July 31st, 2008, 04:04 PM
Post news about the Indian banking, insurance and finance sector here.
About time we had a thread for this sector
About time we had a thread for this sector
View Full Version : Indian Banking, Insurance and Finance
July 31st, 2008, 04:04 PM
Post news about the Indian banking, insurance and finance sector here.
About time we had a thread for this sector
July 31st, 2008, 05:20 PM
Government may slice Axis bank pie
THE government is vetting a proposal to sell part of the equity holdings it controls in Axis Bank through qualified institutional placement (QIP) to a wide base of investors.
The plan centres around offering over 21% of Axis Bank’s equity held on behalf of the government by the Specified Undertaking of UTI (SUUTI) to a broad-based set of investors. A diversified investor base will ensure that the banking regulator’s norm of capping a single investor’s shareholding in a bank at 5% is adhered to. A senior government official with knowledge of the sale process said the transaction would be carried out in a manner in which no regulatory exemptions would be sought.
What he implied was that neither the Reserve Bank of India’s norms on shareholding in banks nor the capital market regulator Sebi’s rules on takeovers would be breached.
The SUUTI holds 27% in Axis Bank — the third-largest private bank in India. However, the entire chunk of equity cannot be offloaded as there is a lock-in clause on 6% of the equity, following an earlier QIP.
Stake sale may fetch govt Rs 5,305 crore
SUUTI was formed over five years ago after the assets and liabilities of the then market leader, UTI Mutual Fund, were bifurcated into two. SUUTI had to warehouse the large equity holdings of that fund along with other assets including property besides 25 assured return schemes. Now, with the last of the tax-free bonds which were issued to unitholders close to being redeemed, the undertaking may be wound up in 2009.
A sale of Axis Bank holdings and some other assets controlled by SUUTI may have to be carried out to help the government realise Rs 9,000 crore, which it has budgeted for this fiscal. However, at today’s market price (Rs 679), the divestment may fetch the government only Rs 5,305 crore if it sells a stake of 21.76%. The government officials said a firm view is yet to be taken given the volatile market conditions.
A senior official said the timing of the sale would hinge on market conditions as the aim would be to maximise realisation for the government. In fact, the government could bargain for a higher amount if it opts for a negotiated sale as it would fetch a control premium for one of the best performing banks in the country. But that would have met with resistance.
source economictimes epaper
July 31st, 2008, 05:25 PM
Govt to give Rs 1,000 crore more to LIC for Aam Admi Bima Yojana
The government on Thursday decided to provide an additional Rs 1,000 crore to Life Insurance Corporation to cover another one crore rural landless households under the social security scheme 'Aam Admi Bima Yojana'.
The scheme will cover an additional one crore landless households by September 30, 2009 under the AABY to provide death and disability benefits to the head of the family or earning members of the family, Information and Broadcasting Minister P R Dasmunsi told reporters after the Cabinet meeting.
The scheme, which is being implemented through the LIC, was launched on October 2 last year.
The union government bears 50 per cent of the premium of Rs 200 per year per person and the state governments pays the rest of the premium on behalf of the beneficiaries.
Besides, the Cabinet also approved giving Rs 500 crore towards Social Security Fund maintained by LIC to provide 50 per cent share of premium Janshree Bima Yojana for all women self help groups credit linked to banks.
Dasmunsi said the decision will facilitate providing life and permanent disability cover to 2.5 lakh women SHGs under the scheme by March 31, 2009.
Janshree Bima Yojana was launched in August 2000 to provide life insurance protection to the rural and urban poor under various vocational groups.
The premium under the scheme is Rs 200 per member per annum, of which 50 per cent premium is paid by beneficiaries of the scheme and the rest pitched in by the government through the fund maintained by LIC.
At present, there are 45 vocational or occupational groups covered under the scheme.
source economictimes.com (http://economictimes.indiatimes.com/News/Economy/Policy/Govt_to_give_Rs_1000_crore_more_to_LIC_for_Aam_Admi_Bima_Yojana/articleshow/3310409.cms)
July 31st, 2008, 05:46 PM
Great start, sn1101. Indeed, there is alot of activity happening in these fields.
INDIA'S TOP 10 MUTUAL FUND FIRMS
1. Reliance Capital Asset Management (www.reliancemutual.com), a unit of billionaire Anil Ambani's Reliance Capital Ltd, managed 908.13 billion rupees ($21.37 billion) in June, more than 1.5 times than amount managed by its nearest rival. In December, the firm said Eton Park had agreed to pay 5 billion rupees to buy a 5 percent stake, valuing the firm at 13 percent of its assets then.
2. British financial services firm Prudential Plc has a 49 percent stake in ICICI Prudential Asset Management(www.icicipruamc.com), with India's top private-sector lender ICICI Bank holding the rest. The fund house managed 594.74 billion rupees in June.
3. Britain's Standard Life Investments holds a 40 percent stake in HDFC Asset Management (www.hdfcfund.com), with HDFC Bank Ltd, India's second biggest private-sector lender, the majority partner. The firm managed 527.11 billion rupees in June.
4. Government-run lenders State Bank of India, Punjab National Bank and Bank of Baroda, and state-owned Life Insurance Corp each own 25 percent in UTI Asset Management (www.utimf.com), India's oldest mutual fund firm. The fund house, which has scrapped a planned public offer, managed 507.71 billion rupees in June.
5. Birla Sun Life Asset Management (www.birlasunlife.com), which managed 410.75 billion rupees in June, is an equal joint venture between India's Aditya Birla Group and Canadian insurer Sun Life Financial.
6. French bank Societe Generale holds a 37 percent stake in SBI Funds Management (www.sbimf.com), with State Bank of India, India's largest bank, holding a majority stake. The fund house managed 301.32 billion rupees in June.
7. Franklin Resources Inc owns India's sixth-largest fund firm, Franklin Templeton Asset Management(www.franklintempletonindia.com), which managed 247.42 billion rupees in June.
8. India's Tata Group owns Tata Asset Management (www.tatamutualfund.com), which held assets worth 238.53 billion rupees in June. In March, the firm formed a venture with Britain's New Star Asset Management to manage New Star's India-dedicated funds.
9. Kotak Mahindra Bank Ltd owns Kotak Mahindra Asset Management (www.kotakmutual.com). The fund house, which has an alliance with T. Rowe Price to launch global funds, managed 211.83 billion rupees in June.
10. DSP Merrill Lynch Ltd, a unit of investment bank Merrill Lynch, holds a 40 percent stake in DSP Merrill Lynch Fund Managers (www.dspmlmutualfund.com), which controlled about 205.40 billion rupees in June. The remaining 60 percent is held by Hemendra Kothari, chairman of DSP Merrill Lynch, and two other firms. In January, BlackRock Inc, the largest publicly traded U.S. asset manager, said it would buy Merrill's 40 percent stake in the Indian asset manager. The deal is awaiting regulatory approval.
July 31st, 2008, 06:02 PM
a result of the RBI rate hike..
HDFC raises lending rate by 75 basis points
Housing Development Finance Corp said on Thursday it was raising its retail prime lending rates by 75 basis points, the latest in a series of rate hikes by lenders after the central bank tightened policy.
The increase will take effect from Aug. 1 and its floating home loan rates will carry a minimum rate of 11.75 percent, a 75 basis point increase, it said in a statement.
HDFC's move follows rate hikes by Punjab National Bank, Axis Bank and Jammu & Kashmir Bank. The central bank raised its key lending rate for the third time in two months on Tuesday, taking it up 50 basis points to 9.0 percent, the highest in seven years. It also raised the cash reserve ratio by 25 basis points.
ICICI Bank raises lending rate by 75 bps
ICICI Bank, India's No 2 lender, on Thursday raised its main lending rates by 75 basis points after the central bank had raised its key rate earlier in the week. The corporate lending rate will rise to 17.25 percent and retail rate to 14.25 percent from July 31, the bank said in a statement.
It also raised fixed deposit rates by 75-100 basis points from August 1. The central bank raised its key lending rate for the third time in two months on Tuesday, increasing it by 50 basis points to 9.0 percent, the highest in seven years. It also raised the cash reserve ratio by 25 basis points.
Top mortgage lender Housing Development Finance Corp, Punjab National Bank, Axis Bank and Jammu & Kashmir Bank have already raised their lending rates.
Yes Bank raises prime lending rate by 50 bps
Private sector lender Yes Bank has raised its prime lending rate by 50 basis points with effect from Friday, it said in a statement on Thursday. The effective rate will be 17 per cent.
August 1st, 2008, 08:04 AM
‘SBI eyeing double digit growth in international biz’ (http://www.financialexpress.com/news/SBI-eyeing-double-digit-growth-in-international-biz/342944/)
The State Bank of India (SBI), India's largest bank, has decided to expand its global operations and expects more than three-fold increase in its international business in the next five years, its Chairman O P Bhatt said.
"The Bank expects more than three-fold increase growth in its international business from seven per cent last year to 25 per cent in next five years," Bhatt said on Wednesday while launching the bank's first debit card in Canada.
"The focus of its international business would be relating to India. We have formulated strategic plans to cash Indias emerging opportunities," Bhatt said.
The SBI (Canada) would encourage Canadian investors, particularly NRI Indians to invest in Indian market. The bank was already offering loans for NRIs to own home in India, he said.
Harinder Takhar, Ontario Minister for Small Business and Consumer Affairs commended India's efforts to expand bilateral relations and urged Canadian entrepreneurs to invest in India.
"In today's challenging economic climate, it is more important than ever that we strengthen the competitiveness of Ontario's small and medium-sized enterprises and take advantage of emerging opportunities in India," he said.
"The Export Market programme, launched by the Ontario government, will help Ontario companies enter and expand into Indian emerging market, generating prosperity here and strengthening our presence on the world stage," Takhar said.
Arun Nagaran, President and Chief Executive Officer of the SBI (Canada) said that launching of new SBI debit card would meet the demand of Indo-Canadian customers.
"Customers can now carry out banking transactions and usage choice of point of sale transactions or bank machines with flexibility," he said.
August 1st, 2008, 06:04 PM
Federal Bank eyeing strategic stakes in lenders
Kerala-based Federal Bank is looking to pick up small strategic stakes in other lenders, including major ones, a top executive said on Friday.
The private bank has already acquired small percentages (up to 5 per cent) in three south-based banks, its Executive Director K F Harshan told reporters.
The three banks are South Indian Bank, Catholic Syrian Bank and Lakshmi Vilas Bank.
"These are financial investments. Existing regulations don't permit us to acquire beyond that (5 per cent)," Harshan said.
Federal Bank now intends to expand its branch network in the south and would approach the Reserve Bank for more licences, he said.
Currently, its has a 606-strong branch network. Asked whether Federal Bank was contemplating hiking its benchmark prime lending rate (BPLR), Harshan said the bank's asset-liability committee (ALCO) would be meeting next week to take a call on the matter.
"We are closely watching the markets...we will take a call next week when our ALCO meets."
The bank is targeting a 25 per cent growth in its deposits and expects its current account, savings account (CASA) to grow 35-40 per cent this fiscal, he said.
Currently, Federal Bank's CASA comprises 25 per cent of its total deposits.
The bank expects its credit growth to be in line with that of the industry, at slightly above 20 per cent.
source economictimes.com (http://economictimes.indiatimes.com/News/News_By_Industry/Banking_Finance_/Federal_Bank_eyeing_strategic_stakes_in_lenders/articleshow/3315778.cms)
August 2nd, 2008, 07:54 AM
Max New York Life launches Max Vijay (http://www.financialexpress.com/news/Max-New-York-Life-launches-Max-Vijay/343422/)
IT service provider IBM and Max New York Life Insurance Company on Thursday announced the launch of an integrated solution for policy issuance and administration for Max Vijay, a new business initiative introduced by Max New York Life.
IBM would help Max New York Life Insurance to deploy and transform its insurance policy processing platform and provide the end-to-end technology backbone for Max Vijay, an insurance product designed specifically for under-served segment of the society, a release said.
IBM will also provide service to various functions of Max Vijay, including insurance policy system administration, policy setup, new business processing and customer care.
For Max Vijay, IBM would use wireless hand-held devices, which enable data transfer through GPRS to the back-end system and facilitate on-the-spot issuance of insurance policies.
Aimed at making insurance available in every nook and corner of the country, Max Vijay would also be sold in neighbourhood stores, microfinance institutions and NGOs, among others. IBM would also provide disaster recovery services for the Max New Life's critical operations.
August 2nd, 2008, 09:01 AM
PNB to launch debt-swap scheme (http://www.financialexpress.com/news/PNB-to-launch-debtswap-scheme/343459/)
Aiming to pulling out farmers from the clutches of money-lenders, Punjab National Bank (PNB) will soon launch debt-swap scheme. Private money lenders charge interest varying from 50% to 200% against the loan due to which farmers never come out of the vicious cycle of debt trap.
Actually, farmers keep on paying the interest while the principle amount remains the same. Under this new initiative farmers can avail the loan up to Rs 50,000 to repay the loan to money lenders.
Talking to FE after the state level bankers’ committee meeting (Haryana) JM Garg, executive director, PNB said, “Farmers don’t need to produce documents if they want to take loan upto Rs 25,000. If the amount is above 25,000 then bank will carry out the verification procedure. To ensure the money is being rightly used, the bank will procure the certificate from money lenders declaring that debt has been written-off. The scheme will be introduced first in northern region and later will be launched in other parts of the country. Bank will charge the interest rate based on prime lending rate (PLR) from farmers”. Last year PNB had disbursed agriculture loan of Rs 20,000 crore last year and has set a target of around Rs 25,000 crore for this fiscal. The finance ministry has decided that at least 3% of the target for agriculture in 2008-9 is to be earmarked for giving loans under ‘Debt Swap scheme’.
Bringing another initiative PNB is also set to launch concept of agricultural hubs across the country. Explaining about this venture Garg said, “Our branches are getting overburdened with handling loan processing applications in agriculture sector, which usually cause unnecessary delays.
To solve these problems various hubs will be introduced where specialised staff will take care of the applications which will simplify the cumbersome procedure. The idea is that one hub will cater to the cluster of 20 branches”.
August 2nd, 2008, 04:21 PM
Bank penetration needs more branches, employees: E&Y (http://in.news.yahoo.com/241/20080802/1264/tbs-bank-penetration-needs-more-branches.html)
A report on banking sector consolidation by Ernst & Young (E&Y) estimates that the banking sector in the country would require several more branches and employees to increase penetration by 2018.
The country requires an additional 11,600 branches and 142,000 employees by 2013 and an additional 20,300 branches and 250,000 employees by 2018 in order to achieve penetration level of 74% and 81.5% in 2013 and 2018 respectively, E&Y said in the report, which was released during a conclave on 'Indian Banking Vision 2010' in Mumbai.
Moreover, given that a major chunk of the workforce of the public sector banks is set to retire by 2018, banks should make efforts to re-skill and re-deploy their workforce to increase their productivity.
However, according to the report, there are some significant issues that need to be addressed to realize the benefits of bank consolidation for the economy as a whole.
First and foremost, some of the legal hurdles need to be removed to make public sector banks (PSBs), which still control about 68% of the banking sector, an active participant in the consolidation process. Especially, consolidation among PSBs could help realize true benefits of consolidation. These hurdles include bringing down the government ownership from mandatory 51% and amending certain clauses in Acts governing these banks to facilitate their merger. Secondly, on the co-operative banking side, issues of dual control should be resolved for a smooth merger of these credit institutions.
Although the banking industry in India has witnessed many mergers and amalgamations triggered by combination of government diktat and synergetic motives, the benefit of size earned in terms of assets and reach is rarely significant to be called 'consolidation', observed the report. A high level of fragmentation among Indian banks, as compared to some of the advanced economies of the world, still exists posing a severe threat to their profitability and viability of conducting business. Fragmentation is particularly high in the co-operative sector, where over 100,000 entities share just 4% of the total banking assets in the economy. The government should aggressively take steps to bring about large-scale consolidation within this sector by eliminating certain regulatory impediments to create a conducive environment, suggested the report.
Thus, by preserving their rural reach and local feel, the government can promote its big-ticket agenda of financial inclusion.
August 2nd, 2008, 04:28 PM
Tata Capital to enter home loans business (http://www.thehindubusinessline.com/2008/08/02/stories/2008080252280600.htm)
Tata Capital Limited, a wholly-owned subsidiary of Tata Sons Limited, plans to enter the booming home loan market by March 2009, its Managing Director and CEO, Mr Praveen P Kadle, has said.
“Although we will be a late entrant in this market, we see good business opportunities in offering home loans. We hope to start this by March next year”, Mr Kadle said here.
Tata Capital, a non-banking finance company, had commenced its operations in 2007. This had marked the entry of Tata Group into a host of new financial services. Currently, the company was capitalised at about Rs 2,000 crore and offered suite of products across multiple financial domains—personal loans, car loans, distribution and broking, wealth management, SME Finance, capital markets, private equity and infrastructure finance.
Mr Kadle also said that Tata Capital would by end-September launch its first private equity fund targeted at opportunities in mid-sized companies. While the size of the fund was yet to be finalised, indications are that the initial fund size may be around $ 250 million. Plans are afoot to also launch a venture capital fund focusing on the technology space (information technology/telecom).
Currently, the balance sheet size of Tata Capital is around Rs 4,000 crore. On whether the company would look at inorganic growth, Mr Kadle noted that most of the opportunities here were expensive. “Indian valuations are expensive. Inorganic growth may not be attractive, but that does not mean we will not look at inorganic growth”, he said.
Meanwhile, Tata Capital would soon foray into insurance broking. “A subsidiary of Tata Motors has got licence for insurance broking from IRDA. This company would eventually come under Tata Capital. We will also get into commodities broking soon”, Mr Kadle said.
On whether Tata Capital would consider listing of its shares in the coming months, Mr Kadle said that the company was not looking at listing now.
August 3rd, 2008, 12:10 PM
India holds huge market potential for Islamic banking: study (http://www.livemint.com/2008/08/03131215/India-holds-huge-market-potent.html)
New Delhi: Given favourable regulatory conditions, India holds promising growth opportunity for Islamic finance institutions, whose asset base globally is expected to more than triple to $1 trillion by 2016, according to a study by market intelligence and data analysis services provider Grail Research.
Islamic banking is already fast gaining prominence among the global financial institutions, especially in the backdrop of the banking sector woes impacting the markets like the US and UK and the concept has a huge potential market in India as well, according to market intelligence and data analysis services provider Grail Research.
The study finds that India has the potential of emerging as a significant market for Islamic banking institutions, provided there is a favourable change in regulatory environment and increased awareness among Muslims and India as a whole.
“You need to look no further than at the profitability of Saudi banks (the world’s highest) for reasons why Islamic finance will have strong interest globally as a growth engine for financial services,” Grail research founder and CEO Colin Gounden said.
August 5th, 2008, 02:06 PM
ECGC to venture in domestic credit insurance (http://www.financialexpress.com/news/ECGC-to-venture-in-domestic-credit-insurance/344956/)
Export Credit Guarantee Corporation, insurer for the exporting firms, on Tuesday said it is foraying into the domestic credit insurance business.
ECGC, which ranks as the world's fifth largest credit insurer, has already approached the regulator for approval of its new business.
"The domestic credit insurance product has been filed with the Insurance Regulatory and Development Authority for final approval, which is expected anytime," ECGC Chairman and Managing Director AV Muralidharan said in a statement in New Delhi.
The corporation has earned a gross premium income of Rs 668.36 crore during 2007-08 as compared to Rs 617.66 crore in the previous year. It achieved recoveries of Rs 161.50 crores during the year. It has paid a total dividend of Rs 162 crore for the last fiscal to the government.
It earned an after tax profit of Rs 479.43 crore for 2007-08 against Rs 369.70 crore in the previous year.
As much as Rs 100 crore was added to the equity base of the corporation, augmenting the paid up capital to Rs 900 crore.
Muralidharna said ECGC would be giving a big push to its its factoring business. Factoring covers from the corporation help exporters in getting post shipment finance with 100 per cent credit risk insurance protection.
August 5th, 2008, 02:06 PM
Max New York Life looks at low-income customers (http://www.financialexpress.com/news/Max-New-York-Life-looks-at-lowincome-customers/344972/)
Max New York Life Insurance Co plans to tap the lower middle-class to boost premium income in a market where insurance penetration is still one of the lowest in Asia, officials said.
"We believe there are 100 million households who are between aspirers and seekers," Deputy Managing Director, Rajesh Sud told reporters while launching a new insurance product with low and flexible premium payment options.
The company plans to garner 10 per cent of the potential market of 100 million households in the next few years, he added. India's total insurance penetration was at 4.8 per cent but the growth potential is seen huge as individual income rise along with awareness levels.
Max New York Life will invest 95 per cent of the investment corpus generated through premiums from this product in government debt while the balance in equity, he said. "We want to avoid exposing these policy holders to the volatility of the stock market," he added.
Max New York Life Insurance is a 74:26 per cent joint venture between Max India Ltd and US-based New York Life International.
The company was set up with a capital of 12.32 billion rupees and the founders have committed to invest another 24 billion rupees over the next four years, Sud said.
It earned a premium income of 15 billion rupees in 2007/09 and 4.25 billion rupees in the three months to June, Sud said.
August 5th, 2008, 02:41 PM
MF houses eye non-metros to beat AUM squeeze (http://www.financialexpress.com/news/MF-houses-eye-nonmetros-to-beat-AUM-squeeze/344647/)
Choppy markets and a dent on assets under management (AUM) have forced the mutual fund (MF) industry to look beyond the metro cities. They are now on the prowl to grab a share of the semi-urban and rural markets across the country.
In a bid to expand its reach in the country, UTI Mutual Fund (UTI MF) is going to set up over 650 outlets in the next 6-8 months. Of these 650 outlets, 200 will be UTI Financial Centres (UTI FCs) and the other 450 will be UTI franchise offices in all major districts of the country.
Also joining the fray are Birla Sun Life Mutual Fund (BSLMF) and Reliance Mutual Fund (RMF) which are set to open 100 outlets by March 2009 to promote their mutual fund schemes.
July was a bad month for MFs, with AUMs slithering for the second successive month and declining over 6%. The unstable markets have also kept investors away from funds as they wait for the markets to stabilise.
Reliance, ICICI Prudential, UTI MF have all witnessed declines in AUM last month. The expansion of reach to touch more potential investors and efforts to increase awareness of mutual funds as a safer investment avenue have, therefore, become a priority for these fund majors.
Debashish Mohanty, country head – retail sales, UTI MF, said, “Our main aim is to promote and educate investors on putting their in MFs. We are going to set up 450 UTI franchise offices in all the major districts of the country, which will train people and where we will be promoting and selling UTI MF. In the rest of the 200 UTI FCs, we will look after the mutual fund and portfolio management services (PMS).”
ICICI Prudential Mutual Fund, on the other hand, has already opened over 245 centres in different cities in the country in the last three months. Senior officials from the company said, “We want to penetrate in all the parts of the country. In March this year, we had outlets only in 80 cities, which increased to 245 centres by July. We are not going to slow down the speed of opening the outlets, but we don’t have a specific target.”
Anil Kumar, CEO of BSLMF, said, “Till now, we had only over 30 branches but by March 2009 we are going to open 100 more. Our main aim will be to educate investors how MFs can become another asset class. In all the centres that we are planning to open, we will be providing education programmes and awareness regarding MFs and its importance as an investment mechanism.”
August 8th, 2008, 11:51 AM
Bharti AXA General plans capital infusion of Rs 645 cr (http://www.financialexpress.com/news/Bharti-AXA-General-plans-capital-infusion-of-Rs-645-cr/345920/)
Bharti AXA General Insurance, the latest entrant in the general insurance business in the country, is planning capital infusion of Rs 645 crore over the next five years.
Announcing the commencement of its operations in Mumbai, Milind Chalisgaonkar, chief executive officer said the general insurance market in India has strong growth potential.
He said the two joint venture partners, namely, Bharti Enterprises which has 74 per cent stake in the company and AXA, a major insurance player internationally holding 26 per cent stake have already invested Rs 130 crore in the venture.
The insurance regulations require minimum capital of only Rs 100 crore.
Responding to queries on the quantum of business the company is targeting, he said he would not like to make forward looking statement. He also pointed out there is no formula that a company could generate a certain level of business based on the capital invested.
He, however, indicated a company could possibly generate business which is four to five times the capital.
There are 25 crore middle class people. The parent company Bharti has 72 million consumers and Bharti group's reach would be leveraged to grow business, he said.
He said the company will offer products to cover property, motor, health, personal accident across rural, urban and commercial segments.
It is the third JV Bharti has entered into with AXA. Earlier, the company had entered into JV with AXA for life insurance and for an asset management company.
August 8th, 2008, 12:00 PM
R-Money eyes Rs 10,000 cr currency export (http://www.financialexpress.com/news/RMoney-eyes-Rs-10-000-cr-currency-export/345915/)
Anil Ambani group's Reliance Money is eyeing to "export" currencies worth about Rs 10,000 crore in the current fiscal a four-fold jump from previous year's figure as part of its money changing and transfer business.
Reliance Money, the brokerage and financial products distribution unit of ADAG's financial services arm Reliance Capital, is looking for a significant growth in its money changing and transfer business, the company CEO Sudip Bandyopadhyay said in Kolkata.
He said the company exported currencies worth Rs 2,500 crore in the last fiscal and is targetting Rs 10,000 crore in current financial year.
The size of the Indian export currency market was around Rs 40,000-50,000 crore to and was growing further due to increased tourist inflows and trade activity, he said.
When Indian rupee became fully convertible, then currency movements would increase and the market would grow exponentially, he added.
On money transfer, he said, Reliance Money was the largest partner of Western Union. The target was to transact Rs 2 lakh per month by the end of the year, he said.
Meanwhile, Reliance Money had floated a company in the Gulf, Riyada Reliance Money, with a view to sell global products to foreign clients.
He said the company would seek membership of Saudi Arabia's Takaful stock exchange to conduct business there.
Bandyopadhyay added that the Riyadh-based firm would make an issue to raise Rs 240 crore by way of off-loading 74 per cent stake to institutional investors on private placement basis.
To further expand its international presence, the company is also eyeing to acquire an entity in the Middle East, the Reliance Money CEO said.
August 8th, 2008, 12:04 PM
Bank of Maharashtra plans 8 new branches in North India (http://www.financialexpress.com/news/Bank-of-Maharashtra-plans-8-new-branches-in-North/345965/)
The new head of Bank of Maharashtra (BoM) for Chandigarh Region, PK Aggarwal, has special vision for this region and plans to open eight new branches in Punjab, Haryana and Himachal Pradesh in the current fiscal to increase its focus in north.
PK Aggarwal, who has taken over as assistant general manager from Anil Thakur now promoted as DGM, started his career from Chandigarh and now had come as head of bank operations in this region as such had special plans for the region. The AGM told during an interview that Chandigarh region holds extensive scope for growth as economy of this region is most vibrant and Chandigarh itself was most banked city in the country.
Talking about the plans of BoM for the Chandigarh region, he said that the eight new branches slated to be opened this fiscal include two branches in Himachal Pradesh at Una and Mandi, two in Gurgaon in Haryana, and one each at Chandigarh, Ludhiana, Jalandhar and Zirakpur in Punjab. Aggarwal told that at present the bank had 18 branches in Punjab, 17 in Haryana, three in Chandigarh, two in Jammu and Kashmir and one in Himachal Pradesh. He said all these 41 branches under Chandigarh region were CBS branches offering connectivity of all branches for the convenience of customers.
He informed that during year 2007-08, the BoM had a business of about Rs 20,00 crores from Chandigarh region with Rs 1,080 advances and Rs 920 deposits. He said that the bank was projecting a growth of about 35% this fiscal which would take total business to Rs 2,700 crore having advances of Rs 14,00 crore and deposits of Rs 1300 crore.
August 8th, 2008, 08:11 PM
Indian Bank to launch exclusive facility for women
Indian Bank is set to launch its special 'Micro State Branch' here exclusively for women Self Help Group (SHG) members and other women customers to avail easy banking services. The bank, the lead bank in the district, would launch the facility in the third week of this month as the willingness to operate savings accounts with Indian Bank in rural areas, especially among women, was now on the rise, Assistant General Manager and head of the Dharmapuri Circle G Muthappan told reporters yesterday.
Next to metros, Dharmapuri launch would be the first in rural area for the bank. Already a micro credit kendra is functioning in Hanumanthapuram village in Palacode taluk. Besides SHGs, general banking also would be carried out in the Micro State Branch. The banking service would be given exclusively for women in Dharmapuri, he said.
As the district administration was keen on enhancing the revolving funds for SHGs, the new branch would support the members of SHGs to promote their economic status through banking, he said adding that it would help avoid delay in processing SHGs' business.
Muthappan also said more than 6,500 women SHGs were functioning in the district, for which Rs 90 crore had been given as loan for economic development. With this facility, women could have general banking, jewel loan and other services under one roof.
source economictimes.com (http://economictimes.indiatimes.com/News/News_By_Industry/Banking_Finance_/Indian_Bank_to_launch_exclusive_facility_for_women/articleshow/3342118.cms)
August 9th, 2008, 08:49 AM
Govt to revamp Punjab & Sind Bank, pave way for IPO (http://www.financialexpress.com/news/Govt-to-revamp-Punjab-&-Sind-Bank-pave-way-for-IPO/346374/)
The government will restructure the capital base of unlisted state-run lender Punjab and Sind Bank to improve valuations before it launches an initial public offer, a minister said on Friday.
Kapil Sibal, a senior minister in charge of Science and Technology, said the cabinet has approved a capital restructuring plan that involves conversion of a major portion of the bank's equity into bonds and preferance shares.
The government will convert 1.6 billion rupees of equity into tier-I debt and another 2 billion rupees of equity into preference shares under tier-II debt, he told a news conference after a cabinet meeting.
The bank will have an equity capital of 1.83 billion rupees after the restructuring, Sibal added.
The capital restructuring will help the bank expand in compliance with Basel-II requirements, and get a "reasonable" premium in an initial public offering, minister Kapil Sibal said.
Punjab and Sind Bank reported a 60 per cent increase in profit to 5.15 million rupees in the year ended March 2008.
August 9th, 2008, 03:29 PM
Banks pull up socks to pump up car loans
CAR sales are clearly on the downswing, but that hasn’t prevented auto financiers from coming up with innovative schemes to boost sales. Lenders are increasingly resorting to lower interest rates, floating rate loans and cutting dealer commissions to drive demand.
Two of the largest players in car financing have decided to slash interest rates by 2% in an effort to keep consumer interest going. This is being done by reducing the commission that banks pay to automobile dealers, thus retaining the rates at a level which makes it affordable to buyers.
Both HDFC Bank and Kotak Mahindra, who figure among the top three financiers of four wheelers, will reduce their rack rates by 2%. Kotak Mahindra Prime now charges an interest rate of close to 16%, which will now be brought down to 14%. HDFC Bank will bring down its rates from 14.75-15.5% to 12.8-14.16% depending on the tenure of the loan, according to bank officials. Financiers currently pass on a commission nearing 5% to dealers. Dealers, in turn, used to pass on part of this commission to customers. Thus, the final rates to customers would be 13.75-15%. Interest rates for car loans have gone up by close to 1.5-2% this year, impacting sales. In July, for the first time, sales of four-wheelers fell for the first time in absolute terms. Sales growth has been decelerating since April.
“The move will help the industry. Earlier, the payouts were as high as 500 bps. It will be now capped at 200. The payout reductions will be passed on to the customer. We will try and come out with new rates next week. The move would also make the portfolio safer. When the payout was 4-5%, dealers used to pass on some of his subventions to fund the margin requirements of customers,” says Kotak Mahindra Prime CEO Sumit Bali.
source economictimes epaper
August 10th, 2008, 07:59 AM
OBC to seek 100 licenses for new branches (http://www.financialexpress.com/news/OBC-to-seek-100-licenses-for-new-branches/346778/)
In a bid to expand its domestic presence, public sector lender Oriental Bank of Commerce said it would soon seek new licenses from the RBI for opening 100 new branches in the country.
"We will soon apply to RBI for 100 licenses to open more branches in the country," OBC Chairman and Managing Director Alok K. Misra told reporters here today, who was here to attend branch opening programme.
The bank already has licence for 60 branches, which would be opened during this year, he said. OBC network presently has 1,339 branches, 75 extension counters and 763 ATMs.
Besides, the bank has also plans to open 10 large branches to cater to corporate sector and 50 mid-sized corporate branches to provide services to small entrepreneurs, he said.
On being asked about its overseas plans, Misra said the bank would open its first overseas branch in Dubai before December this year. "We have got approval from RBI and Central Bank of Dubai for opening our branch," he said.
August 10th, 2008, 05:38 PM
Home loan tap must flow, FM to tell banks
Continuing the flow of home loans and accessing low-cost deposits are two key elements of the government’s instructions to public sector banks.
Sources said that the two issues will figure prominently during Finance Minister P Chidambaram’s meeting with the heads of 28 state-run banks on Wednesday.
While almost all public sector banks have increased the prime lending rate, they have opted to keep the interest rate on home loans up to Rs 30 lakh and education loans unchanged.
When Chidambaram meets the bank chiefs he wants a specific report on the flow of loans under these two segments along with their first quarter performance. The review of non-performing assets and other key parameters will also come up for discussion.
According to the latest Reserve Bank of India (RBI) data, the growth in the overall home loan portfolio had slowed down to 13.8 per cent till May-end this year, compared to 21.6 per cent last year. As of May 23, 2008, the total outstanding home loans were estimated at Rs 2,62,486 crore. The year-on-year variation in the housing loan portfolio till May 23, 2008 was estimated at Rs 31,735 crore, compared to Rs 41,066 crore in the corresponding period last year.
The finance ministry has asked banks to ensure that the flow of loans for the purchase of consumer goods, as also home loans, does not slow down though RBI has specifically targeted these segments in its efforts to moderate the credit growth.
Though bankers maintained that there are no instructions to push home loans, even those up to Rs 30 lakh, they have argued that the move to keep rates intact for existing customers is aimed at checking defaults.
“These loans are part of priority sector lending and borrowers in this segment need to be supported. A higher loan growth in this segment will spur consumption, which is good for the economy,” added a public sector bank chief.
While a senior State Bank of India (SBI) executive did not disclose the growth in the home loan portfolio during April-June he said, the bank with outstanding of Rs 46,000 crore in its home loan portfolio, has seen its portfolio grow across the country. In the semi-rural and rural sector alone, the home loan portfolio is close to Rs 13,000 crore.
The other issue on the seven-point agenda for Chidambaram’s meeting is accessing low or lower cost funds. Bank of India chairman and managing director T S Narayanasami said public sector banks have not leveraged their reach. “It is time to transform the work culture, be cost effective and get more low cost resources,” he said.
Narayanasami, who is also the chairman of Indian Banks’ Association said, banks will need to raise more deposits to meet the credit expansion targets.
An SBI executive said that the use of debt cards was one way in which the bank was looking to increase the share of CASA.
source business-standard (http://www.business-standard.com/india/storypage.php?autono=330965)
August 10th, 2008, 08:38 PM
RBI scanning seven more SBI branches for fake currency
The Reserve Bank of India (RBI) is scanning seven more branches of the State Bank of India (SBI) after fake notes with a face value of Rs 1 crore were recovered from the currency chest of its Domariyaganj branch in eastern Uttar Pradesh.
Officials said an RBI team is scanning branches where the money was supplied from the Domariyaganj branch.
Bank manager Dashrath Cirgainya said the currency chest had about Rs 184 crore and the bank branch supplies cash to smaller branches of the district and the neighbouring districts.
The RBI team raided the bank Aug 4 after the arrest of its cashier Sudhakar Tripathi.
Tripathi on Thursday confessed to the police that he had exchanged fake currency of nominal value of Rs 1.5 crore with the original ones in the bank's currency chest.
The scam being probed by the Special Investigation Team (SIT) of the state police was Saturday recommended to the Central Bureau of Investigation (CBI).
A CBI official confirmed that the agency would start investigation as soon as it receives an official request from the Uttar Pradesh government.
"Looking at the intensity of the case, a joint director rank official is likely to probe the case," a CBI source confirmed.
The SIT team led by Superintendent of Police Anil Kumar met RBI officials Saturday.
"The SIT will carry on the investigations until the CBI takes over the case," Kumar said.
The police officials fear a fake currency racket involving a staggering Rs 50 crore might be thriving in the regions of Uttar Pradesh bordering Nepal.
source economictimes.com (http://economictimes.indiatimes.com/News/News_By_Industry/Banking_Finance_/RBI_scanning_seven_more_SBI_branches_for_fake_currency/articleshow/3348851.cms)
August 10th, 2008, 08:52 PM
Oriental Bank to open 100 branches in FY09
Public sector bank Oriental Bank of Commerce (OBC) is planning to open 80-100 new branches in this financial year. The bank has already received licenses from the RBI for 60 branches and will soon apply for 100 more branches across India.
OBC will open a representative office in Dubai by the end of December as it has already received regulatory permission from the UAE authorities. It has also sought the RBI’s permission to open a branch in Lahore. Moreover, the bank is looking at other countries such as Hongkong, Singapore and Africa.
The bank has decided against hiking the interest rates on education, auto and home loans (upto Rs 30 lakh), inspite of the recent hike in repo rate and increase in the cash reserve ratio.
Oriental Bank of Commerce Chairman and Managing Director, Alok K Mishra said, “In this financial year, we are planning to open 80-100 new branches across India. We already have licenses for 60 branches and would apply for 100 more branches very soon.”
He added, ‘Our focus would be SMEs, mid corporates and retail sector. So, in order to facilitate the corporate sector, we have plans to open 10 large corporate branches and 50 mid-corporate branches.”
With expansion on cards, the bank expects business to grow to Rs 1,65,000 crore in 2008-09. Further, it sees the deposits and credit would be increasing by 20 per cent in 2008-09. “We expect total business to cross Rs 2,00,000 crore and net profit to be around Rs 1,500 crore by 2010,” said Misra.
Commenting upon the net interest margin, he added, “Last fiscal year, the bank’s net interest margin (NIM) declined to 2.34 per cent compared to 2.7 per cent corresponding period last year. In present scenario, we find it very challenging to maintain the net interest margin.”
He added that the bank has enough headroom to support its asset growth in 2008-09. He also added that the company will open its representative office in Dubai by the end of this year.
Commenting upon the hike in interest rate, he said, “ We are not going to raise interest rate on education loan, auto loan and home loan upto 30 lakh. The decision of the bank not to hike interest rate is likely to benefit thousands of the students, auto loan seekers and home loan seekers.
At present the Bank has a branch network of 1339 branches, 75 extension counters and 763 ATMs with business mix currently exceeding Rs. 1, 40,000 crore. The bank would be opening up 6 new branches in Punjab and 2 branches in Haryana in the current year. The concentration of Bank’s branches is higher in Punjab, Haryana, Uttar Pradesh and Rajasthan.
source business-standard (http://www.business-standard.com/india/storypage.php?autono=330953)
August 10th, 2008, 08:56 PM
Yes Bank to up agri fund corpus, scouting for overseas partner
Yes Bank plans to augment the size of its agri-fund by $25-50 million to $150 million and is scouting for a blue-chip overseas partner which it hopes to finalise within the next six months, a top bank official said.
The bank also proposes to broaden the fund's scope of investment by including a few more sectors besides agri.
"We plan to increase the corpus of the fund from the earlier $100 million to around $125-150 million. We also plan to combine 2-3 more sectors besides agri," Yes Bank's Managing Director & CEO, Rana Kapoor told PTI here.
The private sector lender proposes to rope in a partner for the fund by early 2009. "We are also looking at the possibility of having a third investor such as bilateral and multilateral funds," Kapoor said.
The bank's plan now envisages combining sectors such as public health and social enterprises along with agri into a consolidated fund.
The rationale behind rewriting the agri fund's script seems influenced by investors' preference to not just be restricted to the agri-sector.
"We found that investors were looking for a larger and broader gameplan--they did not want to be restricted to just agri but wanted a broader play," Kapoor said.
The fund would look at both, seed investment as well as growth capital in mid-sized companies with a turnover of up to Rs 250-crore
source business-standard (http://www.business-standard.com/india/storypage.php?tp=on&autono=44422)
August 12th, 2008, 12:46 AM
MoF finishes work on SBS & SBI merger
THE government is expected to formally announce the merger of State Bank of Saurashtra (SBS) with the State Bank of India (SBI) this week. The merger had received the approval of the Union Cabinet earlier this month. SBS is a fully-owned subsidiary of SBI.
After getting Cabinet approval, the finance ministry has finished the groundwork for repealing the State Bank of Saurashtra Act, 1950 and amending the SBI Subsidiary Act, 1959 to effect the merger.
The government would have to present a new bill called the SBI Subsidiary Bank Amendment Bill, 2008 in the Parliament during the monsoon session for final approval on the merger. All the references to the SBS Act would be deleted from the SBI Subsidiary Act, 1959 through the proposed Bill.
The merger would pave the way for the amalgamation of other six associate banks of SBI with itself and help the country’s largest lender take on the competition, particularly from private and foreign lenders, in a better manner. The merger will enable SBI to scale up its business in terms of footprint, manpower and resources. Boards of SBI and SBS had given their approval for the merger in August last year.
source economictimes epaper
August 12th, 2008, 12:17 PM
Country's first: Bengal offers free health cover to farmers (http://in.news.yahoo.com/241/20080812/1264/tbs-country-s-first-bengal-offers-free-h.html)
The West Bengal government on Monday claimed to have become the first state in India to provide old farmers with medical insurance for two critical diseases and householders, insurance against a premium to be paid by the government. The insurance will be provided by Iffco-Tokio General Insurance.
