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Friday, November 14, 2014

SBI Q2 net rises 30% to Rs. 3,100 cr

India’s largest bank, State Bank of India posted a 30 per cent rise in net profit at Rs. 3,100 crore for September 2014 quarter as against Rs. 2,375 crore in the same quarter a yea ago. Sequentially, however, the profit declined from Rs. 3,349 crore in the June quarter.

Net interest income (difference between interest earned and expended) was up 8 per cent at Rs. 13,274 crore from Rs. 12,251 crore, in the corresponding quarter last fiscal.

During the quarter, provisioning for bad loans jumped to Rs. 4,275 crore signalling pressure on asset quality. In September 2013, the bank provided for Rs. 3,029 crore.

Gross NPAs for the quarter improved to 4.89 per cent as on September end 2014 from 5.64 per cent as on September end 2013. Further, net NPAs in September 2014 improved to 2.73 per cent from 2.91 per cent in September 2013.

Bank’s recovery efforts helped the bank gets more upgrades and recoveries at Rs. 2,635 crore during the quarter as against Rs. 1,362 crore in the previous quarter.

The bank’s NIM (net interest margin) declined to 3.49 per cent as compared to 3.54 a year ago. However, international NIM improved from 1.08 per cent to 1.20 per cent.

At day's close, SBI shares ended at Rs. 2,788.45 per share, higher by 2.55 per cent over its previous close on BSE.

Source : The Hindu
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FIPB clears HDFC Bank’s proposal to hike foreign holding to 74%

The FIPB today cleared the long-pending proposal of HDFC Bank to hike foreign holding in the bank to 74 per cent.

“FIPB today considered and approved HDFC Bank’s proposal to raise foreign investment ceiling to 74 per cent,” officials said after the meeting of the Foreign Investment Promotion Board.

The FIPB is of the view that HDFC Bank’ parent HDFC Ltd’s 22 per cent holding in the bank is FDI and hence total foreign holding is 73.39 per cent, which includes FII, FDI, ADR and GDR.

“So the bank has little headroom to raise funds from foreign investors,” the official said.

Late last year, HDFC Bank had approached the FIPB for increasing the foreign holding in the bank to 67.55 per cent from 49 per cent.

However, the proposal was not cleared by the FIPB as the Finance and Industry ministry was of the view that the parent HDFC Ltd’s 22 per cent holding in the bank is FDI.

Taking into consideration the 22 per cent parent holding as FDI, the total foreign holding was more than 67.55 per cent when they approached the FIPB for the first time.

Following clarification sought by FIPB earlier this year HDFC Bank sent a revised proposal raising its foreign holding ceiling request to 74 per cent, from its earlier proposal of 67.55 per cent.

Further, the proposal of pharma company Sanofi was cleared by FIPB in today’s meeting along with Punj Llyod’s proposal to enter into defence space.

Source : The Hindu
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SBI indicates capital raising plans

The country’s largest bank State Bank of India plans to raise capital during the current financial year and in the next year.

While the size of the capital to be raised has not been disclosed, the issue would be linked to the extent to which the Central Government would be ready to dilute its holding in the bank which at present stands at 58.60 per cent.

In a communication to the stock exchanges, the bank said that its board of directors today approved the issue of equity shares of
Rs 10 each (post-split Rs 1 each) "such amounts as will dilute the Gol shareholding" to the level approved by it (Gol). The amount would be raised from the market or the GoI by way of preferential issue/QIP/FPO/rights issue/GDR/ADR and/or any other mode(s) or a combination(s) thereof as may be cleared by the Gol and RBI. The number of equity shares to be issued would be decided by the Committee of Directors for Capital Raising and the fund raising would be done during FY15 and FY16, the statement from SBI said.

According the BSE data, the promoters (read GoI) hold 58.60 per cent stake in the bank. While FIIs hold 11.18 per cent share in its equity, DIIs hold 20.07 per cent stake and others hold 10.15 per cent share in the bank’s equity as at the end of Sept 2014. Shares of the bank are up by
Rs 64.80 to Rs 2783.95 on the BSE minutes before the market is to close.

The board also authorised the Committee of Directors for Capital Raising to decide on number of tranches and the timing of issue(s) and the size of the issue for raising additional Non-Equity capital by way of AT-1 and/or Tier II bonds in US currency/ Indian rupee considered as regulatory capital under Basel III guidelines, to be issued to Indian and/or overseas investors, in one or more tranches, during FY15 and FY16 through public offer and/or private placement.

Source : The Hindu
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80% of households have at least one bank account

A survey by banks has found that 80 per cent of households have at least one bank account. This shows improvement over census 2011 data which said nearly 6 out of 10 households have access to banking service.

This happened mainly due to Pradhan Mantri Jan Dhan Yojana (PMJDY) which was reviewed by newly appointed Financial Service Secretary Hasmukh Adhia this week. The meeting reported that 83 per cent of a survey to identify unbanked households has been competed. As per the initial results, on an average about 80 per cent of the households surveyed have now got at least one bank account. Now banks have been asked to complete the remaining work by November 30.

