Puducherry, first UT with full banking coverage

Puducherry would be officially declared the first Union Territory with cent per cent banking coverage of all its villages on November 22 by the Chief Minister of Puducherry, Mr N. Rangaswamy.

According to Indian Bank (Lead Bank) sources, there are as many as 25 villages with a population of 2,000 and less and 42 with a population of more than 2,000 in the Union Territory, that have been brought under banking cover. Nine nationalised bank, one regional rural bank and one co-operative bank have been roped in this exercise.

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Kotak Life launches two traditional child plans

Kotak Life Insurance today announced the launch of two traditional child plans — Kotak Child Edu Plan and Kotak Child Future Plan.

Kotak Child Edu Plan addresses the future financial requirements of children aged between 0 (newborns) and 10 years and Kotak Child Future Plan addresses the future financial requirements of children aged between 11 and 15 years.

Kotak Child Edu Plan provides defined benefits at specific milestones — ‘Edu Boosters’ at ages 15, 17, 19 and 21 to support the child’s education and skill development. Premium payment term continues till the child attains 17 years of age.

Kotak Child Future Plan too provides defined benefits at specific milestones — ‘Future Boosters at ages 23 and 25 to financially support the child’s pursuit of career or life goals without any worries. The plan has a fixed premium payment term of 10 years from the date of entry.

Further, both the plans also offer enhanced protection in the unfortunate event of death of life insured (parent, grandparent, etc.) In such cases, the plans immediately pay out 200 per cent of the sum assured but future premium payment obligation also ceases. Both the plans also waive off future premiums in the case of accidental disability of the life insured.

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Federal Bank signs pact with Tata Motors for vehicle financing

Federal Bank on Monday said it has signed an agreement with the auto major Tata Motors to finance the latter’s commercial vehicles through an alliance partnership.

The partnership can be termed as a strategic alliance between one of the major private sector banks, having 823 branches and the biggest vehicle manufacturer, having over 60 per cent market share in commercial vehicle segment of our country, Federal Bank said in a statement.

“We see vast opportunities in servicing our SME customers through this relationship,” said Mr P.C. John, Executive Director, Federal Bank.

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Bank of India likely to relaunch mutual fund biz by December

MUMBAI, NOV 20: Bank of India has decided to advance its proposed re—entry into the mutual fund business by a few months to December.

“We are working on it (MF business)... by December, I suppose we should have something in place,” Bank of India chairman and managing director, Mr Alok Misra, told PTI.

He refused to give more details on the business model saying the bank is working out the details. He also refused to say whether it will be a joint venture or not.

Earlier this year, the bank had said it would launch its MF business by early 2012 and was scouting for a partner.

It was also reportedly in talks with Bharti Axa Investment Managers and Pramerica AMC which were planning to sell their stakes.

BoI was in the MF business in 1990. Of the six schemes launched by the fund, four had been redeemed and two schemes transferred to Tauras Mutual Fund after giving exit option to investors in 2004.

Banks generally enter the MF space as they can leverage on their branches for distribution, which in turn would help cut cost of delivery, thus improving business efficiency.

Currently, there are eight MFs either fully or partly owned by banks along with overseas partners. These include Baroda Pioneer Mutual Fund, Canara Robeco Mutual Fund, ICICI Prudential MF, Principal MF of PNB and SBI Mutual Fund, Axis MF, IDBI Mutual Fund and Union KBC MF of Union Bank.

There are 40 MF players in the country with average asset under management of over Rs 7 trillion.

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PSU banks want electricity boards to revise tariffs annually

MUMBAI, NOV 20:  Rising incidents of stressed assets in the power sector have prompted banks to ask for tariff revisions every year by the state electricity boards (SEBs), so that the business model remains viable.

“The SEBs have to increase their tariffs annually to pass on their increased cost to their end-users. Otherwise, the business model will be unviable,” Dena Bank executive director Mr A K Dutt told PTI here, adding the revision should be around 20 per cent annually.

In case of a possible debt recast for the SEBs, the public sector banks will ask for increasing the general level of efficiency, he added.

Currently, banks are worried about the advances extended to the SEBs of Tamil Nadu, Rajasthan, Uttar Pradesh, Bihar, Haryana, Madhya Pradesh and Punjab, which according to the rating agency Crisil, are the most vulnerable ones.

As per Crisil, losses of power distribution companies rose by 24 per cent to Rs 27,500 crore between 2006-07 and 2009-10 and it could rise to Rs 35,000-40,000 crore in 2010-11, mainly due to the problems the utilities are facing.

“Though we have some exposure to the Rajastan SEB, there is no request for debt-restructuring,” Mr Dutt said, adding the SEB has made some presentation to the Centre.

Recently, the second largest public sector lender Punjab National Bank, which had restructured Rs 2,500 crore of loans in the second quarter, said of this, Rs 1,800 crore were from the loan extended to the TNSEB

Another public sector bank, Indian Overseas Bank, too, said the bank is currently going slow in its lending to the power sector.

“We have less space to lend to the power sector, as the exposure to this segment is now at the mandated upper level. However, SEBs have to increase their efficiency and raise tariffs annually for any further lending from us,” IOB chairman and managing director Mr M Narendra said.

He also said, his bank has not received any request from any SEB for debt-restructuring.

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