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Wednesday, September 30, 2015

Bank officers threaten nation-wide strike

Bank officers have threatened to go on a nation-wide strike over non-recall of a terminated employee of Thrissur, Kerala-based Dhanlaxmi Bank.

PV Mohanan, general secretary of the Dhanlaxmi Bank Officers Organisation (DBOO) and president of All-India Bank Officers Confederation (AIBOC), Kerala, was terminated on June 11 ‘without citing any reason.’


The Kerala unit of AIBOC observed a lightning strike the very next day, which was followed by a 33-day-long hunger strike by 1,200 members of the DBOO, union sources said here.

The Kerala government and the central trade unions intervened in the matter and held conciliatory meetings in July.

The bank management and DBOO/AIBOC reached an understanding on July 15 in the presence of Ramesh Chennithala, state home minister, and leaders of central trade union leaders.

As per this, the bank had to freeze the termination order and to conduct meetings with the unions to settle the matter within two months.


The employee on whom termination order was served would go on leave during this period. The officers association was also advised not to go for agitation during the period.

But the bank management has failed to keep its end up in the settled terms of agreement even after the lapse of these two months.

The freeze on the termination order has not been effected till date nor has salary been paid to the employee.

The unions accused of the management of avoiding bilateral discussions for normalising the situation despite repeated attempts made by them.

Source : Thehindubusinessline
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UCO Bank to reduce base rate by 25 bps to 9.7%

A day after the RBI announced a 50 basis points repo rate cut, Kolkata-based lender, UCO Bank, has said it will reduce the base rate by 25 basis points.

The base rate, which will come into effect from October 5, will be at 9.70 per cent, according to a notification to the bourses.

"The UCO Bank has informed the BSE that the bank has reduced its Base Rate by 25 basis points to 9.70 per cent with effect from October 05, 2015," it said in the notification.

Source : Thehindubusinessline
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Naina Lal Kidwai to step down as Chairperson of HSBC India

HSBC India Chairperson Naina Lal Kidwai will retire in December after a 13-year stint with the bank, HSBC said today.

"She will also step down from her position of executive Director on the Board of HSBC Asia-Pacific," HSBC said in a statement.

"During this period, she has served HSBC with distinction in a number of senior roles, and we wish her every success for the future," Peter Wong, Chief Executive of HSBC Asia-Pacific said.

Kidwai joined HSBC in 2002 as Vice Chairman and Managing Director at HSBC Securities and Capital Markets, India and was appointed Group General Manager of the Bank in 2006.

She took over as CEO of HSBC India in 2007 and as Chairman of HSBC India in 2009.

"Having reached retirement age, it is time for me to move to different pursuits. I intend to spend more time in the areas of women empowerment and water and sanitation where I have been engaged over the last decade in different capacities," Kidwai said.

Source : Economic Times
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State lenders PNB, BoB, OBC cut base rate by up to 0.40 per cent

State-run lenders Punjab National Bank, Bank of Baroda and Oriental Bank of Commerce have trimmed their base or minimum lending rates by up to 0.40 per cent in response to RBI's policy rate cut.

Punjab National Bank (PNB) cut the base rate by 0.40 per cent, Bank of Baroda (BoB) by 0.25 per cent, while Oriental Bank of Commerce (OBC) slashed the rate by 0.20 per cent.

"Base rate cut by 40 bps from 10 per cent to 9.60 per cent from October 1," PNB said in a statement.

In a BSE filing BoB said it has decided "to reduce base rate by 25 basis points from 9.90 per cent per annum to 9.65 per cent."

It also reduced the Benchmark Prime Lending Rate (BPLR) by 25 basis points (or 0.25 per cent) from 14.15 per cent to 13.90 per cent.

The reduction in both the rates will be effective from October 5, the lender added.

"Oriental Bank of Commerce has slashed its base rate by 20 basis points from 9.90 per cent per annum to 9.70 per cent with effect from September 30, 2015," it said in a filing.