Census 2011 estimated that out of 24.67 crore households in the country, 14.48 crore (58.69%) households had access to banking services. After launch of PMJDY, banks were asked to conduct survey for identification of uncovered households.

The meeting was attended by State Level Banking Committees (SLBC) Conveners of all the States. It was reported that Kerala became the first state on November 11 to have all the households in the state with at least one bank account. In addition, Goa, Union Territories of Chandigarh, Puducherry and Lakshadweep and three districts of Gujarat – Porbandar, Mehasana, Gandhi Nagar, have also covered all households under PMJDY with at least one bank account.

Latest data revealed that a total of 7.24 crore bank accounts have been opened under the scheme. These comprise 4.29 crore in rural area and 2.95 crore are in urban areas. RuPay Cards have been issued in case of 3.97 crore accounts. The scheme has a target of opening 7.5 crore bank account by January 26 next year, but it appears the target will be achieved at least two months in advance. The Finance Minister Arun Jaitley has already said that target will be revised to 10 crore.

Department of Financial Services is regularly emphasising the early issuance of RuPay Debit Cards, e-KYC based account opening, seeding of Aadhaar, Financial Literacy and the progress in Survey made.

In order to record the appreciation of banks, the Government has framed a scheme of rewards for the bankers. This has already been communicated to them, a statement issued by the Finance Ministry said. Now banks have been asked to be in preparedness for modified Direct Benefit Transfer for kitchen fuel LPG proposed to be launched on November 15 in 54 districts and from January 1 in remaining parts of the country.

Source : The Hindu
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Thursday, November 13, 2014

Final norms on small banks by month-end: Raghuram Rajan

The Reserve Bank of India's proposed final guidelines on starting payment banks - meant to serve smaller businesses and lower income households - are likely by the end of the month, central bank governor Raghuram Rajan said on Thursday.

Rajan, during a speech in Mumbai, said the final proposal for establishing payment banks was with the finance ministry for feedback, and said he expected to call for applications for potential payments banks by the end of the month.

In July the central bank had issued draft guidelines on payment banks, which are meant to target the needs of under-banked segments such as small businesses, low income households, and farmers.

Source : The Hindu
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Axis Bank sees faster growth in mobile transactions over ATM

With increasing penetration of smart phones, data connectivity and internet facilities in urban pockets in the country, bank transactions are rapidly shifting from ATM to digital, informed top official of the private sector lender, Axis Bank here.

Rajiv Anand, Group Executive & Head–Retail Banking, Axis Bank informed that online transactions are increasing rapidly. “Till a few years back, ATMs had majority share in overall cash transactions, but now it has reduced to half at 50 per cent, mobile and netbanking has increased from 15 per cent to 30 per cent now. Only 20 per cent cash transactions happen through branches,” said Anand, who inaugurated the bank’s 2500th branch in Ahmedabad on Thursday.

Hinting at the pace of growth in the mobile banking, Anand mentioned that in a span of past few months transactions through mobile phones has increased sharply to over Rs. 1000 crore now.

“Transactions through mobiles are growing at the pace of about 4-5 times every month,” he said adding that the sharp growth is attributed to increasing access to smartphones and data connectivity in the urban centres mainly the Metros.

Giving details about bank’s Gujarat operations, Sanjay Silas, executive vice-president, Regional distribution head-West, said, “Gujarat has about 236 branches and 31 per cent of that is in rural areas. Our 68 branches are in unbanked areas and that remains the focus for us.”

The bank has deposits of about Rs. 17,000 crore and advances of Rs. 15,000 crore in Gujarat. According to Axis Bank officials, Gujarat’s deposit growth is higher at 23 per cent than overall deposit growth for the bank in India at about 20 per cent.

The bank plans to open 13 more branches in the state during the current fiscal.

Source : The Hindu
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Allahabad Bank to raise 500 cr through private placement

Kolkata-based lender Allahabad Bank is looking to raise Basel-III compliant tier-II bonds aggregating upto Rs. 500 crore through private placement.

According to a notification to the bourses, the lender will raise the amount in one or more tranche during the current fiscal (FY-15).

Source : The Hindu
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RBI against loan waiver scheme by state govts

Reserve Bank Governor Raghuram Rajan today expressed reservation over the loan waiver scheme by various state governments and also suggested reasonable interest rate ceiling on loans from microfinance lenders.

“Repeated loan waivers by various state governments distorts credit pricing, thereby also disrupting the credit market,” he said at a function organised by Nabard.

Both Andhra Pradesh and Telangana governments have declared loan waivers for the farmers hit by cyclone Phailin last year.

While the Telangana government has given the mandated 25 per cent of the written off loan amount to the banks, Andhra Pradesh has not done it so far.