The policy, called 'Abasar Sathi Bima Yojana', would provide critical illness cover of Rs 10,000 for cancer and coronary artery disease to the 44,000-odd farmers who get a government pension. The state has 62 lakh farmers. It will also provide householder's insurance to these farmers of a maximum of Rs 10,000 against fire, explosive damage, riot, burglary and allied perils like natural calamities, earthquake and flood.
"The department of agriculture will pay the premium of Rs 100 per year, per person for the pensioner-farmers registered with the department," said Naren Dey, agriculture minister. While the insurance cover will be offered to the farmer-pensioners in the four districts of Purulia, Coochbehar, Murshidabad and Hooghly to begin with, other districts will be included in a phased manner. "The target is to add four new districts per quarter," said Sanjeev Chopra, secretary of the state agriculture department.
The state government had started a Farmers Pension Scheme in 1984 under the WBFOAP Rule, 1980. The scheme, said to be unique in India, gives a pension to farmers above 60 years of age. The pension amount was increased from Rs 100 to Rs 500.
"Pensioners registered with the department will be eligible for the insurance cover," said Dey. "We have set a target of pushing the number of beneficiaries to 52,500 under the farmer's pension scheme this fiscal," he said. The department has also signed an memorandum of understanding with three regional rural banks to open zero balance or no-frills accounts for the pensioners.
August 13th, 2008, 11:49 AM
Tata Capital in alliance with Mitsubishi UFJ (http://www.financialexpress.com/news/Tata-Capital-in-alliance-with-Mitsubishi-UFJ/348366/)
India's Tata Capital said on Wednesday it had signed a memorandum of understanding with Mitsubishi UFJ Securities Co for investment banking, global offerings of Indian equities and other services.
"The top priority of our global business operations is to enhance our presence in Asian markets including India," Yasumasa Gomi, chairman and chief executive of Mitsubishi UFJ Securities, said in a statement.
No financial details were disclosed.
Tata Capital Ltd, a wholly owned subsidiary of Tata Sons Ltd, recently also signed an alliance with Mizuho Corporate Bank for a range of financial services.
August 13th, 2008, 12:02 PM
ICICI Bank aims an overall 15-16% credit growth (http://www.financialexpress.com/news/ICICI-Bank-aims-an-overall-1516-credit-growth/347999/)
Despite economic down turn and tight monetary situation, the country's largest private sector lender, ICICI Bank, expects the retail portfolio to grow by 5-10% during the financial year 2008-09, said Chanda Kochhar, joint managing director of ICICI Bank.
Kochhar said that high interest rates might affect ICICI Bank's growth rate, however, its strong corporate portfolio would help the bank to get an overall credit growth of 15-16%, she said. Kochhar said the bank's corporate pipeline is still strong which would help in better growth. On asking if interest rates will start softening, she said, "Its too early to say if interest rates will come down.”
ICICI expects a GDP growth of 7.5-8% for financial year 2008-09. "We must understand that there are challenges and opportunities in the economy. Clearly, policy measures are used as tools to manage the challenges. The RBI has projected that inflation would be brought down by March," Kochhar said.
During the monetary policy on July 31, the central bank said they aim to bring down inflation to 7% by March 2009. Under the microfinance portfolio, ICICI Bank has covered more than 3 million customers.
August 14th, 2008, 11:22 AM
India's first health insurance policy for HIV launched (http://www.financialexpress.com/news/Indias-first-health-insurance-policy-for-HIV-launched/348474/)
A group insurance plan for HIV positive people, covering their treatment cost among others, was launched in Bangalore in a first such effort in India.
The pilot initiative will provide Rs 30,000 insurance cover for 250 people living with HIV in Karnataka's six districts of Bellary, Mangalore, Mandya, Kolar, Mysore and Udupi.
The insurance cover entails the beneficiary Rs 15,000 assistance for hospitalisation and a similar sum to his family in the event of his death, Sanjay Rao Chaganti, Programme Director of Population Services International (PSI), an NGO behind the project, said here.
PSI in partnership with Star Health and Allied Insurance Company and the Karnataka Network for Positive People (KNP+) has introduced the insurance plan.
"It is a problem to enroll HIV positive people, because they either don't disclose or come forward. It is only through the help of organisations like KNP it can be done," Sanjay explained.
Andhra Pradesh Aids Control Society has identified 3,000 such persons and they would soon be brought under similar insurance programmes, he said.
The annual premium for the policy works out to Rs 1500 per person and the NGO will bear half of the amount.
Karnataka State Aids Prevention Society Project Director, Manjunath Prasad said the state had 2.5 lakh HIV infected and 33,000 suffering from AIDS.
National Aids Control Organisation Director General K Sujatha Rao said out of the Rs 1100 crore budget provided during 2008-09 for AIDS control, about Rs 150 crore was being spent on creation of awareness about the disease.
August 14th, 2008, 11:36 AM
MoF finishes work on SBS & SBI merger
source economictimes epaper
Govt approves SBI-SBS merger (http://www.financialexpress.com/news/Govt-approves-SBISBS-merger/348848/)
Country's largest lender State Bank of India on Thursday said the Finance Ministry has approved the merger of State Bank of Saurashtra with itself.
"The Ministry of Finance has passed an order for acquiring of State Bank of Saurashtra (SBS) by State Bank of India," SBI said in a filing to the Bombay Stock Exchange.
The merger would be effective from the "date as may be notified by the Govt of India in the official Gazette", the filing added.
Earlier this month, the Union Cabinet had approved the merger of SBS with SBI. The boards of both the banks had given their approval for the merger in August last year. SBS is a wholly-owned subsidiary of the State Bank of India.
After getting Cabinet approval, the finance ministry has finished the groundwork for repealing the State Bank of Saurashtra Act, 1950 and amending the SBI Subsidiary Act, 1959 to affect the merger.
Government would have to present a new bill called the SBI Subsidiary Bank Amendment Bill, 2008, in Parliament during the monsoon session for final approval on the merger. All the references to the SBS Act would be deleted from the SBI Subsidiary Act, 1959, through the proposed Bill.
The merger would pave way for the amalgamation of other six associate banks of SBI with itself and help the country's largest lender take on the competition, particularly from private and foreign lenders, in a better manner.
The merger would also enable State Bank to scale up its business in terms of footprint, manpower and resources.
August 14th, 2008, 01:49 PM
Banks see higher credit in Q1 despite rate bites
2008-09 was stronger than what it was a year ago. Till July 6, 2008, nonfood credit increased by Rs 40,344 crore (1.7%) and total resources extended to the commercial sector in the form of loans as well as investment in stocks and bonds by banks rose by Rs 33,218 crore (1.4%) over March 2008. This was due to an increase in credit default swap (CDS) rates reducing access to external debt and low-equity prices, making it difficult to raise money domestically, the EAC has said in its report.
The rates on credit default swaps (a premium for protection against credit risks) on paper of major Indian borrowers have hardened significantly over the past four months. The rates are generally influenced by global market conditions and the outlook in the borrowers’ economy. Ratings agencies have been expressing concerns over India’s sovereign outlook, largely on account of deteriorating financial conditions. As a result, the chances of rates softening in the near future could be dim.
Back home, the stock market has fallen by at least 20% since the beginning of the year. The number of IPOs hitting the market, too, has fallen sharply, as the corporates are not able to get attractive premiums.
Bankers do admit to a slowdown in loan demands, particularly from corporates, retail and agri sectors. The credit numbers in the second quarter could indicate a real slowdown. But, according to TY Prabhu, executive director, Union bank of India, though there is a slowdown in demand from corporates, banks are focusing on the SME sector where the prospects are good. Now that monsoons have arrived, the demand from the agri-sector, too, will pick up.
EVEN though there are signs of a slowdown in the economy, bank loans are showing higher growth this year. This, according to the Prime Minister’s Economic Advisory Council (EAC), is largely because other routes like overseas borrowings and domestic equity markets have dried out.
In its latest report on the outlook for the economy, the EAC has noted that despite tightening of liquidity, credit growth in the first quarter of
source economictimes epaper
August 14th, 2008, 01:49 PM
Global bank majors find India hot, vie for licence
SOME of the top global financial services firms and banks have sought a banking licence in India, a market considered to be perhaps the most attractive after China.
A host of banks, including Credit Suisse, Rabo Group and ANZ, are now looking at having a branch presence in the country, according to officials in the banking industry. Banking regulator the Reserve Bank of India (RBI), in recent months, has granted fresh banking licences to UBS — Switzerland’s largest bank, Dresdner Bank and United Overseas Bank.
Rabobank Group, the Dutch Group, is now in the process of submitting an application for a banking licence. The move at a time, when the group already holds a 18.2% stake in another local private bank YES Bank.
S o u r c e s close to the development said that Rabo had appointed lawyers to work on the banking licence. Also, some of the senior members of the group have met with RBI regarding this proposal.
Rabobank International Holdings has a 18.2% stake in YES Bank. The new private bank was promoted by Rana Kapoor and Ashok Kapur who now control 33.6% of the equity in the bank. Initially, Rabo had a 20% stake in the bank while both promoters jointly held 49% in the bank. However, Rabo had received RBI approval to increase its shareholding in the bank to 20%, post-IPO.
According to the current RBI regulation, a foreign bank, which does not have an India operation, can hold a 10% stake while those with Indian operations have to restrict their equity holding to 5%. Banking industry officials said that going by the current regulations, Rabo will have to prune its stakeholding in the bank.
When contacted, a Rabo spokesperson said, “As we are evaluating expansion in the growing Indian market, we will continue to develop the most-appropriate strategy, involving all members of Rabobank Group. We are investigating ways to upgrade our Indian finance company into a bank while continuing our support to YES Bank. Our holding in YES Bank will also be part of the constantly evolving plans and impacting regulations as we move in the future.”
ANZ has also started work on obtaining a banking licence in the country. StanChart had taken over the operations of ANZ Grindlays in the Middle-East and South Asia and the associated private banking business of Grindlays for $1.34 billion in 2000.
However, some bankers reckon that the central bank may not be very enthused by the ongoing flipflops by banks such as ANZ relating to their India strategy. An ANZ spokesperson said, “ANZ would like to develop its presence in India as part of its strategy to develop a super regional bank. We recognise this will take sometime in India and we are not expecting any major developments in the near term.”
Even with a slowdown in the economy, most banks feel that the medium- and long-term prospects of India is quite intact. Also, most banking groups want to increase their presence in India and China as a counter weight to Western markets, where growth in revenues are lower or have dipped due to the sub-prime crisis. For some of the existing players such as StanChart, Citi and HSBC, India is among one of their top markets. Incidentally, for Dresdner Bank, which just received a banking licence, this would be the second home coming in India after it closed its India operations some years ago. Subsequently, it was taken over by the Allianz group.
source economictimes epaper
August 15th, 2008, 10:19 AM
Flagstone to enter into Indian insurance sector (http://www.financialexpress.com/news/Flagstone-to-enter-into-Indian-insurance-sector/349122/)
After Munich Re another international reinsurance company-Flagstone Reinsurance Holdings Ltd, a global reinsurance company, has now decided to enter into India general insurance market.
The reinsurance company with a focus on specialty, property, property catastrophe and short tail casualty reinsurance is looking at entering the Indian market in the primary insurance business through a local joint venture partner. The company is in talks with several financial institutions in this regard.
Speaking to media persons, Mark Byrne, chairman of the company, said that there were a lot of opportunities in India in primary insurance business. It is an emerging and developing market, which is growing rapidly, but with a low insurance penetration.
"We are in talks with several financial institutions for a possible JV arrangement. We will not wait for the government to increase the FDI limit in insurance business. But, if there are policy changes then it will only be beneficial to us. The company will partner with an institution with a good distribution network. And for the JV we will bring to the table our technical expertise, data processing and underwriting talent. Within one year, the company will enter the insurance business," he said. Flagstone is likely to invest over $30 million (Rs 128.46 crore) as its capital. He was in the city to inaugurate the new state-of-the-art IT campus of Flagstone Underwriting Support Services (India) Pvt Ltd (FSR-India).
He said, FSR India was incorporated in Hyderabad in October 2005. It was engaged in IT enabled services and knowledge processing services such as proprietary software development, research and development, catastrophe modelling, actuarial analysis, underwriting administration, investment research and technical support for the parent company and its global subsidiaries.
August 15th, 2008, 10:37 AM
Indian insurance sector to touch Rs.20 bn mark by 2010 (http://in.news.yahoo.com/43/20080815/836/tbs-indian-insurance-sector-to-touch-rs.html)
India's insurance business will reach a level of Rs.20 billion in the next two years from the current level of Rs.500 billion, according to an industry lobby.
'A growth of over 200 percent is likely to be seen in Indian insurance business by 2009-10 in which private insurance business would grow at 140 percent in view of aggressive marketing techniques,' said a report by the Associated Chambers of Commerce and Industry of India (Assocham).
'The state-owned insurance companies' growth rate will be 35-40 percent,' the study said.
According to Assocham, in the last couple of years, the insurance sector had grown by 175 percent and the trend will emerge still better because of huge potential.
'On account of intense marketing strategies adopted by private insurance players, the market share of state-owned insurance companies like GIC (General Insurance Corp), LIC (Life Insurance Corp) and others have already come down to 70 percent in last four-five years from over 97 percent, and more intense competition is likely to be witnessed in the near future,' Assocham president Sajjan Jindal said.
'The private insurance players' entry into insurance sector is still restricted since India has yet to open it up liberally. But even then, their rate of return to their subscribers and policy holders is estimated at about 35 percent against 20 percent of domestic insurance companies,' Jindal added.
Moreover, the state-run companies have limited number of policies to offer to their subscribers while the private players offer many more policies with premium amount and maturity period, he added.
Interestingly, the private sector insurance players have started exploring the rural markets in which until recently the state-run companies had the monopoly.
The chamber has projected that in rural markets, the share of private insurance players would increase substantially.
At present, India's life insurance premium, as a percentage of GDP, was 1.8 percent against 5.2 percent in the US, 6.5 percent in Britain and eight percent in South Korea.
August 16th, 2008, 08:46 AM
TMB targets Rs 20,000 cr business by FY 2010 (http://www.financialexpress.com/news/TMB-targets-Rs-20-000-cr-business-by-FY-2010/349438/)
Tamilnad Mercantile Bank (TMB) has set a medium term target of Rs 20,000 crore business by March 2010 as against Rs 13,000 crore for the fiscal ended March 31, 2008. The bank is looking at a total business of Rs 15,500 crore by the end of current fiscal (March 31, 2009), said G Narayana Moorthy, managing director, Tamilnad Mercantile Bank.
Speaking to FE on the sidelines of the launch of a new deposit scheme in Chennai on Friday, he said the bank hopes to achieve the target with new products and increased customer mobilisation. The bank is targeting a net profit of Rs 155 crore in the fiscal as against Rs 126.74 crore during last fiscal.
Of the total targeted business of Rs 15,500 crore, the bank aims to post a deposit base of Rs 9,600 crore (Rs 7,670 crore) and advances of Rs 6,900 crore (Rs 5,331 crore). The net non-performing assets (NPA) level will be brought down to less than 0.25% by March 2009, he said. The bank is also planning to add 97 ATMs, taking the total size of 200 ATMs. The CAR, as of March 31, 2008 stood higher at 15.35%.
The bank is in the process of undertaking bancassurance (both life and non-life insurance products) and plans to tie up with leading insurance companies. Plans are afoot to provide internet facility and debit cards as well. The bank will step up the share of fee income by increased focus on non-fund based activities and new diversified service offerings.
Moorthy was in Chennai on Friday to launch `TMB Freedom’, a deposit scheme with both life and accident insurance cover for the customers apart from value added benefits. Under this scheme, persons in the age group of 18 to below 58 years can open a fixed deposit account with a minimum deposit of Rs 25,000 and multiples of Rs 5,000 thereafter. The deposit period is 12 months. Senior citizens will get 10.75% interest and others will 10.50%.
August 16th, 2008, 08:50 AM
LIC & PNB launch insurance scheme for women (http://www.financialexpress.com/news/LIC-&-PNB-launch-insurance-scheme-for-women/349328/)
Life Insurance Corporation, the country’s largest insurer and Punjab National Bank, the second largest public sector lender, have launched a life insurance scheme for credit-linked women self help groups to provide life and permanent disability cover.
This is the first such programme launched on a national level, as per the announcement by finance minister P Chidambaram in his budget speech this year. The scheme will initially cover 5,000 members of SHGs credit-linked to PNB and the annual premium is Rs 200, 50% of this is contributed by the insured and the rest comes from the Social Security Fund of the central government.
There are 30 lakh SHGs credit linked to banks. In the budget for this fiscal, Chidambaram had allocated Rs 500 crore to the corpus of Social Security Fund.
If the insured dies or gets permanently disabled in an accident, LIC would pay Rs 75,000, while in case of normal death, Rs 30,000 would be paid. In a permanent partial disability, the insured would get Rs 37,500.
“The claim would be settled only after adjusting the outstanding credit against the member in favour of PNB,” LIC chief (SBU – Pension and Group Schemes) P Satyanandam said.
The scheme also entitles the insured to a scholarship of Rs 1,200 per annum for her children studying in 9 th -12 th standard.
LIC offers life and permanent disability cover to people in 44 categories, and covers 35,000 SHGs at present.
LIC is targeting 2.5 lakh self help groups in 2008-09 under the scheme.
“I am confident that we would exceed (the target) by launching such programmes in collaboration with other public sector banks, which were advised by the finance minister to facilitate expansion of such services,” Satyanandam said.
“LIC is also in talks with Oriental Bank of Commerce and Punjab & Sind Bank for the scheme,” the insurer’s divisional manager (Pension and Group Schemes) Narendra Kumar said.
“PNB has announced 2008-09 as the financial inclusion year. The bank is opening no-frills account for the poor and is providing them an overdraft limit of Rs 2,000.”
“We have already opened 7 lakh such accounts. The bank would bring 1.5 crore homes and 7.5 crore people under the financial inclusion programme by 2010,” PNB’s executive director J M Garg said.
August 17th, 2008, 07:50 AM
PNB to join credit card bandwagon (http://www.financialexpress.com/news/PNB-to-join-credit-card-bandwagon/349745/)
At a time when ICICI Bank, the number one player in the fast-growing Indian credit card market, has cut its 2008-09 growth targets in the business from 25% to 15% due to rising delinquencies, Punjab National Bank (PNB), the country’s second largest public sector bank, is about to launch credit cards for its massive customer base of 3.5 crore. PNB is in talks with Visa Inc, the global retail electronic payment network, to start its independent credit card business and is likely to launch the service by October.
At present, the bank does issue co-branded credit cards in collaboration with Hongkong & Shanghai Banking Corporation (HSBC), but it has not been successful. “After the launch of our independent credit card business, the tie-up with HSBC would be discontinued,” chairman and managing director, PNB, KC Chakrabarty told The Financial Express .
Earlier, there were talks that PNB may launch a subsidiary for the credit card business on the lines of State Bank of India. According to reports, PNB had roped in Ernst & Young as a consultant to finalise a potential partner for the credit card business. But a bank spokesperson denied such talks and said, “We have our own department for these services”.
Credit card business is considered lucrative and almost all major banks provide this service. ICICI Bank, HDFC Bank, SBI and Bank of India are some of the key players in this portfolio. There are over 40 million customers in the segment at present and the market is growing at 35-40% a year.
But with more credit card use, the chances of default on repayment also increase. Reserve Bank of India has already sounded an alarm on credit card defaults and cautioned banks on the same. RBI deputy governor V Leeladhar earlier this month raised concerns on deteriorating credit quality in the banking system.
According to central bank data, credit card outstanding had surged to Rs 26,500 crore at the end of May 2008, up 87% from a year ago, when it grew by 45%. To put that in perspective, banks’ personal loan portfolios saw growth moderating from 23.9% at the end of May 2007 to around 16% till May-end 2008.
Simply put, with banks being picky about giving out personal loans, consumers seem to be opting for the relatively easier-to-access plastic credit, even if it’s much more expensive. This comes with its own risks, as the RBI has pointed out.
Considering these risks involved in the credit card business, Punjab National Bank would offer the service to its own customers. “Credit card business is a risky one. We are going to issue credit cards only to our own customers,” Chakrabarty said. The bank has over 3.5 crore customers at present.
For the debit cards issued to its banking customers, PNB is linked with MasterCard, another international payment gateway. “We have a tie-up with MasterCard for debit cards and with Visa, our customers could access a much larger global network of merchant outlets,” PNB’s executive director JM Garg said. A PNB debit cardholder can, at present, purchase goods at 99,270 merchant establishments across the country.
The bank is also going to start ‘Cash Management Services’ in the next three months. The services will allow its corporate clients to pool funds spread across the country at the branch of choice within two hours.
“Under these services, the bank would collect the receivables from representative or business associates at the core banking branches across the country and bring them at a single outlet. The funds could then easily be remitted from this branch,” Garg said.
The bank has more than 2,700 branches connected through core banking solution at 935 centres in the country. As per the plan, PNB will charge 25-90 paise per Rs 1,000 of transaction depending on the location.
August 19th, 2008, 02:17 PM
Union Bank ties up with Edelweiss, Wealth Advisors (http://www.financialexpress.com/news/Union-Bank-ties-up-with-Edelweiss-Wealth-Advisors/350217/)
Union Bank of India (UBI) has tied up with Edelweiss Securities Ltd, and Wealth Advisors India (P) Ltd to offer wealth management services (WMS) to its high net worth clients.
Edelweiss would take care of the bank's east and west zone clients, and Wealth Advisors its north and south zone ones, UBI's Executive Director T Y Prabhu said.
Initially, the WMS was being launched in Mumbai, New Delhi, Kolkata, Chennai, Bangalore and Hyderabad.
UBI expects to cover 500 to 600 high networth individual (HNI) clients under this new initiative, which comes after the bank realised that it is losing market share in the high networth segment, by March next year.
"At present, the bank has more than 25,000 HNI clients and expect the number to grow multi-fold due to various transformation that have been initiated in its system", Prabhu said.
"The growth of the economy and growth in the number of high net worth customers of the bank, has given great opportunities to the bank to offer WMS to its customers".
Mahadevan V, Director and CEO of Wealth Advisors, part of the J V Gokal Group, said: "With the emergence of diversified asset classes and significant growth in wealth information, we see a great potential demand for such specialised offerings in India going forward".
According to Bank officials, the target clients for WMS are those with the capability to maintain a total liability relationship with the bank in excess of Rs ten lakh and NRIs having good financial background and high liquidity generation capabilities, among others.
August 19th, 2008, 02:18 PM
Loan growth better than last year: RBI (http://www.financialexpress.com/news/Loan-growth-better-than-last-year-RBI/350669/)
Growth in advances by Indian banks was better than last year, the Reserve Bank of India (RBI) deputy governor V. Leeladhar said on Tuesday when asked whether high interest rates were hurting loan growth.
The credit growth has so far been healthy though retail lending has slightly slowed down, he said, adding farm loans were expected to pick up.
"The growth of advances are far better than what it was last year. Something like 26 per cent against 20 per cent, which we have been projecting," he said in Bangalore.
RBI raised its key lending rate to a seven-year high of 9 per cent in July to rein in double-digit inflation.
Higher rates may slow down credit growth, though that could not yet be determined, he said.
Loans by Indian banks as at Aug 1 were 25.8 per cent higher than a year earlier, RBI data showed.
Asked whether banking sector reforms to allow foreign competitors to buy local banks were on track to be unveiled next year, Leeladhar said it all depends on the review.
"I can't foresee what will be the findings of the review," he said.
August 19th, 2008, 02:19 PM
ICICI Bank in $250-mn pact with US Exim Bank (http://www.financialexpress.com/news/ICICI-Bank-in-250mn-pact-with-US-Exim-Bank/350707/)
Private-sector lender, ICICI Bank on Tuesday entered into an USD 250-million agreement with Export-Import Bank of United States to finance capital goods imports of Indian corporates from USA.
The agreement, which is an extension of Indian infrastructure facility of Exim Bank, will provide credit support to international banks for financing of capital goods imports by Indian corporates, a press release issued in Mumbai said.
This will particularly benefit companies in sectors such as power, transportation, airports, oil & gas and renewable energy, the statement said.
The agreement was signed by Exim Bank's Strategic Initiatives Division Vice President and Manager, Ray Ellis, and ICICI Bank's Executive Direcctor, Sonjoy Chatterjee, ICICI Bank is India's largest private sector bank and has consolidated total assets of about USD 113-billion as on June 30, 2008. The bank has presence in 19 countries.
August 19th, 2008, 02:34 PM
Doha Bank to open AMC in India next year (http://www.financialexpress.com/news/Doha-Bank-to-open-AMC-in-India-next-year/350497/)
Qatar-based Doha Bank is making a foray into NBFC segment in India, starting out with an AMC (asset management company) next year. The activities will include brokerage to currency futures.
It is the DBFS (Doha Brokerage and Financial Services) arm of Bank that's geared into this new set of operations, pumping in a token $50 million this year. It would also be the first time that a West Asian Bank is entering India's NBFC sector.
"Feasibility study on AMC is on. Factoring in the delay for clearances, NBFC activities are expected to get going by middle of 2009. By then the market climate too could emerge more favourable," KV Samuel, vice-chairman DBFS and senior manager (Treasury and Investment), Doha Bank, said.
Starting October, Doha Bank is planning to go ahead with its NBFC operations in India, ramping up its current 145 branch network to 300 branches. The new branches will be spread out mostly in Maharashtra and Gujarat.
DBFC has no intention of taking the deposit-mobilisation plunge now, when the arbitrage window is almost shut. On the other hand, the idea is to make the most of the consumer and housing loan segment.
"Within about six months, investors are likely to look for opportunities. Till then, the market dullness may continue," says Prince George, MD, DBFS. For one, the business cycle could take the return trip to the boom, by about six months. Two, the pre-election political flux might stabilise itself. And three, crude prices have already started the downslide.
It was recently that Doha Bank constituted its NBFC division, by taking over 49% equity in Select Securities (a brokerage network earlier known under the brand name Investnet). It is this new entity that came to be known as DBFS.
August 20th, 2008, 01:52 PM
SBI likely to finalise JV with IAG by Sept (http://www.financialexpress.com/news/SBI-likely-to-finalise-JV-with-IAG-by-Sept/351118/)
Stage is set for the entry of State Bank of India into general insurance as the country's largest lender is expected to finalise the terms for joint venture with Insurance Australia Group (IAG) by next month.
"We are currently working on the structure of the joint venture agreement. We expect to finalise the operating structure by September. Once a mutual agreement is reached, the new company is expected to get operational in the next three to six months," a senior SBI official said in Mumbai.
Both parties signed an agreement in May this year to form a new company for the proposed insurance business. Under the pact, State Bank will hold a 74 per cent stake in the entity and the Australian partner the rest 26 per cent.
State Bank officials, however, declined to divulge the financial terms and management structure of the proposed joint venture company.
SBI's entry into general insurance is expected to pose challenges to existing players. Public sector United India Insurance, New India Assurance, Oriental Insurance and National Insurance hold a major share of the business.
In private sector leading players include Bajaj Allianz, ICICI Lombard, IFFCO-Tokio General Insurance and Reliance General Insurance.
Government-run State Bank has aggressive plans to expand business on various fronts, including custodial business. Though the bank wants to form a JV with French financial-services major Societe Generale, a Finance Ministry official recently said the Government was not in favour of the deal.
August 22nd, 2008, 11:27 AM
YES Bank launches voice-based facility (http://in.news.yahoo.com/241/20080822/1264/tbs-yes-bank-launches-voice-based-facili.html)
For the first time in the Indian financial services sector, a voice-based banking facility has been introduced by Yes Bank in partnership with Cisco Systems. The new facility will enable YES Bank customers to transact round-the-clock banking through their mobile handsets from anywhere in the world, by merely saying 'voice commands' instead of keying-in various menu options, when their calls gets connected to the bank's contact centre based in Gurgaon.
The customers will have to key in their customer identification numbers on their mobile handsets while availing this facility. In association with a US based speech and imaging solutions company 'Nuance', YES Bank is developing an exclusive voice biometrics verification technology for customers in a bid to authenticate their voices for allowing banking transactions.
August 23rd, 2008, 09:30 AM
Bajaj Allianz launches Insta Insure (http://www.financialexpress.com/news/Bajaj-Allianz-launches-Insta-Insure/352105/)
Targeting the individuals who do not have health insurance cover, Bajaj Allianz General Insurance Company on Friday launched Insta Insure, a first product in the health insurance segment.
Bajaj Allianz General Insurance CEO Swaraj Krishnan after formally launching the product in Chennai said "The main USP of this product will be the instant availability and commencement of the cover - as soon as the premium is paid the coverage will commence the moment it is activated".
"There is a wide range of products and services that are available instantly. Insta Insure Family Health is one of such products that we have launched. We will soon launch other retail products also under this sub-brand - Insta Insure" he said.
It will be available in places like retail outlets, grocery or pharmacy chains, he said adding the product is available for all aged between 18 years and 45 years, he said.
Initially the product would be available in cities like Chennai, Bangalore, Hyderabad, Kolkata, Mumbai, Pune, Ahmedabad, Baroda, Surat and Jaipur.
"We have also planned to launch this product in other cities as well", Krishnan said.
August 26th, 2008, 02:19 PM
HDFC to spread its network to rural market (http://www.financialexpress.com/news/HDFC-to-spread-its-network-to-rural-market/353491/)
With the aim of enabling farmers and Self Help Groups (SHGs) have access to banking and finance products, India's third largest bank HDFC has chalked out new measures to expand its network to rural areas of the country.
New branches in rural areas would be equivalent with the core banking facilities that HDFC provides to customers in metropolitan cities, according to a top official of the bank.
"During the next fiscal, we plan to open more than 200 branches across the country. Of this, we will open more than 100 branches in rural areas," HDFC Senior Vice President G S Gopinath said.
Currently, 125 of the total of 325 branches in South India are in rural and semi-urban areas, 113 in urban areas and 87 branches in metro cities. "The main idea is to make farmers and SHG have a bank account and access to the bank,' he said.
For this purpose, HDFC planned to depute more field staff and provide office with internet and other facilities at rural branches.
"We believe that HDFC has great potential for further development due to its broad geographical service coverage, its connection with rural residents and the increasing demand for loans in rural areas,' he said.
August 28th, 2008, 02:21 PM
Railways invites 20 groups to bid for insurance scheme (http://www.financialexpress.com/news/Railways-invites-20-groups-to-bid-for-insurance-scheme/354061/)
Raising the level of competition among private insurance players for the railway insurance scheme, the Railways has invited as many as 20 parties to bid for providing insurance cover during the next one year.
Last year, ICICI Lombard had bagged the offer, battling five other private players.
This year's tenders will be opened on September 1, sources in the Railway Ministry said, adding that invitations have been sent to about 20 companies this time.
The insurance cover will be from September 20 this year to September 19 next year.
The passenger insurance scheme of Indian Railways covers railway passengers against death or injury resulting from rail accidents or untoward incidents as per the Railway Act of 1989.
The Railways began inviting private parties to provide insurance cover about three years back in keeping with its mandate.
At present, compensation payable in case of death is Rs 4 lakh and in case of injury Rs 32,000 to Rs 4 lakh depending on the nature of injury.
The scheme will extend to Indian Railways, Metro Railway (Kolkata) and Konkan Railway Corporation Limited.
Railway passengers holding a valid ticket, railway pass, platform ticket and railway men on duty will be covered under the scheme.
Besides, children below five years of age travelling with bonafide ticket holder, pass holders, platform ticket holders in waiting rooms, cloak rooms, booking offices and railway platforms who become victims of untoward incidents will also be covered.
August 29th, 2008, 02:25 PM
Reliance Money forays into Europe (http://www.financialexpress.com/news/Reliance-Money-forays-into-Europe/354944/)
Anil Ambani Group firm Reliance Money on Friday announced its foray into Europe by setting up operations in Ireland and the UK and is looking to tap over two million non-resident Indian population in the region.
Announcing the foray, R-Money CEO Sudip Bandyopadhyay said, "This is our first move to reach out to the large base of over 2 million NRIs and PIOs based in Europe with our unique, cost-effective and efficient bouquet of products and services. Our presence in Ireland and UK will complement our efforts to have a larger role in this region."
Ireland is the first European country where R-Money would start its operations in less than one year of its decision to tap the overseas markets.
R-Money (Ireland) would in turn enter into partnership with appropriate players in other European countries after getting the necessary approval from regulatory authorities in the respective countries, he added.
The company has already forayed into the UAE, Saudi Arabia, Africa and Hong Kong.
After foraying into other global markets, broking and distribution firm Reliance Money made the first initiative to to offer its services to retail investors in Europe with a strew of financial products.
Bandyopadhyay said the company aims to generate 50 per cent of its revenues from overseas markets by 2012 and capture a bigger share of the record 195 billion dollars invested in India last year by overseas funds.
Through this subsidiary -- Reliance Money (Ireland) -- the non-resident Indian entities and Persons of Indian Origin (PIO) can invest in the Indian market directly through its capital market and portfolio management services for as low as USD 50,000.
September 1st, 2008, 11:11 PM
Subbarao appointed RBI Governor (http://www.hindu.com/2008/09/02/stories/2008090251730100.htm)
The government on Monday appointed Finance Secretary Duvuri Subbarao Governor of the Reserve Bank of India in place of Y.V. Reddy, who completes his term on September 5.
Dr. Subbarao is an alumnus of IIT Kanpur and topper of the IAS (1972 batch).
He will be the 22nd Governor of the RBI.
September 5th, 2008, 12:46 PM
- Deleted -
September 5th, 2008, 12:47 PM
Insurance sector may touch Rs 2 lakh cr by 2010 (http://www.financialexpress.com/news/Insurance-sector-may-touch-Rs-2-lakh-cr-by-2010/349277/)
India's insurance sector may touch a level of Rs 2 lakh crore in the next two years in view of aggressive marketing techniques adopted by private insurance companies, a report said.
"The total insurance business will reach a level of Rs 2 lakh crore in next two years from current level of Rs 500 billion (5,000 crore)," industry body Assocham said in its report `Insurance Sector Futuristic Growth'.
Private insurance business would grow at the rate of 140 per cent in view of aggressive marketing technique adopted by them, against 35-40 per cent of state-owned insurance companies growth rate, it said.
On account of intense marketing strategies adopted by private insurance players, the market share of state-owned insurance companies like GIC, LIC have already come down to 70 per cent in last 4-5 years from over 97 per cent, Assocham President Sajjan Jindal said.
The state owned insurance companies have limited number of policies to offer to their subscribers while in case of private insurance companies, their policy numbers are many more and the premium amount as well as the maturity period is much competitive against those of government insurance firms.
The private sector insurance players have started exploring the rural markets in which until recently the state-run companies had the monopoly, Jindal said.
The chamber has also suggested that insurers strategy should stimulate demand in areas that are currently not served at all. Insurance companies mostly focus on manufacturing sector, though, the services sector is taking a large and growing share of Indias GDP. This offers immense opportunities for expansion opportunities.
September 25th, 2008, 02:48 PM
ANZ jobs axed in New Zealand, some heading to India
ANZ bank, which in July had announced that it will move 238 back office jobs from Wellington and Auckland to Bangalore, is axing jobs throughout its branches in New Zealand.
According to the banking union Finsec, the staff was told of the redundancies at a special meeting convened Thursday.
'When they announced the offshoring of hundreds of jobs to India they promised to increase frontline staff numbers and customer service', Finsec campaigns director Andrew Campbell told the New Zealand Press Association (NZPA).
'At a time when this billion dollar bank continues to make record profits it should be investing in its front line, but once again, it is putting profit before people', Campbell said.
At the Thursday meeting, the bank announced a review of the branch network with a view to reducing staff numbers; a freeze on recruitment which will lead to immediate staff reductions through attrition; and asked frontline staff to consider voluntary redundancy, reports NZPA.
ANZ employs more than 37,700 people around the world.
Earlier, Finsec had accused the Australian-owned bank of being greedy as the work is said to be done at a quarter of the cost in India.
Banks say that jobs are being outsourced to improve efficiency. While some staff is redeployed others are offered redundancy packages.
Another of Australia's four leading banks, the National Australia Bank (NAB), has also announced that it will outsource 500 jobs to India by year-end.
Other Australian banks that have outsourced IT jobs to India include Westpac, St George and the Commonwealth Bank.
source economictimes.com (http://economictimes.indiatimes.com/News/News_By_Industry/Jobs/ANZ_jobs_axed_in_New_Zealand_some_heading_to_India/articleshow/3525708.cms)
October 1st, 2008, 05:04 AM
MUMBAI: Insurance regulator IRDA (http://www.irdaindia.org/) on Tuesday said mutual funds would continue to sell group insurance products even as the life insurance association decided against it.
“ IRDA (http://www.irdaindia.org/) has advised the Life Insurance Council (http://www.lifeinscouncil.org/) to review and put on hold the decision to discontinue offer of group cover," a SEBI (http://www.sebi.gov.in/) release said.
LIC (http://www.licindia.com/) , which is an association of life insurance companies, had earlier decided against offering insurance covers to fresh unit-linked products sold by mutual funds from October 1.
It was decided that the insurer would not sell group covers to mutual funds that bundle life insurance with units and thereby create competition for ULIPs. SEBI (http://www.sebi.gov.in/) regulates the mutual fund industry while IRDA (http://www.irdaindia.org/) is the insurance sector regulator. The mutual fund industry contended that by selling insurance products it is only helping in expanding the insurance market rather than creating any conflict of interest.
October 1st, 2008, 06:14 AM
Anil Dhirubhai Ambani Group Reliance Money on Tuesday said it will foray into the investment banking sector and has obtained a merchant banking licence from market regulator Securities Exchange Board of India.
The new licence from SEBI to focus on small and mid-sized companies would allow Reliance Money to provide a wide range of investment banking services such as issue management, underwriting, private equity advisory/ syndication and corporate finance services in India, a company statement said.
"We are extremely pleased with this development, as we believe the potential for Investment Banking in India is huge.
While the main focus of the industry has been on large caps, we see a huge opportunity in serving the small and mid-sized segment, currently being under-serviced," Reliance Money Director and CEO Sudip Bandyopadhyay said.
The company is eyeing 50 fund raising deals within first the six months and would leverage from its existing customer base of more than 2.5 million and wide distribution network of more than 10,000 outlets, it said.
Reliance Money would initially concentrate on issue management activities such as initial public offerings, rights issue, follow on public offerings, qualified institutional placements, open offers, buyback offers, delisting offers and preferential issue of listed equity.
"Our expansion into investment banking highlights Reliance Money's broad-based approach in building an integrated, comprehensive global financial services platform in the country," Bandyopadhyay added.
October 1st, 2008, 01:47 PM
this is the funnniest yet tragic thing i've heard for a while..
Woman robbed of Rs 4 lakh by youths
Woman robbed of Rs 4 lakh by youths
1 Oct 2008, 0450 hrs IST,TNN
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HYDERABAD: Thieves seemed to have taken advantage of the panic among ICICI Bank customers with both hands. With rumours flying thick and fast about the crisis in the bank, a woman withdrew Rs four lakh cash from the Chaitanyapuri branch. Within no time she was robbed of her cash by two motorcycle-borne snatchers.
At around 2.30 pm, Sunanda, 55, along with her daughter-in-law, Pratima, went to the ICICI Bank's Chaitanyapuri branch and withdrew Rs four lakh. The two were walking back to their house at Gaddiannaram, which is three kilometres away from the bank, carrying the polythene bag containing the money.
Sunanda and Pratima were barely 200 yards away from their house when two men, riding a Passion Plus, came from their behind. The pillion rider snatched the polythene bag from Sunanda's hands.
“The bikers then sped away towards National Highway 9 (Hyderabad-Vijayawada road),” Saroornagar inspector L A Bhaskar said.
Sunanda’s son Nalini Kumar is working as a software engineer and her husband is a retired private employee.
“Like other customers of the bank, Sunanda's family also was worried about rumours about the bank's financial condition and withdrew the money from the bank,”
Saroornagar SI V Yadgiri Reddy said. He said locals noticed the bikers till Red Cross Hospital at Gaddiannaram, but they vanished into the heavy traffic.
The duo could not jot down the vehicle number as it was covered by a helmet hanging from the lock. However, according to their description, the rider of the bike was of dark complexion and was wearing a cream colour shirt. Police have alerted all police stations in the city.
October 12th, 2008, 03:15 PM
BNP likely to decide on Fortis' India biz by Jan
French financial services major, BNP Paribas, is likely to decide on the integration of Fortis' Indian operations with itself by January that includes Dutch Bank ABN Amro's India asset management business.
This follows BNP Paribas agreeing to acquire Fortis' business in certain geographies globally.
Early this month, BNP Paribas has agreed to acquire Fortis' Belgium and Luxembourg operations as well as international franchises for an estimated Euro 14.5-billion after the latter failed to survive the global financial turmoil.
If the acquisition goes through, BNP Paribas will have a combined deposit base of around Euro 600-billion and a 75 per cent stake in Fortis Belgium.
