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Friday, February 6, 2015

Dena Bank profit up 13% at Rs. 76.5 cr in Q3

State—run Dena Bank today posted 12.9 per cent growth in net profit to Rs. 76.5 crore for the third quarter ended December 31, 2014, despite surge in bad loans.

The bank’s net profit in the same quarter last year stood at Rs. 67.8 crore.

Total income has increased to Rs. 2,867.32 crore for the quarter from Rs. 2,662.80 crore for the quarter ended December 31, 2013, Dena Bank Chairman and Managing Director, Ashwani Kumar said here.

Gross NPAs as a percentage to total advances rose significantly to 5.61 per cent from 2.96 per cent in the same quarter a year ago.

Its net NPAs went up to 3.97 per cent from 2 per cent at the end of December 2013.

However, total provisions, excluding for income tax, declined to Rs. 241.33 crore as against Rs. 382.43 crore in the year—ago period.

During the quarter, total interest income has increased by 5.42 per cent to Rs. 2,671.11 crore from Rs. 2,533.84 crore in the same period a year ago.

Non—interest income was at Rs. 196.21 crore as compared to Rs. 128.96 crore, an increase of 52.15 per cent.

Bank effected cash recovery and upgradation of Rs. 274.24 crore compared to Rs. 312.16 crore in the corresponding quarter of previous year.

Total business of the bank rose to 1.82 lakh crore as compared to Rs. 1.65 lakh crore at the end of December 2013, a growth of 10.3 per cent.

The bank is targeting a business growth of 12—14 per cent in 2014—15 in line with the present trend in the banking industry, he said.

During the first three quarters of 2014—15, Dena Bank has recorded a decline of 43 per cent to Rs. 209.65 crore as against Rs. 364.38 crore in the year—ago period.

Total income during the period, however, increased to Rs. 8,577.12 crore to Rs. 8,028.42 crore in the same period a year ago.

Shares of the bank closed at Rs. 55.90 per unit, up 1.82 per cent on the BSE.

Source : Thehindubusinessline
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Punjab & Sind Bank profit down 42% at Rs. 58 cr in Q3

State-run Punjab & Sind Bank today posted a 42 per cent decline in net profit to Rs. 58 crore in the third quarter ended December 31, 2014.

The lender had earned a net profit of Rs. 100.1 crore in the October—December quarter of 2013—14.

Total income during the quarter increased to Rs. 2,266.34 crore as against Rs. 2,172.19 crore a year ago, Punjab & Sind Bank said in a filing to the BSE.

However, operating profit of the bank declined to Rs. 161.29 crore as against Rs. 190 crore in the year—ago period.

Gross NPAs as a percentage to total advances rose significantly to 5.01 per cent from 3.84 per cent in the same quarter a year ago.

Its net NPAs went up to 3.81 per cent from 2.68 per cent at the end of December 2013.

Gross NPA in absolute terms rose to Rs. 2,996.05 crore as compared to Rs. 2,195.76 crore.

Total provisions, excluding for income tax, rose to Rs. 104.93 crore as against Rs. 85.37 crore in the year—ago period.

Shares of the bank closed at Rs. 57.60 per unit, down 1.54 per cent on the BSE.

Source : Thehindubusinessline
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IDBI Bank Q3 net flat at Rs. 102.79 cr

Public sector IDBI Bank today reported a marginal decline in net profit at Rs. 102.79 crore for the October-December quarter of 2014-15.

The bank had a net profit of Rs. 103.96 crore in the third quarter of the 2013-14 fiscal.

Total income of the bank rose to Rs. 7,935.99 crore during the three-month period, from Rs. 7,149.88 crore in the corresponding period a year ago, the bank said in a statement.

The net non-performing assets (NPA) of the bank rose to 3.05 per cent of total advances, as against 2.93 per cent at the end of December 2013. The gross NPA stood at 5.94 per cent.

Interest income of the bank rose to Rs. 7,159 crore during the third quarter, from Rs. 6,617 crore in the same period a year ago.

Shares of IDBI Bank closed at Rs. 65.80, up 0.23 per cent over the previous close on the BSE.

Source : Thehindubusinessline
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Dena Bank Q3 net profit up 13%

Public sector lender Dena Bank reported a 13 per cent rise in net profit for the October to December period at Rs. 77 crore as against Rs. 68 crore in the year-ago period, helped by stronger non-interest income, lower provisions and stable loan growth. Sequentially, the profit increased 48 per cent from September quarter’s profit of Rs. 52 crore.

However, bad loans and net interest income worsened during the quarter.

During the quarter, net interest income declined by 8 per cent to Rs. 608 crore from Rs. 661 crore in the same quarter last year.

On the other hand, non-interest income jumped 52 per cent to Rs. 196 crore as compared to Rs. 129 crore in the same quarter last year.

Gross net performing assets (NPAs) worsened to 5.61 per cent (as a percentage of total advances) as on December 31, 2014 as compared to 2.96 per cent as on December 31, 2013. Net NPA ratio stood at 3.97 per cent.

