Bank of Baroda to hire 600 probationary officers

Bank of Baroda is recruiting probationary officers (in the junior management grade/Scale I) to fill up about 600 vacancies across the country.

The bank has specified that candidates with a total weighted standard score of 125 in the common written examination conducted by Institute of Banking Personnel Selection (IBPS) and fulfill other criteria will be eligible to apply. The bank will specify these criteria and other details on its Web site after February 21.

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SBI sets sights on absorbing State Bank of Mysore

After taking over two associate banks — State Bank of Saurashtra in 2008 and State Bank of Indore in 2010 — State Bank of India has set its sights on assimilating the nearly century old State Bank of Mysore (SBM) this year.

As part of its consolidation strategy, India's largest bank wants to first merge the smaller associate banks before attempting to take over relatively bigger associates such as State Bank of Hyderabad (SBH) and State Bank of Travancore (SBT).

Branch network

“We will take over smaller associate banks first as it is easier to integrate them. We have gained valuable experience through the acquisition and integration of State Bank of Saurashtra and State Bank of Indore,” said a senior bank official.

However, in the case of bigger associate banks, the official observed that the issue is that their branch network in their home State is as big as SBI's branch network in that State. So, the integration will take longer as a branch rationalisation exercise will have to be undertaken.

In the case of SBM, which is listed on the bourses, a swap ratio (whereby SBI will offer its own shares in exchange for SBM's shares to conclude the acquisition) will have to be arrived at for the minority shareholders.

While SBI holds 92.33 per cent stake in SBM, minority shareholders hold the balance stake. The Mysore-headquartered associate bank has over 700 branches.

Share of profit

The five associate banks' share in the consolidated net profit of SBI was higher (33 per cent) in FY 2011, against 25 per cent in FY 2010.

SBI had reported a lower consolidated net profit at Rs 10,865 crore in FY2011, against Rs 11,734 crore in FY2010.

Among the five banks, SBH net profit was the highest at Rs 1,166 crore; followed by SBT (Rs 728 crore), State Bank of Patiala (Rs 653 crore), State Bank of Bikaner & Jaipur (Rs 551 crore), and SBM (Rs 501 crore).

As on March-end 2011, the State Bank group had a network of 18,266 branches including 4,724 branches of its five associate banks.

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Standard Chartered Bank to pay Rs 55K to customer as damages

Standard Chartered Bank has been ordered by a consumer forum to pay Rs 55,000 as damages to a customer for harassing him by raising a demand of over Rs 90,000 for payment against credit card dues and putting his name on the defaulters' list even though he had returned the card.

The District Consumer Forum (Central) gave the order on a complaint of North West Delhi resident Ajit Kumar that the bank had sent a bill demanding over Rs 90,000 and put his name in the defaulters' list in 2008 even though he had returned the credit card, unused, in 1999.

The three-member panel of the forum, headed by President B. B. Chaudhary, observed the demand made by the bank was “unfounded” and by not removing Kumar's name from the list of defaulters, it had caused “deficiency in service“.

“The demand of the bank for use of the credit card is unfounded. By keeping the name of the complainant in the list of defaulters, the bank has caused further deficiency in service,” said the forum.

“No-due' certificate

The forum ordered the bank not to call the complainant for any payment relating to the credit card and to remove his name from the defaulters list and also issue him a ‘no due certificate'

The forum also agreed with Kumar's contention that he had returned the card in February 1999, without using it for any cash transactions.

“We believe the case of the complainant that the credit card was returned to the bank in February 1999 and that the complainant had not used the credit card for any transaction,” the forum said.

It directed the bank to “to pay Rs 50,000 as compensation for causing harassment, pain and mental agony” and Rs 5,000 as litigation charges to Kumar.

Kumar contended that on receiving the bill of Rs 22,600.47 in March 1999, he had informed the bank about the misuse of the card and that the amount was withdrawn illegally, and also sent a legal notice to the bank in April 1999.

Two legal notices

He further argued that later in 2008 the bank sent him a bill for Rs 93,789.84 and put his name on the defaulters list, against which he again sent a legal notice in May 2008. Despite the two legal notices, the bank took no action to remove his name from the defaulters' list, he added.

Standard Chartered Bank, on the other hand, contended that the complaint filed in the month of December 2008, was barred by time.

The forum, however, rejected this contention saying that the complaint is not barred by limitation since the bank raised the demand for payment due in December 2008.

The forum also refused to accept bank's contention that Kumar had not returned the credit card, saying that the bank had received all the letters sent by Kumar, informing about his return of the card and the misuse of the same.

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United India Insurance Q3 profit up 24%

United India Insurance Company has reduced the claims ratio to 81.45 per cent for the nine-month period ended December 31, 2011, which resulted in the combined ratio (a measure of the profitability of insurance operations), dropping to 114.69 per cent from 127.64 per cent during the corresponding period of the previous year.

The investment income of the company for the period stands at over Rs 1,106 crore. The market value of the company's total investment portfolio at the end of the third quarter was at Rs 15,603 crore.

Business growth

The net worth of the company stood at a robust Rs 4,660 crore as at December 31, 2011.

For the period under consideration, its business grew at 27 per cent to Rs 5,872 crore, with an accretion of Rs 1,239 crore over the same period last year. It reported a net profit of Rs 414,41 crore, a growth 24 per cent over Rs 333.25 crore posted during the corresponding previous year period.

A press release from the company says that it will continue its thrust on the retail, MSME (micro, small and medium enterprises) and rural sectors.

During the third quarter of the current financial year, it secured the mandate to implement the Tamil Nadu Chief Minister's comprehensive health insurance scheme for 1.34 crore BPL families in the State.

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RBI hikes bank rate to 9.5%

After a gap of nearly nine years, the Reserve Bank of India has increased the bank rate by 3.5 percentage points to 9.5 per cent with immediate effect.

“This (the increase) should be viewed and understood as one-time technical adjustment to align the bank rate with the marginal standing facility (MSF) rate rather than a change in the monetary policy stance,” RBI said in a notification, adding the new rate will be with effect from February 13.

The bank rate has lost its significance as a monetary policy tool as the central bank signals stance through changes in repo, the rate at which banks borrow short-term funds from RBI.

Penal rate

The bank rate, which is the standard rate at which the RBI buys or re-discount bills of exchange or other commercial paper, is now used as a penal rate which the banks have to pay for their failure to meet the mandatory cash reserve ratio (CRR) and statutory liquidity ratio (SLR).

The bank rate, which has been increased by 350 basis points or 9.50 per cent was kept unchanged since April 2003.

According to RBI, it should technically be higher than the repo rate, which is the policy rate. The repo rate currently stands at 8.5 per cent, while the reverse repo rate is 7.5 per cent.

Liquidity Adjustment Facility

It was kept unchanged, “mainly for the reason that monetary policy signalling was done through modulations in the reverse repo rate and the repo rate under the Liquidity Adjustment Facility (till May 3, 2011) and the policy repo rate under the revised operating procedure of monetary policy (from May 3, 2011 onwards)”, the RBI said.

Marginal Standing Facility

Moreover, it added: “Under the revised operating procedure, MSF, instituted at 100 basis points above the policy repo rate, has been in operation, which in many ways serves the purpose of the bank rate.”

While the policy repo rate and the MSF rate have become operational, the bank rate continued to remain at 6 per cent. The bank rate is also used by several other organisations as a reference rate for indexation purposes.

The RBI said that it has consulted various stakeholders relying on the bank rate as a reference rate before arriving at the decision to revise it.

“Based on the feedback received, it is determined that the bank rate should normally stay aligned to the MSF rate,” it said.

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