Govt to subscribe to SBI rights issue:

Finance minister P Chidambaram on Saturday said the Union government has decided to subscribe to the State Bank of India’s rights issue in a non-cash transaction [SBI,Bank] Confirming reports, the FM said, “the decision is a non-cash transaction which would see the bank (SBI) setting up a redemption fund that would comprise dividends and additional taxes that SBI would pay.” SBI’s Rs 17,000-crore rights issue will be one of the largest public offerings by an issuer in India. The government would need to pump in Rs 10,000 crore as its contribution to the offering. It holds controlling interest in the country’s largest bank after the shares were transferred to it from the Reserve Bank of India. If things go as per plans, the rights issue will be launched in the second week of February and the process will be over by the second week of March ’08. “If something on similar lines has to be done for other PSU banks, then it would depend on how the banks pay the dividends and additional taxes,” Mr Chidambaram added

Withdraw money on Moving Train !!!!!!!!!

Yes, Punjab National Bank is planning to install ATM on Delhi-Agra Shatabdi. [PNB,ATM] There is a new year gift from the Indian Railways to its commuters. After months of will-it-won’t-it speculations, the department has now decided to go ahead with the proposal for automated teller machine (ATM) facility on moving trains. As a beginning, the state-run Punjab National Bank (PNB) will install an ATM on the Delhi-Agra Shatabdi Express, which is likely to be operational by February 15. PNB was awaiting final approval and communication from the railways after which the work of installation of the ATM would begin. The ATM should be installed and become operational by mid-February. After the project’s success, the railways plan to extend similar facility on other routes too. Meanwhile, the railways propose to rope in six nationalised banks, including Canara Bank, Punjab National Bank, Indian Bank, Dena Bank, Union Bank of India and Bank of Baroda, for setting up ATMs at various railway stations.

Karnataka Bank revises rates

Karnataka Bank Ltd has revised interest rates on term deposits with effect from January 1. The interest rate on term deposits of one year to less than two years would be 8/75 per cent (8.50 per cent) and of two years to less than three years would be 9 per cent (9.25 per cent). Interest rate on term deposits of three years to five years would be 9.25 per cent (9.50 per cent). Domestic term deposits of senior citizens with maturity period of one year and above would attract 0.75 per cent more compared to the deposits of the general public. [Karnataka BAnk, Interest]

There’s no one to blame if your ATM hands you a fake note!

What do you do if you find a counterfeit note while withdrawing money from an ATM? You may be shocked to learn this, but there is little you can do. Forget about losing money, you could even be booked for cheating or possessing a counterfeit note. This is what norms of several banks say. “There is absolutely no defined mechanism to fix the responsibility or to check the veracity of counterfeit note claims from the customers,” a top RBI official from Mumbai said. The gravity of the situation can be gauged from the fact that ATMs are rapidly emerging as an alternative to bank branches and currently there are 31,000 ATMs across the country. These ATMs on average register 300 transactions a day. The number of counterfeit Rs 500 notes had gone up from 12,014 in 2005-06 to 25,636 in 2006-07. “We take our own precautions. But if something is suggested or designed, we will be happy to implement,” Mr B. Samba Murthy, CMD, Corporation Bank said.

Finmin no to interest subsidy hike on crop loans

The finance ministry has ruled out an increase in interest subsidy, which at its present level of 2 per cent will cost the exchequer more than Rs 2,000 crore this fiscal, given for short-term crop loans. The government has been giving a subvention of 2 per cent with a ceiling of Rs 3 lakh on the principal amount of crop loans with effect from the kharif season of 2006-07. The scheme has been extended to this fiscal as well. The interest subsidy is provided by the government to public sector banks, cooperative banks and regional rural banks on the involvement of their own funds and concessional refinance to RRBs and cooperative banks through NABARD

SBI to open third branch in US

SBI is readying to open its third full-fledged branch in the US by end-fiscal, to widen its network abroad. The bank is likely to get the approval from the US Federal Reserve Board early next year and is understood to have received the first clearance from the New York State Banking Department. SBI has already two full-fledged branches in the US (New York and Chicago) and a representative office in Washington. The bank has a subsidiary in California - SBI California, which has six banks in the US - Los Angeles, Artesia, San Jose, Fresno, Congoa Park and San Diego. The third branch is expected to come up in New York and it will focus mainly on corporate lending.

Canara Bank redesigns brand identity

In an effort to fight the growing competition and to attract new customers, Canara Bank on Saturday announced a new brand identity. [Canara Bank, Brand] The new logo, which depicts interlocking triangles - one rich blue and the other a bright yellow - was unveiled by Union Finance Minister P Chidambaram at a function in Bangalore. Created by brand consultants Ray + Kesavan WPP, the logo symbolises the bond between the bank and its stakeholders, which includes its customers, employees, investors, institutions and the society at large, bank executives said. Canara Bank Chairman and Managing Director M B N Rao said it had become imperative to rebuild the brand in order to attract and retain customers, who now had a variety of alternatives. “We also have to take into account post-2009 scenario when foreign banks will have access to more organic and inorganic growth,” Rao said. He hoped that the new identity would particularly attract the younger generation

If you are frequent visitor to ATM, then read this..

Free ATM usage from April 2009 Recently RBI gave a statement that ATM usage charges across all banks will be free from April 2009. The customers feel happy about this because they are paying money on every transaction done through other banks ATMs ranging from Rs.10 to Rs.60, now they can save all those money. The banks are not happy because they were earning fee commission every time a non-customer used their ATMs and there will be drain on their profits. During the period when there was craze to open ATMs, Some of the banks joined hands to provide ATM services at reduced costs. Some smaller banks, to retain their customers joined hands with banks having wide ATM base. Some banks are refunding the charges incurred by their customers for using their banks ATM card at other banks ( only if they maintain some balance as stipulated by the bank) From here onwards banks will think twice before opening ATMs because of the costs associated with it. (rent, furnishing, power, machine, A.C., guard, security and many) The banks may force the customers to use ATMs for cash withdrawal. The charges for ATM card issue and annual charges may go up substantially. The other bank may not allow next banks customer to use his ATM. [ATM,Bank,RBI]

Intending to take Educational Loan, then read this...

The Educational Loan is going to be cheaper, say thanks to the government. The Government is thinking to bear interest burden on educational loans taken by students during moratorium period or the times when students are pursuing academincs and have not yet begun earning. The Manmohan Singh government is finalising a scheme in consulation with Planning commission. The corpus of the scheme is estimated to be Rs.4,000 crore and the Interest burden on the government is estimated to be Rs.650 crore a year. The above amount arrived by planners is based on that five lakh students from families earning Rs.2.5 lakh a year or less availed of the loans. The interest subsidy would be availabe for students meeting the economic bar set for beneficiaries and studying professional and technical courses at the undergraduate and post-graduate levels. The government is intending to implement the scheme from the next academic year 2008, also wants to ensure that the benefit should be available only for one loan. Untill now the education loans come with a clause which allows students not to pay interest during academic life. The interest for this period is added to the principal and repayment begin once the student availing of the loan starts working. This step by the government will be a breather to Banks who lend to students as they can lend more freely. This step is more useful to students as the courses take normally 3 to 4 years. By the time they complete the course and start earning their loan would have been increased by 30 to 50% by addition of interest. If the government takes this burden they will be relieved a lot.

Bank of Baroda Recruitment for Specialist in senior management category

BOB is recruiting for specialists in senior management category. Last date for applying 18.01.2008..http://www.bankofbaroda.com/recruitment.asp?artid=2102&modid=36

Deutsche Bank to infuse Rs 2,155 cr in Indian unit

Deutsche Bank said it will infuse an additional Rs 2,155 crore in its Indian operations. This includes Rs 1,470 crore Tier-I capital for the bank’s branches and Rs 685 crore towards equity of the newly formed non-banking finance company for which the Deutsche Bank group received approval recently. With this infusion, the group’s total capital in India will cross Rs 5,700 crore, making it among the highest capitalised foreign banks. The bank will use the additional funds for lending, both corporate and retail. Mr Gunit Chadha, Chief Executive Officer of Deutsche Bank India, said, “The fresh capital will allow us to offer greater local balance sheet financing for our corporate, institutional and retail clients.”

SBI goes aggressive on stocks

State Bank of India (SBI), the country’s largest bank, is aggressively scaling up its equity investments, for the first time since banks were allowed to invest in company shares over a decade ago. Till March 2007, the bank had invested a total of Rs 1,973 crore in shares of companies. In the nine months since then, it has added Rs 3,000 crore to its investment kitty, making investments of over Rs 100 crore in a clutch of blue-chip companies including GMR Infrastructure, Godrej Industries, Maruti Suzuki, Cairn India and DLF, besides closest rival ICICI Bank. Last year, the bank’s equity book had expanded by Rs 455.46 crore. “We have never looked at equity the way we are doing in the last one year or so. We are building (our investment portfolio) gradually and we intend to (continue to) do it,” said a senior SBI official. “There has been a shift in the financing of companies to a combination of debt and equity. If the bank has to have a relationship with the corporate, then it has to be in the debt and equity segment together. We are taking part in nearly all issues unless we feel the valuation is too high,” said the official.

Encashment norms for joint term deposit holders eased

The Finance Ministry has relaxed encashment norms for joint holder type term deposits under the tax-saving ‘bank term deposit scheme’ framed last year. This scheme was developed to encourage flow of long-term deposits into the banking system. In the event of the death of the first holder, the Central Board of Direct Taxes (CBDT) has now allowed the joint holder to encash the term deposit before its maturity. Hitherto, the scheme did not permit any encashment of term deposits before the expiry of five years.

ING Vysya's new deposit scheme

Private lender ING Vysya Bank has hiked interest rate on 120-day deposits by 25 basis points to 7.75 per cent in a bid to attract more funds. The bank has created a new slab of 120 days for fixed deposits. This slab was earlier clubbed with 91-364 days, drawing 7.50 per cent interest rate. The new fixed deposit scheme has been effected from December 15.

Union Bank to enter MF biz

As part of its ‘Vision 2012’ programme, Union Bank of India is planning to diversify into mutual fund business and will also explore the possibility of entering the venture capital arena. Mr M.V. Nair, Chairman and Managing Director of the bank, told newspersons that the meeting also decided to look for a partner to get into credit card business. The ‘Vision 2012’ is aimed at making Union Bank of India one of the three largest banks in the country and also becoming a global player with its presence in at least 20 countries. As of now, the bank has a branch in Shanghai in China and a representative office in Abu Dhabi. These apart, a full-fledged branch will be opened in Hong Kong in February next year. The bank would choose ‘hot growth spots’ for locating its overseas branches. He said that the bank would recruit another 16,000 employees over the next four years to support its diversification plans as also keeping in view the tremendous growth expected in the financial sector.

Bank Unions submit Charter of Demand (Wage Settlement) to IBA

As we are aware the wage settlement expired on 31.10.2007 and new settlement is due from 01.11.2007 And the Bank Unions have already submitted their charter of demands to Indian Banks Association. The copy of same is available for you. Click here to read more.http://groups.google.co.in/group/the-bank-page/web/Charter+of+demands-wage+settlement-bank.pdf

SBI mulls VRS for 40K staff

State Bank of India (SBI) is planning to introduce a voluntary retirement scheme (VRS) for its subordinate staff in the next financial year. The proposed scheme aims to give chance to over 40,000 employees, who find it challenging to work in a computerised environment and competitive market conditions. "The nature of work has changed substantially due to introduction of core banking solutions (CBS) and automation. Besides, the work demands on staff are growing enormously to retain market share. Some of the subordinate staff should get a decent exit option," a senior SBI official said. He, however, ruled out any VRS for the clerical or officer cadre. There are three aspects related to VRS for this category of staffers. First, with computerisation and rollout of core banking platform, their role is limited. Second, even if some of them could be retrained, the cost incurred may not bring much benefit. Finally, they are not mobile.