Total advances of the bank grew to Rs. 75,356 crore as on December end, 2014, up 8 per cent from Rs. 69,895 crore as on December end 2013. Deposits increased by 11 per cent to Rs. 1.07 lakh crore.

Shares of Dena Bank ended at Rs. 55.90 per share, 1.82 per cent higher over its previous close on BSE.

Source : Thehindubusinessline
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Muthoot Fincorp’s first BC outlet

The first ‘business correspondent’ outlet born out of the tie up between YES Bank and Muthoot Fincorp has opened at North Paravur near here. Thomas Muthoot, Executive Director of Muthoot Fincorp, said that initially the NBFC would roll out two YES Bank products — YES Leap and YES Money. Under Leap, financial services such as credit savings and insurance will be offered to self-help groups through Muthoot’s branches. YES Money is a domestic remittance service.

Source : Thehindubusinessline
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Corp Bank extends bond issue date

Corporation Bank has extended the last date for issue of additional tier-I bonds of Rs.500 crore on private placement basis. The issue, which opened on January 20, was supposed to close on February 5. The deemed date of allotment was fixed for February 6. The bank informed the BSE that the period has since been extended to February 7, and the deemed date of allotment has accordingly been extended to February 9.

Source : Thehindubusinessline
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Thursday, February 5, 2015

UCO Bank net dips to Rs. 304 cr

Kolkata-based PSU lender UCO Bank saw a 3.50 per cent dip in net profit to Rs. 304 crore for the period ending October to December 2014. It had reported a net profit of Rs. 315 crore in the year-ago-period.

A jump in other income ( Rs. 660 crore) – because of treasury operations – compensated its losses in the corporate lending segment, Arun Kaul, Chairman and Managing Director, UCO Bank said.

Treasury and retail banking reported profit (before tax) to the tune of Rs. 728 crore and Rs. 146 crore: while corporate and wholesale banking segment reported a loss of Rs. 367 crore.

“The bank has been able to take advantage of market opportunities and benefited from strong treasury operations,” he said.

The company’s provisions moved up to Rs. 908 crore (from Rs. 812 crore in the year ago period).


UCO Bank’s gross non performing assets (NPA) slipped by 29 percent to Rs. 9,531 crore (Rs 7,446 cr) in the third quarter of this fiscal. Gross NPAs moved up to 6.50 per cent (from 5.20 per cent).

Net NPA stood at Rs. 6,051 crore, up by over 43 per cent ( Rs. 4,217 crore) on a Y-o-Y basis. The net NPA per cent was up 119 basis points at 4.25 percent.

According to Kaul, fresh slippages during the quarter stood at Rs. 2,758 crore of which restructured assets worth Rs. 1509 crore had turned bad.

The bank was unable to sale bad assets worth of nearly Rs. 1,500 crore to asset reconstruction companies. The CMD cited a change in sale norms for the failure.

Source : Thehindubusinessline
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SKS Microfinance completes securitisation worth Rs. 83 cr

SKS Microfinance Ltd has completed the fourth securitisation transaction in current financial year worth Rs. 83.32 crore.

With this, the total sum of securitisations completed during FY15 was Rs. 775.13 crore, the company informed Bombay Stock Exchange on Thursday.

The entire pool qualifies for priority sector treatment as per the Reserve Bank of India's priority sector lending guidelines.

The pool has been rated AA (SO) by a rating agency, signifying a `high degree of safety regarding timely servicing of financial obligations’, it added.

Source : Thehindubusinessline
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Exim Bank sells $500 m debt in overseas market at 2.87% coupon

The Exim Bank has raised $500 million in overseas debt by selling fixed rate unsecured senior notes at a coupon of 2.868 per cent for the 5.5-year dollar money.

The notes, which got an over-subscription of four times at $2 billion, are priced at 155 bps over the 5-year US treasury bill at a price of 99.404 to yield 2.868 per cent, Barclays, one of the merchant bankers to the deal, said here today, adding this is the lowest priced notes from the country since 2007.

The current issue is part of the Bank’s $6 billion medium term notes and will be listed on the Singapore Exchange.

Since the beginning of the year, three companies have raised over $3 billion in forex bond sales with Reliance Industries alone raising $1.75 billion in two tranches within a fortnight.

Today, HDFC Bank raised close to Rs. 8,000 crore by selling additional shares in the New York market through an ADR issue formed the part of the bank’s Rs. 10,500-crore fund raising plan with the rest being sold to domestic institutional investors.

Rating agencies Moody’s and S&P have assigned a Baa3 (stable) and BBB— (stable) ratings, respectively, to the issue.

Apart from Barclays, other joint book-runners to the issue include Citi and Standard Chartered.

The Exim Bank spokesman could not be reached for comments.

The transaction was announced yesterday at an initial price guidance of 175 bps over the US treasury.

The final order book stood at $2 billion from 150 orders, allowing Exim Bank to price their transaction at the tight end of the final price guidance at 2.868 per cent.

