Muthoot Finance gets RBI nod to set up White Label ATMs

Gold loan company Muthoot Finance said it has got in-principle approval from the Reserve Bank to set up White-Label ATMs in the country.

White-Label ATMs are to be set up by non-banking entities on behalf of ‘sponsor banks’ but they would not carry the brand label of any bank, and would be accessible to card-holders of all the banks for a fee.

In a BSE filing, Muthoot Finance said the RBI has “granted in-principle authorisation to the company for setting up White Label ATMs in India...”.

The Chief General Manager of Muthoot Finance, K R Bijimon said the company would be setting up 1,000 such ATMs in the first year of operation and another 8,000 in the following two years. He also informed that the company was in discussions with three banks in this regard.

The company had taken approval of shareholders in December last year through postal ballot for carrying out the business of setting up such ATMs.

The RBI in February last year permitted the non-banking entities to operate and own such ATMs with the objective of enhancing the spread of ATMs in semi-urban and rural areas where bank owned ATM penetration was not growing.

Earlier this month, private sector lender Federal Bank said it has tied up with Tata Communications to install 15,000 White-Label ATMs (WLAs) across the country.

Source: thehindubusinessline

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SBI to get tough on loan defaulters

Faced with a Rs 51,000-crore bad loans pile, State Bank of India has decided to tighten the screw on defaulting borrowers.

How? It is taking recovery action, such as filing winding-up petitions against defaulting companies and their guarantors.

SBI wants its field staff dealing with recoveries to go after loan defaulters and wring out as much of the outstanding loan as possible.

A secured creditor files a winding-up petition in a High Court when the borrower fails to repay debt.

Winding up of a company is a process whereby its normal activities are brought to a standstill. The company’s property is administered by a court-appointed liquidator for the benefit of its members and creditors.
On record

To keep tabs on the pledged security, bank staff have been asked to take photographs of the properties during inspectionand keep them in the records, said a senior bank official.

SBI will take physical possession of the assets charged to it by the defaulters to preserve their value and realise the maximum amount from their auction.

Earlier, the bank used to just take symbolic possession of a pledged asset by pasting a notice that the property belongs to it. Defaulting borrowers sometimes take advantage of symbolic possession to sell off plant and machinery and other pledged assets.

The official said, the bank may consider acquiring some properties at the reserve price for its own use when their auction fails.

In the case of loan accounts classified as doubtful, up-to-date valuation of such accounts will have to be done so that they can be showcased to asset reconstruction companies (ARCs).

A loan account is classified as doubtful if it has remained non-performing for more than 12 months. ARCs are in the business of resolving non-performing loans bought from banks and financial institutions.

Due to economic slowdown, which has affected its borrowers’ ability to repay loans, SBI’s bad loans increased by Rs 11,513 crore in FY13 to Rs 51,189 crore as at March-end 2013.

In FY13, the bank saw a gross reduction of Rs 20,480 crore in bad loans. Fresh slippages amounted to Rs 31,993 crore.

Break-up

A break-up of SBI’s bad loans portfolio shows that as on March-end 2013, mid-corporate segment accounted for 36 per cent of the total bad loans; small and medium enterprises (28.4 per cent); agriculture (19.8 per cent); retail (8.3 per cent); international (5.5 per cent); and large corporate (2 per cent).

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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To curb defaults, Canara Bank offers to reschedule education loans

State-run Canara Bank has come up with a ‘one-time settlement’ to help student borrowers reschedule their education loan.

The bank’s Chairman and Managing Director R. K. Dubey told newspersons here on Tuesday that while the bank is interested in lending more, lest a student is deprived of education (for want of funds), poor recovery has been a matter of concern.

‘Nevertheless, we are willing to reach out to all the parents to understand their difficulty in repaying their dues. We are willing to extend the loan tenure and facilitate easy repayment,’ he added.

Canara Bank’s educational loan NPA (non-performing asset) is around 9 per cent, Dubey said.

The demand for student loans is said to be high in States such as Tamil Nadu and Kerala compared with those in the North.

