Standard Chartered to pay $327 mn to resolve US sanctions case

British bank Standard Chartered will pay the United States $327 million to settle charges it violated US sanctions on Iran, Myanmar, Libya and Sudan, the US Treasury announced today.

US authorities said the bank had stripped messages on financial transfers routed through US banks of information that would show the beneficiaries were businesses and entities that fell under US sanctions.

The fines from the Treasury’s Office of Foreign Assets Control (OFAC) and other US federal and local regulators took to $667 million the total the bank has been charged for sanctions violations.

In August the New York state banking watchdog fined Standard Chartered $340 million in the same investigation, saying it hid 60,000 transactions with proscribed Iranian clients worth $250 billion over 10 years.

“Today’s settlement is the result of an exhaustive interagency investigation into Standard Chartered Bank’s attempts to violate US sanctions programmes through the ’stripping’ from payment messages of critical information,” said OFAC Director Adam Szubin in a statement.

The sanctions avoidance involved mainly the bank’s London head office and its branch in Dubai, which masked the details of messages so US authorities would not see the real identity of those sending and receiving the payments.

“As a result, millions of dollars of payments were routed through US banks for or on behalf of sanctioned parties in apparent violation of US sanctions,” the OFAC said in a statement.

The OFAC added that the settlement also covered eight apparent violations of US sanctions on drug lords.

Read more »

Allowing insurers to invest up to 30% in a co is imprudent: IRDA

Raising the investment limit of insurers to 30 per cent of the paid-up capital of a company would be an “imprudent” move, cautioned insurance regulator IRDA.

Pegging the investment limit at 30 per cent would lead to insurance companies behaving like venture capital undertakings, which would not be warranted, according to IRDA Chairman, J. Harinarayan.

“The question is whether insurance investment must be as aggressive as venture capital companies.

“I think not. Insurance companies must be conservative in their approach”, Harinarayan said on the sidelines of a FICCI Health Insurance conference in the Capital.

The Government has circulated a draft that seeks to increase investment limit of Life Insurance Corporation from the current 10 per cent to 30 per cent of the paid-up capital of the investee company.

“The level suggested in the draft is very high. These are the levels at which venture capital companies invest as per SEBI norms”, he said, adding that raising investment limit to 30 per cent would also raise issues on SEBI takeover code.

Acquiring a 25 per cent stake in a company would trigger open offer obligations for the insurance companies, resulting in their taking controlling interest.

Insurance companies should not be in the business of running companies, he indicated.

Harinarayan also said that even at the current level of 10 per cent, there was enough room for insurance companies to invest.

Asked if IRDA will allow private insurers to invest higher than the 10 per cent level if the LIC’s investment limit were to be raised to 30 per cent, he replied in the negative. “No certainly not, I think it is very very imprudent”.

Demands tax breaks for pension products

The suggested that a separate bucket be introduced in the income-tax law to provide for tax breaks on investments in insurance policies.

This would encourage citizens to buy more insurance products, IRDA Chairman Harinarayan said when asked about his Budget wish-list.

He also said that the current provision in income-tax law that exempts the sum received under a life insurance policy should be extended for long-term insurance policies as well.

On pension products, Harinarayan suggested that pension products approved by IRDA should be given the same tax breaks as currently available under the new pension system (NPS).

Srivats.kr@thehindu.co.in

Read more »

Indian Overseas Bank to focus on rural lending, to open 40 agri branches

Indian Overseas Bank is planning to open 40 specialised agri business branches to focus on rural lending, with two of the branches in Andhra Pradesh, according to M. Narendra, Chairman and Managing Director of the bank.

He told presspersons here on Monday after inaugurating the new premises of the regional office of the bank, that 12 such branches would be opened soon in Karnataka, Maharashtra, and Odisha. “There is immense potential for such branches in Andhra Pradesh too, and we are initially planning two such branches in Godavari district,” he said.

He said the branches would focus on lending to small farmers and agri-processing units rather than promoting high-tech agriculture. He said 70 per cent of the bank’s branches were in rural and semi-urban areas. During the current financial year, apart from crop loans, the bank had pumped in additional investment of Rs 616 crore for agri-processing units.

