RBI eyes inflation, raises CRR

RBI in a bid to contain inflation has raised CRR by 50 bps to 8% in 2 stages.

New actuaries on bank pension

The Indian Banks' Association (IBA) has appointed a panel of two actuaries-D Basu from Kolkata and Prasad from Hyderabad-to sort out pension and other post-retirement benefits of the banking industry. A senior IBA official said the appointment followed consensus between IBA and the United Forum for Bank Employees (UFBU), the umbrella body of various bank employees' unions, recently. Also, apex employees' unions have hinted that they may copy some features of the Sixth Pay Commission report for the central government employees. The common parameter to be followed by the panel of two actuaries is based on two parts - financial and non-financial. The financial parameter comprises subjects like return on investment, wage revision and extra pension liabilities. The non-financial parameter handles issues like debt, longevity, date of attrition and a host of other related issues.

ICICI Bank doubles balance for SB account

ICICI Bank has doubled the minimum quarterly average balance to be maintained in a savings account to Rs 10,000 from Rs 5,000 now. The bank has sent a notice to its customers informing them about the same. The change is effective from July 1. “According to the existing terms governing your savings account, non-maintenance of quarterly average balance in any quarter attracts a charge of Rs 750 (plus service tax as applicable, currently 12.36 per cent) or such other charges as may be made applicable from time to time,” the notice said

Corporation Bank launches reverse mortgage plan

Corporation Bank on Tuesday introduced two new facilities - national electronic funds transfer (NEFT) through ATMs, and reverse mortgage - for its customers. With NEFT through ATMs, the debit cardholder of the bank can use ATMs to submit the NEFT request without the use of any paper application form. The reverse mortgage loan scheme - Corp Shelter - is started by the bank for the benefit of senior citizens. Launching the ‘Corp Shelter’ scheme in Mangalore, Mr M. Narendra, Chief General Manager of the bank, said that to qualify for a reverse mortgage the borrower must be at least 60 years of age. The loan amount can be from Rs 1 lakh to Rs 50 lakh. Asked about the interest rates for the loan, he said as on April 15 the floating rate for the loan is 10 per cent and fixed rate is 10.50 per cent. The meeting was informed that the bank has become the first public sector bank to launch NEFT through ATMs for its customers. Ms Devaki Muthukrishnan, Regional Director of Reserve Bank of India, launched the facility of NEFT through ATMs at Bangalore on Tuesday. The parents who hold Corporation Bank debit card can now remit money to their wards across the country almost instantaneously with this facility. Funds transfer transaction under this facility will be available during the currency of NEFT clearing window and is open from 7 a.m. to 3.45 p.m. The cardholder can transfer up to a maximum of Rs 15,000 per day. The advantage of NEFT is its inter-operability between banks as the funds can be transferred to the beneficiaries’ accounts of any bank. At present, over 43,000 branches of scheduled commercial banks in India are having the facility of NEFT.

Banks open wallets as IIM aspirants fret over fee hikes

The recent fee hike at IIMs has not only created a stir in the academia, but also raised concerns among IIM aspirants and their parents. Although the hike has generated mixed reactions from students, thousands of MBA aspirants at the threshold of joining IIMs are worried about arranging finances. Many banks have agreed to raise the bar of their educational loan offerings, to correspond with the higher fees. “SBI offers two educational loan options; general and scholar. Scholar loan is meant for institutes like IIM, MICA and NID, which are usually up to Rs 10 lakh for an entire course. We shall be ready to offer more loans this year since the fee has been hiked and at competitive rates. SBI is planning to raise the loan amount to Rs 20 lakh approximately. Under the bank’s scheme, 95% of the fee amount can be availed as a loan. Dena Bank, too, has similar schemes for students. Private banks do not want to be left behind either.

PNB to go solo on credit card before November

Punjab National Bank plans to roll out its own credit card product much in advance of November, when its existing co-branding tie-up with HSBC is due for expiry. Faced with delays in regulatory clearances, PNB has now dropped the joint venture route for launching its credit card business. “If need be, we can always form a joint venture subsequently,” Dr K.C. Chakrabarty, Chairman and Managing Director of PNB, told. Although the tie-up with HSBC was valid till November 2008, it would expire the moment PNB launches its own credit card. As the card issuer, HSBC played the dominant role and did the credit assessment. “Wherever Indian population goes and Indian trade goes, we will go there. We are looking at Indonesia, Norway, Australia and New Zealand. Next stage, we may look at Africa and Latin America,” Dr Chakrabarty said. PNB already has international presence at London, Hong Kong, Kabul, Shanghai, Almaty and Dubai.

Banking ombudsman receives most complaints relating to credit cards

The number of complaints received by the banking ombudsman offices has constantly increased in the last five years, with more than a three-fold increase in 2005-06 from the previous year after the Banking Ombudsman Scheme, 2006 was notified. The increase was also observed in the year 2006-07 with a 22 per cent increase from the year 2005-06, said the Reserve Bank of India’s annual report on banking ombudsman. In 2005-06, the ombudsman offices received 31,732 complaints and in 2006-07, the number of complaints received was 38,638. The increase in the number of complaints received in 2005-06 and 2006-07 can be attributed to the inclusion of new areas - such as credit card complaints and also allowing complaint submission in any form, such as online and by email - in the Banking Ombudsman Scheme, 2006. The maximum number of complaints dealt with during the last five-year period included complaints regarding deposit accounts, deficiency in servicing of loans and advances and delay in collection of cheques/bills. However, in 2006-07, the largest share of complaints received were credit cards complaints, which accounted for 20 per cent.

