Selection process for public sector bank chiefs to get rigorous

The finance ministry on Friday made changes in the selection process of heads of staterun banks, introducing extra interviews and more independent experts in the selection panel to make the process more robust.

The move falls short of the recommendations of the Reserve Bank of India, which had suggested that the government dissociate itself from the selection process and that the top executives of public sector banks (PSBs) be selected from the wider pool of the private sector. The finance ministry, however, said the changes will bring "more objectivity" to the selection process." We will now have three subcommittees instead of one, which will interview the shortlisted candidates," said financial services secretary GS Sandhu.

Each subcommittee will have two experts and a deputy governor of RBI who will interview the candidates on different parameters before a final decision is taken by the appointment board.

The structure of the appointment board will largely remain the same with RBI governor at the helm and financial services secretary along with four other experts.

"We will hold interviews on November 13 and 14, and hope to give the appointment letter by the end of the month," said Sandhu, adding that the finance ministry will try to get the vigilance clearances for the selected candidates at the earliest. The ministry has further decided not to give a  five-year fixed tenure to the selected candidates. "This we will consider for appointments in 2015-16," said Sandhu.

An executive director with a PSB slammed the new selection process and termed the changes cosmetic. "There is nothing new. Government interference continues and there is no clarity on how much weightage will be given to interview as compared with other parameters," he said.

About 15 candidates are expected to sit for the interview of chairman of eight state-run banks.Earlier this week, the government had cancelled the appointments of eight chairmen-cum-managing directors and 14 executive directors of staterun banks made by the previous UPA government.

The ministry had decided to cancel the appointments on the recommendation of a select committee set up to examine the selection process to the posts of CMDs and executive directors of PSBs for 2014-15.The committee was set up earlier this year after Syndicate Bank CMD SK Jain was arrested by the Central Bureau of Investigation for allegedly accepting bribes of Rs 50 lakh to enhance the credit limit of some companies. The finance ministry is also looking at changing the selection process of statutory auditors of PSBS.



Source : Economic Times

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Union Bank Q2 net up 78% at Rs. 371 cr

Union Bank of India reported a 78 per cent jump in net profit during the July to September period at Rs. 371 crore helped by write-back, lower provisioning and healthy non-interest income.

“The sharp increase in profit was due to Rs. 140 crore received by the public sector bank as write back of income tax,” said Arun Tiwari, Chairman and Managing Director, Union Bank of India.

Net interest income (different between interest income and expended) increased by a moderate 7 per cent to Rs. 2,085 crore as against Rs. 1,954 crore in the same quarter last year. However, non-interest income for the second quarter rose 33 per cent to Rs. 812 crore from Rs. 611 a year ago.

During the quarter provisions declined 16 per cent to Rs. 785 crore from Rs. 937 crore in the second quarter FY14.

Tepid growth

As on September 30, 2014, domestic advances grew 9 per cent to Rs. 226,011 crore, while domestic deposits rose 4 per cent.

“Our growth came from retail, agriculture and MSME, while corporate growth was flat as business growth remains subdued,” Tiwari said.

He added that the credit and deposit growth is likely to be at 11-12 per cent and 9-10 per cent for FY15, while (gross) NPAs will be contained at 4 per cent.

Gross non-performing assets (NPAs) worsened to 4.69 per cent as on September 30, 2014 as against 3.64 per cent as on September 30, 2013. Net NPAs also increased to 2.71 per cent from 2.15 per cent.

Though the bank made recovery of assets worth Rs. 516 crore, the slippages into bad loans were at Rs. 1,968 crore.

Net interest margins dropped to 2.56 per cent from 2.58 per cent in September quarter last year due to proportionately higher cost of funds. “We target NIM of 2.8-2.9 per cent for the full year,” Tiwari said.

The shares of Union Bank of India ended at Rs. 225.50, 0.58 per cent higher over its previous close on BSE.

Source : The Hindu

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IDBI Bank net dips to Rs. 118 cr on higher employee cost, provisioning

IDBI Bank today said its net profit fell by 38 per cent to Rs. 118.49 crore in the second quarter ended September 30 in the current financial year on higher employee cost and provisioning.

The bank’s net profit during the same quarter a year ago stood at Rs. 192.27 crore.

