SBI cuts term deposit rates

Easy liquidity has prompted State Bank of India to cut retail term deposit rates by 25 basis points in select maturities.

The country’s biggest banker State Bank of India (SBI) has cut the retail term deposit rates for deposits below Rs. 1 crore with effect from Monday, December 8.

The bank has revised the rates only for a tenure of one year and above, leaving the short-term deposit rates untouched.

In its filings to the stock exchanges, SBI said that the interest rates for deposits of 1 year and above will be reduced by 25 basis points (0.25 per cent per annum). While the rates for deposits of 1 year to less than 3 years and 3 years to less than 5 years are reduced from 8.75 per cent to 8.50 per cent, for deposits of 5 years and above, the new rate would be 8.25 per cent against 8.5 per cent at present.

However, the interest rates for short-term deposits of 7 days up to 1 year in different terms remain untouched. Rates for deposits of 7 days to 45 days (5 per cent), 46 days to 179 days (7 per cent), 180 days to 210 days (7.25 per cent) and 211 days to less than one year (7.50 per cent) would remain unchanged.

The bank’s action comes in the wake of growing chorus for cut in interest rates as global oil prices are tumbling and as inflation remains under check.

Shares of SBI (face value Rs1) are trading at Rs319.10, down by Rs1.15, on the BSE.

In the last few days, ICICI Bank and HDFC Bank have cut retail term deposit rates by 25-50 basis points in select maturities. 


Source : Thehindubusinessline

Read more »

ICICI Bank sells Russian subsidiary to Sovcombank

The board of country’s largest private sector lender ICICI Bank on Friday approved sale of the bank’s shareholding in its Russian subsidiary ICICI Bank Eurasia, to a third party Sovcombank.

“ICICI Bank Ltd has informed BSE that the Board of Directors of the Bank at its meeting held on December 05, 2014, approved a proposal for the sale of ICICI Bank’s shareholding in ICICI Bank Eurasia Limited Liability Company (IBEL), a non-material wholly-owned banking subsidiary in Russia, to Sovcombank, an unrelated third party Russian bank,” ICICI Bank said in a release to the Bombay Stock Exchange.

At September 30, 2014, ICICI Bank Eurasia had total assets of Russian Ruble (RUB) 4.5 billion (about Rs. 500 crore) and paid-up equity capital of RUB 1.6 billion (about Rs. 185 crore). Its profit after tax in the six months ended September 30, 2014 was RUB 28 million (Rs 3.2 crore).

ICICI Bank Eurasia accounted for less than 0.1 per cent of ICICI Bank’s consolidated total assets at that date and consolidated profit after tax for the period, the BSE release said.

The sale is subject to execution of definitive agreements and regulatory approvals. The purchase price will be determined on the transaction completion date based on the financial statements of IBEL at that date. The transaction is expected to conclude by the end of the financial year.

Shares of ICICI bank ended at Rs. 359.45 per share, weaker by Rs. 2.40 (0.66 per cent) over the previous close on BSE.


Source : Thehindubusinessline

Read more »

HDFC Bank to cut lending rate by March: Aditya Puri

Having cut its deposit offering by up to 0.50 per cent, the country’s second-largest private sector lender HDFC Bank will be cutting its lending rate by March, a top official said today.

“Now I’ve reduced my fixed deposit rates, and you will see by March or so base rate will come down,” the bank’s Managing Director Aditya Puri told PTI after launching a blood donation drive.

Puri said the base rate or the minimum rate of lending is computed on the cost of deposits and the bank cannot cut its lending rate unless the deposit rate comes down.

Once the cost of deposits come down, following the December 1 cut in short-term deposits of up to one year maturities, the bank will pass on the benefit to borrowers, he added.

The bank’s base rate currently stands at 10 per cent and the last movement in it was in November last year, when it was hiked by 0.20 per cent.

The bank cut the deposit rates by 0.25 to 0.50 per cent in various buckets ranging from 49 days to less than a year deposits, attributing it to low credit pick-up, drop in money market rates and competitor’s moves.

On Tuesday, Reserve Bank Governor Raghuram Rajan had rued the fact that banks are not passing the benefits of the declining rates environment to the borrowers, saying the policy measures are not getting transmitted as desired.

Puri today said that policy transmission has happened as the banks have cut rates in different offerings such as car loans, where banks have reduced their spreads, but added that it does not reflect in the base rate due to deposit rates.