Banks have over Rs. 1.3 lakh crore exposure to the farm sector in these two states.

Rajan also underlined the need for reasonable interest rate ceiling for consumer protection.

“There should be a reasonable ceiling on interest rate on loans from microfinance lenders for consumer protection,” he said.

Following the October 2010 crisis in the then undivided Andhra Pradesh that crippled the MFI sector, an RBI—appointed Malegam panel had suggested 26 per cent monthly cap on interest rates for the sector. This cap was notified by the central bank in April 2012.

The crisis began after the state government banned recovery by any coercive means, following a string of alleged suicides by micro-credit borrowers.

Source : The Hindu
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India Post wants to become a universal bank

India Post is interested in turning itself into a universal bank like many of its peers across the world and a committee under former Cabinet Secretary TSR Subramanian is looking into the matter, a senior department official said today.

“We still want to be a full-fledged bank. The government will decide whether they want to give to us or not,” chief postmaster general, Maharashtra circle, Pradipta Kumar Bisoi told reporters here.

“There is a committee under Subramanian which has been formed, they are going to give some recommendations, let’s wait for the report to see whether we should go for a full-fledged bank or a payment bank,” he said.

However, Bisoi added that the department, which has been accepting deposits for many decades and mobilising savings, already works like a payment bank and wondered what is the difference between the work they have already been doing and a payment bank.

The comments come amidst increasing speculation about the department being considered for a licence under the soon-to-be introduced ‘payments banks’ category, rather than as a full-fledged or universal bank with a complete bouquet of offerings.

RBI Governor Raghuram Rajan today said the RBI will invite applications for payment and small banks by the end of the month.

It can be noted that at the time of granting full-fledged licences to infra lender IDFC and micro-lender Bandhan in April after a 12-year hiatus, the RBI had left it to the government to decide on the aspirations of the postal department, which was also one of the over two dozen applicants.

Source : The Hindu
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Monday, November 10, 2014

5 crore Jan Dhan accounts outside Rs 1 lakh accident insurance ambit

Five crore of the seven crore bank accounts opened under the government's flagship financial inclusion programme, Pradhan Mantri Jan Dhan Yojana (PMJDY), have fallen outside the ambit of the in-built Rs 1 lakh accident insurance cover as these accounts have seen no transaction since they were opened.

Bankers and insurance industry executives say rules require at least one transaction in the account in the preceding 45 days for an account holder to be eligible for the insurance cover. But of the seven crore accounts opened under the scheme, only 1.71 crore accounts have seen transactions while the rest have had zero balance since they were opened, which means there have been no transactions in these accounts.

PMJDY, which was launched by Prime Minister Narendra Modi on August 28, seeks to cover 7.5 crore un-banked households in the country in the first phase. It provides Rs 5,000 overdraft facility for Aadhar-linked accounts and RuPay debit card, besides a Rs 1 lakh accident insurance cover "If an account holder meets with an accident during the 45 days when there has been no transaction in his account, he is not entitled to the insurance cover," said a senior executive with state-run Vijaya Bank, who is involved in implementing PMJDY.

The executive said most of the account holders seem unaware of the '45-day clause'. "We are trying to explain it to them," he said. National Payment Corporation of India (NPCI), which has an agreement with private sector HDFC Ergo to provide this insurance cover, is of the view that the accident insurance should not be looked as a plain vanilla welfare measure. "These are initial days of the scheme and there is no need to get disheartened," said AP Hota, managing director and CEO of NPCI. "Most of these accounts will be soon linked with various direct benefit transfer schemes and then there will be regular transactions."

The government is all set to launch a modified direct benefit transfer for liquefied petroleum gas (LPG) on a pilot basis in 54 districts across the country. Under the scheme, LPG consumers will be able to get subsidy directly in their bank accounts even if they do not have Aadhaar numbers.

So far, under PMJDY around 32% accounts have been seeded with Aadhaar and around 4 crore have been issued the Rupay debit card.The prime minister had earlier said that a lot of effort will be required in promoting financial literacy among the new account holders. "New accounts also need to be kept alive and properly utilised.

Aadhaar numbers will need to be seeded in bank accounts," he had said.Towards this end, the finance ministry is working on to increase the reach of banks through various models, including banking correspondents to facilitate banking facilities.

Source : Economic Times
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Rural women in Uttar Pradesh to get loan at three per cent

The government today announced that women belonging to the rural areas of Uttar Pradesh would get loan at the rate of three per cent from the cooperative banks, Cooperatives minister of UP, Shivpal Singh Yadav said here.

"With the help of Rashtriya Pichda Varg Vitt Vikas Nigam, UP Cooperative Rural Development Bank Limited will provide loan to rural women at the rate of three per cent under the mahila gramin samriddhi yojna," the senior Cabinet minister said.

"One woman would be able to get a loan of Rs 50 thousand to Rs one lakh from the bank", Yadav said.

He said that all the women coming to the bank for loan will get the same.