RBI plugs loophole in forex management regulations

The Reserve Bank of India has detected and plugged a loophole in FEMA (Foreign Exchange Management Act) regulations which some Indian companies were exploiting to raise funds abroad and bring to India. The regulations are related to repayment of advances that are paid by overseas investors to Indian companies for allotment of shares under automatic FDI route. Under these regulations, while Indian companies are allowed to receive advance payment from NRIs and overseas investors, no time limit was stipulated for issue of shares or refund of the amount. Taking advantage of this loophole, companies instead of allotting shares use the advance money for other purposes and refund it after two to three years, giving some vague reasons. On Friday, through a circular to banks and authorised foreign exchange dealers, RBI has plugged this loophole, stipulating that companies receiving funds from abroad as advance payment for allotment of equity shares or debentures should issue the instruments to investors within 180 days.

OBC is recruiting - Click here for more details

Oriental Bank of Commerce is Recruiting 200 Officers. Laste date to submit application is 14.01.2008http://the-bank-page.googlegroups.com/web/OBC-PO-2008.pdf

Banks asked to unwind guarantees to FIIs

Foreign institutional investors (FIIs) from now on cannot avail of guarantees (irrevocable payment commitments) from banks for their payment obligations at the stock exchanges. In a circular to banks on capital market exposure, the Reserve Bank of India (RBI) has said entities such as FIIs are not permitted to avail of fund or non-fund based facilities such as irrevocable payment commitments (IPCs) from banks, under the provisions of the Foreign Exchange Management Act (FEMA). Banks have been asked to unwind all such guarantees given on behalf of FIIs within six months starting today. The RBI’s regulations under FEMA state that the payment for buying shares by persons resident outside India has to be made through inward remittances, with non-resident Indians (NRIs) having the option of paying through debits in their bank accounts in India. An official with a private sector bank, which was already including loans to mutual funds as capital market exposure, said this would have a marginal impact as only a few banks had not included loans to mutual funds in their capital market exposures.

Bank loans to equity MFs to be part of capital market exposure

Bank loans to equity-oriented mutual funds will now form part of the bank’s total capital market exposure, said the Reserve Bank of India. In its note the RBI said, “Banks are advised to be judicious in extending finance to mutual funds and grant loans and advances to mutual funds only to meet their temporary liquidity needs for the purpose of repurchase/redemption of units.” A senior official from a public sector bank said, “A short term loan to a mutual fund is a standby facility in any case. In India we have not seen a stage, as yet, of large-scale redemptions, which would make mutual funds approach banks for loans.” The RBI also said that irrevocable payment commitments (IPCs) issued to stock exchanges at the request of mutual funds for their secondary market purchases would also form part of banks’ capital market exposure. This facility, too, is not something that mutual funds normally use, the bank official said.

If you use CyberCafe to do Banking Transaction, Then you must read this

Every time you make an online bank transaction at a cyber cafe, you run the risk of losing all the money in your account, since you could leave traces of your password on the computer. A 27-year-old hacker, who used special software to get nearly 100 bank account passwords from cybercafes, was arrested in Bangalore. "It's a major crime," said SP (Cyber Crime-CoD) B A Mahesh. The hacker is Joseph, a diploma holder in computer science from Virudhunagar district, Tamil Nadu. A Bangalorean since 1999, he worked as a data entry operator before losing his job two years ago. Joseph came under the scanner of sleuths investigating a complaint lodge recently by Carl Braganza, HR manager at a software company. Braganza claimed that someone had hacked into his Citibank account on Oct 10 and defrauded him of Rs.1.27 lakh: Rs.87,200 was used to recharge cellphones and Rs.40,000 transferred to another bank account in Mumbai. The sleuths traced the hacker's IP address to Anu Cyber Cafe in Mahadevapura. They zeroed in on Joseph on November 29. When interrogated, Joseph confessed. Mahesh said Joseph visited cybercafes and installed a free software called 'Key Logger' on computers. "The software captures every stroke on the keyboard. If a person is checking his bank account on the net, all the details are recorded," he said. The number of visitors to cybercafes is high during the first week of the month, when people come to check their salaries. Joseph then went to the computer where he had installed the software and retrieved the data. Once he had the account details, he transferred money to his associates, who charged him a commission. The group recharged others' cellphones at discounted prices from the hacked accounts. " It is similar to a cellphone thief selling a stolen handset for half its original price," sleuths said. Some DOs and DON'Ts for those assessing sites at cyber cafe. DON’Ts Don’t leave personal documents at places where it can be picked up or viewed by others. Don’t log into online account from an insecure network. Don’t enter your log-in details on a website unless you are sure it is secure. A lock at the bottom or ‘https’ in the address field are signs of a secure website. Don’t follow links to banking sites. Don’t respond to e-mails that ask you to enter your bank details. Dos Type the bank’s URL yourself. Use other methods to enter details. Some banks have on-screen keyboards to avoid key presses. Scan your computer and update anti-virus software regularly. Times of India dated 15.12.2007

Corporation Bank offering ‘financial health check-up’

Corporation Bank will now offer a ‘financial health check-up’ for its customers. The bank is offering this service at two of its centres, Mumbai and Bangalore. Customers can get their finance portfolio examined, find out if it is a healthy mix and get advice on making investments. The bank plans to introduce this service at all its other important centres. The service in Mumbai was launched by Mr T.S.Vijayan, Chairman, Life Insurance Corporation of India. To supplement this service, the bank has also set up an ‘Investment Shoppe’, which is a one-stop shop that will offer loans, mutual funds (13 tie-ups), retail gold, demat services as well as offline and online trading. It will also offer non-life insurance products from New India Assurance, life products from Life Insurance Corporation. The bank can also collect direct tax, excise duty and custom duty with online remittance facility at this outlet. The bank is also running a pilot for ‘mobile banking’ at 2,000 merchandise institutions. “Mobiles are more secure than credit cards. The customer can transfer money from his account to his mobile and also use it instead of a credit card to pay his bills at a retail outlet,” said Mr Sambamurthy, CMD, Corporation Bank.

Canara Bank hikes offer price for Can Fin

Canara Bank has hiked its offer price to Rs 63 a share to the shareholders of Can Fin Homes from Rs 58 a share announced in August this year. The announcement to this has been made by Indbank Merchant Banking Services, which is managing the offer on behalf of the bank.

OBC is Recruiting - Click here for more details

Oriental Bank of Commerce is recruiting 200 probationery officers. Last date for application 14.01.2008

PSUs join talent hunt with big hiring plans

After a hiatus of sorts on large-scale recruitments, and with several rounds of voluntary retirement schemes behind them, public sector companies are back to hiring like never before. The trend is more pronounced in the case of PSUs in the infrastructure and banking sectors, with new inductions happening mainly at the entry level. According to Indian Institute of Banking and Finance estimates, public sector is slated to recruit over 1.5 lakh employees across various levels over the next three years. State Bank of India, Oriental Bank of Commerce, Union Bank of India, Andhra Bank and Bank of Baroda are among those working on plans to increase headcount. According to IIBF, public sector banks in the country are likely to recruit over 1.5 lakh employees over the next three years. SBI is looking to hire nearly 3,000 employees, mainly for its associate banks including the State Bank of Hyderabad, while others such as Bank of Baroda, Union Bank of India and Andhra Bank are reportedly looking to expand their workforce by about 2,000 at various junior-and middle-management levels. Oriental Bank of Commerce is already in the market for recruiting around 200 Probationary officers in its first phase of officer-level recruitments.

Insurance investments, banking may need PAN

After the capital markets, the government is targeting the financial sector - banking and insurance segments - to make it mandatory quoting of permanent account number (PAN) for investment products. The government is vetting a proposal to make quoting of PAN as a requirement for investment in financial products such as fixed deposits and unitlinked insurance plans (Ulip) above a certain limit. Credit cards are also expected to be included in the new list. The monetary ceiling has been mooted at Rs 1 lakh initially. According to government officials, the finance ministry has started consultations on the front with the financial sector regulators.

IOB to accept tax payments

Tax payers may pay their taxes through the branches of Indian Overseas Bank. The only requirement is that the taxpayer has to open an account with any of their networked branches and register for E-See Banking (IOB’s Net Banking) with funds transfer facility. With this facility, income-tax, corporation tax, wealth tax, gift tax, fringe benefit tax, banking cash transaction tax can be paid through Internet. Customer needs to log-in to http://tin.tin.nsdl.com/etax or alternatively http://incometaxindia.gov.in and select “Pay Taxes Online” and fill up the requisite challan.

Srs. look ahead with reverse mortgage

Kolkata-based UCO Bank has, on Saturday, announced the launch of a reverse mortgage loan scheme for senior citizens. The scheme is targeted for supplementing pension and other monthly income for citizens over 60 years. The scheme, being new in India, will offer the seniors a regular fixed sum per month from banks and housing finance players, based on the value of their property that they live in. The owners will receive the sum for a period not more than 15 years. A dozen banks, including Allahabad Bank and Punjab National Bank, have already launched a reverse mortgage scheme.

Union Bank mulls rights issue

“We would be making the plans for the next financial year in February, and if we find there is a need for capital, we may look at a rights issue as an option,” Mr M.V. Nair, Chairman and Managing Director of Union Bank of India, told. The Government currently holds 55.43 per cent stake in the bank, with public institutions including mutual funds, financial institutions and banks, insurance companies and foreign institutional investors (FIIs) having 31.1 per cent stake. Union Bank, on Thursday, also raised a debt of Rs 600 crore, which includes Rs 200 crore in perpetual debt and Rs 400 crore in Tier-II bonds. The bank is targeting a total business of Rs 1,85,000 crore of which Rs 1,05,000 crore would be from deposits and Rs 80,000 crore from advances. Currently, the total business is at Rs 1,65,000 crore. Mr Nair also said that the capital adequacy ratio of the bank after the introduction of Basel II norms in April next year will be 11.5 per cent. “The net interest margin (NIM) of the bank is also expected to dip marginally to around 3 per cent for the current fiscal from 3.05 per cent last year.” he said.

SBI tops customer complaints : RBI data

SBI has emerged as the bank with the maximum number of customer complaints in 2006-07 (April-March), followed by ICICI Bank, according to data available with RBI. SBI - the largest bank in the country - had a whopping 8,579 complaints in 2006-07. As against this, ICICI Bank has 5,048 complaints against it - a distant second. This is the first time the central bank has come up with such an exhaustive and dis-aggregated data on customer complaints. Total complaints against public sector banks stood at 21,660, out of which the SBI group alone accounted for more than half - 11,117. Of the 9,036 complaints against private sector banks, more than 90 per cent were against new generation banks - 8,211. In the credit cards segment, complaints against SBI stands at 0.73 per 1000 - much higher than ICICI Bank's 0.19.

12 banks sign financing documents for Delhi airport

Delhi International Airport Pvt Ltd, which is taking up the modernisation of Delhi airport, signed key financing documents with its project lenders for Rs 3,650 crore and foreign currency loan of $350 million. The total debt requirement has been financed by Canara Bank (Rs 600 crore), IIFCL (Rs 500 crore), Union Bank of India (Rs 500 crore), Oriental Bank of Commerce (Rs 400 crore), Central Bank (Rs 400 crore), Andhra Bank (Rs 250 crore), Vijaya Bank (Rs 250 crore), IDFC (Rs 250 crore), Bank of India (Rs 250 crore) and PNB (Rs 250 crore). The loan of $350 million has been financed by ICICI Bank, Singapore - $200 million and Abu Dhabi Commercial Bank, Abu Dhabi - $150 million.