Banks see loss in quicker IPOs

Securities and Exchange Board of India (Sebi) Chairman C B Bhave’s proposal to cut down time between the opening of a public issue and its listing from three weeks to about a week is giving jitters to companies planning mega issues and their bankers. The move could disappoint banks, which open escrow accounts to keep the initial public offer (IPO) application money till allotment of shares. The proposal to slash the IPO time limit could lead to lower interest income for banks from such accounts. The time-consuming IPO allotment system benefited escrow banks, which often deployed huge money collected through the IPO subscription into the call money market for a handsome 7-8 per cent return for over two weeks, admitted a banker. According to the Indian Companies Act, escrow banks are restricted from passing on the interest earned from the IPO money to companies. However, investment bankers are of the view that it has become a normal practice for banks to deduct IPO expenses from the interest rate income. They then pass on the remaining money to companies.

Corporation Bank goes to Dubai in May

The Mangalore-based Corporation Bank will take its first step towards its international presence with the opening of a representative office in Dubai in the first quarter of this fiscal. Mr B. Sambamurthy, Chairman and Managing Director of Corporation Bank, said that the bank has already finalised premises in Dubai and some local formalities are being done. With the opening of representative office in Dubai, the bank is planning to serve the needs of non-resident Indians there. NRIs constantly look for investment opportunities, and seek lot of information on an ongoing basis. The office will interact with them and provide information, he said. To a query on reverse mortgage, he said the bank is all set to launch its reverse mortgage product. “We will be launching the reverse mortgage product in the next one week,” he added.

Recruitment

Corporation Bank, Union Bank of India and SBI are recruiting. Visit their websites for more details.

HSBC loses disc with data on 370,000 customers

Banking giant HSBC has lost a computer disc containing details of nearly 400,000 customers, it said on Monday. The disc contains the names, dates of birth and insurance cover levels of 370,000 people who hold life assurance policies at the bank. It does not contain addresses or bank account details, HSBC said

‘RBI may use CRR, market stabilisation to tackle inflation’

Faced with the tough job of balancing growth, which is showing signs of slowing down, and inflation, which is threatening to rise, the Reserve Bank of India is likely to use the twin tools of market stabilisation schemes (MSS) and cash reserve ratio (CRR), say bankers and analysts. While the Government has already taken some measures by restricting export of essential food commodities and fiscal measures like cutting duties on certain commodities, it is now the central bank’s turn to do its bit. Mr B. Sambamurthy, Chairman and Managing Director, Corporation Bank, said the RBI’s prescription would include both monetary tightening to tackle rising inflation, and also monetary easing to address concerns of growth slowing down. “If inflation is not contained it will have an impact on growth as well. Therefore, the RBI is likely to take some steps of tightening,” he said. Ms Sonal Varma, India Economist, Lehman Brothers, also ruled out a hike in repo rates in the April monetary policy, as it could raise the risk of growth slowing down. “We expect the RBI to maintain status quo in interest rates in the April monetary policy. But liquidity tightening using MSS and CRR cannot be ruled out to anchor inflation expectations,” she said.

Dhanalakshmi in talks with LIC, GIC to help rights issue sail through

Following the lukewarm response to its rights issue, Dhanalakshmi Bank is in talks with several institutional investors to ensure that the issue succeeds. This is despite the fact that the bank has extended the issue by a month in March. The Rs 198.7-crore rights issue, priced at Rs 62 per share, closes on April 17. But with the bank share being traded currently in the range of Rs 62 to Rs 63, investors have kept away from it. The issue which was earlier scheduled to close on March 19 was extended by a month following the poor response. It is imperative for Dhanalakshmi Bank to raise the capital since RBI has stipulated that all private banks should have a net worth of Rs 300 crore. Currently, the bank’s capital stands at Rs 130 crore and the rights issue would add about Rs 198.7 crore if it’s fully subscribed. RBI had indicated that new licences will be issued only after the bank increase its capital.

Govt should sell stakes in banks: Rajan panel

At a time when the government is unable to push through financial sector reforms or disinvestment, a Planning Commission-appointed panel has recommended that the government sell its stake in public sector banks, allow more foreign flows into the bonds markets and rework the regulatory landscape. In addition, the committee on financial sector reforms headed by Raghuram Rajan, professor at the Graduate School of Business, University of Chicago, and former chief economist of the International Monetary Fund (2003 to 2006), has suggested a shift to a true auction method for securities, besides seeking a reduction in the period between auction and listing. While opposing capital controls, the panel in its draft report, which has been put up for public comment, has suggested a steady opening up of the rupee bond market, which may include a larger play for foreign investors, which Finance Minister P Chidamabaram hinted at recently