After IOB, RBI may pull up Allahabad Bank, Central Bank of India and Andhra Bank

The Reserve Bank of India may now turn its focus on Allahabad Bank, Central Bank of India and Andhra Bank as their dodgy loans and provision for loan losses are getting precariously close to that of Indian Overseas Bank's -the bank on which the central bank has imposed restrictions on branch expansion.

On Monday, the Chennai-based Indian Overseas Bank had informed the Bombay Stock Exchange that the RBI has initiated a Prompt Corrective Action (PCA) on the bank, which is triggered if bad loans rise above 10 per cent, capital adequacy ratio slips below 9 per cent, and return on assets falls below 0.25 per cent.

According to a report by Asian Markets Securities, in case of some public sector banks, the gross impaired loans -which includes gross non-performing assets and gross restructured loans -have crossed 15 per cent. This comes at a time when demand for credit has dried up and slippages continue to be at an elevated level which in turn could hurt banks' earnings.

The report says that as on March 2014-15, the gross impaired loans of Central Bank was 21.3 per cent, Andhra Bank's was 16.4 per cent, Allahabad Bank's was 16.6 per cent and Punjab National Bank's was 15.9 per cent. During the same period, the provision coverage ratio -the total provisions set aside to write off bad loans -is less than 60 per cent.

Banking experts said the move to impose PCA on Indian Overseas Bank was taken after the RBI inspected the bank and found several irregularities.

The bank cannot open new branches, declare dividend and recruit new employees without RBI's approval.

"However, the regu lator has not placed any restrictions on lending, which means that the regulator is more concerned about the way the bank is run," they added. In a notice to the ex change, the bank has said that "this action will not have any material impact on the growth prospects performance of the bank. The directions given by the RBI are for improving its internal controls and consolidation of its activities".

In the past, the central bank had initiated Prompt Corrective Action on United Bank of India after it came to light that the bank's bad loans were much more than declared.

The restrictions were, however, lifted after two years once its performance improved.



Source : Economic Times

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Central Bank of India tops list with highest bad loans among PSU banks

Central Bank of India has topped the list of public sector banks with maximum bad loans including restructured assets as a percentage of total advances.

According to the data provided by the RBI to the Finance Ministry, Central Bank of India’s 21.5 per cent assets are either bad or have been restructured to save them turning non-performing assets (NPAs).

The other banks which have significant amount of gross NPAs and restructured loans include, United Bank of India (19.04 per cent), Punjab & Sind Bank (18.25 per cent) and Punjab National Bank with 17.85 per cent as on December 2014.

Indian Overseas Bank, State Bank of Patiala, Allahabad Bank and Oriental Bank of Commerce all have bad and restructured loans in excess of 15 per cent.

The rising bad loans have become a major concern for the Reserve Bank as well as the government.

Most of the restructured loans are from the corporate sector. The top-30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the gross non-performing assets of PSU banks at Rs 2,60,531 crore as on December 2014.

There are four kinds of restructuring. The first and foremost is restructuring of advances extended to industrial units, restructuring under Corporate Debt Restructuring and restructuring of loans extended to MSME as per RBI guidelines.

However, banks have their own operational rule for restructuring of small loans.

RBI has not prescribed any board or bank level position at which these loans need to be approved.


Source : Thehindubusinessline

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Moody’s downgrades Central Bank, IOB

Moody's today downgraded two banks to below investment grade in possibly the start of similar rating revisions for other weaker state-owned lenders.

The agency downgraded to Ba1 from Baa3 its ratings on local and foreign-currency deposits of Central Bank of India and Indian Overseas Bank. IOB's senior unsecured debt was also downgraded to Ba1 from Baa3.

Moody's action reflect its assumption of a lower level of support from the Government, which is rated Baa3/BBB-/BBB-.

State supports typically gives a lift of anywhere between 2 and 6 notches to a standalone rating of a lender, according to analysts.