Barclays said geographically, 52 per cent were Europeans, 36 per cent Asians and 12 per cent offshore US investors.

The notes were distributed to high quality fixed income accounts with 47 per cent being fund managers, 27 per cent banks, 11 per cent each insurers and pension funds and central banks and sovereign wealth funds, and 4 per cent were private banks.

According to Barclays, this is the first issuance by a domestic lender this year.

Source : Thehindubusinessline
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UCO Bank to raise about Rs. 400 cr by selling shares to LIC

State-owned UCO Bank today said it will sell 6.08 crore share to LIC on preferential basis which may fetch about Rs. 400 crore to the bank.

The board of the bank at its meeting has approved a proposal for issue of 6.08 crore shares of Rs. 10 each to Life Insurance Corporation of India (LIC) on preferential basis at a price to be determined in accordance with SEBI regulation, UCO Bank said in a statement.

LIC currently holds 8.69 per cent stake in UCO Bank.

Following the fresh investment, stake of LIC would further go up by more than 5 per cent.

At the current market price, the bank would raise about Rs. 416 crore by allotting shares on preferential basis to LIC.

Shares of the bank closed at Rs. 68.35 per unit, down 5.66 per cent on the BSE.

Source : Thehindubusinessline
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IOB posts net loss of Rs. 516 cr in Q3 on higher provisioning

Indian Overseas Bank (IOB) today reported a net loss of Rs. 516.03 crore for the quarter ended December 2014 due to higher provisioning for bad loans.

The Chennai-based lender had earned a net profit of Rs. 75.07 crore in the October-December quarter of 2013-14.

IOB is the first public sector lender to post a loss during the quarter among banks which have announced their results.

The net loss is due to increased provisioning for domestic and overseas advances and also due to the bank’s conscious decision to contain its credit growth, IOB said in a statement.

The poor performance pulled the bank's share price down by nearly 10 per cent to Rs. 50.50 on the BSE after the numbers were announced.

Gross NPAs as a percentage of total advances rose to 8.12 per cent from 5.27 per cent in the same quarter a year ago.

Its net NPAs went up to 3.52 per cent from 3.24 per cent at the end of December 2013, IOB said in a statement.

Gross NPAs in absolute terms rose to Rs. 14,500.51 crore as compared to Rs. 9,168.08 crore at the end of December 2013.

As a result of this, total provisions, excluding for income-tax, rose to Rs. 1,183.04 crore as against Rs. 811.24 crore in the year-ago period.

However, the total income increased to Rs. 6,647.45 crore for the quarter ended December 31, 2014 from Rs. 6,190.26 crore in the same quarter last fiscal.

Operating profit also declined to Rs. 726.32 crore as against Rs. 960.73 crore in the year-ago period.

However, the net interest income improved marginally to Rs. 1,356.85 crore as compared to Rs. 1,344.45 crore in the same quarter a year ago.

The net interest margin stood at 2.05 per cent at the end of the third quarter.

During the first three quarters of 2013-14, IOB registered a net loss of Rs. 489.82 crore as against a profit of Rs. 333.41 crore in the year-ago period.

Total business, as on December 31, stood at Rs. 4,11,354 crore, as against Rs. 3,87,406 crore at the end of the third quarter of 2012-13, registering 6.18 per cent growth.

Source : Thehindubusinessline
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Allahabad Bank net profit halves to Rs. 164 cr

Net profit of public sector lender Allahabad Bank halved to nearly 164 crore for the third quarter (October-December) of this fiscal. It had reported a net profit of 325 crore during the corresponding quarter last year.

A slow growth in total income, operating profit along with increase in provisioning and tax expenses impacted the bottomline.

Operating profit saw a mere six per cent growth, while total income during the period grew 1.5 per cent to Rs. 5,387 crore.

Provisions for bad loans increased by nearly 15.6 percent year-on-year to Rs. 644 crore in the quarter ended December 2014. It stood at Rs. 557 crore during the year-ago period.

Interest earned during the quarter under review stood at Rs. 4,941 crore, a near 4 per cent rise, compared with Rs. 4,764 crore earned during the year-ago-period.

However, other income (non-interest income) declined by nearly 17.7 per cent to Rs. 446 crore from Rs. 542 crore.

Asset quality

Asset quality of the Kolkata-headquartered bank remained stable.

However, gross non-performing assets (NPA) stood at 5.46 per cent (Rs 8,012.42 crore) in Q3 of FY15. In the year-ago-period, it remained flat at 5.47 per cent.

Net NPAs, however, declined by 30 basis points year-on-year to 3.89 per cent in the third quarter of the current financial year 2014-15.

Capital adequacy ratio (as per Basel-III norms) of the bank was 10.02 per cent in Q3FY15 against 10.46 percent in the year-ago period.

Source : Thehindubusinessline
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Wednesday, February 4, 2015

Government may increase lock-in period for PPF; to offer higher interest rate for 20-year tenure

The government is likely to increase the lock-in period for Public Provident Fund (PPF) by at least two years, reports ET Now.

