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Friday, February 20, 2015

PSU bank unions threaten 4-day nation-wide strike from Feb 25

Public sector bank employee unions today threatened go on a four-day nation-wide strike beginning February 25 to press for their wage-related demands.

"Banks have been providing for a 15 per cent wage hike since November 2012. Thus, banks already have incorporated wage increase of 15 per cent into their accounting but their offering is 13 per cent only.

"This is not acceptable to employees who have been fulfilling all obligations including making Pradhan Mantri Jan Dhan Yojana a runaway success. This was accepted by the Prime Minister. Therefore, we have decided to stick to our strike call till our demands are met," United Forum of Bank Unions (UFBU) Convener M V Murali told PTI.

Ashwini Rana, General Secretary of National Organisation of Bank Workers, said bank employee unions have unanimously decided to go on a four-day strike from February 25-28.

Many banks including Bank of Baroda and Corporation Bank have already informed about the likely inconvenience to customers if strike materialises.

In a filing to the BSE, Corporation Bank said it has received a notice from the convener of UFBU consisting of nine National level unions--AIBEA, NCBE, BEFI, INBEF, NOBW, AIBOC, AIBOA, INBOC and NOBO--informing the decision to go on for a four days nation-wide strike from February 25-28 in support of their demands.

"A major section of the Bank's employees/officers belonging to the workmen unions/officers' association having allegiance to the above national level unions/organisations, may take part in the proposed 4 days strike from February 25, 2015 to February 28, 2015 and indefinite strike from March 16, 2015, if the strike materialises.

"In view of the above, it is likely that the normal functioning of our Branches and offices may get affected during the days the union has given the strike call," it said.

Earlier this month, Indian Banks' Association (IBA) had bettered its offer from 12.5 per cent to 13 per cent against unions demand of 19 per cent hike in wages.

"On suggestion of Chief Labour Commissioner, IBA agreed to hold negotiations with UFBU on February 23. In the meantime strike stands," All India Bank Employees Association General Secretary C H Venkatachalam said.

Source : Economic Times
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Banking sector to witness high attrition rate: RBI

With the banking sector being thrown open to niche as well as more private players, RBI deputy governor R Gandhi today warned the industry to brace for higher attrition, being already faced by highly unionized public sector lenders.

“We’ve been telling banks to expect people to hop from one institution to another. Old method of developing a cadre and expecting them to continue with you for life is going to change. Attrition is going to be the norm,” Gandhi said.

Addressing a seminar organised by the SEBI-managed National Institute for Securities Markets, at its upcoming campus at Patal Ganga near here, Gandhi said he foresees the demand for high specialisation rising in the banking space.

“It is going to be expertise-driven and niche. When expertise, knowledge and specialisation are in high demand, people will be hopping jobs,” he said.

However, he said RBI doesn’t have latest attrition levels in but added that it foresees a spike in demand for experienced hands with more new banks come up.


On inflation, which rose to 5.11 per cent in January, a tad above 5 per cent target set by RBI for 2016, Gandhi expressed confidence that low inflation will continue. “We are definitely going to have a low and stable inflation climate that will lead to low interest rate regime.”

He said that when low interest rate regime stays for long it leads to higher investor appetite. This spawns various new financial instruments, products and services that again increase demand for more expert hands in the market.

Non-performing assets

On the deteriorating NPAs levels, which as per ICRA are set to touch 5.7 per cent next fiscal due to the new CDR norms from April, Gandhi said RBI has been continuously saying that there can be more slippages in restructured accounts.

“We have been warning banks that they should be looking at the entire stressed assets and not just NPAs. That is why we have been paying attention not just on the declared NPAs but the total whole stressed accounts,” he added.

On how long the NPA issue is likely to haunt banks, he said “our expectation on growth is positive. Growth should help them to come out of this problem“.

When asked about allowing banks to convert debt into equities in highly leveraged and troubled companies, which the Governor had announced on the last policy day, he said the RBI is in discussions with the SEBI for the details.

“Recently, in the Companies Act also there was some tweaking to help this out. So we will finalise with the SEBI.

We are discussing with SEBI on the pricing part in particular.

SEBI has its own rules and the responsibilities to protect minority shareholders’ interest vis-a-vis bankers’ own requirement,” he said.

Source : Thehindubusinessline
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Thursday, February 19, 2015

IndusInd Bank to raise up to Rs. 2,000 cr via infra bonds

IndusInd Bank today announced that it will raise capital to the tune of Rs. 2,000 crore through long-term infrastructure bonds.