Even after today's downgrades, CBI and IOB final ratings have government support of five and four notches above their standalone ratings, respectively. Central Bank of India and IOB have standalone ratings of B3 and B2, respectively, from Moody's.

On February 7, the Government announced that it would inject Rs 6,990 crore in capital into nine state-owned banks, the first portion of the Rs 11,200 crore capital infusion earmarked for the current fiscal year to March 31 2015.

Most importantly, the Government changed the criteria for this capital injection, using banks' profitability as a key parameter.

Under the new criteria, the preference for capital infusion will be given only to banks with average returns on assets over the past three years and returns on equity over the past one year that surpass the corresponding weighted average ratios of state-owned banks overall.

Earlier, state owned Indian banks with weaker capital levels received higher capital allocations, regardless of their size or profitability.

The change in criteria was negative for less-profitable Indian banks, such as Central Bank of India, IOB and IDBI Bank, Moody's said in mid-February.

Moody's also said last month that Punjab National, Bank of Baroda, State Bank of India and Syndicate Bank would benefit because they were among the more profitable state-owned lenders.

The agency said today it continued to assume a very high probability that the Government would support Central Bank of India and IOB.

"However, the change of government policy means that the standalone credit quality of public sector banks has become a more important consideration for the senior unsecured and deposit ratings of the banks, compared to previously, when Moody's rated all SOE banks at the same level as the Government of India," Moody's said.

The agency noted that this new approach had been reflected in the capital allocations earmarked for the fiscal years ending March 2015 and March 2016.

For 2015-16, the government has only allocated Rs 7,940 crore for capital infusions even as the requirement remains high.


Source : Thehindubusinessline

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Central Bank to raise Rs. 660 cr

State-run Central Bank of India is in the process of raising Rs. 660 crore through conversion of perpetual non-cumulative preference shares held by the government into equity shares.

“We are converting our PNCPS into equity which will help us raise around Rs. 660 crore,” the bank’s Executive Director R K Goyal told PTI.

He said the bank is waiting for some of the approvals and may raise it within a week’s time.

PNCPS are non-equity instruments which do not qualify to be counted for Tier-l capital of the banks.

The government has, in the past, infused capital by way of these instruments in public sector banks.

In the current fiscal, the bank has raised Rs. 1,208 crore in two tranches from Life Insurance Corporation of India by allotting shares on a preferential basis.

In August, the lender had sold 7.10 crore shares to LIC and raised Rs. 581.61 crore.

Earlier this month, it had raised Rs. 626 crore by allotting over 8.28 crore shares to the life insurer on a preferential basis.

LIC now holds around 15 per cent stake in the bank.

The government’s holding as of September 30, 2014 stands at 84.20 per cent in the city-based bank.

In order to raise funds, the bank has initiated the process to divest its stake in non-crore assets.

The lender is selling stake in its housing finance subsidiary Cent Bank Home Finance and Infrastructure Leasing and Financial Services (IL&FS), where it is one of the promoters.

In Cent Bank Home Finance, the bank holds over 60 per cent and in IL&FS it is having 8.34 per cent stake.

The bank has appointed ICICI Securities to find a potential buyer for its stake in housing finance business and SBI Capital for IL&FS stake.

The bank’s Chairman and Managing Director Rajeev Rishi had earlier said that the bank needs Rs. 2,000 crore capital in the current fiscal.

The city-based bank reported a net profit of Rs. 103 crore in the July—September quarter as against a loss of Rs. 1,509 crore in the year—ago quarter.


Source : Thehindubusinessline

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Central Bank of India launches 'Cent Aspire'

You can now get the power of liquidity in a fixed deposit scheme.

State-owned Central Bank of India has launched a novel deposit scheme that has a free credit card bundled with it.

Under 'Cent Aspire', any individual can get a free credit card against fixed deposit with the bank for deposit amount of Rs. 20,000 and above, K.K.Taneja, Field General Manager, Central Bank of India, told reporters here on Monday.

