RBI to launch plastic currency on pilot basis in 5 centres

Amid instances of counterfeiting of notes, the Reserve Bank said it is working on launching plastic currency and will soon launch a pilot project for the same.

"Counterfeiting of plastic notes is very difficult. So we are planning to launch some plastic money on pilot basis in 4-5 centres. Like Jaipur, Shimla, Bhubaneshwar and other centres. We are working on it," RBI Deputy Governor H R Khan told reporters here.

Under the pilot project for issue of plastic currency notes, notes of Rs 10 denomination would be distributed through the central bank's five regional offices.

The proposed shift to plastic currency notes, instead of the normal paper notes, is primarily aimed at checking the counterfeiting as also high cost associated with printing of paper currency, as they need early replacement due to soiling and mutilation.

These notes would have an average life span of 5 years compared to one year for the currency notes, and also these notes are cleaner than paper notes and it would be difficult to counterfeit the currency.

Besides studying the potential cost savings through plastic notes, the pilot project will also look into the environmental impact of the proposed plastic notes.

The polymer notes were first introduced in Australia to safeguard against counterfeiting of currency. Besides Australia, other countries which have introduced plastic notes include New Zealand, Papua New Guinea, Romania, Bermuda, Brunei and Vietnam.


Source: Financial Express

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Dena Bank to rejig farm lending

Ms Nupur Mitra, Chairperson and Managing Director, Dena Bank, said that the delay in monsoons might affect the credit offtake in the agriculture sector.

The bank, however, aims to grow its agriculture loan book by focusing on allied sectors by way of investment credit or term loans.

Term loans are usually given for allied activities such as digging of wells, drip irrigation, and purchase of agricultural equipment and machinery. It also includes loans to agri-industries such as horticulture, sericulture, fisheries, dairy and poultry.

“Monsoon has been delayed and there is no adequate alternative irrigation facility. Naturally the offtake will be affected,” Ms Mitra told newspersons on the sidelines of an interactive session organised by the Bharat Chamber of Commerce here on Monday.

The bank aims to disburse close to Rs 500 crore to the agriculture sector this year. “Agricultural portfolio is not only crop-oriented. There are also other sectors which are not monsoon-dependent. So we will concentrate on those sectors so that the total agricultural portfolio is not affected,” she pointed out.

Power sector

The bank has brought down its exposure to the power sector to 15 per cent this year, as compared with 20 per cent during the previous year.

“We have curtailed lending to the sector as we did not want concentration risk,” she said.

shobha@thehindu.co.in

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SIDBI plumps for factoring

Small and medium enterprises will benefit from the Factoring Regulation Act, 2012, the Small Industries Development Bank of India has said.

Factoring can help micro, small and medium enterprises to do business in new ways, said Mr N.K. Maini, deputy managing director, SIDBI. He was speaking at a factoring awareness seminar for MSME manufacturers.

These units supply their products on credit terms to domestic purchasers. They can now get funds based on the strength of the transaction between the client and its debtor rather than on collaterals.

Scope for new products

Factoring organisations would bring in new products. New NBFCs could register themselves with the Reserve Bank to take up factoring.

Before the Act was passed, the parties faced high stamp duty, no legal recourse on the buyer and limited legal recourse on the client.

There was no central registry for creating charge; it made them vulnerable to frauds such as double financing and legal remedy for recovering debts was slow.

Worldwide, factoring increased from €724 billion in 2002 to €2015 billion in 2011. Asia’s factoring volume is around 25 per cent of this. National share in the Asian factoring business is just 0.6 per cent.

Growing at 11 per cent a year, the 30-million-strong MSME sector is the second largest employer at seven crore jobs. It contributes 45 per cent of the manufacturing output and 40 per cent of exports.

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IRDA slaps Rs 15 lakh penalty on Indusind Bank

Hyderabad,: The Insurance Regulatory and Development Authority has imposed a penalty of Rs 15 lakh on Indusind Bank Ltd for violating corporate agency norms.

Indusind Bank is a corporate agent of Cholamandalam General Insurance Company and Aviva Life Insurance Company.

On the basis of data submitted by Cholamandalam General Insurance, the regulator has found that Indusind had received higher payments than permissible from the insurer as a corporate agent.

The payments were received in the form of database sharing/incentives to the employees of corporate agent and infrastructure setting up costs for the three financial years commencing from 2007-08, IRDA said in an order.

Indusind Bank was ordered to pay Rs 5 lakh fine for each of the three financial years within 15 days, according to order.

nagsridhu@thehindu.co.in

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Union Bank to open three overseas branches this fiscal

Union Bank of India has said it plans to open three overseas branches in Sydney, Dubai and London before the fiscal end.

“I am hopeful that at least three overseas branches are expected by March 2013,” bank Chairman and Managing Director Mr D Sarkar told PTI here.

On the geographies which the bank is targeting, Mr Sarkar said Australia (Sydney), England (London) and UAE (Dubai) are the areas where the branches will be located.

The city-headquartered Union Bank has already incorporated a subsidiary in England for its London branch, he said, adding the process for setting up the other two is underway.

In line with many of its peers among the domestic lenders like IDBI Bank, Union Bank is also planning to have a branch in the Dubai International Finance Centre which will help it raise money in foreign currencies and on-lend to borrowers in non-rupee denominations, he said.

The exact timelines for opening of the branches will depend on the view taken on its applications by local regulators in these countries, he said.

At present, Union Bank’s international footprint includes a branch in Hong Kong and five representative offices elsewhere, he said, stressing that it is spreading its network ‘slowly’.

The bank is targeting a credit growth of 18-20 per cent this fiscal and in-line with the general trend, its asset expansion in the first quarter has been subdued, Mr Sarkar said, adding that factors like progress of monsoons, which has been lagging behind, will help it achieve the desired growth.

On deposit growth, he declined to cite a number for last quarter saying the bank is in pre-earnings silent period.

The bank, which posted a margin of 3.21 per cent last quarter, is confident of maintaining its net interest margin above 3 per cent, he said.

Meanwhile, the bank inaugurated second of its special automated teller machines (ATMs) for visually-challenged in the adjoining Thane suburb over the weekend.

Mr Sarkar said the bank plans to open 50 such ATMs before September and take it to 100 before the fiscal end.

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