Axis Bank reappoints Shikha Sharma as Managing Director

Axis Bank has reappointed Shikha Sharma as Managing Director for a further period of 3 years.

The board has approved the reappointment of Shikha Sharma as Managing Director and Chief Executive Officer of the bank for a further period of three years with effect from June 01, 2012 to May 31, 2015, Axis Bank said in a filing on the Bombay Stock Exchange (BSE).

The reappointment will be subject to approval of the Reserve Bank of India and subject to confirmation by the shareholders of the bank at the next general meeting, it said.

The bank had appointed Shikha Sharma as its Managing Director in 2009.

Source: Business Standard

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SBI launches special package for railway employees

State Bank of India has launched a special salary package for the Railway employees.

According to Mr B. Venugopal Reddy, Deputy General Manager, Administrative Unit, SBI, Hubli, the package consists of special privileges to employees of railways drawing their salary from State Bank of India.

Special previleges

The privileges include reduced interest rates on home loans, car loans and personal loans. The concessions are available in the locker rentals.

He further stated that zero balance saving bank accounts are opened for all the persons.

Free drafts are issued according to the entitlements of railway employees. Besides, discounts are available up to one per cent on gold coin purchases.

“These are only a few benefits and there are several other benefits also being extended by SBI to the railway employees,” Mr Reddy added.

Special package

The special package was announced by State Bank of India at the Hubli Main Branch, adjacent to DRM's Office, Keshwapur, Hubli.

Speaking on the occasion, Mr A.K. Brahmo, Chief Personnel Officer, South Western Railway, said the Indian Railways and State Bank of India are having the largest employers in India. The Indian Railways is the fourth largest Railway in the world, whereas State Bank of India has branches all over India and abroad.

He said 46 per cent of railway employees are drawing their salaries from State Bank of India and the remaining 54 per cent employees salaries are being shared by other Banks.

Mr Brahmo stated that 7,000 more staff with be joined with South Western Railway within 2-3 years, thereby, the volume of salary package for railway employees would be enhanced.

He complimented the State Bank of India officials for taking such positive initiative in this direction.

anil.u@thehindu.co.in

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SBI’s asset quality worrying as bad loans double in Q3

State Bank of India reported a net profit of Rs 3,263 crore for the quarter ended December 2011, up 15 per cent from Rs 2,828 crore in the corresponding year-ago quarter. The increase in profit was on account of a robust rise in net interest income, which touched an all-time high and improvement in net interest margins.

Profits grew despite an increase of over Rs 1,300 crore in loan loss provision and an over Rs 800-crore depreciation in investment on account of losses in the equity portfolio, said Mr Pratip Chaudhuri, Chairman, SBI.

“The bank is back on a consistent growth path,” he said.

The bank increased loan loss provisions by 84 per cent to Rs 3,006 crore (Rs 1,632 crore).

However, asset quality for the country's biggest bank still remains a concern, with gross non-performing assets touching Rs 40,098 crore as on end December, from Rs 23,438 crore in the ‘year-ago' period.

Fresh slippages to NPAs in the third quarter were to the tune of Rs 8,161 crore.

‘Worst is over'

“We think the worst is over with regard to NPAs. NPAs have plateaued. The biggest hit was from one aviation company, which accounted for about Rs 1,200 crore of the NPAs. But we could expect some improvement in the sector following the proposal to allow FDI and direct import of fuel,” Mr Chaudhuri said.

The highest share in NPAs was from the agriculture sector, which contributed 9.45 per cent. SME's share was 7.9 per cent, mid-corporate was 5.54 per cent and large corporate was at 1.1 per cent. However, strong growth in margins will make it easy to absorb the NPAs, Mr Chaudhuri said.

NIM for December was 3.82 per cent, higher than the guidance of 3.65 per cent. Shedding high-cost deposits and eliminating the dependence on Certificates of Deposits, which come at a high cost, helped the bank improve its NIM.

Credit growth

The demand for credit is muted, said Mr Chaudhuri, although there is very high demand for dollar credit. This year the bank hopes to meet its guidance of 16 per cent growth in credit. The bank may cut interest rates in some loan segments, such as educational loans, but not the Base Rate, Mr Chaudhuri said.

On a consolidated basis, net profit increased to Rs 4,318 crore (Rs 3,710 crore), a growth of 16 per cent.

For the April-December nine-month period, net profit was down to Rs 7,657 crore (Rs 8,244 crore), because the first quarter of the fiscal was a tough one, Mr Chaudhuri said.

Shares of SBI closed at Rs 2,129 crore — down 2 per cent from its previous close on the BSE.