"A clear picture will emerge on this matter in the next two-three months...given that BNP Paribas has a controlling stake in Fortis, it is likely to integrate ABN Amro's mutual funds business here, which is a part of Fortis now," a source in the know told media here.
However, chances of BNP Paribas selling a part of the Fortis' business in some regions to a third party cannot be ruled out if it finds that a more viable option, the source said.
If BNP Paribas decides to acquire Fortis' Indian operations, it may first exit its holding in Chennai-based mutual funds company, Sundaram BNP Paribas, as Sundaram owns a majority stake in the JV.
Since BNP Paribas doesn't have a majority holding in the mutual funds JV with Sundaram, chances of routing the acquisition through the JV is highly unlikely, the source said.
BNP Paribas is presently in the process of securing necessary regulatory and shareholder approvals for the takeover (of Fortis) and the process could take a minimum of 2-3 months to get completed, the source said.
ABN Amro's India mutual funds business has assets under management of around Rs 9,000-crore as on September 30, a presence in 10 locations and a headcount of around 75.
Fortis is present in India through its life insurance JV with IDBI and Federal Bank.
A takeover of ABN Amro's mutual fund business would considerably strengthen BNP Paribas' presence in the domestic MF space. A consortium of lenders--Royal Bank of Scotland (RBS), Fortis and Santander took over the operations of ABN Amro last year. According to the agreement, Fortis took over the asset management business of ABN Amro while RBS will acquire the retail and wholesale banking operations.
The rebranding of ABN Amro mutual funds business into Fortis will come into effect from November 10 after unit-holders' approval is obtained, an ABN Amro official said. The company had received SEBI approval for the rebranding early this month.
"At this level, the rebranding process requires a minimum 30 days to secure necessary approval from the unitholders. This period will get completed by November 9," the official said. All mutual fund schemes presently offered by ABN Amro will be prefixed with the name of Fortis after the rebranding, the official said.
source economictimes.com (http://economictimes.indiatimes.com/News_by_Industry/BNP_to_decide_Fortis_India_biz_by_Jan/articleshow/3586344.cms)
October 12th, 2008, 03:24 PM
ICICI '08 capital adequacy better than SBI, HDFC: RBI
Country's leading private sector lender ICICI Bank, whose shares tumbled by 20 per cent on Friday, has a high capital adequacy ratio of 13
.97 per cent, well above that of State Bank of India (SBI) and HDFC Bank during 2007-08, says a RBI report.
The capital adequacy ratio of the ICICI Bank, according to the central bank's recent profile of the Indian banking industry, was also well above the industry average of 13 per cent.
As against the Capital to Risk Weighted Assets Ratio (CRAR) of the ICICI Bank at 13.97 per cent, the SBI had a CRAR of 12.64 per cent and HDFC 13.60 per cent.
CRAR reflects the ability of a bank to deal with loan defaults, and as per the RBI guidelines, every bank is required to maintain capital adequacy ratio.
The shares of the ICICI Bank during the last week went down by 27.83 per cent on the Bombay Stock Exchange to close at Rs 364.
According to the RBI analysis, CRAR of private banks at 14.30 per cent for 2007-08 was higher compared to the PSU and foreign banks.
The average CRAR of the nationalised banks stood at 12.10 per cent while that of foreign banks at 13.10 per cent for the year 2007-08. State Bank of India and its associates had an average CRAR of 13.20 per cent, with SBI's capital adequacy ratio stood at 12.64 per cent, below the group average.
Among the nationalised banks, Canara Bank's CRAR at 13.25 per cent was higher than the industry average.
The CRAR of foreign banks such as Standard Chartered Bank, HSBC and Citibank stood at 10.59 per cent, 10.59 per cent and 12 per cent respectively, below the industry average.
source economictimes.com (http://economictimes.indiatimes.com/News/News_By_Industry/Banking_Finance_/ICICI_08_capital_adequacy_better_than_SBI_HDFC_RBI/articleshow/3586468.cms)
October 16th, 2008, 01:29 AM
Don’t put money in foreign banks: West Bengal minister
In the backdrop of the global financial crisis, West Bengal Finance Minister Asim Dasgupta Wednesday urged people not to keep their money in foreign banks and even in banks having significant foreign equity holdings.”Please, don’t put money in foreign banks and even in Indian banks having significant holding of equity by foreign institutions, whose names I would not like to take,” Dasgupta said while inaugurating a branch of a rural bank at Barasat near Kolkata.
“Your money is safe only in public sector banks, cooperative banks and regional rural banks,” the minister said.
His statements came a day after the central committee of the Communist Party of India-Marxist (CPI-M) adopted a resolution, urging the United Progressive Alliance (UPA) government to take lessons from the US financial crisis.
“The CPI-M has consistently maintained that the finance-driven imperialist globalisation is unsustainable. The UPA government has been pushing for the very same policies, which have spelt ruin for the financial system in the US and many European countries,” it said.
“The government has been assiduously pushing for financial sector liberalisation in the past four years. The manner in which the US is trying to solve the crisis by bailing out the investment bankers and financers at the expense of the taxpayers will only worsen the situation,” it added.
October 24th, 2008, 11:06 PM
October 24th, 2008, 11:10 PM
October 25th, 2008, 02:48 AM
Don’t put money in foreign banks: West Bengal minister
more like anti capitalist rhetoric actually......
October 31st, 2008, 11:21 PM
On last leg, govt pushes reforms (http://timesofindia.indiatimes.com/On_last_leg_govt_pushes_reforms/articleshow/3660305.cms)
NEW DELHI: Three months after the ruling UPA parted ways with the Left, and with the countdown for general elections nearing, the Union cabinet on
Friday decided to introduce a Bill to raise the foreign direct investment cap in insurance companies from the existing 26% to 49%.
Announcing the cabinet decision to introduce an insurance amendment bill to increase the FDI cap on Friday, finance minister P Chidambaram, however said the Bill is unlikely to be passed by the present Lok Sabha, mainly due to lack of time, as it is expected to be referred to a parliamentary committee after being introduced in the House.
Private sector insurers hailed the decision as a move in the right direction. However, industry sources said its timing was a little out of sync with the present global reality. Hardly any foreign investment is expected to come into the sector.
November 5th, 2008, 02:14 PM
SBI expects 40% growth in net profit in H2
The country's largest lender, State Bank of India, today said it expects 40 per cent growth in its net profit in the second half of thi
s fiscal despite fears of an economic slowdown triggered by the global financial meltdown.
"Net profit growth should be around 40 per cent (in the next two quarters)," SBI Chairman O P Bhatt told PTI.
The bank has recorded a profit growth rate of over 40 per cent to Rs 2,260 crore for the July-September period. Its net profit during the first half was up by over 28 per cent to Rs 3,900 crore.
When asked whether the bank's good performance could be replicated in the second half amid forecasts of general economic slowdown, Bhatt said, "Performance could be ... should be (better)". On credit expansion, Bhatt said the bank is expecting loan growth of 26 per cent in fiscal 2009 against 23 per cent recorded in the previous year.
The country's largest bank's advances for the year ended March 2008 stood at Rs 4,22,181 crore.
Beating business growth projections by research analysts, SBI posted 40 per cent growth in net profit for the second quarter of this fiscal on high interest income. Crediting the good numbers to income from high interest rates and fee-based income, Bhatt had said the bank has been giving good returns consistently in the last 5-6 quarters.
During the second quarter, SBI's total income rose to Rs 17,909.64 crore as against Rs 13,658.22 crore a year ago, an increase of 31 per cent.
source economictimes.com (http://economictimes.indiatimes.com/News/News_By_Industry/Banking_Finance_/SBI_expects_40_growth_in_net_profit_in_H2_/articleshow/3677737.cms)
November 19th, 2008, 05:19 PM
Barclays Wealth launches India operations
Global financial services provider Barclays on Wednesday announced the launch of Barclays Wealth India operations to tap the wealth
management market in the country.
Barclays Wealth said it would provide private client advisory, succession planning and investment services to high net worth individuals, many of whom are presently managing their wealth on their own.
Satya Narayan Bansal, chief executive, Barclays Wealth India said the Indian market is fragmented and still evolving. But going by the market capitalisation figures, the current size of the market for wealth management in India could be about USD 100 bn to USD 200 bn, he said.
Quoting Barclays Wealth Insights report, he said India is expected to have about 4,11,000 households with wealth in excess of USD 1 mn and the aggregate wealth held by them to be in excess of USD 1.7 trillion by 2017.
The bank announced the launch of its wealth management operations at a press conference amid presence of cricketing legends like Kapil Dev, Allan Border and Clive Lloyd, each one of whom was the captain of their cricket teams which had won the cricket World Cup in the past.
When asked whether it is right time to launch wealth management services when the markets are in turmoil, Bansal said ,"it is an opportune time as the current market conditions enable us to engage with clients more deeply than ever before."
source economictimes.com (http://economictimes.indiatimes.com/News/News_By_Industry/Banking_Finance_/Barclays_Wealth_launches_India_operations/articleshow/3733330.cms)
March 6th, 2009, 09:41 AM
Loans to get even cheaper
Interest rates on loans — for homes, cars and other kinds of consumer finance — are set to go down by another 0.5 percentage point following a decision by the Reserve Bank of India to cut key rates to that extent on Wednesday.
The RBI announced that the repo rate, effectively the rate at which it lends short-term funds to banks, and the reverse repo rate — which it gives on funds parked by banks with the central bank — would be cut by 0.5 percentage point with immediate effect. The new repo rate will be 5% and the reverse repo rate 3.5%.
Banks, which have been aggressively slashing rates of late, indicated after the announcement that they would pass on the RBI’s cuts to customers in the form of fresh reduction of interest rates. However, they would also cut interest rates on deposits by a corresponding amount.
Uco Bank chairman and managing director S K Goel said, ‘‘Banks will soon decide to cut rates, which should help in reviving the economy’’. A senior official of ICICI Bank also echoed this view.
In the past, banks have on occasion cut rates for new borrowers without changing the rate paid by existing ones. But this time, old customers on floating rates are also likely to benefit. That is because banks will most probably cut their prime lending rates (PLR), to which the floating rate is benchmarked.
Home loan rates are now around 10% for most public sector banks, while private sector banks are maintaining rates of 11-12%.
SBI has emerged as the most aggressive player with a special scheme under which new home loan borrowers are being offered an 8% rate. Following Wednesday’s announcement, other banks may use the opportunity to come closer to the SBI rate.
March 9th, 2009, 04:25 PM
SBI on ATM expansion project
India's largest lender State Bank of India (SBI) has placed an order for the largest automated teller machine (ATM) expansion project in the country’s . After the expansion is complete, SBI’s total ATM network will have grown to nearly 12,000 installations. Late in 2008, SBI proposed the largest ATM bid ever in India for 4,000 ATMs and awarded the majority of the contract to Diebold.
As part of the contract Diebold, the global leader in integrated financial self-service delivery, is providing SBI with its full-function model D450 ATM, which is specially designed for the Indian market. "The D450 ATM has the smallest footprint compared to the other ATMs in the Indian industry. Adding to SBI’s current network, the D450 will feature Diebold’s Agilis® XV 91X software and a 15" touch-screen" a statement issued by Diebold said. The order also includes ATMs with fingerprint biometric features for identity verification.
The contract also includes ATM site preparation and managed services. Currently, Diebold provides managed services solutions for more than 3,500 of SBI’s ATMs across India. It also offers remote monitoring of the ATM network 24 hours a day, seven days a week.
The proposed sites are environmentally friendly and unique from a conventional ATM site. These sites will be designed for lower power consumption and maintenance costs, which will enhance operational efficiency. "With this project, Diebold is the leading provider of solutions in the ATM industry— including managed services. We will continue to provide solutions to address the specific needs of the Indian market," said Naresh Hosangady, Managing Director, Diebold India.
SBI had earlier announced plans to increase its ATM network to 25,000 by 2010. According to bankers most of the large banks in the west are unlikely to expand their ATM network.
March 10th, 2009, 09:51 AM
MetLife expands foothold in North
American life insurance giant MetLife on Monday said it has expanded its Indian presence by opening 20 new offices across the country’s northern region, which it sees as an important growth engine.
“MetLife now has an established network of 58 branches across 40 cities in the northern region,” MetLife India managing director Rajesh Relan said in a statement.
The insurer, a joint venture between MetLife International Holdings, The Jammu and Kashmir Bank, M Pallonji and Co and other private investors, is one of the fastest growing players in the segment in the country.
“Our country-wide branch expansion plans will bring us in close proximity to our customers. Northern region is an important market... the new offices will help our products to come within an easy reach of our customers,” Relan said.
The new branches are located in cities including Ajmer, Kapurthala, Jalandhar, Sangrur, Barnala, Bathinda, Panchkula, Faridkot, Pathankot, Hoshiarpur, Mohali, Ludhiana, Amritsar, Udaipur and Jodhpur.
The life insurance company, he said, has over 50,000 financial advisers—all of whom have gone through rigorous training to understand customer need and are equipped to provide need based financial solutions.
It has arrangements to sell its products through a network that includes Jammu and Kashmir Bank, Barclays and Axis Bank.
March 14th, 2009, 12:53 PM
IIFCL to lend Rs 10k cr to banks for infrastructure sector loans
Public sector infrastructure funding agency India Infrastructure Finance Co (IIFCL) will lend Rs 10,000 crore to banks for financing highways, ports and other projects being jointly executed by the government and private players.
Banks will get the funds at an interest rate of 7.85% and can charge up to 10.35% from infrastructure developers. IIFCL can lend up to 20% of the total project cost, but its exposure would be less than that of the lead bank. The institution has already raised Rs 7,370 crore through tax-free bonds. It will raise rest of the Rs 10,000 crore by next week, IIFCL chairman SS Kohli said.
“We are closing the bond issue at a rate of 6.5% (the returns investors would get). We will keep a margin of 1% and lend to banks at 7.85%. Banks can lend at not more than 10.35%. This would facilitate funding of infrastructure projects worth Rs 25,000 crore,” Mr Kohli said at a seminar organised in the Capital on Friday. The government has allowed IIFCL to raise Rs 40,000 crore through tax-free bonds to finance projects worth Rs 1 lakh crore, as part of the stimulus package for the economy.
The bond, which is guaranteed by the government and is to be repaid in five years, is being issued to high net worth individuals. Mr Kohli said no decision has been taken on bonds being sold to retail investors yet. IIFCL would soon sign an agreement for raising $250 million from RBI through its UK subsidiary for funding infrastructure projects, including Reliance Power’s Sasan power project and Tata Power’s ultra mega power project in Mundra.
“RBI will subscribe to the bonds issued by the IIFCL UK. The first tranche of $250 million will be raised today or tomorrow,” Mr Kohli said on Friday. The fund would be used to lend to infrastructure developers to import machines. IIFCL has cleared seven proposals out of nine it received for funding the project. “The seven projects include two metro rail projects in Delhi and Mumbai, and five power projects,” Mr Kohli added.
March 16th, 2009, 01:23 PM
IDBI Fortis Life to get Rs 250 cr from JV cos
IDBI Bank, Federal Bank and Fortis are set to infuse Rs 250 crore in their three-way insurance joint venture — IDBI Fortis Life Insurance.
The contribution of each of the three entities will be in proportion to their stakeholding in the venture. People familiar with the development said the capital infusion will help IDBI Fortis in meeting solvency requirements and expanding operations.
Currently, IDBI owns 48% equity while Federal Bank and Fortis own 26% equity each. Under current solvency norms, every insurer needs to maintain an excess of the value of his assets over the amount of his liabilities by an amount stipulated by the Irda.
When asked about the development, GV Nageswara Rao, MD and CEO, IDBI Fortis Life Insurance, told ET: "The branch expansion drive is going on, and we would require funds for this purpose. There will be some capital infusion, but, at this point of time, we cannot reveal more details," he said.
IDBI Fortis plans to set up 100 branches across the country by the end of next financial year, and aims to recruit around 1,500 people. At present, the insurance firm has 31 branches apart from about 1,100 branches of IDBI Bank and Federal Bank, through which it distributes its products.
IDBI Fortis launched its operations in March 2008 with an initial capital of Rs 200 crore. It has raised over Rs 250 crore of first year annual premiums and sold about 62,000 policies. Mr Rao said IDBI Fortis is looking to expand its operations even as market conditions are challenging.
"The global meltdown has highly impacted most of the economies of the world, but India is still better placed. Customers are becoming averse to equity investments, and we have seen their choice shifting in favour of fixed returns," he said.
March 18th, 2009, 01:14 PM
ICICI may spin off ATMs, sales points
The country’s second-largest lender, ICICI Bank, is looking at setting up a new entity to house its automated teller machines (ATMs) and point-of-sale (PoS) terminals, which accept credit and debit card payments. The bank has sought bids from banking technology companies and private equity players for participating in the proposed entity.
This is the first time that an Indian bank is planning to transfer its ATM and PoS assets to a separate company. ICICI Bank has the second-largest ATM network that has more than 4,000 machines, and the largest PoS network with over two lakh terminals.
According to sources, Visa, FSS, Total Systems Services, KKR-owned First Data Corporation, Blackstone-CMS joint venture, Venture Infotek and a few private equity investors have shown interest. Sources said there was a lot of interest in partnering ICICI Bank as payment is an area where many global companies are trying to get a foothold.
ICICI Bank did not respond to email and text messages from ET. “Banks should look at deals like this since ATM management is not really a core-banking activity. ICICI Bank could be looking at its existing ATMs because when it had scaled up its network (before 2000), outsourcing had not really caught on,” said Mani Mamallan, chief marketing officer, C-Edge, a joint venture between SBI and TCS. A separate unit, which specialises in installing and managing ATMs, will be able to deploy new machines at a much faster rate. Although India has over 35,000 ATMs, it is still way behind China, which has over 1.3 lakh machines.
Many banks today have an arrangement whereby ATMs are sourced from other companies, with banks paying a rent for the service. What ICICI is planning is very different: it intends to set up a new company and rope in other stakeholders.
State Bank of India, which owns the country’s largest ATM network, has a deal wherein 300 ATMs are outsourced from Tata Communications, with the bank paying a rent for every transaction. The bank has a similar deal for 200 ATMS with C-Edge. First Data has a partnership with StanChart in Asia for PoS terminals. State-owned banks such as Bank of India, United Bank and Dena Bank have outsourcing deals with Fidelity National Information Service.
From April, banks will have to allow customers access to their accounts through any ATM in India. Non-customer transaction costs are likely to be netted by banks among themselves.
ICICI Bank sources said it was exploring various avenues for ATM management in line with what other banks were already doing. Some of the other banks ET spoke to said they were awaiting responses that ICICI Bank’s proposal receives.
....RBI’s Indiapay aims to rival Visa, Mastercard
A possible participation by Visa in the ICICI venture would be interesting since Visa is a payment service provider in the country. Bankers feel Visa is looking at new avenues, with the Reserve Bank of India (RBI) planning to back ‘Indiapay’ — a network that aims to rival Visa and Mastercard.
Despite the slowdown, payment services have emerged as one of the sectors that’s generating interest among global players. TSYS, one of the world’s largest companies for outsourced payment services, has recently set up shop in India. The company has appointed Amit Sethi as managing director India and South Asia.
CMS Computers, in which Blackstone holds a stake, provides cash management services for banks. Venture Infotek is a pioneer in outsourcing credit card processing in.
March 25th, 2009, 09:59 AM
HDFC Bank most valued in pvt sector, beats ICICI
HDFC Bank has toppled ICICI Bank as the country's most valued private sector bank, after its shares surged over 6% on the Bombay Stock Exchange on Tuesday. State Bank of India continued to be the most valued bank in the country.
Till recently, ICICI Bank was the most valued bank in the country followed by SBI. But, as the share prices of ICICI Bank tumbled sharply since the global financial crisis affected the stock markets in September 2008, SBI became the most valued bank in the country.
During the melt down, the share price of HDFC Bank also fell, so it remained at the number three position. But, in the last couple of weeks, HDFC Bank's share prices rose sharply. This led to increase in its market capitalisation vis-`-vis ICICI Bank, whose share prices did not witness such a sharp recovery.
The share price of HDFC Bank on Tuesday increased by over 6% to close at Rs 940.50, its market capitalisation increased to Rs 40,002 crore. As against this, ICICI Bank's share price increased by 2.44% to close at Rs 355.10 on Tuesday, its market capitalisation went up to Rs 39,517 crore.
At the end of Tuesday's trading, the country's biggest lender State Bank of India's market cap increased to Rs 65,697 crore after its shares rose by 1.09% to close at Rs 1,034.65. The market capitalisation of Housing finance company HDFC Ltd increased to Rs 44501 crore on Tuesday.
However, in term of size of lending activities, ICICI Bank is still the second largest bank in the country after SBI.
April 16th, 2009, 10:47 AM
Credit Suisse to open second back office in India
Credit Suisse plans to set up its second back office in India by September and hire 350 staff by 2010 as it aims to reduce costs, the Swiss bank said on Wednesday.
The new office in Mumbai will focus on investment analysis, risk and analytics modelling, it said in a statement.
Credit Suisse's first India back office was opened in 2007 at Pune in western India and employs more than 1,600 people who provide information technology support for the bank's global operation.
An army of English-speaking engineers and cheaper wages has driven an outsourcing boom in India and pushed financial firms such as Goldman Sachs, UBS, JPMorgan and Deutsche Bank to open back offices in India.
April 17th, 2009, 02:23 PM
SBI wants to raise Rs 70k cr in five years
The country’s largest bank, State Bank of India, will need to raise Rs 60,000-70,000 crore over the next five years, a portion of which it intends to raise from the capital markets if the government permits, chairman OP Bhatt said on Wednesday.
“To be able to serve large Indian corporates that are going out across the world to do business or investments, we need far more capital than what we have now. If we do not raise our capital base, the prudential norms of the regulator will not allow us to serve some of India’s best corporates,” Mr Bhatt said while speaking at the launch of SBI Mutual Fund’s equity-based micro systematic investment plan. Under the micro SIP, investors can start with a subscription as low as Rs 100.
The bank had raised over Rs 16,000 crore as tier-1 capital in March last year through a rights issue. “We raised Rs 20,000 crore last year; we can’t raise any amount lesser than that. If the government permits us, we’ll be happy to raise money through another rights issue, subject to market conditions; otherwise we’ll have to issue bonds to raise money,” Mr Bhatt added.
In contrast to industry estimates of 19% growth in loan disbursals, SBI expects credit to grow 25% in the current fiscal, thanks to expanding branch network and retail base. The bank plans to open 1,000 more branches and reach at least 50,000 non-banked villages. The bank expects to log at least 30% rise in deposits in the current fiscal.
With regards to cutting prime lending rates, Mr Bhatt said: “We’ve had an excess of success in the fourth quarter of the previous year; the quarter witnessed large deposit flows to PSU banks and SBI was one of the largest benefactor of this trend,” he said, adding that at times the deposit growth was to the tune of Rs 1,000 crore a day.
“While we had deposits flowing in, lending was not really happening. It is at that point we came up with the idea to offer home, SME and warehoused agri-products loans at 8% and car loans at 10%. Now where’s the need to reduce PLR when you are getting loans so cheap,” he pointed out.
SBI claims to have disbursed Rs 1,350-crore in concessional home loans over the first 40 days of the scheme. According to Mr Bhatt, SBI will hold interest margins at around 3% despite lower interest rates.
April 19th, 2009, 10:48 AM
After car, home, SBI extends special agri loans till Sept
The country's largest lender, State Bank of India (SBI), on Saturday said it has extended the period of its concessional financing to the farmers against warehouse receipts by another five months to September 30.
The scheme was to expire on April 30, 2009. The announcement comes after the bank extended, last week, its special home and car loans scheme at 8 per cent and 10 per cent, respectively, for the first one year, till September 30, 2009.
The state-run lender had in February started offering loans at a concessional rate of eight per cent to farmers against cold storage and warehouse receipts, in a bid to save them from falling prey to distress sale of their farm produce.
"This initiative has proved to be tremendously popular. Encouraged by the overwhelming market response to its scheme, SBI has decided to extend the concessional interest facility of eight per cent per annum until September 30," the bank said in a statement.
The loan would be available at a fixed rate of eight per cent for a period of 12 months in respect of loans sanctioned and disbursed till the end of September, SBI said.
Further, the biggest lender to agriculture said the move, apart from benefiting the farmers, would also time the market for storage requirements of the expected bumper wheat crop.
May 1st, 2009, 12:44 PM
Sequoia to go ahead with $1-bn investments
Venture capital(VC) firm Sequoia Capital India has maintained that it is going ahead with an earlier announced investment plan of $1 billion in India as valuations have become reasonable, the firm’s managing director Mohit Bhatnagar told ET.
Mr Bhatnagar said the investment will be rolled over the next 3-4 years in sectors such as consumer retail, technology, financial services and energy in the country. “India has tremendous potential for venture capital returns and we are scouting for startups and mid-sized firms that are on the lookout for funds to execute expansion,” he said.
This comes at a time when most private equity and VC firms have shown reluctance in investing. Sequoia, one of the earliest VC firms to enter India, has funds worth $1.8 billion under management. It raised around $725 million last year, a part of which has already been invested in firms such as Cotton County and Satya Paul.
The firm, among the most active VC firms in the country, is also looking at expanding its operations and has opened an office Delhi to increase investments in northern India. “A third of our investments are in north India. With our new office in Delhi, we intend to tap more number of companies in the region now,” Mr Bhatnagar added.
May 3rd, 2009, 11:31 AM
PSBs to open atleast 15,300 ATMs in FY-10; SBI to take lead
With Reserve Bank easing norms on ATMs, public-sector banks (PSB) have chalked out massive expansion plans to open atleast 15,300 ATMs across the country by the end of this fiscal. Five leading state-owned banks, led by State Bank, will open 15,300 ATMs to facilitate retail customers, for whom the service has become free from April 1 this year.
State Bank Group, which runs the largest number of ATMs in the country, has plans to set up 13,400 more ATMs in the current fiscal taking the total number to 25,000 by end-fiscal, an SBI official said. "Customer retention, particularly in the retail segment, necessitates setting up of large number of ATMs. Presently, State Bank Group has 11,600 ATMs pan-India. We plan to more than double this number this fiscal," the official told PTI.
Recently, Reserve Bank had allowed banks to open offsite ATMs without its prior approval. The apex bank also permitted free usage of third party ATMs for customers from April 1. However, banks can charge each other Rs 18 per transaction for every third party ATM transaction.
While, small banks in private sector are likely to scale down their ATM expansion as state-ownd banks' large ATM network will now be available for their customers, PSBs are likely to go ahead with the expansion plans, the official said. "These include the comparatively low cost of setting up an ATM with that of a branch and the fact that more customers now prefer ATMs to perform cash-related transactions rather than approaching a branch," the official said.
Another leading state-owned bank, Union Bank of India has similar plans to expand its ATM network in the current fiscal. The bank aims to set up 600 more ATMs this year taking its total ATM network to 2,000. Its existing branch strength, now at around 2,510 is likely to expand by another 500 this year, UBI's General Manager, Personal Banking, S Govindan said. "Union Bank is looking at to expand the network of ATMs. Apart from other benefits, this would also help to enhance the visibility of the bank in Tier-II and Tier-III cities," Govindan said.
PSBs are keen to set up new ATMs in spite of the maintenance costs required to be incurred by banks but small private players may wait for other bigger banks to take the lead, he said.
Bank of Baroda, another leading Government-owned bank, has decided to open 500 ATMs in this fiscal. Presently, the bank has 1,200 ATMs across
the country. "We have plans to open 500 branches in this fiscal from the current 1,200. Similarly, the branch strength is also likely to increse by 170 from the current 3,000," BoB's General Manager, Nandan Srivastava said.
Bank of India's Chairman and Indian Banks' Associations' Chief, T S Narayanasami welcomed RBI's decision to make the third party ATM usage free for all saying that the move will attract more number of customers to ATMs. BoI currently have 500 ATMs and plans to grow this network by another 500 in 2009-10.
Agreeing to this view, Central Bank of India's Executive Director,Ramnath Pradeep said that the ATM usage is expected to rise significantly following the RBI decision to make the service free for all customers. The bank has 400 ATMs currently, which will go upto 700 by the end of this fiscal-year, Pradeep said. "ATMs have become very acceptable for all category of customers. We have 400 ATMs currently, which will go up to 700 by the end of this fiscal," Pradeep said. The bank has also decided to increase the branch-strength. It has 3,515 branchs as of now and has sought the regulatory approval to open 160 more branches this year, he said.
May 5th, 2009, 12:28 PM
Citibank launches preferred rupee checking account for NRIs
Global lender, Citi Bank on Tuesday announced the launch of preferred rupee checking account, a product aimed at its NRI clients.
The key features of the product include a dedicated priority service platform, superior foreign exchange rates on inward remittances and lower service charges on banking services, a release said.
The service also offers custom-designed privileges on some characteristic India-oriented requirements of NRIs, it said.
The product will be an account domiciled in India and denominated in Rupees under the aegis of Reserve Bank of India, the release said.
Customers will be able to remit money from a foreign country into this account, which can then be operated by their mandate holder in India, it said. "The rupee checking account is our flagship product for the NRIs. The account provides both transactional and lifestyle benefits," Citi India's Global Consumer Group, Country Business Manager, N Rajashekaran said.
Citibank had recently launched Citi Online Remit, a money transfer service to India that provides NRIs based in the US the facility to transfer funds to India. Citibank started its NRI business in US in 1985 and manages wealth needs of over 1.2 lakh clients in the country.
May 5th, 2009, 12:31 PM
Bank of Baroda pips Canara Bank to become third largest public sector bank
Bank of Baroda has pipped Canara Bank in terms of net profit and total business for fiscal 2008-09 to become third largest public sector player in India.
Mumbai-based BoB's net profit for 2008-09 stood at Rs 2,227 crore, about Rs 155 crore higher than that of Canara Bank in FY'09. Bangalore-based Canara Bank's net profit grew by 32 per cent to Rs 2,072 crore during the fiscal against Rs 1,565 crore in 2007-08.
At the same time, total business of BoB stood at Rs 3,36,383 crore at the end of fiscal 2008-09, about Rs 11,000 higher than its closest competitor in the same fiscal. Interestingly, Canara Bank could increase its business mix by 24 per cent to Rs 3,25,112 crore at the end of March 2009 against Rs 2,61,310 at the end of 2007-08.
BoB, which was fourth largest public sector lender at the end of March 2008, had a business mix of Rs 2,58,735 crore, about Rs 2,500 crore lower than the then third largest player in FY'08. The new leader aims to grow its total business by 23-25 per cent in the current fiscal, with its core fee-income expected to expand by 25 per cent. By that yardstick total business of the bank would increase to Rs 4,14,000-4,20,000 crore while Canara Bank aims to cross Rs 4,00,000 crore mark.
For the fourth quarter ended March 2009, BoB reported nearly three-fold growth in its net profit at Rs 752.69 crore on robust growth in net interest income and fee-based revenue. Total income stood at Rs 4,992.41 crore for the quarter ended March 31, 2009 against Rs 3,885.7 crore in the year-ago period. "Maintaining quality of assets and reducing dependence of expensive bulk deposits are key focus areas of the bank in year 2009-10. Also, growing our retail term deposits is also a priority," Bank of Baroda's Chairman and Managing Director M D Mallya had said while announcing the result.
Net Interest Income (NII) of the bank stood at Rs 5,123.41 crore, posting a growth rate of 31 per cent, while low-cost current and savings account deposits posted a growth rate of 20 per cent over the last year.
State Bank of India is the country's largest public sector bank followed by Punjab National Bank.
May 6th, 2009, 12:27 PM
ICICI Bank to open 580 new branches this year, but no new hiring
Top private lender ICICI Bank plans to open nearly 600 branches this year, but will not hire as part of the current workforce would be redeployed to manage the expanded network of 2,000 branches.
"We will set up 580 new branches this year ... one and half years ago we had 750 branches and one year from now, once we open these 580 branches, we will have 2,000 branches," ICICI Bank Managing Director and CEO Chanda Kochhar told PTI in an interview.
Kochhar, however, noted that the bank might not increase the headcount, currently at about 36,000, as it would be "re-skilling and re-training" some people in accordance with the needs of the expanded branch network.
Asked whether the employees could expect some kind of reward in the form of salary hike or other monetary benefits, Kochhar said, "Well, what we have done is (we have) already announced a moderate hike for the year. But, it's a moderate hike ... it's kind of moderate increase in salaries and that's about it."
Kochhar took over as ICICI Bank MD & CEO this month from her predecessor K V Kamath, who has become non-executive chairman.
May 9th, 2009, 09:50 AM
SBI plans to enhance marketshare
State Bank of India (SBI), which controls 17% of the country’s $45-billion inward remittances market, plans to enhance its marketshare significantly with the setting up of a centralised inward remittance cell (IRC) in Kolkata.
SBI chairman OP Bhatt, who launched the modern retail remittance processing cell on Friday, said the bank would step up its marketing strategy to achieve the goal.
As a group, SBI and its associate banks now corner nearly 25% of the inward remittance market. "SBI’s share should not be less than 50% of the country’s inward remittance market," Mr Bhatt said in his address to bank officials.
Incidentally, India is one of the top recipients of the $300 billion global remittance flow. The foreign inward remittances are received as financial messages from across the globe. These messages are now being processed centrally at IRC to enable customers withdraw money within hours of receipt of the message.
Going forward, IRC is expected to handle 2,000 remittances daily on an average. At present, this cell handles 1,300 messages. SBI has 375 branches for forex dealing and these branches have now been linked to IRC.
The cell has the capacity to handle remittances to customers with other banks by means of modern fund transfer systems like NEFT and RTGS. "This is an endeavour to improve customer service further. As the banker to every Indian, quality of service should become the core competence of SBI." In reference to IRC, he said: "We now have best technology available with us. Now, we need to improve our mindset and attitude while dealing with customers."
Incidentally, the decision to locate IRC in Kolkata was not a smooth one. SBI’s employees and officers’ associations played a key role in securing this deal as a bargain against SBI’s move to relocating foreign exchange dealing operation to Mumbai from Kolkata.
SBI chairman OP Bhatt said the bank would review its interest rate again by the month-end. "Our interest rates are the lowest in all segments, but we will still review the rates as the general trend is softening of interest rates," Mr Bhatt observed. The chairman said SBI would look to raise Rs 20,000 crore in this fiscal. Rights issue of shares would be a preferred option for fund mobilisation, Mr Bhatt indicated.
May 11th, 2009, 12:09 PM
HDFC Standard Life plans capital infusion of Rs 350 cr in FY10
HDFC Standard Life, on Friday said it plans to infuse around Rs 350 crore for its expansion this fiscal.
"Last fiscal, we infused around Rs 525 crore. This year too there will be capital addition but not as it was during the previous year. We plan to infuse around Rs 350 crore of capital this fiscal," HDFC Standard Life's Executive Director, Principal Officer and Executive Officer, Paresh Parasnis, said.
The infusion of the capital would be spread over the year, he said. Currently, HDFC Standard Life, a joint-venture between mortgage lender HDFC and UK-based Standard Life Plc has a paid-up capital of Rs 1,796 crore.
The company would go at a slower pace in terms of expansion and do a need-based expansion this fiscal, he said. "We would focus more on improving our productivity and efficiency."
The company's generated a total premium income of Rs 5,564.69 crore in FY 09 as against Rs 4,858.56 crore in FY 08, registering a year-on-year growth of 15 per cent. Its renewal premium also saw a growth of 34 per cent at Rs 2,913.58 crore for the fiscal as compared to Rs 2,173.19 crore in the previous year.
May 13th, 2009, 03:10 PM
ICICI Prudential Life set to hire 3,000 in next two months
The country's largest private sector life insurer, ICICI Prudential Life, today said it will hire 3,000 people in the next two months, debunking reports of any reduction in workforce.
"We are a growing organisation, and we have already started hiring the next round of 3,000 people over the next two months, the process for which is in full swing," insurance company's senior vice president and head-marketing Sujit Ganguli told reporters.
The employee strength of the insurer stood at 25,000 at the end of March 2009.
The insurance company, which has a network of over 2,000 branches, has already rationalised its branch network for optimal utilisation of resources, he added.
"We have combined some of our branches. We have not vacated from any location (cities, towns and tehsils/taluqas) where we were present and have ensured to remain in close proximity to all our customers," he said.
The company added 40 branches to its network in the second half of 2008-09 notwithstanding branch rationalisation exercise, he said, adding that the number of branches have gone up to 2,009 as on March 31, 2009.
Net of opening new branches and rationalising, the number of branches has actually increased from 2,055 in September 30, 2008 to 2,099 as on March 31, 2009, he said.
May 15th, 2009, 12:28 PM
Dena bank targetting business of 1.26 lakh crore in 3 years
Public sector Dena Bank aims to touch Rs 1,26,000 crores of business in three years time and open 400 new branches by this period, a senior official said.
The bank's current year business target was Rs 85,000 crore against last year's Rs 72,000 crore, D L Rawal, the banks's Chairman and Managing Director, told reporters here last night.
Dena bank would be adding 100 new branches this year, including 10 branches in Chennai region and 3 in Kerala at Cheratlla, Muvattupuzha and Angamally. It has opened 4 Retail Asset branch and would be opening 8 more, including one at Chennai. There were also plans to open 3 Corporate business branches one each in New Delhi, Kolkatta and Chennai.
It presently has 1186 branches spread across 24 states from Kutch to Assam and from Srinagar to Thiruvananthapuram and 4 union territories. Kerala has presently 10 branches and a new branch was opened today.
With the opening of more branches, the bank would be increasing its present staff stregth from 9900 to add another 1290 clerical staff and 550 officers.
"The growth this year is likely to be around 20-22 per cent against last year's 26 per cent. The bank would focus on housing, car, and educational loans," he said.
May 19th, 2009, 01:57 PM
SBI to push for mergers of associate banks
After merging State Bank of Saurashtra, India's largest lender State Bank of India might soon start the process of integrating its remaining associates, beginning with two large ones -- State Bank of Patiala and State Bank of Hyderabad.
According to the roadmap set by State Bank, all its associates will merge with the parent entity "as quickly as possible" to make SBI one of the top 25-30 banks in the world.
With the return of the Congress-led UPA to power, without the crutches of the Left and other difficult allies, SBI expects banking reforms to move forward, a top SBI source told reporters.
"The merger-process of State Bank of Saurashtra has already happened and the roadmap is to complete the consolidation process in the shortest possible period," the source said, adding that it could begin with State Bank of Patiala and State Bank of Hyderabad.
Once the new Government extends permission for mergers, the process could happen in the immediate future, the source said. "It will be more feasible now," the source said.
The Patiala and Hyderabad subsidiaries, which are wholly owned by the parent bank, had clocked impressive results in the last financial year. These two subsidiaries are quite large and SBH is now virtually of the size of Canara Bank.
May 20th, 2009, 02:34 PM
Tata group re-enters the home finance biz with Tata Capital Housing Finance
After a gap of six years, the Tata group has re-entered the home finance business. Tata Capital Housing Finance a wholly owned subsidiary of Tata Capital has recieved the certificate of registeration from the National Housing Bank to commence business as a housing finance company.
The new company plans to offer both fixed and floating interest rates. Praveen P Kadle MD, Tata Capital said that interest rate on the loans would be competitive and will meet the benchmarks of the other players in the industry.
The company is mainly targeting Tier II and Tier III cities and will target both retail and commercial loans. In 2003 Tata Finance sold its entire stake in Tata Homefinance to IDBI. The new company is also open to inorganic growth. "If valuations make sense, we will look at inorganic growth," said Mr Kadle. It plans to set up around 35 branches initially.
May 23rd, 2009, 01:31 PM
Opening accounts to be made easier for poor
The Reserve Bank of India (RBI) has urged the government to tweak the Money Laundering Act (MLA), making it easier for people without access to organised credit to open no-frills, or plain savings bank accounts.
The regulator has recommended that an affidavit and a photo should suffice for the opening of such accounts.
The MLA subsumes the Know Your Customer (KYC) norms that banks have to follow while opening accounts for customers, and hence the suggestion by RBI. The KYC norms require a customer to give proof of identify or an introduction from an account holder of the branch to open a no-frills account. The banking regulator is of the opinion that new
customers may not always find it easy to provide proof of address and letters of introduction.
However, for the implementation of RBI’s suggestion of an affidavit and a photo being sufficient to meet KYC norms, the MLA will have to be amended. This was indicated by Usha Thorat, deputy governor of RBI and chairperson of high level committee on Lead Bank Scheme.
The lead bank scheme, which has come up for review after 40 years, provides a forum for banks and state governments to work in unison for achieving the public policy objectives of inclusive growth. The committee is of the view that the scheme will be an enabler in achieving financial inclusion and improve the flow of credit to the priority sector, and help in monitoring the subsidy-linked government sponsored schemes.
The committee has also suggested that a banking outlet be made available in each village with a population of over 2000. It feels that the service may not necessarily be in the form of a branch, but could be provided through alternate channels. This, the committess says, should be achieved before March 2011. It has also suggested that
every lead bank should open a financial literacy and credit counselling centre in every district where it has a lead
To make the lead bank scheme more workable, the committee has suggested that state government should ensure roads and digital connectivity to all centres where banking penetration is required.
Further, the state government should try to reduce the use of cash and cheques and take initiatives to make their bulk payments like salaries and pensions through mechanisms such as electronic clearing system (ECS). This will make banking more cost and operationally-efficient.
Currently, the government is making salary payment under the National Rural Employment Guarantee Act directly through ECS route, which requires the employee to open a bank account.