5 PSBs to have majority stake in Payments Corp

Five public sector banks - State Bank of India, Canara Bank, Punjab National Bank, Bank of Baroda and Union Bank of India - will have the majority stake in a new company to be incorporated to undertake the payment and settlement work, currently being done by Reserve Bank of India. Initially the company, to be incorporated under Section 25 of the Companies Act, will have nine shareholders - five PSU banks, two private and two foreign banks. The non-PSU banks are likely to be ICICI Bank, HDFC Bank, Standard Chartered and HSBC. Initially, the proposed company-National Payments Corporation of India-will take over the RBI-run clearing houses in the four metros-Mumbai, Delhi Chennai, and Kolkata. The employees of these clearing houses will also be transferred on deputation to the new company.

BoE cuts rates by 25 bps to 5.5%

The Bank of England cut interest rates for the first time in more than two years on Thursday, after a week of feverish speculation over whether it would act to shore up economic growth in the face of the global credit crunch. The Bank said it had cut its key rate by a quarter percentage point to 5.5 per cent. The European Central Bank left interest rates at 4.0 per cent on Thursday, as expected, resisting a growing global bias towards monetary policy easing.

HDFC plans mobile wallets, remittances

HDFC Bank, which already provides mobile banking facilities, is now planning to foray into mobile wallets. These will enable customers to use their mobile phones for transactions instead of carrying the debit or credit cards. “Our mobile banking users has doubled in less than six months of this year and with the growing trend, we are planning to introduce mobile wallets and remittances soon,” said HDFC Bank executive vice-president, retail banking, Rahul N Bhagat at the Banktech Congress in Mumbai. “We are looking at getting debit-card and credit-card services on mobile phones for transactions and introduce it in the rural areas,” he added. The bank is also focusing aggressively on ATM expansion. Kotak Bank has invested around Rs 20 lakh for developing mobile banking services. Currently, there are 1.6 million mobile banking users in India

Trust banks to draw up your will and execute it too

Here is the beginning of my post. And here is the rest of it.More and more banks are keen on offering services such as will drafting, execution and trusteeship for management of property of the deceased. For customers, it perhaps makes more sense to entrust their wealth to a bank, which already has experience in handling financial matters. For banks, it is an opportunity to earn fee income and also cross sell other investment products. Some banks such as Canara Bank and Bank of Maharashtra have been offering the service for quite some years now and the latest entrant in this segment is Centurion Bank of Punjab (CBoP). CBoP offers this service through its joint venture, Centurion Executorship, Trusteeship, Real Estate Management and Advisory Services Pvt Limited (CERMA) and Bank of Maharashtra through its fully-owned subsidiary, Maharashtra Executor and Trustee Company (METCO). While CBoP caters to customers with a net worth of $1 million, Canara Bank and Bank of Maharashtra offer this service to everyone. Charges for drafting range from Rs 3,000-Rs 5,000. For execution and management of trusts, banks charge about 1-2 per cent of the value of the assets as fees.

Now, withdraw cash without ATM cards

If you are falling short of money while on a shopping binge, you can ask your friend to SMS a system generated personal identification number (PIN).The PIN can be used to withdraw money from his account in an automated teller machine (ATM). NCR, a global self service technology major, has developed an interactive technology for cash withdrawals without an ATM card. It is in talks with a leading private sector bank to offer this technology. “We are also in talks with a couple of other banks to offer our technology. The technology solution will offer services such as stock trading, shopping, mobile money transfer and bill payments through interactive ATMs. However, the system generated PIN can be used only once. Banks are willing to spend on this technology,” said country sales manager of NCR India’s financial solutions division Mr Manjunath Rao.

KVB ties up with IDBI Capital

Karur Vysya Bank (KVB) has tied up with IDBI Capital Market Services Ltd to provide online trading facility on both BSE and NSE for its demat account holders. These transactions could be put through idbipaisabuilder.in of IDBI Capital and the service would be available from March 1, 2008, Mr P. K. Kuppuswamy, Chairman, KVB said.

Centurion’s service for NRIs in Canada, UK

Here is the beginning of my post. And here is the rest of it.Non-resident Indians in Canada and United Kingdom can get all information regarding account operations through ‘Post Box Service’ without incurring any courier charges. Centurion Bank of Punjab has launched ‘Post Box Service’ in the two countries for NRI customers who can use the service to send documents, statement and cheque requisition, account instructions, electronic banking application form, mandate application form, change of address form, PIN re-generation, debit card re-issue or any other account operating instructions including FD opening or renewal instruction. The service will be provided free of charge. The documents should be sealed thoroughly and sent through ordinary inland postal service in the above countries. The service cannot be used for sending cheque, demand draft, cash or any other monetary instrument.

SBI requires Law Officers - Click here for more

Here is the beginning of my post. And here is the rest of it. SBI is recruiting for Law Officers

SBI is hiring - click here for more details

State Bank of India is hiring for the post of Customer Relationship Executives (contractual basis)

Banks look to sell bad loans to clean up books

Here is the beginning of my post. And here is the rest of it.A number of banks are planning to put on the block loans with a face value of Rs 2,500-3,000 crore to clean their balance sheets before the fiscal year ends. State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank of India, UCO Bank are among some of the banks that are keen on offloading poor quality loans from books. To being with, bidding for PNB’s loan portfolio opened on Monday. The bank is looking at selling 59 loan accounts with a face value of Rs 400 crore for cash and another 10 accounts for security receipts in return. State Bank of India is planning a circle-wise auction. The total face value of the loans is said to be Rs 1,000 crore. Bank of Baroda has invited bidding from December 13 for 100-odd loan accounts with a face value of Rs 400 crore. Union Bank of India has asked the bidders for only security receipts against the sale of bad loans. This would mean that only asset reconstruction companies (ARCs) can bid for the Union Bank’s auction. However, the size of the auction is very small - around Rs 100 crore - since this is the first experiment by the bank. Kolkata-based UCO Bank, too, is eyeing the market with the loan book of Rs 200 crore, but is it looking at a combination of both cash and SRs.

'All Arabs will prefer Islamic banking’

Here is the beginning of my post. And here is the rest of it.Hussein Hamid Hassan is considered as the father of Islamic finance. He received his PhD from the faculty of Sharia at the Al Azhar University in Cairo in 1965 and holds two degrees in law from the International Institute of Comparative Law, University of New York. He chairs the Sharia Supervisory Committee of many Islamic banks in the Middle East, and has advised several governments. An expert in Law, he had been the attorney general for the government of Egypt between 1969 and 1970. He has advised several governments in the Middle East and CIS countries on establishment of Islamic Finance Institutions. According to Mr Hassan, Islamic financing is the most equitable form of financing since it enables the creation of wealth without fuelling inflation or stoking a financial crisis.

Banks refuse dollar loans to exporters

Here is the beginning of my post. And here is the rest of it.Suddenly, foreign currency loans have become a scarce commodity. Indian banks draw foreign currency credit lines from international banks to lend to local exporters. These credit lines have now dried up with the subprime fiasco severely impacting the global money market. Under the rules stipulated by the Reserve Bank, banks can charge a maximum of Libor (London inter-bank offered rate) plus one percentage point for such loans, commonly called packing credit in foreign currency (PCFC). Libor is the international benchmark rate for bulk money. “Liquidity has become so tight that we would be losing money if we give PCFC loans to exporters,” said the head of trade finance of a private bank.

Bank staff to strike work today

Here is the beginning of my post. And here is the rest of it.Over 45,000 employees, under the banner of State Sector Bank Employees Association and 2,500 officers under the banner of All India Bank Officers Association (AIBOA) in the subsidiary banks of SBI, are observing strike on Monday to oppose the attempts of SBI to merge its associate banks with itself. On December 4, over 24,000 officers, under the banner of Associate Banks Officers Association, in all these banks are also observing the strike for the same reason.

Jobs in ICICI Bank : Click here for more details

Here is the beginning of my post. And here is the rest of it.ICICI bank is hiring for more details visit; http://groups.google.com/group/the-bank-page/web/vacancies-in-icici-bank

Banks lure Gen Next with new schemes

Here is the beginning of my post. And here is the rest of it.With 50% of India’s population consisting of youngsters, bankers are increasingly targeting kids and teens by offering products that meet their requirements. And with a third of the population aged between four and 14 years, kids are playing an important role in purchase decisions from consumer durables to automobiles. “We recognise the changing role of children in purchase decisions and want to harness them by introducing them to banking and money management,” says Maninder Juneja, head-retail liabilities, ICICI Bank. Similarly, HDFC Bank also has a Kids Advantage account. Features include a free education insurance cover upto Rs one lakh. Moreover, amounts in excess of Rs 5,000 over and above a balance of Rs 10,000 gets converted into fixed deposit for a specific period in the child’s name. Even nationalised banks are catering to Gen Next. Indian Bank launched its saving product IB Smart Kid in Aug 2007 targeting kids below 18 years.

Realty claims a third of private bank loans

Here is the beginning of my post. And here is the rest of it.For every Rs 10 lent by new private banks, Rs 3 was lent to the real estate sector. In FY07, 32% of their loans were to the ‘sensitive’ real estate market, including direct and indirect exposures. This was despite tightening of lending norms during the period. Even foreign banks had a high share of 26.3% of its total advances in the market in FY07. In contrast, public sector and old private sector banks were more conservative in their real estate exposures with shares at 15.1% and 16.6% of their respective total loans in FY07. Interestingly, the real estate exposure rose sharply, despite several prudential measures initiated by the central bank during the fiscal year, requiring banks to set aside additional capital.

LVB's funds transfer facility

Here is the beginning of my post. And here is the rest of it.Lakshmi Vilas Bank has gone live with National Electronic Funds Transfer transactions across its 156 CBS-enabled branches in the country. The facility is expected to enable LVB customers to transfer funds between banks in a quicker and more secure manner. The bank introduced the `Lakshmi Super Fast money' two months ago. The product facilitated real time gross settlement transfer of funds to the tune of Rs 1 lakh and above among banks, at a flat commission of Rs 50 per transaction. The bank has also introduced on pilot basis a flexible deposit scheme `Lakshmi Freedom Deposit' with sweep out - sweep in facility in select branches

Recruitment : Vijaya Bank (click here for more details)

Public Sector Bank, Vijaya Bank is Recruiting. Kindly refer this to your friends. You can also visit www.vijayabank.com for more details and application forms.

Bank chiefs want flexibility in fixing wages

Public sector banks need to move away from industry-level wage negotiation, said Dr A.K. Khandelwal, Chairman and Managing Director, Bank of Baroda. “We need to dismantle the existing structure. There is no law that restricts us to determine compensation packages at the bank level but we need to persuade the government to permit it,” he said. “We cannot have a standardised approach for measurement of performance,” he added. Mr T.S. Bhattacharya, Managing Director, State Bank of India, said that Government rules were restricting the incentives that could be provided to employees. “We have a totally redundant system. To attract the right talent to my treasury department for instance, I need to pay more,” said Mr M.V. Nair, Chairman and Managing Director, Union Bank. He also felt that unions may not be a stumbling block for restructuring packages based on performance. Another issue that came up in the panel discussion, was the ‘age factor’. Mr Haseeb A. Drabu, Chairman and CEO, The Jammu and Kashmir Bank, said that the age-wise distribution of public sector employees showed that it was on a higher side. “This is a structural constraint and the private sector has an advantage here.” pan>

PNB opens biometric ATM

Punjab National Bank (PNB) has installed the first ever biometric automated teller machine (ATM) of the bank at the Chhapraula village branch of district Gautam Buddh Nagar in Uttar Pradesh. This biometric ATM was the first of its kind in entire North India in Indo-Gangetic belt.

Uco Bank's issue to mop up Rs 450 cr

Here is the beginning of my post. And here is the rest of it.Public sector lender UCO Bank plans to raise over Rs 450 crore through a follow-on public offer (FPO) and will approach market regulator Sebi by the end of December in this regard.