Earlier today, Axis Bank -- first among private lenders after RBI's policy announcement yesterday -- announced a cut of 0.35 per cent in base rate to 9.50 per cent.

The base rate is the minimum rate of interest at which a bank can lend to its borrowers.

Country's largest lender State Bank of India, Andhra Bank and Bank of India were among the first to cut base rate yesterday in the range of 0.20-0.40 per cent in response to RBI's repo rate cut of 50 basis points to 6.75 per cent.

While the base rate cut so far has come mostly from public sector lenders except Axis Bank, other private peers are expected to follow suit soon.

Soon after the RBI announcement, Finance Minister Arun Jaitley yesterday expressed hope that banks will transmit the benefit to borrowers to boost investments and the economy.

"We are looking forward now to the transmission of these cuts which will effectively help to boost confidence and investment. They will also help to realise the economy's medium term potential growth rate," Jaitley had said.

Source : Economic Times
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Tuesday, September 29, 2015

Home, auto loans to cost less as RBI cuts rate by 0.5%

Home and corporate loans will cost less as the Reserve Bank today lowered the key interest rate by 0.50 per cent — the biggest cut in over three years — to bolster the economy.

In its fourth bi-monthly monetary policy for the current fiscal, RBI cut the benchmark repurchase (repo) rate from 7.25 per cent to 6.75 per cent, the lowest in four-and-a-half-years.

RBI Governor Raghuram Rajan, who had faced growing pressure from the Government as also industry to reduce one of Asia’s highest borrowing costs, justified the bigger than expected reduction saying consumer inflation was likely to be at 5.8 per cent, below the 6 per cent target for January.

The focus should now shift to bringing inflation to around 5 per cent by March 2017, he said, adding that RBI will be vigilant for signs of monetary policy adjustments that are needed to stick to the “deflationary path”.

He also drew comfort from the US Federal Reserve delaying the first hike in interest rates in nine years, which may have put emerging market currencies under pressure.

RBI lowered its economic growth forecast for the current fiscal to 7.4 per cent from its previous projection of 7.6 per cent.

“While the Reserve Bank’s stance will continue to be accommodative, the focus of monetary action for the near term will shift to working with the Government to ensure that impediments to banks passing on the bulk of the cumulative 125 basis points cut in the policy rate are removed,” Rajan said.

The reduction comes on the back of interest rates being cut thrice earlier this year by 25 basis points each.

Within minutes of the RBI policy announcement, Andhra Bank cut its benchmark lending rates by 0.25 per cent. The other banks are likely to follow suit.

The BSE Sensex, which was over 300 points down, staged a recovery after the announcement of the policy. However, it again slipped into the negative zone.

Source : Thehindubusinessline
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SBI cuts base lending rate by 40 bps to 9.3%

Soon after reduction in repo rate by the Reserve Bank of India, the country’s largest lender State Bank of India today slashed minimum lending or base rate by 0.4 per cent to 9.3 per cent, setting the trend for benign interest rate regime.

With the reduction in the base rate, all loans, including home, auto and corporate, would become cheaper by at least 0.40 per cent.

The bank has decided to reduce the base rate by 0.40 per cent to 9.3 per cent with effect from October 5, SBI said in a statement.

“RBI has cut interest rate by 0.50 per cent, we have reduced it by 0.40 per cent,” SBI Chairperson Arundhati Bhattacharya said.

The bank will also be cutting fixed deposit rates by 0.25 per cent across various maturities from October 5, she added.

“We will definitely keep looking at ways and means of bringing down rate further. Going ahead, weakening of rate will add to growth of credit,” Bhattacharya said.

With the reduction, SBI’s base rate is the lowest in the market. The reduction by the largest lender is likely to be followed by others.

Meanwhile, Andhra Bank also reduced its base rate by 0.25 per cent to 9.75 per cent effective today.

Base rate is the minimum rate below which a bank can’t lend to consumers.

On cost of fund, Bhattacharya said “on monthly basis, the fall is quite good, also the fact that there are more of retail deposits now than savings.”

