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Nov 26, 2007

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.