According to ET Now sources in the Finance Ministry, those who invest in PPF will be able to withdraw after 8 years, as against the current 6-year lock-in period. The government is also likely to increase the tenure of PPF from 15 years to 20 years.

"While it will be up to the saver to opt for either a 15-year or a 20-year saving period, the government will look to lure people with a higher interest rate for the 20-year tenure, under Section 80C," reported ET Now. "This implies that if the saver is willing to invest in PPF for 20 years, the subsequent tax benefit will be higher," the channel said.

According to ET Now, the government is considering this move in order to ensure a stable source of infrastructure funding.

Meanwhile the RBI has said that unbreakable high value fixed deposits will soon earn higher rate of interest. Depositors who place their savings with a bank earn differential rates of interest based on the size of deposit, less than Rs 1 crore and above Rs 1 crore, and the longer the period, the more the interest is. Additionally, deposits up to Rs 1 crore can be withdrawn prematurely, resulting in asset-liability mismatch.

To correct this skew between the interest earned on loans and that paid to depositors, the RBI has allowed banks to offer deposit schemes up to Rs 1 crore, which cannot be broken prematurely, so-called non-callable deposits, but which can attract different rates of interest. This opens the prospect of retail depositors, who opt for such deposits, to earn a slightly better rate of interest than on a deposit which can be broken, or a callable deposit.

At present, all deposits accepted from individuals and a Hindu Undivided Family of up to Rs 1 crore can be withdrawn prematurely, leading to asset-liability mismatches in banks.

The RBI's latest decision is one of the major steps in the direction of interest rate rules linked to deposits, after the central bank allowed banks to offer floating rates on deposits a decade ago. The central bank will issue detailed guidelines soon. Premature withdrawals make banks' asset-liability management difficult.

Source : Economic Times
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RBI's Rajan for raising savings limit beyond Rs 1.5 lakh for tax benefits

Days ahead of the Budget, Reserve Bank Governor Raghuram Rajan today pitched for increasing the tax exemption limit on financial investments by individuals from Rs 1.5 lakh a year.

Acknowledging that there was a Rs 50,000 increase in the limit in the last budget to Rs 1.5 lakh a year, he said benefits of this instrument have been lost over time as the limit was anchored at Rs 1 lakh for a long time.

"Remember the government increased the limit for tax benefit in savings by Rs 50,000 in the last budget. The question is -- is there room for more primarily because the real tax benefit has fallen over time because the limit was at Rs 1 lakh for a long time. Maybe what we have to do is increase that," Rajan said on a call with analysts.

Investments of up to Rs 1.50 lakh in Public Provident Fund, Provident Fund, New Pension Scheme, insurance policies and equity-linked saving schemes is deducted from the taxable income under Sec 80 C. This helps in financial savings.

It can be noted that the national savings rate has dipped to the 30 per cent level from a high of over 36.9 per cent in FY 2008.

Finance Minister Arun Jaitley, who increased the limit to Rs 1.5 lakh in his July 2014 budget, will be presenting the first full fiscal budget of the new Government on February 28.

Rajan said also that the RBI would like to see quality fiscal consolidation with a shift to capital spending rather than on mistargeted subsidies.

"A movement of spending from mistargeted or poorly targeted subsidies towards more capital investment would be a good move," he said, clarifying that the RBI is not against subsidies and there are sections which need to be given the benefits.

He said such a shift in spending will also help in inflation management as the supply side constraints will be removed with capital spending by the government.

The RBI had yesterday linked the future course of its policy action to fiscal consolidation.

Source : Economic Times
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Canara Bank net profit vaults 60% to Rs. 656 cr

State-run Canara Bank today reported 60.2 per cent increase in net profit at Rs. 655.92 crore for the quarter ended December despite an increase in bad loans.

The Bangalore-based lender had posted a net profit of Rs. 409.35 crore for the October-December quarter of 2013—14 fiscal.

The bank’s total income increased to Rs. 12,227.86 crore for the quarter under review from Rs. 10,935.29 crore in the year-ago period, Canara Bank said in a filing to the BSE.

As far as asset quality of the bank is concerned, gross NPAs as a percentage of total advances rose to 3.35 per cent from 2.79 per cent in the same quarter a year ago.

Its net NPAs went up to 2.42 per cent from 2.39 per cent at the end of December 2013.

Gross NPAs in absolute terms rose to Rs. 10,573.57 crore as compared to Rs. 8,073.92 crore at the end of December 2013.

However, total provisions, excluding for income tax, made during the third quarter of 2014—15 were Rs. 841.33 crore as against Rs. 1,051.51 crore in the year—ago period.

Operating profit increased to Rs. 1,797.30 crore as against Rs. 1,590.86 crore in the corresponding period.

During the first three quarters of 2014—15, Canara Bank posted 7.5 per cent decline in profit at Rs. 2,443.17 crore as compared to Rs. 2,641.73 crore in the year—ago period.