The cooperative banks, he added, was on the brink of closure during the BSP rule with the employees not getting salaries.

"Samajwadi Party government helped the bank with Rs 1,650 crores and the bank which was running into losses of Rs 204 crores was today in a profit of Rs 88 crores", he said.

Yadav alleged that after the state demanded aid for drought, the centre started survey and it was not known how much time would be lost in the name of survey work.

"Reports of crime are lodged in the SP government and cases are investigated while it was not the case during the previous government", he said to the questions on the rise of crime against women in Uttar Pradesh.

Source : Economic Times
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Any Time Money turns dear

Savings bank account holders are walking around with a long face these days. Weighed down by rising prices and stagnant salaries, they now have an additional headache to bear. Henceforth, they will not have the convenience of walking across to the friendly neighbourhood ATM (automated teller machine) to draw money for free more than five times a month.

Those living in Mumbai, Delhi, Kolkata, Chennai, Bangalore and Hyderabad will have the convenience of only three transactions in a month if they were to use an ATM belonging to a bank where they don’t hold an account. For transactions over these limits, including balance confirmation and PIN change, the bank will levy a fee on them.

The Reserve Bank of India (RBI) had in August allowed banks to levy such fees and it also set the limits for the number of free transactions terming it ‘rationalisation’. And banks have been quick to revise their charges once the RBI deadline of November 1 was crossed. Every transaction over the permitted limit will now cost Rs. 20 plus service tax. Some banks charge half this for balance confirmation and PIN change.

HDFC Bank and Axis Bank have already intimated the new charges to their customers which will kick in from December 1, as have IOB and SBI which has adopted a nuanced stance on this issue. SBI customers, who hold more than Rs. 25,000 in their SB accounts, will not be constrained by limits which will apply only to those holding less than that amount in their accounts. Other banks are either in the process of finalising their policy.

The RBI had to act after repeated representation from banks which have been complaining of the transaction costs that they have to bear every time a customer swipes his card in an ATM. In the process, it overturned its own earlier policy on this as set out in a March 2008 circular that expounded on the benefits of transacting through an ATM. This particular circular spoke about how in countries such as the U.K., Germany and France customers could access all ATMs, except white-label ones, free of charge.

“The ideal situation is that a customer should be able to access any ATM installed in the country free of charge through an equitable cooperative initiative by banks,” the circular dated March 10, 2008 had said while asking banks to allow unlimited free transactions at ATMs in India.

In contrast, the central bank now talks about “the growing cost of ATM deployment and maintenance” for banks. And what is that cost? It ranges between Rs. 18 and Rs. 25 per transaction, say banks.

These developments are ironic indeed considering that ATM growth really took off in the last few years after the RBI made transactions free of charges. As per latest RBI data, there are an estimated 1.6 lakh ATMs in the country which is almost six times the 27,000 ATMs that India had in March 2007.

Banks expanded their ATM networks rapidly to draw in customers and also drive them away from the branches; servicing simple requests such as withdrawals and balance confirmation at branches was estimated to be more expensive than through ATMs.

According to one private bank, servicing a customer at the branch costs Rs. 40 per transaction. Indeed, some private banks, and well-known ones at that, imposed a fee on customers who visited their branches for transacting more than a specified number of times in a given period. The aim was to reduce footfalls in the branch and run a lean operation. Having achieved that objective and hooking customers to ATMs, how is it fair to now impose a limit on free transactions?

For their part, the banks say that the aim is to increase non-cash transactions and drive people into digital banking. A digital, cash-free economy is a laudable objective indeed but achieving that involves many simultaneous steps. The RBI and banks would like people to use their debit/credit cards more, even for minor transactions at the grocer or the chemist as it happens abroad. Yet, the truth is that many small merchant establishments with point of sale (POS) machines charge customers anything up to 2.5 per cent as transaction fee when it is paid by card.

In fact, banks charge an additional fee when their cards are used at petrol bunks. Such fees and surcharges defeat the objective of pushing people into using their cards more. Banks also need to spread the reach of POSs. In the last seven years, the number of POSs in the country has trebled to 10.65 lakh from 3.2 lakh, according to the RBI. This is commendable but we need greater reach into smaller establishments.

Students and senior citizens, who prefer drawing small sums at frequent intervals for reasons of convenience and safety, are likely to be affected the most by the new ATM rule.

While students may find it easier to adapt to the new norms, the same cannot be said of senior citizens. Again, customers in the cities may be better placed to move to digital banking but the same cannot be said of those in rural and semi-urban centres, at least not yet.

Digital banking yet to spread

Poor Internet penetration, including inadequate bandwidth, power cuts and low literacy levels are factors that work against the spread of digital banking in rural areas.

Though financial inclusion account holders are exempt from the ATM rule, it needs to be pointed out that not all rural account holders fall in this category.

