Allahabad Bank revamps AllBank Finance

AllBank Finance — the 100 per cent subsidiary of Allahabad Bank that has been barely functional since 2005 — is now on a revamp spree. Hit by falling revenues and profits, that almost halved last fiscal, the company's board has been reconstituted and AllBank Finance plans to focus on new segments to drive its revenues.

The board — reconstituted by Allahabad Bank two months ago — will have four members from the bank, said Mr J. P. Dua, Chairman and Managing Director of the bank. “Mr Dua will be the chairman of the Board, while Mr D. Sarkar, executive director, and Mr A. B. Bhattacharjee and Mr Narang, both general managers, will be the directors on the board,” Mr Dua said.

This apart, the board will have three independent directors — Mr Vinod Kothari, a chartered accountant and company secretary; Mr Subir Das and Mr Emron Samuel, both chartered accountants. Allahabad Bank has also selected Mr M. Satpathy as the vice-president and Chief Executive Officer of the company.

Under the new management, the company plans to venture into such new areas as trustee and custodial services and carry out techno-economic viability study of projects to improve earnings; besides raising debts, doing syndication of loans and distributing mutual funds.

Incorporated in 1951 as “Allahabad Bank Nominees Limited”, the company subsequently changed its name to “AllBank Finance Limited” in 1991.It has, however, remained dormant since 2005, Mr Dua said.

Hardening interest rates, tight liquidity and rising inflation pulled down AllBank Finance's revenues and profits, the company said in its annual report 2010-11. The company reported a 46 per cent drop in revenue, at Rs 5.80 crore, and 61 per cent decline in net profit to Rs 2.80 crore for the year ended March 31, 2011.

“Despite having adequate capital, the company has not been doing well due to the lack of focus. Our main aim now is to revive the focus,” Mr Dua said. The company — which has two branches, one each in Kolkata and Mumbai — plans to open one in Delhi by end January and another one, either in Bangalore or Chennai, by March.

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PSU banks consortium begins work on ordering ATMs

A consortium of public sector banks has begun putting out orders for supply of automated teller machines (ATMs)/cash dispensers.

Hitherto, these banks placed orders for purchase of ATMs on an individual basis.

About 40,000 ATMs are expected to be ordered by this consortium, with different banks assuming lead bank responsibility for the process, across different geographies in the country.

The installation, maintenance and management of services of such ATMs and cash dispensers will be done through a totally outsourced model.

In Madhya Pradesh

State Bank of India on Sunday has notified an all-India tender for installation of 3,893 cash dispersers in Madhya Pradesh.

SBI has called for the request for proposal on behalf of a consortium of banks, including itself, United Commercial Bank, Allahabad Bank and United Bank of India.

The rollout of the cash dispensers would be in urban, semi-urban and rural locations according to the requirements of each bank, the notification said.

The requirements are spread over two years - 2012-13 and 2013-14.

SBI alone will need 1,980 ATMs in this area (MP) during the two years.

VENDOR SPECIFICATIONS

The contract will cover provision of services for seven years.

Bidders who wish to participate in the request for proposal process (RFP) should have a minimum annual turnover of Rs 20 crore from ATM operations in India.

In off-site locations (sites away from the branch), vendors can set up ATMs in any site of their choice while sticking to the broad area specifications given by banks.

The specifications include a requirement for a disaster recovery centre and business continuity plans.

USER-FRIENDLY

The minimum availability of an ATM (uptime) for use by customers in a month has been mandated at 97 per cent in urban areas and 95 per cent in semi-urban and rural areas.

Penalties have also been prescribed for those vendors who fail to maintain the mandatory availability of ATMs services.

GAIN FOR BANKS

While banks are tight-lipped about the cost-advantage they have in outsourced ATMs model as against own ATMs, experts agree that reduction in ATM transactions-related costs has been a focus area of banks.

This happened particularly after the regulator forced banks to share their network - enabling customers of any bank to use any other bank's ATM.

Banks bear the fees charged for their customers using other banks' ATMs – and, therefore, are a shade prickly when this happens.

ICICI Bank, for instance, has stated sending a SMS immediately after any its customers uses a non-ICIC bank ATMs.

It promptly SMSes that it has 7,300 of its own ATMs !

It also offers information on the nearest ATM location through the registered mobile of a customer.

