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Saturday, January 11, 2014

Oriental Bank announces interim dividend of Rs 4 per share

It appears to be virtually a season of interim dividends for PSU stock holders with Oriental Bank of Commerce (OBC) joining the list of PSUs to announce such a move.

The bank's Board of Directors today approved interim dividend at Rs 4 per share for 2013-14, subject to the Centre’s approval, the bank said in a filing with the stock exchanges.

Apparently, the GoI wants the PSUs to come out with generous payouts to meet its cash crunch and the market is already betting on one of the largest such payouts from Coal India Ltd.

Source: Thehindubusinessline
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On expansion mode, Syndicate Bank to recruit 5,000 next fiscal

Syndicate Bank plans to recruit around 5,000 new staff in 2014-15.

In an informal chat with Business Line, on the sidelines of the inauguration of the office of the Field General Manager of the bank at Manipal on Friday, S.K. Jain, Chairman and Managing Director said some retirements are due in the coming year and the bank also plans to open more branches.

Considering this, the bank will recruit around 2,500 officers and an equal number of clerical staff. Of this, around 750 will be specialised officers.

The bank, which opened 145 branches during the current financial year, plans to open 250 branches by the end of the fiscal. “For 2014-15, we are planning another 200 branches. Our target is to reach 3,500 branches by end of next fiscal,” he said.

Syndicate Bank provides training to its employees in fields, such as credit, HR and forex.

The bank has started a special course for its employees and the training programme includes two weeks of classroom and two weeks of on-the-job training. The bank plans to provide etiquette training to its frontline staff, he said.


To a query on the management of non-performing assets, he said the bank’s NPA levels were below the industry average.

He said the bank is hopeful of showing a better performance on the NPA front during the December quarter vis-à-vis the September quarter.

The bank has formed a Stressed Tiny Assets Recovery (STAR) team in its branches to look at small NPA accounts of up to Rs 10 lakh.

Anjaneya Prasad, Executive Director, said the bank conducted three ‘brihat adalats’ in the last three quarters. Around 40,000 one-time settlement proposals were finalised in the adalats. With this, the bank recovered around Rs 100 crore in cash on the spot, he said.

The one-time settlement proposals would help recover around Rs 600 crore in due course. One more adalat is planned for February.

Prasad said the bank would start around 10 mid-corporate branches by the end of the financial year, exclusively catering to the needs of that segment.

Jain said the performance of the bank on the retail front is encouraging. Whatever the bank could do in six months, it did in the third quarter. “We are hoping to do better in the fourth quarter,” he said.


Jain said the bank board has approved the payment of an interim dividend of Rs 2.50 per share for 2013-14. The extraordinary general meeting of shareholders on Friday approved the allotment of equity shares on preferential basis to the Union Government.

The shareholders unanimously passed a special resolution to issue 2,26,34,676 equity shares of face value Rs 10 each at a premium of Rs 88.36 a share, aggregating to Rs 200 on preferential basis to the Government of India.

Source: Thehindubusinessline
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Slowing retail growth may impact earnings

IndusInd Bank kicked off the results season for banks on a slightly muted note. While the bank managed to deliver strong earnings growth, pressure on asset quality and slowing growth in retail loans played spoilsport. The stock lost 3 per cent on Friday.

Loans have grown at a steady pace over the last three years, and this quarter too, 24 per cent growth in lending supported the core performance of the bank. However, the weak link in the lending profile was the slowdown in high-yielding retail loans that have been the main driver of loan growth in the past. From loan growth of 30 per cent in the March quarter, growth in the retail segment has tapered off to 14 per cent in the December quarter.

Corporate loans

This may lead to pressure on margins as the low-yielding corporate segment now accounts for 53 per cent of the loan book. The yields on corporate loans are 4 percentage points less than those in the retail segment. After consciously building the loan-mix in favour of the retail segment in the last three years, slowing credit offtake in the retail segment is a worry.

CV segment

Within the retail segment, nearly half comes from commercial vehicle financing. IndusInd Bank acquired the vehicle finance business of Ashok Leyland in 2004. This segment grew 35 per cent annually over the last three years. However, due to the slowdown in the CV segment, lending growth in this segment has been muted at 2 per cent in the December quarter. Diversification to LCVs and the used commercial vehicles segment has helped offset the sluggishness in the medium and heavy commercial vehicles space.

Asset quality did see some pressure both in the corporate and retail portfolio, but as a percentage of total loans it was only a marginal 7 basis points increase over the previous quarter. In the retail segment, the pressure has been mainly from the commercial vehicles and construction equipment portfolio, which will recede once the segment starts to recover.