RBI cut benchmark repurchase (repo) rate from 7.25 per cent to 6.75 per cent, lowest in four-and-half-years.

The reverse repo rate, at which it accepts banks’ excess liquidity, will be 5.75 per cent, while the cash reserve ratio has been kept unchanged at 4 per cent.

Soon after the RBI policy announcement, Finance Minister Arun Jaitley expressed hope that banks will transmit the benefit to borrowers so as to boost investments and the economy.

“We are looking forward now to the transmission of these cuts which will effectively help to boost confidence and investment. They will also help to realise the economy’s medium term potential growth rate,” Jaitley said

Source : Thehindubusinessline
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Syndicate Bank bonds worth Rs. 1,000 cr fully subscribed

Public sector Syndicate Bank today said the issue of Rs. 1,000 crore tier-II Basel compliant non-convertible bonds has been fully subscribed.

“The bank has finalised the issue of unsecured redeemable non-convertible Basel III compliant tier-II bonds in the nature of debentures aggregating to Rs. 1,000 crore. The issue is fully subscribed,” it said in a BSE filing.

The issue, which opened on September 24 and closed on September 28, carries a coupon rate of 8.58 per cent per annum.

The maturity date of the bonds is as on September 28, 2025.

The debentures have been issued via private placement. However, the bank did not elaborate about the usage of the proceeds.

Shares of the bank closed at Rs. 83.30 on BSE, up 0.66 per cent from the previous close.

Source : Thehindubusinessline
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Andhra Bank cuts base rate by 25 bps to 9.75%

Andhra Bank has reduced its base rate by 25 basis points to 9.75 per cent with immediate effect.

A press release in this regard was issued here on Tuesday. Andhra Bank was the first to announce an interest rate cut after the Reserve Bank of India announced a 50 bps cut in the repo rate in its policy review today. 

Source : Thehindubusinessline
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RBI cuts repo rate by 50 bps

In a big surprise for the markets, the RBI on Tuesday cut the policy repo rate by 50 basis points to 6.75 per cent.

The equity market which was in the red till the announcement after a brief bounce back slipped into the red again.

The market was widely expecting the central bank to go only for a token 25 basis points cut in view of the deficit monsoon and expectation that the US Fed will raise interest rates by December.

The RBI said monetary policy has to be accommodative to the extent possible, given its inflation goals, while recognizing that continuing policy implementation, structural reforms and corporate actions leading to higher productivity will be the primary impetus for sustainable growth.

Furthermore, investment is likely to respond more strongly if there is more certainty about the extent of monetary stimulus in the pipeline, even if transmission is slow. Therefore, the Reserve Bank has front-loaded policy action by a reduction in the policy rate by 50 basis points.

“Given our year-ahead projections of inflation, this ensures one year expected Treasury bill real interest rates of about 1.5-2.0 per cent, which are appropriate for this stage of the recovery,” the RBI said.

The RBI reasoned that since bi-monthly policy statement of August, inflation has dropped to a nine-month low, as projected. Despite the monsoon deficiency and its uneven spatial and temporal distribution, food inflation pressures have been contained by resolute actions by the government to manage supply. The disinflation has been broad-based and inflation excluding food and fuel has also come off its recent peak in June.

The Federal Reserve, according to the RBI, has postponed policy normalisation. Markets have transmitted the Reserve Bank’s past policy actions via commercial paper and corporate bonds, but banks have done so only to a limited extent.

“Since our last review, the bulk of our conditions for further accommodation have been met. The January 2016 target of 6 per cent inflation is likely to be achieved. In the monetary policy statement of April 2015, the Reserve Bank said that it would strive to reach the mid-point of the inflation band by the end of fiscal 2017-18.

“Therefore, the focus should now shift to bringing inflation to around 5 per cent by the end of fiscal 2016-17,” the RBI said.

 As the RBI Governor Raghuram Rajan is set to announce the fourth bi-monthly monetary policy statement for 2015-16, the stock markets are down over 1 per cent.

