regular EMI product. So, from next month you start paying your EMI. We have found from our experience that where the ladies are also co-borrowers, there is pressure to pay. The discipline is more.”

Jump in bad loans

Bhattacharya pointed out that her bank retreated from the tractor loan segment because it was not able to get the repayments, leading to a jump in bad loans.

However, with the introduction of the revamped tractor loan product, SBI expects the tide to turn, leading to more credit flow to the segment.

Source : The Hindu
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FIIs need RBI nod to buy YES Bank shares

YES Bank’s equity share purchase by foreign investors will be allowed only after obtaining the RBI approval as it had reached the trigger limit, the central bank notified on Friday.

“The Reserve Bank of India has notified that the foreign shareholding through Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs)/Non Resident Indian (NRI)/ Persons of Indian Origin (PIO)/ Foreign Direct Investment (FDI)/American Depository Receipt (ADR)/Global Depository Receipts (GDRs) in YES Bank Ltd has reached the trigger limit.

FIIs held 45.04 per cent shares in YES Bank as of quarter ended June 2014, according to BSE data.

Source : The Hindu
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