While the bank’s provision coverage ratio came down to 74 per cent in the December quarter (from 80 per cent in the last two quarters), it is still above the steady 70 per cent that it has maintained in the past few years.

Slowing growth in the retail segment, pressure on margins and incremental stress on asset quality may need some watching in the coming quarters. The company’s earnings have grown at 45 per cent over the past three years, and the sixth-largest private sector bank has always traded at a premium to ICICI and Axis Bank, on account of higher growth seen in the past. The stock is now trading at 2.4 its one-year forward book value, which is close to its historical average.

Source: Thehindubusinessline
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Muthoot Finance hopes to regain lost business

Muthoot Finance expects to recoup, in the next two-three quarters, the business it lost to the unorganised sector in the last two years or so as the central bank has relaxed the restriction on the amount of loan that non-banking finance companies can give against the pledge of gold jewellery.

According to George Alexander Muthoot, Managing Director, Muthoot Finance, the company lost almost 14 per cent of its business to the unorganised sector after the RBI, in March 2012, restricted the amount of loan that non-banking finance companies can lend to 60 per cent of value of the gold jewellery pledged.

RBI norms

The RBI has now allowed the NBFCs to lend up to 75 per cent of the value of the gold jewellery pledged.

After the RBI restriction on lending, the company’s business declined from Rs 25,500 crore in March 2012 to about Rs 22,000 now. “The regulator now has more comfort with the business model of gold loan companies,” said Muthoot.

Gold purity

He emphasised that the RBI stand on the need to give a certificate on the purity of gold to customers and the method of establishing ownership of gold jewellery are hygiene factors in the lending business and are welcome.

Source: Thehindubusinessline
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Central banks of India, Japan tie up

The central banks of India and Japan have concluded an agreement that expands the maximum amount of the Bilateral Swap Arrangement (BSA) between Japan and India to $50 billion.

With this agreement, the current BSA, effective for 3 years from 2012 to 2015, is expanded from the original size of $15 billion, the RBI said in a statement.

The BSA will now enable both countries to swap their local currencies (i.e., either Japanese yen or Indian rupee) against the dollar for an amount up to $50 billion

The BSA was signed by Governor Haruhiko Kuroda of the Bank Of Japan and Governor Raghuram G. Rajan of the Reserve Bank of India and has become effective from January 10.

The BSA aims at addressing possible short-term liquidity difficulties and supplementing the existing international financial arrangements, as one of the efforts in strengthening mutual cooperation between Japan and India.

This expansion of the BSA will contribute to the stability of global financial markets including emerging economies, the RBI said.

The BSA will be effective until December 3, 2015.

Source: Thehindubusinessline
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LIC launches new Jeevan Anand plan

LIC has re-launched its “Jeevan Anand” plan, a participating non-linked plan which offers an attractive combination of protection and savings.

This product provides financial protection against death throughout the lifetime of the policyholder with a special feature wherein it offers cover for whole life even after payment of maturity amount.

The policy can be taken from age 18 years to 50 years with age of policyholder on policy maturity age not exceeding 75 years. The policyholder can choose policy term from minimum 15 years to maximum of 35 years. The minimum sum assured is Rs 1 lakh and in multiples of Rs 5,000.

The policy matures at the end of the chosen policy term and the surviving policyholder will get Basic Sum Assured along with Vested Simple Reversionary Bonus and Final Additional Bonus.

The sum assured on death during the term of the policy will be higher of 125 per cent of Basic Sum Assured or 10 times of annualised premium.

Source: Thehindubusinessline
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Development Credit Bank renamed

Private sector lender Development Credit Bank Ltd will now be DCB Bank Ltd, an Reserve Bank of India notification said on Friday.

“We advise that the name of ‘Development Credit Bank Limited’ has been changed to ‘DCB Bank Ltd’ in the Second Schedule to the Reserve Bank of India Act, 1934 with effect from October 24, 2013,” RBI said.

DCB bank, which was converted into a scheduled commercial bank from a co-operative bank, has a network of 100 branches across 15 States in the country.

The bank’s net profit for FY12-13 was at Rs 102 crore compared with Rs 55 crore in FY11-12.

The balance sheet size had increased by Rs 2,602 crore to Rs 11,279 crore as on March 31, 2013.

Source: Thehindubusinessline
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HDFC plans to raise $ 300 mn

Housing Finance firm HDFC Ltd said it plans to raise $ 300 million through external commercial borrowing (ECB) to fund its expansion.