The committee is also of the view that state government should participate in recovery drives. Wilful defaults and misuse of loans should be treated as an economic offence. The committee has also urged private banks to actively involve themselves in the lead bank scheme and extend their service to underbanked and unbanked areas.
May 23rd, 2009, 01:33 PM
PNB registers impressive growth in Kerala
KOZHIKODE: Punjab National Bank (PNB) has recorded an impressive growth of 24 per cent in its total business in Kerala during the previous fiscal ending March 31 2009, a top bank official said.
"The bank's total business stood at Rs 3,759 crore compared to previous year's Rs 3,027 crore," PNB General Manager, Kerala Circle, Krishnan Ramiah told reporters here last night.
While deposits increased to Rs 2,120 crore, registering 27.61 per cent year-on-year growth, advances stood at Rs 1,639 crore as against Rs 1,366 crore during the previous year, he said.
Priority sector advances went up from Rs 863 crore in March 2008 to Rs 1,040 crore in March 2009 and agriculture credit registered an impressive year-on-year growth of 74 per cent amounting to Rs 295 crore, he said.
The focus was primarily on retail business, which resulted in an encouraging customer-driven growth, he said.
A sum of Rs 467 crore was disbursed as housing loan, which was 48 per cent of the retail credit, he said, adding Rs 96 crore was given as students' loan benefitting a total of 6,900 students.
June 8th, 2009, 04:42 PM
SBI to double number of branches selling gold coins to 1,100
Country's largest lender State Bank of India will double the number of branches for retail sales of gold coins to 1,100 in the current fiscal to reach out to all important centres of the country.
SBI had increased the number of branches for retail sale of gold coins to 518 in 2009 from 250 in 2008. "The scheme will be extended to cover all important centres of the country in 2009-10 by increasing the number of branches selling glod coins to about 1,100," SBI said in its latest annual report.
SBI said it has re-launched the gold deposit scheme at 50 branches to mobilise the precious metal from domestic market for deployment as metal loans to jewellers.
SBI also undertakes supply of customised gold coins to corporates. It is also in the process of setting up a dedicated bullion branch in Mumbai to undertake bullion business in a focused manner, the report said.
According to World Gold Council, India's gold imports fell 14 per cent to 660.2 tonnes in 2008 due to higher prices of the metal. The gold offtake in the first three months of the current year was also slowed due to subdued consumer sentiment.
June 10th, 2009, 12:01 PM
SBI to hire 13,000 staff during current fiscal
The country's largest lender, State Bank of India, plans to recruit 13,000 persons at various levels during the current fiscal. "During 2008-09, the bank absorbed 33,703 new employees and this year we have plans to induct 13,000 into the SBI system," a top official of the bank said.
The new recruits will be deployed across various businesses with objective to drive productivity, he said. There is also need to groom leaders for the future at all levels, the official added. It is to be noted the bank last fiscal recruited 20,000 clerks across the country.
SBI is currently in the process of recruiting officers, marketing and recovery (Rural), and technical officers (farm sector). Both the jobs, though contractual in nature, will provide employment opportunity to about 481 persons.
According to an initial estimate public sector banks are set to hire 30,000 personnel during 2009-10. "As per the preliminary estimates, public sector banks are expected to hire over 30,000 people during 2009-10," Institute of Banking Personnel Selection (IBPS) Director M Balachandran said. Thus, SBI alone would hire close of 50 per cent of the total estimated number.
July 15th, 2009, 08:52 PM
Banks net Rs 42.7K cr profit in 2008-09
Indian banking has set an example by posting a robust profit of more than Rs 42,700 crore after accounting for taxes during the global financial meltdown in 2008-09. According to finance ministry data, all public sector banks and 21 private banks have posted an aggregate post-tax profit of Rs 42,763 crore for the year 2008-09.
The state-run SBI, also the country’s largest bank, had posted the maximum profit of Rs 8,483 crore, followed by the largest private sector bank ICICI at Rs 3,299 crore. The other banks which did well include Punjab National Bank which earned Rs 2,767 crore and Bank of India at Rs 2,673 crore. Canara Bank made profit of Rs 2,057 crore.
PSU banks also paid big dividends, amounting to over Rs 7,000 crore during this period. SBI again was the number one with dividend payout of Rs 2,154 crore, followed by PNB with Rs 737 crore. While Bank of India paid Rs 492 crore as dividend, Canara Bank and Bank of Baroda each paid Rs 384 crore.
Earlier, when results for the first quarter advance (direct) tax (April-June 2009) had come, SBI had posted a handsome growth in its profit while depositing Rs 1,068 crore in the tax kitty. The profitability of state-run SBI had shown an increase by more than 61% as against Rs 663 crore it had paid in the same period last year when the economy was growing at a rate of 9%.
The results of advance tax payments for Q1 had revealed that among the top 25 companies, at least 10 were from the banking sector and each of them had paid between Rs 100 crore and Rs 1,000 crore for April-June 2009 period.
July 18th, 2009, 04:50 PM
Banks face fines for ATM errors
Banks will now have to pay accountholders a compensation of Rs 100 per day for every day of delay in reversing a failed ATM transaction. The Reserve Bank of India (RBI) has imposed stringent penalties on banks who fail to reverse a transaction where cash is not dispensed by the ATM but the customer’s account gets debited within 12 days.
In a circular issued on Friday, RBI has said banks must re-credit such customers’ accounts within 12 working days from the date of receipt of the complaint.
The circular is in response to complaints from customers who had to put up with delays in getting back money erroneously debited during failed ATM transactions. Besides imposing the stiff penalty, the central bank also made it clear that this amount needs to be credited to the customer’s account automatically on the day of the re-credit without the customer having to make a claim.
In case the delay is because of a third-party bank ATM through which the customer has transacted, the card-issuing bank must still pay the penalty to the customer. However, it will recover this amount from the bank that owns the ATM. Similarly, if a non-bank network operator is the reason behind the delay, the bank will make the payment and recover the penalty from the operator.
Furthermore, the RBI has instructed banks to extend the scope of concurrent audit to cover cases of such delays. Banks are now also required to place a quarterly review of ATM transactions to its board of directors, indicating the quantum of penalties paid, reasons for the same, and the remedial action taken to prevent the recurrence of such cases. A copy will have to be forwarded to the central bank.
This apart, the Reserve Bank made a critical note of different banks setting different cutoff limits for permitting cash withdrawals from/for other bank customers.
August 5th, 2009, 06:35 PM
Barclays Global Retail and Commercial Bank (GRCB) India, unveiled an exclusive offering from its Barclaycard division, the Platinum Credit Card. This premier international lifestyle card comes with special luxury offerings across travel, hospitality, world class brands, adventure sports and an enriching rewards programme. Privileged cardholders will get more as they spend at every step which is an unmatched proposition both in terms of benefits and experience for these customers.
Globally, Barclaycard, a division of Barclays GRCB, is a leading global payment business which understands the needs of both purchasers and sellers. It enables retailers and merchants to accept cards, helps customers make payments as well as extends credit to consumers. Today, Barclaycard has over 10 million retail customers in the UK and now a rapidly expanding global cards and lending business with 8.8m cards in issue outside of the UK and operations in over fifty countries and four continents.
Speaking about the new offering, Ram Gopal, Interim Managing Director, India, Barclays GRCB said, ‘‘At Barclays, the customer is at the forefront of everything we do. Globally, our Barclaycard Platinum offering has attracted customers who enjoy the finest things in life. We expect this to be true in India as well with today’s discerning Indian customer demanding nothing but the best. It is this very same level of sophistication that we seek to provide customers with this offering. Barclays is committed to meeting and exceeding the expectations of customers around the country and the geographies within which it operates.”
As first impressions are critical, this card presents a host of ‘Platinum Privileges Welcome’ offerings which are unmatched. Starting with a classic Emporio Armani watch and cufflinks, there are a host of offerings like complimentary golf packages at two renowned golf courses in India and six golf courses internationally and access to golf courses at fabulous rates for both avid golfers and aspirants. Art connoisseurs can enjoy a complete ‘Art Solution’ programme with an original reprint from a noted senior artist. Finally, for the adventure sports enthusiasts, the package includes scuba diving advisory, a special initiative with Barracuda Diving India, offering a full range of PADI certification dive courses
To enjoy those special occasions in life and an ultimate fine dining experience, Barclaycard Platinum has partnered with one of the most elite hotel brands – ITC WelcomGroup – 5 Star Luxury Hotels in India to offer ‘Platinum Pleasures Celebrations’ – for those special moments.
Through ‘Platinum Pleasures Concierge’ cardholders have access to a dedicated team of personal assistants, who work round-the-clock to fulfil your request within no time.. From a table reservation at some of the finest restaurants to a limousine at your door steps, your personal service is just a phone call away.
The exclusive ‘Platinum Prize Rewards’ incentive programme promises the customer value with each card transaction. This incentive programme goes further than the existing rewards programmes and not only rewards customers for each purchase but presents customers with attractive gifts as the customer reaches predetermined spend milestones. The customer gets “more” than just rewards as he uses his Barclaycard Platinum. These gifts are ranging from dinners, gifts from premium Lifestyle Brands to weekend getaways as milestone spends are achieved.
“The Barclaycard Platinum complements our existing suite of card offerings in the country. We are sure that customers will not only find the offering convenient and rewarding, but also unique in an already crowded space. The Barclaycard Platinum has been created to give our customers an experience which is truly relevant to their needs and aspirations. The card’s distinctive features and attractive benefits will help us build and nurture long lasting relationships with our existing and potential customer base,” added Ram Gopal.
The privileged cardholders can now be a part of the Barclays Premier Banking experience which is free for the first three months. This will include financial advisory services through a personalized relationship manager, special pricing for e-filing tax returns and other select add–on services. The card is powered by Visa.
Barclays GRCB business has built a strong franchise in India over the past two and a half years with over 900,000 clients and customers. Barclays continues to be committed to India through its six Barclays entities including Global Retail and Commercial Banking, Barclays Capital, Barclays Wealth and specialist technology and BPO centres of excellence. India is one of the leading markets for Barclays Bank Plc.
September 13th, 2009, 08:38 AM
MANGALORE: India Post, one of the best instruments of financial inclusion, is mulling a foray into the banking sector in the next five to 10 years, says Vasumitra, postmaster general (business development, marketing and technology), South Karnataka Region, Bangalore.
Talking to STOI, Vasumitra said India Post has a deposit of Rs 5.5 lakh crore, much more than the deposits of all nationalized banks put together. "The process will commence as soon as consultants are finalized. This exercise will take six to eight months," he said. India Post, which has more than 1.5 lakh post offices in the country, has a savings bank account holder base of about 21 crore. "Only post offices have the power to reach the remotest corner of the country to make financial inclusion a reality," he said. India Post has intimated the Centre on this ambitious plan in its five-year Plan. "After getting the feasibility study report, a road map will be drawn," he added.
Access accounts from any corner
As a precursor to this exercise, the Core Banking Solution (CBS) will be adopted by the department at select POs in the country soon, which will enable customers access accounts from any post office branch in the country. Accenture will be the technology partner. The banking consultant will be finalized by next year. The plan is to put 4,000 POs under CBS by the end of 11th Five Year Plan said Vasumitra.
"Even if we do not get into banking, CBS will help in personal banking and ATMs as we already have SB accounts," he noted.
Source: TOI (http://timesofindia.indiatimes.com/news/city/bangalore/Soon-you-can-bank-at-the-nearest-PO/articleshow/5004850.cms)
The official said that the Postal Life Insurance was doing well in the market as it provided bonus rates that were higher than those provided by other players. It had launched rural postal insurance and branched off into accidental and health insurance schemes, following a tie-up with The Oriental Insurance Company Ltd, he said.
Source: The Hindu (http://www.hindu.com/2009/09/13/stories/2009091358830300.htm)
September 17th, 2009, 12:55 PM
Talking to STOI, Vasumitra said India Post has a deposit of Rs 5.5 lakh crore, much more than the deposits of all nationalized banks put together
Deposits of Nationalized banks- 13 Lakh Crore.
but still it would be doing gr8 job of providing services to rural India where banks have relatively limited network.
October 23rd, 2009, 11:15 AM
One Question to people,
In US , for every $ spent using credit card, you get 1 reward point and to redeem the reward points, it is almost 10% worth of amount you spent on credit card.
Consider the scenario of HDFC bank, where for which for every 200 Rs, you get one reward point, and to redeem points you need atleast 1000 points for a 500 Rs Reward.
so ineffect if you are spending 2 lakh rs, you get a 500 Rs reward, where is 10% and where is 0025%.
I think it is injustice to customers in INDIA. If we have raise this to RBI , what is channel we have to go any idea.
Though personally i am also victim of this, but when i consider such a injustice to this level, it should be worth to raise a point.
February 26th, 2010, 08:13 PM
FM resurrects banking foray dream of Ambani, Birla, others (http://budget.business-standard.com/news.php?id=&bs_autono=87031)
Press Trust of India / New Delhi February 26, 2010, 17:26 IST
Industrial houses like Tatas, Birlas and Anil Ambani-led Reliance group today got a shot in the arm as Finance Minister Pranab Mukherjee today made it easier for private sector entities' to enter the banking sector.
"This move will potentially open exciting new avenues of growth for Reliance Capital in the future. We await further details and guidelines," Reliance Capital CEO Sam Ghosh said on Mukherjee's proposal on banking licences to private entities and non-banking financial companies.
Delivering his Budget speech in the Parliament, Mukherjee announced that RBI was considering to give banking licences to some private sector players and NBFCs could also be considered for the same.
Besides Reliance Anil Dhirubhai Ambani Group, many other private sector groups and NBFCs, such as Aditya Birla Group, Tata group arm Tata Capital, Malvinder Singh-led Religare group and Muthoot Group, have been eyeing a banking licence and many such entities welcomed today\'s announcement.
Aditya Birla Group Chairman Kumar Mangalam Birla said: "This has come as a pleasant surprise... We would very much want to become a bank."
At the same time, the country's largest private sector lender ICICI Bank's CEO and MD Chanda Kochhar said that banking was "a very complex business" and it needed to be seen how RBI formulates the entire procedure for giving additional licenses.
For Anil Ambani group in particular, entering the banking space has been a long-standing dream and the same has been stated quite a few times by the group Chairman and other officials of the group.
"We welcome the announcement that the RBI is considering the grant of banking licenses to new private players and NBFCs," said Ghosh of Reliance Capital, whose share price today soared by over eight per cent.
At the beginning of this year, Ghosh had said the group\'s foremost hope for the new year would be change in regulatory framework to allow new private players in banking sector.
Religare Enterprises chief economist Jay Shankar said, "It has been a long time since the NBFCs have been demanding banking licence. This is a positive move and it will augur positively for the banking sector as well."
"This is a very positive step that will accelerate the mobilisation of resources for transformational growth in infrastructure and other productive sectors of the Indian economy," Ghosh said after Mukherjee\'s budget speech.
Muthoot Capital Services also welcomed the announcement and said it would decide on its action plans after the RBI guidelines come out.
"Indian banking system has emerged unscathed from the crisis. We need to ensure that the banking system grows in size and sophistication to meet the needs of a modern economy," Mukherjee said.
"Besides, there is a need to extend the geographic coverage of banks and improve access to banking services. In this context, I am happy to inform the Honourable Members that the RBI is considering giving some additional banking licences to private sector players," he added.
March 25th, 2010, 11:54 AM
The new method of interest calculation will earn higher returns.
Come April and saving bank account holders will have a reason to cheer. The Reserve Bank of India [ Get Quote ] has asked banks to start calculating interest on savings account on a daily basis, starting April 1.
At present banks compute interest on the lowest available balance in the account, between the 10th and the last date of any month. And the rate of interest on a savings bank account is 3.5 per cent annually. If one withdraws a certain amount from his/her account on the last day of a month, the interest on that amount is lost for the entire month.
Also, a deposit made during this period would not be counted, as higher balance does not play any role in this calculation. This often leads to a position where the interest earned is extremely low, even if an individual maintains a high balance in his savings account.
Therefore, the new daily balance method will yield a better rate of return for individuals. Here's how
Impact Of Change: Once this norm comes into effect, the balance at the end of each day would be utilised for the calculating the final interest received by the account holder. This is called the daily balance method. The rate of interest, however, remains 3.5 per cent.
For instance, an individual who earns Rs 50,000, which is credited to his account on the first of every month. Assume the existing balance in the account at the start of the month was zero. From the salary received, he withdraws Rs 25,000 for various household expenses on the 5th of the month. So, the available balance on the 10th of the month will be Rs 25,000. Assuming there is no regular payment to the account but a withdrawal of Rs 10,000 is likely on the 20th of the month for some expense that may arise.
According to the present norm of calculating interest for savings account The balance on the 10th of the month is Rs 25,000. There is a reduction in the account balance by Rs 10,000 by the 20th of the month. Hence, the balance used for calculating interest is Rs 15,000 and the interest for the month will be Rs 44.
By the new daily balance method, there will be a minute look at the changes that have taken place and hence there will be a different method for the calculation. Let's assume a month of 30 days, there will be interest paid on Rs 50,000 for five days (1st to 5th of the month), then on Rs 25,000 for 15 days (5th to the 20th of the month) and lastly, on Rs 15,000 for 10 days (20th to the 30th of the month). Therefore, the total interest earned on various available balances will amount to Rs 75, higher than what is earned as per the present norm.
Now consider the same case, where instead of a withdrawal towards the end of the month, there is a deposit of Rs 15,000 on the 25th of the month due to interest received on a fixed deposit. If we go by the current norms, there will be no change in the interest, that is the interest earned will be around Rs 44. The reason: The deposit does not impact the lowest balance figure between the 10th and the end of the month so the total interest received stands at Rs 43.75. The daily interest method will compute interest on Rs 50,000 for 5 days, Rs 25,000 for 15 days, Rs 15,000 for 5 days (20th to 25th of the month) and then Rs 30,000 for 5 days (25th to 30th of the month, as the deposit was made on the 25th). So, in this case, the total interest earned will be Rs 82 for the month, almost double of what is earned by the old method.
This entire working shows that a savings account holder stands to benefit directly from the new daily balance method because returns will be earned on the amount remaining in the savings bank account. But more importantly, the above examples show that there is a clear way in which the individual can conduct their financial activities without worrying too much about the consequences. The account holder need not worry about the date of fund deposition or withdrawal. They can concentrate on better use of their funds so that they are able to get higher returns.
All this reduces the complications in the bank dealings and at the same time provides a fair value for the individual. This will push up the overall return of the funds and they can go forward in their activities in a confident manner.
The writer is a certified financial planner
June 7th, 2010, 05:37 AM
INDIAN GOVERNMENT INFUSES RS 1,500 CR INTO 4 BANKS
NEW DELHI, June 6 (NNN-PTI) -- The government has infused Rs 1,500 crore into four public sector banks, including UCO Bank and Central Bank of India, as part of their recapitalisation package. (One Crore: ten million)
Of the total, Vijaya Bank got Rs 700 crore, UCO Bank got Rs 300 crore, Central Bank of India and United Bank of India received Rs 250 crore each, sources said. The letter to this effect was issued by the government on June 2.
The government has instructed to issue perpetual non-cumulative preference shares (PNCPS) in favour of the President, the recently listed United Bank of India said in a statement. Accordingly, the bank has issued 25,000 PNCPS of Rs 1 lakh each on June 4 in the name of the President, it added.http://namnewsnetwork.org/v2/read.php?id=122823
June 9th, 2010, 09:48 PM
The insurance sector has opened up for private insurance companies with the enactment of IRDA Act, 1999. A large number of companies are competing under both life and general Insurance. The FDI cap/equity in this sector is 26% and the proposals have to be cleared by Insurance Regulatory and Development Authority (IRDA) established to protect the interest of holder of Insurance policy and act as a regulator and facilitator in the industry.
July 9th, 2010, 06:23 AM
L&T Infra gets infrastructure finance company status 2010-07-08 16:50:00
Last Updated: 2010-07-08 17:12:44
Larsen and Toubro Infrastructure Finance Company (L&T Infra) Thursday said the Reserve Bank of India (RBI) has accorded it the status of a 'infrastructure finance company'.
This will help L&T Infra, a subsidiary of engineering and construction major Larsen and Toubro (L&T), to mobilise funds at cheaper rates and provide more flexibility in its lending to infrastructure projects.
'Larsen & Toubro Infrastructure Finance Company has received the status of 'infrastructure finance company' from the Reserve Bank of India within the overall classification of non-banking finance company (NBFC),' said the company in a regulatory statement.
The RBI has carved out a separate segment for financing of infrastructure projects from the NBFC group to remove the lending limits applicable to the latter type of institutions.
July 9th, 2010, 01:09 PM
i don't know if it is posted before but it is a must see video.
July 10th, 2010, 02:58 AM
ICICI Bank raises $500 m via bonds issue
The country's largest private sector lender ICICI Bank today said it has raised $500 million through an issue of bonds in the international market.
Low rates should benefit old home loan customers too: RBI
The bank has priced the five-and-a-half year bonds at 275 basis points over five-year US treasuries, ICICI Bank said in a filing to the Bombay Stock Exchange.
ICICI Bank sold the bonds through its Hong Kong branch.
Earlier this week, rating agency Moody's had assigned a Baa2 rating to the dollar-denominated bonds, issued by the bank through its Hong Kong branch.
"The rating reflects the bank's comfortable liquidity position, strong capitalisation levels, as well as its satisfactory recurring profitability driven by robust fee income," Moody's had said.
Shares of ICICI Bank were trading at Rs 868.25, up 0.71 per cent in the afternoon trade on the BSE.
October 7th, 2010, 12:18 PM
Great news! There are a plethora of activities going on with banking sectors. With foreign investment making its easy way into the Indian market, the banking sector has grabbed the opportunity to provide an array of lucrative financial options. Retail and stock market are the most targeted areas for investment. Introduction of new regulations through the budget, enabling NRIs and other foreign investors to the Indian market has played another important role. This has in-turn spiraled the banks and other financial services company (http://www.guptaequities.com/) to introduce novel investment options. For more news and updates you can follow GEPL which is known for regularly providing updates on stock markets at http://twitter.com/geplindia
October 17th, 2010, 04:24 AM
India’s new tax code 'fixes' NRIs:banana:
By GOPAL SUTAR | ARAB NEWS
Published: Oct 16, 2010 23:19 Updated: Oct 16, 2010 23:19
BANGALORE: India’s New Direct Tax Code (DTC) described as generous to residents unfortunately seeks to extract a mouthful from millions of non-resident Indians (NRIs). It is good news that the government is all set to replace the age-old Income Tax Act of 1961 and bring far reaching changes in the tax structure with an aim to tax those citizens in lower income brackets as little as possible, bring the growing number of rich people in the tax net and prevent tax evasion in the notoriously corrupt system.
With the possibility of archaic rules getting replaced with new ones from 2011-2012, emerging India seems to have welcomed the path-breaking initiative taken by the central government. However, scores of NRIs are disappointed and are sure to seek changes in the proposed laws that affect them negatively. For example, under the DTC, NRIs staying in India for more than 59 days in a year and 365 days or more over a period of four years prior to the financial year will be considered residents and are therefore liable to be taxed on their global income. Currently they can stay in India up to 181 days in a year and still have no tax liability on the income earned outside India.
Such NRIs typically do not have citizenship of any other country and this is particularly true with those living in the Gulf countries where citizenship is extremely difficult to get. Most of the companies or employers send their employees on two to three-month vacation period albeit once in two or three years. Some NRIs prolong their stay because of medical, social or business reasons.
Whatever the reasons, what the DTC implies is henceforth NRIs must count their days whenever they visit India. The proposed 59-day stay restriction to save their hard earned money from being taxed has put them in fix. The message is clear: “If you are an NRI, you need to think twice in case you wish to stay in your home country for too long!” :cheers:
November 2nd, 2010, 05:09 AM
In India, new wealth brings a rise in giving
By Emily Wax
Monday, November 1, 2010
MUMBAI - The Malkani family made its fortune selling plane tickets and tour packages to India's fast-expanding middle class, building one of the country's first online travel agencies.
Now the Malkanis are among a growing number of successful Indian entrepreneurs blazing another trail: charitable giving. :)
"Earlier, if an Indian traveled, it was so rare that 25 people would see them off at the airport, garland them with flowers and print their picture in the newspaper," said Anjal Malkani, whose husband helped her family start the business. "That has completely changed in India, and we've been so blessed in our lives to benefit. We wanted to give back."
As India's wealth continues to expand, a growing number of millionaires here are finding ways to do more for the poor :banana:, especially as cash-strapped foreign donors, including the United States, curtail aid.
The philanthropic mood extends to some of India's biggest corporations, many of them IT companies at the forefront of India's boom.
India has a long tradition of giving, and all major religions here - Hinduism, Islam and Buddhism - see charity as a cornerstone of a noble, happy life. Wealthy families have long built wells and schools in their native villages, and even the poorest Indians leave a rupee coin at a temple or mosque.
But organized, large-scale giving by wealthy Indians and corporations has only recently become common as India's economy soars ahead.
"Old money really looked at alleviating poverty and community development - largely at factory sites - by providing services and facilities to their workers," said Priya Viswanath, a philanthropy expert. "New money giving is really about empowerment."
The number of Indian billionaires grew from 27 in 2009 to 52 this year, :smug: according to a report by Bain, a global consulting firm. Half of the top 25 Asian billionaires listed in a recent Forbes magazine survey were Indian.
During a visit to China last month, Bill Gates and Warren Buffett urged Asia's billionaires to give more. India's growing pool of super rich would be their next target, they said.
Where to invest?
Indian billionaires give more than billionaires in China but less than those in developed countries, including the United States, according to the Bain report.
The U.S. Agency for International Development gives India $131 million per year to fund girls' education, farming programs and solar energy projects. But those funds have long been a source of embarrassment for India's government, which is teaming up with Indian corporations to help the poor.
"Corporations and India's growing wealthy classes should be doing a lot more because all profitability is premised on stability," said Narendra Jadhav, a senior member of Prime Minister Manmohan Singh's planning commission for economic development. "The corporation should, out of enlightened self-interest, move forward to join the change of India's underprivileged participating in India's prosperity."
When President Obama visits India this month, his meetings with business leaders will focus on ways to strengthen India's growing middle class and lift hundreds of millions out of poverty, senior U.S. and Indian government officials said.
"The India-U.S. relationship is no longer one of donor and donee," said a senior U.S. government official. "It's more equal, :cheers1: and we are looking to help unleash that potential."
However, some of the rich in India say they don't give more because they question how the money will be spent.
"In India, there's a psychology of scarcity. So in India, the tipping point for philanthropy has yet to come," said Arpan Sheth, a partner at Bain who wrote the report. "There still has to be more institutions in place to make people feel more comfortable about giving. There is a significant amount of wealth creation. Now the question will be what to do with that wealth."
Last month, India's Tata Group donated $50 million to Harvard Business School, the largest gift ever received by the institution from an international donor. The gift came days after another wealthy industrialist - Anand Mahindra, a Harvard alumnus - gave $10 million to the Humanities Center at Harvard.
"There was a lot of criticism here, and Indians asked, 'Why couldn't you both give it to India?' " Sheth said. "But others felt like, 'Well, the structure is there at Harvard.' Everyone knows where the money will be well spent."
'Spirit of giving' :banana2::applause:
Deval Sanghavi and his wife, Neera Nundy, worked as investment bankers in New York but decided to move back to India. They now run the Mumbai-based Dasra, which helps prospective donors sift through the country's 3.4 million registered non-governmental organizations to determine which would do the best work with their money.
In March, they held the first Indian Philanthropy Forum to introduce prospective donors to potential programs. They also host quarterly workshops and visits to school and health projects.
"In India, the need is really there and so is the spirit of giving," said Sanghavi, who recently organized a giving circle of 10 wealthy philanthropists, including Malkani, which will donate $600,000 over the next three years to Mumbai's public schools. "We want to create a community of do-gooders who can motivate each other."
On a recent afternoon, Malkani visited Salaam Baalak Trust, a shelter she helps support. The children there were preparing for a party celebrating Diwali, one of India's most important Hindu holidays.
A large Indian bank was sponsoring the party, and dozens of young professionals, BlackBerrys beeping in hand, had come. Some seemed overwhelmed at first, but within a few minutes, they were dancing with the children.
As sweets were brought out for the children, Malkani explained that her father had been a middle-class family doctor who often helped feed his less fortunate patients. One day, a client who couldn't afford to pay his bill left him a deed to his struggling travel business. The Malkani family later found the deed and decided to start their own company.
"My father's family was blessed by his act of generosity," Malkani said. "I hope many more people like me start giving in India. Kindness is how we overcome all suffering."
December 23rd, 2010, 02:19 AM
Open bank account with Aadhaar Number
TNN, Dec 22, 2010, 01.32am IST
NEW DELHI: There is good news for millions of Indians who are unable to open bank accounts for want of documents that meet the know-your-customer (KYC) norms. The finance ministry has recognized Aadhaar number issued by the Unique Identification Authority of India (UIDAI) as an officially valid document to satisfy the KYC norms for opening bank accounts, the Planning Commission said in a statement on Tuesday. The finance ministry had issued a notification to this effect last week.
"This notification is expected to promote financial inclusion of the poor and the hitherto excluded by making it possible for them to easily establish their identity and open bank accounts," the statement said. The UIDAI is facilitating opening of bank accounts for residents at the time of enrolment for Aadhaar through partner banks and acceptance of Aadhaar as a valid KYC document will make the process seamless.
At present, banks seek documents such as passport, driving licence and voter's identity card, among other specified documents, for KYC purposes. The documents have to establish the identity of an individual and provide address details.
Read more: Open bank account with Aadhaar Number - The Times of India http://timesofindia.indiatimes.com/business/india-business/Open-bank-account-with-Aadhaar-Number/articleshow/7141968.cms#ixzz18tCsnR8y
December 25th, 2010, 02:34 AM
India sets new housing loan norms
By WALID MAZI | ARAB NEWS
Published: Dec 24, 2010 22:02 Updated: Dec 24, 2010 22:02
NEW DELHI: India’s central bank — the Reserve Bank of India (RBI) — has prescribed a ceiling of 80 percent of the purchase value on all housing loans above Rs.2 million ($44,231), a move that will impact resident and non-resident Indian property seekers alike.
However, the loan-to-value ratio (LTV) could be 90 percent in case the value of loan is below Rs.2 million, said the country’s apex bank.
“At present, there is no regulatory ceiling on the LTV ratio in respect of banks' housing loan exposures. In order to prevent excessive leveraging, the LTV ratio in respect of housing loans hereafter should not exceed 80 percent,” the central bank said.
Raising concern on the teaser rates in the home loan market, the central bank said some borrowers may find it difficult to service the loans once the normal interest rate, which is higher than the rate applicable in the initial years, becomes effective.
The RBI said that many banks, at the time of initial loan appraisal, do not take into account the repaying capacity of the borrower at normal lending rates.
“Therefore, in view of the higher risk associated with such loans, the standard asset provisioning on the outstanding amount has been increased from 0.4 percent to 2 percent with immediate effect. The provisioning on these assets would revert to 0.4 percent after one year from the date on which the rates are reset at higher rates if the accounts remain ‘standard,’” the RBI notification said.
Some banks including ICICI Bank, HDFC has already withdrawn their teaser rates scheme while State Bank of India's scheme would continue till this month.
The announcement follows the concerns expressed by RBI Governor D Subbarao in his half-year review of the monetary policy in October. The decision, the RBI said, is aimed at “preventing excessive speculation in the high value housing segment.”
Home buyers now must pay a margin money of at least 20 percent of the value of the property for loans up to Rs.2 million, a buyer will be allowed to get loan by paying at least 10 percent of the value of the property.
In another development, the country’s apex bank said that the risk weight for residential housing loans of Rs.7.5 million and above will be 125 percent, irrespective of the LTV ratio, to prevent excessive speculation in the high value housing segment.
In May 2008, the RBI had stated that the risk weights on residential housing loans with LTV ratio up to 75 percent will be 50 percent for loans up to Rs.3 million and 75 percent for loans above that amount.
In case of LTV ratio of more than 75 percent, the risk weight of all housing loans, irrespective of the amount of loan, will be 100 percent.
Some banks are following the practice of sanctioning housing loans at teaser rates i.e. at comparatively lower rates of interest in the first few years, after which rates are reset at higher rates.
“This practice raises concern as some borrowers may find it difficult to service the loans once the normal interest rate, which is higher than the rate applicable in the initial years, becomes effective,” the RBI said.
It has been also observed that many banks at the time of initial loan appraisal, do not take into account the repaying capacity of the borrower at normal lending rates, the central bank cautioned.
January 20th, 2011, 05:48 AM
Swiss par panel gives nod to new tax treaty with India
Wednesday, January 19, 2011, 17:00 [IST]
Geneva/New Delhi, Jan 19 (PTI) A Swiss Parliamentary Committee has given the go-ahead to the revised tax treaty between India and Switzerland that would eventually allow Indian government access to secret Swiss bank accounts of Indian tax evaders.
The amendments to the treaty will now be placed beforethe Swiss Parliament for final approval.
Once the revised treaty gets the approval, Switzerland would provide administrative assistance to India to track cases of tax evasion and tax fraud. :banana2::cheer:
The development comes at a time when the Indian government is under mounting pressure from Opposition parties and the Supreme Court to reveal the names of individuals who have stashed away black money overseas.
Swiss Parliament''s Committee for Economic Affairs andTaxes (CEAT) in a statement on Tuesday said it has received the India-Switzerland double taxation treaty document and forwarded the same to the National Council.
CEAT, which has 25 members, is tasked with examining and drafting advisory opinions on messages, parliamentary initiatives, and reports concerning economic and fiscal issues, according to Swiss Parliament''s official website.
Finance Minister Pranab Mukherjee and Swiss Federal Councillor Micheline Calmy-Rey signed a "protocol" to amend the double taxation agreement (DTA) in the area of taxes onincome on August 30, 2010.
As per an agreement between the two countries, theinformation exchange was to have taken effect on January 1,2011.
However, earlier this month, Switzerland''s Federal Tax Administration department had said the protocol was still to take effect as they were yet to inform each other about extending the necessary approvals.
"In Switzerland the Parliament has not agreed upon the protocol yet.
"The exchange of information will be applicable for information that relates to any fiscal year beginning on or after the 1st January 2011, as soon as the protocol has been given effect," a department spokesperson had said.
The amended tax treaty would help the Indian government to seek information about illict wealth allegedly hidden in Swiss banks by Indians. :banana: :banana2:
Earlier, the influential Swiss Bankers Association had said they would not permit "fishing expeditions", indicating that indiscriminate trawling through bank accounts would not be allowed.
January 21st, 2011, 02:27 PM
how will this change anything? might catch some of the smaller businessmen, but politicians and big business will continue to plunder. after all turkeys dont vote for christmas
July 23rd, 2011, 12:36 PM
Government's health insurance scheme to cover rickshaw pullers, cab drivers, miners, sanitation workers and toddy workers (http://economictimes.indiatimes.com/news/economy/policy/governments-health-insurance-scheme-to-cover-rickshaw-pullers-cab-drivers-miners-sanitation-workers-and-toddy-workers/articleshow/9330894.cms)
NEW DELHI: India's flagship health insurance scheme may soon be extended to cover seven more unorganized sectors, as the government gradually expands its scope to include most of the workers engaged in informal vocations.
The labour ministry, in separate Cabinet notes, has proposed to expand the Rashtriya Swasthya Bima Yojana to include rag pickers, rickshaw pullers, taxi and autorickshaw drivers, miners, sanitation workers and toddy workers.
"Our aim is to gradually cover all workers in the unorganised sector," a ministry official said. The ministry circulates separate Cabinet notes for individual sectors to ensure that if differences crop up among Cabinet members on a particular sector, it does not hold back approval for other sectors.
ET had reported on Monday that the RSBY will also pay for doctor visits and medicines if pilots underway prove feasible.
The RSBY provides Rs 30,000 crore annual health cover to a family of five against a token registration charge of Rs 30. States give 25% of the funds required for the scheme while the rest is given by the Centre.
The scheme initially covered all below-poverty-line families and later MGNREGA workers. Earlier this year, the Cabinet cleared a proposal to include domestic workers, beedi workers and street vendors as well. Labour minister Mallikarjun Kharge has asked state governments to expedite the process of putting in place implementing agencies. The Centre has already issued guidelines to states for identification of domestic workers, street vendors and beedi workers.
In his budget speech this year, Finance Minister Pranab Mukherjee had also announced that more sectors, including non-coal mining, would be extended RSBY cover.
July 23rd, 2011, 04:20 PM
Ya. This kind of information always give a detailed view of current situation. We need clear and perfect service. I think we are in the era of such a financial situation.
August 1st, 2011, 02:21 PM
The humble post office is all set to undergo a radical change with a proposal to convert over 1.5 lakh post offices across the nation into full fledged banks on the anvil.
Telecom Minister Kapil Sibal wants to reach out to the masses in the rural areas with modern banking facilities through the post offices. “We want to commercialise the department. We will seek a licence from the RBI to convert all our post offices into banks,” Mr. Sibal told PTI.
The lack of modern banking facilities in rural areas and dependence of villagers on informal sector for their credit requirements has prompted the government to work on financial inclusion by way of setting up ‘postal banks’.
“The State Bank of India can’t build branches all over India, but there are post offices across India. The branches are already there, so infrastructure expenditure is not required. So you can actually give banking facilities at relatively lower costs, which would be extremely beneficial to people,” he said.
The post offices currently offer financial services like savings bank, postal life insurance, pension payments and money transfer services. Its total corpus stood at Rs. 5,82,832.9 crore as on March 31, 2011.
DoP’s revenues grew 11 per cent to Rs. 6,954.09 crore in 2010-2011 from Rs. 6,266.70 crore in the previous fiscal.
However, negative growth rate in some circles has pushed the Department’s deficit to Rs. 6,625 crore in FY’11, almost equal to the annual revenue of the Department.
The Hindu (http://www.thehindu.com/news/national/article2310715.ece)
August 2nd, 2011, 08:37 AM
Nice... at least something good by govt
August 11th, 2011, 12:36 PM
M. R. Sreenivasa Murthy
One of the more impressive aspects of India's growth story relates to the expansion of the banking infrastructure. Between 1969 and now, the banking network has grown ten-fold — from 8,000 branches to 80,000. The number of rural branches has increased phenomenally, from 1,443 to 32,000. This expansion was triggered by nationalisation, first in 1969 and again in 1980.
However, it is a sad reality that, for all the impressive growth, nearly 40 per cent of the households in the country — many of them rural — do not have a bank account. This ‘exclusion' of a vast segment of the population — comprising mostly marginal farmers, agricultural workers, and casual labourers — is perceived as an impediment to ‘inclusive growth.' “Financial apartheid” is how Muhammad Yunus, reputed founder of Bangladesh's Grameen Bank movement, called this exclusion of the poor from the banking network. The term ‘financial inclusion', therefore, means delivering banking services such as savings, credit and insurance facilities to the left-out social strata.
This book, by a senior RBI official, looks at the problem in the overall context of the country's economic policy and examines the strategies adopted over decades to tackle it. To start with, Joshi dwells at length on poverty and development theories and the need for providing access to financial services to the low income groups, and goes on to discuss the RBI's post-nationalisation initiatives to extend the banking network in the rural areas.
The central bank placed the commercial banks under regulatory obligation to open rural branches and to sponsor the Regional Rural Banks. Every bank was required to advance 40 per cent of its lending portfolio to certain specified sectors categorised as “priority sectors”; they included agriculture, lending to which must constitute at least 18 per cent. This stipulation enabled farmers to borrow for buying inputs. The RBI's “service area approach” by which the responsibility of meeting the rural credit needs of a specific area was assigned to a particular branch, and the provision of refinance facility by NABARD were among the other significant steps.
The Central Government's Integrated Rural Development Programme (IRDP) and Swarna Jayanthi Swarozgar Yojana (SJSY), launched as part of the poverty alleviation endeavour, also brought about considerable attitudinal change among bankers towards lending to low-income households, although these subsidy-linked schemes met with only a partial success.
What stood in the way of the poorer sections accessing bank credit was that their level of savings was so low that they were unable to provide collateral security for their borrowings. This barrier was overcome by creating the institution called ‘Self-Help Group' (SHG), an innovation of the 1990s. The banks lent money to the SHG, which in turn gave loans to its members. The SHG idea caught up fast and gained wider acceptability from the banks quickly. The NGOs also played a part in giving a push to the SHG movement by acting as sponsors and inculcating the savings habit in the poor and thus making them more ‘credit worthy'. Remarkably, loans to the SHGs were repaid more promptly than those under the poverty alleviation programmes, although they carried higher interest rates and had no subsidy component.
The success of the SHG movement, particularly in south India, led to the emergence of a large number of microfinance institutions, promoted by NGOs as well as private entrepreneurs. That the proliferation had a negative fallout — what with some of the MFIs resorting to sharp practices that got the borrowers into a debt trap — and the Central Government has had to step in and come up with legislation to regulate the microfinance sector is another story; it's a development this book has not covered.