Changing banking habits is a slow process and that needs to be recognised by banks and the RBI. A gradual transition to digital banking would have been the ideal thing to do in a country of India’s size and complexity. Till such time that the ecosystem for digital banking and card payments improve, a more relaxed ATM usage policy is probably necessary.

Source : The Hindu
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Issue of non-CTS complaint DDs poses hardship to bank customers

Krishnan was visibly upset over the inordinate delay in encashment of a demand draft issued by a bank. It is close to a week since I presented the instrument, but the said amount is still not reflected in my account statement,” Krishnan told this correspondent, clearly ignorant of the cause for such delay.

Enquiries revealed that issue of non-CTS complaint demand drafts by banks posed a lot of hardship, delay in encashment of the instrument.

And this, a cross-section of bankers admit, is continuing to happen even after two years of RBI's instructions to banks to phase out such instruments.

Demanding RBI's immediate intervention in this regard, the Secretary of Coimbatore Consumer Cause K Kathirmathiyon pointed out that the Banking Regulator had issued instructions to banks in 2012 to issue only CTS-2010 complaint cheque books, demand drafts and pay orders and not charge the customer for issuing CTS complaint cheque books for the first time.

Further, to discourage presentation of non-CTS instruments, the RBI had, towards the end of last year, imposed restrictions on clearing of such instruments.

Such instruments were cleared thrice a week during the first four months of this calender year (January 1 2014 to April 30, 2014); this was reduced to two times a week (Monday and Friday) between May and October, and from November 1 onwards, down to once a week (Monday only and before 11 am).

If one presents a non-CTS demand draft on say Monday, it would be sent for clearing only the following Monday and proceeds credited to the payee's account on Tuesday or Wednesday, taking nearly 10 days in the process for encashing the draft for no fault of the customer.

“Some of the bank's branches want to exhaust non-CTS demand drafts,” the Consumer Cause Secretary said adding “it is tantamount to deficiency in service. Since these are issued against the Regulator's instructions, the customer can demand compensation and claim damages from the bank that issued the non-CTS draft/ pay order. It is a serious issue. The RBI should take action against such erring banks in the interest of the public,” Mr Kathirmathiyon said.

Source : The Hindu
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Central Bank cuts size of corporate loans

To rein-in bad loans, Central Bank of India has drastically cut the ticket size of loans it gives to India Inc.

The public sector bank has capped fresh loan exposure at Rs 150-200 crore per company as against
Rs 300-400 crore earlier.

The bank has also pared its corporate loan exposure by
Rs 13,797 crore in the last one year.

Instead, it has focused on giving loans to the non-priority sector such as agriculture, retail, and micro and small enterprises (MSE).

“This (curtailing the ticket size of loans to companies) is a risk mitigation measure. We are not renewing low-yielding short-term loans,” said BK Divakara, Executive Director.

The bank believes multiple smaller loans, as opposed to a few large corporate loans, can reduce the risk of bad loans.

The bank’s corporate credit portfolio has come down from
Rs 1,13,573 crore in September-end 2013 to Rs 99,776 crore in September-end 2014.

According to Executive Director Raj Kumar Goyal, Central Bank has taken a conscious decision to focus on non-priority sector loans. This has also helped correct the earlier skew in the bank’s loan portfolio towards corporate loans.

Corporate credit accounted for 53.55 per cent of total loans in the September 2014 quarter, as against 63.58 per cent during the corresponding quarter last year. Agriculture loans account for 17.89 per cent of total loans (12.73 per cent as on September-end 2013); retail accounts for 16.24 per cent (13.37 per cent); and MSE account for 12.32 per cent (10.33 per cent).

Rajeev Rishi, Chairman and Managing Director, said after his bank posted a huge loss of
Rs 1,509 crore in the second quarter of FY14, it undertook course correction, focusing on recovery from bad loans, increasing retail credit and mobilising low cost deposits.

In the second quarter ended September 30, 2014, Central Bank saw a turnaround in its fortunes, reporting a net profit of
Rs 103 crore.

Year-on-year bad loans, in gross terms, edged down to
Rs 11,440 crore as against Rs 11,563 crore during the corresponding quarter last year.

Source : The Hindu
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Dena Bank net drops 52% to Rs. 51.6 cr

Dena Bank reported a sharp 52 per cent decline in net profit at Rs. 51.58 crore in the second quarter ended September 30, 2014, as against Rs. 107.38 crore in the year ago period.

Net interest income (the difference between interest earned and expended) was flat at Rs. 625 crore.

Other income was up 19 per cent at Rs. 179 crore (Rs 150 crore in the year-ago period).

Year-on-year, bad loans, in gross terms, saw a 96 per cent jump to Rs. 3,861 crore (Rs 1,968 crore).

At 2.30 pm, Dena Bank shares were trading at Rs. 62.10 per share, down 4.09 per cent, on the BSE.

Source : The Hindu
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Syndicate Bank opens mid-corporate branch in Vizag

Syndicate Bank is planning to open 300 more branches and 27 mid-corporate branches during the current financial year, according to Executive Director M. Anjaneya Prasad.