“About $ 300 million, we are going to raise but we have to wait for interest rate to stabilise,” HDFC Vice Chairman and Chief Executive Officer Keki M Mistry told PTI.

Asked whether the raising of funds will happen this fiscal or the next one, he said it is not yet decided.

HDFC is raising the money under the $ 1 billion ECB window for housing finance companies that the Reserve Bank allowed for funding affordable housing projects.

Last month, HDFC slashed interest rates by 0.25 per cent on home loans. The new rates for HDFC home loans of up to Rs 75 lakh have come down to 10.25 per cent, from 10.50 per cent.

In its monetary policy review last month, RBI kept the short-term lending rate unchanged at 7.75 per cent, while the cash reserve ratio (CRR) remained at 4 per cent.

Earlier, speaking at an ICAI event, Mistry said interest rate is likely to remain stable in the current quarter but may see some moderation in April-June quarter.

“I don’t see interest rate going down in the first quarter of this year as there is a huge demand for credit during the period due to various reasons. It is usually busy season,” he said.

Post April, RBI will have more options to bring down interest rate as credit off-take during that period will be low, he said.

Source: Thehindubusinessline
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Sunday, January 5, 2014

SBI red flags asset quality, says strain will last for 3 more quarters

Faced with rising stressed assets over the past two years, SBI has said it does not expect to come out of the woods till the end of 2014 and an uptick in growth is central to the turnaround of the banking system.

“Even when I joined I had said that I do not see anything (improvement in asset quality) before three quarters and I continue to maintain that. I don’t think you can see a turnaround that fast,” State Bank of India chairperson Arundhati Bhattacharya told PTI in an interview.

Replying to questions on bad assets, she said some improvement may be seen after the forthcoming general elections but any concrete signals can come only towards the end of 2014.

“You would see the stress lessening when you see GDP growth going up. Till such a time, the stress is going to be there,” she said, adding that revival of stressed projects is essential for the economy to revive.

Bhattacharya said she hopes that clearances granted by the Cabinet Committee on Investment (CCI) will result in some loan demand by March, as state-level approvals are likely to be secured by the companies over the course of this quarter.

CCI, since last June, has cleared 128 large projects worth over Rs 4 trillion (Rs 4 lakh crore), while over 200 more projects involving more than Rs 14 trillion are still stuck for want of various approvals. After the approval, projects need certain state-level clearances as well.

Hence, the tepid loan demand from corporates even in the current busy credit season. Till mid-December credit growth was a poor 14.7 per cent, according to RBI data.

SBI’s net profit dipped 35.08 per cent to Rs 2,375 crore in the July-September quarter because of 43.99 per cent jump in provisioning for bad loans at Rs 2,646 crore and a massive spike in pension coverage.

Source: Thehindubusinessline
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IT-enabled services from Vijaya Bank

In pursuing excellence in customer service, Vijaya Bank has identified Information Technology to be the key driver for enhancing the banking experience.

This has led the bank to launch IT-enabled services for customers. Vijaya Bank is one of the first few banks to achieve 100 per cent CBS implementation, large-scale ATM installation, launch of net banking, mobile banking, and transaction-related SMS alerts.

The bank, on its 83rd anniversary, launched V-ePassBook+ — a mobile application that lets the user carry passbook details on his/her mobile device.

Facilities provided

Some of the facilities provided are: the customer can maintain the passbook details of multiple accounts, make personal notes on each passbook entries, maintain personal accounts and tag transactions of passbook to it, record transactions occurring outside the bank in these personal accounts, a mini version of bank’s website with links to main site and inbox facility to receive important messages from the bank with links to get details from bank’s website.

Other facilities include: register requests, complaints search for any transaction within period selected by the user, share account details such as no, IFSC code of branch with others through email/SMS to facilitate inward remittances and refer the banking experience with friends and relatives by email and SMS.

Customers can download the application to their Apple and Android devices. The Windows version will be launched shortly. On installing the application on the mobile device registered with the bank for transaction-related SMS alerts, a One Time Password will be received.

On entering this OTP, customer will be asked to enter the PIN number and the application is ready for use.

Source: Thehindubusinessline
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Bank of Maharashtra to focus on small-scale, retail segments

Bank of Maharashtra has opted for qualitative realignment of assets and plans to focus more on advances to the micro, medium and small enterprises and retail segment instead of large corporates.

Currently, the bank has an exposure of 11 per cent to the retail sector and 16 per cent to the MSME sector.

“We have set a target of 15 per cent to the retail sector and 20 per cent to MSME sector by next fiscal (2014-15),” Chairman and Managing Director Sushil Muhnot, told Business Line.