The advent of National Rural Employment Guarantee Scheme, under which wages payable to workers are routed through banks, has rendered ‘inclusive' banking all the more imperative. “No-frills” bank accounts without the requirement of a minimum balance and “Business Correspondents” for carrying out simple banking transactions in villages using ‘smart cards' are the two steps taken more recently towards financial inclusion. As it turns out, however, the thrust of the policy initiatives aimed at financial inclusion has been on the supply side. The demand side has not received adequate attention. For instance, the RBI's effort to spread financial literacy among the rural population and stimulate the demand for banking services is yet to gather momentum. Joshi has elaborately, and somewhat repetitively in patches, dealt with the various policies and programmes initiated for reaching the bank services to the rural parts, but has refrained from analysing them critically. Moreover, since the ‘last mile' is critical for financial inclusion, the value of the book would have been enhanced considerably, if the author had drawn material from field studies rather than rest content with summarising official reports.
The Hindu (http://www.thehindu.com/arts/books/article2339950.ece)
August 11th, 2011, 05:50 PM
^^ and In comes UID to plug the gap!! If nationalization gave us 10 fold increase over 40 years - I expect UID to wipe out that figure in the relatively shortest span of time with astronomical rural banking penetration figures!!
August 31st, 2011, 01:48 AM
India Faster-Than-Forecast Expansion Keeps Pressure on RBI to Raise Rates
India’s economy grew faster than estimated last quarter, maintaining pressure on the central bank to extend its record interest-rate increases even as the global recovery weakens.
Gross domestic product rose 7.7 percent in the three months ended June 30 from a year earlier, the Central Statistical Office said in New Delhi today. That compares with a 7.8 percent climb in the previous three months. The median of 26 predictions in a Bloomberg News survey was for a 7.6 percent gain.
India’s consumption has “remained strong” because of higher salaries and inflation may remain “stubborn” in the near term, the Reserve Bank of India said last week. By contrast, growth has cooled in Asian nations from Taiwan to South Korea and Malaysia as a faltering U.S. recovery and Europe’s debt crisis curbs demand for the region’s exports.
“This data reinforces our view that the RBI will remain in a tightening mode,” said Biswa Swarup Misra, Mumbai-based chief economist at the state-run Bank of India who worked at the central bank from 2002 to 2010. “Even though the global mayhem poses risks to growth, the RBI’s core concern right now would be to control inflation.”
He expects the Reserve Bank to raise its repurchase rate by a quarter of a percentage point to 8.25 percent in the Sept. 16 policy meeting.
Services including hotels, banking and telecommunications, which account for 58 percent of India’s economy, grew 10 percent in the three months through June from a year earlier after an 8.7 percent gain in the previous quarter, according to today’s report.
Manufacturing expanded 7.2 percent, while mining output rose 1.8 percent, the report showed. Farm output rose 3.9 percent last quarter, slower than the 7.5 percent growth in the three months ended March 31.
August 17th, 2012, 01:33 PM
India's ICICI treads cautiously on return to growth path (http://in.reuters.com/article/2012/08/13/india-icicibank-idINL4E8JD0IW20120813)
Aug 13 (Reuters) - Loans for motorcycles are a thing of the past at India's ICICI Bank. So are credit cards for anyone other than existing customers.
India's second-biggest bank, whose aggressive growth made it an investor favourite before it was nearly brought to its knees during the financial crisis, has even become picky about lending to power and infrastructure projects, a core market.
With its once-sickly loan portfolio on the mend after several years of consolidation that saw it lose market share, I CICI is looking once again to grow faster than the industry - though more cautiously this time around.
"Growth for the sake of growth can get into asset quality problems," said N.S. Kannan, executive director and chief financial officer at India's largest private sector bank, with assets of $93 billion.
ICICI aims to grow its domestic loans by around a fifth this fiscal year, led by consumer loans and working capital, and will be especially cautious with project finance, Kannan said. In the last fiscal year, ICICI pared back overall loan growth to 17 from its initial target of 20 percent.
"For retail unsecured loans we have clearly tightened the filters. We are very careful in project finance and in identifying the projects that are worthy of financing," said Kannan, who assumed his role in 2009 when Chanda Kochhar was promoted to CEO.
Eric Mookherjee, fund manager at Shanti Gestion in Paris, said ICICI had little choice but to be much more cautious, which could hinder growth if India's flagging economy recovers from its most sluggish pace in nearly a decade.
"There's a lot of gloom about the Indian economy and if it turns out that India is not able to recover then ICICI is in good stead, but if the economy recovers they would have lost a little bit of leverage," said Mookherjee, who recently sold his ICICI stake and will re-enter at lower levels. So far this year, ICICI shares are up more than a third - outpacing 28 percent growth in bank stocks - though they are still down nearly a quarter since the start of 2008, lagging rival HDFC Bank, India's No.2 private sector lender, which is up nearly 75 percent, and the banking index's 6 percent gain. Its current market value is close to $20 billion.
Still, ICICI's price-to-book ratio of 1.8 is the lowest among India's four largest private sector banks, and pales next to HDFC's 4.7. Of 48 analysts covering ICICI, 42 rate it a buy.
Kannan acknowledged it took time for some investors to come around to its less-aggressive mindset.
"Initially, one of the pushbacks we used to get from investors was that your DNA is a growth-oriented DNA: So, will you be able to deliver on the consolidation agenda?"
ICICI still bears the scars of the financial crisis, when bad loans surpassed 5 percent of total assets in the year to March 2010. It has pared that to about 3.5 percent, still far above HDFC Bank's, which are just under 1 percent.
After Lehman's 2008 collapse, worries about ICICI's overseas exposure prompted a near-50 percent one-month drop in its shares and led some depositors to queue at branches to withdraw cash, forcing it to issue text messages assuring that it was healthy and prompting the central bank to declare it well-capitalised.
In 2007, consumer lending accounted for more than 65 percent of ICICI's assets; it is almost half that now, although it wants to grow that to 35-40 percent over the next couple of years.
ICICI was involved in some of India's most notorious troubled corporate loans, including to Kingfisher Airlines , Air India and GTL Infrastructure, but has been more hard-nosed in restructuring terms than some of the state banks that lent alongside it.
It recently sold its remaining exposure to embattled Kingfisher at face value, although it took a hit after converting part of its debt to equity. Other Kingfisher creditors, mostly state banks, are still on the hook.
"You should give us some credit for our ability to resolve," Kannan said from his 10th-floor office in the sprawling Bandra-Kurla office park in suburban Mumbai. "Kingfisher, for example, we could resolve that asset by selling it off. In taking steps like talking to promoters (controlling shareholders), talking to lenders' consortium and protecting our interests, I think we have been above the curve."
ICICI expects asset quality to improve. Its restructured loans more than doubled last year to 47 billion rupees ($850 million), but it does not expect to restructure much more.
Kannan also expects the overall group's return on equity - a measure of profitability - to grow a couple of percentage points to 15 percent by next March. Its return on equity is the lowest of India's top five banks, including Axis Bank and HDFC, which have ROEs of 20.3 and 18.8 percent, respectively.
ICICI surprised investors two quarters running with robust profits and better asset quality. Its latest quarterly growth was its strongest in over a year.
"If we want, we can always grow faster, but growth should be subject to risk and profitability. That's quite embedded now," Kannan said.
August 17th, 2012, 01:33 PM
CIMB May Start Broking Operations In India, South Korea (http://www.bloomberg.com/news/2012-08-16/cimb-may-start-broking-operations-in-india-south-korea.html)
CIMB Group Holdings Bhd. (CIMB), Southeast Asia’s top-ranked investment bank over the past three years, said it may start broking operations in India and South Korea after buying most of Royal Bank of Scotland Group Plc’s Asian investment banking assets.
The Malaysian lender may acquire existing broking licenses or apply for new ones in both countries, Nazir Razak, CIMB’s chief executive officer, told reporters in Kuala Lumpur yesterday, after unveiling a 14 percent jump in second-quarter earnings. It’s still in talks to buy a 50 percent stake in Australian brokerage RBS Morgans, he said.
“The whole idea is to build a comprehensive Asia-Pacific stockbroking and investment banking network,” Nazir said. “India and Korea are essential to such a network. We feel that we must be in both markets.”
The Kuala Lumpur-based lender has spent about $2.3 billion on 19 acquisitions since Nazir became CEO in 2006, including the purchase announced in June of a 60 percent stake in the Philippines’s Bank of Commerce. The RBS deal allowed CIMB to absorb or buy investment banking and broking operations in markets including Hong Kong, Indonesia and Thailand.
Net income climbed to 1.11 billion ringgit ($354 million), or 14.9 sen per share, in the three months ended June, up from 970 million ringgit, or 13.1 sen, during the same period a year earlier, according to a Kuala Lumpur exchange filing yesterday. Even so, the group cut its dividend to 5 sen per share from 12 sen a year ago.
Earnings were boosted by higher net interest income, as well as increased contributions from consumer and investment banking, the filing showed. CIMB helped manage deals including Felda Global Ventures Bhd.’s $3.3 billion initial public offering in Kuala Lumpur in June, the world’s biggest share sale this year after Facebook Inc.
CIMB’s shares fell 0.3 percent to 7.89 ringgit at 10:24 a.m. in Kuala Lumpur trading and have risen 6.1 percent this year. The stock’s price target was raised to 8.20 ringgit from 7.60 ringgit at HwangDBS Vickers Research Sdn., analysts Lim Sue Lin and Hon Seow Mee wrote in a report today.
“With the momentum that we built in terms of growth and assets, we are looking at the targets we set at the beginning of the year quite confidently,” Nazir said.
CIMB is benefiting from Malaysia’s resilient economic growth, which unexpectedly accelerated to 5.4 percent last quarter, according to a central bank statement yesterday. The benchmark FTSE Bursa Malaysia KLCI Index closed at a record yesterday, having climbed 8 percent this year.
Net interest income, or revenue from borrowers after deducting interest paid to depositors, rose 12 percent to 1.9 billion ringgit in the quarter, CIMB said. Allowances for impairment losses on loans and financing shrank 40 percent to 51.5 million ringgit, the company said.
The Malaysian lender is ranked first in takeover advisory and in managing equity and bonds sales in Southeast Asia over the three years to June 21, according to data compiled by Bloomberg.
August 17th, 2012, 01:35 PM
'Union Bank needs Rs 1,000 cr more capital in FY13' (http://www.business-standard.com/india/news/union-bank-needs-rs-1000-cr-more-capital-in-fy13/483481/)
State-run Union Bank of India (UBI) will need Rs 950-1,000 crore as additional capital to meet its business needs this financial year, chairman and managing director D Sarkar said here on Thursday.
“We had asked for Rs 650 crore from the government last year. But we did not get it. Based on our current growth projections, we will probably need Rs 950-1,000 crore capital this year,” Sarkar told reporters on the sidelines of a banking seminar organised by the Federation of Indian Chambers of Commerce and Industry.
UBI closed the first quarter of 2012-13 with a capital adequacy ratio (CAR, showing a bank’s cushion to absorb risks) of 11.64 per cent. The Tier-I capital adequacy ratio was 8.36 per cent at the end of June. According to Basel-III norms, Indian banks need a minimum CAR of nine per cent, in addition to a capital conservation buffer in the form of common equity at 2.5 per cent of the risk-weighted assets.
In other words, banks’ minimum CAR must be 11.5 per cent. The current Indian requirement is at least nine per cent. The Reserve Bank of India (RBI) has also said the common equity in Tier-I capital must be 5.5 per cent of risk-weighted assets and the minimum tier-I CAR must be seven per cent instead of six per cent.
The new rules take effect from January 2013 and banks will have to implement these by March 2018.
Sarkar said besides strengthening its capital base to meet Basel-III norms, the funds were needed to finance business growth. UBI expects 18-19 per cent growth in advances and 15 per cent in deposits this financial year. Total advances were Rs 173,911 crore and total deposits were Rs 222,110 crore at the end of the first three months of this financial year.
August 17th, 2012, 01:35 PM
ICICI Bank raises $750 mn abroad (http://www.business-standard.com/india/news/icici-bank-raises-750-mn-abroad/483483/)
ICICI Bank, the largest private sector lender in the country, on Thursday said it has raised $750 million by selling bonds in the overseas markets.
This was the fourth foreign currency bond issue by an Indian lender in recent weeks after State Bank of India, Export-Import Bank of India and Indian Overseas Bank.
The private lender’s 5.5-year fixed rate notes carry a coupon of 4.70 per cent. The notes were issued at 99.813 per cent of the book value of bonds, representing a spread of 364 basis points over Libor, bankers said.
RECENT OVERSEAS BOND ISSUES
ICICI Bank 750.00
EXIM Bank 500.00
Indian Overseas Bank 500.00
Union Bank of India 350.00
The bonds were sold by ICICI Bank’s Dubai branch. The issue was subscribed 7.6 times, with 312 investors showing interest.
Several Indian banks and companies have been waiting for an opportunity to raise funds from the international markets since April 2012.
The companies were waiting for better pricing and improvement in investors’ sentiment following the crisis in the Euro region.
“We will keep evaluating options and go for an issuance only if we think that we can protect our international net interest margin at about 1.5 per cent,” a senior official of ICICI Bank had told investors following the lender’s first quarter earnings in July 2012.
State-run lender Union Bank of India has also raised $350 million through overseas bond sale.
According to market participants, several institutions — including Axis Bank, Bank of Baroda, Bank of India, Rural Electrification Corporation and Power Grid Corporation — are looking to raise funds abroad.
August 17th, 2012, 08:38 PM
Citibank India Bags Two Global Finance World’s Best Internet Bank Awards (http://www.itnewsonline.com/showbwstory.php?storyid=7935)
Mumbai, Maharashtra, India : Citi Asia Pacific was a big winner in this year’s Global Finance magazine’s annual World’s Best Internet Banks, hauling a total of 26 awards across the corporate/ institutional and consumer banks categories.
Citibank India has been named 'Best Consumer Internet Bank' and 'Best Corporate/Institutional Internet Bank' in India by Global Finance magazine. This is the fourth consecutive year that Citi India won 'Best Consumer Internet Bank' award and the second consecutive year that it bagged the ‘Best Corporate/Institutional Internet Bank’ Award.
Anand Selvakesari, Country Business Manager, Global Consumer Group, Citi India said, “Winning these awards year-on-year, reinforce our commitment to offer the most convenient and secure banking platform for our consumers. Citibank India's internet and mobile banking platform today is the largest channel for customer interaction with nearly 70% of the active banking customers accessing it regularly. We will continue to invest in making our digital platform the most preferred channel of banking for our consumers.”
Security being a key focus, Citibank India was one of the first banks in India to launch multi-factor authentication - using a combination of instruments such as hardware tokens, one-time passwords and Email and SMS alerts for its domestic and NRI customers. The well engineered online offering enables customers to manage their accounts through an easy to use and functionality loaded interface. It allows them to perform every possible banking transaction online at www.citibank.com/india and the linkages to credit cards, loans, mutual funds, brokerage and insurance products differentiate Citibank Online from the other entrants.
Of the 14 consumer markets in the region, Citi won in seven for Best Consumer Internet Bank on a country level. These markets included Australia, Guam, Indonesia, India, Philippines, South Korea and Thailand. Citi was also lauded for Best Information Security in Asia Pacific and was named Best Trade Finance Services, Best in Mobile Banking and Best Web Site Design, in the region.
Winning banks were selected based on the strength of their strategy in attracting and servicing online customers, success in getting them to use web offerings, the growth of online customers, breadth of product offerings, and web site design and functionality. Winners were chosen among entries evaluated by a panel of independent judges, with Global Finance editors responsible for the final selection of winners.
Winners of Regional and Global winners will be announced in November during the Award Ceremony in New York City and published in December’s issue of Global Finance.
August 17th, 2012, 08:38 PM
India cbank says reverse repo bids at 2.05 bln rupees (http://in.reuters.com/article/2012/08/17/india-rbi-repo-idINI8E8IN01Q20120817)
The Reserve Bank of India (RBI) said on Friday, it accepted both
the bids for 2.05 billion rupees ($36.8 million) at its four-day
reverse repo auction, through which it absorbs excess liquidity
from the banking system.
Earlier in the day, it accepted all 27 bids for 483.75
billion rupees at its four-day repo auction, through which it
injects liquidity into the banking system.
August 18th, 2012, 03:03 PM
Banks set for an extended festival break (http://timesofindia.indiatimes.com/city/lucknow/Banks-set-for-an-extended-festival-break/articleshow/15538575.cms)
LUCKNOW: If you haven't done shopping for Eid yet, make sure you have enough cash in hand to spend on the festival exigencies. After Saturday, you will have just one-day window - Tuesday, August 21 -- to do your transactions before banks reopen next Friday. And Saturday being the half day, banks are expected to witness a mad rush on the festive weekend.
While it will be Sunday on August 19, Eid is most likely to fall the next day, which is Monday. After reopening on Tuesday, the banks will again stop business for the next two days -- August 22 and August 23 - due to a strike called by United Federation of Bank Unions (UFBU). P 4in protest against the proposed reforms in the banking sector and outsourcing of jobs.
This peculiar situation is all set to affect banking transactions amid strong possibilities of ATMs running dry. According to an estimate, Lucknow alone records transactions to the tune of around Rs 200 crore per day. This goes up during the festival season.
In fact, even on Tuesday, when banks reopen for a day, there will be protest of bank employee in different districts, including Lucknow. "This would badly affect the operations. We don't want this. But we are forced to resort take such steps," said Tahir Ali, district president of National Confederation of Bank Employee Association, which is part of UFBU, an umbrella organization comprising five employee unions and four officer unions of state-run banks in the country.
The bank employees are angry with the Centre-appointed Khandelwal panel which suggested a slew of measures, including more outsourcing of non-core activities in a time-bound manner. Besides advocating raising the standard for recruitment, including testing of computer skills, the committee also suggested that the minimum qualification for clerks and sub-staff should be graduation and class 10, respectively.
Though the chief labour commissioner has called the bank unions on August 21 for a conciliation meeting on strike notice, the employee and officers keep their fingers crossed. There are about 87,000 branches of public sector banks across the country. The state-owned banks control about 75% business.
Notably, banks have lost 11 holidays this year. In January 2011, the UP government removed 11 holidays notified in the state gazette under the negotiable instrument act which governs banks. Until last year, the banks used to have 32 holidays. This year, the number has been reduced to 21, a bank official said.
The state government employees faced no such cuts. The state government offices and banks were closed on August 10 for Janmashtami and August 15 Independence Day. With August 10 being Friday, it provided an extended weekend to the state government employees as offices were closed for second Saturday. After working days on Monday and Tuesday, Wednesday (August 15) was again a holiday.
On Friday, the state government offices were closed for Alvida namaz. And after the weekend, Eid most probably falls on Monday. So, between August 9 and 20, most state government employees needed to work just for three days.
August 18th, 2012, 07:27 PM
Future Generali India views rise in medical costs driven by poor health insurance coverage (http://pharmabiz.com/NewsDetails.aspx?aid=70698&sid=1)
Future Generali India Insurance sees medical costs in the country increasing on an average of around 15 per cent annually. Now with the absence of a viable widespread health insurance mechanism, two thirds of all spending on hospitalization is done by private financing.
In India, according to Future Generali, only 320 million which is 26 per cent of the country’s population have some sort of medical insurance coverage. Most of the household expenses are being met out of savings. The challenge is to capture a significant part of current household spending and assure that the total was spent on more cost effective and higher quality services like a medical insurance, said Shreeraj Deshpande of Future Generali India Insurance.
Currently in India, there is an immediate demand for such health insurance coverages. It can help remove urban bias and develop health care infrastructure in rural areas. A health insurance would increase the standardized data resulting in hospitals, growth in pharma industry and increased manpower needs not just in health insurance but hospitals too, he added.
Insurance providers in India have now a supplier induced demand which is a sellers’ market with aggressive marketing initiatives. The health insurance premiums have grown from Rs. 741 crore in 2001-02 to Rs. 11,215 crore in 2011-12. Around 52 per cent of the market share is of the public sector companies and 48 per cent by the private insurance companies, he said.
The industry is expected to grow at a rate of 16-20 per cent for the next five to six years. The growth in the retail sector is still very low. A major portion has been corrections in the group health premiums. The potential for growth is high but for insurance companies the business is still a loss making business. The loss ratios have been above 100 per cent on just premiums to claims and combined ratios at 120-125 per cent, he said.
The national programme of Rashtriya Swasthya Bima Yojna in 25 states is covering around 32 million families and 110 million persons. For instance, Arogyashri in Andhra Pradesh has 60 million. Tamil Nadu government scheme has 35 million families coming under its purview. Commercial Insurance has 40 million subscribers and ESIS, GHS/Railways/Defence/Ex-Service Men/Self Funded Schemes have a registered 75 million people.
Presently, Health Insurance in India is transacted by Non-Life Insurance, Life Insurance and Specialist Health Insurance Companies. The key determinant of its demand is the inadequate public health care systems. There is the issue of higher health care costs. In addition, there is a perceived quality difference between public and private hospitals, pointed out Deshpande.
The evolution of health insurance has moved from the indemnity which covered hospitalization only to include all expenses and now to managed care. The companies are also looking at comprehensive coverage to include outpatient, dental and prescription drugs.
Efforts are also on for Medical Saving Accounts (MSA), wellness initiatives and benefit products for critical illness covers, besides Disability Income Insurance where the payment is made when the insured is unable to work as a result of sickness or injury, he said.
The growth of health insurance is an opportunity to improve health care standards especially health care infrastructure and accessibility to quality care. It will promote uniform standards of health care across the length and breadth of the country. The success or failure of any health insurance programme depends largely upon the network and quality of health care providers.
August 18th, 2012, 07:41 PM
Indian Bonds Complete Weekly Drop as RBI Sees No Easing Scope (http://www.businessweek.com/news/2012-08-17/indian-bonds-set-for-weekly-drop-as-rbi-sees-no-scope-for-easing)
India’s bonds completed a weekly decline after central bank Governor Duvvuri Subbarao said inflation limited room for policy easing to spur growth.
The nation’s benchmark price index rose 6.87 percent in July from a year earlier, a government report on Aug. 14 showed, the fastest pace among the largest emerging markets. Consumer prices rose 5.2 percent in Brazil, 1.8 percent in China and 5.6 percent in Russia last month, according to official figures. Subbarao left the repurchase rate unchanged at 8 percent on July 31. The monetary authority will next review borrowing costs on Oct. 30.
“Stubborn inflation has reduced the possibility of rate cuts in the near future,” said Krishnamurthy Harihar, a Mumbai- based treasurer at the local unit of FirstRand Ltd. (FSR), South Africa’s second-largest banking group. “That will be a negative for the bond market.”
The yield on the 8.15 percent notes due June 2022 rose seven basis points, or 0.07 percentage point, this week to 8.24 percent in Mumbai, according to the central bank’s trading system. The rate fell three basis points today.
The Reserve Bank of India raised its inflation estimate for the fiscal year through March 2013 to 7 percent from 6.5 percent on July 31. Sudipto Mundle, a member of the bank’s technical advisory committee, said in an interview yesterday that the RBI shouldn’t shift “its focus from inflation.”
“There is just no space for fiscal or monetary response,” Subbarao said in a speech on Aug. 13.
India must damp inflation, allow more foreign investment to boost growth and raise diesel prices to contain subsidies that have fanned a budget deficit, Prime Minister Manmohan Singh’s economic panel said today.
One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, climbed seven basis points this week to 7.81 percent, according to data compiled by Bloomberg. The rate fell two basis points today.
August 18th, 2012, 07:54 PM
Problems will be resolved once investment is revived: FM (http://timesofindia.indiatimes.com/business/india-business/Problems-will-be-resolved-once-investment-is-revived-FM/articleshow/15544850.cms)
NEW DELHI: Finance minister P Chidambaram on Saturday said most of the country's economic problems will be solved once investment is revived.
"Reviving investments is a key challenge for us. (Investor) sentiment is not the only issue...sentiment will change with other issues...once we get the investment engine started, I think many of our problems can get resolved," Chidambaram said after meeting chiefs of public sector banks. The finance minister reviewed the performance of public sector banks (PSBs) in the wake of the slowdown and concerns over rising bad loans.
"We had a very substantial agenda, which included agri credit, lending to minorities and state of health of the banking sector. Fuel supply grievances, land acquisition issues have also been discussed, which are inhibiting investments. I am going to discuss all these issues with the line ministries to push investments," he added while briefing the media about the meeting.
The minister said the Indian banking system is sound and there has been a marginal increase in non-performing assets (NPAs) which is not alarming.
"No banks in India have failed in terms of parameters in which we measure health in banks. All banks are in good health." He also advised banks to focus on sectors which deserve credit and urged people to take to banking.
"Rs.11 lakh crore lies as cash in the hands of the people that should be in the banking system," the minister said, adding that banks have been advised to quickly enable ATM machines as not just cash disbursing machines but also cash accepting machines.
August 18th, 2012, 08:02 PM
Chidambaram to banks: Keep EMIs affordable, cut interest rates (http://timesofindia.indiatimes.com/business/india-business/Chidambaram-to-banks-Keep-EMIs-affordable-cut-interest-rates/articleshow/15547380.cms)
NEW DELHI: In a bid to revive investment across the board, finance minister P Chidambaram on Saturday asked banks to cut interest rates and keep EMIs at affordable levels to encourage sale of consumer durables that will restart the engine of manufacturing.
After a review meeting with the chiefs of public sector banks against the backdrop of slowdown in the economy, he also announced rescheduling of farm loans in drought affected states and revision in procedures for easy sanction of education loans to students.
Maintaining that health of the banking sector is extremely good, Chidambaram directed the banks to double the number of ATMs from 63,000 in two years and also to make them cash accepting machines so that the money remains in the banking system.
"Most of our problems will be over if we revive investment. Investment must be revived across the board small, medium and large industries. Sentiment is only one factor. Sentiment will change if the other issues are addressed.
He said the bank chairmen have been candid and they have identified a number of issues such as fuel supply agreement, delay in clearances and approvals, land acquisition and government entities like NHAI and SEBs not making payment in time. A certain amount of choking in supply of credit. "These are issues which have been identified as inhibiting. I will take up the issues with ministries concerned. Once we get the investment cycle going, once we get the investment engine started many of our problems can be solved. We have asked the banks to focus on sectors that deserve credit," the minister said.
Asserting that the EMIs should be kept at affordable levels, Chidambaram said, "the middle class is complaining about increasing EMIs and stretching payment cycle. The middle class, which consumes consumer durables postponing purchases, and that is not good for the industry". He said just as investment plans must be brought forward, consumers must be encouraged to buy consumer durables that will keep the engine of manufacturing.
"EMI must be kept at affordable level so that people will buy two wheelers, cars, refrigerators, washing machines, cooking ranges, mixies and grinders. "That will keep the engine of manufacturing going and large industries continue to produce these goods. The suppliers of parts and accessories in the small and medium enterprises will continue to do business." he said.
Chidambaram cited the example given by the State Bank chairman that cars sales picked momentum after reduction of EMIs. SBI was selling 400 cars per day when the EMI was Rs 1,766 per lakh per month for seven years loan. The sales jumped to 700 cars per day, when the EMI was brought down to Rs 1,725. It shot up further to 1,200 cars, once the EMI was further reduced to Rs 1,699.
"I have urged the other banks to look at SBI example", the minister said, adding "the point is well taken."
Chidambaram said Rs 11 lakh crore in cash remains with the people and it must come into the banking system. This could be done by increasing the number of ATMs, he added.
ATMs, he added, should also become cash accepting machines to allow people to deposit and withdraw cash at any time.
The finance minister further said that Indian Banks Association (IBA) would soon come out with a campaign to encourage e-transaction.
On problems in the housing sector, Chidambaram said he had asked the IBA to set up a small group to look into the vexed issues which include high demand, vacant flats and unfinished buildings.
According to reports, he added, 5 lakh flats were lying vacant in Mumbai despite high demand for housing.
On the impact of deficient monsoon and likelihood of drought, Chidambaram said banks are fully geared up to deal with the situation.
Credit, he added, would be provided to farmers to ensure that an alternate crop could be sown in October to mitigate the impact of shortage of rainfall.
Banking loans to agriculture in the current fiscal would be around Rs 6 lakh crore, more than the target of Rs 5.75 lakh crore, he said, adding banks have already issued 11.5 crore Kisan Credit Cards (KCC) which would benefit the farming sector.
He further said about 60 per cent of loans is provided to farmers at 4 per cent, three per cent less than the regular rate of 7 per cent. The farmers, he added, were repaying the loans and there are no concerns of NPAs.
With regard to loans to corporates and SME sector, Chidambaram said although NPAs have gone up in March 2012 to 3.17 per cent, there is no cause for "alarm".
The minister hoped that situation would improve with the economy coming back on rails.
Referring to education loans, Chidambaram said the IBA in the next few days would soon come out with a revised circular to ensure that no child, who fulfils prescribed parameters, is denied loan.
"Education loan is right of every student", he said, adding action would be taken against those bank officers who deny loans to deserving students.
On corporate debt restructuring (CDR), Chidambaram said it was for the Reserve Bank to take a call on the issue as the ministry does not interfere in the CDR.
The minister further said PSU banks are working to increase reach of banking in 121 districts with concentration of minority population. These banks had opened 1,098 new branches in these districts in 2011-12 and more would be done in the current fiscal.
August 18th, 2012, 08:18 PM
India Factoring: the way to get SME credit beyond banks (http://www.moneycontrol.com/news/business/india-factoringway-to-get-sme-credit-beyond-banks_746989.html)
The role of a factoring business is yet to gain ground in India wherein small and medium enterprises (SMEs) struggle to get funding support from banks on concern of asset quality. At a little higher cost of funds, a factoring company can well be the liquidity generator to scoot the SME growth engine.
The role of a factoring business is yet to gain ground in India wherein small and medium enterprises (SMEs) struggle to get funding support from banks on concern of asset quality. At a little higher cost of funds, a factoring company can well be the liquidity generator to scoot the SME growth engine.
According to Sudeb Sarbadhikary, chief executive officer, India Factoring - a Mumbai based standalone company, the business volume is increasing for factoring companies even as banks' credit is contracting. SMEs generate the majority of country's (around 75%) employment and they should keep growing with free fund flows.
"SMEs are promoter driven company with limited resources. The challenge is that money is blocked for 6-12 months leading to liquidity stress for them. In FY12, our business volume was at Rs 2,500 crore while we aim to take it to Rs 5,000 crore in FY13. We have around 200 SME clients, which form around 90% of the total kitty. It was around 160 in the previous year," he told moneycontrol.com in an exclusive interaction.
The year-on-year business growth is on a lower base as the company was started in December, 2009. There are around 10 factoring companies in India. Canbank Factors and SBI Global Factors are two of the oldest factoring companies in India. As of now, the total size of factoring business volume in India roughly stands at around Rs 17,000 crore, which according to Sarbadhikary, forms around 0.30% of the total banks' credit in the country.
So, how does it work?
Small businesses sell their products to other big companies, which do not immediately release cash. Meanwhile, the former, with limited wherewithal, require more funds to expand their business. Banks are not so keen to extend credit to them beyond a point.
Here comes the role of a factoring company, which gives 80% of the assignment money upfront at an interest cost in the range of 14-15% per annum to the seller (chargeable on monthly basis). The factor will recover the money from the product buyer after a stipulated period. If the SME client does not repay interest, the factor will deduct it from the rest 20% at the time of final realization.
Typically, business entities with turnover of Rs 20-200 crore avail this form of credit facility. For India Factoring, ticket size is in the range of 2-18 crore.
Does it require any collateral?
"Banks want more collateral against loans. Factoring companies are relatively flexible. If we are satisfied with the quality of the debtors, we then are not hooked into collateral. In the last few years, we have seen SMEs are getting starved of traditional liquidity. In the recent time, a lot of new clients are approaching us," the CEO said.
What suddenly added to factoring demand?
No doubt, it is banks' drying up credit. In the wake of rising bad loans, banks have of late, become very selective about sanctioning SME loans. Other major trigger is the Factoring Bill enacted by the Parliament in January, 2012.
"Factoring bill brought in clarity of assignments. Earlier, we did not have any right to proceed legally against the buyers (on behalf of SMEs) in case of any default. Moreover, we could not expect our clients, who own smaller business entities to pay off the debt. The Bill now empowers us to have the same legal right," Sarbadhikary said.
Following the Factoring Bill, the Reserve Bank of India recently issued guidelines creating a new non-banking finance category christened as NBFC-Factors. This has separated the class from other NBFCs, which have been facing a slew of regulatory issues.
Capital infusion and fund raising
Shareholders of India Factoring include Punjab National Bank (30%), Malta-based FIMBank (49%), Italy-based Banca IFIS (10%), Blend Financial (1%) and employees' ESOP (10%). The current share capital stood at around Rs 150 crore. According to industry sources, shareholders are planning to infuse Rs 350 crore capital in next 2/3 years. In FY12, they will give Rs 50 crore capital support.
Besides, the company is raising bank loans of Rs 1,000 crore on an average every year at different banks' base rates (around 11% average) and thereby earning a spread of around 2/3% at the time of lending.
August 19th, 2012, 07:57 PM
Banks offer festive bonanza to customers (http://www.business-standard.com/india/news/banks-offer-festive-bonanza-to-customers/483670/)
With an eye on getting business in the festive season, banks have started offering discounts on interest rates and waiving processing fees to attract retail customers.
Mumbai-based Union Bank of India on Saturday announced it has waived processing fees on home and auto loans from August 15 to January 26.
State Bank of Bikaner and Jaipur, an associate of the State Bank of India, has found an innovative way to attract customers. While the bank is giving a discount of 25 basis points on retail loans across the board, customers who are applying for a car loan above Rs 10 lakh on line will get an additional rebate of 25 basis points, thus making the effective interest rate at 10.5 per cent which is the base rate of the bank, said Shiva Kumar, managing director, SBBJ. He added, the bank was offering 10.75 per cent for home loan customers, and those who apply on line will get a rebate of 10 basis points.
With credit growth slowing down in the current financial year amid high interest rate, banks are seeing the festive season as an opportunity to boost their credit portfolio. State Bank of India, for example, had said that it expected growth in retail credit to offset the impact of slowdown in corporate credit.
The country's largest lender had earlier announced the cut in the interest rates for home and auto loans, immediately after Reserve Bank of India announced a one per cent SLR cut in July. SBI's home loan rates stand at 10.25 per cent for home loans up to Rs 30 lakh and 10.4 per cent for the loans above Rs 30 lakh. It also slashed its interest rate on car loans by 50 basis points to 10.75 per cent across the tenors.
Another public sector lender Andhra Bank is expected to take the decision about cutting interest rates on retail products. “We will be taking a decision soon” said, K K Misra, executive director of Andhra Bank.
Central Bank of India has already launched some products and is in the process of launching few more schemes both on asset and liability side. It has launched a special 555 days fixed deposit product in which the interest rate is higher by 50 basis points that the normal deposits of that tenor.
It has also launched a recurring deposit account where the customer has the flexibility of putting the money according to his/her adjustment. Normally in the recurring accounts one has to put a fixed sum every month.
“We will be waiving the processing fees on the retail loans, and where there is scope of reduction of interest rates we will cut the rates” said Ram Sangapure, general manager (retail), Central Bank of India.
August 19th, 2012, 08:31 PM
Bank unions strike on August 22, 23 (http://timesofindia.indiatimes.com/city/bhopal/Bank-unions-strike-on-August-22-23/articleshow/15552528.cms)
BHOPAL: More than 80,000 bank employees in Madhya Pradesh will join the country-wide strike on August 22 and 23 called by the United Forum of Bank Unions (UFBU) protesting against the Centre's policy of forcing the nationalised banks towards privatisation.
UFBU convenor Sanjeev Mishra told reporters here that the changes in the banking policies were not in the interest of the people at large. He said banking law amendment bill and other reforms, move to shut down rural branches and practice of outsourcing would adversely affect the banking sector.
He said officers and employees of all banks in the state would stage demonstrations in front of their respective bank branches on August 21. Banking services would remain paralysed on August 22 and 23 as all the nine federations of bank officers and employees would join the two day strike, he added.
August 19th, 2012, 08:31 PM
Government asks banks to ease cash deposits for daily mop-up (http://timesofindia.indiatimes.com/business/india-business/Government-asks-banks-to-ease-cash-deposits-for-daily-mop-up/articleshow/15552300.cms)
NEW DELHI: The neighbourhood ATM is set for an overhaul with the government asking state-run banks to turn the machines from being mere cash dispensers to cash collectors. The move is part of a plan to get the Rs 11 lakh crore cash floating in the economy into the banking system.
"That should not lie in the hands of the people but should be in the banking system. A person should be able to withdraw it whenever he needs it and put it back whenever he wants to," finance minister P Chidambaram said on Saturday.
The minister said the government has asked banks to initiate other steps, including enhancing electronic transactions and starting door-to-door cash collection service for daily mop up.
At present, e-transactions account for around 20% of the activity in bank branches and the India Banks' Association is going to initiate steps to get more customers to use electronic channels to complete their transactions.
In addition, banks have been asked to double the number of ATMs from the existing 63,000 so that cash acceptance and dispensing becomes easier.
Earlier, some of the ATMs installed by foreign banks had the facility to deposit cash but most of the machines now come without the facility. In the past, there have been several complaints regarding cash that is deposited via ATMs.
While the minister did not say so, a government-appointed committee had pointed to sectors such as real estate, where a large part of the transactions are in cash, as a major source of generation of black money.
August 20th, 2012, 01:06 PM
Sebi to consider 'safety net' for IPO investors next month (http://timesofindia.indiatimes.com/business/india-business/Sebi-to-consider-safety-net-for-IPO-investors-next-month/articleshow/15555750.cms)
NEW DELHI: Market regulator Sebi will consider next month providing capital protection to part of investments made by very small investors in IPOs ( initial public offers), although the move is being opposed by investment bankers and certain other sections of the industry.
In its last board meeting on Aug 16, Sebi had to defer a decision on providing a 'safety net' guarantee to investors buying shares through IPOs, as issues were raised about any such provisions interfering in the normal market functions where share prices move as per the fundamentals of the company and overall marketplace.
After the board meeting, Sebi chairman U K Sinha had said that further larger consultation is required on this issue and a final view will be taken accordingly.
However, the 'safety net' proposal would be back on the agenda when Sebi board's meets next month, although some changes could be made to limit this benefit to "very small investors", a senior official said.
Sebi is of the view that a 'safety net' provision in the IPOs could help in the government's efforts to channelise the household savings into the equity market, rather than turning into 'idle money' by going to assets like gold, he added.
It is also being considered that the safety net could be provided for only the minimum lot of shares, which Sebi has proposed for every retail investors in the IPOs, the official added.
The 'safety net' is one of the key proposals being discussed by Sebi for its primary market reforms. It has been felt that such a provision would help in fair pricing of IPOs, besides providing investors some sort of a capital protection guarantee.
Last week, finance minister P Chidambaram had said that he has requested Sebi Chairman to consider further market reform measures for the benefit of the investors in its next board meeting.
Welcoming the wide-ranging reforms undertake by Sebi in its last board meeting, the finance minister had said that these measures "will stimulate financial savings among households as well as give a fillip to the mutual fund industry. More and more households should be encouraged to save in financial instruments rather than in gold".
August 20th, 2012, 01:24 PM
Punjab & Maharashtra Co-Op. Bank Embraces IBM Smarter Computing to Support Its Branch Expansion and Online Presence (http://www.rdmag.com/News/Feeds/2012/08/information-tech-punjab-maharashtra-co-op-bank-embraces-ibm-smart/)
Mumbai, INDIA - 14 Aug 2012: Punjab & Maharashtra Co-op. Bank Ltd (PMC), one of India's youngest co-operative banks, has selected the IBM (NYSE: IBM) Smarter Computing approach to IT to accelerate its growth and reach in the fast developing financial services landscape in India. PMC Bank chose to migrate its applications including core banking to an IBM infrastructure with Power Systems to support the growing needs of its more than 66 branches, two extension counters and ATM network, while strengthening its online presence through remote banking.
Headquartered in Mumbai, Maharashtra, the richest and fastest developing state in India, accountable for 25 percent of India's industrial output and five percent of its GDP , the client base of PMC Bank is growing and diversifying even faster. Established as a new bank in 1984, today PMC Bank supports more than 500,000 clients and more than 5500 crore of business. To keep up with its growth without compromising its standards of service and to be able to enrich its offerings while developing its branch and ATM network, PMC Bank needed a totally new concept for its IT infrastructure to support varied applications like mobile banking, SMS banking, Internet banking, Treasury operations and kiosk services.
"We want to offer our clients a banking experience which is easier, faster, more convenient and secure," said H Krishna Karanth, General Manager, PMC Bank. "We also want to enhance the role of our branches and let them focus on providing financial services advice and counsel, while leaving the transactions part to the IT infrastructure."
This means executing millions of transactions daily, handling iterations in a secure way, maintaining full data integrity across multiple subsystems and constantly balancing workloads. It also means dealing simultaneously with challenges such as managing risk and regulations, achieving optimum connectivity and finding new ways to attain efficiency and cost-savings. That is why PMC Bank considered IBM.
“Banks and financial institutions have achieved reduced operating costs with high performance for many years with IBM Power Systems,” said Viswanath Ramswamy, Director, Power Systems, IBM India South Asia. “For PMC Bank, our goal is to provide a technology roadmap which will also assist the bank sustain its long-term growth. The choice of an IBM Smarter Computing solution over competitive platforms reaffirms our leadership in the Indian UNIX server market.”
