ICICI Bank: Margins drive earnings

ICICI Bank reported a steady performance, with net interest income growing 22 per cent in the March quarter. This was backed by an 18 per cent growth in the domestic loan book, improvement in net interest margins and stable asset quality. However, fee income growth continued to remain lacklustre, rising by a mere 2.7 per cent over the corresponding year-ago period.

Notable has been ICICI Bank’s 38 basis points improvement in net interest margin (NIM) in FY13. The bank maintained a NIM of above 3 per cent through FY13 on the back of a healthy deposit mix. In the March quarter, the bank improved its NIM sequentially by 26 basis points to 3.33 per cent.

At 41.9 per cent, the CASA ratio continued to remain healthy in the March quarter, and was 100 basis points more than in the previous quarter. The bank has expanded its branch network over the past three years and had 3,100 branches as of March 2013.

The branch expansion has in turn led to market-share gains in savings deposit over the years. The CASA per branch for ICICI Bank still remains at Rs 39 crore as against Rs 49 crore in March 2010 (HDFC Bank’s current CASA/branch at Rs 46 crores).

Asset quality remained steady with net non-performing assets (NPAs) at 0.64 per cent of loans, similar to that in the December quarter.

However, the provisioning for bad loans as a per cent of the overall gross NPAs declined by 90 basis points from the December quarter.

The addition to the bank’s restructured book has been Rs 788 crore in the March quarter, lower than the earlier guidance of Rs 1,000 crore. While the management remains cautious on the asset quality in FY14, the provisioning costs as a per cent of loans are expected to be 75 basis points in spite of further slippages. ICICI Bank continues to maintain a healthy Tier-I capital adequacy of 12.8 per cent and looks set to meet the Basel III norms. The overseas subsidiaries have excess capital adequacy of above 30 per cent.

The bank will try to repatriate capital back from its subsidiaries, subject to regulatory and tax considerations. This should be giving the bank sufficient capital cushion to improve returns.

The bank has been able to increase its return on assets from 1.4 per cent in FY12 to 1.7 per cent in FY13.

radhika.merwin@thehindu.co.in

Source: thehindubusinessline

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Vijaya Bank profit up 24% on improved loan growth

Vijaya Bank profits rose 23.86 per cent to Rs 224.15 crore in the fourth quarter of fiscal 2012-13.

The bank’s total income during the period increased 17.02 per cent to Rs 2,680.20 crore, while EPS (basic) stood at Rs 3.92 compared with Rs 2.98 last year.

Vijaya Bank Chairman and Managing Director H. S. Upendra Kamath attributed the performance to the increase in loans and advances by 8 per cent, investment income by 15 per cent and a doubling of other income.

“With signs of improving global and domestic economic scenario, Vijaya Bank has set an ambitious target of reaching a business mix of Rs 2,00,000 crore by December 2013,” he added.

Bank’s operating profit rose 47.35 per cent to Rs 388.25 crore.

Vijaya Bank shed bulk deposits/certificate deposits (CDs) worth Rs 16,933 crore during FY13. The percentage of bulk deposits/CDs has fallen to 22.30 per cent as on March 31, 2013, from 46.47 per cent in the year-ago period.

“The bank shall continue to shed bulk deposits/CDs during the current financial year and has set a target of Rs 7,000 crore this fiscal,” Kamath said.

As for the bank’s asset quality, gross NPA (non-performing asset) and net NPA ratios stood at 2.17 per cent and 1.30 per cent respectively as at end-March 2013 against 2.93 per cent and 1.72 per cent, respectively, in the same period last year.

Net interest income (NII) in the quarter increased 4.87 per cent to Rs 517 crore, and the net interest margin (NIM) dropped to 2.21 per cent from 2.41 per cent.

Provisions and contingencies increased to Rs 205.32 crore from Rs 86.83 crore.

The credit-deposit ratio of the bank stood at 72.68 per cent as at March 31, 2013, as against 70.64 per cent in the same period last year.

Current account savings account (CASA) deposits grew 11.3 per cent in FY13. During Q4 CASA grew 53.75 per cent to Rs 1,655.98 crore. CASA ratio was at 20 per cent of total deposits as at the end-March against 20.91 per cent in the same period last year.

anil.u@thehindu.co.in

Source: thehindubusinessline

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Interest income lifts LIC Housing Fin net 24%

LIC Housing Finance reported a 24 per cent increase in fourth quarter net profit, helped by higher loan disbursements to individual home buyers and healthy net interest income.

In the January-March quarter, the housing finance arm of Life Insurance Corporation posted a net profit of Rs 316 crore against Rs 254 crore a year ago. The company’s board has recommended a dividend of Rs 3.80 per share of Rs 2 face value.