For speedy recovery of MSME and retail stressed assets, the bank has initiated a one-time settlement scheme for loan sizes up to Rs 5 lakh. Exposure in this category is around Rs 800 crore.

“The scheme has been successful so far. Our main aim is to recover these non-performing assets by offering incentives to borrowers. Depending on the response to this exercise, the bank is planning to cover loan portfolio up to Rs 10 lakh in the next phase,” he said.

Branch network

The bank is planning to increase its network of branches to generate additional business.

“Branches should generate business instead of just handling transactions. We are planning go for a hub and spoke model to expand our operations,” he explained.

The bank has 1,863 branches and is planning to to open 65 more before March 31. “The bank’s capital requirement will increase in the coming months. We will examine various options to infuse additional capital in the next fiscal. The bank’s capital adequacy ratio is about 11 per cent,” Muhnot said, referring to compliance with Basel-III norms.

Source: Thehindubusinessline
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PSU bank employees to go on 2-day strike from Jan 20: UFBU

Operations at all the public sector banks and regional rural banks are likely to be affected for two days from January 20 as the United Forum of Banks Unions has given a strike call, demanding wage revision as well as the resolution of certain other issues.

The National Convener of UFBU M. V. Murali told PTI today the Centre and the Indian Banks’ Association (IBA) have failed to settle the 14-month long pending demand for 32 per cent wage revision for about a million strong staff in the banking sector.

He also urged the Government to immediately halt the ongoing reforms in the banking sector as it would pave the way for the arrival of a number of foreign banks.

Foreign and Indian private corporate sector banks would not serve the needs of the common man in any manner, Murali said.

The wage revision of public sector bank employees has been due since November 2012.

UFBU is an umbrella organisation of nine bank employees and officers' unions.

There are 27 public sector banks in the country with an employee strength of about 8 lakh. There are about 50,000 branches of these banks across the country.

Source: Thehindubusinessline
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SyndMobile – offers many choices

In an effort to provide an additional delivery channel to customers, Syndicate Bank introduced Mobile Banking services such as balance enquiry, mini statement of account, inter, intra-bank fund transfer, and cheque book request. Everyone can use SyndMobile using any type of phone — be it a basic phone or the latest smart phones.

Syndicate Bank is one of the first banks to enable mobile banking in the latest Windows 7.5/8 phones, and also one of the few banks which have enabled remittance by using bank account and IFSC code of the beneficiary in the USSD mode.

Mobile banking services can be availed by by submitting an application at the customer’s home branch. On successful registration, the customer receives a confirmatory SMS containing the Activation Code and URL to download the app. Customer needs to collect MPIN from the home branch.

Mobile Banking facility is available to customers through SMS/IVR Platform, GPRS/WAP, NUUP (USSD). Those with Java-enabled Android/WindowsPhone/iphone can either use the SMS/IVR platform or download the mobile banking app. Those witha basic model can either use the NUUP platform (only for BSNL/MTNL SIM) or SMS/IVR platform according to their SIM. Except for NUUP platform, there is no restriction on service provider for the customer’s mobile.

InterBank fund transaction can be done through IMPS either using MMID/ Mobile Number or IFSC code /Account Number.

Source: Thehindubusinessline
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Vijaya Bank targets CASA share at 25% of total deposits in 2 years

Vijaya Bank hopes to take its CASA (current account/savings account) deposits to 25 per cent of its total deposits over the next two years to bring down its costs.

Its immediate target is to increase CASA to 20 per cent from 17.83 per cent of its total deposits now, according to V. Kannan, Chairman and Managing Director. Vijaya Bank will enhance its service to grow the CASA deposits.

This will “enable us to compete with our peers better,” he said. CASA of most other public sector banks stands above 35 per cent.

The move will also help the bank improve its net interest margin, from the current 2.12 per cent. “Anything above 2.7 per cent can be considered ideal, and we hope to get there in another 2-3 years,” he said. Kannan, who recently took over as the bank’s head, says CASA can be improved only by improving the bank’s service quality. “My first priority will be to ensure customer delight at every step.” Kannan was here to participate in the Vijaya Bank Workers’ Organisation’s 13th Regional Conference.

Govt share up

With a business of Rs 1.88 lakh crore, the bank is in the 17th place in terms of business size among the 19 public sector banks. “We expect the total business to cross Rs 2 lakh crore by the end of the current financial year,” he said.

Last week, the government approved conversion of its perpetual non-cumulative preference shares in the bank into equity. Following this, the government's shareholding has gone up to 71.82 per cent from 55 per cent earlier.