"The main idea is to ensure that our customers in semi-urban and rural areas get a credit card product and liquidity in a fixed deposit scheme," Taneja told BusinessLine.

As much as 66 per cent of the branch network of 4,700 branches are located in rural and semi-urban areas, Taneja said.

Cent Aspire will enable the customers in these branches to avail themselves of a credit card, he said.

The maximum credit limit that could be availed through the credit card will be Rs. 4,00,000.

Better features

One of the salient feature of the credit card is that it comes with a personal accident cover of Rs. 1,00,000 (against

death). As much as 80 per cent of the deposit amount could be availed as credit limit.

Also, the interest rate on the amount outstanding beyond the credit period is lower than the prevailing interest rates on card receivables, Taneja said.

Home loan

Central Bank of India on Monday also launched a new housing loan product -- Cent Home Double Plus scheme.

This State owned bank's home loan portfolio had recorded a 40 per cent increase on a year-on-year basis as of end September 2014.

srivats.kr@thehindu.co.in



Source : Thehindubusinessline

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Central Bank cuts size of corporate loans

To rein-in bad loans, Central Bank of India has drastically cut the ticket size of loans it gives to India Inc.

The public sector bank has capped fresh loan exposure at Rs 150-200 crore per company as against Rs 300-400 crore earlier.

The bank has also pared its corporate loan exposure by Rs 13,797 crore in the last one year.

Instead, it has focused on giving loans to the non-priority sector such as agriculture, retail, and micro and small enterprises (MSE).

“This (curtailing the ticket size of loans to companies) is a risk mitigation measure. We are not renewing low-yielding short-term loans,” said BK Divakara, Executive Director.

The bank believes multiple smaller loans, as opposed to a few large corporate loans, can reduce the risk of bad loans.

The bank’s corporate credit portfolio has come down from Rs 1,13,573 crore in September-end 2013 to Rs 99,776 crore in September-end 2014.

According to Executive Director Raj Kumar Goyal, Central Bank has taken a conscious decision to focus on non-priority sector loans. This has also helped correct the earlier skew in the bank’s loan portfolio towards corporate loans.

Corporate credit accounted for 53.55 per cent of total loans in the September 2014 quarter, as against 63.58 per cent during the corresponding quarter last year. Agriculture loans account for 17.89 per cent of total loans (12.73 per cent as on September-end 2013); retail accounts for 16.24 per cent (13.37 per cent); and MSE account for 12.32 per cent (10.33 per cent).

Rajeev Rishi, Chairman and Managing Director, said after his bank posted a huge loss of Rs 1,509 crore in the second quarter of FY14, it undertook course correction, focusing on recovery from bad loans, increasing retail credit and mobilising low cost deposits.
Profits

In the second quarter ended September 30, 2014, Central Bank saw a turnaround in its fortunes, reporting a net profit of Rs 103 crore.

Year-on-year bad loans, in gross terms, edged down to Rs 11,440 crore as against Rs 11,563 crore during the corresponding quarter last year.


Source : The Hindu

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Central Bank turns around, posts Q2 net profit of Rs. 103 cr

Central Bank of India has turned around to report a net profit of Rs. 103 crore in the second quarter ended September 30, 2014, against a loss of Rs. 1,509 crore in the year-ago period.

The public sector bank reported a 27 per cent rise in net interest income at Rs. 1,828 crore (Rs 1,434 crore in the year-ago period).

Other income nudged up 7 per cent to Rs. 403 crore (Rs 378 crore).

Year-on-year, bad loans nudged down Rs. 123 crore to Rs. 11,440 crore as at September-end 2014 as against Rs. 11,563 crore as at September-end 2013.​ 


Source : The Hindu

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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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Central Bank opens liaison office in Hong Kong

The third largest public sector lender by branches Central Bank of India  said it has opened a representative office in Hong Kong.

The representative office will facilitate the bank to tap the huge business potential in the thriving island city by providing marketing and liaisoning, its chairman and managing director Rajeev Rishi said in a statement.