He was speaking to reporters here on Saturday evening after the inauguration of the Visakhapatnam regional office and also a mid-corporate branch at Daba Gardens earlier in the day. He said the region comprising Visakhapatnam, East Godavari, Srikakulam and Vizianagaram would grow very fast after the bifurcation of the State and the bank had therefore set up a regional office. The mid-corporate branch would sanction loans ranging from Rs. 5 crore to Rs. 100 crore.

Prasad said the bank had decided to open five new branches shortly in the region, having at present 47 branches. The region as on date has a total business of Rs. 1,690 crore. A mid-corporate branch would be opened shortly at Guntur.

He said the bank, which had set up a branch in London, was planning to set up branches in Hong Kong, Dubai, South Africa and China to increase its overseas business.

Loan rescheduling: He said the bank would reschedule loans in the districts hit by Hudhud cyclone. Every effort would be made to help the industrial units hit by the cyclone. The scale of finance would be increased and there would also be deferment of payments. As part of its corporate social responsibility, the bank would adopt Ippili village in Srikakulam district.

Source : The Hindu
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RBL Bank to launch IPO in 9 months

RBL Bank, formerly known as Ratnakar Bank, plans to raise funds through an initial public offer which will hit the market in the next 8-9 months.

“We are preparing ourselves for the IPO and it may hit market in 8-9 months. It would not happen this fiscal but next calendar year,” RBL Bank Managing Director Vishwavir Ahuja told PTI.

The quantum of offer has not been finalised by the board of the bank, he said, adding that the decision will be taken in the next few months after taking into account various factors including Basel III requirement.

The bank has been able to build scale and size in the last four years so that it gets right valuation, he said.

The capital is required for the next phase of operation as the bank has already done with transformation stage, he said, adding it has got high technology and risk management system.

The bank services more than 6 lakh customers and has a total business size of over Rs. 26,000 crore. As of September total deposits were Rs. 12,000 crore while advances stood at Rs. 14,000 crore.

The bank posted a net profit of Rs. 87 crore for six months ended September 2014, while for the entire 2013-14 the profit stood at Rs. 93 crore.

“So we have almost matched the net profit of the last fiscal in the first two quarters of the current financial year,” he said.

It got capital support of about Rs. 1,500 crore from global and domestic investors in the last three years.

The bank had raised Rs. 328 crore from a group of global investors, including CDC Group and Asia Capital and Advisors in April 2014.

Existing investors, including International Finance Corporation (IFC) and Gaja Capital, also participated in the capital infusion.

Last year, the bank acquired some assets of Royal Bank of Scotland Group (RBS), including the UK bank’s mortgages, credit card and loan—against—property portfolios.

Source : The Hindu
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Central Bank turns around, posts Q2 net profit of Rs. 103 cr

Central Bank of India has turned around to report a net profit of Rs. 103 crore in the second quarter ended September 30, 2014, against a loss of Rs. 1,509 crore in the year-ago period.

The public sector bank reported a 27 per cent rise in net interest income at Rs. 1,828 crore (Rs 1,434 crore in the year-ago period).

Other income nudged up 7 per cent to Rs. 403 crore (Rs 378 crore).

Year-on-year, bad loans nudged down Rs. 123 crore to Rs. 11,440 crore as at September-end 2014 as against Rs. 11,563 crore as at September-end 2013.​ 

Source : The Hindu
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Syndicate Bank to open two new regions in Telangana, AP

Syndicate Bank will be adding two regions to its network in Telangana and Andhra Pradesh for better reach in the two States post the recent bifurcation.

``These two regions will be opened next year and we are targeting a total business of Rs. 45,000 crore for March 2015 from both States,’’ M Anjaneya Prasad, Executive Director, Syndicate Bank, told newspersons here.

As on September 30, 2014, total business in both States stood at Rs. 38,095 crore, of which deposits were Rs. 17,528 crore and advances Rs. 20,567 crore.

The number of new accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMDJY) in both States stood at Rs. 3.79 lakh at the end of September, he added.

Source : The Hindu
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Corporation Bank net profit zooms

Corporation Bank recorded a net profit of Rs 160.51 crore in the second quarter of 2014-15 as against a net profit of Rs 15.48 crore in the corresponding period of the previous fiscal, registering a growth of 937 per cent.

Addressing presspersons here on Friday, SR Bansal, Chairman and Managing Director of Corporation Bank, said that issues such as reducing operational expenses, manpower rationalisation, and space audits have contributed. The bank registered this growth by “avoiding the avoidable expenses,” he said. Explaining some of these measures, Bansal said operational expenses have come down from 19.99 per cent to 13.60 per cent during the period. The bank has a separate vertical to monitor operational expenses, he said.

Giving another example, Bansal said the rationalisation of manpower in security staff would help save around
Rs 22.79 crore annually.