The mid-sized private bank informed the BSE: “The bank’s board of directors had, at its meeting held on January 13, 2015 approved the proposal for Issuance of long-term infrastructure bonds, and subordinated non-convertible debentures(NCDs)/bonds eligible to be included as Additional Tier 1 (AT 1) and Tier 2 (T2) capital of the bank up to Rs. 2,000 crore on private placement basis, as permissible under RBI guidelines.”

The approval of shareholders of the bank is proposed to be obtained by way of postal ballot.

In July last year, the Reserve Bank of India had allowed banks to raise long-term infrastructure bonds with a minimum maturity of seven years. "In order to provide liquidity to retail investors in such bonds, it has been decided that banks can extend loans to individuals against long-term bonds issued by them...," RBI said.

The board at the aforesaid meeting appointed Romesh Sobti, Managing Director & CEO, S V Zaregaonkar, Chief Financial Officer, and Haresh Gajwani, Company Secretary, as persons designated for conduct of the entire postal ballot process, the BSE filing said.

It has aso authorised Sobti for finalisation of terms and conditions for issuance of long-term bonds/NCDs to finalise the calendar of events with regards to postal ballot, to appoint various intermediaries, and to sign, execute and enter into agreements with the intermediaries, etc.

Shares of IndusInd Bank were trading at Rs. 854.85 per share, down by Rs. 9.80 (1.13 per cent) on the BSE.

Source : Thehindubusinessline
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Axis Bank to launch 'Burgundy' for HNI customers

Axis Bank will provide premium personalised banking services with dedicated managers to its affluent high net-worth individual (HNI) customers with preferential treatment with an intention to increase business from the segment.

The third largest private bank will launch ‘Burgundy’ to offer personalised end-to-end services across segments.

“The categorisation of this segment of clients will be entrepreneurs or self-employed people, senior salaried employees and small business owners. We are looking at a net salary credit of Rs. 3 lakh (per month) or an ARV (average relationship value) of Rs. 30 lakh across products,” Rajiv Anand, Group Executive and Head Retail Banking, Axis Bank, said.

The bank has 40,000 such HNI customers (of its total customer base of over 1.5 crore). “We expect to add about 100,000 (new customers) in about next 18 months.

At present, Axis Bank's total deposit base has a market share of 3.7 per cent. It is looking to increase the market share from the HNI segment alone to 3.7 per cent in the next 3-4 years, Anand said.

The bank will facilitate a certified and dedicated Burgundy relationship manager (RM) who has an average experience of eight years and will be an expert across services, including insurance, private wealth management, asset allocation, and equity management.

Around 230 RMs have already undergone a training for 30,000 manhours to provide services across 60 locations in Tier I and II regions.

“The people in this segment are rich on money but poor on time...We believe the affluent segment will grow much faster than the mass segment and therefore give them a differentiated product proposition,” Anand said.

The services will include Burgundy world debit card offering higher limits and better features, a complimentary personalised multi-currency forex card, flexible credit limits, preferential rates, and customised business solutions for business and capital raising requirements, among other services.

Axis Bank has also roped in film actress Deepika Padukone and her father and former badminton player Prakash Padukone for the new product.

Source : Thehindubusinessline
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Andhra Bank invokes Sarfaesi Act to recover loans from Agri Gold Projects

Andhra Bank has invoked the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act to recover over Rs. 100 crore loans from Agri Gold Projects Ltd.

A demand notice has been issued by Andhra Bank on February 16, 2015 to the Vijayawada-based company in this regard.

The company is engaged in the generation of electricity using biomass as fuels and execution of infrastructure projects. It has been availing credit facilities from Andhra Bank since 2009, including a corporate loan of Rs. 26 crore, working capital term loan of Rs. 65 crore and a short-term loan of Rs. 20 crore.

It has been given 60 days time to repay the loan failing which the bank could take the possession of securitised assets of Agri Gold, including its head office, to auction them.

Source : Thehindubusinessline
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IOB, Apollo Munich join hands to offer health, accident insurance

Indian Overseas Bank (IOB) and Apollo Munich Health Insurance today announced that they are joining hands to provide specialised health and personal accident products to Indian Overseas Bank customers. Through this arrangement, IOB will sell Apollo Munich’s products in over 3,350 branches across the country, the companies said in a release issued today.

Apollo Munich will offer customised products with a sum insured ranging from Rs. 3 lakh to Rs. 10 lakhs. IOB customers would be able to enjoy policies without any sub limits or co pay clauses, inbuilt accidental covers, etc. The health policy offers double sum insured with the same premium for claims related to listed critical illnesses up to Rs. 5 lakh and an annual health check-up benefit worth Rs. 3,500 for sum insured of Rs. 7.5 lakh to Rs. 10 lakh. The health policy will be handed over to the customer on the spot in the respective branches of IOB.

