Reject Nayak panel report on PSU banks, demands bank union

A bank employees' union has asked the government to reject the Nayak committee recommendations on bank privatisation saying the report would not be against national interest.

"The report of the committee, which was appointed by the RBI Governor, deserves to be rejected by all authorities," All India Bank Officers Association ( AIBOA) General Secretary S Nagarajan said.

Nagarajan also said that banking should also be brought under Banking Audit Commission identical to CAG.

"We have also written to the President of India seeking his immediate remedial action to safeguard the public sector banking from ever growing bad loans due to various external factors," he told reporters here today.

The committee headed by P J Nayak, former chairman of AXIS Bank, has recommended mainly privatisation of public sector banks by reducing the government equity below 51 per cent, merger of Bank, repealing Bank nationalisation which would be against national interest.


Source: Economic Times

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UBI gears up for slapping more winding up notices against four firms

After the winding up notice to REI Agro for defaulting on Rs 224 crore in payments, United Bank of India is poised to take similar action against four more such firms, an official of the bank said.

"At today's meeting, it has been decided to slap winding up notices against four more firms where the total defaulting amount is around Rs 300 crore," the official told PTI.

He said the bank is also seeking change in the management of these companies.

UBI executive director Sanjay Arya said the bank resorts to such action only after all the avenues of recovery are exhausted.

"Once an account becomes NPA (non-performing asset, or bad loan), we ask them to pay immediately. If not, we either file a petition under the Sarfaesi Act or go to the Debt Recovery Tribunal (DRT)... We evaluate each case on its merit and gravity," Arya said.

Asked about the cash recovery which the bank was expecting to make this quarter, Arya said the conservative estimate is about Rs 250 crore.

Stung by staggering losses in the third quarter of the last fiscal, the city-based bank staged a turnaround by posting a net profit of Rs 469 crore on the back of cash recovery and an effective NPA management.

Amid administrative probe in the matter pertaining to bad loans, the Finance Ministry had earlier this year accepted UBI Chairman and Managing Director (CMD), Archana Bhargava's application for voluntary retirement.

Bhargava, who took over as CMD on April 23, 2013, cited health ground for seeking premature retirement. Her term was due to end on February 28, next year.


Source: Economic Times

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State Bank of India opens Retail Assets and Small and Medium Enterprises City Credit Center in Shillong

State Bank of India Deputy Managing Director (Operations) P K Malhotra today inaugurated Retail Assets and Small and Medium Enterprises City Credit Center (RASMECCC) and felicitated top ranked students in the city.

The RASMECCC is a is a specialized loan processing, sanctioning and maintenance hub, which deals with the Personal and SME loans of 21 city based branches, handling more than 20000 loan accounts including big branches in the state. The centralization of loan processing, sanctioning and maintenance enables the bank to give better customer service, besides the convenience of having multiple functions under one roof, he said while inaugurating the new office premises.

Branches are also relieved by having their processing/sanctioning and maintenance job shifted away from them, leaving them with more time to market the Bank's products and concentrate on business development. The new location of RASMECCC will definitely make it well connected with all parts of the city, which will be of special convenience for our customers, he said.

The RASMECCC premises will also host another important marketing hub, known as Multi Product Sales Team (MPST) aimed at providing convenience for the customers. The Bank official also felicitated top ranked students in the recently declared results of the XII science and XII commerce streams.


Source: Economic Times

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Indian banks will have to raise Rs 3 lakh crore in external capital

Indian banks will be required to raise Rs 3 lakh crore in external capital in the next four years, which was a huge challenge, a top bank official said.

"Indian banks will be required to raise Rs 3 trillion in external capital in next four years. Expansion of capital to this extent will affect the returns on the equity of these banks, especially public sector banks," Indian Overseas Bank DGM Vairam Somasundaram said at a seminar here.

"It will be difficult for the government to find such a large amount to capitalise the public sector banks. The situation of the private sector banks will not be much different, leading to merger and consolidation of the banks," he opined.

RBI's directive to implement the Basel III norms by 2018 March, was also a big challenge, he said.

According to Somasundaram, the financial inclusion target laid down by the government by 2016, increasing competition among banks, huge spending on technology, emergence of mobile service providers like Airtel into the banking sector and lack of experienced employees are among the other challenges before the banks in future.

K S Harikumar, Chief Regional Manager, Manappuram Finance Ltd said along with Basel 111 implementation, fresh banking licences also will be a threat to existing banks.

He was of the opinion that the private banks in Kerala may merge together within next five years to "overcome competition."

Increasing NPAs will be a major challenge for the Indian banks. It was estimated that the NPA will grow to Rs 12,5000 crore by 2018, he added.

Source: Economic Times

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Public sector banks to sell Rs 2,000 crore of bad loans to asset reconstruction companies

A clutch of public sector banks, including the country's largest lender State Bank of India, is trying to sell about Rs 2,000 crore of bad loans to asset reconstruction companies, reflecting mounting pressure from stressed assets.

People with knowledge of the matter said UCO Bank wants to offload Rs 1,000 crore of outstanding loans, while State Bank of Hyderabad has already called an auction for Rs 700 crore. Also on the list are Canara Bank and State Bank of India, though they are selling a smaller portfolio of sticky loans. This is the first time in a decade that banks are eager to sell stressed loans in the beginning of the year. Until now, lenders were selling bad loans only in last quarter to clean their balance sheets. The gross non-performing assets, or bad loans prior to making provisions, for calendar year 2013 stood at Rs 2,43,210 crore, up 35% on a y-o-y basis.

Some analysts say lenders want to benefit from the one-time dispensation given by the Reserve Bank of India on sale of such loans. The RBI had said in February that if banks sell assets to ARCs below the net book value, losses incurred due to this could be amortised over two years. The offer is until March 2015. "This move is likely to encourage banks to sell assets when there is a value in it," Siby Antony, managing director and chief executive at Edelweiss ARC, told ET. "So far, only vintage assets were sold when the only resolution with ARCs was asset stripping." Another factor encouraging banks to offload bad assets is the RBI view that ARCs should be construed as a supportive system for stressed assets rather than the last resort to dispose of NPAs.

ARCs, on the other hand, are working towards resolution of loans acquired from banks. ARCs will have to demonstrate their capabilities, else banks that have reposed confidence in them will not come back to sell stressed assets, said P Rudran, MD and CEO, Asset Reconstruction Company of India, popularly known as Arcil.

"All recovery efforts will be in consultation with the selling bank because they may give inputs that we may not be aware of at the time of due-diligence of the account or resolution of account." Banks sold Rs50,000 crore of outstanding bad loans to ARCs in 2013-14, compared with Rs 12,500 crore a year ago.



Source: Economic Times

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