He said the office will not engage in core banking but will use its local presence to explore business opportunities with the aim of establishing a long—term presence and penetrate the markets.

Source: thehindubusinessline

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Central Bank signs MoU with NCDEX

Central Bank of India has entered into a memorandum of understanding with NCDEX Spot Exchange (NSPOT), the e-market place for farmers. The objective is to cater to the needs of the farmers, agri processors and market participants.

A tri-partite agreement was signed by Central Bank of India, NSPOT and two collateral managers viz. Navjyoti Commodities and Origo Commodities in AP and Karnataka States.

Central Bank of India is the first Bank to provide this type of facility to the farmers in these two States.

Speaking on the occasion, N. K. Balakrishnan, Field General Manager said the bank’s association with NSPOT will promote easy finance to farmers against their stock and will also bring in transparency and efficiency in lending operations benefiting farmers, traders, SMEs etc.

Under this agreement, the customers desirous of storing their produce for better price realisation can avail this facility of loan. They would deposit their goods in NSPOT accredited warehouses and the banks would provide loans against the deposited goods. When the goods are sold, the proceeds directly go to the banks.

Central Bank has 309 branches in these two states with a total business of Rs 29,300 crore.

NSPOT is a wholly owned subsidy of NCDEX – a leading commodities exchange in agri. commodities, ferrous metals and steel in India. This platform is now accessed by more than 40,000 farmers on daily basis under this e-mandi programme.

Somasekhar.m@thehindu.co.in

Source: thehindubusinessline

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Central Bank not to raise lending rates now

State-run Central Bank of India (CBI) is not planning to increase its lending rate even though it has been witnessing an uptick in cost of funds following RBI’s liquidity tightening moves, a top official said today.

“Last two months, we have seen an escalation in cost of funds. But whether this is going to result in a change of base rate, I don’t think so as of now,” its new chairman and managing director Rajeev Rishi told reporters.

He said the bank may think of raising the base rate or the minimum rate of lending as and when a need arises.

“Our base rate is at 10.25 per cent and I am comfortable as of now,” Rishi said.

It can be noted that the Finance Ministry is against the hiking lending rates in times of a slowdown in economic growth. A couple of banks, including Union Bank of India and Andhra Bank, have hiked their offerings in the recent past, though.

However, most private sector banks like ICICI Bank, HDFC Bank and Axis Bank have hiked their rates following the RBI moves.

A delay in passing the increase in cost of funds can impact a bank’s net interest margin for the particular period, and hence affect the profitability.

Rishi said so long as the bank is able to protect its NIM —— it reported a NIM of 2.68 per cent in Q1 —— it will not react in a “knee-jerk” fashion to raise the lending rates.

Pressure on the cost of funds is emanating from the RBI’s liquidity tightening moves starting July 15 aimed at curbing speculation in the forex markets. The moves, which include a cap on the bank’s overnight borrowing, have pushed up rates in the money markets.

Meanwhile, Rishi said the asset quality is the primary focus for him and added the bank is putting in extra efforts on the recoveries front to bring down gross bad loans to 5 per cent by March from over 6 per cent now.

The stress will continue for at least the next two quarters, he said.

The bank has applied for capital infusion from the government, Rishi said but declined to give an exact amount which it has sought. “As of now we are comfortable with tier—I capital, which is above 8 per cent,” he said, adding he expects funds to come in by December.

Source: thehindubusinessline

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Central Bank, Suvidhaa launch a channel card for retailers

Central Bank of India and Suvidhaa today launched a prepaid card for retailers that will enable people to pay their utility bills, taxes and book tickets by going to the nearest Suvidhaa outlets.

The Suvidhaa retailer will charge a small service fee over and above the bill amount.

The card can be used by any customer, including those who do not have a bank account or an email id.

There are over 65,000 Suvidhaa retailers across 2,800 towns in India.

