Bank deposits score over gold

Higher returns from bank deposits seem to have robbed the sheen of the yellow metal with a massive decline of above 55 per cent expected in gold imports in February.

India's gold import is likely to dip by 55 per cent to 20-25 tonne in February as compared to 45 tonne in the same month in 2010 following increase in bank deposit rates to nearly 10 per cent, Bombay Bullion Association President Prithivraj Khotari said.

"Higher food inflation and liquidity problem in the market have further affected the demand," he said.

Khotari said record gold prices during February, which almost touched Rs. 21,000 per 10 grams, is also likely to have negative impact on imports. India is the world's largest consumer of gold.

Source: Financial Express

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LIC launches Samridhi Plus under Ulip portfolio

Life Insurance Corporation of India today launched ‘Samridhi Plus’ under its unit linked portfolio offering insurance protection, safety and growth.

Samridhi Plus safeguards policyholders’ investment from market fluctuations, LIC said in a statement here.

Accident benefit option is also available under this plan that will be equal to the life cover up to a maximum of Rs. 50 lakh, subject to certain conditions.

The policy term for the plan is fixed for 10 years, it said.

The minimum age at entry level for Samridhi Plus is 8 years while the maximum age is 65 years.

The minimum premium ranges from Rs. 1500 (monthly - ECS) to Rs. 30,000 (single premium) depending on the mode of payment while the maximum is Rs. 1 lakh per annum under any mode for the 5 year premium paying term.

Source: Financial Express

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Economic Survey favours banking licences for industrial houses

NEW DELHI: Pitching for industrial houses wanting to set up banks, the Economic Survey today said that they should be given banking licences to promote the goal of financial inclusion.

"As regards allowing industrial houses, business houses and NBFCs to promote banks, they may be allowed full banking license with provision for avoiding conflict of interest issues," the 2010-11 Survey tabled in Parliament by Finance Minister Pranab Mukherjee said.

Providing access to banking facility to all citizens is one of the main objectives of the inclusive development agenda, it said. While providing banking access, it said, the issue of regulatory robustness for the banking sector should not be compromised. "Therefore, the issue of providing eligibility norms for new entities to operate as banks is of paramount importance," it said.

Following announcement made by the Finance Minister in the last Budget, the Reserve Bank had brought out a discussion paper in August 2010 on giving out new banking licenses to business houses and non-banking finance companies, and regulations for the same to foster greater competition.

The RBI also sought to know "whether industrial and business houses could be allowed to promote banks." Also, if NBFCs should be allowed to convert into or promote banks.

RBI has received comments on its discussion paper from all stakeholders and expected to come out with final guidelines in the coming months. Various entities like Reliance Capital , IndiaBulls, Religare , IL&FS, IDFC, IFCI and Aditya Birla Financial Services are reported to be mulling entering the banking space.

Presently, India has 27 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks, 4 local area banks, 1,721 urban cooperative banks, 31 state cooperative banks, and 371 district central co-operative banks.

Besides, the survey said, Macro-Finance Institutions (MFIs) and Non-Banking Finance Companies (NBFCs) should be considered giving licence for only basic banking functions. It said it is essential that the basic banking functions are clearly and objectively defined.

The survey also suggested variable capital requirement for banks based on the operation. "Minimum capital requirement for banks should be graded. Having two types of licenses namely one for providing basic banking to fulfill the obligation of financial inclusion and the other for full banking encompassing all activities of a commercial bank could be considered," it said.

Source: EconomicTimes

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Inflation in India driven by supply pressures: RBI

Reuters / Bhubaneshwar February 26, 2011, 14:55 IST

Food inflation in India is largely driven by supply side pressures and the central bank is not responsible for that, the Reserve Bank of India (RBI) governor said on Saturday.

Food inflation is among the highest in Asia despite good harvests and food prices have been in double digits for much of the last year, sparking street protests and keeping pressure on the government

The food price index rose 11.49% and the fuel price index climbed 12.14% in the year to February 12, government data on Thursday showed.

"Food inflation is because of the supply side and RBI (Reserve Bank of India) is not responsible for that. You have to have a supply side response," Duvvuri Subbarao said.

The wholesale price index , the most widely watched gauge of prices in India, rose 8.23% in January from a year earlier, compared with 8.43% in December.

To fight inflation which continues to be stubbornly high in India, the Reserve Bank has already raised rates seven times in the last one year and is expected to raise rates again in March.

"Monetary policy becomes the first line of defence for inflation process... People think that inflation is going to be high and that becomes a self fulfilling prophecy. To break that inflationary psyche the Reserve Bank has to act and that is why we have been acting since last one year," Subbarao said.

Source: Business Standard

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Allahabad Bank aims to raise biz to Rs 2.20 lakh cr

Press Trust of India / Bhubaneswar February 25, 2011, 20:57 IST

Aiming at raising its business up to Rs 2.20 lakh crore by this fiscal-end, Allahabad Bank today said it has achieved business of Rs 2.07 lakh crore during the first nine months of 2010-11.

"Our target is to increase the total business up to Rs 2.20 lakh crore by March 31, 2011, while the business level had already touched Rs 2.07 lakh crore by December 31, 2010," Allahabad Bank Executive Director D Sarkar told reporters.

Similarly, the profit level of the bank was Rs 1,166 crore as on December 31, 2010 as against Rs 1,206 crore achieved last year, he said.

The bank's net income has been up by 55.67%, while the Net Interest Margin (NIM) surged to 3.44%, Sarkar said, adding the number of branches would also increase from 2,403 to 2,425 very soon.

Sarkar said the bank's Micro and Small Enterprises (MSE) credit grew from Rs 4,593 crore as on March 2009 to Rs 8,188 crore as in March 2010, registering an absolute growth of Rs 3595 crore (78.27%).

Share of Micro Enterprises to total Micro and Small Enterprises has exceeded the National Goal of 60% by achieving 62.25% as in March 2010, he said.

Credit to Micro, Small and Medium Enterprises (MSME) increased to Rs 9770.71 crore as on March 31, 2010 showing a growth of 77.39% during 2009-10.

As the bank has 65% of its branches in rural and semi-urban areas, MSME and Agricultural lending has been an area of priority of the bank, he said.

In Orissa, the total business of the bank stood at more than Rs 4,100 crore comprising aggregate deposit of Rs 2,350 crore and gross credit above Rs 1,750 crore as on January 31, 2011, Sarkar said.

Source: Business Standard

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