A senior official at the company attributed the growth in profit to lower cost of funds and conversion of home loans from fixed to floating rate of interest.

Individual loan disbursements grew 19 per cent at Rs 7,536 crore in the quarter ended March 31, 2013.

Net interest income, the difference between interest earned and interest expended, grew 24 per cent to Rs 461 crore (Rs 371 crore, a year ago). Net interest margins for the quarter stood at 2.45 per cent as against 2.09 per cent in Q3 FY13.

In the January-March period, revenue grew 25 per cent to Rs 2,028 crore (Rs 1,628 crore, a year ago).

The company expects its loan book to grow by 20 per cent in financial year 2013-14.

For the full year ended March 31, 2013, the net profit rose 12 per cent to Rs 1,023 crore.

Shares of the Mumbai-based company closed at Rs 247/share, up 6.31 per cent, on the Bombay Stock Exchange.

satyanarayan.iyer@thehindu.co.in

Source: thehindubusinessline

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Retail lending pushes up ICICI Bank Q4 net 21%

Stable loan growth and higher margins helped ICICI Bank report a 21 per cent increase in net profit at Rs 2,304 crore in the fourth quarter ended March 31, 2013.

The country’s largest private sector lender had reported a net profit of Rs 1,902 crore in the year-ago quarter.

Net interest income (difference between interest earned and expended) increased 22 per cent to Rs 3,803 crore (Rs 3,105 crore in Q4 FY12). Other income fell marginally to Rs 2,208 crore on the back of muted fee income and lower dividend.

During the quarter net interest margin (NIM) was at 3.3 per cent.

Provisions during the quarter remained almost flat at Rs 460 crore (Rs 469 crore in the year-ago quarter). Sequentially, however, provisions increased from Rs 369 crore in the December-quarter.

For the full year ended March 31, 2013, net profit increased 29 per cent to Rs 8,325 crore from Rs 6,465 crore in FY12.

As on end-March, the total loan book grew 14 per cent to 2.90-lakh crore from Rs 2.53-lakh crore in FY12.

“Retail lending, which accounts for 37 per cent of total loans, rose by 25 per cent……Revival in corporate loan growth will take another six months. Currently, greater demand is coming from working capital loans,” said Chanda Kochhar, Managing Director and CEO, ICICI Bank. “Deposit growth rate will continue to remain under pressure,” she added.

NIM stood at 3.11 per cent for the full year ended March FY13 (from 2.73 per cent in FY12).

“We will work towards improving NIM by 10 basis points,” Kochhar said.

The bank’s net non-performing asset ratio was 0.64 per cent as on March 31, 2013, from 0.62 per cent as on March 31 last year.

The board proposed a dividend of Rs 20 per share to the shareholders. It was at Rs 16.5 per share last year. The bank’s scrip ended 2.82 per cent lower at Rs 1,144.30 per share on the Bombay Stock Exchange.

Cobrapost allegations

The bank found no evidence of money laundering as claimed by online magazine Cobrapost.

The magazine had charged ICICI Bank, HDFC Bank and Axis Bank with money-laundering activities and know-your-customer (KYC) norm violations.

Following the allegations, the bank conducted an internal investigation and also engaged external agency (Deloitte) to investigate 14 branches.

“No actual instances of money laundering have been found in the transactions as mentioned (by Cobrapost),” Kochhar said.

“However, there have been errors in KYC documentation and we will be looking at improving it,” she added. Pending enquiry, the bank has suspended 18 employees following the allegations.

Beena.parmar@thehindu.co.in



Source: thehindubusinessline

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Axis Bank: Retail focus pays dividends

De-risking its business model, Axis Bank’s renewed focus on the retail segment over the last two years has worked to its advantage.

The bank held up its performance on all key parameters in the March quarter. Net profit grew 22 per cent in comparison to the previous year. This was despite an additional Rs 240 crore provisioning for contingencies.

The net interest income grew 24 per cent backed by loan growth of 16 per cent and increase in net interest margins by 13 basis points to 3.7 per cent in the March quarter.

The bank has consistently delivered better growth than the industry, and the momentum continues. The loan growth during the quarter was driven by a 44 per cent jump in the retail loan book which now contributes 27 per cent of the overall loans.

The company is well on track to increasing its contribution from retail loans to the targeted 30 per cent by end- FY15.

Slowdown in the large- and mid-corporate segments continued to impact loan growth, which rose 7.9 per cent during the March quarter. However, SME (small and medium enterprise) loans maintained its momentum, growing 26 per cent. The company remains focussed on top-rated SMEs.

