RBI wants more banks to launch mobile banking

The Reserve Bank of India (RBI) wants more and more banks to launch services on mobile, its Deputy Governor Shyamala Gopinath said here today.

Launching Canara Bank's CanMobile, a mobile banking product, she said RBI has already enabled mobile banking and issued guidelines in this regard.

"...And we do hope that more and more banks now join in the launch of this product," she said.

According to Canara Bank's Chairman and Managing Director S Raman, the product is user-friendly, safe, secure and swift.

It facilitates customers to conduct transactions on 24X7 basis from anywhere with the use of mobile handset.

Registered customers of "CanMobile" can now access Canara Bank's services for balance enquiry, viewing of last five transactions, transfer funds intra-bank and inter-bank through Inter Bank Mobile Payment System (IMPS) provided by National Payments Corporation of India (NPCI).

At present, the bank does not levy any service charge for funds transfer.

Customers can daily transfer up to a limit of Rs 50,000 through Java/GPRS enabled mobiles and up to Rs 5,000 through non-Java/non-GPRS enabled mobiles by using Unstructured Supplementary Services Data (USSD)/SMS.

Mobile banking services work on both Java-based and non-Java based applications, bank officials said.

Source: Business Standard

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RBI monitoring economy, liquidity before policy action

Ahead of its mid-quarterly policy review, the Reserve Bank of India (RBI) today said it is monitoring the economic data and also the liquidity situation, and would take a forward-looking view while deciding on the policy action.

"We would monitor various data...and take a forward-looking view and take action," RBI Deputy Governor Shyamala Gopinath told reporters here when asked how the central bank plans to arrest the economic slowdown.

The central bank has raised key policy rates nine times since March 2010, to check inflation, which is hovering above 8%, much above the comfort level of 5-6%.

The RBI is scheduled to come out with mid-quarterly review of the policy on June 16.

The policy initiatives, however, will have to be taken with a view to containing inflation without sacrificing growth, which has started showing signs of a slowdown.

India's economic growth during January-March quarter of 2010-11 slowed down to 7.8% from 9.4% during the corresponding period the previous fiscal.

The GDP growth rate this fiscal is expected to moderate to about 8-8.5% as against the original estimate of 9%.

Referring to the issue of liquidity, Gopinath said there was no shortage of funds in the system.

"We are closely monitoring the liquidity situation. We are aware that the market is in repo mode, they are borrowing from us and that is something in line with our monetary stance," she said.

The Reserve Bank, Gopinath added, "does not see much of a stress in the call rates...The short term rates, but we are closely monitoring the situation. We are aware that advance tax payment will start a week later. We invariably monitor the situation".

On capital inflows, Gopinath said there was nothing that the central bank was "really concerned about", especially with regard to stability on the external front.

As a matter of policy, she said, Foreign Direct Investment (FDI) was welcome into the country.

Source: Business Standard

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Bad loans to cross Rs 1 lakh-cr mark

Mumbai: Bad loans, or non-performing assets (NPAs) of banks are set to cross the Rs one-lakh crore mark in the current fiscal as the weakened asset quality of the banking sector is likely to spill over to the year 2011-12. After the 25 per cent rise in gross NPAs of bank to Rs 77,048 crore in 2009-10, bad loans of banks shot up by another 20.97 per cent in 2010-11, impacting the earnings of many banks and showing an overall rise of 77.75 per cent in the last three years.

Of this, State Bank of India alone accounts for over one-fourth of the NPAs as the largest bank reported bad debts of Rs 25,326 crore in 2010-11.

“The current fiscal will be slightly better for banks as most banks including SBI had made higher provisioning to clean up their balance sheets. The impact of this measure will be witnessed in the coming quarters. If they tighten up the recovery process, whatever they had provided will add to the profits,” said the former chief of a nationalised bank.

Among other banks, Punjab National Bank NPAs rose from Rs 3,214 crore to Rs 4,379 crore and Bank of Baroda from Rs 2,400 crore to Rs 3,152 crore. Among private sector banks, HDFC Bank managed to bring down its NPAs from Rs 1,816 crore to Rs 1,694 crore, ICICI Bank reported a marginal rise in bad debts from Rs 9,480 crore to Rs 10,034 crore in 2010-11.

“The earnings growth in the Indian banking sector in Q4 of FY11 grew by only 8 per cent y-o-y. This is attributable to the dismal performance by SBI, whose net profits for Q4 declined by 99 per cent to Rs 20.9 crore for the period. The reason for this decline in performance by SBI is being ascribed to decline in the Net interest margins; deterioration in the asset quality (and the consequent rise in NPAs); and the rise in the pension provisions for the employees,” said a note by Kotak Mutual Fund.

