YES Bank raises $225 m using swap loan facility

YES Bank has become the first bank to raise funds overseas using the swap loan facility provided by the Reserve Bank of India (RBI) last week.

The private sector lender raised $255 million ($180 million and €58 million) by way of dual currency, multi-tenor syndicated loan facility.

RBI, on September 10, had announced that banks can raise funds overseas above 50 per cent of their Tier I capital with a minimum maturity of three years and swap these borrowings with the central bank at a concessional rate for one to three years.

A Treasury head of a private sector bank had said that this facility could bring in dollar inflows to the tune of $10-15 billion.

“The facility has a maturity of one and two years with majority commitments coming in the two-year tenure bucket. The loan has been distributed with commitments from 11 banks representing eight countries across US, Europe, Middle East and Australia. The facility shall be utilised for general corporate purposes and trade finance,” YES Bank said in a statement.

According to the bank: “The recent RBI guidelines on offering swap facility to banks, for their FCY borrowings, at 100 bps below the market rate, will further make the landed rupee cost (or the effective interest rate) of these funds extremely competitive vis-a-vis rupee funds of equivalent maturity.”

The lead arrangers and book-runners for the transaction are ANZ Banking Group, Citigroup Global Markets Asia, HSBC, Standard Chartered Bank and State Bank of India.

Source: thehindubusinessline

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Lakshmi Vilas Bank creating new verticals to double turnover

Lakshmi Vilas Bank is creating new business verticals by re-allocating resources and rationalising workforce with an aim to double its turnover.

The bank has created business, operations and compliance verticals in its management hierarchy with a thrust on credit and product marketing.

“To achieve this, the bank is realigning workforce to drive productivity. According to the plan, we will be deploying about 30 per cent of work force in client interfacing,” J. Moses Harding, Executive Director, Lakshmi Vilas Bank, told Business Line.

The bank plans to tap the existing manpower by creating sales team, educating it with ‘right people at right place’.

Starting September 1, the bank has already realigned eight regional offices. Now each regional office will have four-five clusters, with each cluster handling 10-12 branches.

“By adopting this model, we are to focus exclusively on credit and product marketing which is expected to grow and give us good topline (advances) and CASA growth,” said Harding.

“As part of this exercise, we are planning to reach out to the clients, deepen relations with existing customers and aggressively go for mass acquisition of new clients,” he added.

Harding said “the bank is also working out a three-year business continuity plan with an objective to grow the business over Rs one lakh crore from the current Rs 30,000 crore.”

anil.u@thehindu.co.in

Source: thehindubusinessline

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RBI norms take sheen out of gold loan firms

Gold financing firms will need to relook their business model as the Reserve Bank of India’s new, tightened norms are likely to hurt growth, according to analysts.

Uncomfortable with the systemic risks involved in the extant lending model, the RBI on Tuesday issued new guidelines on gold loans by non-banking finance companies (NBFCs) to bring in more transparency.

Prakash Agarwal, Associate Director - Banks, India Ratings, said: “It is positive from the systemic point of view and will reduce risks. From the companies’ point of view, the portfolio of gold loans could see a further downside for the next three-four quarters. Amid the recent downturn in the business, we could also expect some de-growth.”

Further trouble

NBFCs such as Muthoot Finance and Manappuram Finance, which are largely into gold financing, will further face troubles going forward.

Both companies were not reachable for comment.

According to Agarwal, the entire disbursement of the loan is by cash as the borrowers are largely not savvy with the documentation process.

paper tedium

Hence, the new requirement to bring in more paperwork can put off the borrowers and they could shift to banks or the unorganised sector to meet their gold loan requirements.

Vaibhav Agrawal, senior analyst at Angel Broking, said: “The strength of these firms was to disburse faster loans.

“However, the new rules may deter borrowers from going through the longer processes and in turn prefer banks, which also have lower interest rates.”

According to him, the firms also need to consolidate their smaller branches.

The business model will need to be relooked at as this will incrementally impact the gold loan business.

The boom that the gold loan business saw in the past is unlikely to be repeated, Agarwal added.

Muthoot Finance ended 8.28 per cent weaker at Rs 103.60 per share, while Manappuram Finance closed 4.62 per cent down at Rs 15.50 on the Bombay Stock Exchange.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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Top IRDA official charged with sending ‘spurious mails’

Whistleblower or blackmailer? The staff and management of the Insurance Regulatory and Development Authority (IRDA) have adopted diametrically opposite positions in a controversy relating to a joint director, who was arrested on a complaint from the regulator.

S. K. Jain, who is also the Vice-President of the IRDA Officers and Staff Association, was charged with using fake IDs to send e-mails to senior officials, including those in the Ministry of Finance, about corruption and malpractice in the regulatory body.

The remand report of the police dated August 23, 2013, notes that Jain had “noticed some irregularities in promotions, absorbing of ineligible employees and corruption, upon which they have tried to convey them to senior officers but they have showed deaf ear… As such, he had decided to send mails to private persons…’’

These e-mails were sent from as early as February 2013, but the IRDA formally complained about the ‘spurious mails’ only in July.

After discovering that the mails originated from a computer at Jain’s residence, he was arrested under Section 66 A of the Information Technology Act, which penalises “sending false and offensive messages through communication services”.

He is now out on bail. Jain’s mail to the IRDA Chairman in February alleged many irregularities in the filling up of about 25 vacancies , including senior positions such as Executive Director and Actuary.

They also mentioned some unspecified “acts of corruption’’ and alleged misuse of official position by the executive director.

Strong objection

IRDA’s staff body has taken strong exception to the arrest of Jain, saying he has been victimised for being a ‘whistle-blower’.

In a letter addressed to the Chairman of IRDA dated September 10, Suresh Nair, President of the employees association, demanded that the case against Jain be withdrawn immediately and that an independent investigation be conducted into the alleged irregularities. When contacted, Sriram Taranikanti, Executive Director, IRDA, said: “Allegations of corruption/irregularities have been made in 10 to 12 cases but they are baseless”.

When asked whether any probe was ordered on the allegations, he said the authority had looked into the issues but was content with the stand it had taken on each of them.

No employee had a right to disclose or share internal issues with outsiders, especially with those entities which are regulated by it, he said.

“This is not whistle-blowing but black-mailing tactics. We are open to correction or take a re-look at any thing always,” he said.

naga.gunturi@thehindu.co.in

Source: thehindubusinessline

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10-12% growth in project finance portfolio: SBI

The project finance segment of State Bank India, the country's largest lender, is witnessing a 10-12 per cent growth on a year-on-year basis.

According to P.K. Malhotra, Deputy Managing Director, SBI Project Finance SBU, the bank has witnessed an increased outflow towards project finance.

Higher number of projects have also been sanctioned.

The project finance unit accounts for nearly 10 per cent of SBI's total portfolio.

"Project sanctions are higher than last year," Malhotra told reporters on the sidelines of the "Banking Colloquium 2013" organised by the Confederation of Indian Industry (CII).

According to him, while others might stop lending because of the slowdown; SBI has not done so. This has led to growth in sanctions.

Retail Growth

SBI, he said, is expecting a credit growth in the region of 18-20 per cent during the July-September quarter.

"Credit growth in the current quarter is being driven by retail portfolio," he said.

abhishek.l@thehindu.co.in

Source: thehindubusinessline

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