Indira Padmini, General Manager – Retail Banking and Marketing, Indian Overseas Bank said, "This partnership with Apollo Munich will provide our customers with innovative and specialised health insurance plans.”

Antony Jacob, CEO, Apollo Munich Health Insurance said, “By partnering with Indian Overseas Bank under Stand Alone Insurance model, we aim to deepen our reach across the country. We have designed customised products for Indian Overseas Bank customers according to their needs. I am confident that Apollo Munich’s association with the Indian Overseas Bank will enable the bank to offer well researched, unique and customer-friendly products to its customers.”

Source : Thehindubusinessline
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Wednesday, February 18, 2015

Government may infuse Rs 18000 crore in public sector banks next fiscal

The Centre may look to infuse about Rs 18,000 crore into public sector banks next fiscal, more than doubling the allocation from the current fiscal after a number of lenders expressed concerns over their fundraising ability due to lack of support from the government.

Since the beginning of this financial year, the government has provided an assistance of Rs 6,990 crore to nine of the 26 state-run banks on the basis of two new parameters of efficiency - return on equity (RoE) and return on assets (RoA). It had budgeted Rs 11,200 crore for capital infusion this fiscal.

"We expect that banks will be able to raise about Rs 80,000 crore through their public offers. This additional support will help the government retain its stake at 52% in all public sector banks," a government official said.

Finance minister Arun Jaitley is expected to make a reference in the upcoming budget to the banks looking to set up a holding company. "Each bank will set up a holding company to bring all of its financial subsidiaries, including insurance and investment bank arms, under the ambit," another government official said, adding that under the Basel-III capital adequacy norms, the provisioning requirement will be considerably higher if banks continue to hold direct stakes in their financial subsidiaries.

As per the finance ministry's estimates, there is a requirement to infuse Rs 2.4 lakh crore as equity in public sector banks to help them meet the Basel-III norms. Rating agency Moody's had earlier this week said that weaker state run banks with low capital levels and less ability to generate capital internally will have to rely on external capital infusions.
"This will be challenging given that even strong state-owned banks have found it difficult to access the equity capital markets. Thus, capital infusions from the government are currently the only way for these banks to improve their capital ratios," Moody's said. The government infusedRs 58,600 crore between 2011 and 2014 in the state owned banks. It has allowed staterun banks to raise equity subject to the condition that its stake remains 52% at least.

Earlier this year, at the banking retreat, 'Gyan Sangam,' the government had agreed to explore the idea of setting up a Bank Investment Company, which will look into the capitalisation needs of public sector banks.

The government is reviewing the possibilities, under which a non operating holding company can raise capital. "Various options such as issuing shares with differential voting rights, or non-voting shares with insertion of protective clauses to keep government's majority status are being looked at," a finance ministry official said.

Source : Economic Times
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Virtual form of RuPay card on anvil

After launching the RuPay debit card, National Payments Corp (NPCI) is set to come out with its virtual form in the next few months, a move that will give further push to smartphone—based transactions.

“We are planning to go for pilot of a virtual RuPay card over the next 4—5 months,” NPCI Managing Director and Chief Executive said here today.

NPCI is the nodal agency for all retail payment systems under the Jan Dhan scheme.

Under the virtual form, there will be no need of a physical card and a transaction can be done with the help of the 16—digit number alone.

The initiative will enable all account—holders send and receive money from their smartphones with a single identifier which may include the Aadhaar number, mobile number or virtual payment address without entering any bank account information.

Average value of the card payment system per head as on date was Rs. 1,500 and an average remittance stands at Rs. 2,500. Under the new virtual system, the amount would be much less and may include school fee and grocery payments, he said.

The proposed payments banks are likely to provide this virtual card facility from the beginning, Hota said. “The specifications standards are now available for payments banks and hence it is a great opportunity for them.”

Around Rs. 8,000 crore worth of transactions are taking place through IMPS (immediate payment service) per month. What we are doing now is just putting another extra layer on the already existing system so as to make transaction easier, Hota explained.

Currently, only around 20 per cent of the total transactions are happening through IMPS and hence NPCI is working on further simplification of the facility so as to make it more popular in future, he added.

Talking about authentication system for the virtual RuPay card, former Chairman of UIDAI Nandan Nilekani said “with everybody having cellphones, going forward the single— factor authentication can be the cellphone, replacing the physical cards.”

Source : Thehindubusinessline
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Yes Bank to raise Rs. 500 cr for green energy projects

Private sector lender Yes Bank said it will be raising Rs. 500 crore through issuance of “green infrastructure bonds”, which will be deployed to fund renewable energy and energy efficiency projects.