The bank made provisioning towards bad loans of Rs. 990.47 crore during July-September, 2014—15; up from Rs. 878.72 crore in the same quarter of 2013—14.

Meanwhile, employee cost went up to 497.31 crore during the quarter from Rs. 360.49 crore a year earlier.

“Total income has increased from Rs. 7,114.44 crore to Rs. 7,610.52 crore for the quarter ended September” it said in a BSE filing.

The non-performing assets (NPAs) rose to 5.72 per cent in Q2—FY15, from 4.98 per cent year ago.

Net NPAs, however, reduced to 2.79 per cent of total advances as of September 30, from 2.82 per cent year earlier.

IDBI Bank shares closed at Rs. 70.55 apiece on the BSE today, up 3.37 per cent from the previous close.

Source : The Hindu

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Karnataka Bank net profit jumps to Rs. 88.46 cr

Karnataka Bank recorded a net profit of Rs88.46 crore in the second quarter of 2014-15 as against Rs28.95 crore in the corresponding period of the previous fiscal, registering a growth of 205.56 per cent.

During the quarter, the net interest income (NII) of the bank stood at Rs297.27 crore (Rs284.54 crore), and the other income at Rs102.77 crore (Rs87.80 crore).

There gross NPA of the bank was at 3.53 per cent (3.59 per cent), and net NPA at 2.37 per cent (2.25 per cent).

Provisions (other than tax) and contingencies came down to Rs83.64 crore during the second quarter of 2014-15 as against Rs126.71 crore in the corresponding period of the previous fiscal.

Source : The Hindu

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State Banks' staff union meet in Mangalore on Nov 1 & 2

The 12th triennial general council meeting of State Banks’ Staff Union (Karnataka) will be conducted in Mangalore on November 1 and 2.

Addressing presspersons in Mangalore on Friday, M C Mangsuli, President of Karnataka unit of the union, said that Ashwini Mehra, Deputy Managing Director of State Bank of India, will participate at the inauguration of the programme.

He said that the State Banks’ Staff Union (SBSU) is representing around 99.99 per cent of the clerical and subordinate staff working in 700-plus branches of State Bank of India in Karnataka.

Various issues related to banking sector will be discussed at the meeting, he said.

Though the discussions on wage revision in banking industry under the 10th bipartite agreement are underway for more than two years, there are no signs of reaching an early settlement.

To achieve some of the demands, the United Forum of Bank Unions (of which SBSU is a part) has chalked out various programmes. The United Forum of Bank Unions will stage a one-day strike on November 12 in the country. This will be followed by relay strikes at zonal-level from December 2 to 5, Mangsuli added.


Source : The Hindu

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Manappuram Finance net up 73 per cent at ₹76.43 cr in Q2

Manappuram Finance Ltd has posted a 73.8 per cent increase in its net profit at Rs76.43 crore during the second quarter in the current fiscal compared to Rs43.98 crore in the preceding quarter ended June 30, 2014. The company’s net profit stood at Rs69.71 crore in the corresponding Q2 of FY-2013-14,.

The Board also approved an interim dividend of Rs0.45 per share of face value of Rs2.

The operating income increased to Rs 502.84 crore against Rs456.32 crore reported in the first quarter. The same was reported at Rs544.11 crore in Q2 of the previous fiscal.

The company recorded a 4 per cent increase in its gold loan Assets under Management (AUM) to Rs8,518.03 crore against Rs8,197.50 crore reported in Q1 of the year. The aggregate gold loans disbursed during the quarter amounted to Rs5,835 crore.

As part of a policy decision to widen its portfolio, the company has decided to enter into housing loans, vehicle finance, and microfinance. The objective is to reduce concentration risk.

The company also restructured its top management with new appointments in the grade of Executive Vice President (EVP).

Aloke Ghosal has been appointed as CEO - Housing Finance. K. Senthil Kumar has joined as National Head - Commercial Vehicle Finance. R. Raghavender Anand has been inducted as National Head- Micro Finance.

I. Unnikrishnan has resigned from the position of Executive Director and Deputy CEO to pursue his entrepreneurial ambitions. He will be relieved from office on November 30 and will continue on the company’s Board of Directors as a Non-Executive Director.

