South Indian Bank, Federal Bank increase deposit rates

MUMBAI: Deregulation of interest rates on non resident term deposits has triggered an interest rate war among banks, with small banks like South Indian Bank and Federal Bank increasing deposit rates. Kerala headquartered Federal Bank on Monday hiked interest rates on one year non resident term deposit to 6.5% from 3.82%.

Thrissur based South Indian Bank also increased interest rates on non resident external term deposits across maturities to 6.75% from 3.82%. The revised interest rates will be applicable to fresh deposits and on renewal of deposits.

Their peers like IndusInd Bank, Dhanalaxmi Bank and Laxmi Vilas Bank could follow suit. The Reserve Bank of India on December 16 had deregulated interest rates offered on non resident external rupee and ordinary non resident deposits to attract flows.

The deregulation of interest rates has triggered the move. The hike in interest rates would be applicable for deposits opened for a period of one year only,'' said P C John executive director, Federal Bank. The hiked rate is applicable until the year end. Currently, the bank's non resident Indian deposit base stands at about Rs10,000 crore.

Interest rate on non resident external deposit is tax free and the interest is fully repatriable unlike the non resident ordinary account. This would encourage depositors to park excess funds in these accounts,'' said John.

The hike in interest rates analyst say would not have any impact on banks net interest margin and cost of funds. Banks currently offer about 9.75% interest on non resident ordinary accounts which is taxed and has limitations on repatriation unlike the non resident external account.

The deregulation will enable banks to substitute these high cost deposit with low cost deposits,'' said a banking analyst with a domestic brokerage.

We expect to maintain our net interest margin in the range of 3.7% to 3.75%,'' added John from Federal Bank.

Source: EconomicTimes

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ING Vysya Bank bags energy conservation award

ING Vysya Bank's corporate office premise at M G Road, Bangalore, has bagged the energy conservation award for 2010-11 instituted by the Karnataka Government.

The State Energy Minister, Ms Shobha Karandlage, gave away the award to the bank for its achievements in energy efficiency. ING Vysya Bank's energy-saving efforts have yielded around 13 per cent savings in terms of energy costs.

The bank has plans to invest in energy-efficient lighting solutions, added the release.

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Andhra Bank opens financial inclusion centre

Andhra Bank has opened a financial inclusion centre at Peda Ogirala village in Vuyyuru Mandal, Krishna district.

The centre would act an intermediary cost-effective brick and mortar structure, which is one the models being adopted for promotion of financial inclusion by banks.

Besides providing all necessary services to customers, it would also coordinate the financial inclusion activities in 17 villages in Vuyyuru and Thotlavalluru Mandals.

Andhra Bank is presently implementing financial inclusion plan in 1,144 villages across the country where population is 2,000 and above.

In Andhra Pradesh, 1,054 villages are being covered under financial inclusion plan, out of which 59 villages are in Krishna District.

The centre was formally inaugurated by Mr G. Ravi Kumar, Deputy General Manager and Zonal Manager- Vijayawada, Andhra Bank, according to a release.

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SBI sees credit growth of 16-18% this fiscal

State Bank of India would stick to its credit growth guidance of 16-18 per cent for the fiscal. “We are seeing some increase and some upsurge in credit growth in October and November and hopefully that should continue,” Mr Pratip Chaudhuri, Chairman of the bank, said here on Sunday .

On asset quality, he said that the bank's net NPA had peaked at 2.05 per cent. “We don't think it will go up sharply or go up at all.”

There was some stress in the agricultural sector, he said, adding that with the new harvest coming in, recoveries in agriculture have also improved. According to him, several sectors of the economy are under stress: aviation, distribution companies of the electricity boards, and to some extent textile sector — “because these companies had procured cotton at higher prices and the cotton prices have come down”, and some steel companies in the intermediate sector.

On recoveries, he said that at SBI, the focus was on selling some of the NPAs to asset restructuring companies, and co-ordination with other banks for sale or resolution of issues. “We are very increasingly taking recourse to legal measures like the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and selling of properties,” said Mr Chaudhuri. He pointed out that the bank was, in fact, “persuading companies to sell off their non-core assets and bring their debt to more manageable levels”.

On interest rate cycle reversing, Mr Chaudhuri said that he did not expect it to happen right now. “Till the inflation becomes 7 per cent, I don't think the RBI would like to put brakes on its anti-inflationary measures,” he said.

On capital infusion into SBI, he said that it was in its final stages. “It may happen by December-end or latest by March 31, 2012.”

Kingfisher issue

All efforts are being made by the lender-banks to ensure that Kingfisher Airlines remains a viable airline, Mr Chaudhurisaid. SBI is the lead bank of the 13-bank consortium which has lent to the cash-strapped airline.

“Kingfisher is a very big and an important company. There are multiple lenders and it requires a lot of co-ordination and co-operation among all lenders. Even as late as yesterday (Saturday), there was a very high-level meeting with the company. So every effort is being made that the KFA remains a viable airline,” said Mr Chaudhuri. He, however, refused to comment on rumours about the company's CEO quitting, saying it was the company's internal matter.

On the Air India restructuring, Mr Chaudhuri said that it has been “blessed by the government and everybody is very keen that Air India remains a viable national airline of which the country is proud”.

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Bank of Baroda opens branch in Lalbaug

Bank of Baroda opened branch in Lalbaug in Central Mumbai, taking the total number of branches to 171 under greater Mumbai zone. 

The branch has latest technology under Baroda Next architecture. It was inaugurated by Mr M.D. Mallya, Chairman and Managing Director, BoB.

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