PMC Bank implemented IBM Power Systems built with IBM BladeCenter H, POWER7 blades, AIX operating system, IBM Storwize V7000 storage system and IBM Tivoli Storage Manager. Featuring IBM PowerVM virtualization technology, the system provides a more dynamic and flexible platform, and facilitates data sharing between bank branches more swiftly, while optimizing resources utilization and keeping costs under control. RAS (Reliability, Availability and Serviceability) and SSD (solid state drives) features automate data tiering to help PMC Bank handle peak loads in real time, thus improving response time for customers and reducing business down time due to hardware failures.
PMC Bank's entire implementation and consolidation was done in association with IBM Business Partner Orient Technologies.
August 20th, 2012, 01:38 PM
TMB, United India launch health insurance product (http://www.business-standard.com/india/news/tmb-united-india-launch-health-insurance-product/483704/)
Tamilnad Mercantile Bank Ltd, in tie up with United India Insurance Company Ltd, has launched a cobranded family healthcare product, to offer customised health insurance policy for the bank's customers.
“The cost of healthcare is going to increase rapidly in the coming years and insurance is a requirement to meet the cost of healthcare for each individual. The cobranded product will give our customers a fine risk coverage at a low premium,” said said KB Nagendra Murthy, managing director and CEO of the bank, while launching the product.
TMB had entered into an agreement with United India Insurance Company in 2010 to act as a bancassurance partner and has been marketing various products of the latter through its 288 branches. The bank expects to sell the policy to around 50,000 customers in the current fiscal, he added.
The demand for health insurance is growing and the penetration of such schemes is low, said G Srinivasan, chairman and managing director of United India Insurance.
“Only 15 per cent of the population is covered under insurance and around nine per cent of it is through various central and state government schemes. Excluding the government schemes, hardly 5-6 per cent of the population has insurance coverage,” he said.
The company has prepared a customised product for the customers of TMB.
The insurance company expects its premium income to grow from last year's Rs 8,200 crore to around Rs 10,000 crore by end of this fiscal and "to add another 300 offices in next three months in class III, IV cities as part of financial inclusion," he said. It currently has around 1500 offices across the country.
TMB, which posted a total business of around Rs 31,034 crore last fiscal, expects around Rs 40,200 crore by the end of the current fiscal.
Net profit, which was Rs 313.46 crore during 2011-12, is expected to grow to Rs 400 crore and the total network would grow from 288 branches to 330 branches during the period, said the company officials.
August 20th, 2012, 01:42 PM
United Bank of India to open new branches (http://www.business-standard.com/india/news/united-bankindia-to-open-new-branches/483729/)
United Bank of India, a public sector bank concentrated in north and north-east states of India is planning to ramp up its presence in north and south.
According to Deepak Narang, the Executive Director of United Bank of India, the bank plans to add 84 new branches across India in urban and semi-urban locations. He added that an approval for 34 branches has been sought by the Reserve Bank of India and rest were in the pipeline. Twenty branches would be opened in rural area for which permission was not required. Narang said that in the current situation of subdued economic growth and lackluster credit demand, the bank was aiming the retail sector to push the credit offtake.
“The segments like education loan, auto loan, SMEs and housing can be growth drivers. The demand for housing loan may be stagnant but taking cognizance of urbanization need of the country it can never drop. The real estate developers do not have a inventory holding capacity for long so the prices are bound to become flexible in times to come. Since our bank has a limited exposure of Rs 3000 cr to housing against the total bank advances of Rs 63,000 cr so we can quickly expand in housing.
The bank has 26 retail hubs pan India and the retail portfolio is well diversified, he added. The bank registered an increase in NPAs from 3.42% in quarter ending March 2012 to 3.47 % in quarter ending June 2012. According to Narang, the exposure of Bank to steel aviation sector was largely responsible for this as there were problems faced by these two sectors. “The provisions were to be made as Air India was also restructured by us.
But we are targeting a recovery of Rs 400 cr to Rs 500 cr this year” The bank is all set to open its representative office in Myanmar and it would be first representative office by any India public sector bank there.
All government approvals, according to Narang were acquired and only local authorities permissions were awaited to commence the operations. The bank has a representative office at Bangladesh.
August 20th, 2012, 01:48 PM
Banks rush to raise money where companies fear to tread (http://www.livemint.com/2012/08/19183315/Banks-rush-to-raise-money-wher.html?atype=tp)
July fundraising by SBI opens the gates for overseas borrowing; at least two more banks to soon take the same path
After almost a year, Indian banks have started tapping offshore investors for cheap money they can give to local companies that have been struggling to raise funds for their overseas needs.
In July, the State Bank of India (SBI) raised $1.25 billion (around Rs.6,962 crore) and Exim Bank, $500 million.
Close on the heels of SBI and Exim Bank, which together raised $1.75 billion in July, ICICI Bank Ltd, Union Bank of India and Indian Overseas Bank raised a total of $1.6 billion last week.
At least two more banks will soon enter the market to raise money and many may follow them.
The banks are raising money when the global economic outlook is uncertain and credit rating agencies Standard and Poor’s and Fitch Ratings Inc. have revised India’s outlook to negative from stable, making overseas money potentially more expensive for Indian entities. The Reserve Bank of India (RBI) data shows corporate borrowings from abroad have slowed in the last one year.
Indian companies raised about $2 billion from the overseas market in June 2012, down from $4.16 billion in June 2011. In May, they had raised $3.37 billion but Reliance Industries Ltd accounted for about 60% of that.
Overseas investors continue to be comfortable to lend to Indian banks.
The rush from Indian banks has been driven by global liquidity, said Naresh Takkar, managing director of Icra Ltd, Moody’s India associate.
“Though there are concerns over the domestic economy, money is available in the international market and fears of event risks have also come down. Banks deploy money wherever they get positive spreads. They can also naturally hedge their currency risk which is not the case with companies. This is why for companies, raising money is more difficult,” Takkar said.
Smaller companies, say bankers, are not getting money from the overseas lenders. The rates being offered to Indian companies have also widened to up to 500 basis points (bps) over the Libor (London Interbank Offered Rate) from up to 400 bps above Libor previously. One basis point is one-hundredth of a percentage point.
Six-month Libor is now around 72 bps. Interest rates for banks are still very competitive, around 350 bps over Libor.
“The companies that are taking dollar loans need to have foreign currency earnings. Since export growth is falling, from where will they get the dollar resources to pay back the money to banks? If they don’t have dollar earnings, they will have to hedge their exposure,” said an executive director of a large bank who didn’t want to be named.
Since the hedging cost is around 6-7%, for those companies which do not earn dollars, foreign currency loans from banks become very expensive. For such borrowers, banks are running default risks.
SBI, India’s largest lender, raised $1.25 billion on 26 July by selling five-year bonds at 4.125%. This was the first instance of a public sector bank tapping the overseas market since May 2011. The bond was priced at 375 bps above the prevailing five-year US bond at the time of the issue and was the largest single-tranche offering by a public sector bank from India. It received bids worth $6.8 billion.
“The State Bank of India issue opened the gates because it showed there is demand for Indian paper. Banks always need money to meet the credit demand from companies and there could be more in pipeline because SBI has created a benchmark for other Indian banks,” said Jayesh Mehta, managing director and country treasurer, global markets group, Bank of America Corp., one of the managers for the bond issues of ICICI Bank, Union Bank and SBI.
Another executive of a US bank involved in all five transactions said Indian banks have timed their issues well. “Global debt markets were quiet for many months and there was a lot of pent-up demand for Indian paper. The coupon was also lower than what they had paid in 2010. More Indian banks could come to the market.”
In 2009-end, SBI had raised $750 million, five year money, at 4.5%.
ICICI Bank raised $750 million through a 5.5 year bond at 4.70%. The issue was was subscribed 7.6 times and had an order book of $5.7 billion.
Both Chennai-based Indian Overseas Bank and Mumbai-based Union Bank raised money at identical rate—4.625%.
This is Union Bank’s first offering after a $400 million issue in August 2010. The bonds were originally priced at a higher rate but strong demand pulled down the rate by about 20 bps.
Syndicate Bank Ltd and Allahabad Bank could be in the market in next few weeks but the relatively large public sector banks may take time to tap the overseas investors.
“We don’t immediately have any plan to raise funds from overseas market. But we are watching the space and as and when required, we will tap into the market, may be even in this calendar year,” said Bank of Baroda chairman and managing director M.D. Mallya. For larger banks, the minimum size of overseas bond issuance is usually $500 million.
September 10th, 2012, 02:14 PM
They should not be offered a normal rate though, their ethics are low, they are likely to screw another bank. Their interest rate should reflect their level of dishonesty.
car loan interest rates (http://www.dialabank.com/article.cfm/articleid/5804)
December 14th, 2012, 02:45 PM
Karnataka Bank best performing banking stock on BSE over last year
MUMBAI: Amongst the 41 banks listed on the BSE Sensex, Karnataka Bank has clocked the maximum returns for the investors over the last year. It has outperformed all its peers giving returns of 181% from January till date compared to the benchmark index- Bankex with 54% returns. At Rs 164.50 it is trading a current price to book value (P/BV) of 1.19, a discount to the Bankex which is trading at 2.
One of the possible reasons for the spectacular increase in the share price is the speculation of a possible takeover by one of the large private sector banks to expand their network.
However, operationally too, the bank has been improving. It has availed of the services of a consulting firm to redesign the business process to achieve higher growth with superior quality. It posted a three-fold jump in its net profit in the quarter ended September compared to a year ago period. The bank has put in place stringent risk management practices to improve the asset quality. According to analysts, it is poised for a robust loan growth of 19% over FY12-FY14E.
The bank's strategy to increase its share of retail advances together with low cost CASA deposit franchise and improving asset quality will augur well going ahead.
Mangalore Based Karnataka bank...Mangalore "the cradle of Indian banking" :cheers:
December 31st, 2012, 07:11 PM
Cheque out the new system (http://www.thehindubusinessline.com/opinion/columns/cheque-out-the-new-system/article4259372.ece)
Faster clearances now. — P.V. Sivakumar
December 31, 2012:
The Cheque Truncation System is all set to replace the age-old clearing system in India, where physical cheques were exchanged between banks. Under the new system, images of the cheques flow between banks instead of the physical cheques, thus making it possible to electronically clear a cheque which would have otherwise been exchanged physically between the banks to take financial decisions.
What is Grid CTS?
The Reserve Bank of India, in collaboration with the National Payments Corporation of India, has worked out a roadmap for CTS implementation across the country. Just as power grids serve a geographical spread, a CTS grid spans geographies, in the sense that various clearing centres across the country would be linked to a nodal centre for settlement. For example, the Southern Grid comprises the States in South India and extends as far as Kolkata, with Chennai as the nodal centre for the Southern Grid. That would mean that all cheque images from across various bank branches in the Southern Grid would flow to Chennai for electronic transmission to the other bank and eventually be settled in Chennai. All such instruments will be locally cleared in Chennai, thus obliterating the concept of collection instruments.
How customer benefits
How does the new system benefit bank customers? In a non-CTS scenario, a physical cheque payable at SBBJ, Guntur, if deposited at SBI Kolkata would be sent to SBI Guntur from where the cheque would be presented to SBBJ locally to get it cleared. The whole process of realisation would take 3-4 days based upon the transit time. In cases of branches located in interior rural areas, the turnaround time would increase based
upon the reach of the couriers.
In Grid CTS clearing, in the scenario mentioned above, the image of the SBBJ cheque gets scanned at SBI Kolkata and gets routed to SBBJ Chennai directly, where SBBJ will clear the Guntur cheque locally at Chennai. And all this happens within one day, thus reducing the turnaround time by obviating the necessity for transit of the instruments all the way to the home branch (Guntur). So the realisation time for a cheque gets reduced, and customers enjoy quick access to their funds.
For CTS implementation, the RBI has mandated certain standards for cheques, called CTS-2010 standard specifications. A cheque that is CTS-compliant would have to adhere to the minimum mandatory features as specified in the standards. These standards were introduced in the interest of the bank customers to minimise the risk due to frauds that can take place by way of cheque tampering. For this reason, the RBI has prohibited corrections/alterations on the cheques except for the date.
The standardisation would also help banks to directly process the data to their Core Banking System without manual intervention. Considering the advantages in the new CTS-2010 standard cheques, the RBI has decided to withdraw the old non-CTS 2010 standard cheques from circulation by calling upon the banks to get back the old cheque leaves from their customers and replace them with new CTS-2010 standard cheques. The deadline for the replacement is March 31, 2013.
Just as Grid CTS has been rolled out in the Southern region, plans are afoot to roll out Grid CTS at Mumbai and New Delhi. Mumbai would be the nodal centre for Western and parts of Central India while New Delhi would cater to North and Eastern India. Thus the entire clearing system in the country would be encompassed under three grids, transforming the paper-based clearing system to an electronic one.
January 1st, 2013, 01:40 AM
My experience with Indian Banks is mixed. Modern ones like ICICI are fine but those that are Govt owned like Indian Bank or Canara Bank are archaic, rude and hardly customer friendly. The accounts are not kept in electronic form, each branch has its own setup with dogged earred ledgers, unfriendly bank managers and rude cashiers/clerks. A simple operation like withdrawing money from a check is a tedious process. You get the check cleared in one counter after an interminably long wait. They scribble something in your check book to keep things "upto date". Then a token is handed and you wait at a cashier counter to get your money. What humbug is this process. Seriously the banking system in India requires a major overhaul. These bank employees are a fat pampered lot, the middle class depends on these bank jobs for a cushy existence. They come in late and have such attitudes and air that is quite unbelievable. You ask them a question and they look irritated and dismissive. The bank manager is some exalted official with pretentious pomp and overlordship. Time to boot these employees and get young energetic people. Give them access to electronic systems (no dog-earred ledgers please) with full authority to do cash transactions like all other banks in the world.
January 9th, 2013, 09:29 PM
Shriram Group to raise $200 mn for non-financial sector biz
A mandate had been announced for a boutique advisory firm to raise the amount
Chennai-based Shriram Group is preparing a road map to raise about $200 million through the private equity (PE) route to seed emerging businesses in the non-financial segment.
Recently, the group formed Shriram Entrepreneurial Ventures, a holding company for 10 non-financial services businesses such as Shriram EPC, Shriram Properties, Take Solutions (the technology arm), medical diagnostics, musical instruments and automobile components. Cumulatively, these segments contribute revenues of about Rs 6,000 crore to Shriram Group’s total revenue of Rs60,000 crore.
NON-FINANCIAL SERVICES FIRMS OF SHRIRAM GROUP
Information Technology: Take Solutions
Real estate: Shriram Properties
Automobile components: Rambal
PET & flexible packaging: Victory Laminations
Drugs & pharmaceuticals: Medispan
Medical diagnostics: Neugen Diagnostics
Musical instruments: Harmony Musical
Business process management: Shriram Value
Infrastructure & power: Shriram Infrastructure & Power
Engineering services: Shriram EPC
Two investment bankers in the know said a mandate had been announced for a boutique advisory firm to raise $200 million.
Earlier, the group had formed a holding company for the financial services business as well; global PE entity TPG is expected to have a minority stake in that company. Shriram Group has a well-established business in various financial services — from financing trucks and life and general insurance to chit funds and consumer and enterprise finance. The group is aggressively expanding this business and preparing for a banking licence, as and when there is an opportunity for entrants in India.
Shriram Group has relied heavily on the private equity route, with 23 PE investing $800 million since 2005.
Marquee PE investors which have invested in Shriram Group include ChrysCapital, ICICI Venture, Bessemer Ventures, Norwest Partners and Merrill Lynch.
January 16th, 2013, 06:33 PM
Banking in 2050 (http://www.pwc.com/gx/en/world-2050/banking-sector/banking-in-2050.jhtml)
The accelerating shift in economic power from the developed to emerging economies is dramatically changing the banking industry across the world.
This report provides projections of the long-term trends of the banking sector based on the underlying macro-economic trends, from now until 2050 for the world’s leading economies.
The recent global financial crisis shook the world economy and set in motion significant changes to the banking industry. In this report we present updated projections on how large we expect the banking industry to become in the world’s largest economies over the next 40 years, building on our 2007 report on this same topic that was produced prior to the onset of the financial crisis, and our updated GDP projections published earlier this year
Our key findings are that:
The emerging economies’ banking sectors are expected to outgrow those in the developed economies by an even greater margin than we projected before the financial crisis.
By 2050 the leading ‘E7’ emerging economies could have domestic banking assets and profits that exceed those in the G7 by around 50%.
China could overtake the US in terms of the size of their domestic banking sectors by around 2023.
India has particularly strong long-term growth potential and our projections suggest it could become the third largest domestic banking sector by 2050 after China and the US, but ahead of Japan, the UK and Germany. Brazil could also rise strongly up the global banking league table over this period.
January 18th, 2013, 03:25 AM
Yashwant Sinha says no to bank licenses to corporates (http://economictimes.indiatimes.com/news/economy/policy/yashwant-sinha-says-no-to-bank-licenses-to-corporates/articleshow/18064940.cms)
MUMBAI: Yashwant Sinha, chairman of the Parliamentary Standing Committee on Finance and a former Union Finance Minister today joined the chorus against corporates being given banking license as the conflict of interest could defeat the very purpose of having new banks.
Sinha, a member of the Opposition Bharatiya Janata Party joined Nobel Laureate Joseph Stiglitz and the International Monetary Fund who are opposed to big corporates getting into banking.
"I entirely agree with IMF," said Sinha told reporters. "It is a very bad idea to give new banking licence to a corporate. This was something when clear separation took place decades ago for very good reason and any relaxations in these norms is going to lead to not only unnecessary conflict of interest but also unnecessary risks to the financial system. "
The Reserve Bank of India is in the process of finalising norms for new bank licenses. There is a demand for letting corporate houses also to get into banking since they have deep pockets. But a section is worried that the financial system could be misused since there could be diversion of funds as it was prevalent before bank nationalisation in 1969.
Flagging concerns on lack of regulatory independence, IMF in its Financial System Stability Assessment report said that the legal, operational and regulatory framework for consolidated supervision of both bank-led groups and financial conglomerates is missing some important elements.
"This may lead to concerns of 'under the radar' risk transfer; concentration of risk exposures; and contagion across the group," IMF had said.
Some of the business houses aspiring to get a banking license could be the house of Bajaj, Tatas, Birlas, and Ambanis.
"I think, the real problem in the financial sector are issues of conflict of interests,'' Stiglitz said recently during his trip to Mumbai. ``And when you have corporates opening their own banks, you are opening a venue for conflict of interests."
IMF said that international experience has supported the prudent policy position of disallowing industrial houses from promoting and owning banks. Highlighting regulatory risks, it said that consolidated supervision frameworks and capabilities are weak even for bank-led groups and the oversight of financial conglomerates continue to be a "work in progress" at the international level.
Even the RBI had raised its fears in a discussion paper in the past.
``Prior to nationalization of major commercial banks in 1969, the industrial and business houses, having control of the banks, diverted bulk of the bank advances to industry, particularly to large and medium-scale industries and big and established business houses, while the needs of vital sectors like small-scale industry, agriculture and exports were neglected,'' said the paper.
January 19th, 2013, 01:32 AM
Sebi revises insider trading norms (http://timesofindia.indiatimes.com/business/india-business/Sebi-revises-insider-trading-norms/articleshow/18083201.cms)
CHENNAI: In an effort to protect the interests of smaller investors better in comparison to large investors, the Securities and Exchange Board of India (Sebi) on Friday announced, after its board meeting in Chennai, that its insider trading regulations will be applicable to all entities with more than 5% stake.
Sebi also said the price offered to public shareholders and the price for preferential allotment would need to be decided on the basis of the prevailing market price on the earliest date when the company's board approves the transaction. To standardize disclosure requirements among various market norms, Sebi has also decided to align takeover related disclosures with that of insider trading norms.
To resolve the confusion over the effective date, Sebi also said that where open offer obligations are triggered — pursuant to an agreement or otherwise in combination of any modes of acquisition — the relevant date for making the public announcement and determination of offer price would be the "earliest date on which obligations are triggered. This will, however, not be applicable if the subsequent trigger is on account of willful and deliberate act on the part of the acquirer".
The market regulator also said that it was serious about minimum public shareholding in companies. Promoters of nearly 190 companies are yet to bring down their shareholding to the desired level to meet the guidelines, although Sebi has already provided various options to meet these norms.
It said the government is committed to ensuring that public sector companies comply with the minimum public shareholding norms and will not be seeking any extension.
The regulator is currently holding consultations with firms to understand their problems. "We are going to have more consultations. We are actually calling them and engaging them in discussion, trying to find out what their difficulties are," said U K Sinha, chairman, Sebi. Already, 70 companies have been contacted and there were consultations held in Mumbai and Kolkata, he added.
To make it easier for companies to comply with public shareholding norms, Sebi decided to abolish the 25% margin money requirement for entities bidding through the auction route.
It also said that indicative prices during Offer for Sale (OFS) or auction route, should be disclosed throughout the trading session. To give a boost to corporate debt market, Sebi said that it will create a separate debt segment on stock exchanges, wherein banks would be allowed to become trading members of the bourses and trade in this market.
Also see :
Sebi relaxes OFS, IDF, IDR norms, tweaks takeover code (http://www.livemint.com/Money/r8k6iw2EXgss458MeQOaHL/Sebi-relaxes-OFS-IDF-IDR-norms-tweaks-takeover-code.html)
January 19th, 2013, 03:17 PM
My experience with Indian Banks is mixed. Modern ones like ICICI are fine but those that are Govt owned like Indian Bank or Canara Bank are archaic, rude and hardly customer friendly. The accounts are not kept in electronic form, each branch has its own setup with dogged earred ledgers, unfriendly bank managers and rude cashiers/clerks. A simple operation like withdrawing money from a check is a tedious process. You get the check cleared in one counter after an interminably long wait. They scribble something in your check book to keep things "upto date". Then a token is handed and you wait at a cashier counter to get your money. What humbug is this process. Seriously the banking system in India requires a major overhaul. These bank employees are a fat pampered lot, the middle class depends on these bank jobs for a cushy existence. They come in late and have such attitudes and air that is quite unbelievable. You ask them a question and they look irritated and dismissive. The bank manager is some exalted official with pretentious pomp and overlordship. Time to boot these employees and get young energetic people. Give them access to electronic systems (no dog-earred ledgers please) with full authority to do cash transactions like all other banks in the world.
I think it varies from branch to branch. I have got better service from SBI and Bank of Baroda than at Axis Bank and CitiBank.
January 26th, 2013, 03:10 PM
Corporation Bank to migrate to new core banking solution
Chennai, Jan 26 — The Mangalore based Corporation Bank will be the first public sector bank to migrate from an existing core banking solution (CBS) platform to a new one in 12-15 months time, said a senior official.
"We were the first public sector bank to have a CBS in 2003. Now we will again be the first government bank to migrate from an existing CBS to a new solution. In 12-15 months' time, the first branch will go live," a bank executive, who did not want to be named, told IANS over phone from Mangalore.
According to him, initially around 10 branches will go live and then the new CBS will be implemented in batches of around 50 branches.
The bank has over 1,600 branches across the country.
While the official does not want to hazard a guess on what the ultimate outlay for the bank would be on the new project, industry officials told IANS that Corporation Bank might have to shell out around Rs.200 crore for the software and hardware.
Dwelling on the reasons for the bank's decision to replace the CBS and the hardware, the bank official said the technology has changed a lot between 2003 and 2013 and Corporation Bank is the only bank to have its solution based on COBOL language.
"The advantage of a new CBS will be that it will be faster, efficient and would support newer applications like mobile banking. With a new CBS design and launch of new products will be faster. Further the new solution is expected to offer better business analytics for the bank to decide is strategies. There will be consistency in data," he said.
The bank has floated the Request for Proposal (RFP) and bids are expected to be received soon from interested companies.
Refuting that the tender condition that the system integrator should have the experience of implementing the proposed CBS in at least 1,000 branches of a public sector bank is restrictive in nature, the senior bank official said only two companies wanted the condition to be altered.
Meanwhile inaugurating the two day 19th All India Conference of Corporation Bank Officers' Organisation (CBOO) here Saturday, chairman and managing director Ajai Kumar said the bank has to move forward further in terms of technology.
"Even now it is termed as a technology savvy bank," he said.
Ajai Kumar said people in the age group of 35 years and less are not within the bank's fold and this situation has to be changed.
According to him, only five percent of the debit cards used by the bank are being used whereas it is around 10 percent in respect of other banks.
"We can earn around Rs.10-20 crore per annum by increasing the debit card usage. The bank should be ready with digital/internet and mobile phone banking," Kumar said.
He said younger generation should be brought to bank with the bank and officials should also actively involve in cross selling of the bank's products.
Read more: http://india.nydailynews.com/business/d10e97c9c4891af28877e4581e7d477d/corporation-bank-to-migrate-to-new-core-banking-solution#ixzz2J5RMCtee
February 6th, 2013, 01:11 AM
Global gang skims Indian credit card industry of Rs 30 crore in 2 months (http://timesofindia.indiatimes.com/business/india-business/Global-gang-skims-Indian-credit-card-industry-of-Rs-30-crore-in-2-months/articleshow/18357670.cms)
Mayur Shetty, TNN | Feb 6, 2013, 12.23AM IST
MUMBAI: The credit card industry in the country has been hit by a series of frauds over the past couple of months, a scam which could potentially impact a large number of credit card users in days to come. Top card issuing banks have seen unauthorized transactions totalling around Rs 30 crore so far by an international syndicate, which bankers believe is capturing card information through retail outlets that have been compromised.
The most disconcerting part is that banks have not been able to identify the establishments or the machines which are swiping card information. A couple of banks that TOI spoke to suspect the theft could be taking place in swipe machines in departmental stores that have been accessed by hackers and compromised to read and transmit credit card information.
All top credit card issuers—ICICI Bank, HDFC Bank, Citibank, SBI Cards and Axis Bank—have been affected by these frauds.
Here is how it works. After accessing the credit card information, the hackers use it internationally for online transactions. There have been cases where cards have been cloned and used for transactions in shops.
"We have seen cloning happening when cardholders travel to some global destinations that are notorious for cloning. Now we are seeing this happen with cards where the holder has neither travelled abroad nor used it for online transactions," said a bank official.
Although fraudulent transactions in India have shrunk dramatically with the introduction of 3D security, the weak link is international transactions. In India, a user needs the cardholder's name, expiry date and CVV number (the three-digit number on the back of your card) plus the online banking password or one-time password for online transactions. Internationally, the transactions are done on the basis of credit card information alone.
There is, however, hope for consumers who have been cheated. Banking sources say where it is established that the consumer is not at fault, they don't have to bear the loss. However, there is substantial inconvenience to the consumer as the amount is kept pending until investigations are complete.
Banks on the other hand may have to reissue thousands of cards which have been compromised and replace existing cards much ahead of their expiry date. In some cases the card issuing banks are protected by insurance if the fraud amount crosses a certain level if they have purchased covers. The bank's contracts with the credit card payment companies Visa and MasterCard also provides for reversal of charges if the merchant has not taken precautions.
"ICICI Bank has noticed that certain fraudulent transactions have taken place in the last few weeks across some overseas merchant terminals on credit cards that have been skimmed. This is not specific to ICICI Bank; it's across the credit card industry. ICICI Bank has taken measures to protect its customers whose credit cards might have been compromised, by issuing new cards to them," ICICI Bank said in a statement.
Although RBI does not investigate these frauds, it does prescribe standards for the card industry. To enhance security features the central bank has asked banks to move to chip-based cards by June 2013 for those who use cards in international transactions. RBI has also said that it will decide whether to make chip-based cards mandatory depending on the progress of Aadhaar, which if successfully rolled out, would provide another level of security through biometric identification.
Bankers said that it was not possible to classify all the contested transactions as fraudulent. "We have had cases where the cardholder could not identify the name of the company in his billing statement. But that customer apologized later when he recalled the transaction," said a bank official. They said that the true extent of fraud could be known after each case is investigated.
Citi, another large issuer which has also been hit by such frauds, did not comment on the magnitude of such cases. "Citibank is committed to providing enhanced security for customer transactions across all channels, including credit and debit cards, at all times. In keeping with this objective, Citibank is amongst the first banks to issue Chip + PIN credit cards in the country for higher security. The bank has also invested in robust controls including advanced transaction monitoring system (with real-time monitoring capability), process of call back to customers for high-risk transactions, proactive reissuance of cards at risk as well as conducting regular customer and merchant education programmes," Citi said.
IndusInd Bank, meanwhile, has experienced a fraud on its pre-paid card. The fraud was a result of hacking the Electronic Clearing System using a malware. The bank believes the hacking to be the work of an international fraud syndicate. "There is no impact to any of our customers. The malware has been identified and removed. External consultants have been hired to investigate this incident and steps taken to secure their systems basis advice from them. Monitoring controls have been enhanced including using the fraud prevention systems of the Associations" a spokesperson said.
According to SBI Cards, the company immediately blocks a card when it gets information on a fraud. "We analyze and try to identify a common fraud and tend to narrow down on the possible compromise point and subsequently block the suspected merchant to pre-empt any further misuse or fraudulent activity," it said. It added that it also informs the payment network (Visa and MasterCard).
February 7th, 2013, 12:37 AM
Banks will pip software sector as top job creator (http://www.thehindubusinessline.com/industry-and-economy/banking/banks-will-pip-software-sector-as-top-job-creator/article4386588.ece?homepage=true)
Growing opportunities: Banks, especially in the public sector, will create more jobs as a bulk of their lower and middle level employees will retire in the next five years. — Mohammed Yousuf
Chennai, Feb. 6:
A decade ago, Ananth, a commerce graduate, took a diploma in computer science from NIIT to enter the IT industry. He then moved to the US to work for an American company.
Today, it’s a different scenario. Mahesh, an engineering graduate, is working hard to get through a banking recruitment examination for the post of “specialist officer.” Mahesh feels his job will be more secure in a bank than in a software company.
This reversal in trend of an engineering graduate looking at a bank, and not a software company, for a job is an indication of what lies ahead. The banking sector will create more jobs than the IT industry.
Nationalised banks will add 5-7 lakh people in the next five years, which means the sector needs to add about 1.25 lakh people every year, Going by the current trend, the IT sector will struggle to add one lakh, said Santanu Paul, CEO and Managing Director, TalentSprint, a skill development training company.
India has 6.40 lakh villages but only 32,000 bank branches. Less than 20 per cent of the Indian population has a bank account. The government in its financial inclusion drive will increasingly use banks and ‘business correspondents’ to reach out to the rural population. Also banks, especially in the public sector, will create more jobs as a bulk of their lower and middle level employees will retire in the next five years, said E. Balaji, CEO,Randstad India, an HR firm.
The banking sector will soon match the IT industry in salary. A specialist officer in a bank is today paid Rs 3.6 lakh a year, which is more than the Rs 3 lakh paid to an engineering graduate on campus recruitment by most companies, said Balaji. In the next five years, the banking sector will change dramatically.
Sunil Goel, Managing Director, GlobalHunt, an executive search firm, said that formalising banking transactions and making it mandatory in the villages with a low population and integration of transaction with all the banks will create the demand for people across the functions, including core /technology/mobile/Internet banking.
Availability of technology and mobile telecom networks are giving a boost and accessibility to the banking industry, he said.
Keywords: Ananth, commerce graduate, computer science, different scenario
February 7th, 2013, 05:08 AM
RBI working group wants banks to step up jewel loans (http://www.thehindu.com/business/Industry/rbi-working-group-wants-banks-to-step-up-jewel-loans/article4386565.ece)
Proposes setting up of Bullion Corporation of India to provide refinance
A working group set up by the Reserve Bank of India (RBI), on Wednesday, suggested banks to increase their gold jewellery loans portfolio to curb large imports of gold, which is widening the current account deficit (CAD).
The working group was set up to study issues related to gold imports and gold loans provided by non-banking finance companies (NBFCs).
“This greatly facilitates monetisation of huge stocks of gold. Given the superior quality of gold as collateral, the prudential norms like risk weights and provisioning on gold loans may be softer than other loans,” it said in its final report.
This move would also reduce reliance of economically weaker sections of the society on money lenders and pawn brokers.
“There is a need to moderate the demand for gold imports considering its impact on the current account deficit,” the report said. The working group proposed a combination of measures to pare demand, manage supply and increase monetisation of idle gold stocks . CAD increased to a record high of 5.4 per cent during the second quarter of the current financial year as compared to 4.2 per cent in the corresponding period in the previous fiscal.
The working group proposed the setting up of ‘Bullion Corporation of India’ (BCI), as a backstop facility, to provide refinance to institutions lending against the collateral of gold, and also to undertake retailing functions in gold, including pooling of idle gold, in the system.
“If BCI is established in India, it would facilitate the activation of idle domestic gold and thereby reduce gold imports,” it pointed out.
On the other extreme, the gold corporation could be empowered with wide-ranging activities related to the entire spectrum of commercial policies related to gold. The corporation could make purchases and sales of gold and issue gold bonds and collect the gold stocks, it added.
The idea of a Gold Bank was mooted by the then Finance Minister, Manmohan Singh, in his budget speech in 1992. However, the proposal was not implemented. The group suggested that the gold bank could be given powers to import, export, trade, lend and borrow gold and deal in gold derivatives. “Its role should be that of intermediary in gold transactions, providing liquidity to holders of gold and gold loan providers,” it added.
The proposed BCI could also play a major role in recycling and pooling of domestic scrap gold, which comes to nearly 300 tonnes per annum.
The group suggested the government to give in-built tax incentives for Gold Bonds and Gold Deposits schemes. “The impounded gold through gold bonds can be used to reduce the demand for gold imports. There can be a lock-in period.
This would impound domestic gold in various forms, such as jewels, ornaments and coins,” it said.
It also wanted the government to align gold import regulations with the rest of imports as gold imports were getting a preferential and favourable treatment compared to import of any other item. “This will take away significant incentives to gold imports, and will go a long way towards reducing gold imports,” it pointed out.
Reiterating its earlier proposal, the group proposed to explicitly prohibit banks from extending advances for purchase of gold bullion, primary gold, jewellery, coins, ingots, Gold ETF and gold MF units with the exception of providing working capital finance to jewellers. However, the working group felt that there need not be any curb or limits on advances against gold jewellery and gold coins for productive purposes.
It proposed more gold-backed products to unlock the hidden economic value in idle gold stocks. To begin with, the group suggested products such as Gold Accumulation Plan, Gold-Linked Account, Modified Gold Deposit and Gold Pension Product.
“Banks may also be permitted to issue gold bonds for terms longer than 10 years in the same way as gold deposits. Banks may also be permitted to lend against these gold deposits / bonds, and also buy back such gold deposits from the public,” the report said.
February 9th, 2013, 04:13 PM
50 crore debit cards in next three years (http://timesofindia.indiatimes.com/business/india-business/50-crore-debit-cards-in-next-three-years/articleshow/18418464.cms)
CHENNAI: Around 50 crore debit cards are set to be issued in the next three years as per a study done by Assocham (The Associated Chambers of Commerce and Industry of India). "In the next three years, around 54 crore bank customers in India are expected to be issued debit cards marking an impressive rate of inclusive banking, while the number of credit cards would remain at less than three crore in the same period," Assocham said.
As on December end of last year, 31.44 crore bank customers have been issued debit cards and the number is growing at a compound annual rate of about 18%. On the other hand, the number of credit cards, largely a metro phenomenon is not growing at the same pace as debit cards. At the end of December 2012, the number of credit cards was just 1.88 crore with an annual growth rate of 6-7%. Conservative habits in financial matters, high interest rates and excessive penal rates even for short delays in payment, by say a few days, are some of the reasons keeping consumers away from credit cards.
"The so-called plastic money culture, implying living on borrowed money, has not really caught on in India. Part of the blame lies with the card issuers, which have kept so many hidden charges making users feel deceived," Rajkumar Dhoot, president, Assocham said. Also, rising credit card and cyber crimes with credit card misuse and other frauds on the rise have also resulted in loss of confidence in plastic money.
February 23rd, 2013, 01:01 AM
Decks cleared for new players in banking space (http://www.thehindu.com/business/Industry/decks-cleared-for-new-players-in-banking-space/article4443488.ece?homepage=true)
Any Indian-owned corporate can apply
The Reserve Bank of India (RBI), on Friday, issued final guidelines for setting up of new banks in the private sector, including corporate houses and non-banking finance companies (NBFCs), through a wholly-owned Non-Operative Financial Holding Company (NOFHC).
Public sector companies are also eligible to apply. The RBI will allow applicants for new licences until July 1.
“Promoters/ promoter groups should have a past record of sound credentials, integrity and should be financially sound and have a successful track record of running their business for at least 10 years,” RBI said in its guidelines.
The RBI further said that “promoter groups’ business model and business culture should not be aligned with the banking model and their business should not potentially put the bank and the banking system at risk on account of group activities such “as those which are speculative in nature or subject to high asset price volatility.”
However, the RBI does not exclude any companies from speculative sectors such as real estate and brokerage houses from entering the banking sector. In its draft guidelines, earlier, the RBI had excluded companies from these areas from getting new banking licences.
The initial minimum paid-up voting equity capital for a bank would be Rs.500 crore. The NOFHC would initially hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which would be locked for five years and which would be brought down to 15 per cent within 12 years. “The bank shall get its shares listed on the stock exchanges within three years of the commencement of business,” the RBI added.
The aggregate foreign shareholding in the new bank would not exceed 49 per cent for the first five years after which it would be as per the extant policy.
At least 50 per cent of the directors of the NOFHC would be independent directors. The NOFHC and the bank would not have any exposure to the promoter group. “The bank shall not invest in the equity / debt capital instruments of any financial entities held by the NOFHC,” it added.
The new banks should open at least 25 per cent of its branches in un-banked rural centres (population up to 9,999 as per the latest census).
Keywords: Banking sector, private players entry, Reserve Bank of India, non-banking finance companies, public sector companies
February 25th, 2013, 05:28 AM
Shriram Group to focus on low-cost banking (http://timesofindia.indiatimes.com/business/india-business/Shriram-Group-to-focus-on-low-cost-banking/articleshow/18668366.cms)
MUMBAI: Shriram Group has said that it will seek a banking licence for a new group entity which will focus small-ticket loans and will have a low-cost model.
Speaking to TOI, Arun Duggal, chairman, Shriram Capital said that "We would prefer to apply for a new banking licence with a model for lending to low income families."
Chennai-based Shriram Group, promoted by R Thyagarajan, has its roots in the chit funds business but today is a financial conglomerate with Shriram Transport Finance as group flagship. The group also owns Shriram Life and Shriram General Insurance Companies and Shriram City Union — a consumer finance business. The group is one of the contenders for a banking licence under the new guidelines issued by Reserve Bank of India on Friday.
According to Duggal, the cost structure of existing banks is too high to effecitively service low-income groups and small borrowers. "Even now our focus is on retail our intention is to use technology for servicing loans to low-income families," he said. Duggal does not see the Rs 500-crore paid-up capital requirement as a deterrent.
"Shriram Capital is in the nature of a financial services holding company and our insurance entities are owned by it. As a group, we are already fully regulated by RBI." While the group does not see any deterrent in applying for a banking licence, it is still in the process of examining the regulations and does not see any advantage in being the first mover in terms of applying for a licence.
"We are studying the regulations. We have an internal counsel and, if necessary, we will take outside advice and prepare our business plan. We have until July to submit our application and will submit it before then," said Duggal.
March 13th, 2013, 12:51 AM
RRBs lax in adapting to new CTC cheque format (http://timesofindia.indiatimes.com/city/lucknow/RRBs-lax-in-adapting-to-new-CTC-cheque-format/articleshow/18940082.cms)
All those who have yet to apply for the new 'CTS-2010' cheque format need to do so before March-end as all banks would necessarily adapt to the new technology of cheque truncation system (CTS), meant to reduce the unnecessary time and energy spent on clearing of physical cheques.
The system eliminates excess time consumed in physical movement of cheques.
Instead, it ensures easy realisation of cheques through transmitting the cheque image online. RBI had earlier set the deadline for its implementation as December 31, 2013 but later extend it for three more months.
Sources in RBI have told TOI that the deadline might extend to June to ensure that everyone complies to the new system.
CTS is intended to bring a more secure and universalised standard of payment across the country. Vivek Dwivedi, deputy bank manager, ICICI Bank Ltd, said, "Earlier, we had to spend a lot of time clearing cheques. The new system reduces logistics and travel cost. CTS enables online scanning and transmission of cheques, hence, ensures faster clearance." He said that ICICI had already adapted to the new system about a year back.
In fact, almost all banks have started issuing new format cheque books to customers. In Lucknow, about 75% customers have already switched to the new format, but in rural areas, the number is bleak. Nawal Saxena, senior manager in IT department of Bank of Baroda (Convener of state level bankers' committee in UP) said, "The response from cooperative banks and RRBs (regional rural banks) has been poor till date. I hope, their sponsor banks take lead in bringing them at par with the national system."
The new cheque has a number of new features-it has the new rupee symbol, carries user name and a unique CTS number on left hand side of the cheque. It also contains a watermark as a security feature to keep a check on the increasing incidences of cheque misuse, tampering and alternations.
The CTS complaint cheques are homogenous in terms of paper quality, cheque-size, security features and fields like signature and date details.
RBI guidelines had made it mandatory for all kinds of banks to use the new cheque format from April 1 onwards. In the new system, cheques containing special electronic images are scanned and transmitted online to the drawee bank along with relevant information about the clearing house. These cheques comprise 'MICR' codes which are specific to a branch, hence ensure easy processing of cheques.