The thrust on retail business has also led to a stable fee income, contributing one-third of the total fee income. In the March quarter, the 22 per cent rise in fee income was led by a 32 per cent growth in the retail fee income.
low-cost deposits

Axis Bank continued to focus on low-cost current and savings deposits. Savings deposits, which have grown at a faster pace than that of the industry, maintained a strong 23 per cent growth during the March quarter. The CASA (current account savings account) deposits grew 23 per cent over the previous year.

Also, the bank continues to focus on increasing the share of retail term deposits. During the March quarter, these deposits grew 24 per cent, lending stability to the bank’s liquidity.

CASA and retail term deposits together contributed 68 per cent of the overall deposits as of March quarter.
Steady Asset quality

Axis Bank also held up on asset quality, with gross non-performing assets at 1.06 per cent and net non-performing assets at 0.32 per cent of loans in the March quarter. Restructured assets stood at Rs 4,368 crore, which is 2.2 per cent of the loans. While restructuring remains the highest among private sector peers, additional slippages and restructuring every quarter have been in line with the management’s guidance.

radhika.merwin@thehindu.co.in


Source: thehindubusinessline

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SBI looking to decongest branches

A number of people arefilling up forms , quite a few milling at various counters wanting to draw money or check balances, and some merely looking to chat up with a friendly face.

A detached observer can look at this picture with equanimity. But if you were a customer at this branch, who quickly wants to draw some money or complete some banking business on your way to the office, you may find the scene a bit depressing.

MIGRATING ACCOUNTS

Crowds may mean more business for the bank, but are inconvenient for customers.

This seems to have nudged State Bank of India, the country’s largest public sector bank, into action. The bank is now proposing to move low-value and high-volume transactions from the branch channel to the business correspondent/customer service point channels to ‘decongest’ branches.

Business correspondents are agents (a post office, a cooperative or an individual) appointed by banks to conduct banking operations in remote areas where they have no branches. They provide services such as opening bank accounts, accepting deposits and disbursing money.

They have/carry point of sale (PoS) machines, a hand-held device, to help customers transact business after identifying themselves by means of finger prints/smart cards.

The SBI move comes in the context of implementing ‘Swabhiman,’ the financial inclusion programme, and the direct cash transfer scheme, as advised by the Department of Financial Services.

Customers visiting SBI branches range from 1,000 to 2,000 a day. Those approaching a branch even for making enquiries are counted as customers, sources in the bank said.

The number could go up in the context of the low-value accounts being added as part of a drive to increase financial inclusion and implement the direct benefits transfer scheme of the Government.

According to RBI data, the average number of customers per bank branch is 13,400. This could vary bank-wise and State-wise. For example, Chandigarh has 4,000 customers to a branch while in Manipur and Nagaland they are around 33,000 and 26,000, respectively.

While the average number of customers per branch has been coming down slowly as banks add more branches every year, the demand for bank services remains high. The need to achieve targets for financial inclusion had compelled banks such as SBI to open more bank accounts in un-banked areas through the branch channel, thereby choking existing resources.

This is now being streamlined and the process for migration of self-help groups or its members and such other account-holders to the business correspondent/customer service point is being notified to all its zonal offices (circles).

vinson.kurian@thehindu.co.in

vageesh.ns@thehindu.co.in


Source: thehindubusinessline

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United Bank to apply for overseas licences

United Bank of India plans to expand into international destinations.

The bank, which currently has representative offices in Myanmar and Dhaka, plans to set up branches in Mexico and BRICS (which comprise, apart from India, Brazil, Russia, South Africa and China) nations.

According to Archana Bhargava, Chairman and Managing Director, United Bank will soon apply to the RBI seeking licences for setting up shop in these destinations.

“There is a huge opportunity in expanding in international locations both from remittance and trade point of view.

“We want to tap these opportunities,” Bhargava said at her first press meet after assuming the office of CMD of the bank.

“Initially, we will apply for eight to 10 licences and we hope to get permission for at least half of these,” she said.

This apart, the bank would also look to upgrade its representative offices in Myanmar and Dhaka into full-fledged branches.
Rights issue

The bank would also take forward its plans of coming out with a rights issue for boosting its capital adequacy ratio.

The bank had earlier planned to raise nearly Rs 300 crore by way of a rights issue.

However, in the wake of the CMD’s position lying vacant for the last few months, the matter could not be pursued. “We plan to pick up the threads again and take it (rights issue) forward,” she said.

shobha.roy@thehindu.co.in



Source: thehindubusinessline

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Central Bank of India to expand ops in Himachal

State-owned Central Bank of India would expand its activities in Himachal Pradesh by financing the hydro power, horticulture, infrastructure development, tourism and other sectors and make planned efforts to increase the credit-deposit ratio, a top company official said.