“Already interest rates have gone down in the market, whether it is car loans or term loans. Monetary transmission with or without reduction in policy rates has already happened,” he said.

Puri said Rajan’s stance has been dovish, which comforts the banking system and added that the RBI Governor should unleash a 0.50 per cent cut in the next policy.

“His statement is also dovish, saying that once he can see stability in the benignness of inflation, you can expect a cut. Let’s hope that the cut is a meaningful one at 50 basis points since he didn’t do it this time,” Puri said.

HDFC Bank today started a single-day blood donation drive at 2,000 locations across the country simultaneously. Last year, it had collected 67,000 units of blood in a similar drive and is targeting the same to go up to 1 lakh this year, Puri said. 


Source : Thehindubusinessline

Read more »

Federal Bank cover for students

Federal Bank has tied up with Kotak Life Insurance for the launch of a student insurance scheme. Called Vidya Suraksha, the scheme provides life cover for students who have taken education loans. It gives insurance protection to the extent of loan liability of a student in event of death. It is a single-premium policy and the premium will be funded by the bank.


Source : Thehindubusinessline

Read more »

Bank services in Bihar hit due to strike

Banking operations in Bihar was hit today after Public Sector bank employees in the state joined the relay strike call given by United Forum of Bank Unions (UFBU) for early signing of wage accord.

According to general secretary of Bihar Bank Employees Federation, J P Dixit, around 7,200 bank branches in the state remained closed and a majority of 4,878 ATMs stopped working after their cash got over.

“The strike has been total. It is a mark of unity across the banks and has instilled hope and enthusiasm among the employees that their wage revision will be taken seriously by the government and other agencies,” Dixit told PTI.

Bank employees converged at their branches and shouted slogans in support of their demands. They also demanded regularisation of the services of contractual and daily wages workers.

Hundreds of bank employees staged a dharna at SBI Local Head Office in the state capital. It was led by Shaligram Sharma, the President of SBI wing of All India Bank Employees Association (AIBEA).

Sharma said the bank employees’ wages are revised every five years, but the latest one is due since November 1, 2012. The last wage revision was done in 2007.

SBI Staff Association General Secretary Umesh Prasad Singh pointed out that there have been 13 round talks on the issue and they have come to a naught so far.

BI Officers Association President Kamlesh Kumar Singh said the strike has been conducted peacefully at all the bank branches.


Source : Thehindubusinessline

Read more »

Axis Bank raises Rs. 5,700 cr through infra bonds

Country’s third largest private sector lender, Axis Bank raised Rs. 5,705 crore by issuing long term infrastructure bonds for a 10-year period.

The senior unsecured redeemable non-convertible debenture issue was priced at 8.85% p.a. (fixed coupon) payable annually maturing on December 05, 2024. The NCD’s are rated AAA by CRISIL & ICRA. The NCDs shall be allotted to eligible investors on December 05, 2014, Axis Bank said in a statement.

It’s the highest amount a bank has raised by selling such bonds, which were issued under the new RBI guidelines for lending to infrastructure and affordable housing projects.

Axis Bank had taken approval from its board of directors to raise up to Rs. 6,000 crore by selling such bonds. The bonds opened for subscription on November 20 and closed on Wednesday.

Under a similar bond issue, ICICI Bank had raised Rs. 3,900 crore in September by selling 10-year bonds at an annualised yield of 9.25%.

The Axis Bank transaction saw investor participation from Life Insurance Corporation, International Finance Corporation, Washington (IFC-W) and other Pension, Provident Funds, Mutual Funds, Multilateral Financial Institutions, Foreign Financial Institutions (FII’s) and Insurance Companies. It is the single largest issue by any private sector issuer in recent times of Senior Unsecured Redeemable Non-Convertible Debentures, the statement said.

“The NCDs are issued in Rupee at a fixed coupon and the proceeds shall be utilised for enhancing long term resources for funding infrastructure and affordable housing,” Axis Bank said.

Sidharth Rath, President - Treasury, Business Banking & Capital Markets, Axis Bank said, “We are pleased to have received a very good response for the infrastructure bonds from the domestic as well as foreign investors. This issue was launched immediately after our recent international bond offering and generated a very good response...”

Earlier this year, RBI had allowed banks to raise funds by selling special long-term bonds that are exempt from cash reserve ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements. The funds raised are also exempt from priority-sector norms under which banks have to channel 40% of the loans to agriculture, small businesses and weaker sections of society, making the sale of these bonds attractive for banks that finance infrastructure projects.