Indian Bank sheds Rs 1,500-cr costly deposits

Here is the beginning of my post. And here is the rest of it.It can raise resources cheaper by selling its investments than by accepting high-interest deposits, the Chairman and Managing Director of Indian Bank, said. Indian Bank has not renewed around Rs 1,500 crore of high cost deposits that matured after September. The bank was paying between 8.5 per cent and 9 per cent on these deposits. The bank can afford to say ‘no’ to deposits without hurting its ability to lend. With this, Indian Bank’s SLR investments work out to about 34 per cent of deposits, against the mandatory 25 per cent. It can raise resources cheaper by selling its investments than by accepting high-interest deposits.At the other end of the spectrum, micro-credit is picking up.

The survival of the fittest

Here is the beginning of my post. And here is the rest of it.The annual bankers’ conference - BANCON (earlier known as the Bank Economists’ Conference) is one of the India’s most popular conferences for discussing key issues affecting Indian banking industry. The theme of this year’s conference (BANCON 2007 scheduled on 26th & 27th Nov.07) is ‘Indian banking - Towards global best practices’. Even though Indian banking sector is stronger than ever before, challenges abound. In the broader context, the challenges originate from volatile economic environment, increasing inflows of portfolio capital and consequent monetary tightening measures, cross currency movements, oil price shocks, etc. Only those banks that have robust risk management capabilities and sufficiency of capital will be able to survive in the long-run. Gradually, a case for merger between stronger banks is also gaining ground in India. With the liberalisation of entry norms for foreign banks post-April, 2009, “consolidation” will gather significant momentum in our banking sector. This will have a significant impact on the business models and operational strategies of Indian banks.

Syndicate plans third public offer

Here is the beginning of my post. And here is the rest of it.Syndicate Bank is planning for its third public offering by the end of this financial year. K Devananda Upadhyaya, the new general manager of the bank’s Kolkata region, said, “We have the approval from the board of directors and are waiting for the clearances from the Reserve Bank of India (RBI) and Sebi.” Although he declined to divulge further details regarding the timeframe, he said the procedure is expected to be completed by the end of this financial year. “Our sources at the bank suggested that the bank is looking to bring down government holding from 66.47 per cent to 57.64 per cent, which implies a dilution of 10 per cent,” he added. The bank’s last issue was in July 2005, when it raised Rs 165 crore. The bank has reported a net profit of Rs 277.6 crore for the quarter ended September 2007 up from Rs 205.1 crore registered a year earlier.

Now, get ready to send money through your mobile phone

Here is the beginning of my post. And here is the rest of it.Ramesh - a migrant from Kerala who works in Dubai - will soon be able to use his mobile to transfer money to his wife. All he would need is to 'top up' his mobile phone with money - the way he currently operates his prepaid account - and SMS the amount to his wife's mobile. She, in turn, would receive a number (similar to a PIN) and be able to redeem this for cash at any prepaid distribution point of her mobile service provider. Banking regulations in India currently do not allow cash for exchange of another 'unit' such as 'airtime' in the case of mobiles. Only banks and the Indian Post (through money orders) are currently allowed such transfers. "We expect India, as one of the biggest recipients of remittances, to be among the first countries to benefit from mobile money transfer services," a GSM Association (GSMA) spokesperson said. Bharti Airtel has already tied up with SBI for mobile remittance, and is pilot testing it at a few villages in India (one such project is in a small Himalayan town of Pithoragarh in India). Vodafone too has tied up with Citibank towards the same end. The regulatory hurdle apart, the mobile money transfer opportunity is huge. India has over 200 million mobile subscribers, a little over 300 million savings account holders but slightly over 70,000 bank branches.

Dhanalakshmi Bank plans rights issue

Here is the beginning of my post. And here is the rest of it.Thrissur-headquartered Dhanalakshmi Bank Ltd is contemplating a rights issue route to enhance its capital base. The bank’s Managing Director and CEO, Mr P.S. Prasad, maintained that the board has in-principle agreed for the rights issue, but the timing, size and price was being worked out. Asked about the likely time span, he said: "We want to complete the process by the close of this fiscal.” Claiming to be the principal banker for temples, churches and mosque, he said ‘over 1,800 temple accounts are with us. “We have bigplans for traders and SMEs,” he said but did not elaborate further. The bank is planning a co-branded credit card

PNB board okays merger of PNB Gilts with itself

Here is the beginning of my post. And here is the rest of it.Punjab National Bank said the board has given go-ahead to PNB Gilts to work out scheme of merger with the bank. The Delhi-based bank currently holds about 74 per cent in PNB Gilts and the rest is with retail investors and institutional investors. PNB Chairman & Managing Director, Mr K C Chakrabarty, has said : "we are looking at merger as one of the options because it does not make sense to have a separate subsidiary which is not into any business other than gilts." A merger will allow us to avail the Rs 40-50 crore capital infused in PNB Gilts and put it to other use, he had said. Similarly, the bank is also reviewing the possibility of merging its housing finance arm PNB Housing Finance Ltd with itself.

Banks may branch out, set up ATMs sans RBI blessing

Here is the beginning of my post. And here is the rest of it.Banks planning new branches and ATMs may no longer require a mandatory approval from RBI. The government is considering a proposal to de-license bank branches and ATMs in the country. The move is in tune with the likely findings of the committee on financial sector reforms headed by Raghuram G Rajan. It is understood from official sources that members of the committee are in favour of abolishing licencing for bank branches and ATMs, starting with rural and semi-urban areas. “We are discussing various proposals pertaining to financial sector reforms with the government and this is one of them,” one of the members said. The opening of branches by banks is governed by the provisions of section 23 of the Banking Regulation Act 1949. Accordingly, banks cannot open a new place of business in India or abroad without RBI approval

United Bank cuts term deposit rates

Here is the beginning of my post. And here is the rest of it.United Bank of India has announced downward revision of interest rates on domestic term deposits of certain maturities. With effect from November 19, the rate of interest on term deposit for three years to less than five years will be 8.75 per cent compared with nine per cent previously and for five years and above, the revised rate will be 8.5 per cent (8.75 per cent). The rates of interest in respect of term deposits of other maturities however will remain unchanged.

SBI offers e-trading service

Here is the beginning of my post. And here is the rest of it.State Bank of India has tied up with its wholly owned subsidiary SBICAP Securities Ltd for providing e-trading services to its customers. SBI already provides online trading through ‘eZ-trade@sbi, in a tie-up with Motilal Oswal Securities Ltd. It is a three-in-one account where the demat account and the savings or current account is with SBI and the trading account is with Motilal Oswal.

SBI may absorb Uco, Dena banks

Here is the beginning of my post. And here is the rest of it.Banking consolidation in the public sector is set to deepen further with State Bank of India (SBI) seeking to expand its foothold beyond immediate associate banks by possibly absorbing Uco Bank and Dena Bank. The government has, of course, decided to maintain a hand-off approach to the development, but it is understood that informal consultations are already on among the banks. In October, SBI absorbed State Bank of Saurashtra within its fold. That process is likely to be completed by the end of this fiscal. The government has recently decided to approve a rights issue by SBI. It is also expected to soon okay a capital recast plan for Uco Bank. The plan, to be ratified by the Cabinet soon, will involve reducing its equity base to Rs 500 crore after converting Rs 300 crore of equity into preference capital.

PNB plans to sell NPA worth Rs 100-200 cr

Here is the beginning of my post. And here is the rest of it.Punjab National Bank (PNB), which is sitting on around Rs 4,800 crore worth bad loans or non-performing assets (NPAs), may sell off at least Rs 100-200 crore to asset reconstruction companies, according to a top official. “We are looking at the option of selling some of the NPAs to asset reconstruction companies, but only if we get a good price for it. But our first priority is recovery of NPAs,” said PNB chairman and managing director Dr KC Chakrabarty. For the three quarters ended September 30, 2007, PNB’s gross NPAs were Rs 4,716.57 crore or 4.57% of total advances. Dr Chakrabarty said that the bank hoped to recover at least Rs 1,500 crore by the end of the year. However, the timeline for PNB’s insurance foray is still undecided. Dr Chakrabarty had earlier said that the bank would take a call to strengthen or segregate its insurance joint venture by the end of the year after restructuring the bank’s subsidiaries. “It may take another six months to decide,” he said. PNB is part of a proposed four-way life insurance JV with Berger Paints, Principal Financial Group and Vijaya Bank. Recently, Vijaya Bank said it is pulling out of the JV, sparking speculation that PNB would do the same.

Axis Bank plans hiring 4,500 this fiscal

Here is the beginning of my post. And here is the rest of it.Private sector lender, Axis Bank, plans to hire around 4,500 employees in the current fiscal, of which 2,500 appointments will be through the lateral route. The bank plans to cover up the shortage of nearly 2,500 officers in retail banking through the new recruitments, the President (Human Resources), Mr S Bhattacharya, said. "The attrition rate has gone up to 14.6 per cent in the current fiscal, up 2 per cent from last year's rate of 12 per cent; this has come as a challenge," Mr Bhattacharya said. According to him, the country's private banking sector has an average attrition rate of 18 per cent, which is growing every year.

Syndicate Bank's online loan scheme

Here is the beginning of my post. And here is the rest of it.Syndicate Bank has become the first bank in the country to launch a new facility for online submission of requests seeking credit facilities by the small and medium enterprises (SMEs), students for higher education loan under the Syndvidya Scheme, and others. The facility, made available through its Web site, www.syndicatebank.in , can also be used by traders and individuals wanting to avail themselves of a housing loan. The applicant would get an acknowledgement of the form automatically, with a unique reference ID, enabling him/her to track the status of their application.

'No right to bank a/c info'

Here is the beginning of my post. And here is the rest of it.Noting that the agreements entered into by banking enterprises with its customers were matters of "commercial confidence", the Central Information Commission (CIC) has ruled out disclosure of information pertaining to bank account details under the Right to Information Act, while dismissing a RTI request of an Amritsar resident Mr Rajan Verma who had sought from Canara Bank five years details about all non performing accounts at its Jalandher branch.

MoU for life insurance venture

Here is the beginning of my post. And here is the rest of it.Bank of Baroda and Andhra Bank along with the UK-based Legal and General Group on Friday signed a Memorandum of Understanding for a joint venture to offer life insurance products. While Bank of Baroda is to have a 44 per cent share in the venture, Andhra Bank would have a 30 per cent share with Legal and General would hold the remaining 26 per cent. Addressing the MoU signing ceremony, the Union Finance Minister, Mr P. Chidambaram said that with less than 20 per cent of the population having an insurance cover, there was infinite opportunity for the new entity.

Corporation Bank opens Invest Shoppe

Here is the beginning of my post. And here is the rest of it.Corporation Bank on Friday launched two maiden services for its customers - ‘Financial Health Check-Up’ and ‘Invest Shoppe’ - in Mangalore. While the financial health check-up service facilitates the customer to get his/her finance portfolio examined from the point of having a healthy mix and to get advice on risk-reward portfolio sharing, Invest Shoppe provides a host of financial services such as investments in share market, sale of mutual funds and gold coins and tax collection under one roof. Launching these services at Ram Bhavan Complex in Mangalore, Mr B. Sambamurthy, Chairman and Managing Director of the bank, said the bank’s initiative is the first of its kind in the country. Based on the response to this pilot project, the bank is planning to extend it to other parts of the country.

IndusInd to vend Chola MS products

Here is the beginning of my post. And here is the rest of it.IndusInd Bank today signed up with Cholamandalam MS General Insurance Company to sell the insurer’s products through its branches. The Chennai-based insurer expects to sell Rs 250 crore worth of insurance products through the bank over the next three years.

