PSU banks may get additional capital infusion of Rs 7,000 crore

To further enhance capital base, the government is planning to make additional infusion of up to Rs 7,000 crore in the public sector banks during the current fiscal.

"In the interim budget, the government provided Rs 11,200 crore for the public sector banks. There could be additional provision of Rs 7,000 crore for these banks when government tables regular budget for 2014-15 in June-July," a senior Finance Ministry official said.

The Department of Financial Services would request for additional funds in regular budget as banks require more capital than what has been allocated in the interim budget, the official said.

Even Finance Minister P Chidambaram after interim budget had indicated that the government will provide more funds if it mobilises higher resources.

"What we have provided is what we have budgeted now. This is an Interim Budget. In regular budget you will get a full picture what government can provide as additional capital," he had said.

"As you know, government has provided Rs 11,200 crore for next year. This is not adequate, but that's the budget estimate... As we find more money, we should infuse more into the public sector banks," he had said.

The government infused Rs 14,000 crore in public sector banks during the current financial year ending March 31. Of this, the State Bank of India got Rs 2,000 crore while Indian Overseas Bank received Rs 1,200 crore.

In view of the Basel III, or global prudential banking norms, all banks have been planning to shore up their Tier 1 capital.

According to RBI Indian banks will require an additional capital of Rs 5 lakh crore to meet the new global banking norms, Basel III.

The government, which owns 70 per cent of the banking system, alone will have to pump in Rs 90,000 crore equity to retain its shareholding in the Public Sector Banks (PSBs) at the current level to meet the norms.

Of the total Rs 5 lakh crore, equity capital will be of the order of Rs 1.75 lakh crore and Rs 3.25 lakh crore as non-equity.

RBI recently extended the deadline for Basel III implementation in a phased manner by banks by one year March 2019.

The government infused Rs 20,117 crore in public sector banks during 2010-11, and Rs 12,000 crore in 2011-12.


Source: Economic Times

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Allahabad Bank registers 7 pc growth last fiscal

State-owned Allahabad Bank has registered a growth of 7 per cent in the last financial year.

"In the fiscal 2013-14, the bank's business stood at Rs 3.31 lakh crore, with deposits at Rs 1.90 lakh crore and advances at Rs 1.41 lakh crore," bank's chairman and managing director Rakesh Sethi told reporters here today.

He said that in the absence of takers of any corporate credit, the bank was now focusing on farm credit, retail and the MSME sector.

The newly-appointed CMD said that the bank would target arresting of slippages as well as maintaining asset quality.

Although the bank had obtained the RBI approval for qualified institutional placement (QIP), Sethi said the government nod was yet to come.

He said that the bank would raise Rs 320 crore from the market through QIP once the government approval was accorded to it.

The bank would celebrate its 150th year of existence tomorrow. It would open 150 units of branches, ATMs and e-lobbies tomorrow.

He said that the bank was eyeing the semi-urban and rural areas for growth.


Source: Economic Times

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Reserve Bank of India deputy governor K C Chakrabarty questions payment banks' viability

Outgoing Reserve Bank of India deputy governor K C Chakrabarty has questioned the viability of payment banks and has said that they do not serve the purpose of financial inclusion. The statement comes at a time when RBI governor Raghuram Rajan has indicated that the central bank was in favour of issuing bank licences for limited purposes such as payments.

In an interview to a television channel, Chakrabarty said, "My only question about payment banks is what will be their viability? The question is how will they earn money?" The deputy governor also said that financial inclusion was not limited to merely opening bank account. "Financial inclusion is also providing emergency credit. But the maximum request from the poor is for emergency credit." He, however, added that this was an experiment that should be tried.

The concept of payment banks was mooted by a panel headed by veteran banker Nachiket Mor, who was asked to look into ways and means of extending financial inclusion across the country.

One of the recommendations of the Mor Panel was allowing payments bank which will open accounts for the underprivileged. These accounts will enable the customer to receive funds, deposit cheques and make payments. However, it will not engage in any form of lending and instead park all funds in government bonds.

Chakrabarty, who headed two large public sector banks before taking over as a deputy governor at RBI, has sought early retirement two months ahead of his tenure coming to an end and will step down on April 25. He was responsible for several customer friendly measures during his term at the central bank. These include the move to remove pre-payment charges on loans and also a requirement that all bank branches offer a basic savings account facility for those who do not have a bank account.

The unique feature of the basic savings account was that it did not require any minimum balance requirements and could be opened on the basis of self-declaration without immediately offering any proof of address or identity.

According to bankers, if customers are to be provided free ATM access, free cheque books and are provided with regular statement of account, the break-even could be achieved only with an average balance of Rs 30,000 per account. If they were to offer an account without any balance requirement but with all these services, the customer would have to be charged separately for the services.

According to Mor, licence to payment banks will bring in tech savvy service providers such as pre-paid card operators who can leverage technology to provide services for the unbanked at low cost.


Source: Economic Times

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Doha Bank to purchase HSBC Bank Oman business in India

Qatar-based Doha Bank has entered into an agreement with HSBC Bank Oman to purchase the latter's banking business in India.

HSBC Bank Oman is an indirect 51 per cent owned subsidiary of HSBC Holdings plc.

Chairman of Board of Directors of Doha Bank, Sheikh Fahad Bin Mohamed Bin Jabor Al Thani, said that all staff of this operation (the business) will be transferred to Doha bank as a part of the purchase.

"The business being acquired consists of its two branches and had gross assets of Rs 3.5 billion (about USD 58 million) as on 31.12.2013," he said.

Sheikh Fahad Thani also said that the transaction is subject to the approvals of Regulatory Authorities in Qatar, India, Oman and Jersey.

Doha Bank was incorporated in 1978 and commenced its banking business (including its International Banking services) in Doha, Qatar on March 15, 1979.


Source: Economic Times

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Trends in Vogue inks pact with Bhartiya Mahila Bank

Trends in Vogue, a CavinKare initiative that manages hair saloons under Green Trends, has entered into an agreement with Bhartiya Mahila Bank to promote women entrepreneurship.

Under the agreement, Green Trends plans to have 500 salons nationally set up by women entrepreneurs by the end of the current financial year, a top company official said today.

"We are happy to associate with Bhartiya Mahila Bank in providing collateral free loans to prospective franchises across the country, especially women. We believe it will not only ease the process of salons but also empower more women to emerge as successful entrepreneurs...," CavinKare Chairman & Managing Director CK Ranganathan said.

Green Trends has also introduced mobile and online check- in service for customers, he said.

"We have been noticing a significant upswing trend of women from various backgrounds entering this beauty salon segment and this MoU with Bhartiya Mahila Bank will further strengthen the support," Trends in Vogue's Business Head R Gopalakrishnan said.

Bhartiya Mahila Bank Chairman and Managing Director Usha Ananthasubramanian said after this tie-up with CavinKare, the bank is confident of developing women as "entrepreneurs" across the country.

She said the bank will provide loans of up to 75 per cent of the total project cost to women entrepreneurs across the country.

"The rate of interest will be between 11.5 per cent and 12.5 per cent," she said.


Source: Economic Times

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