At 10.45 am, the Sensex was trading down 304 points at 25,312.03 while the NSE Nifty was down 98 points at 7697.90.

With a mounting chorus of powerful voices demanding a deep cut in policy rates from the Reserve Bank of India, the market is betting on Governor Raghuram Rajan obliging with a small 25 basis point cut in his fourth bi-monthly monetary policy announcement on Tuesday.

Source : Thehindubusinessline
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Monday, September 28, 2015

IDFC Bank mulls having no ATMs, free service at other machines

As it prepares to launch its banking services with motto to become "hatke bank", IDFC Bank is contemplating a low capex move of not having its own ATMs and making transactions at rivals' ATMs free for customers, a senior official said.

"We feel there is a saturation of ATMs in the market and even after having the machines, you spend on its maintenance. We are looking at not having a network of ATMs," its head of personal and business banking Naval Bir Kumar told PTI after the bank unveiled its logo last week.

He added that IDFC Bank customers may be allowed to use existing automated teller machines (ATMs) without any charges.

Kumar explained that the money a bank pays for installing and maintaining the ATMs from third parties works out almost the same as the commission or fees paid to other banks for a transaction.

He, however, added that no final decision has been taken on the matter as yet.

IDFC Bank is aiming to start personal banking operations by January.

At present, all the banks have invested in their own ATM networks and customers are charged for transacting at other lenders' ATMs after breaching a fixed number of free transactions a month.

Generally, a bank pays under Rs 20 to another bank for helping its customer carry out a transaction, but Kumar said it can be negotiated down.

The RBI has allowed operations of white-label ATMs, which are being run by non-banking entities, with an eye on generating fees.

At the event, its executive vice chairman and managing director Rajiv Lall had said its market surveys have shown a deep unhappiness among customers about banks and had stressed IDFC Bank's motto to be the different by becoming the "unbank" or "hatke bank".

Technology will play an important part in this journey of having a bank whose operations are different from those being offered at present, he had said.

Lall said the bank does not plan to offer higher rate of interest on saving deposits, as is being done by others like Kotak Mahindra Bank or Yes Bank.

It is formally launching services on October 1 with 23 branches, out of which 15 will be in rural areas, Lall had said.

By end of the year, it is planning to take the total branch network up to 60, with 40 in rural areas.

Kumar said the component of rural branches, being called 'Bharat Bank' at IDFC, will be higher than the regulatory prescription of 25 per cent for the initial 12 to 18 months and will be gradually increased.

Source : Economic Times
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DoP may seek Cabinet nod to set up payments bank

The Department of Posts (DoP) is expected to seek Cabinet nod within two months for raising Rs. 292 crore from Public Investment Board to set up payments bank, for which it has already got the RBI approval.

“The DoP is going to take approval for Rs. 292-crore fund from Public Investment Board after which it will be submitted for Cabinet approval. We expect the fund to be cleared in two months,” an official source told PTI.

Payments bank licence will allow companies to collect deposits (initially up to Rs. 1 lakh per individual), offer Internet banking, facilitate money transfers and sell insurance and mutual funds.

Besides, they can issue ATM or debit cards, but not credit cards. The Department expects revenue of over Rs. 550 crore from PBI in the first five years.

The postal department had earlier tried for Rs. 632-crore fund approval from government for full-fledged banking services but it was not cleared by PIB.

The Government has in-principle agreed to the entry of Postal Department in banking service through payments bank route.

“The DoP expects to roll out payment bank services by March 2017. There are no major infrastructure issues with the department. Only there is need to set up a data centre and disaster recovery centre which will be done soon,” the official said.

The postal department has computerised about 25,000 of its departmental post offices but rural post offices will be provided handheld devices for digitalising records.

The department is in final stages of appointing a consultant that will guide it in setting up payment banks.

According to another official source, the department may go for a hybrid model under which about 600 branches will be directly operated by payment bank staff in post office premises and transactions in other parts of the country will be supported by India post staff.

The payments bank entity is proposed to have its own employees and IT infrastructure.

Source : Thehindubusinessline
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