Excluding SBI, the earnings in the banking sector saw a growth of 31 per cent (year-on-year). The loan growth continues to expand at around 22.5 per cent (YOY). However, due to slower expansion in deposit growth despite high interest rates, the net interest margins (NIMs) are expected to come under further pressure in future. Moreover, the rising interest rates may hit the treasury income and may also continue to dampen the asset quality.

Many analysts and bankers feel that banks with buoyant credit growth and high CASA (current and savings account balances) may be able to address their asset quality and NIM concerns more efficiently.

“The RBI has initiated a slew of policy measures including aggressive rate hikes to rein in Inflation. The banking sector has responded by raising base rates with SBI raising its base rate by 75 bps. With every such hike in interest rates, we are reaching the tipping point beyond which demand could suffer. Thus volumes, margins and asset quality of the sector will come under increasing stress,” said a study by Enam Research.

The RBI stepped in to take preventive measures even before Finance Minister Pranab Mukherjee expressed his concern over the weakening asset quality on May 22. “Advances classified as “sub-standard” will attract a provision of 15 per cent as against the existing 10 per cent.

The “unsecured exposures” classified as sub-standard assets will attract an additional provision of 10 per cent, i.e., a total of 25 per cent as against the existing 20 per cent,” RBI said in a circular on May 18.

Source: Financial Express

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China to become banking king by '23

London: China could leapfrog the United States to become the world’s largest banking economy by 2023, 20 years earlier than expected, raising pressure on western banks to brush off the effects of the credit crisis and head east.

According to a report published by consultants PricewaterhouseCoopers (PwC) on Friday, India is expected to leapfrog Japan to rank third in terms of domestic banking by 2035 -- and could pass China as its population rapidly ages.

PwC’s chief economist John Hawksworth urged current banking leaders, whose power has been sapped by the credit crisis, to heed the accelerating shift in global economic power and claim a share of emerging markets’ relatively unbanked populations.

“With populations of well over a billion each, access to markets like China and India is critical for growth,” he said.

Chinese banks already dominate global rankings by market value, and some lenders have already secured heavy emerging market exposure to tap into booming demand for financial products from young and increasingly wealthy populations.

Banks in the fast-growing emerging markets (E7) of China, India, Brazil, Russia, Mexico, Indonesia and Turkey have been relatively shielded from the financial crisis that brought many western peers to their knees and sent asset values plunging.

With watchdogs determined to rein in institutions that presided over an exuberant era of high-risk expansion that culminated in a rash of taxpayer-funded bailouts, western banks are also contending with tough new regulations, which are curbing lending growth, while domestic populations age.

PwC, which based its report on projections for GDP and domestic credit and used net interest margins as a measure of profit, said E7 growth hinged on state investments in infrastructure, opening markets to fresh competition, reducing bureaucracy and budget deficits and increasing rural education.

It predicts that global banking assets could quadruple to around $300 trillion by 2050, with the GDP of the E7 level pegging with the G7 nations of the United States, Japan, Germany, the UK, France, Italy and Canada within the next two decades -- and well ahead within the next four.

Britain, which it ranks fourth in terms of domestic banking assets, is expected to be pushed into fifth place by India within the next 20 years before fast-growing Brazil is likely to push it down another notch by 2050, PwC predicted.

But investing in emerging markets can be an uphill struggle.

“The E7 doesn’t need the G7 for capital, decision making or consumers, so the established economies will have to make a strong case to convince new economy policy makers of the benefits of inviting foreign competition in,” Hawksworth noted.

Source: Financial Express

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SBI set to launch operations in Jeddah

Dubai: State Bank of India (SBI) is set to commence operations in Saudi Arabia in the next four to six weeks, a senior bank official has said.

Hemant G Contractor, managing director and group executive (international banking) said he has reviewed the set up with the team and they all set to go.

Contractor was in Saudi Arabia with a team of top officials to discuss and facilitate all preparatory aspects prior to the launch of the branch in Jeddah.

"We will start soon after completion of few regulatory requirements. This is expected in the next few weeks. So we will commence operations by next month," he was quoted by Arab News as saying.

Contractor added: "We have completed all other procedural requirements and all necessary infrastructure is in place. We are ready in all aspects to launch operations in Jeddah." Contractor was confident that SBI would make an impact in the country despite some big players in the sector. "The Saudi market is a growth driver for the entire GCC, the Kingdom is host to a great number of Indian expatriates and India and Saudi Arabia have strong and extensive links in trade and commerce. All these are strong reasons for us to be here," he said.

"Also once we begin operations, the Jeddah branch will provide a slew of services on both sides of the balance sheet and beyond balance sheet as well, he added.

Project finance, syndication, SME lending, trade finance, car loan, personal loan, etc, will be among the target products for the bank while electronic remittance, NRI services will be another focus area.

Source: Financial Express

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