The bank proposed to open 525 village branches and 25 ultra small branches in near future, bank's Chairman M V Tanksale told reporters here.

He added that despite of economic slowdown, the NPA of the bank was five per cent but in the state, the recovery was quite good and NPA was just two per cent.

The credit deposit ratio of the Bank was 35 per cent in the state but with 48 branches across the state, it has branch share of 2.94 per cent but market share of 3.91 per cent, even though it was not the lead Bank in the state, Tanksale said.

He said that the bank proposed to open 10 more branches in Himachal and majority of the branches would be opened in rural areas.

Tanksale said that the bank would focus mainly on priority sector lending in agriculture and allied activities, housing, education, small and medium enterprises in a big way during the current financial year.

The bank has 4,300 branches and 2,500 ATMs across the country, he said.



Source: Economictimes

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Union Bank of India to use $350 million bond proceeds for lending at international branches

State-run lender Union Bank of India  said it will be deploying the USD 350 million it raised through a bond sale for lending at its international branches.

The bank also clarified that it had not fallen short of achieving its target as erroneously reported earlier, saying the issue got oversubscribed by 4.3 times.

UBI carried out the bond sale through its Hong Kong branch and will be deploying the money for its ongoing lending activities at its international branches, the bank said.

"We are pleased to receive good response from investors, on what has been our fourth international bond transaction," its chairman and managing director D Sarkar said.

Strong perception of the bank allowed it to price the new 5.5-year bond at levels inside its existing secondary yield curve, Sarkar said.

The bank priced the issue at 3.625 per cent, it said in a statement.

As per the public sector bank, out of the USD 2 billion medium-term-note programme, the bank had raised over USD 1.2 billion with this issue.

"The success of the transaction is evidenced by the final spread achieved, which was 0.04 per cent tighter than the fair value price for a new 5.5-year issuance based on the secondary levels of the previous issue," said a senior banker of StanChart India.



Source: Economictimes

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Dena Bank launches health insurance plan for Kisan credit card holders

Public sector lender Dena Bank has launched a health cover scheme for farmers holding Kisan Credit Cards.

The bank will offer KCC holders and their family members mediclaim with maximum cover up to Rs 30,000, the bank said in a statement.

Celebrating its Platinum Jubilee year, Ashwani Kumar, Chairman and Managing Director, Dena Bank, said that this facility will be available to KCC holder of Dena Bank and his/her spouse and two children under tie up with UIIC under group health insurance cover.

This cashless facility will be available at around 4,200 hospitals all over the country, the bank said.


Source: thehindubusinessline

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Axis Bank Q4 net rises 22% on stable loan growth

Higher interest income and stable loan growth helped Axis Bank post a 22 per cent increase in net profit at Rs 1,555 crore in the January-March quarter.

The country’s third largest private bank had posted a net profit of Rs 1,277 crore in the year-ago quarter.

Net interest income (the difference between interest earned and expended) increased by 24 per cent during the quarter at Rs 2,665 crore. ‘Other income’ grew 26 per cent to Rs 2,007 crore driven by higher trading and fee incomes. The bank recorded net interest margin of 3.70 per cent in Q4 FY13.

“Going forward, NIM will be in the 3.25-3.50 per cent range,” said Somnath Sengupta, Executive Director, Axis Bank.

For the full-year ended March 31, 2013, net profit grew 22 per cent to Rs 5,179 crore against Rs 4,242 crore in FY12.

NII rose by 21 per cent to Rs 9,666 crore in FY13 from Rs 8,018 crore in FY12.

As on March 31, the bank’s advances (year-on-year) grew 16 per cent to Rs 1.97-lakh crore. Retail advances, which constitute 27 per cent of total loans, grew 44 per cent, while corporate loan growth was slower at eight per cent.

Agriculture loan growth, however, declined by 14 per cent to Rs 14,845 crore from Rs 17,340 crore.

“We expect retail portfolio to be 30 per cent of the total loans by year end,” Sengupta added.

As on March 31, total deposits increased 15 per cent to Rs 2.53 lakh crore.

The bank restructured assets worth Rs 791 crore in the reporting quarter. As on March 31, 2013, the total restructured assets stood at Rs 4,368 crore.

The bank’s board proposed a dividend of Rs 18 per share in FY13.

The shares of Axis Bank had ended 0.24 per cent higher at Rs 1,443.80 per share on the Bombay Stock Exchange.

Following investigations after the expose by online magazine Cobrapost, the bank has denied an instances of money laundering in its branches.