With weak credit demand, most banks are waiting for a policy rate cut and sensing the market conditions before raising such bonds so as to get a better pricing.


Source : Thehindubusinessline

Read more »

RBI’s big mobile banking push

Next time when you call your bank, don’t be surprised to hear a recorded voice speak to you about the benefits of mobile banking. Or, when your driver or your maid goes to open a new bank account, tell them to be prepared for a sales pitch from the bank official on the benefits of mobile banking.

These are some of the suggestions made by the Reserve Bank of India to banks in order to push mobile banking in a big way.

According to the latest notification, the central bank has made suggestions to banks to push mobile banking to the new and the existing customer.


Source : Thehindubusinessline

Read more »

IRDA orders audit of Future Generali Life Insurance

The Insurance Regulatory and Development Authority (IRDA) has ordered an independent audit into some outsourcing transactions and payments made by Future Generali Life Insurance Company.

In an order issued here on Tuesday, IRDA Chairman TS Vijayan said the company had violated the guidelines on outsourcing activities issued by the regulator in February 2011.

The company had also paid Rs100-200 for a specific period of time to outsourced persons for organising some events.

Vijayan said the payments constituted 8-11 per cent of the operating expenses but the objectives of these agreements need to be examined.

Independent auditor

IRDA directed the audit be conducted by an independent auditor and completed within 90 days of his appointment and submit the action taken report to the authority. In a separate order, the regulator had imposed Rs15 lakh fine on Birla Sun Life Insurance Company Ltd for not paying adequate attention to settlement of maturity claims, selling a product by micro insurance agents in violation of norms, among others.


Source : Thehindubusinessline

Read more »

Bank unions on relay strike from tomorrow after talks fail

Banking services are likely to be affected for the next four days as employees of PSU banks plan to go on a zone-wise relay strike beginning with Southern region tomorrow, after wage revision talks failed here on monday.

The decision came after talks at a conciliation meeting called by the Deputy Chief Labour Commissioner of Mumbai, the Indian Banking Association (IBA) and the United Forum of Banking Unions (UFBU) failed. The UFBU represents about five workmen unions and four officers' associations.

Accordingly, the first phase of the relay strike would be held in Southern India tomorrow (December 2), followed by Northern India on December 3, Eastern India on December 4 and Western India on December 5.

"The government and the IBA want us to call off our strike and then participate in negotiations, which is not acceptable to us," UFBU's convener for Maharashtra Vishwas Utagi said.

"They are not serious about wage revisions and so we are going ahead with our relay strike," Utagi, who is also senior vice-president of the All India Bank Employees' Association said.

Bank unions, which have demanded an immediate wage revision, had observed a national one-day strike on November 12.

Besides wage revision, bank unions have also demanded a reduction in the number of working days of employees to five days from six days as well as regulated working hours for officers.

Banking sector wages and service conditions are governed by industry-level bipartite settlements signed between the IBA and unions.

The last bipartite settlement was signed on April 27, 2010 and was valid from November 1, 2007 to October 31, 2012. All banks which gave mandate to the IBA to negotiate on their behalf are parties to the settlement.


Source : Economic Times

Read more »

Kisan Vikas Patra: a re-launch with very few justifications

Despite some criticism and misgivings in certain quarters, the Government has decided to re-introduce the Kisan Vikas Patra (KVP), a savings instrument that was discontinued three years ago. Positioned as a savings instrument in line with other continuing ‘small savings schemes’ such as the Public Provident Fund (PPF) and the National Savings Certificates (NSCs), the new KVP, like its predecessor, has certain advantages as well as disadvantages over these. Most ordinary investors will compare the new KVP with bank deposits and other debt instruments.

Broad features of the new KVP

* Interest: 8.7 per cent.

* Tenure: eight years and four months (100 months).

* Investment doubles in 100 months.

* Minimum lock-in period two years and six months.

Liquidity

* Can be encashed in eight equal monthly instalments after the lock-in period

* Can be transferred to another person by endorsement and delivery

* Can also be given as collateral for loans by banks

* Minimum investment Rs. 1,000. Thereafter, in denominations of Rs. 5,000, Rs. 10,000 and Rs. 50,000. There is no maximum limit.

* Taxability: fully taxable

* Mode of investment: cash or cheque

* Know your customer (KYC) norms: PAN not required but identity/address proof required

* Will be sold initially through post offices across the country, but later through some Government-owned banks also

How does the new KVP fare?

