C.V.R. Rajendran appointed CMD of Andhra Bank

After being headless for more than three months, Andhra Bank has a new Chairman and Managing Director in C.V.R. Rajendran.

Prior to this elevation, Rajendran was executive director at Bank of Maharashtra.

Rajendran will be Chairman and Managing Director of Andhra Bank for a period of five years or until superannuation, whichever is earlier. He is due to superannuate in April 2015.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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DHFL Vysya Housing eyes 30% growth in disbursements

DHFL Vysya Housing Finance Ltd (DVHF) is confident of achieving at least a 30 per cent increase in home loan disbursements this fiscal, its Managing Director R. Nambirajan has said.

The company is targeting a disbursement level of about Rs 400 crore in the current fiscal, he told Business Line.

Last year, the housing finance company, which is part owned by Dewan Housing Finance, had disbursed Rs 272 crore, recording a near 35 per cent jump on a year-on-year basis.

Strong demand

Nambirajan said that there was strong demand for housing loans among the middle class and lower middle class, especially in tier-3 cities.

He ruled out any capital raising this fiscal, stating that the company had comfortable capital adequacy ratio of 18 per cent.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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Banks may soon begin charging customers for ATM usage

Free withdrawals at ATMs may soon become a thing of the past. To make good the expenses incurred on beefing up security, banks are considering levying a charge on all ATM transactions, be it a cash withdrawal or a balance enquiry.

With the police in various States insisting that ATM kiosks have security guards 24x7, CCTV cameras inside and outside the kiosks, and video footage to be preserved for at least six months, bankers say the costs will more than double.

The security concerns have been triggered by the recent lethal attack on a woman customer in an ATM booth in Bangalore. Most of the over 1,00,000 ATMs in the country neither have round-the-clock guards nor surveillance cameras.

Currently, all transactions by customers at their bank’s ATMs are free. The first five transactions in a month at other ATMs are also free.

“Hiring trained guards for three eight-hour shifts, procuring arms licences, installing cameras inside and outside the ATM and connecting alarms to the nearest police station will have huge cost implications for banks,” said a senior public sector bank official.

Discussions on fee

Banks are now in discussions with the Indian Banks’ Association (IBA) to arrive at the fee to be levied and the modalities relating to enhancement of security.

Further, to cut costs, they are also considering the feasibility of having operational hours, say from 8 a.m. to 8 p.m., for some ATMs, which either do not have footfalls at night or are in locations that are sparsely populated.

“We are all working on the modalities through the IBA. There are issues, such as competition and ATM spread, which have to be taken into consideration before arriving at a decision,” R.R. Sharma, Chief General Manager, Canara Bank, told Business Line on Wednesday.

According to initial estimates, the cost per transaction works out to Rs 6 on the basis of an average of 200 transactions in each of the 100,000-plus ATMs across the country, Sharma said. However, the individual cost structures for banks might wary.

“But definitely, it will be a significant cost for banks, which can impact profitability. Every branch should have an ATM and there are some ATMs that are not frequented by many customers. Providing security at these would be expensive,” said M. Anjaneya Prasad, Executive Director, Syndicate Bank.

BIG BURDEN

Banks are worried. If the 100,000 ATMs have 20 million transactions a day that means 600 million transactions a month.

So, if each transaction costs Rs 6, the total expenditure for banks would be Rs 360 crore a month. If the proposal goes through, this cost would have to be borne by customers.

Imposition of any fee would mean the end of free ATM usage for customers. “Already we just have five free transactions in ATMs of other banks. While this itself is not justified, how can we be made to pay for security at ATMs?” questioned H. Phaneedra, a customer.

Bankers are, however, hoping that the Reserve Bank of India will give its nod to levy charges on ATMs transactions.

naga.gunturi@thehindu.co.in

ramkumar.k@thehindu.co.in

Source: thehindubusinessline

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IRDA: HIV/AIDS patients to pay higher insurance premium

Persons suffering from HIV/AIDS or other pre-existing illness will have to pay higher premium for life insurance, regulator IRDA said.

Insurance Regulatory and Development Authority (IRDA) Chairman T. S. Vijayan said insurance companies will provide life cover to persons with pre-existing illness, but the pricing will be based on commercial considerations.

“The whole idea is the person may be having a disease, once the policy has started even if the person is having disease, he is not excluded. Obvious thing is pricing has to be different. That is the commercial decision left to the industry,” he told presspersons after a FICCI event here.

He said a few insurers have already introduced cover for HIV/AIDS infected patients. “I am sure more companies will bring policies,” Vijayan said.

The IRDA had in October come out with a draft circular asking all insurers to provide life insurance cover to HIV/AIDS patients.

The circular on policies for people with HIV/AIDS is likely come into effect from April 2014 and insurers would be required to put in place procedures for underwriting and claim settlement, and proposal form before that.

The circular also provides for health insurance products offered by life insurers for those who are HIV negative at inception of the policy and acquire HIV/AIDS after commencement of insurance policy.

With respect to such persons who are HIV negative at the commencement of the contract and subsequently found to be HIV positive during the term of the policy, the circular states that the insurers should not reject/deny any claim on such grounds and in all such cases, the underwriting guidelines and claims settlement guidelines applicable at the time of commencement should be applicable.

Source: thehindubusinessline

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Muthoot plans new NCD issue

Encouraged by a strong response to its recent NCD issue, Muthoot Finance will tap the market with a similar debt offering, its Managing Director George Alexander Muthoot said.

In November, the gold loan company had mobilised Rs 300 crore through a non-convertible debenture issue.

About 25,000 retail investors subscribed to the offer, the company’s sixth NCD issue, and this has encouraged it to look at a higher issue size for the seventh NCD issue, Muthoot told Business Line here on Saturday.

The company is now looking at an issue size of Rs 250 crore with a green shoe option of Rs 250 crore for the upcoming NCD issue, likely to open on December 16.

This will be the third debt issue by the company this fiscal, with the first one hitting the market in September to mop up about Rs 300 crore.

“We need to deepen our debt markets. Muthoot Finance is also trying to bring more people into the debt (securities) market,” Muthoot said.

To encourage retail participation in the debt market, Muthoot Finance has been incurring certain costs (like stamp duty) involved in the opening of a demat account by retail investors.

With market regulator SEBI now allowing investors to open demat accounts sans stamp duty, the debt market activity may see some boost, say market observers.

“The SEBI move to do away with stamp duty for opening demat accounts could help spur activity,” Muthoot said.

He further said the company’s strategy of diversifying its resource base and reducing its reliance on bank loans is working well.

Towards this end, it has tapped the market with several NCD issues over the past few years, he pointed out.

Going forward, it will repay more of its higher cost bank loans out of the resources mobilised from the NCDs.

To sponsor event

Muthoot Finance will be the title sponsor of the Cochin International Half Marathon to be held on December 29.

srivats.kr@thehindu.co.in

Source: thehindubusinessline

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