According to Kannan, Vijaya Bank’s strength is its asset quality. Its gross non-performing assets (NPA) stand at 2.77 per cent, while that of most other public sector banks, it is above 4 per cent.

For the second quarter of the current financial year, the bank posted a growth of 10.4 per cent in net profit to Rs 136 crore, against Rs 123 crore in the comparable previous year quarter. It proposes to open 50 branches before the end of fiscal 2014, taking the total number of branches to 1,550.

Source: Thehindubusinessline
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J&K Bank to increase credit to over Rs 25,000 cr in next 3 years

Expressing satisfaction over the performance of J&K Bank in various sectors, its Chairman & CEO Mushtaq Ahmad has said the lender will continue to take steps for further improvements and increase credit levels to over Rs 25,000 crore from the current Rs 18,000 crore.

"In next two to three years, J&K Bank's credit book will increase beyond Rs 25,000 crore from the existing Rs 18,000 crore," Ahmed said.

He was delivering the inaugural lecture at valedictory function of Platinum Jubilee celebrations of the bank here last night in the presence of state Governor N N Vohra and Chief Minister Omar Abdullah.

"Everybody knows during the last three to four years there has been a slowdown in the Indian economy. There was very small credit growth in rest of the country - it has been around 15 per cent.

"But we have been growing in the Jammu and Kashmir by 25 per cent as per out credit book -- that means a great satisfaction to us," he said.

On the growth of the bank, he said after being set up having few branches and then battling the crisis during the 1947 partition, it has come a long way and now had 639 branches.

"When we see towards the contribution to the state -- out of a total credit of Rs 27,000 crore -- J&K Bank alone has contributed Rs 18,000 crore, which is about 67 per cent of the total," he said.

As far as total priority sector advances are concerned, J&K Bank has contributed 63 per cent, he said adding as regards agriculture credit, it stood at 76 per cent to the sector, which is the backbone of the state's economy.

Source: Economic Times
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Banks free to charge 'reasonable ATM fees': RBI's Chakrabarty

Amid growing clamour from banks to charge customers for transactions at ATMs to make them economically viable, RBI Deputy Governor K C Chakrabarty on Thursday said the regulator will have no objections if the lenders charge "reasonable fee" for such services.

"If banks charge a reasonable fee on ATM transactions then the RBI will have no objections," Chakrabarty, in charge of banking services at RBI, told reporters on the sidelines of an event here this evening.

The senior-most Deputy Governor said till now, no request has come from the banks to raise the fees for transacting at ATMs.

Ideally, the issue of charging customers for ATM usage should be left to competitive market forces and banks should be allowed the liberty to decide their own offerings, the commercial banker-turned-central banker said.

Following a brutal attack on a woman inside an ATM of Corporation Bank in Bangalore in November last, banks have been asked to ensure round-the-clock armed security at their cash dispensing kiosks.

This did not find favour with banks, who argued it would be unfeasible to have 24-hour security at ATMs. Reports said lenders are considering charging customers on a per transaction and shutting certain ATMs at odd hours.

At present, a customer can use his/her bank's ATM as many times in a month, while free transactions at cash outlets of other banks are capped at five a month.

A bank pays Rs 15 plus taxes for every transaction to the other bank even for the free transactions.

"If banks are going into losses they will have no choice but to raise charges," Chakrabarty said.

Banks are learnt to be discussing the issue within the apex industry body Indian Banks Association and will be coming out with a decision soon.

Meanwhile, commenting on the recent Financial Stability Report's suggestion to reduce the cap on single entity or group exposure caps, Chakrabarty said, "not only RBI but all international regulators are looking into risks of corporate exposure."

Source: Economic Times
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Corporation Bank launches campaign for agri credit delivery

Corporation Bank has launched a year-long campaign for the delivery of agriculture credit and financial inclusion initiatives at all its branches.

A statement by the bank said here that the campaign has been launched in tune with the ‘International Year of Family Farming’, declared by the United Nations for 2014.

The focus of Corporation Bank will be to assist farming families, especially having small and marginal holdings; the weaker sections, minority communities, and self-help groups and joint liability groups, it said.

Lending to agriculture and allied activities to farming families and assessing their needs comprehensively will be pursued during the camps at the bank’s branches.

Extending the services and products of the bank, including savings accounts, recurring deposits, micro insurance and remittance facilities, will also be among the main activities proposed, the statement said.

The objective of the campaign is to stimulate sustainable development of agricultural systems focused on farming families, community units, self-help groups, and cooperatives working in rural areas, the statement added.
Source: Thehindubusinessline
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