New licences don't scare Federal Bank

"It may be three years away from when new bank licences get operationalised and build up some scale, but we are not just going to stay quiet and watch," says Mr Shyam Srinivasan, Managing Director and Chief Executive Officer, Federal Bank.

"We have our own aspiration plans to scale-up, he told Business Line here. Three years from now, Federal Bank will have 1,500 branches. It will be a formidable size," he added.

But he would not sit and worry whether new banks would hurt because they have a lot of catching-up to do. But he anticipates what he described as 'a huge raid' on the bank's employees.

"By that time, our young team would be four years into the job, trained and invested by us. The challenge of a hostile raid on the human resources is bound to happen in any competitive environment. "Yes, that is a huge challenge, but I will not brood over it and get alarmed yet," Mr Srinivasan said.

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Bank of India plans 'big' retail vertical

Bank of India plans to focus big on its retail vertical, by setting up 20 retail centres across the country. "We are looking at branch hub-and-spokes and retail processing centres closely," Mr N. Seshadri, Executive Director, Bank of India, told.

A pilot for making branches sales centres, and not service units, is already underway, he said.

"We plan to take the entire service part of operations to the back office," said Mr Seshadri. The idea is to ensure that the entire focus at a branch is as a sales unit.

He also added that the bank was focusing on re-balancing their corporate to retail portfolio because of margin shrinkage.

"We want to go up a couple of percentage points in terms of the whole portfolio from corporate to retail over a period of time," said Mr Seshadri. The increasing interest rates have not impacted the bank's retail portfolio so far, "mainly because we have rescheduled repayment schedules of our customers", he said. But if the interest rates are very high for a long period of time, there could be some impact, he added.

The bank is also looking at expanding its footprint overseas by "either acquisitions or branches depending on local regulatory requirements", he said. Countries on the bank's radar include Botswana, Rwanda and Canada. The bank recently started operations in New Zealand, he pointed out.

Bank of India is expecting capital infusion from the Government in the second half of this fiscal, Mr Seshadri said. According to him, the bank has a total capital requirement of Rs 4,000 crore over the next two years.

Capital infusion could either be through a rights issue, follow-on offer or a combination of instruments. Currently, the Government's shareholding in Bank of India is about 66 per cent.

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Fixed rate products will insulate banks' loan portfolio

The Deputy Governor, Reserve Bank of India, Mr Anand Sinha on Sunday said it is better that banks introduce more long-term fixed interest rate products to insulate themselves against credit risk.

This comment comes in the context of banks' lending rates jumping from 8 per cent to 10.75 per cent in the last 17 months and concerns emerging about the ability of borrowers, especially home loan borrowers, to service loans taken on floating rates.

“Any long-term loan product, if it is on a fixed interest rate basis, it is better from the interest rate risk perspective,” said Mr Sinha on the sidelines of the Bankers' conference.

Most of the home loans carry floating interest rate. Given that lending rates have gone up sharply, banks face the danger of borrowers falling behind on loan servicing and the loans turning into non-performing assets. The Deputy Governor stated that non-performing assets in the banking system were not a concern.

He added that fixed rate loans will insulate banks' loan portfolio as well as borrowers from the vagaries of sharp, uncertain interest rate movements.

Wholesale funding

Mr Sinha warned banks about their dependence on wholesale funding as it could have systemic implications. In a tight liquidity situation, when funding dries up, banks could be forced to resort to distress sale of assets. This, in turn, could affect the valuation of such assets held by other banks.

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LIC Housing okays Rs 100-cr loans in 3 days

LIC Housing Finance has sanctioned over Rs 100 crore towards home loans during a three-day property exhibition that concluded in the city today, a senior company official said.

The company has organised the ‘Home for All Expo 11', at Pragati Maidan. “We have sanctioned more than Rs 100 crore to home seekers in this show,” the LICHFL Regional Manager, Mr Ajay Grover, said in a statement.

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State Bank of India (SBI) two-day nationwide strike called off

All India State Bank Officers Federation was given call for nations wide two days strike on 8th and 9th November, 2011 in pursuance of their various demands. 

But as per latest news from our sources, State Bank of India (SBI) two-day nationwide strike proposed on 8th & 9th Nov. 2011 is called off.

The officers' union of State Bank of India (SBI) has called off a two-day nationwide strike that was to begin on November 8 after the management conceded to some of their demands, a development that comes as a relief to over 14-crore customers of the bank.

“The strike has been deferred as understanding on certain issues has been reached with the management,” All-India State Bank Officers Federation (AISBOF), General-Secretary, Mr G. D. Nadaf, told PTI. 

Keeping in mind the convenience of customers and reputation of the bank, the union decided to defer the two-day countrywide strike, he said, adding that dialogue with the management is still going on with respect to the remaining issues. 

On Saturday, the SBI Chairman, Mr Pratip Chaudhuri, had appealed to the union to withdraw the proposed strike. 

“We expect and hope that the strike will be called off. 

We have not estimated our losses on account of the strike yet. 

More than the loss of money, it will damage the confidence of our customers,” he had said.

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