Source: thehindubusinessline

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Central Bank of India to open 23 more branches in Vizag zone

The Central Bank of India is in the expansion mode in the north coastal districts of Andhra Pradesh as 23 more branches will be added during the current financial year, according to N.K Balakrishnan, the Field General Manager in charge of Karnataka and Andhra Pradesh, Central Bank of India. The Visakhapatnam zone covers the five districts - Srikakulam, Vizianagaram, Visakhapatnam, East Godavari and West Godavari.

Balakrishnan was speaking to reporters here on Wednesday after opening a retail asset branch of Central Bank in the city. He said it was bank’s 75th retail asset branch in the country.

“Our focus is on retail lending and our interest rates are competitive and much cheaper than those offered by private banks," he said. The bank was offering customers 30-year tenure for housing loans and there would be on-the-spot sanctions if the customers brought with them all the required documents.

He added the bank was offering loans to small and medium enterprises at 10.5 per cent and for women no security would be needed up to Rs 1 crore if they wanted to set up SMEs. The bank itself would pay the guarantee fee under the scheme specifically meant for women and has been named “Cent Kalyani”. Balakrishnan urged women entrepreneurs to make use of it.

He mentioned the bank was making all efforts to compete with the new generation private banks and “in fact the customers will get better service in our branches without the extra cost and hidden charges he/she would have to bear in the private banks.”

He said the bank would appoint business facilitators to promote retail lending. M. Achi Reddy, the chief manager, also spoke in the event.

sarma.rs@thehindu.co.in
Source: thehindubusinessline

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Central Bank Q1 net plummets 94% on higher provisioning, depreciation

A sharp jump in provisions towards bad loans and depreciation in investments dragged down Central Bank of India’s net profit in the April-June quarter. Net profit dropped 94 per cent to Rs 22 crore in the April-June quarter against Rs 336 crore in the year-ago period.

In the reporting quarter, the public sector bank made bad loan provisions of Rs 825 crore, including Rs 189 crore towards restructured assets, against Rs 382 crore (including Rs 196 crore towards restructured assets) in the year-ago period.

Provision towards investment depreciation was at Rs 170 crore against a write-back of Rs 39 crore.

The incremental increase in bad loans and restructured loans during the quarter was at Rs 2,073 crore and Rs 3,024 crore, respectively.

Doubtful advances

As per the notes to the bank’s accounts, it had to make provisions for the standby letters of credit extended to certain merchant exporters and manufacturers of diamond jewellery, including Winsome Diamonds and Jewellery, getting devolved as funded exposure aggregating Rs 956.33 crore. Further, an outstanding advance of Rs 370 crore to a marketing federation under the Agriculture Ministry became doubtful and provision had to be made.

The bank’s net interest income (difference between interest earned and interest paid) increased by 11.54 per cent to Rs 1,537 crore (Rs 1,378 crore in Q1FY2013). Non-interest income grew 86 per cent at Rs 598 crore (Rs 322 crore).

Net interest margin (net interest income/ average total assets) improved a tad to 2.68 per cent in the reporting April-June quarter against 2.64 per cent in the year-ago period.

According to Chairman and Managing Director M.V. Tanksale, the bank will increase the spread (over the base rate) on large corporate loans to protect the net interest margin.

Given the downturn in the economy, the bank will revise downwards the projected credit growth target of 17-18 per cent for FY2014, he said. However, the deposit growth target of 16 per cent remains.

Tanksale said once the economic environment improves, the bank’s inherent strengths will show up.

Central Bank of India will aim to bring down gross non-performing assets and net non-performing assets in percentage terms to 5 per cent (6.03 per cent as at June-end 2013) and 3 per cent (3.85 per cent) by March-end 2014.

The Central Bank of India share closed at Rs 62.05, down 3.8 per cent on the BSE.

Winsome Diamonds CDR

The corporate debt restructuring cell will consider the banking system’s Rs 4,000-crore exposure to Winsome Diamonds for possible restructuring on Thursday, said Tanksale.