Kapil Krishan, CFO, will now hold charge of investor relations and treasury management.

The company also signed a non-binding Term Sheet to acquire a majority equity shareholding in Asirvad Microfinance Pvt Ltd through a combination of secondary purchase of equity shares and primary investment by way of subscription to equity shares of the company.

The closure of the transaction is contingent, among other factors, upon satisfactory completion of due diligence and receipt of statutory and regulatory approvals including from RBI. Headquartered in Chennai, Asirvad Microfinance is an RBI registered NBFC-MFI. It operates in Tamil Nadu, Kerala, Odisha and Gujarat.


Source : The Hindu

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ICICI Bank Q2 report card: Higher slippages a concern ​

ICICI Bank’s net profit grew 15 per cent in the September quarter, on the back of 15 per cent growth in its net interest income. While the bank’s retail focus continues to pay off, driving the overall loan growth, asset quality has witnessed some pressure — an area of concern in recent quarters. Slippages of about Rs. 700 crore during the September quarter has been the highest in recent periods.

At a time when its peers such as HDFC Bank and Axis Bank have been able to maintain stable asset quality, ICICI Bank’s higher addition to bad loans is a dampener. HDFC Bank has the lowest loan delinquency with bad loans at 1.02 per cent of loans as of September. While Axis Bank has a higher gross non-performing asset (GNPA) at 1.34 per cent of loans, the bank has been able to keep it steady during the latest September quarter. ICICI Bank’s troubles with bad loans are bigger than that of its peers, with GNPA at 3.12 per cent of loans in the September quarter, up from 3.05 per cent in the June quarter.

Besides the bad loans, ICICI Bank has a larger restructured book too compared with its peers. The bank has been stepping up on its loans recasts over the last year. From about 2.2 per cent last September, ICICI Bank’s restructured book currently accounts for 3 per cent of its loans. Axis Bank’s restructured assets are 2.5 per cent of loans, while HDFC Bank has just 0.1 per cent of its loans recast.

Healthy retail trend

However, ICICI Bank continues to score well on the retail front; its 15 per cent loan growth was led by 25 per cent growth in retail loans. This compares well with the performance of its peers. Axis Bank and HDFC Bank grew retail loans 27 per cent and 17 per cent respectively in the September quarter. ICICI Bank’s strong retail performance augurs well for its profitability and growth. The bank has also been ramping up its low cost CASA (current account savings account) base over the last couple of years. The CASA ratio continues to remain healthy at 43.7 per cent as of September 2014. After achieving its first full-year net interest margin of 3 per cent in 2012-13, the bank has been able to scale it up further to 3.4 per cent in the September quarter.

Given that the overall bank credit slipped to five-year low levels of 9.7 per cent in September, the performance of the three large private banks has been healthy. For ICICI Bank in particular, easing of asset quality pressure over the next year or so will hold the key to the stock’s performance.


Source : The Hindu

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Yes Bank registers 30% rise in Q2 profit on higher fee income

Yes Bank posted a 30 per cent jump in net profit at Rs. 483 crore for the second quarter ending September 30, 2014 on the back of robust growth in loans and interest income.The net profit in the year ago period was at Rs. 371 crore.

Net interest income (difference between interest income and interest expended) soared by 27 per cent to Rs. 856 crore as compared with Rs. 672 crore in the same quarter last fiscal. Non-interest income increased 13 per cent to Rs. 506 crore from Rs. 446 crore in Q2FY14, limited by lower treasury fee income.

The bank’s provisions

“Asset quality is under control. However, the environment is still evolving and some cyclical improvement in policy is needed... In power and mining sector, there is need for more policy action,” said Jaideep Iyer, Senior President – Financial Markets, Yes Bank.

As on September 30, 2014, advances grew 30 per cent to Rs. 62,030 crore (from Rs. 47,717 crore as on September 30, 2013); while deposits grew 19 per cent to Rs. 80,131 crore from Rs. 67,575 crore.

The loan book is likely to grow in the mid-20 per cent for the full year, Iyer added.

The net interest margins expanded to 3.2 per cent from 2.9 per cent driven by healthy growth in retail deposits and capital raising.

