State Bank of Patiala’s scheme

State Bank of Patiala (SBP) has launched ‘SBP-Smart Deposit Scheme’ (term deposit and special term deposit) for a maturity period of 455 days. The deposits would provide an interest of 9.5 per cent per annum for general public and 10 per cent per annum for senior citizens.

State Bank of Saurashtra to be merged with SBI

SBI has decided to merge State Bank of Saurashtra, a wholly owned associate bank, with itself. The boards of both SBI and State Bank of Saurashtra have given an in-principle approval to the merger proposal, a senior SBI official confirmed on Saturday. SBI will now have to get approvals from both the Government, the majority owner of the bank holding 59.73 per cent stake, and the Reserve Bank of India. State Bank of Saurashtra is the smallest among the seven associate banks of SBI, in terms of networth. SBI’s controlling interests in the associate banks range from 75 per cent to 100 per cent. State Bank of Saurashtra (SBS) has a branch network of 460 and SBI officials said once the merger is approved, consolidation of the branch network for eliminating duplication of branches in the same geographical area would start in six months. SBS reported a net profit of Rs 87.4 crore in 2006-07, a jump of 45.4 per cent from Rs 60.1 crore in the previous year. The bank has paid-up equity capital of Rs 314 crore. SBS’ total deposits stood at Rs 15,804 crore while total advances were at Rs 11,081 crore. A senior SBI official said State Bank of Indore could be the next bank on the radar in the consolidation process as it is the smallest bank after State Bank of Saurashtra

Canara Bk plans open offer for Can Fin Homes

The board of directors Canara Bank, which met recently, approved a proposal to make an open offer for Can Fin Homes. The bank will acquire shares so as to hold 51% stake in Can Fin Homes in order to convert the sponsored entity into a subsidiary. Necessary permissions have been obtained from the Reserve Bank of India (RBI) and the ministry of finance.

Indian Bank to hike stake in NSE

Indian Bank, one of the leading state-run lenders in southern India, will increase its stake in the National Stock Exchange (NSE). At present, the bank holds 0.52% stake in NSE, the country’s largest bourse in terms of turnover

Public sector banks want to use more profits for staff rewards

Public sector banks have pitched for the right to use up to 5% of their net profits for compensation purposes. As of now, the government policy allows them to use only up to 1% of their profit to compensate performers. Speaking at an HR conference organised by Indian Banks’ Association (IBA) on Friday, Bank of Baroda CMD Anil Khandelwal indicated that IBA has made such a proposal. He further said the restriction to use only 1% of profit has not yielded proper results. Though public sector banks are still giving huge competition to private and foreign banks, rigid compensation packages are the biggest disadvantage they face in attracting and retaining talent. Canara Bank chairman and managing director MBN Rao raised concerns over PSBs being constrained by “structured compensation packages with limited flexibility”. Mr Rao, who is also the IBA chairman, further said, “PSBs need to find ways to nurture their available talent base rather than hiring fresh talent.” Mr Khandelwal said, “Nationalised banks are losing more than a thousand employees to private and foreign banks every year. Union Bank CMD MV Nair said it was the time to take a call on whether all PSBs should have the same salary structure. Most felt that serious engagement of employees, providing ownership and instilling a feeling of institutional pride in them were the main ways of employee retention, apart from compensation. Mr Chakrabarty felt there should be a common objective that the CEO of the bank as well as the head of human resources work towards, which should be effectively communicated to every employee of the organisation

Bank staff to strike on Sep 12

The United Forum of Bank Employees will spearhead a nationwide strike on September 12 for additional pension benefits and protest against outsourcing activities of banks. The forum is represented by 8.5 lakh nationalised bank employees. The protest is being supported by one crore signatures to be presented to Prime Minister Manmohan Singh. While unions are quiet on the service issues plaguing state-owned banks, the four bank officers unions and five bank workmen’s union have decided to jointly highlight how government’s banking policy is hurting the interests of the nation.

New priority sector lending norms for RRBs

The Reserve Bank of India (RBI) has issued revised priority sector guidelines for regional rural banks (RRBs) to increase lending under financial inclusion. The banks will have to ensure that 60 per cent of their advances are towards priority sectors such as agriculture, small industries and retail trade. Of the total priority sector advances, at least 25 per cent (that is 15 per cent of the total advances) should be advanced to weaker sections of the society. The revised guidelines have taken effect immediately.

Banks to start new pension plan

In their first step towards introducing a pension scheme based on defined contribution, public sector banks have in-principle decided to introduce such a scheme for new recruits in the officer cadre. The cost of servicing the present “defined benefit” pension scheme has been mounting, with banks having to make provisions to the extent of 32 per cent of the employee’s annual salary. Under the government’s defined contribution pension scheme, the employee has to compulsorily contribute 10 per cent of the basic pay and dearness allowance every month. This contribution has to be matched by the employer. The income that the employee receives is not fixed and depends on the returns earned on the funds contributed towards pension. For higher returns employees, can increase their contribution, even as the employer’s contribution remains fixed.

Farm loans up to Rs 50 k may get service tax waiver

Small and marginal farmers availing agriculture loans up to Rs 50,000 need not pay any service charge and need not deposit land documents at bank branches. These are some of the recommendations of the group set up by the Reserve Bank of India to examine the procedures and processes of agriculture loans. For loans exceeding Rs 50,000, the service charge should not exceed 0.25 per cent of the loan limit per annum, said the group’s report. The group has suggested that the Nabard should issue and circulate the mandatory application forms among banks. The form should be simple, user- friendly and should use the local language. The report also suggest that all loans having credit limit of up to Rs 50,000, should be disposed off within a fortnight and those with credit limits up to Rs 3 lakh, within four weeks.

All borrowers to get documents in loan agreement

It is now mandatory for banks to provide a copy of the loan agreement including all enclosures to the borrower. The condition would apply for all loans across the board, said a senior RBI official. Banks usually furnish these documents only at the request of the borrowers. Banks also provide a copy of all the documents to their corporate or big-ticket size customers.

LS passes Bill to replace SBI Ordinance

The Lok Sabha on Monday (20.08.07) passed a Bill to replace the Ordinance promulgated on June 21 to facilitate the Centre’s buyout of the Reserve Bank of India’s shareholding in SBI. On June 29, the Centre acquired 59.73 per cent stake of RBI against total payment of Rs 35,531.33 crore drawn from the Consolidated Fund of India