Space audit

Stating that the bank had done a space audit, he said it had maximum area per branch in the country. Many rental agreements were renegotiated.

He said earlier 10.54 lakh customers of the bank were using the ATMs of other banks.

“Now 1.33 lakh customers of other banks are using our ATMs. This is also helping us,” he said. Corporation Bank has 2,746 ATMs.

Asset restructuring

During the quarter, gross NPAs increased to 4.45 per cent (3.17 per cent), and the net NPAs to 2.92 per cent (2.20 per cent). The bank did not sell NPAs to ARCs (asset reconstruction companies) at ‘throwaway’ prices.

The bank also did not go in for technical write-offs to reduce gross NPAs. The bank has made efforts to persuade the borrowers and recover more, he said.

NPA recoveries

During the second quarter of 2014-15, NPA recoveries of the bank stood at
Rs 182.93 crore (Rs 107.33 crore), and upgradation of NPAs at Rs 244.67 crore (Rs 104.71 crore). Net interest income was at Rs 983.10 crore (Rs 909.87 crore), and non-interest income at Rs 288.94 crore (Rs 339.66 crore).

On Friday, the Corporation Bank scrip closed at
Rs 336.60 on the BSE, down 0.16 per cent, against the previous close of Rs 337.15.

Source : The Hindu
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RBI not ready to cut rates despite inflation dip

Inflation may be down, but the RBI is not in a hurry to lower interest rates.

According to Reserve Bank of India Deputy Governor HR Khan, structural issues such as high input costs, rising wages, and elevated food prices were complicating the fight against price rise. Rural areas faced supply chain issues too, he said at a CFO summit organised by the CII.

The Deputy Governor’s comments, though coming in the backdrop of the consumer price index inflation for September hitting a near three-year low of 6.46 per cent, can be interpreted to mean that the RBI is not ready to cut the key policy, or the repo, rate at which the central bank provides short-term funds to banks.

The fifth bi-monthly monetary policy review is scheduled for December 2. The central bank has kept the repo rate unchanged at 8 per cent in the last four policy reviews, beginning April 1, fending off pressures from India Inc. The RBI has blamed high and persistent inflation for its reluctance to oblige.

With international crude prices softening and a relative stability in the foreign exchange market, upside risks to inflation are definitely receding.

However, the RBI warned that there are risks from food price shocks as the full effects of the monsoon are yet to unfold, and from geopolitical developments.

In its fourth bi-monthly monetary policy statement, the RBI had said inflation has ebbed to levels consistent with the desired near-term glide path of disinflation — 8 per cent by January 2015. But playing down the demands of a rate cut, RBI Governor Raghuram Rajan had in August said: “Let’s fight the anti-inflation fight once and let’s win; that will create the best conditions for sustainable growth.”

PTI adds: Stating that he is “chastened” by the massive jump in foreign investments by India Inc, Khan chided corporations for not doing enough research before taking their decisions, as many had had to exit such investments in distress.

“You’ve gone without proper research, due diligence and adequate planning. So you now see a large-scale disinvestments of such assets happening,” he said.

Reeling out data pointing to a rise in outward FDI (foreign direct investment) in the last four years, Khan said he was a “champion” of the phenomenon, but is now “slightly chastened” by the experience.

Source : The Hindu
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Bank of Maharashtra net surges

Robust cash recoveries and upgradation of assets helped Bank of Maharashtra log a 247 per cent jump in net profit in the second quarter ended September 30, 2014.

The bank recorded a net profit of Rs 163 crore , compared with
Rs 47 crore in the year-ago period.

The bank made cash recoveries of
Rs 217.51 crore (Rs 89.15 crore in the year-ago period). It saw upgradation in assets of Rs 425.92 crore (Rs 118.61 crore). Net interest income (the difference between interest earned and expended) was up 13 per cent at Rs 992 crore (Rs 876 crore).

Non-interest income, which includes profit from the sale of investments and recovery in written-off accounts, rose 21 per cent to
Rs 222 crore (Rs 183 crore).

Sushil Muhnot, Chairman and Managing Director, said the bank is in a consolidation mode, whereby it has de-grown the corporate loan book and stepped up loans to the retail, agriculture and MSE segments.

The bank is focusing on high-yielding loans and is also shedding high-cost deposits, he added.

Though the bank managed to make handsome recoveries, the net rise in NPAs, post-reduction in bad loans, was
Rs 589 crore.

Muhnot said his bank will mop up about
Rs 500 crore by issuing Basel III-compliant additional Tier I bonds in the next couple of months.

Source : The Hindu
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Bank of Baroda maintains asset quality

Bank of Baroda’s net profit fell 5.5 per cent in the September quarter, despite 17.5 per cent growth in its net interest income. This was due to higher tax provisions.

This is the fourth consecutive quarter when BOB has been able to expand its net interest income. The bank has also been able to improve its asset quality over the last five quarters, with lower slippages to bad loans and lower addition to restructured loans.