CanBank to go in for brand makeover

Here is the beginning of my post. And here is the rest of it.Canara Bank, which recently turned 100, is in for a brand makeover. The Bangalore-based PSU bank will be the latest in a long list of banks and financial institutions to rebrand themselves in their pursuit to stay ahead of the times. Ray+Kesavan has been assigned the task of the bank’s makeover. The bank will soon sport a trendier logo in place of the familiar ‘flower and palm’ one with the tag ‘serving to grow, growing to serve’. The new tagline will be ‘business to profit, profit to business.’ It is also learnt that the formal launch of the new logo would in all probability coincide with the bank’s foundation day later this month. It is not known whether Canara Bank would go in for a brand ambassador although it had been using the services of Venkatesh Prasad, Indian cricket team’s bowling coach, as a model for some of its products. Prasad, it maybe recalled, is an employee of Canara Bank.

Your family photo on your Deutsche Bank credit card

Here is the beginning of my post. And here is the rest of it. Would you like to put your family photo on your credit card? Customer-chosen photo on the plastic is something that Deutsche Bank is planning to bring out soon. Deutsche Bank is the new kid on the block in the Indian credit cards business. It launched its cards business only about a year-and-a-half ago and has issued since 350,000 cards. Mr Shameek Bhargava, Director & Head of Credit Cards, Asia Pacific, Deutsche Bank, says (without sharing numbers) that spends on the cards are better than the industry average. But what if you want a picture of your choice on the card ? According to Mr Bhargava, the bank is in the process of putting in place a mechanism for screening the pictures so that less-than-honourable pictures do not get on to Deutsche Bank’s credit cards. Once the mechanism is in place, customers would have the facility

DCB asked to cut promoter stake

Here is the beginning of my post. And here is the rest of it. The RBI has asked Development Credit Bank Ltd to gradually reduce promoter's stake in it to 10 per cent by 2009. Currently, promoters hold 25.1 per cent stake in the bank. Chief Executive Officer and Managing Director of Development Credit Bank, Mr Gautam Vir, confirmed the development.

SBI has strong case for rights issue, says Chidambaram

Here is the beginning of my post. And here is the rest of it. The State Bank of India’s long awaited ‘rights issue’ of shares to raise additional capital would appear to have received official blessings with the Finance Minister, Mr P. Chidambaram, strongly endorsing the bank’s proposal. The bank’s board is understood to have made a presentation to the Minister in Mumbai on its capital requirements. The Government had acquired the 59.73 per cent stake of the bank from the Reserve Bank of India at Rs 35,531 crore in June this year. A senior official of the bank said, “We have an immediate requirement of Tier-I capital of Rs 10,000 crore in order to make ourselves Basel II compliant by March 31, 2008.” He also said that the bank has a long-term capital need in order to fund its growth. The bank’s Capital Adequacy Ratio was 12.85 per cent (12.63 per cent) as on September 30.

Religare, Corporation Bank tie up

Here is the beginning of my post. And here is the rest of it. Religare, an integrated financial services provider, announced that it will be tying up with the Corporation Bank to further strengthen its Bancinvest Channel. This tie-up will focus on offering Religare’s Internet trading services platform to the bank’s customers. The facility will be part of a value-added 3-in-1 offering for the bank’s savings account customers, offering them a savings and a DP account from the bank along with Internet trading account, powered by Religare.

IDBI cuts term deposit rates

Here is the beginning of my post. And here is the rest of it. IDBI has reduced interest rates on some of its term deposits with effect from November 12. The interest on its 360-day deposits have been reduced by 0.75% from 9.5% to 8.75%, the bank said. For deposits of 500 and 800 days as also on deposits of five years, the bank has reduced its interest rates by 0.5% from 9.5% to 9%.

DCB to sell HDFC home loans

Here is the beginning of my post. And here is the rest of it. Development Credit Bank (DCB) has tied up with HDFC for a strategic alliance to market the latter’s home loans. This is the second bank after HDFC Bank to market HDFC’s home loans. DCB MD & CEO Gautam Vir said, “Home loan is not the most profitable business because these are long-term loans. Also it’s not our area of expertise.” The bank is also likely to get more time to reduce the 25% stake of AKFED in the bank to 10%. The bank is looking at increasing the retail portfolio of its advances from 45% to around 55% by the end of next fiscal.

Pref allotments trimmed, clarifies ING Vysya Bank

Here is the beginning of my post. And here is the rest of it. The ING Vysya Bank has clarified that it raised only Rs 192.50 crore through the preferential placement of 62.09 lakh shares with qualified institutional buyers (QIB). The Extraordinary General Meeting (EGM) last week had approved the issue of 74.75 lakh shares to QIBs. The final allotment to QIBs was done at a price of Rs 310 a share at a premium of Rs 300. Similarly, ING Vysya also pared the preferential placement to the ING Mauritius Holdings and ING Mauritius Investments, subsidiaries of the ING Groep, Netherlands

ICICI Bank, Delhi varsity tie up

Here is the beginning of my post. And here is the rest of it. The Delhi University along with ICICI Bank is planning to launch a three-month-long certificate course on banking. The course, named as Foundation on Banking, would be launched by the Commerce Department of the University, which was recently entered into a partnership with the banking major. Specifying eligibility criteria for getting admission in the proposed course, it said the candidates must have 50 per cent marks in aggregate in B.Com degree.

Credit Agricol plans insurance, MF foray

Credit Agricol (CA), the second-largest French bank, is all set to enter the Indian insurance and asset management business. The group, through its subsidiaries, Predica, the life insurance company, and Pacifica, the non-life insurance company, is in talks with a couple of top Indian players for a foray into insurance businesses. The Indian rules require foreign companies to hold not more than 26 per cent in Indian insurance ventures. Credit Agricol Asset Management (CAAM) is in talks with a local brokerage house for a tie-up to launch the AMC business, according to a group executive in India.

ING Vysya Bank raises Rs 232 cr via pref issue

ING Vysya Bank has placed its preferential issue to qualified institutional buyers (QIB) at Rs 310 a share that translates into a discount of Rs 28.5 over the 52 week average price. The bank through its QIB (banks, mutual funds, provident funds, venture funds and foreign institutional investors) placement raised approximately Rs 231.74 crore.

UBI to recruit 1,200 staff

Union Bank of India will add 1,200 personnel, close to 5 per cent of its existing employee strength, in specialist functions such as information technology and rural development during this financial year. This fresh intake will cover three aspects - branch expansion, sales growth and marketing and attrition through retirement and resignations. The bank’s manpower strength is 26,000.

State Bank, Canara halt loans at lower rates

State Bank of India (SBI), the country’s largest bank, and Canara Bank, the third-largest public sector bank, have rid their balance sheets of large amounts of short-term loans at substantially lower interest rates in the third quarter of 2006-07. The banks have taken this move to ease pressure on their net interest margins (NIMs). Both the banks declined to roll over about Rs 8,000 crore of loans each on maturity as borrowers did not agree on higher interest rates. SBI has decided to price its loans “aggressively” and not succumb to pressure from corporates to lend at lower rates. There is an aggressive move within the bank where pricing of assets is concerned,” said SBI Chairman O P Bhatt at an analysts’ meet to review the bank’s second-quarter results recently. Till a year ago, banks had been extending short-term loans up to one year at rates of 6.5-8 per cent. However, their cost of raising incremental deposits has gone up by 250-300 basis points as banks have been offering up to 9.5 per cent on one-year deposits. While SBI’s NIM dipped to 2.84 per cent at the end of September 2007 from 3.02 per cent a year earlier, Bangalore-based Canara Bank’s NIM fell to 2.36 per cent from 3.15 per cent over the same period.

BoI cuts deposit rates by 50 bps

Bank of India has reduced the rates on its term deposit rates by 50 basis points with effect from November 12. The effective rate for a deposit rate for one to two years will be 8.5 per cent and for deposits of five years and above it will be 9 per cent. For deposits above Rs 15 lakh and less than Rs 5 crore, the rates remain unchanged for periods up to one year. The bank has already withdrawn all its special schemes with lock-in-period and special rates of interest. Earlier this week, ICICI Bank had cut interest rates on special deposit schemes by 25-50 basis points and also realigned rates in some segments. Other banks that have reduced interest rates on term deposits include Union Bank of India, which cut rates between 25 and 100 basis points and Centurion Bank of Punjab, which cut rates by 25-50 basis points on deposits of varying maturities.

PSBs set to tap bond market for Rs 5,500 cr

Public sector entities are expected to swamp the domestic financial markets with bonds worth Rs 9,000 crore over the next four months. Public sector banks (PSBs) alone are expected to raise Rs 5,500 crore during the period. Banks in the fray to raise resources through bonds include Bank of India, State Bank of India, Union Bank of India, Vijaya Bank, UCO Bank and Dena Bank. Banks are raising the resources to beef up their respective Tier II capital, for propelling their asset growth and partly for offsetting the impact on capital standards after migrating to Basel II next financial year. Bankers said that almost all of them expected to push up their advances portfolio by 25 per cent over the last financial year. This was despite the fact that credit growth so far this year has not been very encouraging.

China raises bank reserve ratio again

China's central bank, battling to restrain growth in the money supply and inflation, announced it was raising the proportion of deposits that commercial banks must keep in reserve to a record high. The 0.5 percentage point increase in banks' reserve ratios, the ninth this year, will take effect on November 26 and bring the ratio for big banks to 13.5 per cent, the central bank said on Saturday.

ATM Frauds(test post)

This article aims at alerting those who use their ATM/Debit cards. In this world fraud can take place in any form. We should be ever vigilant to protect ourselves from that frauds. The technology has paved the way to many frauds. Today’s fraudsters are white collard people sitting somewhere and steeling from your pocket your hard earned money. E-mail and Internet related fraud schemes are being perpetrated with increasing frequency, creativity and intensity. A few methods adopted by fraudsters are; Skimming: Here the fraudsters make counterfeit ATM cards by using a skimmer, which is s card swipe device that reads the information on a consumer’s ATM card. Scammers insert onto an ATM, ready to swipe information from unsuspecting customers. They take a blank card and encode all the information from an ATM card when they swipe The skimmer catches the PIN through a small camera mounted on the ATM. Lebanese Loop: Here fraudsters insert a portable steel loop into an ATM card slot. The fraudster usually approaches the victim while at the machine, and poses as the person next in the line. Victims are advised to enter their PIN three times and then hit cancel to get the machine to accept the cards. The fraudster is able to memorize the PIN for future use and the machine keeps the card because of the excessive number of attempts to enter the correct PIN. The victim cannot get back the card as it is held in the loop. When the victim leaves the fraudster removes the loop and he has both card and pin. Spoofing: Here the attacker creates a misleading context to trick victim into making an inappropriate security relevant decision. For example, fraudster have set up bogus automated teller machines, typically in public areas or shopping malls. The machines would accept ATM cards and ask for PIN codes. Once victim gives the information. Fraudster has enough information to steel the money. Pretexting: Here the fraudster has some information about you and wants to have more information so that he can steel your money. He claims to be from victims bank and makes calls to victim to provide the needed information. Many a times victim provides the needed information and fraudster can make merry on that. Phishing: Here the fraudster sends emails at random, purporting to come from a genuine company operating on the internet and this mail requests the victim to provide his personal information like password etc to update the database. The link provided in the mail takes the victim to look alike website of the bank. When the victim provides the required information, fraudster can steel the money at his will. Protect yourself: 1. While using ATM see that no extra fitting is attached to Machine if any inform the security or the contact number of the bank provided on the ATM. 2. Never take the help of third person to operate your card. 3. Never disclose your PIN to anybody. 4. Never keep your PIN and card at same place. 5. Be cautious when third person comes to help you generously. 6. Never disclose your personal information over phone to bank unless you know Cent percent that this is genuine call. 7. Banks usually never call/mail you to take your personal information, when you receive Such call/mail take his number and confirm/inform the bank.

