IDBI Bank may raise capital in FY16, says CMD Raghavan

IDBI Bank may look to raise further capital this fiscal and is not averse to tapping the market with a follow-on-public offering (FPO), its Chairman & Managing Director M.S. Raghavan has said.

"We definitely need capital. I am not ruling out tapping the market with FPO for this purpose this fiscal", Raghavan told Business Line when asked about capital raising plans for 2015-16.

Raghavan said that he would look to tap the market the day the Bank’s share price equalled its book value.

"Current price-to-book (P/B) of the bank is around 50 per cent. The day my price comes close to the book value that is the day I will go to market"

At the same time, he made it clear that the bank was not in any "dire need" of capital and could manage the current fiscal with existing capital.

The credit growth in the financial year just gone by was muted at about 6 per cent, Raghavan noted.

He was however confident about the prospects for the current fiscal (2015-16) and expects the overall business to grow 12-15 per cent this fiscal.

IDBI Bank has aggressive plans to increase its branch network to 2,000 by end June from the current level of 1,711.

Plans are afoot to add another 750 ATMs this fiscal, taking the overall count of ATMs to 3,750.

Raghavan was in New Delhi for launch of the 3,000th ATM of the bank.

srivats.kr@thehindu.co.in


Source : Thehindubusinessline

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P.G. Jayakumar lays down office as MD and CEO of Dhanlaxmi Bank

P.G. Jayakumar has laid down office as Managing Director and CEO of the Kerala-based Dhanlaxmi Bank on Monday. He took charge as MD & CEO three years ago.

G. Sreeram, who was Chief General Manager, Canara Bank, Mumbai Circle, is succeeding him.

Jayakumar rose from the cadre to the highest office and served the bank for more than 37 years in various capacities including Branch Head, Zonal Head, and General Manager in charge of HR, Administration, Credit, Risk Management, and Treasury.

He assumed charge as MD & CEO at a crucial juncture after the exit of Amitabh Chaturvedi.

The bank, during Jayakumar’s period, raised capital funds of Rs521crore. This helped it comply with the regulatory capital adequacy requirements. The bank underwent total reorganisation as a customer-focused branch-centric model and a series of customer-friendly products and technology services were introduced, a press release said.

He has worked towards developing a microfinance model to uplift the poor by working closely with the major NGOs and churches, particularly in Kerala.

The bank has recorded positive growth in all key areas. In the first three quarters of financial year 2014-15, it posted a net profit of Rs25.14 crore on cumulative basis.


Source : Thehindubusinessline

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Government mulls steps to encourage use of Jan Dhan accounts

Having opened over 12 crore Jan Dhan bank accounts under its flagship financial inclusion programme, the government is now mulling over ways to step up the utilisation of these accounts, including through POS transactions and the Business Correspondents.

A meeting has been called by the Finance Ministry on Tuesday, April 7, of representatives from public sector banks and the business correspondents (BCs) of the banks, who can help in last-mile implementation of the inclusion efforts.

Among other matters, the meeting would deliberate on issued faced by the BCs and banks in their operations, including with regard to remuneration, technical support and the required incentives.

Earlier last week, Prime Minister Narendra Modi had said at a function to mark RBI's 80 years that as much as Rs 14,000 crore has been deposited in Jan Dhan accounts and the challenge now will be to increase the transactions.

The scheme offers free zero-balance bank account with a debit card, a Rs one lakh accident insurance policy and Rs 30,000 free medical insurance cover for the poor. In his Budget speech, Finance Minister Arun Jaitley had said that over 12.5 crore bank accounts had been opened under the scheme in just nine months.

However, concerns have been raised in some quarters that a large number of people are not transacting through these accounts, although the government has been passing on subsidy and other benefits to them.

Anand Shrivastav, Chairman, Regulatory Affairs Committee, Business Correspondents Federation of India (BCFI), which will be attending the meeting, said that the underutilisation of the Jan Dhan cards is a result of several factors.

"The solution that we will be discussing revolves around the fact that the BC Networks or Bank Mitras under the BCFI need to be formally recognised as a self-regulating- organisation and their remuneration fixed that is economically viable.

"At present a single ATM withdrawal would cost a bank Rs 15-20 per transaction whereas Bank Mitras/BCs receive inadequate remuneration for their services. Due to the relatively poor ATM network in rural areas, there is virtually no place to withdraw or swipe the cards by the financially excluded strata who are issued Jan Dhan cards.

"Unless the government fixes these problems and addresses the structural limitations faced by BC Network Managers we will be away from achieving efficiency under the PMJDY scheme," he added.

Among others, it is being proposed to increase the cash withdrawal limit at Point of sale (POS) from Rs 1,000 to Rs 5,000 per transaction.

It has also been suggested that all banks should enable cash at POS which is allowed only by few banks and that too only for the debit cards issued by the respective banks.

Source : Economic Times

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Dena Bank plans lower price to sell around Rs 500 cr NPAs

State-run lender Dena Bank, which did not receive good response for its non-performing assets (NPA) sale last fiscal, is now planning to auction again but at a lower price.

The bank, which is still fighting high bad loans, had put on auction Rs 400-500 crore of stressed assets in the last quarter for asset reconstruction companies (ARCs).

"We had put on auction our NPAs but were able to sell very minimal amount of bad loans as the prices offered to us were much lower than our reserve price," a senior bank official told PTI.

Out of the Rs 400-500 crore of NPAs, the bank could sell around Rs 30 crore of loans in the auction, he said, adding the bank is looking at remaining assets put on block for sale.

The official said the bank will now again try to sell those bad loans by revising the price.

"We would again put on auction the balance NPAs and will also lower the reserve price," he said.

It could be noted that last August the Reserve Bank had made norms tighter for asset reconstruction companies by asking them to pay upfront 15 per cent of the bid value of non-performing loans, against 5 per cent earlier.

Following this, ARCs were going slow in distressed asset purchases.

Analysts say the RBI regulation has resulted in sharp fall in sale of bad loans by banks to ARCs as they are demanding lower price.

As of December 2014, the mid-sized lender's gross non-performing assets stood at 5.61 per cent, while net NPA was at 3.97 per cent.

Source : Economic Times

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Central Bank of India tops list with highest bad loans among PSU banks

Central Bank of India has topped the list of public sector banks with maximum bad loans including restructured assets as a percentage of total advances.

According to the data provided by the RBI to the Finance Ministry, Central Bank of India’s 21.5 per cent assets are either bad or have been restructured to save them turning non-performing assets (NPAs).

The other banks which have significant amount of gross NPAs and restructured loans include, United Bank of India (19.04 per cent), Punjab & Sind Bank (18.25 per cent) and Punjab National Bank with 17.85 per cent as on December 2014.

Indian Overseas Bank, State Bank of Patiala, Allahabad Bank and Oriental Bank of Commerce all have bad and restructured loans in excess of 15 per cent.

The rising bad loans have become a major concern for the Reserve Bank as well as the government.

Most of the restructured loans are from the corporate sector. The top-30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the gross non-performing assets of PSU banks at Rs 2,60,531 crore as on December 2014.

There are four kinds of restructuring. The first and foremost is restructuring of advances extended to industrial units, restructuring under Corporate Debt Restructuring and restructuring of loans extended to MSME as per RBI guidelines.

However, banks have their own operational rule for restructuring of small loans.

RBI has not prescribed any board or bank level position at which these loans need to be approved.


Source : Thehindubusinessline

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