As of now, there are about 75,000 ATMS in the country out of which over 26,000 belong to the SBI group.

nagsridhu@thehindu.co.in

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Andhra Bank opens 1700th branch

Andhra Bank has opened its 1700th branch at Nanakramguda financial district here. The 88-year-old bank also set up an e-banking centre at the Vidyanagar branch in the State Capital.

Speaking to Business Line after formally inaugurating the branch and e-banking centre on Saturday, Mr R. Ramachandran, Chairman and Managing Director, Andhra Bank said the bank had grown from a regional bank to a pan-Indian Bank.

Mr Ramachandran, who inaugurated the branches on his last day in office as Chairman and Managing Director, said the aim of the bank was to have its roots in Andhra Pradesh but to spread to other parts of India.

On his 14-month stint as CMD , he said: “It has been short and pleasant. Things did happen the way I wanted them to happen.”

Till the end of September quarter, the bank's business registered year-on-year growth for 13 consecutive quarters.

Setting up of the Staff College of Andhra Bank was a landmark for the bank, he said, adding, “we expect this institution to significantly contribute to skill building at all levels.”

On the banking industry scenario, Mr Ramachandran said banks were facing a lot of stress in maintaining asset quality because of internal and external economic factors.

“However, as far as Andhra Bank is concerned, we are within manageable levels and do not expect business/profit to be impacted significantly,” he added.

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Karnataka Bank's new AGMs

Karnataka Bank Ltd has promoted six chief managers in the bank as Assistant General Managers (AGMs).

A bank release here gave the names of the new AGMs as Mr Ranganatha, Mr Bhaskara Halambi H.R, Mr Kameshwar M. Bhat, Mr Shashiraja Rao N, Mr Venkatakrishna Bhat and Mr Mahalingeshwara K.

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7 PSU banks, LIC, IICL to partner to boost infrastructure projects

India's top seven public sector banks, Life Insurance Corporation of India, and India Infrastructure Company Ltd are planning to join forces to give a fillip to large infrastructure projects.

State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and IDBI Bank, the country's largest life insurance company (LIC) and the Government-owned non-banking finance company (IIFCL) are working out the modalities of undertaking joint appraisal and co-financing of infrastructure projects.

This consortium of nine State-owned financial intermediaries will constitute a committee of senior officials to consider the viability of large infrastructure projects (entailing a capital expenditure of Rs 1,000 crore or more).

Pact for financing modalities

A memorandum of understanding to formalise the joint infrastructure project financing arrangement is in the works.

The move to stitch together a grand alliance to put big infrastructure project proposals on the fast track comes at a time when inadequate infrastructure in segments such as roads, ports, airports, railways, power, oil and gas pipelines, irrigation, and water supply and sanitation is proving to be a constraint on growth, say bankers.

“Currently, a project developer or his debt arranger has to go to each bank and financial institution to get his project vetted and get loan sanctioned.

Hence, it takes a long time to achieve financial closure.

This delays commencement of the project.

Single point of contact

“Once this consortium of banks, LIC and IIFCL begins joint operations, project developers can look forward to a single point of contact for loan appraisal and sanction. So, projects can be quick off the blocks,” said a senior executive with a State-owned bank.

The combined balance-sheet strength of the above mentioned entities will ensure that large viable infrastructure projects will be fast-tracked.

Besides interest income, they can also earn a decent fee income.

Currently, the project developer pays fee to debt arrangers for helping tie up funds.

According to the Planning Commission's Draft Approach Paper for the 12th Plan (2012-2017), special attention needs to be paid to the financing needs of private sector investment in infrastructure.

The Paper has assessed that infrastructure investment will need to increase from about eight per cent of gross domestic product in the base year (2011-12) of the Plan to about 10 per cent of GDP in 2016-17.

Investment in infrastructure

The total investment in infrastructure would have to be over $1 trillion (Rs 53 lakh crore at the current exchange rate) during the 12th Plan.

A significant part of the supportive framework to enable manufacturing to expand rapidly in line with both domestic and overseas demand is the rolling out of adequate physical infrastructure support including electric power, railways, roads and ports, the Paper said.

According to the latest Reserve Bank of India data, infrastructure credit accounted for 14.11 per cent (or Rs 5,79,968 crore) of the non-food credit of Rs 41,10,331 crore as on November 18, 2011.

kram@thehindu.co.in

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