Debt Trap

How to get out of Debt Trap Every one of us take some debt for one reason or the other. Debt free persons are a few. So can we take as granted that every one is in Debt Trap?. The answer will be “no”. Then What is debt trap. The simple answer will be living beyond ones means or expenses not In proporation to earnings. Now a days getting into debt is very easy. There are so many banks behind you offering you Credit Cards, personal loans, vehicle loans, housing loans and many more. The grocery shop owner also gives loans. The shopkeeper where you purchase whitegoods, Software etc also gives you loans. In good old days you had to run to banks to get a loan sanctioned, sign the agreements, deliver the documents as required by the banks. Now the bankers come to your house to give you the loan. There is huge flow of credit cards from all the banks. And added to it there are huge discount offers/cash back offers all round the year . And also a devil called EMI. All these lures the common people like us to buy things where we commit our future income(by way of EMI/credit card purchases etc.) for the present. As we try to get more things the future incomes goes on reducing. The condition will worsen if we take more than one source for our finance. If we cross a limit of income which serves the debt ,we will loose our control on our finances and we are in debt trap. Methods to come out of debt trap: 1.Prepare monthly income/expense account. Note down your income stream like salary/business income etc and also list down what are your expenses. 2.See where your money is leaking and try to patch it. From above list you can easily see what are the unwanted items of expenses and try to avoid them. 3.Prioritize your debts from high int. bearing to low int. bearing. List down your debts, amount, interest etc. From this you can make out which debt is carrying high int. and which is carrying low int. 4.See how much amount you can set aside to clear your debts. From your income and expenses account you can easily make out how much amount you are left with to repay your debt. The higher the amount left with your earlier you will be debt free. 5.Calculate how much amount you can allocate to high int. bearing debt. If you pay high int. bearing debt first your interest outgo will be less and you will have more money at your disposal for repaying other loans. 6.See if you can get low int. bearing debt to pay high int. bearing debt. As said before early payment of high int. bearing debt has twin advantage. The int. outgo will be less and more amount will be at your disposal to pay other loans. So you can take Low int. bearing debt to immediately repay high int. bearing debt. 7.Make a commitment not to take any new debt. Make a commitment not to take new debt and stick to it. 8.Postpone any new high budget purchase. If you are making any idea to purchase any high value item kindly postpone it unless it is Very very essential for you. Good Habits you can develop: Have your monthly income and expenses budget. List out your income and expense and verify with above. Save at least 30% of income for future. Before taking any debt / using credit card think twice. Plan well about finance before investing in high value items. Hope this post is useful to you. Kindly leave your comments for making my posts more effective.

CRR hikes could be reversed

The rate decisions of the Reserve Bank of India (RBI) and the Federal Reserve dominated last week. The Indian central bank did not change its repo and reverse repo benchmarks, but increased the CRR to 7.5 per cent from 7 per cent, while the Fed snipped its rates 25 basis points. Overnight money market surpluses have dwindled to less than Rs10,000 crore. Coupling the impounded CRR and the reluctance of the Government to spend ahead of the financial year close, it would seem liquidity is set to tighten in the coming days and weeks. There is every possibility of the US economy sinking into the red this quarter itself. Further rate cuts are unavoidable. That might halt the RBI on its tracks. Reversing the series of CRR hikes, at least partly, is distinctly likely if liquidity contracts too much and call rates spill well out of the RBI’s corridor on the upside.

ICICI Bank cuts rates on special deposits again

ICICI Bank has cut interest rates on special deposit schemes by 25-50 basis points and also realigned rates in some segments, effective November 12. The interest rate on 390-day deposit will now stand at 8.50 per cent (9 per cent) and that on a 590-day deposit will be 8.75 per cent (9 per cent). This is the second time in less than a month that the bank has reduced interest rates on special deposits. The bank had earlier reduced interest rates by 50 basis points and consequently, the interest rates on the 390-day, 590-day and 890-day deposits came down to 9 per cent (9.5 per cent). The bank has also realigned interest rates for deposits of greater than 1 year up to three years at 8 per cent to meet its asset liability requirement, said Mr V. Vaidyanathan, Executive Director, ICICI Bank. Mr Vaidyanathan, however, said that the cost of funds would remain unchanged and that there will be no revision in lending rates. The bank has also discontinued the 890-day special deposit scheme. Earlier, Union Bank of India reduced deposit rates between 25 and 100 basis points and Centurion Bank of Punjab by 25-50 basis points on deposits of varying maturities.

Pick for Diwali " South Indian Bank "

Diwali Pick by “Dalal Street Journal” South Indian Bank CMP: Rs.160.40 BSE Code: 532218 Face Value: Rs.10 ()Takeover candidate with strong FII investment ()Efficient small bank with strong net-worth and ability to raise tier-two capital. ()Bank taking initiatives to improve asset quality and increase low-cost CASA deposit. We are recommending South Indian Bank considering some quality aspects. The bank registered a good growth in H1FY08, and with a busy season ahead in the second half we expect it to go forward with the same momentum. The bank has registered a strong growth. The total business of the bank stood at Rs.23,100 crore (as on the end of H1FY08), showing a growth of 29.50 percent over H1FY07. During the same period deposits grew by 28.30 percent to Rs.13,932 crore, where the advances showed a growth of 31.50 per cent at Rs.9,150 crore. At this pace, we feel, the bank will not only achieve the target of Rs.25,000 crore business set for FY08, but is expected to exceed the target in FY08. Says its Chairman Dr.V.A.Joseph, “Now as we are nearing the target set by us. Instead of revising the target, we are trying to replace our high-cost deposits to low-cost deposits. This will improve our NIM going forward.” The bank’s NIM currently stands at 2.93 per cent. It declined compared to last year, but going forward the bank expects to improve its NIM to around 3.10 to 3.15 percent. The business growth in the next year is expected to come from new branches. SIB currently has 485 branches and 34 extension counters and holds licence for 28 new branches. Says Joseph, “We will open 15 new branches till March 2008. The rest would be opened in the first half of FY09.” With addition of new branches, the low-cost CASA deposits are also expected to improve from the current level of 23.94 percent. Here, one should also notice that the bank has 4.50 per cent NRI deposits, where the rate of interest is low, but is not included in CASA deposits. On the NPA front, the bank has improved a lot with net NPA for H1FY08 standing at just 0.71 per cent as compared to 1.69 percent in H1FY07. The bank is making conscious efforts to bring down NPAs to 0.50 per cent till March 2008. These levels of stressed assets are very credible in the wake of the bank’s strong growth in its customer assets. SIB has recently made a qualified institutional placement (QIP) of 2 crore equity shares at Rs.163 per share to raise Rs.326 crore which has improved the CAR of the bank to 14.30 percent with tier-one capital comprising 12.50 percent of risk weighted assets. The bank did have sufficient headroom to raise tier-two capital without diluting equity. However, considering the higher cost of subordinated debt in the current scenario and taking advantage of favourable capital market conditions, it has opted to raise fresh equity; which we feel is a smart move. Going forward, the bank has no plans to raise further tier-two capital in FY08. With the QIP, the FII holding in the bank now stands strong at 44.07 percent. Now, with this we feel the bank is a strong takeover candidate by foreign banks. For H1F08, the company showed good growth and posted a net profit of Rs.66.06 crore as compared to Rs.56.72 crore in H1FY07. But here one should note that H1FY07 included Rs.22.84 crore as extraordinary income. Otherwise, the bottomline growth is strong 94 per cents. For FY08, the bank expects to post a bottomline of Rs.142-147 crore, resulting in EPS of Rs.16.45 and P/E of 9.60x at CMP of Rs.160.40. At present the price to book ratio stands at 1.54x. With all these factors, we emphasize the counter with a target price of Rs.205-210.

Gold Selling rates of different Banks

Many banks are selling gold coins on the eve of Deepavali Festival. As the purity is same the best is that which is available at lower price. So here is the list http://groups.google.co.in/group/the-bank-page/web/gold-selling-rates-of-different-banks is

Reverse mortgage scheme for senior citizens takes shape

Launching an exclusive product for the senior citizens, banks here are promoting the reverse mortgage loan scheme for their benefit. While the Punjab National Bank (PNB) introduced this scheme in the market as 'PNB Baagbaan' on April 13, the number of enquiries has increased tremendously over this time period. Toeing the same line, the State Bank of India (SBI) has also geared up by launching 'SBI Reverse Mortgage Loan' on October 12. Where PNB is charging an interest rate of 10% per annum, SBI will be disbursing the loan at a rate of 10.75% per annum. Under this scheme senior citizens can avail minimum of Rs 3 lakh upto Rs 1 crore against the house for at least 20 years. A senior official of PNB said , "The Union Budget proposals of 2007-08 included the introduction of 'reverse mortgages' in Indian Markets. This novel product will enable a senior citizen to avail a monthly stream of income against the mortgage of his house. The main objective of the loan is to generate income, supplement the pension or other income for day-to-day requirements." The tenure of the loan is about 15 to 20 years for the 60-70 age group and 10 to 15 years for individuals aged above 70 years. In case of joint account, the minimum age of the spouse for availing the loan under these two categories shall be 58 and 68 respectively.

ICICI Bank sells 45% bad home loans to Arcil

ICICI Bank, the country’s second largest bank, has sold roughly 45 per cent of its sticky home loans to the Asset Reconstruction Company India Ltd (Arcil) in a first step towards creating a market for retail loans that have turned bad. ICICI Bank sold Rs 360 crore of non-performing home loans at a price around the book cost, confirmed Rajiv Sabharwal, senior general manager, ICICI Bank.

Corporation Bank in tie-up for money transfer

To tap the Indian population living in the United Arab Emirates, UAE Exchange & Financial Services and Corporation Bank will facilitate money transfer between the two countries through Money-Gram's services. The service will route money to India through Money-Gram's services. The service will route money to India through Money-Gram's exchange counter at UAE Exchange and Financial Services in the Gulf country and Corporation Bank in India.

Notice must for dishonoured cheque cases, says apex court

The Supreme Court said on Friday that a notice in accordance with law is required for initiation of proceedings in cases related to dishonoured cheques. An omnibus notice without specifying as to what was the amount due through the dishonoured cheque would not subserve the requirement of law, the court said. Such a notice has to be issued within a period of 30 days from the date of receipt of information from the bank in regard to the return of the cheque as unpaid, the apex court said.

SBI board okays pension benefit to SBS employees

The State Bank of India (SBI) board has decided to provide pension benefit to employees of State Bank of Saurashtra (SBS), a subsidiary which was merged with the parent last month. This third benefit is in addition to gratuity and provident fund for SBS employees who will now become part of SBI. SBI provides all the three benefits for its employees.

Decision on UCO capital rejig soon

The Government is likely to approve soon the capital restructuring plan for Kolkata-based UCO Bank to enable it to come out with a follow-on public issue of up to Rs 250 crore. Restructuring by converting a portion of equity share into preference shares would allow the bank further headroom for raising resources. The bank has a paid-up capital of Rs 799.3 crore as on September 30. As part of its capital restructuring proposal, the bank has asked for conversion of Rs 300 crore of its Rs 800 crore equity capital into preference capital.

Bank chiefs may ask RBI to pay interest on CRR

Chiefs of large commercial banks have decided to make a case to the Reserve Bank of India (RBI) for interest payment on the cash reserve ratio (CRR). Unlike in the past, the central bank does not pay any interest on the CRR, the slice of deposits that banks have to park with RBI. Bank chiefs met on Friday under the aegis of the Indian Banks’ Association, a body which represents the interests of the banking industry. They have decided to take up the issue of non-payment of interest with the central bank. The CRR is now 7.5%. For State Bank of India, the country’s largest bank in terms of assets and market share, with deposits (net time and demand liability) of Rs 5 lakh crore, a 7.5% CRR works out to Rs 37,500 crore which will not attract any interest. If the bank were to deploy this money at 4% on an annualised basis, it would earn Rs 1,500 crore. Bankers fear their margins will be hit as another rate hike may not be far off if the fund inflows continue. Already, in the first half of this fiscal, several banks have seen a squeeze in their net interest margins. Bankers feel there is nothing that prohibits the central bank from paying interest on CRR. Current pricing of deposits doesn’t factor in future rate hike. Banks want to rein in recovery agents to avoid RBI action.