Apart from agriculture, he said, the bank had floated special loan schemes for urban horticulture. Under the scheme, an individual could borrow Rs 25,000 to Rs 2.5 lakh for raising a roof garden or a backyard garden in his or her house, while institutions could borrow up to Rs 25 lakh. The bank wanted to lend at least Rs 100 crore under the head during the year.

He said the bank was also concentrating on medium and small enterprises by opening special SME loan processing centres and on the retail business by opening rapid retail centres. IOB had also provided credit linkage to 4,35,000 women's self-help groups, Narendra said.

As the bank was rapidy expanding, he said, it had recruited 1,500 officers and 1,500 clerks recently and 500 special credit officers would be appointed. The bank’s total business amounted to Rs 3,45,000 crore. The bank had set up six branches overseas and four representative offices. The representative offices in China, Dubai and Vietnam would soon be upgraded into full-scale branches.

NPAs: He said non-performing assets of the bank were on the slightly higher side, but they were still within manageable limits. “As on September 30, the gross NPAs stood at Rs 5,930 crore (inclusive of Rs 630 crore contributed by overseas branches), roughly 3.87 per cent of advances. The net NPAs stood at Rs 3,378 crore, roughly 2.25 per cent. We are expecting economic recovery in the near future and we will recover the amount. Certain sectors such as iron and steel and textiles have contributed to the NPAs. But there is really no cause for concern,” he added.

sarma.rs@thehindu.co.in

Read more »

Union Bank of India expects Rs 1,000 cr infusion

Union Bank of India expects fund infusion of about Rs 1,000 crore as part of recapitalisation plan of the government.

“We have applied and we are expecting about Rs 950—1000 crore (capital infusion during the current fiscal),” said D Sarkar, Union Bank of India Chairman and Managing Director.

“The government has agreed in—principle to infuse the capital and may be in week’s time we will be getting information from the government,” he added.

Last fiscal, the state—owned bank got capital support of Rs 280 crore.

With the infusion, Tier I capital of the bank will go up, he said, adding, it was 8.17 per cent as on September 2012.

The capital infusion will help the bank to enhance lending to productive sectors.

The government has made budget provision of Rs 15,000 crore for recapitalisation of public sector banks in the current fiscal.

On the stressed assets, Sarkar said, rise in NPA is reflection of economic situation. With improvement in the economy, things would get better.

“We aim to bring down the gross NPA to 3 per cent of the total advances by March 2013,” he added.

Gross NPA of the bank stood at 3.66 per cent at the end of first half of the current fiscal.

Asked about the expectations from upcoming mid—quarter review of monetary policy by RBI, Sarkar said: “As a banker I expect that there should be some reduction in the policy rates. It will boost up the sentiment and economic sentiment.”

There is expectation that repo rate or CRR could come down by about 25 basis points, he said.

Read more »

Union Bank gets in-principle nod for opening offshore unit in Dubai

Union Bank of India has received in-principle approval for opening an offshore banking unit in Dubai International Finance Centre (DIFC), D. Sarkar, Chairman & Managing Director, has said.

The public sector lender is confident of setting up at least three units abroad in 2013 as part of efforts to expand its overseas footprint, Sarkar said.

Besides Dubai, the bank is also looking to open a subsidiary in London, a branch each in Sydney and Antwerp in calendar year 2013.

Having a presence in DIFC will help the bank raise money in foreign currencies and on-lend to borrowers in non-rupee denominations.

Sarkar was in the capital for the launch of the bank’s 180th ‘Union Xperience’ branch. This branch has been opened under its ‘Nav Nirman’ transformation initiative, which aims at delivering superior customer experience.

“We are at an advance stage of getting clearances and completing the formalities for London subsidiary and a branch in Sydney,” Sarkar said.

At present, Union Bank’s international footprint includes a full-fledged branch in Hong Kong and a representative office each at London, Sydney, Beijing and Shanghai.

Srivats.kr@thehindu.co.in

Read more »