“Inquiries have been initiated by external and internal agencies and there is no evidence of any systemic money laundering,” Sengupta said. The Reserve Bank of India has completed its investigation.

Axis Bank has appointed KPMG as their external audit agency for investigating the allegations in its 12 branches. Sengupta refused to give a timeframe on the completion of the investigations.

The bank has shifted 20 employees allegedly involved in the Cobrapost expose from the branches to the administrative offices.

Beena.parmar@thehindu.co.in


Source: thehindubusinessline

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‘No instances’, says HDFC Bank

Private sector lender HDFC Bank has ruled out money laundering in the transactions allegedly captured in the expose by online magazine Cobrapost.

“Clearly, all this (internal investigation) has shown no instances of money-laundering transactions as charged by Cobrapost,” said Paresh Sukthankar, Executive Director, HDFC Bank.

Following the money-laundering allegations by Cobrapost, the second largest private lender had suspended 25 employees and appointed Deloitte for conducting internal forensic audit.

“The investigation is being undertaken in about 25 branches and transactions in the past 12 months are being reviewed,” he said.

Further, the HDFC Bank ED said, the bank has its internal timeline for the investigations. “Hopefully, the investigation will be over in a few weeks. Till the findings are out, the employees will remain suspended.”


Source: thehindubusinessline

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HDFC Bank Q4 net up 30% on strong interest income

Continuing its 30-per cent profit growth cycle, private sector lender HDFC Bank 's net profit jumped by 30 per cent year-on-year to Rs 1,889 crore in the fourth quarter ended March 2013.

Country’s second largest private sector lender had posted a net profit of Rs 1,453 crore in the year-ago quarter.

Net interest income (interest earned less interest expended) for the quarter grew by 21 per cent to Rs 4,295 crore (from Rs 3,561 crore in Q4FY12) driven by loan growth and higher net interest margin (NIM).

“Other income declined by 6 per cent to Rs 1,804 crore from (Rs 1,928 crore) due to moderation in fee income and de-growth in foreign exchange trading,” said Paresh Sukthankar, Executive Director, HDFC Bank.

Meanwhile, net interest margin improved to 4.5 per cent from 4.4 per cent in the year-ago quarter.

Gross non-performing asset (NPA) declined to 0.97 per cent in fourth quarter as against 1.02 per cent in fourth quarter last year, while net NPA remained unchanged at 0.2 per cent during the quarter.

Full year results

For the full year ended, net profit of the bank increased 30 per cent to Rs 6,726 crore in fiscal year 2012-13 as compared with Rs 5,167 crore last year.

Net interest income rose by 23 per cent to Rs 15,811 crore in January-March quarter.

Advances grew by 23 per cent to Rs 2.40 lakh crore, while deposits increased by 20 per cent to 2.96 lakh crore.

The board also recommended a dividend of Rs 5.5 per equity share (face value of Rs 2 each) for the year ended March 31, 2013.


Source: thehindubusinessline

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RBI for lower commission to curb KYC abuse like money laundering

The Reserve Bank may push private sector lenders to rationalise the commission they pay to wealth and relationship managers, as it tries to check dubious transactions and flouting of know-your-customer norms.

An online portal had alleged last month that some banks were involved in money laundering and were not complying with know-your-customer (KYC) norms. According to an RBI official, a probe by the central bank has indicated that the policy of some banks to reward employees with high commissions leads to staff overlooking KYC norms.

"It has been observed that various incentive schemes and commission structures were the foremost reasons for lower- and mid-level bank staff disregarding KYC Norms," the official, who did not wish to be named, said, adding that the RBI may ask private sector banks to rationalise the commission they pay to wealth and relationship managers.

In 2012, the central bank had issued guidelines that restricted bank staff's variable pay to 70% of fixed pay in a year. Further, private and foreign banks were directed to obtain prior approval from the RBI for remuneration of CEOs and full-time directors.

"In this case, there cannot be an overarching guideline from RBI. The banks themselves have to put caps over such commissions and ensure that all such incentivised employees have met all regulatory norms," the official said.

The issue may soon be taken up with other banks, the official added.

The central bank had initiated a probe after online portal Cobra Post alleged that the country's three largest private banks-ICICI Bank, HDFC Bank and Axis Bank-were indulging in money laundering. The three banks have denied the allegations, saying none of the conversations led to any transaction.

Private banks offer incentives to relationship and wealth managers mostly in the form of commissions and foreign travel. Banks also set steep targets for their staff to get business through insurance and other high-commission paying financial instruments.