Gross non-performing assets (NPAs) were up at 0.36 per cent as on September 30, 2014 from 0.28 per cent a year ago. Net NPAs also increased a tad to 0.09 per cent (Rs 54 crore) from Rs. 0.04 per cent (Rs 19 crore).

Yes Bank shares were trading at Rs. 662.50 per share, up by 3.7 per cent over the previousclose on Bombay Stock Exchange


Source : The Hindu

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Andhra Bank Q2 net zooms to Rs. 144 cr

Andhra Bank has posted a net profit of Rs. 144.49 crore for the quarter ended September 30, 2014 as compared to Rs. 70.65 crore for the corresponding quarter last year.

Total Income has increased from Rs. 3,817.57 crore for the quarter ended September 30, 2013 to Rs. 4,423.62 crore for the quarter ended September 30, 2014.


Source : The Hindu

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Allahabad Bank net profit halves to Rs. 141 cr

Kolkata-based Allahabad Bank reported a near 49 per cent dip in net profit to Rs. 141 crore for the period ending September 30, 2014.

Profit for the corresponding period last fiscal stood at Rs. 276 crore.

During the period, the bank, however, reported a marginal increase in both total income and interest earnings.

Total income for the second quarter stood at Rs. 5,417 crore, an increase of mere 2 per cent (over Rs. 5,303 crore it reported last fiscal).

Interest earnings moved up by 6 per cent to Rs. 4,901 crore ( as against Rs. 4,607 crore last year) for the period between July and September.

Asset Quality

The bank, meanwhile, saw an approximate 16 per cent rise in gross non-performing assets (NPAs) to Rs. 7,674 crore for the period ending September 30, 2014. Gross NPAs for the corresponding period last year stood at Rs. 6,613 crore.

Gross NPA per cent during the period rose to 5.36; as against 4.94 in the year ago period.

Net NPAs in Q2 of FY-15, however, saw a marginal decline of 2 per cent to Rs. 4,948 crore (as against Rs. 5,048 crore last year).

As a result, net NPA per cent during the period improved to 3.54; from 3.83 from the year-ago period.

At 2.15 pm shares of Allahabad Bank were trading at Rs. 111.40, up by 4.26 per cent at the BSE on Thursday.


Source : The Hindu

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Vijaya Bank raises Rs. 500 cr through bonds

Vijaya Bank has raised Tier II capital of Rs. 500 crore through a bond offering to fund its business growth.

In a statement, the bank said the capital was raised by issuing Unsecured Redeemable Non Convertible Basel III Compliant Tier II Bonds with a coupon rate of 9.15 per cent p.a. The issue was fully subscribed and allotment has been made on October 30, 2014, it added.

Vijaya Bank scrip ended marginally higher at Rs. 47.25 on the BSE.

The Rs. 500 crore bond issue is in addition to the proposed equity offering of Rs. 600 crore that the bank is contemplating later this fiscal. The bank has already received an enabling resolution from its shareholders to raise additional equity capital of Rs. 600 crore from the markets.


Source : The Hindu

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IOB reports Q2 loss at Rs. 245 cr

Indian Overseas Bank today reported a net loss of Rs. 245.51 crore for the second quarter ended September 30 due to higher tax expenses and provisions for bad assets.

The bank had reported net profit of Rs. 132.55 crore during July-September quarter in the previous fiscal.

Total income has increased from Rs. 5,999.75 crore for the quarter ended September 30, 2013 to Rs. 6,440.77 crore for the quarter ended September 30, 2014, it said in a BSE filing.

The bank made provisioning for bad loans to the tune of Rs. 892.38 crore in the second quarter of 2014-15, up from Rs. 619.90 crore in the same period a year ago.

Tax expenses during the quarter under review went up at Rs. 82.57 crore, against Rs. 38.55 crore a year ago.

Also, the asset quality of the bank deteriorated significantly as gross non-performing assets (NPAs) or bad loans rose to 7.35 per cent of total advances, while it was at 4.65 per cent a year ago.

Net NPAs in Q2FY15 also increased to 5.17 per cent from 2.83 per cent a year ago.

Indian Overseas Bank shares traded at Rs. 57.15 per piece on the BSE, down 4.11 per cent from previous close.