An officer in RBI, Lucknow said, "We don't want people to panic at the last minute. Against those who have still not learnt about the new system and end up with old cheques even after the deadline, we might not take immediate action, instead will give extra time to adapt to the new system." He confirmed there had been no official communication on this front yet but given the lack of awareness, especially among rural belt probability of such relief was high. CTS has already been implemented in cities like Delhi, Chennai and Bangalore and would be rolled out in other parts of the country as well.
The idea is to build a common payment grid across nation and standardise cheques for the purpose. It is applicable to multi-city and payable-at-par cheques at any branch of a bank.
Bankers have been informing customers via text messages, e-mailers, public notices in newspapers, displaying notice in branches etc to surrender their old, 'non-CTS' cheque book and instead apply for the new CTS standard cheque book at the branch. "The cheque book comes free of cost and the mode of application is similar to that of older one. Only the cheque format has changed. Almost all banks have adopted it by now. I assume that about 75% of people in the capital would already know about it", said Sunil Mehta, general manager (UP and Uttarakhand) Allahabad Bank.
March 19th, 2013, 08:59 AM
More time to migrate to CTS-2010 cheques
May 10th, 2013, 05:41 AM
Chennai's Unmetric tracks how banks use social media (http://economictimes.indiatimes.com/news/emerging-businesses/startups/chennais-unmetric-tracks-how-banks-use-social-media/articleshow/19981039.cms)
As tracking consumer response on social media becomes more important for businesses, a number of startups are creating tools to address this market. Chennai's Unmetric, which provides insights to global brands on their social media rankings, has tracked the performance of Indian banks on social media.
Unmetric scores from Facebook, Twitter and YouTube were added together to determine which banks are reaching out to customers on the net. HDFC Bank topped with a score of 110, while ICICI BankBSE -0.47 % came in second with a score of 108. Axis BankBSE -2.50 % was third with 93.
"There is a clear division between the social media efforts of private-sector and public sector banks," said Lakshmanan Narayan, CEO of Unmetric. However when it comes to actually providing customer service, banks mostly prefer customers calling the helpline. "Most customers trust other customers, their peers or friends, rather than a bank trying to convince them about their products," said Mukund Mohan, CEO-in-Residence at the Microsoft Accelerator, who earlier founded a social media startup in the US.
Here are some key findings in the report:
May 14th, 2013, 04:02 AM
Guys, look at this huge scam, corrution and black money market with the private and public banks in India. This is such a fucking brave sting operation by cobra post named "Operation Red Spider", where everyone is exposed. Politicians, Swami ji, doctors, bankers, NGOs, insurance companies, Hawala operators, stock brokers. Fuck man fuck man. Behenchod, saare corrupt hain, hamara desh me. sab ko goli mar do!
watch the entire sting operation with all the banks here! I will make a orderly playlist of the entire sting operation and post the link later, but in the mean while look at all the videos and your bank's involvement in this scam if any.
Yaar , kya ho raha hai yaar, is desh me?
May 14th, 2013, 04:16 AM
Marathaman where are you?
The nation needs you .
May 14th, 2013, 08:10 AM
i hate myself. when will i get chance to earn money by corruption. i m tired of working.
khaa pee raha he saara zamaana, jo kaam karta he who hei chutiyapa
May 14th, 2013, 06:39 PM
^^ exactly. Aaj ke zamaane me, jo imaandari se aur samarpith kaam kartha hai, wohi is duniya mein chootiya aur haare bantha hai.
May 14th, 2013, 11:34 PM
Still this does not justify corruption. Apne desh mein har aadmi aisa hi sochta hai and bhrastachar failata hai.
Everyone thinks such and spreads corruption that is the reason society is corrupt.
May 15th, 2013, 03:35 AM
^^ Yaar, meine kisi cheez ko justify nahi kar raha hoon. Maine sirf hamara desh ki sthithi ke baare mein bata rahahoon.
May 15th, 2013, 12:23 PM
Chalo thoda corrupt ban jaye
(said in a gist of Thoda Roomani Ban Jaye)
May 15th, 2013, 04:03 PM
i hate myself. when will i get chance to earn money by corruption. i m tired of working.
khaa pee raha he saara zamaana, jo kaam karta he who hei chutiyapa
May 28th, 2013, 05:20 PM
HDFC Bank manually clears 1.61 lakh cheques in a day (http://www.thehindubusinessline.com/industry-and-economy/banking/hdfc-bank-manually-clears-161-lakh-cheques-in-a-day/article4759728.ece)
Ahmedabad, May 28:
HDFC Bank conducted a full-fledged Business Continuity Plan (BCP) drill during which it processed a record 1,61,373 instruments worth Rs 1,130 crore in a single day in Ahmedabad.
The exercise was carried out recently under the guidance of the Reserve Bank of India (RBI) to check the readiness and manual processing capacity of its back-up centre, in case of any disruption in the electronic clearing system in the future, the bank said in a statement.
HDFC Bank’s back-up centre in Ahmedabad is the first to conduct the BCP exercise on a weekday, without placing any restriction on banks on presentation. Over 300 representatives from 88 member banks participated in the drill.
These BCP drills ensure continuity and recovery of critical business processes in emergency situations, and limit their impact on people, processes and infrastructure.
Rajul Sarkar, Senior Vice-President, Wholesale Banking Operations, said on Tuesday that HDFC Bank was the first commercial bank to successfully organise such a large scale manual cheque clearing (BCP) drill in Ahmedabad.
May 28th, 2013, 05:22 PM
RBI not to ban banks from selling gold coins (http://www.thehindubusinessline.com/industry-and-economy/banking/rbi-not-to-ban-banks-from-selling-gold-coins/article4759819.ece)
Pune, May 28:
The Reserve Bank of India (RBI) does not want to prohibit banks from selling gold coins so as to encourage genuine investment, but is not in favour of speculative buying or aggressive marketing by banks, D Subbarao, Governor has said.
On Monday, the RBI had said that banks will not be permitted to give loans against gold exchange-traded funds (ETFs) and gold mutual funds.
“If people want to buy gold for savings, the route should be available for them but for genuine purpose. But if the loan to value ratio is not restrained, there is a possible risk,” he said.
Speaking on the sidelines of a meeting at the College of Agricultural Banking here, Subbarao said that he recognised that the attractiveness of gold was a consequence of high inflation, but pointed out the need to invest in financial savings which is good for the economy.
According to reports, the central bank is examining the business practices of 30 banks to ascertain whether bank staff was under pressure form senior officers to sell gold coins or related products, and to find whether they are being sold as a pre-requisite for offering regular banking services.
June 11th, 2013, 07:33 PM
Axis Bank unveils co-branded credit card (http://www.thehindubusinessline.com/industry-and-economy/banking/axis-bank-launches-new-credit-card/article4804068.ece)
Mumbai, June 11:
Axis Bank on Tuesday launched a new co-branded credit card targeting affluent customers.
The card holders can get a discount of 20 basis points on home loans from the bank with a 50 per cent concession on processing charges.
Further, the card holders will be provided with reward points which can be redeemed with Miles & More’s partners across sectors such as flights, hotels, resorts, car rentals and retail stores among others. Miles & More is a Europe-based international frequent flyer program.
The card is available in two variants —World Select and World — with a joining fee of Rs 10,000 and Rs 3,500 respectively. The annual fee on World Select and World cards is Rs 4,500 and Rs 3,500, respectively.
It combines insurance and travel benefits for international frequent flyers and gets them access to Lufthansa and other member airlines’ programs.
In 2008 the credit card industry was at its peak. However, the slowdown that followed led to de-growth.
“Over the past 12 months, customer interest and usage of credit cards has increased with overall card spends in the industry going up by over 30 per cent last year,” said Jairam Sridharan, Head Consumer Lending and Payments, Axis Bank.
Currently, the loan outstanding on Axis Bank’s credit cards is about Rs 1,200 crore, accounting for about 2 per cent of its retail book.
The bank has about 1.1 million credit card customers, while the total outstanding cards in the banking industry stood at 19.5 million as on April 2013.
June 12th, 2013, 09:14 PM
Indian Bank, United India Insurance launch portal (http://timesofindia.indiatimes.com/business/india-business/Indian-Bank-United-India-Insurance-launch-portal/articleshow/20558021.cms)
CHENNAI: State-run Indian Bank and United India Insurance Company (UIIC) have joined hands to launch a webportal offering online entry and renewal of group insurance policies.
Indian Bank Chairman and managing director T M Bhasin and United India Insurance Company Chairman and managing director Milind A Kharat launched the portal here today.
Indian Bank has been offering a Arogya Raksha Group Mediclaim Insurance Policy to its customers since 2006. This is a floater policy offered at high premium, a bank statement said.
"Indian Bank has mobilised a non-life business for UIIC, amounting to Rs 31 crore during 2012-13, earning a fee based income of Rs 3.23 crore", it said.
Till now the entire operation was done manually consuming huge time. To move towards a more customer friendly business model, Indian Bank and UIIC have developed this web portal which will offer online entry/renewal (of policies) among other services, the statement added.
"The introduction of web portal will add momentum to alternate channels besides enabling us to harnes the CBS technology for adding business volumes," Bhasin said.
To a query he said the Bank proposes to add about 10,000 online policies through the portal during this year and generate over Rs 20 crore in commission earnings. This online facility would be extended to other policies also, the statement added.
June 12th, 2013, 09:30 PM
Staff benefit costs may delay merger of associate banks with SBI (http://www.thehindubusinessline.com/industry-and-economy/banking/staff-benefit-costs-may-delay-merger-of-associate-banks-with-sbi/article4807647.ece)
Kolkata, June 11:
Huge costs, particularly relating to employee benefits and provisioning for non-performing assets, might delay the merger of the five associate banks with State Bank of India, sources said.
According to S. Vishvanathan, Managing Director of SBI Associates and Subsidiaries division, the bank would have to fork out around Rs 10,000 crore for merger of all the associate banks with itself. The amount of capital required would depend on the size and business of the individual bank.
“Cost, expenses and employee perquisites are different and we need to bring them on equal footing (with SBI). For instance, there are three terminal benefits in SBI as compared to two in case of associate banks. Capital will be required to create a corpus,” Vishvanathan told Business Line.
State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed entities with non promoter holding ranging between 7.7 and 25 per cent; while State Bank of Hyderabad and State Bank of Patiala are wholly owned. It might take time for the merger process in case of listed entities.
SBI had set aside nearly Rs 1,500-2,000 crore each during the previous mergers of State Bank of Saurashtra (August 2008) and State Bank of Indore (August 2010).
“We will take a non-discriminatory approach while deciding on the sequencing of mergers,” he said.
SBI Chairman, Pratip Chaudhuri had recently indicated that the merger process would begin by September. Interestingly, Chaudhuri’s term expires in September.
Strain on capital
“The funds are likely to come from SBI’s own capital. This is likely to bring down their capital adequacy ratio and might prove to be a drain on their CAR,” Vaibhav Agrawal, Vice-President, Research, Banking, Angel Broking, said. The bank might in turn have to resort to government borrowing to shore up its CAR, he added.
As on March 31, 2013, SBI’s capital adequacy ratio stood at 12.92 per cent.
SBI has set up a committee to be headed by Vishvanathan to conduct a study on the merger process based on its previous experience.
The bank is also in the process of studying the various “softer” issues — relating to human resources and branding — involved during the merger.
“We want to do it (the merger) slowly and carefully. Both financial and softer issues need to be addressed during a merger,” Vishvanathan said.
The cultural similarity between SBI and its associate bank would be easier compared to a merger between any two banks. However, SBI would have to take into consideration the market perception of the associate banks before going ahead with consolidation.
“These banks have their own specific markets and a loyal customer base. In fact some customers recognise associate banks as their own brand. SBI will have to tackle these issues too,” he said.
According to Akeel Master, head of financial services of KPMG in India, trade union related challenges would be a bigger matter to address than finding capital for the bank, particularly, in an election year.
June 16th, 2013, 12:36 PM
Private banks step up hiring; top-five add over 15,000 staff (http://www.deccanchronicle.com/130616/news-businesstech/article/private-banks-step-hiring-top-five-add-over-15000-staff)
New Delhi: Leading private sector lenders are in top gear when it comes to expanding their headcount and just five of them, including ICICI Bank and HDFC Bank, added more than 15,000 employees to their payrolls in the last fiscal.
The expanded workforce also seems to be giving them rich dividends in terms of improvements in their employee productivity, shows an analysis of the annual staff details of ICICI Bank, HDFC Bank, Axis Bank, Yes Bank and Kotak Mahindra Bank.
At the same time, the full-year staff costs also rose for all the five banks. Together, the five banks saw their cumulative headcount rise by 15,823 persons in the latest fiscal, ended March 31, 2013, to close to two lakh employees. While HDFC Bank had the biggest workforce (69,065) among the five at the end of the fiscal, the highest increase (6,163 employees) was recorded by Axis Bank in absolute terms.
HDFC Bank's workforce rose by 2,989 employees, while that of ICICI Bank rose by 3,789 persons to 62,065 during the fiscal 2012-13, shows the details published in the banks' latest annual reports. Axis Bank saw its headcount rise to 37,901 employees, while Yes Bank and Kotak Mahindra Bank also expanded their staff strength by 1,382 and 1,500 persons, respectively. The collective headcount of the five banks stood at 1,99,555 as on March 31, 2013.
The five banks together incurred total employee expenses of close to Rs 13,000 crore in the year 2012-13, marking an increase of about Rs 1,700 crore, with HDFC Bank leading the charts in terms of increase as well as the total staff costs for the fiscal. While per-employee profitability rose for all the five banks, four of them also recorded an improvement in their respective business per employee. Axis Bank was the only one to see its business per employee dip marginally to Rs 12.15 crore, from Rs 12.76 crore in the previous fiscal.
Yes Bank was on the top in terms of per-employee profits as well as business. Its profit per employee was Rs 21 lakh, followed by Axis' Rs 15 lakh, ICICI Bank's Rs 14 lakh and Rs 10 lakh each for HDFC Bank and Kotak Mahindra Bank.
The per-employee profitability is derived by dividing the bank's net profit after tax by the number of emplpyees, while the 'business per employee' is the average deposits plus average advances divided by number of employees.
June 17th, 2013, 06:02 PM
Dena Bank plans to open more branches in W. Bengal (http://www.thehindubusinessline.com/industry-and-economy/banking/dena-bank-plans-to-open-more-branches-in-w-bengal/article4822896.ece)
Kolkata, June 17:
Dena Bank is planning to open more branches in West Bengal.
According to a press note, plans are also afoot to open more branches in Assam, Nagaland, Tripura and a few other north eastern states.
The bank today opened its 37th branch in West Bengal. Four more branches are to be opened shortly in Burdwan and Birbhum districts of the state shortly.
June 17th, 2013, 06:03 PM
Banks expect rate cuts in July; rule out cut in lending rate (http://www.thehindubusinessline.com/industry-and-economy/banking/banks-expect-rate-cuts-in-july-rule-out-cut-in-lending-rate/article4823341.ece)
Mumbai, June 17:
Ruling out the possibility of cutting lending rates after Reserve Bank kept key rates unchanged, bankers today said the central bank decision to hold the rates was on expected lines given the troubles on rupee and high current account deficit.
Describing RBI policy as not surprising, State Bank of India Managing Director and Chief Financial Officer Diwakar Gupta said there is room for the central bank to look at the long—term and not too much on the short—term issues like rupee fall and the CAD.
“Therefore, I expect them to do something on the next policy day as inflation is under control,” he said, adding that food inflation is a structural issue and not driven by money supply.
On the changing concerns of RBI, which for too long has been harping on the high current account deficit and now is expressing concerns over balance of payments, Gupta said: “Our problems on the BoP will remain so long as we remain a services-driven economy and not a manufacturing one.”
“The recent depreciation of the rupee and the absence of any uncertainty about its future course warranted holding action by the RBI,” HDFC Bank said in a statement.
“Prudence pays, especially for a central bank that’s attempting to manage an economy buffeted by adverse external pressures and extreme uncertainty in the global policy environment,” it added.
Bank of India CMD V R Iyer said the RBI move to hold the repo rate at 7.25 per cent was expected given the troubles on the rupee and the current account deficit.
June 18th, 2013, 04:51 PM
IDFC to apply for banking licence (http://www.thehindubusinessline.com/industry-and-economy/banking/idfc-to-apply-for-banking-licence/article4827048.ece)
Mumbai, June 18:
IDFC Ltd has decided to apply for a banking licence.
On Tuesday, the company’s board approved a resolution to apply under RBI’s guidelines for licencing of new private sector banks.
RBI had issued guidelines last February and disseminated clarifications in the first week of June.
June 23rd, 2013, 03:10 PM
Message from banks: No more free SMS alerts (http://www.thehindubusinessline.com/industry-and-economy/banking/message-from-banks-no-more-free-sms-alerts/article4841065.ece)
Hyderabad, June 22:
A very welcome SMS — bank alerts — will cost more. Some leading private sector banks, including HDFC Bank, Axis Bank and ICICI Bank, have announced that they will charge an annual fee for SMS alerts.
While savings accounts customers will pay Rs 60 a year, current account customers will pay Rs 100.
An ICICI Bank spokesperson said: “ICICI Bank, like many other banks, has started charging its savings account customers for SMS alerts, following the steep hike in SMS charges by telecom operators.”
Until recently, this facility was free and seen as a value-added service. While fees on various banking services is hardly new, the latest, on SMS alerts, is worrying customers. “The incidence of charges for services is already high. Can’t these alerts be treated as a basic service?” asked a visibly agitated Amala, an Axis Bank customer. The RBI is not in favour of increasing service charges. However, its policy is not to interfere with the service charges levied by banks under normal circumstances.
Customers can ask the banks not to send them alerts, but most people are unwilling to de-register because the alerts help prevent high-tech frauds.
“Till now, banks prided themselves on providing instant SMS alerts for free. Just when we got accustomed to it, they are levying a charge,” said B. Raghavender, an Infoscion, as he waited to be served at a bank branch here.
Private banks have been charging for a number of services and though they appear to be small, customers end up paying a substantial amount over a year.
Public sector banks, however, are not yet aggressive in charging extra for services.
State Bank of India, for instance, still offers the alert service free of cost as do other public sector banks.
An Axis Bank official, who did not want to be named, said SMS fees would soon become an industry standard, whatever the reason.
Private banks were not willing to quantify or comment on the fees they could get, given their large customer base.
June 23rd, 2013, 06:36 PM
RuPay cards can be used online (http://timesofindia.indiatimes.com/tech/tech-news/internet/RuPay-cards-can-be-used-online/articleshow/20709685.cms)
MUMBAI: Account holders in rural banks and small cooperatives can now make online purchases with the National Payment Corporation of India launching an e-commerce solution for its RuPay card. RuPay is India's answer to Visa and MasterCard and has been set up at the behest of the Reserve Bank of India (RBI) to bring down transaction costs and spread electronic payments.
"Functionality across ATMs, credit card point of sale terminals and over the internet are the holy trinity of any electronic payment service. Until now, the card could be used in ATMs and as a debit card only. Now, with the e-commerce platform also available, banks should have no reluctance in issuing RuPay cards," said A P Hota, MD & CEO, NPCI.
Over 30 lakh RuPay cards have been issued since it was launched in March 2012. RuPay debit cards are being issued by 20 commercial banks, 32 RRBs and over 75 co-operative banks. As against this, commercial banks have already issued over 30 crore debit cards, most of them on the Visa and MasterCard network.
What makes RuPay transactions distinctive from Visa or MasterCard transactions is that the ATM pin number doubles as the secure code since RuPay manages both the ATM and e-commerce network.
Speaking at the launch, H R Khan, deputy governor, RBI, said that the objective was to ensure that RuPay transactions touched every Indian by 2020.
"The whole purpose of a payment system is to reduce the use of cash. One of the unintended consequence of increasing the number of ATMs has been that demand for cash has actually gone up," he said.
Khan said that RBI has directed banks to improve the security level on cards by introducing a chip and pin-based payment system by end-June 2013. "We will be reviewing the progress in the next couple of days," he said.
The company will set up machines and earn revenues from fees for every transaction from the card-issuing bank.
June 25th, 2013, 06:12 PM
Canara Bank unveils eLounge, eLobby services
Coimbatore, June 25:
Have you dreaded going to a bank’s branch for some reason or other? Well, you may not have to wait indefinitely to get into the ‘do-it-yourself’ act, if you are a customer of Canara Bank.
The bank’s latest technology initiative — the eLounge or eLobby — aims to help the customer do all his transactions, including pass book updation himself.
“There will be no manual intervention,’’ said R.K. Dubey, Chairman and Managing Director of Canara Bank.
While the eLobby service will be available round-the-clock, all through the year, it will not be available at the customer’s door-step. Rather, the bank is planning to set up the facility in its own premises.
Canara Bank has already launched the eLounge service in Bangalore and Delhi. Dubey indicated that the bank would look to create one in each city, including Coimbatore.
The eLounge will have a cash dispensing machine, cash deposit and cheque deposit unit, passbook printing machine, an online trading terminal and another machine working like an eKiosk, for Internet banking operations, he said.
While the initiative is expected to lure tech-savvy customers, Dubey made it clear that proper use of the eLounge alone would help the bank benefit from the roll-out of such an initiative.
June 26th, 2013, 04:28 AM
South tops in bank access; Maharashtra, Gujarat below national average (http://timesofindia.indiatimes.com/business/india-business/South-tops-in-bank-access-Maharashtra-Gujarat-below-national-average/articleshow/20768948.cms)
NEW DELHI: Southern states have emerged on top on financial inclusion parameters, while the East and some of the developed states of the West - including Gujarat and Maharashtra — are below the national average.
A new index on financial inclusion released by ratings and analytics firm Crisil on Tuesday showed that Puducherry topped the list, followed by Chandigarh and Kerala. In fact, most of the top slots were occupied by smaller states and Union Territories with Goa and Delhi at number four and five.
Although the poor performance of the Bimaru states was on expected lines, what came as a surprise was the fact that Gujarat and Maharashtra, which rank high on industrialization and income levels, fared poorly when it came to financial inclusion. Crisil used bank branch, credit and deposit penetration (per lakh population) to assign scores to each district and then arrived at a score for every state and Union Territory.
The two western states rank 18 and 19 among 35 states and Union Territories. Against a national average of 40.1, Gujarat's score was 38.6, and Maharashtra's 37.5, with even Andaman & Nicobar Islands, Odisha, Sikkim and Tripura faring better. In fact, had it not been for Mumbai, Maharashtra would have fared even worse. In case of Gujarat, Porbandar, ranked 115, had the highest level of financial inclusion in the state, according to Crisil's Inclusix.
In terms of districts, five from Kerala made it to the top six in the country with Pathanamthitta occupying the numero uno slot followed by Karaikal in Puducherry and Thiruvananthapuram, Ernakulam, Kottayam and Thrissur.
Given the low banking penetration in the East and the North-East, Kurung Kumey in Arunachal Pradesh was ranked at the bottom of the rankings covering 632 districts with a score of 5.5, nearly one-eighth the national average. Nine out of the 10 least scoring states on the index were in the eastern and north-eastern regions.
In contrast, the southern region led on all three parameters used to build the index. In terms of districts, 103 of the 107 districts in the South had scores higher than the national average, with 36 making it to the top 50 list for the country. In fact, 17 of the top 20 districts were from southern states and Union Territories with Mumbai (11), Mumbai suburban (16) and Chandigarh (18) being the exceptions.
When it comes to changes, between 2011, the year for which the index has been released, and 2009, the year for which it was first prepared, the picture is mixed. Kolkata saw the maximum deterioration in its score, followed by Delhi, which may be explained by the fact that the population has grown faster than the pace at which banking penetration has increased. In contrast, Rangareddy in Andhra Pradesh saw the maximum improvement, followed by Kinnaur in Himachal Pradesh and Mahe in Puducherry.
July 1st, 2013, 05:03 PM
July 1st, 2013, 07:20 PM
Tata, Ambani, Birla in race for bank licence (http://timesofindia.indiatimes.com/business/india-business/Tata-Ambani-Birla-in-race-for-bank-licence/articleshow/20863489.cms?)
MUMBAI: Tata Sons, India's biggest business group, and firms controlled by billionaires Anil Ambani and Kumar Mangalam Birla are among the 26 companies that have applied for a licence to open banks. Ambani's Reliance Capital has applied for a banking licence along with Japan's biggest life insurer Nippon Life Insurance Co and SumitomoMitsui Trust Holdings Inc.
Former Citigroup Inc chief executive Vikram Pandit has teamed up with JM Financial Ltd. Among public sector entities, India Post and IFCI also submitted applications for bank licence while micro finance institutions like Bandhan Financial Services, Janalakshmi Financial Services too expressed their intention to set up a bank.
"The Reserve Bank of India in all received 26 applications," the central bank said after the deadline for applying for a bank licence expired today. The RBI had issued guidelines for 'Licensing of New Banks in the Private Sector' on February 22 and came out with clarifications in the first week of June. It is, however, not yet clear how many new bank licences will be issued.
RBI Governor D Subbarao had earlier said that "our effort will be to make that judgement as transparent as objective as contestable as possible...I want to say that not everybody who is fit and proper will be given a (bank) licence because we expect the number of eligible applicants will be much larger than what is meaningful number of licences we can give". In its clarification, the RBI had said the entities getting licences to open new banks will be given 18 months to open branches, and promoters would have to transfer their holdings to the non-operative financial holding company (NOFHC) in a stipulated period.
July 2nd, 2013, 06:51 PM
SBT introduces doorstep banking in Kerala (http://www.thehindubusinessline.com/industry-and-economy/banking/sbt-introduces-doorstep-banking-in-kerala/article4873530.ece)
Thiruvananthapuram, July 2:
State Bank of Travancore (SBT) has introduced doorstep banking in the State as part of reaching out to customers, especially corporates.
The bank has rolled out a van to pick up cash from doorsteps of business and government establishments. Sajeev Krishnan, Managing Director, flagged off the vehicle here on Monday.
To start with, the van will drive in to customer’s doorstep anytime between from 10 a.m. to 4.30 pm. The timeline is likely to be extended later. The customer’s account will get credited the same day.
Customers can choose the time of their convenience with prior appointment. The minimum pick-up at a given time will be Rs 5 lakh and the maximum Rs 2 crore.
The van is fitted with hi-tech gadgets to ensure security of customers’ money, a spokesman for the bank said. The van will be manned by bank’s own staff, including an officer, and not outsourced.
The bank intends to soon roll out similar services at more centres in the State such as Ernakulam, Kozhikode, and Kottayam, the spokesman added.
July 2nd, 2013, 07:05 PM
RBI gives in-principle nod for all-woman bank (http://www.thehindubusinessline.com/industry-and-economy/banking/rbi-gives-inprinciple-nod-for-allwoman-bank/article4873925.ece)
New Delhi, July 2:
Reserve Bank of India has given in-principle approval to set up the country’s first all-woman bank.
The proposed bank will be the first-ever commercial bank to be floated by the Central Government and is expected to have a pan-India presence with six branches to start with. The headquarters for the bank is likely to be located at New Delhi. The Government will initially pump in Rs 1,000 crore as paid-up capital of the bank.
Initially, the bank is likely to start with at least one branch in each major region – North, South, West, East, Centre and the North East. It will lend mostly to women and women-run businesses besides providing support to women self-help groups. It will predominately employ women and take deposits from both men and women.
The all-woman bank is expected to start operations from November, Finance Minister P. Chidambaram had said recently.
July 3rd, 2013, 06:41 PM
Central Bank of India launches ‘Wonder Card’ (http://www.thehindubusinessline.com/industry-and-economy/banking/central-bank-of-india-launches-wonder-card/article4877752.ece)
Patna, July 3:
The Central Bank of India today rolled out a new debit-cum-credit card, called ‘Wonder Card’, for the benefit of salaried customers in Bihar.
Speaking at a function here after launching the Wonder Card, Central Bank of India Executive Director Malay Mukherjee said the new card will enable a customer to withdraw a fixed amount in excess of his salary to be adjusted against deposit under salary head in the next month.
A Wonder Card holder with a salary of up to Rs 25,000 per month can withdraw an excess amount of Rs 10,000 against his salary amount, while one with Rs 60,000 salary could withdraw Rs 25,000 excess amount, he said, adding, such a card holder with salary of more than Rs 60,000 per month could withdraw up to Rs 60,000.
Mukherji said withdrawal of excess amount against salary will be adjusted from the next month’s salary with interest at the bank’s base rate at 10.25 per cent, in addition to four per cent interest.
He added Bihar has become only the second state after Maharashtra where the Wonder Cards have been launched for the salaried account holders.
Mukherjee distributed ten Wonder Cards and Rs 12 crore loan among 80 people on the occasion.
July 3rd, 2013, 07:48 PM
July 5th, 2013, 03:51 AM
July 8th, 2013, 06:31 PM
SBI launches State Bank Xpress Money Card (http://www.thehindubusinessline.com/industry-and-economy/banking/sbi-launches-state-bank-xpress-money-card/article4894769.ece)
Mumbai, July 8:
State Bank of India, in partnership with a non-banking finance company, UAE Exchange and Financial Services, has launched a card which will enable the holder to receive the remittance directly on the card.
The card — State Bank Xpress Money Card — can be loaded with up to Rs 50,000. A maximum of 30 remittances can be loaded during a calendar year.
The card can be used for cash withdrawals from any bank ATM, transactions at point of sale (PoS) and e-commerce transactions.
A depositor will have to visit the UAE Exchange and Financial Services branch to deposit the money. For now, the card will be available free-of-cost in Kerala. Subsequently, it will be rolled out across the country.
Prepaid cards are beneficial to customers as there is no need to open a bank account, State Bank of India said.
July 16th, 2013, 03:58 AM
September 3rd, 2013, 01:35 PM
We want to strengthen our presence outside Andhra Pradesh (http://www.thehindubusinessline.com/industry-and-economy/banking/we-want-to-strengthen-our-presence-outside-andhra-pradesh/article5086300.ece)
State Bank of Hyderabad, one of the oldest banks in the South and the largest among the associate banks of the State Bank of India, is spreading its wings beyond Andhra Pradesh in a big way.
The 71-year-old bank opened over 200 branches in the last couple of years, with over half of these outside Andhra Pradesh. “Not that we do not want to open more branches in Andhra Pradesh, but we want to have a wider presence,” said M. Bhagavantha Rao, Managing Director of the bank, in an interview to Business Line.
Excerpts from the interview:
State Bank of Hyderabad seems to be on an expansion spree, particularly outside Andhra Pradesh. Why the sudden shift?
Our expansion drive is part of our move to concentrate beyond our traditional areas of Andhra Pradesh and parts of Karnataka and Maharashtra. Last year, we opened zonal offices in Mumbai and Delhi to extend our reach. Recently, we opened branches in Raipur, Ranchi and Patna.
We are planning to open more branches during the current financial year. Of the 200 branches we opened last, 60 per cent was outside Andhra Pradesh.
This ratio will keep increasing as we go forward. Not that we do not want to open more branches in Andhra Pradesh, but we want to have a wider presence. We have over 1,000 branches in Andhra Pradesh, in addition to several banking correspondents operating throughout the State.
How long does a new branch take to break even?
Depending on the rental and number of employees, it may vary. For us, on an average, it takes 12-15 months. We can break even much earlier, if the number of staff is lesser.
We will need at least 4-5 people in a new branch. All our new branches are giving us good business. For example, last year we opened branches in Kelambakkam, Chitlapakkam, Urapakkam and Sholinganallur — the southern suburbs of Chennai. Within 15-16 months, these branches contributed at least Rs 10 crore of business each.
What is the bank’s total business and how much of it comes from Andhra Pradesh at present?
At the end of the first quarter of the current fiscal, our total business stood at over Rs 2.10-lakh crore. Of this, 50 per cent came from Andhra Pradesh, and the remaining from rest of the country.
What is your turnover target for the next couple of years?
We want to achieve a business turnover of Rs 3-lakh crore by 2015, and we are on track to get there.
Considering the current economic situation….
(He interrupts) Our profitability may come under pressure, due to various provisioning and the general slowdown, but not the topline.
What is your strategy to achieve the growth target?
First, we want to expand our footprint to other geographies, particularly in the South this year. At present, we have 49 branches in this region. We want to take it to 65 by the end of the current financial year. We are planning to set up two branches in Kerala and 14 more in Tamil Nadu, including an all-women branch in Salem in October.
Second, we want to focus more on retail deposits and advances this year with more stress on car loans and the MSME (micro, small and medium enterprise) segment. This year being ‘the year of MSMEs’, we are planning Rs 9,000 crore of additional business from this segment. We have already done about Rs 1,500 crore so far.
There is great potential in this sector. All it requires is a bit of planning and training. As entrepreneurs require some sort of handholding, we need to have some trained people with us. This took some time for us. Now, we are completely equipped. We have posted 600 officers to manage the MSME business.
October 2nd, 2013, 06:12 AM
Canara Bank launches online window to open SB accounts (http://www.thehindubusinessline.com/news/states/canara-bank-launches-online-window-to-open-sb-accounts/article5190034.ece)
Thiruvananthapuram, Oct. 1:
Canara Bank, Kerala Circle, has thrown open an online facility to open savings bank accounts ‘free of hassles.’ Anybody with access to Internet can apply from anywhere in the country for the facility, according to G. Sreeram, general manager, Kerala circle, Canara Bank.
The aspirant needs to come only once to the branch in order to complete the know-your-customer formalities and the specimen signature.
Increasing penetration of Internet to semi-urban and even rural areas means that one can save valuable time by using it for completing most of the formalities online.
The facility is barely into its second week of operation, and the bank was in the process of assessing the response, Sreeram said.
In a similar initiative, the bank has extended the Aadhaar seeding facility to all ATMs as well as on the net banking window, simplifying the process involved.
Meanwhile, employees of the State Government and Kerala State Electricity Board can now look forward to a custom-made loan schemes made available by the bank.
The scheme offers competitive rates of interest and terms and would be available to these employees for a limited period of one year ending October 31, 2014.
A hub for non-resident customers has been set up in Thiruvananthapuram with a view to extending quick personal services.
The bank has undertaken to open accounts referred by representative offices abroad in all four Southern States, Sreeram pointed out.
As part of its endeavour to assist entrepreneurs in the micro, small and medium sector, the bank has evolved two loan schemes viz. Canara Unnathi and Canara Pragathi.
It has opened three hubs for small and medium enterprises at Thiruvananthapuram, Ernakulam and Kozhikkode. This is in addition to the 12 existing branches in various parts of the State.
Meanwhile, the bank on Tuesday opened three branches at Vaikom, Kaduthuruthy and Kuttikattoor, taking the total number the State to 357.
This is in addition to 331 ATMs in various parts of the State. The bank proposes to increase its network to 400-plus branches in the State by the end of March 2014, Sreeram said. It had recently opened an ATM in the Government Secretariat complex here.
The bank has 13 financial literacy centres functioning in the State. Four Rural Self Employment Training Institutes and a Canara Bank Institute for Information Technology are already functioning.
October 2nd, 2013, 06:14 AM
Axis Bank launches version 2.0 of mobile banking app (http://www.thehindubusinessline.com/industry-and-economy/banking/axis-bank-launches-version-20-of-mobile-banking-app/article5189842.ece)
Mumbai, Oct 1:
Axis Bank has launched version 2.0 of its mobile banking application that segments mobile banking users into the youth, premium and prime segments.
Each of the three sets of customers will get to use a customised version of the mobile banking application on their Android and iOS enabled smartphones.
The bank said it hopes to reach out to 15 lakh customers through the mobile banking application by the end of March 2014.
According to estimates, a mobile banking transaction costs about a tenth of the total cost for similar transactions in branches.
October 8th, 2013, 07:57 PM
Analysts welcome RBI move, predict another repo hike on Oct 29
Welcoming RBI’s liquidity infusing moves wherein it cut MSF by 0.50 per cent and introduced a term repo window, analysts on Tuesday said this in no way reflects a shift in the stance and the market must expect a repo rate hike at the next policy review later this month.
“At the October 29 policy, we expect the RBI to cut the MSF (marginal standing facility) rate by a further 0.25 per cent, but hike the repo rate by 0.25 per cent to contain inflation expectations,” brokerage firm Bank of America Merrill Lynch said in a note.
Governor Raghuram Rajan’s move to cut the MSF rate, at which banks borrow if they exceed their repo borrowing limits, by 0.50 per cent to 9 per cent should not be construed as a reversal in his policy stance and is more of a normalising measure, Citi said in a note.
It expects a cut of up to 0.25 per cent more in the MSF rate and a hike of up to 0.50 per cent in the repo rate by December.
“Further policy rate hikes are, therefore, in a sense a pre-condition for any further roll-back in the currency stabilisation measures to ensure that the monetary stance is appropriately calibrated to contain domestically and externally sourced inflation pressures,” HSBC said.
To defend the depreciating currency, the RBI had taken a series of unconventional measures mid-July, including limiting the banks’ borrowing under the repo window to 0.50 per cent of their liabilities and increasing the MSF rate by 3 percentage points to take the difference between the repo rate.
The measures did not have the desired impact on the currency, but pushed up rates in the system.
At his first policy review on September 20, Mr. Rajan cut the MSF by 0.75 per cent and increased the repo rate by 0.25 per cent to anchor inflationary pressures. The gap between the repo and the MSF rates reduced to 2 per cent as a result of the moves and further narrowed to 1.50 per cent, following on Monday’s cut.
Without specifying which of the two rates will do more walking, Mr. Rajan had said he wanted to narrow the gap between the repo and the MSF to the normal one percentage point.
“Going forward, we expect that the RBI will further roll back the currency stabilisation measures, but also raise the repo rate to anchor inflation expectations. More liquidity measures are also expected,” HSBC said in a note.
It added with the rupee stabilising in the 61-62 levels since September, the RBI is more comfortable about the currency, but concerned over the liquidity conditions.
The RBI also said it would be injecting additional liquidity through 7 and 14 day term repos.
“RBI’s Monday action reflects the stability of the rupee around 61-62 to the US dollar and increased demand for liquidity as people withdraw cash from the banking system during the festival season,” India Ratings said in a note.
Some analysts also point to the onset of the busy second half of the fiscal which generally witnesses a higher credit pick-up as a factor which RBI would have considered.
India Ratings said the move is positive for the banks, as it will help them widen the net interest margin, which had come under pressure following hardening of rates.
Bank of America Merrill Lynch said Monday’s measure are positive for banks, especially the smaller ones with lower percentage of low-cost current and saving account deposits.
October 8th, 2013, 07:58 PM
Sensex gains; earnings in focus with eyes on RBI policy
The BSE Sensex rose on Tuesday to their highest close in nearly two weeks, led by gains in lenders after the Reserve bank of India (RBI) cut an overnight interest rate on Monday, further unwinding extraordinary measures taken to defend the rupee.
Still, indexes failed to hold onto early gains of more than 1 percent as broader sentiment is expected to turn cautious ahead of July-September earnings which are expected to be weighed down by weakening economic growth and the rupee volatility.
The government will have to rein in spending and cut subsidies to meet its fiscal deficit target, Finance Minister P. Chidambaram told Reuters on Monday, underlining that an austerity drive will not be blown off course by an election due next year.
The continued U.S. government shutdown and political stalemate over the country's debt ceiling also continues to dent sentiment globally.
"Markets would be watchful of the earnings season from here onwards alongside more clarity on the RBI's stance on rates, as the rollback of extraordinary measures has already been factored in," said Deven Choksey, managing director of K R Choksey Securities.
The benchmark BSE index closed up 0.44 percent, or 88.51 points, at 19,983.61 after rising as much as 1.3 percent.
The broader NSE index rose 0.38 percent, or 22.25 points, to end at 5,928.40.
Although banks had initially rallied on expectations the Reserve Bank of India's move late on Monday to cut the margin standing facility would lower funding costs, some of that positive sentiment waned as any benefits would be offset by expected interest rate hikes by the central bank in its next policy review on October 29.
Yes Bank Ltd (YESB.NS) ended up 4.3 percent after gaining as much as 9.3 percent, while ICICI Bank Ltd (ICBK.NS) ended higher 2.3 percent after rising nearly 4 percent.
Among state-owned banks, Oriental Bank of Commerce Ltd (ORBC.NS) gained 1.4 percent, while Canara Bank (CNBK.NS) rose 1 percent.
Infrastructure companies gained after TV channels ET Now and CNBC-TV 18 reported that the cabinet has allowed developers to defer the bulk of the payments they must pay to the state as part of a revenue-sharing agreement for projects, without citing sources.
GVK Power and Infrastructure Ltd (GVKP.NS) surged 17.7 percent, while NCC Ltd (NCCL.NS) gained 6 percent and GMR Infrastructure Ltd (GMRI.NS) ended 1.1 percent higher.
However, a government spokesperson said the issue was not on the agenda of the cabinet panel that met on Tuesday. It was not immediately clear whether the issue was discussed informally.
Apollo Tyres Ltd (APLO.NS) gained 1.2 percent as the Indian company and Cooper Tire & Rubber Co (CTB.N) are at odds over whether Apollo can reduce the price for its proposed takeover of the U.S. firm, the latest hurdle in a deal beset by lawsuits and labour issues.
Among stocks that fell, Tata Consultancy Services Ltd (TCS.NS) ended 1.4 percent lower on profit-taking after making its all-time high at 2,098 rupees.