The bank’s total income for the nine month period in the current fiscal stood at Rs. 35,871.08 crore as compared to Rs. 31,870.65 crore in the same period of previous financial year.

Shares of Canara Bank were trading 2.71 per cent up at Rs. 450.70 per unit during afternoon session on the BSE.

Source : Thehindubusinessline
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Yes bank, UAE Exchange launch travel prepaid card

Global remittance provider UAE Exchange India tied up with private lender Yes Bank to launch ‘Go Cash’ prepaid travel.

"It is a multicurrency card which can be easily used at ATMs/POS & for online purchase around the globe," UAE Exchange said in a statement.

The maximum or minimum limit to the amount that can be carried on the card and the number of different currencies were not specified in the statement.

GO CASH pre-paid Travel card enables exchange rate lock facility, security and accessibility at minimum time with worldwide acceptance for purchases across millions of Master Card-approved outlets. Travel card acts as a safety machine and customers can be free from the fear of cash carrying enigma.

V. George Antony, MD, UAE Exchange said,” UAE Exchange India is consistently looking at ways in which we can make a difference in people’s lives. We believe in providing a differentiated value proposition to customers in sync with our customer centric approach. UAE Exchange India has always been at the forefront of customer-centric innovations and services. We are the market leaders in Foreign exchange business and by introducing such financial products we are going to address customer’s needs even better.”

Pralay Mondal, Senior Group President, Retail and Business Banking, Yes Bank, said, “This product is a next step towards us offering the best in class products to our valued customers. We are certain that our customers shall appreciate the unique features and convenience of this card.”

Customers can apply the card through an online application.

Source : Thehindubusinessline
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Syndicate Bank plans to raise Rs. 2,100 cr

Syndicate Bank is planning to raise Rs. 2,100 crore capital soon, according to its Executive Director, T K Srivastav.

Speaking to BusinessLine on the sidelines of a meeting with micro, small and medium enterprises (MSME) customers organised by the bank here on Tuesday, the official said that the proposed capital would be raised by way of tier I capital and bonds.

"`We are in the process of completing necessary approvals and the mobilisation of capital or part of it could happen before "the end of March this year,''’ he added.

On the likely impact of cut in statutory liquidity ratio from 22 per cent to 21.5 per cent by the Reserve Bank of India on Tuesday, he said it was a good indication for future.

For Syndicate Bank, however, the credit growth was 'good' at 17 per cent which was being driven largely by the retail and MSME segments.

A segmented approach with a special focus on a particular customer category each week is being followed for better focus. "We have been marketing special loans for doctors, textiles, transport operators, marble trading and women entrepreneurs, among others. Last month, we have disbursed Rs. 18,000 crore loans for women entrepreneurs,’’ Srivastav said.

On the asset quality front, Syndicate Bank does not see any immediate cause for alarm as it has gross and net non-performing assets of 3.42 per cent and 2.2 per cent, respectively at the end of second quarter of the current financial year.

"In the quarter ended December 2014, we will be almost in a similar situation,'' the official added. The board of directors of the bank will be meeting on February 10, 2015 to finalise the third quarter numbers.

Source : Thehindubusinessline
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Tuesday, February 3, 2015

HDFC Bank to raise Rs 10,000 crore this week via QIPs and ADRs: Sources

HDFC Bank, India's largest private sector lender by market capitalisation, is set to raise Rs 10,000 crore sometime this week through a combination of qualified institutional placements (QIPs) in the domestic market and a follow-on offering of American Depository Receipts (ADRs) in the US, two people familiar with the proposal told ET.

A successful issue would create a record of sorts with Indian companies raising more than Rs 32,000 crore in just a week. Last week, the government raised Rs 22,500 crore by selling a 10% stake in Coal India Limited as part of its disinvestment programme

On Monday, HDFC Bank rose marginally to close at Rs 1,082.30 on the Bombay Stock Exchange.

Is there that much appetite for Indian paper in the market? Yes, seems to be the answer.

"Though a substantial portion of the Coal India issue was subscribed by state-run financial institutions, foreign investors are extremely bullish to invest in quality Indian companies at the right price," said the managing director of a leading foreign bank's local unit, not wanting to be named. He's not part of the HDFC Bank transaction.

HDFC Bank to raise Rs 10,000 crore this week via QIPs and ADRs: Sources"This would possibly be one of the largest follow-on offerings from a private sector institution," he said. HDFC Bank is looking to enter the market at the earliest so that its plans are not complicated by the remainder of the government's fund-raising plan for the fiscal year. Given current indications, the government may launch another share sale any time this week or the next. "The government is fully ready to launch a 5% share sale in Power Finance Corp and Rural Electrification Corp any time. The PFC issue would be worthRs 1,900 crore while REC would be about Rs 1,600 crore," said the banker.

Last week, the Cabinet Committee on Economic Affairs cleared HDFC Bank's proposal to increase foreign ownership to the maximum permissible limit of 74% of total paid-up capital. The bank has been looking to raise Rs 10,000 crore for more than a year but delays in regulatory approvals have kept it from the market. Most of the money will be raised through overseas share sales, said one of the persons cited above

"Out of Rs 10,000 crore, the bank will raise 74% through ADRs in the US market and the balance amount will be raised from the domestic market through the QIP route," the person said. The bank's ADRs are listed on the New York Stock Exchange.