"These structures need to be defined or more cautiously regulated," the official said. Financial services secretary Rajiv Takru had said last week that the RBI audit report had found certain "aberrations" in its probe into allegations of money laundering, but no risk of systemic failure was discovered.

"There is no risk of systemic failure. There are certain aberrations that we have discovered in the audit report. These would be addressed," Takru had said, adding that the RBI will take whatever action needs to be taken.

RBI deputy governor HR Khan had said that the central bank would initiate action against the erring banks. "Scrutiny has been done. Action is being taken both in respect of systemic level and at the individual banks," he had said.

But private sector banks say it will be imprudent to cap commissions. "Incentives are a part of all employment. Just because some may have not conformed to the norms does not mean all employees are violating them," said a senior executive with a private sector bank.


Source: Economictimes

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HSBC overhauls incentive structure for its sales staff

The Hong Kong and Shanghai Banking Corporation has overhauled incentive structure for its sales staff to prevent recurrence of misleading sales pitch to its customers and charges of aiding transactions that violate the law.

"We have changed the incentive structure beginning this year," Stuart P Milne, chief executive officer at HSBC India, said. "We now reward based on how many consultations they (staff) have with the customers. Did your customer increase the value of assets with you? These are the kind of things based on which we are incentivising."

This incentive structure revamp follows allegations of the lender aiding money laundering, and some of its staff misleading customers about investment options. The lender has faced such charges in other markets too.

"When you run as large a business as we do, you can expect a certain amount of wrong sales pitch," says Milne. "In India, we had no experience with black money. We have extremely strict controls on KYC, and this stuff is monitored carefully."

The bank, which has set its house in order after losses in retail and small business lending, faces tough time ahead with the new norms for lending to the priority sector.

Milne also said the new rule that foreign banks operating in the country must adhere to 40% priority lending within five years is not achievable or sensible. "The regulations are saying we have to go to 40% in five years while our balance sheets are doubling.... We don't think it is either sensible or achievable," Milne said here on Thursday.

According to the new Reserve Bank of India norms, foreign banks with more than 20 branches in India will have to channel 40% of their lending to priority sectors such as agriculture and small and medium businesses in five years.

"I don't think any of the Indian banks have been able to meet these targets fully after doing this for six decades. The large foreign banks are now mandated to do so starting April 1 in the next five years. That's going to be a massive challenge," Milne said.

He also said that HSBC is not keen to expand its branch network to enter small towns as it may not be viable. "We don't want to open branches in smaller cities. The economy is only growing at 5%. So for us, we can expand our footprint in India with our existing network," Milne said. "We have reasonable coverage in major cities. We need to make these branches work for us. Being in smaller cities is not particularly attractive."

HSBC has a network of 50 branches and has not set up any new branch in the past three years.

Unlike Indian banks that do business with the masses, foreign banks prefer to deal with the affluent and rich customers, which makes opening branches in rural centres unattractive.

"These (Indian) banks play across the customer spectrum, while we are much smaller, much more focused on international business. As an international bank, we are looking for finding customers where we can make a difference and where Indian banks cannot compete with us directly," Milne said.

The RBI caps the number of bank branches that all foreign banks can open annually at 14. The central bank is also encouraging foreign banks to open new branches in smaller towns to push the financial inclusion agenda, which is not going down well with most foreign banks.

"As a foreign bank, if we want to open branches in Bangalore and Hyderabad, the RBI will not accept those applications. They (Indian banks) can say I want these 10 branches in metros and, in return, we would open two in remote locations. They would accept it. We don't even have that say," Milne said.

While the RBI wants foreign banks to increase priority lending from 32% to 40% on the recommendations of a panel headed by former Union Bank of India CMD MV Nair, it wants foreign banks to match this over the next five years, starting April 1.


Source: Economictimes

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Karnataka Bank chief’s fiat to boost advances

Mobilisation and expansion of advances portfolio are important for improving the bottom line of the bank, said Managing Director of Karnataka Bank P. Jayarama Bhat.

Addressing the regional heads’ review meeting in Mangalore on Monday, he stressed on the importance of low-cost deposits and expansion in advances portfolio, through proper scrutiny and selection of borrowers, to improve the bottom line of the bank.

Bhat urged them to focus more on improved customer service and credit to retail sector – especially to micro, small and medium enterprises – besides agriculture and forex sector to ensure sustained growth.

He also underlined the need for speedy recovery of non-performing assets by initiating appropriate recovery action at right time.

Bhat said that in this era of keen competition when the banking industry growth rate is moderate, the quality of service and assets scores over the quantity. The strength of an organization lies in effective management of assets. Both staff and customers are critical to the growth and development in the banking sector, Bhat said.