German bank to open representative office in Mumbai

To tap the transport and energy financing market, German bank NORD/LB plans to set up an office in India shortly. The representative office, to come up in Mumbai, is expected to commence operations in January 2008. “We have got the licence from the Reserve Bank of India and are in the process of completing the legal formalities. The economic strength being witnessed in India is attractive and we have decided to open an office in Mumbai,” said Dr Hannes Rehm, Chairman of the Board of Management of the bank. The bank would be getting into ship financing, air-carrier financing and exports. The bank would also be getting into energy financing, he added. It, however, does not have plans to enter retail banking currently.

PSU banks make profits, but not from lending

Corporate India may be reporting good profit numbers. But lending money didn’t make much for public sector banks as a group in the second quarter ended September 30. Their net interest income (or interest earned less interest expense) did not grow at all in this quarter. Yet profits grew 23 per cent for a set of 21 public sector banks for which the figures are available. It was liquidation of some of their equity investments, cashing in on the stock market boom, some recoveries of old bad debts, some treasury gains from the bond and forex markets and some other non-interest income that rescued public sector banks this quarter. Other income grew 45 per cent for these banks contributing almost the entire profits for this quarter. Comparatively, private banks did better. The profits of about 16 private banks grew 34 per cent riding on a robust 38 per cent growth in net interest income and a healthy 33 per cent growth in other income. All banks are hopeful of improving their net margins in the third quarter. This is the busy season for credit. So, one can expect a pick-up there. As for deposit costs, there are indications that a cut may be around the corner. Banks can then hope to make more money by just lending it.

RBI loan rules turning good assets into bad

Banks are being forced to classify as bad loans what they consider as good assets, thanks to the Reserve Bank of India’s norms. The banking regulator’s norms on loans stipulate that commercial production should start within one year of completion of the project. It also says that at the time of financial closure, the company should clearly spell out the date of completion of the project. Banks have told RBI that even if the project is complete, the commercial production does not commence within a year for various external reasons. These include public interest litigations, hurdles in getting environment clearances, government approvals and similar issues. As a result, the commercial project may not start on the stipulated date. Thus, banks have to categorise such account as bad account. In many cases, the account is treated as bad even as the borrower continues to service the loan on time. The RBI guidelines say an account has to be treated as a bad account if the borrower fails to repay a loan within 90 days. “Several large banks have reported a rise in bad loan portfolio partly due to this norm and partly due to delinquencies in the retail portfolio,” a bank analyst pointed out. RBI officials indicate according to the earlier rules, banks had to show an account as a bad loan if the commercial production was delayed by six months. However, following repeated request from banks, this was extended by one year in August 2007.

New product from Karur Vysya

Karur Vysya Bank has introduced yet another variant of its multi-city current account product - KVB Economy.The other variants include KVB Standard, KVB Classic, KVB Premium, KVB Gold and KVB Platinum. The major difference in opting for a particular variant of this product is in the maintenance of the minimum average balance. KVB Economy would require current account holders to maintain a minimum average balance of Rs 10,000.

Some banks trimming deposit rates

After offering high interest rates on term deposits, some banks have now started reducing rates in order to ease the pressure on their margins. Centurion Bank Centurion Bank of Punjab announced that it is cutting interest rates on deposits of some maturities effective November 5. The bank cut interest rate on deposits for one-to-less-than two years to 8 per cent from 8.50 per cent and on deposits of 13 months 15 days to 9 per cent from 9.25 per cent. Last week, Union Bank of India had reduced deposit rates between 25 and 100 basis points on deposits of varying maturities. Bank of Baroda has cut the interest rate on car loans by 100 basis points as a festival bonanza. The new rate of 11.5 per cent would be effective for all new loans on floating option sanctioned on or after November 1, 2007. The bank is also offering an additional concession of 25 bps during the ongoing Centenary Retail Loan Festival period. State Bank of India has introduced a new time slab in its term deposits, of 550 days. For this period, the rate has been increased by 75 basis points to 8.75 per cent. Earlier the interest rate on the period of one to less than two years was 8 per cent.

SBI to hire recovery officers

Plagued by complaints against the high-handedness of private loan recovery agents, SBI is looking to directly hire 3,000 marketing and recovery officers whose job profile would include "soft recovery" of loans. These officers, vacancies for which were advertised in newspapers on Wednesday, would market the bank's products, conduct pre-sanction survey, file applications, and verify papers. The officers would be hired across the country on "contractual" basis with a compensation package of Rs 2 lakh per annum.

RBI may ban recourse to recovery agents

Retail borrowers and credit card holders, who have been harassed by recovery agents sent by banks, may find some relief if the measures suggested by the Reserve Bank of India are put in place. In the mid-term annual review of the annual monetary policy released today, the RBI has come down strongly against the practice of recovery agents employed by banks. “The RBI would consider imposing a temporary ban (or even a permanent ban in case of persistent abusive practices) for engaging recovery agents on those banks where strictures have been passed or penalties have been imposed by a High Court or Supreme Court. A circular in this regard would be issued by November 15, the policy added.

'No signal to raise interest rates’

The Finance Minister, Mr P Chidambaram, has said that the Reserve Bank of India’s move to raise the requirement for banks to keep cash with the central bank was intended to mop up excess liquidity from the system. He also felt that this step cannot be construed as a signal on interest rates, implying that banks should not look at a hike in lending rates on account of the CRR hike. I hope banks will draw the correct message from the policy,” Mr Chidambaram said. He said that he expected the country’s gross domestic product (GDP) growth to be “slightly higher” than the level projected by the central bank.