While the bank’s total educational loan exposure is around Rs 4,200 crore, the quantum advanced in Tamil Nadu is around Rs 430 crore, and in Kerala, marginally higher.

But over Rs 100 crore of the Rs 430 crore student loan given in Tamil Nadu has been categorised as NPAs. “This is quite high and is a cause of concern for us,” he added.

The bank, meanwhile, is getting aggressive on education loans.

“We will not shy away. Instead, we will look to advance more and be aggressive on the recovery front too.

“By rescheduling the loan and facilitating easy repayment of dues, we are confident of bringing the NPA down to 2 per cent in 18 months time,’ the bank’s chief said.

Asked if he expected a loan waiver, Dubey said, ‘No, not on education loan.’

Canara Bank is also looking to boost lending to micro industries and the retail segment.

revathy.lakshminarasimhan@thehindu.co.in

Source: thehindubusinessline

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Exim Bank chief urges more investment in high-tech goods

With the entire global economy going through a churn now, “this is the right time to weed out inefficiencies in our system and gear up our manufacturing capacity to emerge successful in the global economic scenario”, said T.C.A. Ranganathan, Chairman and Managing Director of Export-Import Bank of India.

Indian manpower

Technology manufacturing in particular is something Indian manufacturers should focus on, he said. India has the necessary manpower for that. State and Union Governments too should encourage investment in this sector, and one must seize this opportunity to produce high-tech capital goods, he said.

Delivering his special address at the 177th annual general meeting of the Madras Chamber of Commerce and Industry here today, he said India’s total manufacturing is valued at $300 billion, while it imports $90-billion worth of high-tech capital goods alone. It would be much cheaper to manufacture them in India. “We must produce what we import more,” he said.

Pointing out that over 25 per cent of the world’s total export is made up of high-tech capital goods, and India’s participation in that is very negligible, he said it is crucial to raise the country’s contribution in the global high-tech goods export. This would enable Indian companies to gain product competitiveness in the international markets, he insisted.

India’s global merchandise exports recorded a compound annual growth rate of 10 per cent during the decade following the reforms (1990-2000), which more than doubled to 21.5 per cent in the following decade, as against 8.5 per cent growth witnessed in the decade preceding the reforms, 1980-90.

Talking about the country’s growth potential, Ranganathan, quoting Jim O’Neill, former chief economist and Chairman of Goldman Sachs Asset Management, said even with unspectacular growth of a little more than six per cent a year, India’s economy could be 40 times bigger by 2050 than it was in 2000 – about as big as the US economy will probably be by then (though not as big as China).

But it could do much better than that. Growth of 8.5 per cent over the entire period is possible - with growth of more than 10 per cent over the next 15 to 20 years not out of the question - provided it makes some changes.

“If industrialists choose to ride this growth wave, they can emerge successful; and if they choose not to, they may perish. But the country’s economy will certainly grow,” he said.

He also assured federations of Indian industry and chambers of commerce of the support of Exim Bank.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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Corporation Bank to open 300 branches this fiscal

Corporation Bank will open around 300 branches this fiscal, according to its Chairman and Managing Director, Ajai Kumar.

The bank opened 207 branches in 2012-13, and is planning to open around 300 more this fiscal and another 900-1000 in the next three years, he said at the 16{+t}{+h} annual general meeting (AGM) here on Tuesday. Currently, the bank has 1,707 branches.

He said the number of ATMs would be increased from the present 1,400 to 5,000 in the next three years. Every branch would have an ATM, he said.

KYC, NPA

As regards fulfilling know-your-customer (KYC) norms, Ajai Kumar said that this is a regulatory requirement and the even old customers have to adhere to them.

On non-performing assets (NPAs), the chairman said despite the economic slowdown, the bank managed to recover/upgrade loans worth Rs 1,509 crore in 2012-13 against Rs 758 crore in the previous fiscal.

The bank, he said, is among the top five public sector banks in almost 13 parameters.

The shareholders approved a resolution to pay a dividend of Rs 19 per equity share of Rs 10 each for 2012-13.

vinayak.aj@thehindu.co.in

Source: thehindubusinessline

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