The outcome of the forensic audit conducted by banks on Winsome will decide whether the loan can be restructured.

Source: thehindubusinessline

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Rajeev Rishi appointed CMD, Central Bank of India

Central Bank of India has a new Chairman and Managing Director in Rajeev Rishi. Prior to this elevation, Rishi was an Executive Director at Indian Bank.

Rishi will assume charge on August 1. His appointment is for a period of five years.

Central Bank of India’s incumbent Chairman and Managing Director M.V. Tanksale is due to retire on July 31.

Rishi has served as Executive Director at Indian Bank since October 1, 2010.

Before joining Indian Bank, Rishi was General Manager at Oriental Bank of Commerce.

Srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Central Bank of India launches ‘Wonder Card’

The Central Bank of India on Wednesday rolled out a new debit-cum-credit card, called ‘Wonder Card’, for the benefit of salaried customers in Bihar.

Speaking at a function here after launching the Wonder Card, Central Bank of India Executive Director Malay Mukherjee said the new card will enable a customer to withdraw a fixed amount in excess of his salary to be adjusted against deposit under salary head in the next month.

A Wonder Card holder with a salary of up to Rs 25,000 per month can withdraw an excess amount of Rs 10,000 against his salary amount, while one with Rs 60,000 salary could withdraw Rs 25,000 excess amount, he said, adding, such a card holder with salary of more than Rs 60,000 per month could withdraw up to Rs 60,000.

Mukherji said withdrawal of excess amount against salary will be adjusted from the next month’s salary with interest at the bank’s base rate at 10.25 per cent, in addition to four per cent interest.

He added Bihar has become only the second state after Maharashtra where the Wonder Cards have been launched for the salaried account holders.

Mukherjee distributed ten Wonder Cards and Rs 12 crore loan among 80 people on the occasion.

Source: thehindubusinessline

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At Central Bank, CCTVs to help monitor ‘fishy’ deals too

Central Bank of India has found one more use for the CCTVs in its branches. Besides security, the bank will scan the video recordings for fishy dealings, if any, in the sale of financial products and services.

This move follows an undercover sting operation by online magazine Cobrapost at some of the branches of 30 banks and insurance companies, where officials allegedly offered to convert tax-evaded money into legitimate money.

According to R.K. Goyal, Executive Director, Central Bank of India, “Our bank’s chief security officer will call for video recordings of different branches on sample basis. Almost all our branches have CCTVs (closed circuit TVs).

“After going through the recordings, if the officer finds that something fishy is going on in any of the branches, the matter will be escalated to the top management.

“So, we are taking all steps (to prevent regulatory violations).”

In this regard, the public sector bank will select one branch under the jurisdiction of each of its 77 regional offices for the investigation. As of March-end 2013, it had 4,294 branches.

“This (investigation) will also send a message to the field staff that they should comply with know-your-customer (KYC) norms. Only then they should open accounts and allow transactions,” said Goyal.

Central Bank conducted an internal investigation at its large corporate branch in Delhi to check if violation of KYC norms, as alleged by the online magazine, had taken place.

KYC is a customer identification process.

It involves making reasonable efforts by banks to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, and reasonableness of operations in the account in relation to the customer’s business which in turn helps the banks to manage their risks prudently.

The objective of the Reserve Bank of India’s KYC guidelines is to prevent banks being used, intentionally or unintentionally, by criminal elements for money laundering.

“Our investigation report is on our records now. There is not even a single transaction where KYC norms have not been complied with….

“When we investigated all accounts opened in that branch (large corporate branch, Delhi) and all transactions, we found that they have all been done exactly as per regulatory requirements. So, there is nothing wrong,” said Goyal.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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Central Bank of India begins profiling defaulters

Central Bank of India has kicked-off an exercise to profile its defaulting borrowers. This move is aimed at assessing whether the defaulters are amiable to repay their overdue debt or should be proceeded against under the recovery law.