October 8th, 2013, 07:59 PM
RBI restricts FIIs to buy shares of 2 companies as trigger limit met
MUMBAI: The Reserve Bank today restricted foreign institutional investors (FIIs) to purchase shares in Great Eastern Shipping CompanyBSE 0.74 % and Kajaria CeramicsBSE 1.79 % as the foreign equity shareholding have reached the trigger limit of 24 per cent.
"The Great Eastern Shipping Co. Ltd. has crossed the limit of 24 per cent of its paid-up capital. Therefore, no further purchases of shares of this company would be allowed through stock exchanges in India on behalf of Foreign Institutional Investors," RBI said in a release.
Also, it said Kajaria Ceramics has crossed limit of 24 per cent of its paid-up capital for investment by FIIs.
"Therefore, no further purchases of shares of this company would be allowed through stock exchanges in India on behalf of FIIs," it added.
Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are allowed to invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS).
Under the scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India.
Economic Times (http://economictimes.indiatimes.com/markets/stocks/market-news/rbi-restricts-fiis-to-buy-shares-of-2-companies-as-trigger-limit-met/articleshow/23737194.cms)
October 8th, 2013, 08:00 PM
RBI announces measures to improve liquidity, cuts MSF rate by 50 bps to 9%
MUMBAI: RBI Governor Raghuram Rajan kept his promise of moving the money market to normal conditions as he cut the penal rate of interest, and took a step towards expanding financial markets by agreeing to lend to banks for a longer term.
The central bank reduced the rate under the marginal standing facility (MSF) by 50 basis points to 9%, and introduced lending to banks for seven days and 14 days, instead of the current practice of just a day. The longer-tenor lending will begin October 11 at rates based on bids by banks. A basis point is 0.01 percentage point.
The measures are an unwinding of the liquidity tightening that began in July to fight a currency slide that took the rupee to a record low of 68.84 to the US dollar. The governor, who raised the repo rate last month, may keep interest rates high, or even raise them to show his determination to curb rising prices. The repo rate is the one at which RBI lends to banks.
Economic Times (http://economictimes.indiatimes.com/news/economy/policy/rbi-announces-measures-to-improve-liquidity-cuts-msf-rate-by-50-bps-to-9/articleshow/23652855.cms)
October 8th, 2013, 08:01 PM
RBI eases cash squeeze for festive season
Even as Navratri ushers in the festival season, Reserve Bank of India has eased more money into the system to help banks offer affordable lending options to retail customers.
RBI cut the interest rate on Marginal Standing Facility (MSF) by 50 basis points to 9 per cent. MSF is the rate at which banks borrow funds overnight from RBI against approved government securities. Also, banks can now borrow money from RBI for one-week and two-weeks. This new offer of extended period loans is also expected to further ease liquidity in the system. This will also boost the government’s efforts to pump-prime the economy by lending to consumers at a lower rate of interest.
These measures come in the wake of a gradual stability in the rupee and point towards a seemingly combined effort by both the central bank and the government to pep up demand in the crucial festive season.
The rupee volatility had prompted RBI to tighten liquidity by raising the MSF rate.
However, since the September policy review, it began a calibrated unwinding of these exceptional measures, reducing MSF by 75 basis points from 10.25 per cent, while increasing the repo rate to 7.50 per cent. Repo rate is the rate at which banks borrow funds from the central bank.
By rolling down the MSF rate by another 50 basis points, RBI, perhaps, is indicating that it is comfortable with the current level of the rupee.TH (http://www.thehindu.com/news/national/rbi-eases-cash-squeeze-for-festive-season/article5211178.ece)
October 8th, 2013, 08:22 PM
RBI move to curtail volatility, lower banks' borrowing cost: Assocham
New Delhi: Welcoming the RBI's move to cut the marginal standing facility (MSF) rate, industry body Assocham today said the step will curb volatility in the interest rates and lower cost of borrowing for banks.
"I firmly believe that the cut in MSF rate will help reduce volatility in the interest rate market and lower the weighted cost of borrowing for banks," Assocham president Rana Kapoor said.
The RBI yesterday cut the marginal standing facility (MSF) rate, at which it lends emergency funds to banks, by 0.5 per cent to 9 per cent with an aim to improve liquidity and boost economic activities.
MSF allows banks to borrow money from the central bank at a higher rate when there is a significant liquidity crunch.
The central bank also said it will provide additional liquidity through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25 per cent of net demand and time liabilities (NDTL) of the banking system through variable rate auctions every Friday, starting October 11.
"The decision to provide additional liquidity through term repos of 7-day and 14-day tenor will deepen the money market through development of term repo borrowing," Kapoor said.
"With external sector developments showing a marked improvement and evidence on the utility of interest rate defence remaining hazy, the current set of easing measures will help RBI to focus on growth risks," Kapoor added.
The notified amount and tenor of the term repo auctions will be announced prior to the auction dates.
October 8th, 2013, 08:25 PM
RBI considering making bank licencing process more frequent
NEW DELHI: In order to expand the reach of banking, Reserve Bank on Monday said it is considering making bank licensing process more frequent and allow free entry of banks as and when necessary.
"We propose to carry forward these ideas and come up with a detailed road map of a necessary reform and regulations for free entry and making the licensing process more frequent after we get comments from the stakeholders," RBI Deputy Governor K C Chakrabarty said here.
RBI is in the process of issuing new bank licences consistent with highest standards of transparency and diligence, he said.
RBI has already come out with a discussion paper on banking sector in India, on which the regulator has invited comments from stakeholders.
"The document explores possibility of differentiated licence for small banks and wholesale banks, possibility of continuous on tap licensing and the possibility of converting large urban co-operative banks into commercial banks," he said.
Currently the central bank is in the process of issuing new bank licences for which it has received applications from 26 public and private sector entities. The RBI is likely to issue the licences by January 2014.
The apex bank has already set up an external committee of financial sector experts, headed by former RBI Governor Bimal Jalan, to scrutinise applications.
"With a view to ensuring that the banking system grows in size to meet the needs of a modern economy and improve access of banking services, the RBI is considering giving some additional banking licenses to private sector players subject to their meeting our eligibility criteria," Chakrabarty said.
He further said the regulator is encouraging foreign banks to adopt the wholly-owned subsidiary model to carry out business in the country.
"We have more than 44 foreign banks in the country and at least 3 of them more than 100 years old ... RBI will encourage qualifying foreign banks to move to a wholly owned subsidiary structure that will enjoy near national treatment," Chakrabarty said.
He further said banking system is well capitalised. "Profitability is reasonable, return on equity is reasonable, NPA is under control and it meets with all global standards of regulation for business," he added.
He said the Indian economy is facing challenges of high inflation, slow growth and investment, Current Account Deficit (CAD) is above sustainable levels and fiscal deficit high.
"It is intent and objective of the government to attract and promote foreign direct investment in order to supplement domestic capital, technology and skill for accelerated economic growth," he said.
Economic Times (http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/rbi-considering-making-bank-licencing-process-more-frequent/articleshow/23641745.cms)
October 8th, 2013, 08:26 PM
Provisional list of new banks by January, says RBI Deputy Governor
Mumbai: Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty has said that only a provisional list of new bank licencees will be announced by January and it will take at least two years for a player to become operational.
"Let me clarify, no new bank will come by January. A provisional list of applicants who are eligible to get a licence will be decided in January. New banks will take at least two years to come," he said in Mumbai over the weekend.
RBI Governor Raghuram Rajan has been repeatedly assuring that some concrete action will be taken on issuing new bank licences before the end of the term of Deputy Governor Anand Sinha, who is in charge of banking department, in early February.
After announcing a panel headed by former RBI chief Bimal Jalan to look into the issue, Mr Rajan on Friday followed up by announcing the remaining members of the committee.
The panel includes former RBI Deputy Governor Usha Thorat, former Sebi chief C B Bhave and a former executive director at ICICI Bank Nachiket Mor.
Finance Minister P Chidambaram on Saturday said seven licences will be issued in the current round of bank licensing.
The apex bank had last issued licences in 2002. Kotak Mahindra Bank and Yes Bank were granted licences at that time.
Following an announcement by the then Finance Minister Pranab Mukherjee, the RBI issued final guidelines on new banks in February this year.
The most notable feature is the decision to allow corporates into the fray, provided they meet proper norms.
Mr Rajan, during his academic days, however, was vocal in speaking against letting corporates into the banking domain.
Twenty-six entities, including the Tatas, Aditya Birla Group, Anil Ambani-led Reliance Capital and Religare, apart from India Post, applied. Videocon Group, later on withdrew its application.
October 8th, 2013, 08:32 PM
Banking shares dazzle as RBI lowers short-term interest rate
Banking stocks today rose by as much as 4 per cent after the RBI cut a short-term interest rate, effectively lowering lenders' cost of funds ahead of the busy festive season.
The RBI yesterday lowered the marginal standing facility (MSF) rate, at which it lends emergency funds to banks, by 0.5 per cent to 9 per cent.
Shares of Yes Bank rose by 4.11 per cent, while ICICI Bank gained 2.26 per cent, Federal Bank (1.29 per cent), Canara Bank (0.84 per cent) and BOB (0.72 per cent).
Led by the gains in these stocks, the BSE banking index settled 0.67 per cent higher at 11,552.85.
"After the RBI's surprising announcement in the reduction of the MSF lending rate by 50 basis points, banking stocks surged," said Raghu Kumar, Co-founder, brokerage firm RKSV.
"As an immediate impact of these measures, short-term interest rates are likely to reduce proportionately. The measures are positive for more wholesale funded banks, as it is likely to result in further decline in their costs of funds by roughly 5-10 bps on an annualised basis (the reduction in cost across banks would be in congruence with its dependence on wholesale funds)," Angel Broking said in a report.
With rupee recovering from all-time low levels, the RBI yesterday cut the MSF rate by 0.5 per cent to 9 per cent with an aim to improve liquidity and boost economic activities.
This was the second cut in the overnight interest rate since September 20 mid-quarter monetary policy review when it was lowered to 9.5 per cent from 10.25 per cent.
Indian Express (http://www.indianexpress.com/news/banking-shares-dazzle-as-rbi-lowers-shortterm-interest-rate/1179936/)
October 8th, 2013, 08:33 PM
Raghuram Rajan: India’s economy will improve
Mumbai: The news on the economy will only start getting better from now, Reserve Bank of India (RBI) governor Raghuram Rajan said in an interview, reflecting a growing view in many quarters that the Indian economy has bottomed out. He listed the factors behind his assessment: rising exports in the second quarter; the possibility that the US’s problems would be temporary and that lawmakers in that country would arrive at a fiscal deal; stronger agri production; and the revival of many projects that were stalled.
Rajan added that the first signs of revival would likely happen in the sector that went down first – large infrastructure projects. It was in 2010-11 that “the first large projects started stalling,” he said. When these projects are revived, Rajan said, there are benefits from the actual project itself, the liquidity that is released into the market, and the spillover effect on suppliers, some of whom are medium and small enterprises. The first set of stalled projects were revived in January, he said, and the impact is beginning to be seen now.
The Cabinet Committee of Investment was created to fast-track stalled projects. Since January, it has revived, at least on paper, 171 projects involving a total investment of Rs 1.69 lakh crore (or trillion)
India’s economy expanded by 5% in 2012-13, a decade’s low, and it grew by 4.4% in the first quarter of 2013-14, a steep fall for an economy that expanded at an average rate of 8.3% between 2004-5 and 2001-12.
That, and the stalling of large infrastructure projects, partly due to issues related to financial closure, but also due to delays in acquiring land or securing environmental clearances have taken the sheen of the so-called India story for investors, both foreign and domestic. The situation has been exacerbated by a spate of corruption scandals involving the government, the resultant policy paralysis, and some retrograde changes in tax laws as the country’s administrators tried to come to grips with a rising fiscal deficit.
India needs two transformations, Rajan said: “More investment, and less consumption, at least of some kinds; and more savings, financial savings.”
Rajan said it was heartening to see large Indian companies selling assets (as reported by Mint on Tuesday ). “We need more of that,” he added, explaining that other companies that were flush with funds, or private equity investors, even asset reconstruction companies could buy these assets.
The process helps everyone, he argued. “The liquidity strapped entities can get financial space, can start bidding again, start fulfilling some of their commitments.”
Still, Rajan admitted that non-performing assets (NPAs) and restructured assets of banks, were, at 10% of the total assets of banks, at a level that was “not comfortable.”
Gross bad loans at India’s banks topped Rs2 trillion in the three months ended 30 September. Total loans restructured by banks under the CDR platform on a cumulative basis rose to Rs2.65 trillion at the end of September.
Rajan said banks needed to closely monitor these, and act – some assets could be recovered by rolling over debt; others by infusing new blood in the management, and still others by simply pumping in more money. But banks have to be careful with how they restructure debt and bail out promoters, he cautioned. They cannot bail out promoters who have siphoned off money, he said. Nor can they restructure debt in such a way that all the downside is borne by the banks and the upside, by the promoters. “The pain of restructuring has to be borne fairly,” he said.
Such restructuring and asset sales could help increase capacity and “part of our inflationary problem is supply,” Rajan said.
“Inflation is the primary concern,” Rajan said, “but we will keep in mind the state of the economy.”
He refused to be drawn into a discussion on his stance regarding interest rates and said part of the reason why the market was confused by RBI’s moves was because “it takes a 25 basis point repo increase and then delves deep into the psychological attributes (behind this).” Data will drive the central bank’s next step, he explained. “Positive, negative, neutral – wait till the end of the month,” Rajan said. The next monetary policy review is on 29 October.
Rajan said RBI was comfortable with where the rupee is, which is why it has started unwinding some of the liquidity tightening measures put in place over the past two months.
Answering a question on the issue of new bank licences he said there was no number RBI had in mind and that this would be a function of not just the credentials and business models of the applicants, but also the number of banks that could be supported by the market. “How many will depend on Rs.fit and proper’ (criteria laid down) and economic needs,” he added.
Not everybody needs to do plain vanilla banking, Rajan said. Some banks could focus on different segments; others could use different technologies; and still others could offer different products.
Live mint (http://www.livemint.com/Politics/ZLQG6XApzRi6dCzK6Y0McP/Raghuram-Rajan-says-things-will-only-get-better.html)
October 8th, 2013, 08:54 PM
India Eases Cash Crunch at Banks, Leaves Benchmark Unchanged
India’s central bank rolled back further an emergency step taken to shore up its currency as the rupee’s continued stabilization allowed it to relax liquidity for the nation’s banks.
Governor Raghuram Rajan lowered the marginal standing facility rate to 9 percent from 9.5 percent, the Reserve Bank of India said in a statement yesterday, the second cut in less than a month. The benchmark for monetary policy, the repurchase rate, was left at 7.5 percent. Rajan raised the repo rate last month to fight elevated inflation.
The rupee has climbed about 12 percent versus the dollar since reaching a record low in August, among the world’s best performers in that time, boosted by Rajan’s steps to attract inflows of the U.S. currency. The governor, a former International Monetary Fund chief economist, took over at the RBI in September and has said he plans a measured rollback of liquidity curbs imposed on the banking system in July.
“The rupee’s trading strong so they’ve got a very good window of opportunity to unwind some of these quantitative tightening measures,” said Mirza Baig, head of foreign-exchange and interest-rate strategy at BNP Paribas SA in Singapore. Rajan is “saying the right things and he’s being more orthodox in terms of how he’s running monetary policy,” he said.
The currency appreciated 0.2 percent to 61.65 per dollar as of 10:35 a.m. in Mumbai. The S&P BSE Sensex index of stocks rose 0.9 percent. The yield on the 10-year bond maturing May 2023 decreased to 8.51 percent from 8.68 percent yesterday.
Cutting the MSF rate will help put the focus on the repo rate as the benchmark, Baig said.
The MSF borrowing cost will probably be reduced by a quarter of a percentage point at the policy review due Oct. 29, Kotak Mahindra Bank Ltd. said. The repo rate will be boosted by the same magnitude at that meeting, Kotak added.
The impact of yesterday’s decision on the Indian rupee is “ambiguous,” Sean Callow, a Sydney-based senior currency strategist at Westpac Banking Corp., wrote in a research note. While easier monetary conditions could attract foreign inflows to stocks, they also reduce “the yield support for the rupee,” he said.
Rajan offered concessional swaps for banks’ foreign-currency deposits and borrowings to encourage them to raise dollars after taking over at the RBI. That spurred the rupee’s recent gains, helping to pare its drop in the past 12 months to about 16 percent.
The U.S. Federal Reserve’s decision to postpone tapering of monetary stimulus has also aided the rupee, said Tirthankar Patnaik, a Religare Capital Markets Ltd. strategist in Mumbai.
The RBI, which also lowered the bank rate to 9 percent, will provide additional liquidity to the banking system, according to yesterday’s statement. The decisions came between scheduled policy reviews.
Rajan faces the challenge of guiding a slowing economy where consumer-price inflation is almost 10 percent. Gross domestic product growth will cool to 4 percent in the fiscal year ending March 2014, according to HSBC Holdings Plc. That would be the weakest pace in more than a decade.
Rajan’s predecessor Duvvuri Subbarao increased both the MSF and bank rates by 200 basis points in July to try and contain the drop in the currency, which has been weighed down by a current-account deficit, price pressures and slowing growth.
The gap between the MSF and repo rates will eventually be lowered to 100 basis points, Rajan said on Sept. 20 in his first policy review. He reduced the MSF rate by 75 basis points that day, while increasing the repo rate by a quarter point and pledging to fight inflation.
“There’s less need to maintain the interest-rate defense with the currency stabilizing,” said Shubhada Rao, chief economist at Yes Bank Ltd.
October 9th, 2013, 05:55 AM
RBI Governor Raghuram Rajan vows to free markets for $1-trillion core sector investments
MUMBAI: Reserve Bank of India Governor Raghuram Rajan aims to build sophisticated financial infrastructure in three years that will facilitate trillion-dollar core sector investments, leading to sustained economic growth.
Further, now that the currency has stabilised, the dependence on external sources of funding needs to be curbed and domestic savings have to be encouraged, the governor, who took charge on September 4, said.
"We cannot rely too much on the outside world because we do not want to run large current account deficits...moderate CAD with a lot of saving domestically will allow us to still fund a significant amount of investment which we need," Rajan said in an interview to ET. "We have to give savers a good deal, be it outside savers or domestic savers. That match between savings and investment has to come about."
Despite anaemic economic growth, monetary policy should aim at bringing down inflation expectations. Growth with low inflation will strengthen the economy, Rajan said. Many investors expect Rajan to raise the benchmark repo rate by 25 basis points on October 29.
October 29 is the date of RBI's next rate-setting meeting. On September 20, Rajan had raised the repo rate — the rate at which RBI lends to banks — by 25 basis points to 7.5%.
"By focusing on generating growth with low inflation in this country we will do the best thing we can to stabilise the value of the currency to stabilise capital flows," said Rajan. "So, let us focus on that. And the other would take care of itself."
The currency was stabilising, Rajan said, because of the growing expectation that the government would be able to restrict the current account deficit to less than $70 billion, the target set by the Centre.
Both the government and the central bank are on the same wavelength when it comes to what is good for the country, though the tools to achieve them may be debated about, at times even in public, which is a sign of the central bank's autonomy, he said. "Both sides want growth, both sides want low inflation," said Rajan.
"There is always a healthy debate on the pace and the instruments we use to achieve those objectives. Ultimately, I think this is true in every country and the whole issue is to try and convince the other side."
The recent currency and bond market turbulence will not hold back the central bank from moving ahead with the liberalisation of currency and futures trading, since a broader and deeper financial market is essential to fund economic growth.
"There is no intent to clamp down," said Rajan. "And if anything, what we have to see is how to deepen all our markets and that is going to be our focus. As things return to normalcy, we are going to look at our debt markets, look at our currency markets. Ultimately, you have to look at that number of ($)1 trillion, which is what we need for infrastructure investment over the next few years."
October 9th, 2013, 06:16 AM
Growth, low inflation to be Reserve Bank of India’s priority: Raghuram Rajan
ET gets together with the Reserve Bank of India's governor Raghuram Rajan to talk about the various issue like growth, investment, inflation, etc that need to be tackled on a priority.
ET gets together with the Reserve Bank of India's governor Raghuram Rajan to talk about the various issue like growth, investment, inflation, etc that need to be tackled on a priority.
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ET gets together with the Reserve Bank of India's governor Raghuram Rajan to talk about the various issue like growth, investment, inflation, etc that need to be tackled on a priority. "Both the RBI and finance ministry want growth and low inflation, but there is a debate on the pace and the instruments we use," says Rajan.
There is no dramatic improvement in the rupee since the liquidity tightening measures were brought in a few months ago. What gives you the comfort to unwind?
The RBI has consistently said the issue is not so much as the level as volatility, I would say, downward volatility. The sense that the rupee could go anywhere, which was present when these measures were initiated, has significantly abated.
Now, there is a general sense echoed by independent sources, and just not the government, that the CAD this year would come down below $70 billion...that the safe financing we have, which would be FDI, ECB and NRI deposits, would be sufficient to cover that. You don't see analysts out there saying that the rupee would go to 75, 80 or 100 ...That sense of free fall has been eliminated.
Does that mean we are safe? Not entirely, but sufficiently, so that we feel comfortable to unwind some measures. What I would like to do is go back to ordinary monetary policy as a way of stabilising the value of the rupee rather than extraordinary measures. We are vigilant and we can always take steps. Now most people would feel that high 50s or early 60s is where the fundamental value of the rupee lies.
After yesterday's measures, the perception is that there will be more MSF unwinding and at the same time repo will be hiked...
Exceptional liquidity measures would be unveiled in between policy dates. That we were waiting to see data come in and see the development of data to make the next move on the policy. That is precisely where we are. We felt the rupee has maintained some stability.
It was about the same level yesterday as it was when we announced the monetary policy. So we felt confident in removing another layer of the exceptional liquidity measures.
So one cannot rule out a repo hike?
We will take a call on the 29th.
Will it be that unconventional policy measures such as the July 15 increase in penal borrowing rate (under the marginal standing facility or MSF) will not be resorted to by you once you bring the repo and MSF gap back to 100 basis points?
I think that the measures starting July 15 were basically attempts to raise the short-term interest rate over a period of time which was not seen as permanent. Unlike repo rate hike, which was seen as more longer term hike, the pushing up the MSF rate, pushing people to borrow at that rate and therefore effectively pushing up short-term rates to that rate were measures intended to convince people to bring back the money into India if they were headed outside or to make it costlier to speculate against the rupee.
Now at some point, if these rates stay high, it does affect growth, it does affect cost of funding, it does make it harder to do the normal things that an economy does. I do not think that the effective monetary policy rate should stay at that level given the growth conditions in the economy and the inflationary conditions.
But isn't there a divergence? On one hand the government has said capital infusion would translate into pre-festive cheaper loans, on the other hand, you have raised the repo rate.
Let me be very clear about what we agree with the government. The government indicated to us that they were interested in putting more capital into banks and as a regulator, we welcome that because some banks have higher NPAs and building a good capital cushion is always a good thing from that perspective.
Incidentally, better capitalised banks have lower cost of funding and that lower cost of funding as well as the ability to leverage any increased capital will result in more lending capacity. Now we must be clear that not all demand at this point is a bad thing.
Demand that is created through more investment also helps the supply side and helps growth. That is the kind of demand we need. Not saying we do not need consumption demand, but we need more of investment demand. Corporate investment has fallen off. We need more investment so as to bolster the supply side, which will help in the fight against inflation.
To the extent that it goes to certain consumption sectors that are deeply depressed, it is not an entirely bad thing. If, for example, it goes to the auto sector, but it is hard for me to see how you can direct it towards those sectors...
So, will a shift towards Consumer Price Index (or CPI) as a nominal anchor happen at some point?
The RBI has always looked at different measures. It is important to note that you cannot focus only on WPI core even though that is very attractive because that has come down a lot. It is one element of what we look at, but it is also important for us to look at other elements, which WPI core does not pick up.
In an environment where there is noise and no single indicator is perfect, you have to look at multiple measures of inflation. Over time, as we know what is really driving it, then we may converge to the measure, but at this point, we have to work on improving the quality of the measures.
Some negativity, driven by data, is coming down. But can the US debt ceiling fiasco upset some of your plans?
The short answer is, it's possible. But I am convinced, if we do what we need to do to put our ducks in order, we will achieve our goal. Yes, volatile flows you have to worry about, but a fair amount of volatile money has gone and that is not to say that we should not worry.
For example, FII investors in equity have been very stable, we should not upset them. But I would say that by focusing on generating growth with low inflation in this country we will do the best thing we can to stabilise the value of the currency, to stabilise capital flows.
So let us focus on that and other things would take care of themselves...I am willing to focus now on setting our own house in order, which means growth with low inflation, and if we can do that I think international investors will repose confidence in us.
Is low inflationary condition a precondition for having that growth?
I do not think it is a precondition, but for sustainable growth it is necessary. You cannot have unanchored inflationary expectation, people believing inflation is going to stay high, wage demands going up, wage is increasing at over double digits every year, and still have sustainable growth.
At some point it starts affecting how people plan, it affects the weaker section.
There's dependence on FII investment in debts — something which your predecessors like Reddy had resisted — and this has turned out to be hot money. How would you attract more stable inflow in debt? Will figuring in the emerging market index help?
We are exploring some of that and now you have to remember that a number of countries allowed FII investments in debt, but did not simultaneously run large current account deficit. Some of these investors come on a hedge basis, taking spread returns in the short run and so long as they get the spread returns they are happy; as soon as they see that those spreads narrow, they are out. But that is not to say all money is impatient.
There are long only investors. Some of them will come through this window we have opened for sovereign wealth funds and pension funds. Of course, the rupee has just depreciated a lot, it takes a brave person to say I am going to overlook that, but that is probably the best time to come in because we have seen bouts of rupee depreciation tend to be followed by periods of stability.
I am not saying history will exactly repeat, but that is the past. It would be a good thing in addition to get into some of these indices as index investors have to mimic the index and therefore tend to be more stable.
Savers have moved away from financial products to gold and property. And there are complaints against the kind of the tax treatment for savings in various instruments. How does one bring them into financial savings?
Savings have declined much more than investment, which is problematic. Certainly, the tax benefit to savings has remained fairly constant in nominal terms therefore on real terms has fallen.
But if the government is cash strapped and cannot offer more sort of tax benefits to savings, then the answer has to be higher returns to get the kinds of savings that we need and this is something that people do not make the connection, industry does not make the connection that to some extent in order to get a better balance we need savings and the investment that is needed, need interest rates that will call forth that level of savings.
But interest at that level becomes unviable for industry...
Not necessarily. From the consumer's perspective, the interest return is negligible in real terms because inflation has been high. From the producer's perspective, the interest he is paying is really high. So we have two economies today — the economy the consumer is seeing, the economy the producer is seeing and there is a gap between the two.
How do you make both see the same economy? You have to bring down inflation so that the consumer sees the return as adequate in real terms and the producer also sees that the interest rate he pays comes down over time as inflation comes down and that he does not feel that he is paying an arm and leg for the money he is getting.
What I am saying is, we have different rates of inflation faced by different people in society and bringing down the overall level of inflation will help all of them... Some people start talking about the new Volcker or whatever. You know these are all short forms. I think they caricature too much. You are not in the same position and you are not trying to do the same thing.
There's a huge concern about bad loans. Do you think there is a need for a fundamental change in the way loans are given? Banks lend based on assets, while asset classification depends on cash flows...
I think that there is a fundamental need to rethink capital structures for these projects. India has changed since 2005-2006. We have new set of legislations that alter the pace at which projects can be completed, that creates some uncertainties, some times create a better environment. The point is, your capital structure has to adjust. I think in general if you believe that permissions are going to take longer, your capital structure should adapt that.
Typically, if you have more uncertainty, you must have more equity. So to go ahead with the same capital structure and say I am going to ignore the fact that India has changed and use those same rules of thumb, I think creates problems for the future. Similarly, I mean if uncertainty has increased you will have more restructures but we have to be careful that those restructurings are genuine and not strategic and those restructurings do not occur because of malfeasance.
The public in many ways does pay a price for the restructuring because these are public sector banks that are taking hits on the debt that they have given. The public has the right to know that their money is being used in a fair way.
Technically, banks can change inefficient managements, but lenders rarely do that because of the power and influence of business houses...
I think both the government and the RBI have been saying very clearly that we have to do what is economically beneficial and do that in a way that we do not have any fear of doing it. Ultimately, debt is a contract where if you default on the debt, debt has the right to take the project. No equity, no nothing, it is all wiped up, that is a contract.
Every time you know somebody stays in despite not paying the debt holder, you are violating that fundamental contract. Now, in the largest scheme of things that may be sensible because they are the best people to run the project, but we must recognise what you are negotiating from: It's not that I will do you a favour by staying in control, you are doing me a favour by letting me stay in control.
But with elements of chrony capitalism and nexus, do you think lenders can exercise that power?
Over the past few years, many of the institutions are basically gearing up to sort of try and bring some clarity, some transparency to various processes. I think you know if you hear the messages from the RBI and from the finance ministry over the past few years, it has been...
I think the finance minister probably said something like the following: that we have sick companies, but no sick promoters. I think that summarises the issue. It is not in any way to taint all promoters.
How do you clean up the bank balance sheets? Introduce something like the US bankruptcy laws, or do what Sweden did in the 90s — separating good banks and bad banks?
I do not think in the short run we will bring in a whole new bankruptcy code, but we have got the CDR mechanism. We have got Debt Recovery Tribunals. We have the Sarfaesi Act. We should make all these work. Ultimately the idea is to get the real assets back on track functioning when they are viable or closed down.
We have a number of structures, for example, asset reconstruction companies, which are currently moribund. We need to revive that so we need to do some of these things. We are looking at this spectrum and we will come up with some actions we need to take to accelerate their work.
How will you go about with the bank licences?
We will see if they meet the fit and proper criteria, both based on their business behaviour, as well as business capabilities, then look at the model that they are proposing, see the overall fit of that model whether it brings new capabilities, reaches new customers, reaches new markets, bring new technologies, whatever.
Whether there's something additional or even brings good new competition. Look at all that, form a view, and then decide. I do not think we have any number in mind. It could be zero. It could be 26.
After every RBI action, various government functionaries comment on it. But this time when you raised repo rate, there were no comments from New Delhi. How did you achieve it?
Anyway, look the finance ministry and the RBI talk. It has been true since September 4th, it was true before September 4th. We talk and very rarely one side surprises the other... Let me start by saying objectives are the same. Both sides want growth, both sides want low inflation.
The pace and the instruments we use to achieve those objectives, there is always a healthy debate and ultimately I think this is true in every country and the whole issue is to try and convince the other side.
It is not that the objectives vary, but that happens even among economists, like my good friend Surjit Bhalla would never agree with an interest rate hike... What you have to do is to ensure that you have room to disagree without that disagreement going out into the open. That said, I would emphasise the fact that some times disagreement has been open does indicate very strongly to the world at large that we have an independent central bank.
RBI has seen a flight of talent and it is often perceived that the central bank is no longer the institution it once was. What do you think?
I think inflows and outflows are not unhealthy so long as it is not one way. It also reflects the quality of the RBI staff. I have great respect for the quality of people that the RBI has. It's just impressive.
Now that said, you know as the economy changes, needs change and sometimes we have need for more specialists in certain areas. So, I do think that in RBI there is a very strong recognition of the need to facilitate lateral entry, especially in areas where we require specialists.
We have specialists of course through internal grooming, but they may be specialists in other areas. So we are examining ways to bring in more lateral entry.
October 9th, 2013, 06:22 AM
US shutdown boosts RBI chance to shore up forex cover: BofA-ML
Brokerage firm Bank of America Merrill Lynch (BofA-ML) today said the ongoing US government shutdown is positive for the country, as it gives additional time to recoup the forex reserves.
"Our base case is that the US shutdown persisting for a fortnight to push Fed tapering into January. Reserve Bank of India (RBI) Governor Raghuram Rajan should get more time to raise forex reserves if the tapering is deferred to January," it said in a note.
"We expect the RBI to capitalise on the postponement of Fed tapering to recoup forex reserves," it said, noting that it is necessary as the import cover has dwindled to seven months, last seen in 1998.
A two-week shutdown, however, will have little impact on the country's growth, it said, holding on to its earlier estimate of 4.6 per cent GDP growth for FY'14.
The postponement of the taper should provide the Reserve Bank necessary time to ease the debt limits for foreign institutional investors to list government bonds in emerging market bond indices to attract more benchmark funds, it added.
If the ongoing FCNR(B) deposit mobilisation scheme is successful, investor confidence will get boosted and assuming that the country gets a 10 per cent weighting in the indices, the RBI can mop-up up to $25 billion in reserves through the route.
The RBI will most likely start buying dollars once rupee stabilises at the 62 level against the dollar, it said. It can be noted that the Reserve Bank took a series of unconventional moves in face of the heavy depreciation in the rupee, which touched a lifetime low of 68.85 to the dollar late August.
Among the steps it announced were liquidity tightening measures and also a special window to banks for swapping fresh dollar deposits of over three years at a concessional rate.
Governor Rajan last Friday said $5.6 billion had been collected through the aforesaid swap window, while analysts expect it to touch around $10 billion by November, till when the window is open.
The liquidity tightening measures announced in July will be reversed by December, the note added
Financial Express (http://www.financialexpress.com/news/US-shutdown-boosts-RBI-chance-to-shore-up-forex-cover--BofA-ML/1179492)
October 9th, 2013, 07:17 AM
TABLE-Indian banks' cash balances with RBI down to 3.08 trln rupees
Oct 9 (Reuters) -
COMMERCIAL BANKS' CASH AS ON AVG DAILY CASH FORTNIGHT
BALANCES WITH RBI DATE RESERVE REQUIREMENT ENDING
(billion rupees) (billion rupees)
3,080.8900 05/10 3,033.3000 18/10
3,120.9000 04/10 3,047.1000 04/10
3,084.4000 03/10 3,047.1000 04/10
3,121.4000 02/10 3,047.1000 04/10
3,121.4000 01/10 3,047.1000 04/10
3,242.6300 30/09 3,047.1000 04/10
3,315.7000 28/09 3,047.1000 04/10
3,273.1900 27/09 3,047.1000 04/10
3,100.6800 26/09 3,047.1000 04/10
3,118.3000 25/09 3,047.1000 04/10
3,091.4300 24/09 3,047.1000 04/10
3,139.2300 23/09 3,047.1000 04/10
3,178.3100 21/09 3,047.1000 04/10
3,206.6100 20/09 3,013.8000 20/09
3,179.7100 19/09 3,013.8000 20/09
3,183.9700 18/09 3,013.8000 20/09
3,199.8700 17/09 3,013.8000 20/09
3,236.0500 16/09 3,013.8000 20/09
3,306.5800 15/09 3,013.8000 20/09
3,617.9700 14/09 3,013.8000 20/09
3,563.6600 13/09 3,013.8000 20/09
3,192.1900 12/09 3,013.8000 20/09
3,192.1600 11/09 3,013.8000 20/09
3,200.7500 10/09 3,013.8000 20/09
3,252.4000 09/09 3,013.8000 20/09
3,252.4000 07/09 3,013.8000 20/09
3,305.2400 06/09 3,003.3000 06/09
3,168.9100 05/09 3,003.3000 06/09
3,177.4200 04/09 3,003.3000 06/09
3,192.8800 03/09 3,003.3000 06/09
3,197.3700 02/09 3,003.3000 06/09
3,318.4100 31/08 3,003.3000 06/09
3,267.0300 30/08 3,003.3000 06/09
3,201.6900 29/08 3,003.3000 06/09
3,182.9200 28/08 3,003.3000 06/09
3,172.1100 27/08 3,003.3000 06/09
3,214.0900 26/08 3,003.3000 06/09
3,226.5700 24/08 3,003.3000 06/09
3,193.9000 23/08 2,994.7000 23/08
3,179.7000 22/08 2,994.7000 23/08
3,177.5400 21/08 2,994.7000 23/08
3,193.7700 20/08 2,994.7000 23/08
3,195.1500 19/08 2,994.7000 23/08
3,233.0600 17/08 2,994.7000 23/08
3,248.5800 16/08 2,994.7000 23/08
3,202.2400 15/08 2,994.7000 23/08
3,202.2400 14/08 2,994.7000 23/08
3,196.8700 13/08 2,994.7000 23/08
3,196.1900 12/08 2,994.7000 23/08
3,231.6800 10/08 2,994.7000 23/08
3,220.4800 09/08 2,988.1000 09/08
3,220.4800 08/08 2,988.1000 09/08
3,187.4200 07/08 2,988.1000 09/08
3,173.9600 06/08 2,988.1000 09/08
3,192.3800 05/08 2,988.1000 09/08
3,249.5400 03/08 2,988.1000 09/08
3,245.0300 02/08 2,988.1000 09/08
3,206.0200 01/08 2,988.1000 09/08
Source - RBI website: (www.rbi.org.in)
October 9th, 2013, 07:19 AM
This week, withdraw from an ATM, get crisp new notes
RBI, Chennai has instructed banks in the city to provide fresh currency notes to their customers
This festival season, residents of Chennai will get to experience the feel of fresh, crisp currency notes when they withdraw cash from automated teller machines (ATMs).
Residents said most ATMs and bank branches do not dispense fresh currency notes very often.
V. Bhuvana, a resident of Ashok Nagar, said she sometimes received rupee notes with numbers or names scribbled on them. “I specifically ask for fresh currency notes from the nationalised bank where I hold a savings account and wait for them to be given to me,” she said.
Such complaints may now reduce, as the Reserve Bank of India, Chennai, has instructed various banks in the city to provide fresh notes to its customers, particularly through ATMs.
Starting last week, RBI officials initiated the process and directed banks to feed new notes, particularly of those under the denomination of Rs. 100 and Rs. 500, into their ATMs.
“We have roped in private banks for the initiative to circulate a large number of fresh notes. Chennai has nearly 2,000 ATMs owned by private banks,” said an official.
Some customers who withdrew cash from private banks’ ATMs in the past few days said they had received fresh notes.
Meanwhile, awareness messages about soiled currency notes are also being spread on social networking websites.
A recent message said that banks may stop accepting notes with squiggles on them a few months from now.
However, RBI officials denied this and said that though banks would continue to accept them, those notes with most of the white space covered with names or numbers would be considered soiled and unfit for circulation. Banks have also been asked to train their staff members to avoid writing anything on currency notes that could reduce their life.
RBI is also pumping in coins to ensure sufficient supply. Sources said exchange melas for soiled notes and coins are being conducted through banks every month.
In the past few days, camps have been held in Vadapalani and Washermenpet and Rs. 7.5 lakh worth of coins were distributed at each camp.
In the last few months, RBI has pumped in 70-90 million pieces of coins in various denominations, worth a total of about Rs. 50 crore, every month, officials said.
October 9th, 2013, 07:29 AM
TABLE-Indian banks' refinancing with RBI falls to 410.26 bln rupees
ed Oct 9, 2013 9:05am IST
Oct 9 (Reuters) -
Date *LIQUIDITY SUPPORT OUTSTANDING
(in billion rupees)
Funds extended at repo rate, currently at 7.50 percent.
Note : * - Data related to Mumbai centre
^^^^^- Includes 52.56 billion rupees of refinance under forex
^^^^- Includes 59.77 billion rupees of refinance under forex
^^^ - Includes 62.47 billion rupees of refinance under forex
^^ - Includes 67.87 billion rupees of refinance under forex
^ - Includes 71.12 billion rupees of refinance under forex
@@@@ - Includes 76.9 billion rupees of refinance under forex
@@@ - Includes 81.53 billion rupees of refinance under forex
@@ - Includes 81.85 billion rupees of refinance under forex
@ - Includes 85.16 billion rupees of refinance under forex
#####- Includes 89.88 billion rupees of refinance under
####- Includes 90.43 billion rupees of refinance under forex
### - Includes 90.69 billion rupees of refinance under
## - Includes 96.32 billion rupees of refinance under
# - Includes 97.56 billion rupees of refinance under
Source - RBI's website: (www.rbi.org.in)
October 14th, 2013, 04:25 PM
Big banking sector reforms coming soon: Raghuram Rajan
The Reserve Bank of India (RBI) will soon come out with major reforms in the banking sector that will allow foreign banks to enter India in a big way and even take over domestic lenders, RBI Governor Raghuram Rajan has said.
“That is going to be a big opening because — one could even contemplate taking over Indian banks, small Indian banks and so on,” he told a Washington audience on Saturday.
The policy framework for the entry of foreign banks in India, Mr. Rajan added, would be unveiled in the next few weeks.
The banking sector reforms, in particular to those facilitating entry of foreign banks in India in a “big way” is part of the five pillars of reforms, including monetary policy framework, which the RBI is going to implement in the next few years, the RBI Governor said.
“For foreign banks, if you adopt a wholly-owned subsidiaries structure and we are coming up with details on that in the next couple of weeks, we will allow you near national treatment,” he said, quickly adding that there would be two conditions.
“One reciprocity — your country should allow the same to our own banks — and second you come through one route either you have a branch or you have a subsidiary; don’t do both.
That is primarily to simplify our regulatory function, but also to make it clean. But once you have a fully owned subsidiary, we would allow you a lot of freedom,” he said.
Acknowledging that price situation was an issue for the economy, Mr. Rajan said the ordinary monetary policy would be focused on containing inflation and not directed towards external sectors.
The RBI is scheduled to present the quarterly review of the monetary policy on October 29.