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Manappuram Fin ‘will ensure' compliance with RBI norms

Manappuram Finance will take immediate steps to completely ring-fence its operations and ensure there is no overlapping of business, assets, branches or personnel with other entities owned by the promoters or their family members. The Board of Directors of the company met at Thrissur to review the operations and performance in the context of the recent communication received from the RBI. The Board also directed the company to take all measures to fully address the concerns raised by the central bank.

To enhance governance and better manage growth to the next level, the Board also decided to constitute an independent committee under the chairmanship of Mr Jagdish Capoor (former Deputy Governor of RBI and former Chairman of HDFC Bank). This committee will review relevant aspects of operations, systems, controls and organisational structure, including Board composition and effectiveness.

Review exercise

The committee was free to appoint leading independent legal counsel and other advisors as was deemed appropriate to assist with the review. Further, the company proposed to retain a leading accounting firm to supplement the in-house internal audit team. A leading law firm, Amarchand Mangaldas, and the internationally reputed accounting firm, KPMG, will assist the committee in this independent review exercise.

At the outset, the Board noted that the company has not accepted any deposits from the public since March 22, 2011, in compliance with its status as a non-deposit-accepting non-banking finance company.

Mr V.P. Nandakumar, Executive Chairman, Manappuram Finance, assured the Board members of his fullest support and cooperation. He pointed out that he had issued public notices in newspapers undertaking to honour all obligations to the depositors of his proprietary concern Manappuram Agro Farms, without causing any inconvenience to them. The Manappuram Finance scrip closed lower at Rs 46, a fall of 2.44 per cent over the previous close.

cj@thehindu.co.in

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Strong case for higher govt stake: SBI Chairman

The State Bank of India Chairman, Mr Pratip Chaudhuri, on Monday said there is a strong case for the government to infuse capital in his bank.

The reason: the 18.12 per cent post-tax return that the capital investment will fetch will be far in excess of the cost of the government's borrowing.

“The cost of government borrowing is in the 8-9.5 per cent range. But infusing capital in SBI will give the government a post-tax return of 18.12 per cent,” explained the SBI chief, at a press meet.

The expected capital infusion of Rs 7,900 crore, coupled with a plough-back of profit (the bank has estimated full year profit in the Rs 10,000-11,000 crore range), will see Tier-I capital adequacy (core capital) cross the 9 per cent level by March-end 2011, against the current level of 7.59 per cent, said Mr Chaudhuri.

Will seek re-rating

The capital infusion will see the government's stake in the bank go up to 62 per cent from 59.40 per cent as of December-end 2011.

The bank could leverage the higher government shareholding to raise further capital, either through a follow-on public offer or the qualified institutional placement in the next financial year.

Based on the expected higher capital adequacy ratio, India's largest bank will seek a re-rating from global ratings firm Moody's.

In October 2011, global ratings firm Moody's had downgraded SBI's financial strength rating by a notch to ‘D+' on account of the bank's low Tier-I capital ratio and deteriorating asset quality.

SBI Global Factors

SBI Global Factors Ltd, a subsidiary of State Bank of India, may either be sold to strategic investors or merged with the parent bank, according to Mr Pratip Chaudhuri, Chairman, SBI.

SBI holds 85.39 per cent stake in SBI Global Factor Ltd. The remaining 14.61 per cent stake is held by SIDBI, Bank of Maharashtra and Union Bank of India.

With the Lok Sabha passing the Regulation of Factors (Assignment of Receivables) Bill 2011, the State Bank of India chief observed that the bank may be in a better position to undertake the factoring business in-house.

In the nine months ended December-2011, SBIGFL reported a net loss of Rs 80 crore. However, it turned in a profit of Rs 20 crore in the October-December 2011 period.

The non-banking finance company has a total business of Rs 2,500 crore, said Mr Shyamal Acharya, Deputy Managing Director, SBI.

Capital adequacy

Mr Acharya explained that NBFCs are required to maintain a higher capital adequacy ratio of 15 per cent.

Further, since the NBFC is not a wholly-owned subsidiary, taxation rules do not permit setting off losses against the profit of the bank.

SBIGFL provides factoring (a financial transaction entailing sale of accounts receivable by a business enterprise to a factor — SBI Global Factors Ltd— at a discount) and forfeiting (a financial transaction entailing purchase of accounts receivable from exporters by a forfeiter — SBIGFL).

State Bank of India may raise benchmark size ($1 billion) resources under its medium-term programme only if the cost of borrowing softens to LIBOR plus 225 basis points.

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