In short, the public sector bank is attempting to separate the wheat from the chaff in order to recover the loans that have turned sour.

Profiling of defaulters assumes urgency as the bank’s bad loans increased by 16 per cent year-on-year to Rs 8,456 crore as at March-end 2013.

The field staff have been asked to complete the profiling exercise by June-end so that appropriate action, for either reviving the borrower’s enterprise or initiating recovery proceedings, can be taken, said a top official.

The bank wants granular information, among others, pertaining to the viability of the defaulting borrower’s business and the value of the collateral in hand.

In the current financial year, the bank is seeking to bring down its bad loans pile from Rs 8,456 crore as at March-end 2013 to about Rs 8,000 crore (after taking into account fresh slippages during the course of the year).

Genuine cases

In case a defaulting borrower is facing genuine difficulty in keeping his enterprise afloat, either due to electricity crunch or short-supply of raw materials or lack of demand for finished goods, the bank is willing to extend fresh loan to help effect a turnaround in its fortunes.

However, fresh loan will be offered by the bank only if the borrower is able to stump up margin either on his own or gets a private equity/ strategic investor to do so.

In case a defaulting borrower wants to reach an amicable settlement with the bank and close the loan account, the bank will offer a one-time settlement. Depending on the realisable value of the security pledged with it, the sacrifice/write-off to be made by the bank on the loan outstanding is arrived at. The sacrifice/write-off will be kept at the minimum.

The bank has increased the frequency for organising loan recovery camps from once a month to twice a month at the zonal and regional office levels, said the bank official.

Wilful defaulters

If a borrower has wilfully defaulted on his loan and has no intention to pay back then the bank will turn up the heat. It will proceed against the borrower simultaneously under the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Act) and the Debt Recovery Tribunal.

Keeping up pressure on two fronts — SARFAESI Act and DRT — could possibly get the defaulter to the negotiating table.

Written-off accounts

Central Bank of India has appointed a general manager solely to effect recoveries from written-off accounts. The outstanding in written-off accounts amounts to Rs 2,400 crore.

Banks’ write-off bad debt when it is considered non-collectable and they have set aside capital to cover the loan loss. When they make recoveries in such cases, it finds a positive reflection on the bank’s bottomline.

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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Central Bank posts Rs 169-crore profit in Q4 on stable loan growth

Central Bank of India swung back into the black with a net profit of Rs 169 crore in the January-March quarter on the back of lower bad loans and stable loan growth.

The public sector lender had posted a loss of Rs 105 crore in the same quarter last fiscal. Net profit for the immediately preceding December quarter stood at Rs 180 crore.

Net interest income (difference between interest earned and expended) increased 25 per cent to Rs 153 crore.

During the quarter, contributing to the profits were lower provisions of Rs 445 crore that declined by about half from Rs 859 crore in the year-ago quarter.

Net profit in FY13 almost doubled to Rs 1,015 crore compared with Rs 533 crore in FY12.

As on March 31, 2013, the bank’s total advances rose by 16 per cent driven by robust growth in retail and agriculture loans, while corporate loan growth remaining flat during the year.

Total deposits grew 15 per cent. “We expect the deposits and advances growth to be bottom-driven at around 18 per cent in FY14,” said M.V. Tanksale, Chairman and Managing Director.

Net interest margins (NIM) annually declined to 2.67 per cent from 2.75 per cent in FY12 due to higher cost of deposits.

“NIM will be better going forwards as costs of deposits are likely to come down. NIM is expected to be in the 2.75 to 3 per cent range,” Tanksale said.

Gross non-performing loans (NPA) ratio declined marginally to Rs 4.80 per cent, while net NPA ratio declined to 2.90 per cent.

The board recommended a dividend of Rs 2.50 per share in FY13.

Shares of Central Bank closed higher by 4.25 per cent at Rs 72.30 per share on BSE on Friday.


beena.parmar@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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