Foreign institutional investors (FIIs) won't be allowed to participate in the domestic issue "as it would result in breaching the sectoral cap", said the second person. In response to emailed queries, an HDFC Bank spokesperson referred ET to a clarification issued by it on Sunday to the stock exchanges. "The mode of capital raising, the timing and type of issuance, i.e. domestic or international, will be decided by the board of directors of the bank/special committee of the board at an appropriate time subject to receipt of necessary approvals, market conditions and other considerations," the statement read.

"This is all that we have on the matter at this juncture," the spokesperson added. The bank is waiting for the communication allowing the increase in foreign investment to 74%, said one of those aware of the plan. "The government has made the announcement but the bank is yet to receive a formal letter," said the person."Once the letter is received, the bank will simultaneously launch the QIP in the domestic market and the ADR issue in the US," the other person said.

"The aim is to launch the issue either on Wednesday or Thursday." After foreign ownership in HDFC Bank crossed 49%, the RBI stopped purchases of its stock by overseas investors in December 2013. Overseas investment up to this level is allowed in private banks through the automatic route and any subsequent increase has to be approved by the Foreign Investment Promotion Board. Subsequently, HDFC Bank moved a proposal to raise the overseas investment limit to 67.55% from 49% but this stalled after RBI, the Department of Industrial Policy & Promotion and the finance ministry's Department of Economic Affairs felt the overseas holding in the bank was already over the limit sought by the bank.

This stemmed from a 2009 foreign direct investment policy guideline that said investment by a company that's majority foreignowned or foreign-controlled in an Indian entity would be considered as foreign investment. This guideline made parent HDFC, which has more than 50% of its equity held by overseas investors, a foreign-owned company and its 22.5% stake in HDFC Bank was counted as an overseas investment.

Source : Economic Times
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Monetary Policy review: RBI leaves key rates unchanged; cuts SLR by 50 bps

As was widely expected, the Reserve Bank of India on Tuesday kept the repo rate (the interest rate at which it lends short-term funds to banks) unchanged at 7.75 per cent.

Given that there have been no substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it is appropriate for the Reserve Bank to await them and maintain the current interest rate stance, the RBI said in a statement.

The RBI had cut the rate on January 15, outside policy review cycle, from 8 per cent to 7.75 per cent.

In all likelihood, the central bank is awaiting cues on the fiscal consolidation front in the Budget, scheduled to be announced on February 28, before further embarking on rate cuts, say market experts.

SLR cut

To encourage banks to lend more, the central bank reduced the statutory liquidity ratio (SLR) -- the slice of deposits that banks necessarily have to invest in Government securities -- of scheduled commercial banks by 50 basis points from 22.0 per cent to 21.5 per cent of their deposits with effect from the fortnight beginning February 7, 2015.

The RBI said banks should use this headroom to increase their lending to productive sectors on competitive terms so as to support investment and growth.


Also, to help exports sector, which of late has been struggling following more headwinds in the global economy, the central bank has decided to replace export credit refinance facility with the provision of system level liquidity with effect from February 7.


The RBI Governor said: "We should not attribute stigma to an NPA. It just means it is not paying. Projects that are halted because of NPAs can be re-started by new loans."


​Looking ahead, inflation is likely to be around the target level of 6 per cent by January 2016. The baseline projection for growth using the old GDP base has been retained at 5.5 per cent for 2014-15.

The policy document took consolation in the declining trend and noted that even the upturn in December turned out to be muted relative to projections.

Rajan said: “The Reserve Bank will keenly monitor the revision in CPI, which will rebase the index to 2012 and incorporate a more representative consumption basket along with methodological improvements“.

Despite fiscal deficit touching 99 per cent by November, the Governor said he was confident that the Government will not miss the budgeted 4.1 per cent target.


The RBI Governor said that he was looking for developments including disinflationary trends and on the fiscal front with the Budget. "These are the the indicators we will look for. This includes low oil prices, that feeds into the disinflationary process, we also had stable exchange rate. So we will see how all these moves."

"What we have said is we are waiting for data, we are looking for Budget, inflation numbers, new GDP numbers. These are important pieces of information that we are waiting for which we will take into account."

Forex rates

Rajan said, "It's too early to say that exchange rate has played a role in export numbers. it would be wrong to say we are grossly uncompetitive. We do not intervene to target a particular level, what we do is intervene where there is volatility we have intervened both ways. We are perfectly comfortable where the rupee is but with quantitative easing going on there is a risk that we would become uncompetitive.

FII investments

The RBI said that it would not like to be seen as being against foreign investors. Therefore, foreign investors who have been patient and have been with us for long will be allowed to reinvest their coupons.

"When you reinvest, you reinvest in 3 years and above securities. Hopefully that alleviates some pressure on the corporate debt market," Rajan said.