M.S. Mahabaleshwara Bhat, General Manager, outlined the performance of the bank 2012-13 and presented goal for 2013-14.

A bank release said here that the General Managers P. Jairama Hande, M.V.C.S. Karanth and Meera B. Aranha, spoke on the occasion.

vinayak.aj@thehindu.co.in


Source: thehindubusinessline

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Union Bank launches overseas bond sale

Union Bank of India has launched an overseas US-dollar denominated bond sale through its Hong Kong branch.

According to banking industry sources, it is a benchmark 5-and-a-half-year transaction and the bank will look to raise at least $300 million through the sale of unsecured notes.

This overseas bond sale is the third tranche under a $2-billion European Medium Term Note programme, it is learnt.

The initial guidance for the coupon is US Treasury plus 315 basis points. One basis point is one hundredth of a percentage point.

Citigroup is the joint book runner for the bond sale. Moody’s has assigned Baa3 to the proposed US-dollar denominated senior unsecured notes drawdown.

srivats.kr@thehindu.co.in


Source: thehindubusinessline

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Muthoot Fincorp aims doubling MFI biz to Rs 600 cr in FY14

Gold loan major Muthoot Fincorp, the flagship brand of diversified Muthoot Pappachan Group, is targeting to nearly double its micro-lending business to Rs 600 crore this fiscal from Rs 330 crore in FY2012-13.

The Kochi-based company is also planning to hive off the micro finance business, which is currently managed under its gold loan company, into a separate company under the NBFC-MFI model as soon as it gets the go-ahead from the Reserve Bank, Muthoot Fincorp Chief Operating Officer Microfinance (MFI) Business Unit Sadaf Sayeed told PTI.

The diversified group, which nets its maximum income from the gold loan business, started its MFI business in April, 2010. As part of diversification and to offer more focus to the MFI business, the company had bought city-based Pancharatna Securities in January, 2012.

“If we get the RBI nod and are able to rename Pancharatna, then we are sure to nearly double our business this fiscal to around Rs 600 crore. Last fiscal we closed the books with an asset of Rs 330 crore,” Sayeed said, adding that the company serves around seven lakh women clients across Kerala, Tamil Nadu, Karnataka and Gujarat.

In its home state Kerala, the company has over 2.25 lakh clients with an asset size of Rs 180 crore. When asked about the average ticket size, he said it is Rs 12,000 and the interest it charges vary from 24 to 26 per cent.

To fund expansion, the company is also planning to come out with an NCD issue worth Rs 100 crore this fiscal. Once it has the RBI nod, it will also get into funding MSMEs and SMEs as the company sees big business opportunities there, Sayeed further said.

Its MFI business also includes extending dairy support loans to women under which it extends Rs 25,000-40,000 to women to buy or support dairy farming, he said. On the asset quality, he said, the net bad loan ratio is only 0.29 per cent.


Source: thehindubusinessline

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Three in fray for LIC chief post; interview likely on Apr 23

The interview for the selection of chief of country’s largest insurance company LIC is scheduled on Tuesday, with three candidates in fray for the high profile post.

A five-member panel led by Department of Personnel & Training Secretary P K Misra will choose the successor to D K Mehrotra, whose term as chairman of the state-run insurer ends on May 31.

“The interview for selection of Chairman is scheduled on April 23,” an official source said.

The candidates in fray for the top job are the present Managing Director of the company Sushobhan Sarkar and two other executive directors S K Roy and S B Mainak.

LIC, which manages assets worth around Rs 14-lakh crore of over 20 crore policyholders, has the largest market share among 24 players.

The source said while seniority would be the basis for deciding on the Chairman, the panel would also keep in mind the candidate who would be best suited to balance the interest of its policyholders, and give returns to the government as well.

The other members of the panel are Financial Services Secretary Rajiv Takru, Economic Affairs Secretary Arvind Mayaram, Insurance Regulatory and Development Authority (IRDA) Chairman T S Vijayan and former LIC Chairman S B Mathur.

After the interview, the panel will recommend the name to the Appointments Committee of the Cabinet for final approval.


Source: thehindubusinessline

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Syndicate Bank branch

Syndicate Bank opened its 75th branch at B.C. Road Town in Dakshina Kannada district recently.

A press release said here that M.G. Sanghvi, Chairman and Managing Director of the bank, inaugurated the branch, and informed the gathering about the progress of the bank during 2012-13. He also spoke about various products of the bank.

Sanghvi, who also visited Mangalore, interacted with the important clients of the bank. The bank has decided to enter into an agreement with Life Insurance Corporation of India to distribute its product through bank’s network, the release said.