In the last few quarters, Bank of Baroda (BOB), cautious of the slowing economy, has been focussing on asset quality and profitability, rather than on expanding its loan book aggressively. During the September quarter, the bank’s loan book grew a slower 13.5 per cent (18.8 per cent in the June quarter). Primarily a corporate lender, the bank has been focusing on higher growth segments, such as retail and SME, which have grown 15.8 per cent and 13.5 per cent, respectively, during the September quarter.

BOB is among the few public sector banks to have contained slippages and additions to restructured assets. During the September quarter, fresh slippages were Rs 1,758 crore, down from
Rs 1,863 crore last year. Similarly, additional restructuring is down to Rs 1,175Rs crore from Rs 1,637 crore during the same period last year. Total stressed assets (bad loans plus restructured assets) were about 9 per cent of the loan book. This is better than most other PSU banks, whose stressed assets are at about 11 per cent of loans.

BOB’s retail focus has led to a strong retail deposit base. The bank has been shedding high-cost deposits to reduce the cost of funds. From
Rs 11,792 crore as on March 2014, high-cost deposits fell to Rs 9,460 crore as on September 2014. This has improved BOB’s net interest margin in the last year to 2.4 per cent during the September quarter from 2.3 per cent in the year-ago period.

Source : The Hindu
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Syndicate Bank Q2 net down 33% at Rs. 315 cr; to raise Rs. 1,100 cr through QIP

Syndicate Bank's net profit declined 33 pc at Rs. 316 crore in the second quarter ended September 30, 2014 compared to Rs. 470 cr in the corresponding quarter last year.

The decrease in net profit was mainly on account of higher provisioning at Rs. 537 crore.

"Actually, there was good growth of operating profit at 18 per cent. But movement of non performing assets resulted in higher rovisioning", M. Anjaneya Prasad, Executive Director, Syndicate Bank said here on Friday.

Though the Gross NPAs and Net NPAs had gone up to 3.43 per cent (2.88 per cent) and 2.20 per cent (1.66 per cent) espectively, they were lowest among the banks, he said.

The NPA increase was mainly from textiles, paper industry and hotel industry, among others.

The net interest margin decreased to 2.96 per cent (3.38 per cent).

The net interest income was almost flat at Rs. 1,422 cr (Rs 1,411 cr). The total business of the bank crossed Rs. 4 lakh cr.


The bank had received approval to go for Qualified Institutional Placement (QIP) to raise Rs. 1,100 crore capital besides Rs. 500 crore by tier II bonds. "This will be done by December this year, " the ED said.

The total headroom available for bank now is Rs. 3,250 cr. The Government stake in bank is 67.39 per cent.

The Capital Adequacy ratio (Basel III) stood at 10.42 per cent (11.58 per cent) last year.

Source : The Hindu
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Vijaya Bank Q2 net up 5.53% to Rs143.75 cr

Vijaya Bank has reported a 5.53 per cent increase in net profit for the September quarter at Rs. 143.75 crore on higher income. The bank had reported a net profit of Rs. 136.22 crore in September quarter last fiscal.

Total income for the September quarter this financial year was up 15 per cent to Rs. 3,253.75 crore. Interest income grew 11 per cent while the income on investments rose 28 per cent to Rs. 838 crore. The net interest income, the difference between the interest earned and expended, fell marginally to Rs. 578.70 crore.

Vijaya Bank reported a 12 per cent rise in operating profit at Rs. 306.10 crore. Advances for the quarter increased by 9.95 per cent to Rs. 78,540 crore, while deposits grew a tad higher by 14 per cent to Rs. 1.07 lakh crore.

Priority sector advances were up 27 per cent while agri advances grew 16 per cent. The total retail advances increased 17 per cent to Rs. 16,974 crore, said Vijaya Bank Chairman and Managing Director, V. Kannan. Retail lending accounted for 21.61 per cent of the advances, while credit demand from corporates saw a decline. "There is hardly any demand for credit from corporate sector as no new greenfield or brownfield investments are happening," Kannan said.

Kannan said the bank saw fresh slippage of Rs. 731 crore during the quarter, of which Rs. 300 crore pertained to two accounts mainly in the telecom industry that had gone through restructuring.

Provisions for the non-performing assets (NPAs) grew 17 per cent to Rs. 139.28 crore. The gross NPAs increased by 13 per cent to Rs. 2,239 crore over the corresponding last quarter's Rs. 1,980 crore. The Gross NPA ratio edged up marginally to 2.85 per cent from 2.77 per cent in the corresponding previous quarter. Also, the net NPA ratio saw a marginal increase to 1.88 per cent from 1.75 per cent. The provision coverage ratio stood at 63.10 per cent.

The bank raised Rs. 500 crore through Tier II bonds during October. "We are planning to raise about Rs. 600 crore through a QIP issue some time during the January-March quarter," he added.

Source : The Hindu
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