Bank rates

The Governor said that while many have been quick to cut deposit rates, not many have cut lending rates. "Eventually, competition is what matters. It is their management which decides on rate cuts. It is not regulatory intervention." he said.

"A couple of banks have cut their base rates.... Others have been quick to cut their deposit rates. Banks at some point will have to revive lending. I am hopeful. It is a matter of time... competition will force them to pass through these cuts. Banks are now facing competition from money market. Over time transmission will take place."

Budget Indicators

Answering a question on what he was looking for in the Budget, the RBI Governor said, "There is lot of anticipation over the fiscal path. We are not locked into any specific number but it is about the overall package that will impact inflationary forces, which is what we are worried about. The Government has the intent of producing a solid Budget."

Surprise rate cut

On the surprise 25 bps rate cut on January 15, he said the decision was led by falling inflationary expectations and data on weak commodity prices and muted rural wage growth.

“Having committed in public statements to initiate a change in the monetary policy stance as soon as incoming data permitted, the Reserve Bank cut the policy rate on January 15,” he added.

Economic growth

Referring to economic growth, RBI said that though revision in the base year for GDP and calculation methods will mean some revision in GDP growth numbers for 2014-15 as well as in the forecasts, growth expectations should be tempered.

“Domestic activity is likely to have remained subdued in Q3 of 2014—15, mainly reflecting the shortfall in the kharif harvest relative to a year ago but agricultural growth is likely to pick up in Q4 with the late improvement in the north—east monsoon and in rabi sowing.

“Nevertheless, growth expectations should be tempered as lead indicators such as tractor and motorcycle sales and slowing rural wage growth all point to subdued rural demand,” RBI’s monetary policy document said.

However, it noted that there is improvement in business confidence as visible from a pick—up in new investment intentions, especially in transportation, power and manufacturing.

RBI estimated the current account deficit (CAD) for 2014— 15 at 1.3 per cent of the GDP, significantly lower than the earlier projection.

“The CAD has been comfortably financed by net capital inflows, mainly in the form of buoyant portfolio flows but also supported by foreign direct investment inflows and external commercial borrowings. Accordingly, there was accretion to India’s foreign exchange reserves to the tune of USD 6.8 billion in Q3,” RBI said.

(With additional inputs from PTI)

Source : Thehindubusinessline
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Bank wage talks end in stalemate

Not satisfied with the 0.5 per cent increase in the offer made by the Indian Banks' Association, the United Forum of Bank Unions (UFBU) has decided to revive the strike programme.

The All India Bank Employees Association (AIBEA) General Secretary C H Venkatachalam said that the unions have issued a strike call to its members for a four-day strike between February 25 and 28.

This is expected to be followed by an indefinite strike from March 16

Source : Thehindubusinessline
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Muthoot Fincorp is Business Correspondent for Yes Bank

Muthoot Fincorp, the flagship company of Muthoot Pappachan Group, on Tuesday launched its Business Correspondent operations in the country with Yes Bank.

The launch is pursuant to the agreement signed nearly two months ago between the two financial services providers after RBI gave its nod on allowing banks to appoint non-banking financial companies (NBFCs) as Business Correspondents.

Thomas Muthoot, Executive Director of Muthoot Fincorp told reporters that with this arrangement, MFL is set to become the country’s first NBFC in the gold loan space to act as a Business Correspondent to the bank.

Muthoot Fincorp rolled out its disbursement of funds for two of Yes Bank’s products -Yes Leap (Yes Livelihood Enhancement Action Programme) is the flagship product of the inclusive and Social Banking (ISB) division of Yes Bank.

Under this comprehensive financial services such as credit, savings and insurance to the self-help groups will be provided to customers of Yes Bank through branches of MFL. The ’Yes Money’ would help to provide seamless domestic remittance service to customers at reasonable fee.

Muthoot said the new services have been rolled out from one of their branches here. Ganesh Narayanan, President and RBL-Indian Financial Institutions, Yes Bank Ltd, said that in Tamil Nadu they have done a business of Rs. 150 crore with two partners in the last two years.

In Kerala, where Yes Bank has also partnered with Muthoot Finance ltd, was looking to roping in more partners. ‘We are not chasing any targets’, he said.

Yes Bank has 40 business correspondents across the country.

Source : Thehindubusinessline
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RBI receives 113 applications for niche bank licences

At final count, the Reserve Bank of India received 113 applications from aspirants to set up niche banks.

To be precise, the central bank received 72 applications for starting small finance banks and 41 for payment banks. The deadline for receipt of applications was February 2, 2015.

The central bank, in a statement, said the External Advisory Committees (EACs) for small finance banks and payments banks will be chaired by Usha Thorat, former Deputy Governor, Reserve Bank of India, and Dr. Nachiket Mor, Director, Central Board of the Reserve Bank, respectively.