Source : The Hindu

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Axis Bank launches online outward money transfer in 100 currencies

Axis Bank, India’s third largest private Bank, announced the launch of its seamless online outward remittance facility in over 100 currencies.

“Axis Bank customers can now make faster online outward remittances in over 100 currencies across 150 countries to accounts held with various other Correspondent Banks using this facility, from the comforts of their home or office,” the bank said in statement.

The new outward remittance service offers customers the convenience and choice to initiate transfers through Axis Bank in additional 88 currencies taking the total to 101 currencies.

Sidharth Rath, President - Treasury, Business Banking and Capital Markets said, “We believe that this facility will empower our customers to transfer money to as many as 150 countries from the comfort of their home or office. The service also offers greater transparency as the exchange rates are displayed upfront to the customer before initiating the remittance. Altogether, this offering will simplify outward remittance service for our customers and enrich their experience of banking with us.”


Source : The Hindu

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PM Narendra Modi to meet bank chiefs on Nov 5

The Prime Minister Narendra Modi will meet chief executives of public sector banks (PSBs) on November 5.

This meeting, which will be held in the Capital, assumes importance as it will be the first instance when Prime Minister himself will interact with the chief executives of PSBs.

It comes at a time when public sector banks are crying for reforms and nearly eight of them are headless.

Indications are that the meeting--which will also be attended by Finance Minister Arun Jaitley--will see review of banks' operational and financial performance including status of nonperforming assets.

The top 30 NPA accounts of each bank will also come up for discussion, official sources said.

srivats.kr@thehindu.co.in


Source : The Hindu

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Hamstrung by the limited number of products: LIC chairman

Life insurance Corporation, the country’s largest insurer, is facing a challenge due to the limited number of products in its basket after the new regulatory guidelines came into force in January 2014, said a top company official.

The Insurance Regulatory and Development Authority put in place a new set of guidelines for life insurance products which involved changes in product structure, and required insurers to phase out all old products and re-file all their existing products.

LIC Chairman SK Roy said that, at present, the company has only 22 products in the market as compared with 60-odd products earlier. He was speaking at the Asia Insurance Post seminar in Mumbai.

“For an organisation of our size with an agency force of 1.2 million, 27,000 unit managers and a huge marketing team, there is a very large appetite for products, and we are struggling to meet the demand. We cannot escape the reality that products are a major challenge for the life insurance industry,” said Roy.

On being asked about the insurer’s investment during the first half of the current fiscal, Roy said the company has Rs20,000 crore in equity investments in the period.

“We have had a very long bull run so this has been an opportunity for us to book some profit. We are long-term investors, so we have to do a balancing act so that we don’t liquidate all our assets and yet book profits to pass on to the policy-holders. So we do a tightrope walk on that,” said Roy.
Investment plans

Asked about the insurer’s plans to invest in public sector companies in line with the Government’s divestment plans, Roy said, “Contrary to what is believed, we have done well on this front, so if an opportunity comes, we will look at it. Right now there is no opportunity.”

Roy said the insurer’s design team was working on a product on the unit-linked platform, where it is currently not present, and the insurer would launch a Ulip product by the year end.


Source : The Hindu

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Canara Bank ties up with Origo Commodities for agri loans

Public sector lender Canara Bank entered into a Memorandum of Understanding with Origo Commodities, a post-harvest management services company, to support farmers with warehouse receipt financing across the country.

Warehouse receipt financing is a tool that enables farmers to avail financing and avoid “Distress Sale” of their produce. The MoU between Canara Bank and Origo Commodities will focus across multiple states including Karnataka, Andhra Pradesh, Tamil Nadu and Maharashtra among others,” company said in a statement. Origo Commodities has presence across 15 states.

S Ramesh, General Manager, Canara Bank said, “Given the importance of Produce Loan Financing, this MoU will go a long way in helping the farmer clientele of Canara Bank. The MoU will be win-win situation for all the parties, and allow farmers to take benefit of the produce loan scheme to improve yields and better their living standards.”

The partnership is cumulatively targeting more than Rs. 1,000-crore business under Warehouse Receipt Financing in the coming season.


Source : The Hindu

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Moody’s retains negative outlook on banks

International rating agency Moody’s retained its negative outlook on the domestic banking system, citing high leverage in the corporate sector that may prevent any meaningful recovery in asset quality.

