Recruitment

State Bank of India and subsidaries call for Specialist Officers/Executives Last date for sending application : 09.12.2006 For details kindly visit www.statebankofinida.com www.employmentnews.gov.in or see employment news dated 18-24 November2006

Recruitment

IDBI Bank ltd: Post : Assistant Manager (Grade A) Number of posts : 550 Last date for receipt of application : 05-12-2006 (from far flung areas-15-12-2006) Reservation : As per government rules Eligibility Criteria: 1. Graduate in any discipline from a recognized university 2. The candidate should have minimum 3 years banking experience including clerical/executive experience or 1 year banking experience as an officer. Contractual experience will not be considered. Core banking experience will be desirable. Age (as on November 1,2006) Not more than 28 years. SC/ST/OBC/PH/Ex-servicemen will be eligible for relaxation as per government rules. Pay and Other benefits: 1. The starting basic pay would be Rs.11,250/- per month. The gross monthly emoluments at the start of scale would be Rs.15,600/- 2.In addition to pay and allowances, the selected candidate will be eligible for benefits like pension, gratuity, leave fare concession, reimbursement of medical expenses, vehicle maintenance allowance, vehicle loan, housing loan etc. as per banks rules. Bank accommodation will be provided subject to availability. Selection Process: Selection process will comprise of Written Test followed by Personal interview for those who qualify in written test. The written test will comprise of a) Test of Reasoning b) Test of English Language c) Test of quantitative Aptitude d) Test of General and Financial Awareness Test Centers: 1. Mumbai 2. Delhi 3.Kolkata 4. Chennai 5.Guwahati For more information and application form: www.idbibank.com www.employmentnews.gov.in or employment news dated 18-24 November 2006

News

Capital market exposure of Banks may go up If the modified Reserve Bank of India guidelines come into force from January 2007, the aggregated capital market exposure of banks can go up to 40% of their networth on both solo and consolidated basis. However, banks' direct capital market exposure will be limited to 20 percent of their individual net worth. Currently, banks' capital market exposure is restricted at 5 percent of their total outstanding advances. Within the overall new ceiling of 40 percent, banks' direct investment in shares, convertible bonds, debentures, units of equity oriented mutual funds and all exposure to venture capital funds should not exceed 20 percent of their net worth.

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Innovative instruments to raise banking capital Sunil Gidwani & Robin Roy (Business Line 18.11.2006) In an age where risk determined performance management is increasingly getting into board level agendas and where moves towards capital convergence are the order of the day, banks are compelled to look at innovative ways of continuously shoring up their capital base. Over the years since Basel I, banks have been providing for expected credit losses on credit portfolios, based on their historical defaults. Banks are currently required to provide for adequate capital for both credit and market risks on their banking and investment portfolios respectively. Under Basel II, banks can expect to put aside capital according to the "riskiness" of their credit portfolios and are now requird to have a capital cover for operational risks. Though Basel II is not a legal document, to synchronise with global trends and expectations of all stakeholders, banks are planning to adopt these guidelines as per local regulatory directives. In India, the transition to the new capital adequacy framework in accordance with Basel II norms (originally scheduled for March 2007 but recently extended), would require banks to raise additional capital, particularly for some of their credit portfolios and operational risk. Till now banks have not had many options to raise capital. It is here that the recent RBI guidelines, which allow banks to raise capital by issue of Innovative Perpetual Debt Instruments (IPDI) and Debt Capital, open the doors for looking at "innovative instruments" to raise further capital. Lets's take a look at the salient features of these instruments and the minimum qualifying requirements: Innovative Perpetual Debt Instruments are eligible to be issued as Tier I capital. It can be issued in rupees or with prior approval in foreign currency. Maximum amount that can be raised is 15 % of Tier I capital reduced by intangible asset. As the name suggest, the maturity period is perpetual. The instruments can be issued at fixed or floating rate referenced to a market determined rupee interest benchmark rate. As regards trading in options, investors are not allowed to exercise put options. Call options are exercisable only after 10 years and with RBI approval. Step option can be exercised in conjunction with the call option, and the step-up not nore than 100 bps. If the capital adequacy ratio is not met, then there can be lock-in period for the interest payment. In case of losses, RBI approval is required for payment of interest. Debt capital instruments are eligible to be issued as Upper Tier II capital. Maximum amount that can be raised should not exceed Tier I capital reduced by intangible assets. The maturity period is minimum of 15 years. The instruments can be issued at fixed or floating rate referenced to a market determined rupee interest benchmark rate. As regards trading in options, investors are not allowed to exercise put options. Call options are exercisable only after 10 years and with RBI approval. From the aforesaid features one can note that these instruments can be termed as what are globally known as hybrid intruments, that is, those having characteristics of both equity and debt capital which exhibit all the benefits of debt but can be treated as equity, creating a powerful proposition. This enables spacing out of maturity profiles of instruments.

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Gold based deposit scheme - proposal Bankers are trying to moot a gold-based scheme to raise the long term deposits. The scheme will be designed to induce people to invest in the yellow metal while simultaneously offering banks a new source of funds. The 'Gold Accumulation Scheme' as it is being referred to, was discussed by bankers at a meeting convened by Indian Banks' Association on Thursday. The proposed scheme will work like this; A customer can buy gold by depositing the market price of the metal with the bank. The bank will provide the customer a receipt for physical deposit of gold. The customer can either get the gold in physical form or its value at the prevailing market price anytime after a specified period, say five or 10 years. A customer can keep on depositing funds ( in other words, buying gold ) at intervals of his convenience and accumulate it for 5-10 years. Interest at a nominal rate will be paid on the deposit. For the customer, it will work like a Systematic Investment Plan. On the other part, banks will buy gold futures to hedge against price variations.