Source: thehindubusinessline

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Vijaya Bank opens Bhopal branch

Vijaya Bank has opened its 1,360th branch at Kolar Road, Bhopal. The new branch was formally inaugurated by K. R. Shenoy, Executive Director, Vijaya Bank in the presence of Kalpana Srivastava, Commissioner, Women Empowerment and Managing Director, Women Finance Development Corporation.

The Guest of Honor was Nishank Kumar Jain, Director, Vijaya Bank. Speaking on the occasion, Shenoy said that Vijaya bank will adopt a host of innovative methods to ensure inclusive growth for all with an increased focus on opening branches in semi-urban and rural areas.


Source: thehindubusinessline

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Federal Bank in Rupay League

Federal Bank has joined the Rupay League of India’s own domestic payment network. N.R. Narayana Murthy, Chairman Emeritus of Infosys Ltd, unveiled the bank’s Rupay Brand Debit card at Kochi. The new card offers another option to Federal Bank’s customers to choose from. 

The debit card would be accepted on over 1 lakh ATMs of National Financial Switch member banks in the country and would be accepted on POS and Internet soon. Federal Bank is the first private sector bank and the 10th bank in the country to launch Rupay Card, a press release said. Rupay is the card scheme launched by the National Payment Corporation of India to offer a domestic, open loop, multilateral system which will allow all Indian banks and financial institutions in India to participate in the electronic payments market.


Source: thehindubusinessline

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More debate needed on financial code, says IRDA chief

There is a need for a debate on the Indian Financial Code (IFC), according to T. S. Vijayan, Chairman, Insurance Regulatory and Development Authority (IRDA).

Speaking at a seminar on IFC organised by the Institute of Company Secretaries of India (ICSI) here on Saturday, Vijayan said a standardisation of intermediation should be brought in by the proposed financial code.

IFC is a draft bill recommended by the Financial Sector Legislative Reforms Commission (FSLRC) in its report to the Government.

It has recommended that the existing regulators — SEBI, FMC, IRDA and PFRDA — should be merged into a new unified agency.

“If the financial code comes into force, Hyderabad will lose its only regulator and IRDA would not be there,” Vijayan, who recently took over IRDA chief, said.

Vijayan said there should be no ambiguity in various recommendations of the FSLRC, such as principle-based regulation and modalities on capital flows.

C. K. G. Nair, Secretary, FSLRC said the proposed code is for ‘tomorrow’s India’ as the economy is expected to touch $15 trillion by 2030 from the current $2 trillion.

S. N. Ananthasubramanian, President, ICSI said the seminar was the first initiative of its kind to debate the financial code.

naga.gunturi@thehindu.co.in


Source: thehindubusinessline

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Andhra Bank to auction Deccan Chronicle properties worth Rs 200 cr

Andhra Bank is set to auction properties worth Rs 200 crore of Deccan Chronicle Holdings Ltd (DCHL) to recover loans.

“We have started the process under the Sarfesi Act and identified some properties in Bangalore and Chennai,’’ B. A. Prabhakar, Chairman and Managing Director, Andhra Bank told Business Line here on Saturday.

Andhra Bank has an exposure of Rs 200 crore to the beleaguered company. “These are fully securitised loans. According to valuations, the indemnified assets should give our money back,’’ the CMD said, adding that the auction process would be completely transparent.

The outcome of proceedings in the ongoing case in the Debt Recovery Tribunal is also awaited. “If there is any shortfall in recovery of assets through auction of properties, the DRT route will be helpful,’’ Prabhakar said.

Andhra Bank is one of the lenders of the company along with ICICI Bank, Canara Bank, Axis Bank, IDBI Bank, Corporation Bank, YES Bank and IDFC Ltd, among others.

DCHL has about Rs 4,000 crore loans which are collateralised. Its script closed at Rs 3.48 after gaining 9.78 per cent on the Bombay Stock Exchange on Thursday.

naga.gunturi@thehindu.co.in


Source: thehindubusinessline

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HDFC Bank reaches new milestone

HDFC Bank, the second largest private sector bank has reached a milestone of 200 branches in Andhra Pradesh. The latest one has been set up in Vemulawada, a pilgrim town in Karimnagar district. The bank will focus on opening more branches in the rural parts of Andhra Pradesh.

Currently, more than 75 per cent of its total branches in the country are outside the top nine metros, which indicates its intent to growing its network in semi-urban and rural areas. This focus is part of the bank’s Board approved mandate to bring 10 million families (40 million individuals) into the banking fold, said Madhusudan Hegde, branch banking head – South, HDFC Bank. The bank has a countrywide network of 2,776 branches and 10,490 ATMs, a press release said.


Source: thehindubusinessline

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