“Our outlook for the country’s banking system remains negative, as it has been since November 2011.

“The negative outlook reflects our view that high leverage in the corporate sector could prevent any meaningful recovery in asset quality, notwithstanding a moderate rebound in economic growth,” the agency Moody’s Investors Service said in a note issued from Singapore.

The report further said continuing poor asset quality, wherein the NPAs levels are set to touch 4.5 per cent of the system, will require continued provisioning and strengthened capital buffers. After provisions, profitability of public sector banks will generate insufficient internal capital for loan growth, the report added.

The negative outlook pertains mainly to the public sector banks as they represent more than 70 percent of total banking system assets. These banks have experienced higher growth rates in non—performing and restructured loans, as well as greater weakening in profits, than their private sector peers, Moody’s said.

The report says while these trends are unlikely to improve for public sector banks, in contrast, private sector banks have stronger margins, reserves, and capital levels, which serve as buffers against conditions that remain challenging.

On growth, which inched up to surprising 5.7 per cent in the first quarter of the current fiscal after logging in sub—5 percent growth in the past two fiscals, Moody’s said GDP will pick up moderately this fiscal, but remains constrained by the high interest rates due to inflation.


Source : The Hindu

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Oriental Bank Q2 net up 16% at Rs. 291 cr

Public sector Oriental Bank of Commerce (OBC) reported 16 per cent growth in net profit at Rs. 291.42 crore for the second quarter ended September 30, 2014.

The bank had posted a net profit of Rs. 251.41 crore in the July-September quarter of the previous fiscal.

The bank’s provisioning during the quarter increased to Rs. 641 crore from Rs. 551 crore in the September quarter of 2013-14 fiscal.

Interest income of the bank grew 5.56 per cent to Rs. 4,936 crore.

Net NPA as a percentage of total advances stood at 3.29 per cent against 2.69 per cent in the year-ago period.

Total income of the bank increased to Rs. 5,328.58 crore for the quarter ended September 30, 2014 from Rs. 4,987.71 crore in the same period last fiscal.


Source : The Hindu

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Government cancels appointment of 8 state-run bank CMDs, 14 EDs

The government on Monday cancelled the appointment of eight chairmen-cum-managing directors and 14 executive directors of state-run banks appointed by the previous UPA government.

In a statement released late on Monday, the finance ministry said the decision was taken after a committee set up to examine the selection process to the posts of CMDs/EDs of Public Sector Banks (PSBs) for 2014-15 submitted its report.

The committee, which was set up earlier this year after the Syndicate Bank cash for loan scam had surfaced, included secretary (expenditure), secretary (school education) and governor of the Reserve Bank of India (RBI).

"The government has decided to cancel the current selection process of CMDs/EDs of public sector banks (PSBs). As a result, eight posts of CMDs and 14 posts of EDs would require to be filled up de nonovo," the statement said.

The previous Manmohan Singhled UPA government had selected CMDs and executive directors for six state-run banks, including Bank of Baroda, Oriental Bank of Commerce, Canara Bank, United Bank of India and Indian Overseas Bank. Bank appointments had come under lens after Syndicate Bank chairman and managing director ( CMD) SK Jain was arrested by the Central Bureau of Investigation for allegedly accepting bribes of Rs 50 lakh to enhance the credit limit of some companies. CBI director Ranjit Sinha had then said that Jain was favoured during the appointment process and the investigation agency has sent a report to the finance ministry.


Source : Economic Times

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UCO Bank identifies Kingfisher Air as wilful defaulter

Kolkata based UCO Bank today said it has “identified” Vijay Mallya-owned Kingfisher Airlines as a “wilful defaulter” and will be sending a notice to the defunct carrier.

“We have identified KFA as a wilful defaulter. We are in the process of sending a notice to the company in this regard,” a source in the bank told PTI.

Other banks like State Bank of India and Punjab National Bank are also mulling this route.

United Bank of India has already declared KFA a ‘wilful defaulter’ for defaulting on a loan of Rs. 350 crore.

UCO Bank will also send a notice to the company which had furnished a corporate guarantee for a loan of around Rs. 450 crore, the source said.

