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Dec 18, 2007

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.