Any investment proposition needs to be evaluated in terms of certain well-defined parameters. These include safety, security, yield or return, liquidity, accessibility, convenience and tax advantage. These parameters are relevant for any investment proposition whether debt or equity.

For convenience sake, the re-launched KVP can be compared on the one hand with the existing savings instruments, and with bank deposits on the other. In comparison to its previous version, the new KVP offers a 0.5 percentage point higher yield (8.7 versus 8.2). Investment under the old KVP doubled in eight years and seven months. In the new KVP, the doubling takes place in eight years and four months.

A comparison with a discontinued scheme is not particularly useful. In relation to the existing savings schemes, the yield on the new KVP is on a par with the PPF and the NSCs. It is equally safe. The Government would make it more easily available and also educate customers. Accessibility to the KVP should not be a problem.

Comparing with bank deposits

Taking three other relevant traits — liquidity, convenience and tax advantage — the new KVP is reasonably liquid. Investors can come out after the minimum lock-in period in eight equal instalments. The KVP can also be given as collateral. Unlike PPF and NSCs, the KVP does not have a tax advantage. Interest on it is fully taxable.

Bank deposits are superior to KVP in terms of returns — three-year fixed deposits offer 9 per cent and some banks even more. The argument that deposit rates are set to fall over the medium-term is no doubt valid, but one expects the banks to safeguard their depositors’ concerns by floating innovative schemes. It is also certain that the corporate bond market will revive and be a conduit for infrastructure finance. This will matter to senior citizens and others who want a fixed, steady return in the form of investment in infrastructure bonds. Bank deposits are liquid, absolutely secure and highly accessible to most middle-class investors. They have a minimum tax advantage — practically restricted to interest on savings accounts.

For those who have no access to banks, investment in KVP may be a worthwhile proposition. Having no tax concessions, the KVP as in investment is for those who do not pay taxes at all or are in the lower tax bracket.

The biggest advantage claimed for the KVP — indeed its USP — is that it is a bearer bond, transferable by endorsement and delivery. This confers unmatched anonymity to the holder of the instrument.

Policy perspective

But that precisely is its main drawback from a policy perspective. The earlier version was discontinued because it was suspected of being a conduit for laundering black money.

In the new KVP too, there is very little compliance of KYC norms that are routinely applied by banks, mutual funds and the like. In fact, it is the conviction that the onerous KYC norms are driving away bank customers at a time when household financial savings have dipped seriously, that seems to have prompted the Government to re-launch a new instrument with very few entry barriers, The Finance Minister has clarified that certain precautions will be taken for large investments in KVPs.

How that reflects on the new KVP’s success in terms of collections remains to be seen. Whatever way one looks the KVP has very few justifications beyond the obvious — mobilising funds by the Government at all costs.


Source : Thehindubusinessline

Read more »

Bhartiya Mahila Bank eyeing Rs. 1,000-cr deposit base by March-end

Bhartiya Mahila Bank (BMB), the country’s first all-women bank, today said that it is targeting a deposit base of Rs. 1,000 crore and advances of Rs. 800 crore by March-end this fiscal.

At present, the bank’s deposit base stands at over Rs. 300 crore and loans at Rs. 500 crore.

“As of today, our total business is at Rs. 825 crore. For this year, we are aiming advances of Rs. 800 crore and deposits at Rs. 1,000 crore,” BMB Chairman & Managing Director Usha Ananthasubramanian told reporters today after inaugurating its 35th branch here.

The branch, which was opened in Ghatkopar, Mumbai, is the third in Maharashtra. The bank would shortly open branches in Nagpur, Pune and Haridwar.

BMB is looking to increase its branch network to 80 by March 2015, which will also include 20 rural branches.

Ananthasubramanian said the bank’s focus would be on opening branches in tier II and tier III cities.

“We are also planning to roll out 50 offsite ATMs across the country by the end of this year,” she said.

The country’s first all-women bank was launched in November last year and is wholly owned by the government which had initially infused Rs. 1,000 crore in it.

Ananthasubramanian said the bank does not plan to raise any fund as the capital which it received from the government is sufficient to take care of its business currently.

Total employee strength of the bank is 300 and it will add another 120 by the end of this fiscal. It has one lakh customers, out of which 81 per cent are women.


Source : Thehindubusinessline

Read more »