As per RBI guidelines, a wilful defaulter tag would be given if it is found that a loan taken is diverted for some other use rather than for which it was availed, as well as the default is made in spite of having the ability to repay it.

Source : The Hindu

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Corp Bank donates Rs2.15 cr to Prime Minister’s relief fund

Corporation Bank donated Rs2.15 crore to the Prime Minister’s National Relief Fund for relief and rehabilitation of the people affected by floods in Jammu and Kashmir.

A press release by the bank said here on Monday that SR Bansal, Chairman and Managing Director of the bank, presented the cheque to the Fund in New Delhi recently.

As the bounden duty to extend support for the relief and rescue operations as well as for mitigating the sufferings of the affected people, Corporation Bank has risen to the occasion and donated to the Prime Minister’s National Relief Fund towards the cause of the affected in Jammu and Kashmir, it said.

Source : The Hindu

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United India keen on entering Sri Lanka

Public sector general insurer United India as part of its plans to have presence overseas, was keen on setting up its first office in Sri Lanka, a top official said today.

“We are looking at Sri Lanka. We have not yet finalised. It is still in the early stages..”, United India Insurance Company Ltd Chairman and Managing Director, Milind Kharat told reporters here.

The company had earlier set up office in Hong Kong but was shut in 2002.

Elaborating, he said, “We are keen in starting one office in Sri Lanka. We have to get the regulatory approvals, clear the formalities...”.

United India Insurance, Director and General Manager, M Vasantha Krishna said the company was serious about setting up the footprint in Colombo.

“We are serious about it. Hopefully, we are looking at setting up an office this year...,” he told PTI later.

Asked on whether the company would set up the overseas office through a joint venture partner, Kharat clarified that the company would set up its office on its own. “We will be going alone there“.

To a query on the common third-party administrators mooted by public sector general insurers, Kharat said it was expected to function from next year.

“Yes, it is taking shape. IT consultants have been appointed. From next financial year, it will start functioning. It will be operating in New Delhi and Mumbai“.

On the wage revision issue, Kharat said the company has completed two rounds of talks with employees and offered 10.5 per cent increase in revision. “Discussion has been going on.

Of course, the demand is more. We have offered 10.5 per cent (increase)...,” he said.

Source : The Hindu

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Get banks to fill up top posts quickly, union petitions PM

Bank employees have urged Prime Minister Narendra Modi to take “expeditious” steps to fill up the top posts of several public sector banks (PSBs) which are headless.

Currently, the post of Chairman and Managing Director remains “unfilled” in as many as six PSBs, AIBEA (All-India Bank Employees Association) General-Secretary CH Venkatachalam said in a letter to the Prime Minister.

PSBs where the post of CMD remains vacant are United Bank of India, Canara Bank, Syndicate Bank, Indian Overseas Bank, Bank of Baroda and Oriental Bank of Commerce.

Also, the post of executive director in Allahabad Bank, Andhra Bank, UCO Bank, Union Bank of India remains “unfilled”, the AIBEA letter said.

The AIBEA is the premier trade union body of bank staff in the country.

Source : The Hindu

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SBI targets Rs. 250 cr/day home loan business

Country’s largest lender State Bank of India has set an ambitious target of disbursing Rs. 250 crore of home loans every day during the ongoing festive season, which currently stands close to Rs. 200 crore.

After it waived off the processing fee late September as part of its festive offering, the bank is disbursing close to Rs. 200 crore home loans every day.

“The home loan disbursement is going up each day. It was Rs. 130 crore in the beginning when we scrapped the processing fee. Then it moved up to Rs. 150 crore, and then Rs. 175 crore, and has now stabilised at Rs. 188 crore a day. My target is Rs. 250 crore a day,” managing director for national banking and group executive B Sriram told PTI in an interview.

Year-to-date, the home loan sanctions stood at Rs. 20,032 crore as against Rs. 18,500 crore a year ago, he said, constituting around 14 per cent uptick year-on-year.

In percentage terms, the growth is 14-15 per cent year-on-year in the first half, he said, adding, “we are hopeful that it will become 18-20 per cent in the current quarter.”