On the one hand, the Reserve Bank of India has received applications from RIL, Aditya Birla Nuvo Ltd, Bharti Airtel and Vodafone. On the other, there are virtually unheard of aspirants such as Village Financial Services from Kolkata and ItzCash of Mumbai.

In some cases, the opportunity has spawned interesting partnerships. For instance, RIL, India’s largest private sector company, said it will promote a payments bank in which the State Bank of India, India’s largest bank, will be a joint venture partner with an equity investment of up to 30 per cent.

Aditya Birla Nuvo Ltd is in partnership with group company Idea Cellular Ltd. If selected, ABNL will hold 51 per cent equity in the payment bank called ‘Idea Payments Bank Limited’. ABNL failed to make the cut when it applied for a new bank licence in the private sector last year.

The Kishore Biyani-promoted Future Group too has applied for a payments bank licence. If the Group receives a licence then IDFC, which is in the midst of getting converted into a universal bank, may acquire a small equity stake in its payment bank.

Others who have applied for payments include Oxigen Services India Pvt Ltd, Paytm, Citrus Payments, Cholamandalam Investment and Finance Co, Telenor, Videocon Industries and Vakrangee Ltd.

As for small finance banks, there have been at least four applications — from SKS Microfinance, DHFL, IIFL Holdings Ltd (formerly India Infoline), and UAE Exchange.

Source : Thehindubusinessline
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PNB net inches up 2.5%

Delhi-based public sector bank, Punjab National Bank has reported a meagre 2.5 per cent growth in net profit for the three-month period ending December 31, 2014.

Net profit grew to Rs. 774.56 crore as against Rs. 755.41 crore in the corresponding period of fiscal 2013-14. The bank's bad debts (technically known as non-performing assets or NPA) also surged during the quarter. Its gross NPA as a percentage of total advances went up to 5.97 per cent from 5.65 per cent. Net NPA rose to 3.82 per cent from 3.26 per cent.

Net interest margin remained high at 3.21 per cent for the quarter ended December 2014.

The market showed its disappointment with the result as the bank’s share plummeted to Rs. 179.35 crore at 12.30 pm with a loss of over 6.5 per cent on Monday’s closing price.

Source : Thehindubusinessline
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SBI Life net profit jumps 43% to Rs. 156 cr in Dec quarter

SBI Life Insurance today announced a 43 per cent increase in net profit of Rs. 156 crore for the December quarter of FY 2014.

New business premium of the company grew by 25 per cent to Rs. 1,633 crore during this period as against Rs. 1,303 crore in the same period last year. The collection of renewal premiums recorded a growth of 33 per cent at Rs. 1,958 crore from Rs. 1,472 crore over the corresponding quarter last year.

Arijit Basu, Managing Director and CEO of SBI Life Insurance, said, “Our multi-channel distribution network continues to work well with bancassurance sales picking up steadily. We have taken up various measures to further improve our client servicing and quality of sales, including a pre-issuance welcome call that has been well received. We look forward to ending the last quarter of the year on a strong note.”

For the nine months ended December 31, 2014, new business premium rose 11 per cent to Rs. 3,362 crore, renewal premium was up 33 per cent to Rs. 4,402 crore and net profit rose 14 per cent to Rs. 615 crore.

Assets under management grew 23 per cent to Rs. 67,323 crore as on December 31, 2014. The company’s net worth stood at Rs. 3,980 crore, a growth of 32.5 per cent over last year.

The 13th month rolling persistency of the company was at 74.8 per cent.

Source : Thehindubusinessline
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Canara Bank’s Rs 1,500-cr bond issue

Canara Bank has decided to raise an additional Rs.1,500 crore through Tier I bonds. In a notice to the BSE on Monday, the bank said it plans to raise the amount through the issue of Basel-III complaint additional Tier-I perpetual bonds by way of private placement. The bank received ‘IND AA’ rating from India Ratings & Research and ‘AA Hybrid with Stable Outlook’ from ICRA for the proposed issue. Canara Bank shares ended 2.63 per cent higher at Rs.454.75 on the BSE on Monday. The bank will announce its third quarter results on Wednesday.

Source : Thehindubusinessline
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Bank of Maharashtra launches mobile banking app

Bank of Maharashtra has launched its new mobile banking application – MahaMobile in a bid to make banking simpler for customers.

“Designed to be intuitive and user friendly, MahaMobile App will enable the Bank’s customers to view all their deposit and loan accounts, do fund transfers, bill payments and raise a variety of service requests on their mobile anytime, anywhere,” the bank said in a statement.

Any Bank of Maharashtra customer with a debit card and registered mobile number can register for this facility without visiting the branch.

The launch is part of a series of customer initiatives by the public sector bank as part of Project Utkarsha –its Bank transformation program. Last month, it introduced 24x7 convenience lounges at select branches in Pune.

S. Muhnot, Chairman and Managing Director, Bank of Maharashtra, said, “Bank of Maharashtra has always believed in making banking simple for everyone and with smart phones and mobile internet becoming increasingly affordable in India, we offer yet another convenient channel for our customers to bank with us.”

Source : Thehindubusinessline
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