Dhanlaxmi Bank to grow gold loan business

Banks are likely to gain from the restrictions imposed on gold loan companies by the Reserve Bank of India.

In fact, old generation private sector bank, Dhanlaxmi Bank is looking to increase its gold loan portfolio from 8 per cent of total loans to 20-25 per cent in the current financial year, said Mr P. G. Jayakumar, Chief Executive Officer.

The bank's gold loan portfolio is expected to increase from Rs 750 crore as at March-end 2012 to Rs 2,500 crore by March-end 2013.

Speaking to newspersons in Mumbai on Monday, Mr Jayakumar said gold lending is a very attractive and secure business and many banks are aggressively pursuing it. The RBI is perhaps more comfortable with banks doing this business than NBFCs because banks follow the required Know Your Customer norms before giving loans.

For banks, too, it is a safe product since it is a secured loan, he added.

In 2012-13, the bank is looking to increase its retail loan book and within that the share of gold loans.

Last month, the RBI directed gold loan NBFCs not to exceed the loan-to-value (LTV) ratio of 60 per cent for loans granted against the collateral of gold jewellery. Further, such NBFCs must maintain a minimum Tier-l capital of 12 per cent by April 1, 2014.

The RBI also said that NBFCs should not lend against bullion or gold coins.

A recent report by credit rating agency Crisil said that RBI's guidelines for the gold loan companies will significantly moderate the sector's growth and profitability over the next year.

Business growth is likely to fall from 80 per cent per annum to 20-25 per cent per annum.

The LTV cap is likely to result in significantly lower growth rates, as the borrowers will have to bring in additional jewellery to get a loan of the same amount.

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Oriental Bank of Commerce cuts base rate by 10 bps

Taking the lead, Oriental Bank of Commerce has cut its base rate by 10 basis points to 10.65 per cent with effect from Wednesday.

This move is expected to translate into lower interest rate for borrowers, and comes a week ahead of the Reserve Bank of India's annual credit policy announcement on April 17. The base rate is the minimum rate at which banks can lend to its borrowers.

“We have taken a bold decision ahead of the RBI policy. There are some events in the last few months that have enabled us to take this decision and pass on the cost benefit to our customers,” Mr S. L.Bansal, Chairman and Managing Director, said.

The RBI's move in the recent months to cut the cash reserve ratio has helped OBC get as much as Rs 2,000 crore released. This money was not earning any interest when it was placed with the central bank.

Speculation is rife that the RBI will go in for another 75 basis point reduction in CRR on April 17.

krsrivats@thehindu.co.in

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RBI allows RRBs, cooperative banks to transfer funds online

To popularise electronic transfer of funds, the Reserve Bank today allowed regional rural banks (RRBs) and cooperative banks to participate in the centralised payment systems.

With this, all the banks can now transfer funds electronically through real time gross settlement system (RTGS) and national electronic funds transfer (NEFT).

At present, the centralised payment systems -- RTGS and NEFT can be accessed only by members that included public and private sector banks. As an exception, RRBs have been given access to the NEFT system through their sponsor banks.

"On a review, it has been decided to expand the sub- membership route to enable all licensed banks to participate in NEFT and RTGS systems," RBI said in a notification.

NEFT, an electronic transfer of funds system meant for retail customers while RTGS system facilitates high-value transfer of money with threshold limit of Rs 2 lakh.

This would be an alternate mechanism to all licensed banks which have the technological capabilities but are not participating in centralised payment systems on account of either not meeting the access criteria or because of cost considerations, it said.

Eliciting condition for such transactions, the notification said, the sub-member would participate in the centralised payment systems through their sponsor bank which is a direct member of the centralised payment system.

In order to ensure compliance with the timely credit and return discipline which are of utmost importance in centralised payment systems, branches of sub-member that are not under core banking system shall be kept out of the centralised payment systems till such time they are brought under core banking, it said.

The sponsor banks would be responsible for sending or receiving the transactions or messages on behalf of their sub-member, it added.

The charges, it said, for customer transactions of sub- member cannot exceed the charges applicable to customers of sponsor banks or direct members of the centralised payment systems.

Source: EconomicTimes

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Bank of India to rename Indonesian arm

Public sector lender Bank of India today said that it will rename its Indonesian arm, Bank of Swadesi, as Bank of India Indonesia.

Bank of India holds 76 per cent stake in the Indonesian bank. The state-run lender said that it has obtained necessary approvals for the same.

“Indonesia and India have close cultural and economic ties and with the core competency that Bank of India brings with it in the areas of agricultural and industrial finance capabilities, we are sure that Bank of India Indonesia will contribute in much larger measure to the growth of the Indonesian economy,” Bank of India Chairman and Managing Director, Mr Alok Misra said.

He added that Bank of India’s global reach would be available to Bank of India Indonesia in expanding its business in forex and international trade finance.

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Jane Ong appointed Citi’s Corporate Affairs Head

Citi India has appointed Ms Jane Ong as the Corporate Affairs Head for Citi South Asia.

Ms Ong will be responsible for media relations, managing external and internal communications as well as Citi’s citizenship portfolio. She will report to Citi India Chief Executive Officer, Mr Pramit Jhaveri, the bank said in a release.

Prior to joining Citi, Ms Ong was with Royal Bank of Scotland. She was also associated with CNBC Asia at Hong Kong and BBC World TV.

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