Stating that the bank has not launched any scheme during the festive season but has waived off the processing charges on car and home loans, Sriram said from the last week of September the bank was seeing quite a traction on loan queries and disbursals.

On the average ticket size, Sriram said it is improving and it is Rs. 30-32 lakh now and the focus is to take it to Rs. 50 lakh.

“We are focussing on high value home loans because now almost 80 per cent of our home loans are below Rs. 50 lakh. So we are not very much in the above Rs. 50 lakh segment. And above Rs. 75 lakh we are just 12 per cent. So we need to improve that and have also brought down interest rates on par with the other segment. This is one focus areas now. We need to push the average ticket size to about Rs. 50 lakh,” Sriram said.

Impact of processing fee waiver on auto loans

On the impact of the processing fee waiver on auto loans, Sriram said, “In the first week of September we were giving 700 to 800 car loans a day but on September 30, the total was 3,400 loans. Because last week we saw quite an increase — some 1,500-3,400 loans a day.”

“Every day there was a jump of 300-400 cars. Since then because of holidays it has come back to 800-1,000 cars, but again improved from October 15 onwards. We hope this trend to continue till the rest of the quarter,” he said.

This is despite the fact that after five successive months of sales growth, car sales slipped 1.03 per cent in September to 1,54,882 units year-on-year. But motorcycle sales climbed 19.34 per cent to 10,56,509 units, according to SIAM data. But vehicle sales across categories rose 20.44 per cent to 19,04,007 units in September.

It can be noted that despite the general weakness in credit growth for the system, which has been hovering at 10-11 per cent for quite some time, there was come pick in mortgage loans, especially by retail customers.

HDFC growth

For instance, the pure-play mortgage leader HDFC which reported a 7.2 per cent jump in net profit in the September quarter at Rs. 1,358 crore, was driven primarily by a healthy growth in individual loans which clipped at 23 per cent or 71 per cent of its total loans sold in the quarter.

Growth in the non-individual loan portfolio stood at a low 11 per cent. The growth in the total loan book inclusive of loans sold is 19 per cent.

For HDFC, a whopping 81 per cent of the incremental growth in the loan book during the period came from individual loans.


Source : The Hindu

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IRDA favours lifting cap on agent fees

Sectoral regulator IRDA is expected to suggest to a high-level panel that the new Insurance Bill remove the existing 40 per cent cap on agency commission and leave agent licensing process to insurers themselves.

Insurance Regulatory and Development Authority (IRDA) chairman T S Vijayan is slated to meet members of Parliamentary panel on Insurance Law (Amendment) Bill here on Monday, said a source.

The Bill is likely to be tabled in the winter session.

The regulator is likely to suggest that the agent licensing process, which is currently handled by IRDA, be handed over to insurers. Currently, after training and examination, the IRDA grants licence to an agent.

Also, the regulator wants the new law to let insurers fix the agency commission on their own. Currently, the law does not allow an insurer to pay more than 40 per cent of the first-year premium to the agents as commission.

Sources said the regulator is of the view that a flexible commission framework will make agents more productive and help deepen insurance penetration, which is only 3.2 per cent now.

There were 21.5 lakh life insurance agents at the end of the September quarter. In FY11, there were 26 lakh, which has been steadily declining ever since the commission was capped at 40 per cent. Since the beginning of this fiscal alone, there was a decline of 40,000 agents from 21.9 lakh at the end of the last fiscal.

The decline started after SEBI banned life insurers from selling unit-linked insurance products in June 2010.

The insurance industry has been demanding hiking agency fees for long as it would help them organise their agency force better.

“Agents are responsible for bringing in over 90 per cent of business to the life insurance industry. But they do not find their job attractive now with the 40 per cent of first year premium as their commission,” Life Insurance Council secretary general V Manickam said.

“Hence, the industry has been demanding that the provisions governing licensing and commission in the Act must be transferred to IRDA so that the regulator has the flexibility to allow insurers to fix remuneration to their agents of their own,” he added.

Since an agent can sell policies of only one company that one is associated with, there is no sense in not allowing an insurance company to issue licence to them, he added.

The source said all the three IRDA members and few other senior officials will be present during the interaction with the MP. The meeting is likely to be attended by the house panel chairman and BJP MP Chandan Mitra.


Source : The Hindu

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