Mid-term review of Annual Policy for year 2007-08

Dr. Y. Venugopal Reddy, Governor, presented the Mid-term Review of Annual Policy for the Year 2007-08 today in a meeting with Chief Executives of major commercial banks. The Mid-term Review consists of two parts: Part I Mid-term Review of the Annual Statement on Monetary Policy for the Year 2007-08; and Part II Mid-term Review of the Annual Statement on Developmental and Regulatory Policies for the Year 2007-08. Highlights Bank Rate, Repo Rate and Reverse Repo Rate kept unchanged. The flexibility to conduct overnight repo or longer term repo including the right to accept or reject tender(s) under the LAF, wholly or partially, is retained. CRR increased by 50 basis points to 7.5 per cent effective fortnight beginning November 10, 2007. GDP growth forecast retained at 8.5 per cent during 2007-08, assuming no further escalation in international crude prices and barring domestic or external shocks Inflation to be contained close to 5.0 per cent during 2007-08 while resolving to condition expectations in the range of 4.0-4.5 per cent, with a medium-term objective of inflation at around 3.0 per cent. Moderating net capital flows so that money supply is not persistently out of alignment with indicative projection of 17.0-17.5 per cent. Covering of ‘Short-sale’ and ‘When Issued’ transactions to be permitted outside the Negotiated Dealing System – Order Matching (NDS-OM) system. Systemically important non-deposit taking NBFCs (NBFC-ND-SI) to be considered as ‘qualified entities’ for accessing the NDS-OM using the Constituents’ Subsidiary General Ledger (CSGL) route. Reinstatement of the eligible limits under the past performance route for hedging facility to be permitted. Oil companies to be permitted to hedge foreign exchange exposures by using overseas over-the-counter (OTC)/ exchange traded derivatives up to a maximum of one year forward. Importers and exporters having foreign currency exposures to be allowed to write covered call and put options in both foreign currency/ rupee and cross currency and receive premia. Authorised Dealers (ADs) to be permitted to run cross currency options books subject to the Reserve Bank’s approval. ADs to be permitted to offer American options as well. Working Group to be constituted for preparing a road-map for migration to core banking solutions (CBS) by Regional Rural Banks (RRBs). RRBs and State/ Central Cooperative Banks to disclose their capital-to-risk weighted assets ratio (CRAR) as on March 31, 2008 in their balance sheets. A road-map to be evolved for achieving the desired level of CRAR by these banks.M High Level Committee to be constituted to review the Lead Bank Scheme. Financial assistance to RRBs for implementing information and communication technology (ICT) based solutions. Working group to be constituted to lay down the road-map for cross-border supervision and supervisory cooperation with overseas regulators, consistent with the framework envisaged in the Basel Committee on Banking Supervision (BCBS). Besides general market risk, specific risk, especially the credit risk arising out of deficient documentation or settlement risk to be covered under the supervisory process. Action plan to be drawn up for implementation of National Electronic Clearing Service (NECS) with centralised clearing and settlement at Mumbai. Domestic Developments Real GDP growth during the first quarter of 2007-08 is placed at 9.3 per cent as against 9.6 per cent in the corresponding quarter a year ago. The year-on-year (Y-o-Y) wholesale price index (WPI) inflation eased from its peak of 6.4 per cent on April 7, 2006 to 3.1 per cent by October 13, 2007. The average price of the Indian ‘basket’ of international crude has increased to US $ 80.0 per barrel as on October 23, 2007 from US $ 72.1 per barrel in July-September, 2007. The Y-o-Y CPI inflation for industrial workers showed a sharp increase to 7.3 per cent in August 2007 as against 6.3 per cent a year ago. The Y-o-Y growth in money supply (M3) was higher at 21.8 per cent on October 12, 2007 than 18.9 per cent a year ago. The Y-o-Y growth in aggregate deposits at Rs.5,69,061 crore (24.9 per cent) was higher than that of Rs.3,88,528 crore (20.4 per cent) a year ago. Total credit exhibited a Y-o-Y growth of Rs.3,81,333 crore (23.3 per cent) as on October 12, 2007 on top of an increase of Rs.3,66,463 crore (28.8 per cent) a year ago. The Y-o-Y growth in total resource flow from scheduled commercial banks (SCBs) to the commercial sector was 22.1 per cent, over and above the growth of 28.0 per cent a year ago. Banks’ holdings of Government and other approved securities increased to 30.0 per cent of their net demand and time liabilities (NDTL) as on October 12, 2007 from 28.0 per cent at end-March 2007. The overhang of liquidity under the LAF, MSS and the Central Governments’ cash balances taken together increased to Rs.2,22,582 crore by October 24, 2007 from Rs.85,770 crore at end-March 2007. The Government of India, in consultation with the Reserve Bank, revised the ceiling under MSS for the year 2007-08 from Rs.1,10,000 crore to Rs.1,50,000 crore on August 8, 2007 and further to Rs.2,00,000 crore on October 4, 2007. During the second quarter of 2007-08, financial markets remained generally stable with conditions of abundant liquidity and interest rates moderated in almost all segments of the financial system. During April–October 2007, public sector banks (PSBs) decreased their deposit rates, particularly at the upper end of the range for various maturities, by 25-60 basis points. During April-October 2007, the benchmark prime lending rates (BPLRs) of private sector banks moved from a range of 12.50-17.25 per cent to 13.00-16.50 per cent. The range of BPLRs for PSBs and foreign banks, however, remained unchanged at 12.50-13.50 per cent and 10.00-15.50 per cent, respectively, during this period. The BSE Sensex increased from 13,072 at end-March 2007 to 19,243 on October 26, 2007. The gross market borrowings of the Central Government through dated securities at Rs.1,27,060 crore (Rs.1,17,548 crore a year ago) during 2007-08 so far (up to October 26) constituted 67.3 per cent of the budget estimates (BE) while net market borrowings at Rs.75,387 crore (Rs.65,951 crore a year ago) constituted 68.7 per cent of the BE. External Sector Merchandise exports rose by 18.2 per cent in US dollar terms during April-August 2007 as compared with 27.1 per cent in the corresponding period of the previous year while import growth was higher at 31.0 per cent as compared with 20.6 per cent in the previous year. Non-oil imports rose by 44.3 per cent (10.9 per cent a year ago); oil imports, however, slowed down to 6.0 per cent (44.5 per cent), mainly on account of moderation in the price of the Indian basket of crude oil by 0.5 per cent during April-August 2007. India’s foreign exchange reserves increased by US $ 62.0 billion during 2007-08 and stood at US $ 261.1 billion on October 19, 2007. The rupee appreciated by 10.3 per cent against the US dollar, by 2.4 per cent against the euro, by 5.4 per cent against the pound sterling and 7.1 per cent against the Japanese yen during the current financial year up to October 26, 2007.Global Developments The downside risks to the global economic outlook have increased from a few months ago, accentuated by the recent financial market turmoil, firm inflationary pressures and high and volatile crude prices. According to the IMF’s World Economic Outlook (WEO) released in October 2007, the forecast for global real GDP growth on a purchasing power parity basis has been retained at 5.2 per cent for 2007 as in the July 2007 update, down from 5.4 per cent in 2006, but forecast for 2008 has been revised down to 4.8 per cent in October from 5.2 per cent in the July 2007 update. In the US, real GDP growth had risen to 3.8 per cent in the second quarter of 2007 as compared with 2.4 per cent a year ago - The IMF’s October 2007 WEO expects the US economy to grow at 1.9 per cent in 2007 and 2008 as against 2.9 per cent in 2006. There was a sudden fall in credit market confidence in late July brought on by the spread of risks from exposure to the US sub-prime mortgages with credit crunch spreading into corporate bond markets and equity markets. The European Central Bank and the US Federal Reserve, which have intervened since August 9 by providing liquidity to the inter-bank market, were joined by central banks in Canada, Japan, Australia, Norway and Switzerland. Bank of England has provided liquidity support to a mortgage lending bank, while giving a blanket guarantee to depositors on the safety of their deposits. Several central banks have cut policy rates during the third quarter of 2007 after financial markets were significantly affected by turbulence, such as the US Federal Reserve, the Banco Central do Brasil, Bank Indonesia (BI) and the Bank of Thailand. The central banks that have tightened their policy rates include the European Central Bank; the Bank of England; the Bank of Japan; the Bank of Canada; the Reserve Bank of Australia; the Reserve Bank of New Zealand; the People’s Bank of China; the Bank of Korea; the Banco de Mexico; and the Banco Central de Chile. A few central banks in Asia have used supplementary measures for tightening, besides increasing key policy rates. The only central bank that has kept policy rates steady is the Bank Negara Malaysia. Overall Assessment Some positive elements in the global economy are (i) the global economy is strong and resilient; (ii) EMEs, by and large, have a better macro-environment than before; (iii) globally, corporate balance sheets are strong and less leveraged than in the past; (iv) large financial intermediaries are perhaps adequately capitalised to absorb the shocks of credit infirmities; and (v) the inflation environment has been, on the whole, benign. The global environment is fraught with uncertainties with international crude prices at new highs, having breached the level of US $ 90 per barrel while elevated food and metal prices would, in current circumstances, pass through to domestic inflation. The US Federal Reserve has been the most aggressive in terms of easing monetary policy, with a higher than expected rate cut, reflecting the concerns over impact of housing issues on consumption and, hence, growth. The most important issue for India is the possible impact of global financial market developments and policy responses by central banks in major economies. The immediate task for public policy in India, therefore, is to manage the possible financial contagion which is in an incipient stage with highly uncertain prospects of being resolved soon. On the domestic front, aggregate demand conditions have remained firm and on the uptrend. Key monetary aggregates, i.e., reserve money and money supply have been running well above initial projections, reflecting the impact of higher than expected deposit growth and the exogenous expansionary effects of capital inflows as well as the drawdown of fiscal cash balances. The incomplete pass-through of international prices of crude, metals, food and commodities in general to consumer prices is indicative of suppressed inflation which carries destabilising potential into the future. The policy responses in the form of active liquidity management operations to modulate expansionary monetary and financial conditions were reflected in a generally orderly evolution of market liquidity. Since late July, global financial markets have experienced unusual volatility, strained liquidity and heightened risk aversion. While the trigger was the rising default rates on sub-prime mortgages in the US, the source of the problem was significant mis-pricing of risks in the financial system. Easy monetary policy, globalisation of liquidity flows, wide-spread use of highly complex structured debt instruments and inadequacy of banking supervision in coping with financial innovations also contributed to the severity of the crisis. At the current juncture and looking ahead, on the domestic front, the biggest challenge for monetary policy is the management of capital flows and the attendant implications for liquidity and overall stability. Yet another challenge is the rapid escalation in asset prices, particularly equity and real estate, which are significantly driven by capital flows. Over the next twelve to eighteen months, risks to inflation and inflation expectations would also continue to demand priority in policy monitoring. Stance of Monetary Policy Real GDP growth in 2007-08 is placed at 8.5 per cent for policy purposes, as set out in the Annual Policy Statement of April 2007 and reiterated in the First Quarter Review. Policy endeavour would be to contain inflation close to 5.0 per cent in 2007-08 and the resolve, going forward, would be to condition expectations in the range of 4.0-4.5 per cent so that an inflation rate of 3.0 per cent becomes a medium-term objective. Moderating the expansionary effects of net capital flows is warranted so that money supply is not persistently out of alignment with the indicative projections. The Reserve Bank will continue with its policy of active demand management of liquidity through appropriate use of the CRR stipulations and open market operations (OMO) including the MSS and the LAF, using all the policy instruments at its disposal flexibly, as and when the situation warrants. Barring the emergence of any adverse and unexpected developments in various sectors of the economy and keeping in view the current assessment of the economy including the outlook for inflation, the overall stance of monetary policy in the period ahead will broadly continue to be: • To reinforce the emphasis on price stability and well-anchored inflation expectations while ensuring a monetary and interest rate environment that supports export and investment demand in the economy so as to enable continuation of the growth momentum. • To re-emphasise credit quality and orderly conditions in financial markets for securing macroeconomic and, in particular, financial stability while simultaneously pursuing greater credit penetration and financial inclusion. • To respond swiftly with all possible measures as appropriate to the evolving global and domestic situation impinging on inflation expectations, financial stability and the growth momentum. • To be in readiness to take recourse to all possible options for maintaining stability and the growth momentum in the economy in view of the unusual heightened global uncertainties, and the unconventional policy responses to the developments in financial markets. Monetary Measures The Bank Rate has been kept unchanged at 6.0 per cent. The repo rate under the LAF is kept unchanged at 7.75 per cent. The reverse repo rate under the LAF is kept unchanged at 6.0 per cent. The Reserve Bank has the flexibility to conduct repo/reverse repo auctions at a fixed rate or at variable rates as circumstances warrant. The Reserve Bank retains the option to conduct overnight or longer term repo/reverse repo under the LAF depending on market conditions and other relevant factors. The Reserve Bank will continue to use this flexibility including the right to accept or reject tender(s) under the LAF, wholly or partially, if deemed fit, so as to make efficient use of the LAF in daily liquidity management. CRR increased by 50 basis points to 7.5 per cent effective fortnight beginning November 10, 2007.Developmental and Regulatory PoliciesFinancial Markets Non-Competitive Bidding Scheme in the Auctions of State Development Loans (SDLs) to be operationalised by March 31, 2008. Re-issuance of SDLs in the second half of 2007-08. The facility of new issuance structure for floating rate bonds (FRBs) is being built into the new Negotiated Dealing System (NDS) auction system being developed by the Clearing Corporation of India Limited (CCIL). The Reserve Bank is committed for permitting market repos in corporate bonds, once the corporate debt markets develop and the Reserve Bank is assured of availability of fair prices, and an efficient and safe settlement system based on delivery versus payment (DvP) III and Straight Through Processing (STP) is in place. Covering of ‘Short-sale’ and ‘When Issued’ transactions to be permitted outside the Negotiated Dealing System – Order Matching (NDS-OM) system. Systemically important non-deposit taking NBFCs (NBFC-ND-SI) to be considered as ‘qualified entities’ for accessing the NDS-OM using the Constituents’ Subsidiary General Ledger (CSGL) route. The facility of permitting all exporters to earn interest on their Exchange Earners’ Foreign Currency (EEFC) accounts to the extent of outstanding balances of US $ 1 million per exporter is extended up to October 31, 2008 and banks are free to determine the rate of interest. Reinstatement of the eligible limits under the past performance route for hedging facility provided that supporting underlying documents are produced during the term of the hedge undertaken. Oil companies to be permitted to hedge their foreign exchange exposures to the extent of 50 per cent of their inventory volume as at the end of the previous quarter by using overseas over-the-counter (OTC)/ exchange traded derivatives up to a maximum of one year forward. Importers and exporters having foreign currency exposures to be allowed to write covered call and put options in both foreign currency/ rupee and cross currency and receive premia. Authorised Dealers (ADs) to be permitted to run cross currency options books, subject to the Reserve Bank’s approval. ADs to be permitted to offer American options as well. Credit Delivery Internal Working Group to be constituted to examine the recommendations of the Committee on Agricultural Indebtedness (Chairman: Dr. R. Radhakrishna) relevant to the banking system in general and the Reserve Bank, in particular. Working Group to be constituted with representatives from the Reserve Bank, the NABARD, sponsor banks and RRBs for preparing a road-map for migration to core banking solutions (CBS) by RRBs. RRBs and State/ Central Cooperative Banks should disclose the level of CRAR as on March 31, 2008 in their balance sheets. A road-map may be evolved for achieving the desired level of CRAR by these banks. Working Group to be constituted to study the recommendations of Sengupta Committee report on ‘Conditions of Work and Promotion of Livelihood in the Unorganised Sector’ relevant to the financial system and suggest an appropriate action plan for implementation of acceptable recommendations. High Level Committee to be constituted to review the Lead Bank Scheme. Proposed to prepare a concept paper on financial literacy-cum-counseling centres detailing the future course of action. Financial assistance to RRBs for implementing information and communication technology (ICT) based solutions, including installation of solar power generating devices for powering ICT equipment in remote and under-served areas. Prudential Measures Final guidelines on Credit Default Swaps would be issued by end-November 2007. Banks are urged to follow prescribed specific considerations while engaging recovery agents. Abusive practices followed by banks’ recovery agents would invite serious supervisory disapproval. Constitution of a working group to lay down the road-map for adoption of a suitable framework for cross-border supervision and supervisory cooperation with overseas regulators, consistent with the framework envisaged in the Basel Committee on Banking Supervision (BCBS). In order to enhance the effectiveness of the banking supervisory system, the process of consolidated supervision to be integrated with the financial conglomerate monitoring mechanism for bank-led conglomerates. It is proposed to cover, besides general market risk, specific risk, especially the credit risk arising out of deficient documentation or settlement risk, under the supervisory process. Institutional Developments Banks are urged to ensure that adequate disaster recovery systems are put in place to fully comply with the requirements. Banks are urged to draw up time-bound action plans for implementation of CBS across all their branches. An action plan to be drawn up for implementation of National Electronic Clearing Service (NECS) using the existing infrastructure of National Electronic Funds Transfer (NEFT) system with centralised clearing and settlement at Mumbai. Working group to be constituted comprising representatives of the Reserve Bank, State Governments and the Urban Cooperative Banks (UCBs) to examine the various areas where IT support could be provided by the Reserve Bank to UCBs. The Committee on Financial Sector Assessment (CFSA) (Chairman: Dr.Rakesh Mohan; Co-Chairman: Dr.D.Subbarao) submitted an interim report delineating its approach and reviewing the progress of work to the Finance Minister and Governor, Reserve Bank of India in July 2007. The CFSA is expected to complete the assessment by March 2008 and lay out a road-map for further reforms in a medium-term perspective. From RBI website