The bank claimed it is the first such issue in the country and the money will be used to fund solar power, wind power, biomass, and small hydel projects.

The bond will have a tenor of ten years, it said in a statement, adding the issue has already been launched.

The city-headquartered lender said it had made a commitment to fund 5,000 MW of renewable energy projects during the recent summit organised by the Government and added the proceeds from the issue will be used to fund the same.

In FY15, the bank has raised USD 1.2 billion through various transactions, including USD 500 million funding in May 2014, USD 422 million syndicated loan in October and USD 200 million loan from Asian Development Bank in December.

It said globally, a sum of USD 35 billion were raised by issuing such green bonds in 2014, while the market in the country is either non-existent or nascent.

Given the long term gestation of such projects, the bonds are useful in taking care of any potential asset liability mismatches, it said.

Source : Thehindubusinessline
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Brace for a four-day bank strike from February 25

The four-day strike by bank employees’ unions, scheduled to begin on February 25, in support of their demand for wage hike, will be the longest at the all-India level in the country’s banking history. And, together with a Sunday that follows the four-day strike, the entire banking sector, and hence most of the financial services industry, will be nearly shut for five days.

The strike, of course, will depend on the outcome of the tri-partite negotiations called by the Chief Labour Commissioner (CLC) to be held on February 20 in New Delhi. However, the employees’ unions are not enamoured of the CLC-initiated negotiations between the United Forum of Bank Unions (UFBU) and the Indian Banks Association.

“We do not expect a positive outcome at the February 20 talks,” MV Murali, convenor of the nine-union UFBU, told BusinessLine.

He added that the UFBU had twice postponed the proposed four-day strike by assuring the IBA negotiating team that substantial increase would be made in their offer. But UFBU, which had, ‘as a gesture of goodwill,’ put off of the strike, had been badly let down, Murali said. “This time if we do not get a concrete and substantial offer from the IBA side, all the unions in the banking industry are going on the long strike,” he said.

RBI and NABARD unions will be on strike on February 26, while the unions of Gramin Banks will join the four-day strike.

Murali said that over the past two years, several rounds of negotiations on arriving at a five-year wage agreement had been held, but the IBA had so far made only a 13 per cent increase in the monthly wages. Nearly one million bank employees, both in the public and private sectors, had stayed cool this long awaiting a fair agreement. But, the IBA had let them down, Murali alleged.

The four-day strike scheduled for last month had been put off on the assurance of a substantial hike in the offer, and hence a possible successful end to the wage negotiations process, but the IBA had only offered to raise the offer from 12.5 per cent to 13 per cent. The entire bank staff had felt let down. Murali noted that the unions had initially asked for a 25 per cent wage increase, but had come down to 19.5 per cent.

He said the four-day strike would be followed by an indefinite all-India strike starting from March 16.

Source : Thehindubusinessline
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Andhra Bank plans Rs. 120 cr pref shares to Govt

Andhra Bank will consider issue of equity shares by way of preferential allotment to Government of India to the tune of Rs. 120 crore.

The bank proposes to issue and allot 1,32, 31, 888 equity shares of face value of Rs. 10 each at a premium of Rs. 80.69 per share to Government of India after obtaining the approval of shareholders of the bank at the ensuing Extraordinary General Meeting to be held on March 12, 2015 in Hyderabad.

In a regulatory filing with BSE, Andhra Bank has mentioned that the issue of allotment of equity shares to Government on preferential basis would be taken up as an additional agenda during the EGM.

The Bank also proposes to secure nod from the shareholders for election of three Directors from amongst the shareholders of the Bank other than the Central Government.

The Bank has fixed February 10, 2015 as the relevant date for determination of the issue of price. The issue price has been arrived at Rs. 90.69 as per SEBI regulations.

Source : Thehindubusinessline
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Deutsche Bank eyes slimmed-down universal bank model

Deutsche Bank is focusing on plans for a slimmed-down universal bank as part of the management's strategic review where the group remains internationally engaged in most of its current activities but pulls out of unprofitable regions and business lines, newspaper Handelsblatt reported on Monday.

The bank would shut operations abroad that contribute little to the bottom line, the paper wrote, citing unnamed sources.

The bank "doesn't have to do everything worldwide," Handelsblatt reported, citing an unnamed company source.

The bank is considering unveiling the new plan, possibly one of the biggest overhauls in decades, on March 20, the paper wrote.

A spokesman was not immediately available for comment on Monday.

Deutsche Bank is reviewing its universal banking model which sees it selling everything from home loans in Wuppertal to equity derivatives in New York to see if hiving off parts of the group, such as its Postbank branch network, would boost profits.

Source : Thehindubusinessline
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