Govt fiat to bulk up PSBs

In a significant move, the finance ministry has issued a directive instructing all government departments and ministries to park with public sector banks at least 60% of the funds under their control and distributed by them to PSUs and state government agencies. The move is aimed at helping nationalized banks garner significant business over their private sector counter parts. Simultaneously, the finance ministry has also directed government departments and PSUs to discontinue the practice of inviting competitive bids for bulk deposits with banks. This, according to the finance ministry, resulted in undesirable competition amongst banks, thereby leading to arbitrary hikes in deposit rates (even in the short term), which has consequences on the economy. Bulk deposits should be placed with the banks conducting the irregular business, the ministry said. The letter stated that as public sector banks had "a special role and importance in the banking industry and in advancing the economic policies of the government, it is important that departments/ministries conduct their business, as far as possible, through public sector banks".

BoE cuts rates by 25 bps

The Bank of England cut its benchmark interest rate by a quarter-point in response to slowing consumer spending and the steepest decline in house prices in a decade. The nine-member Monetary Policy Committee, led by the Governor, Mr Mervyn King, reduced the key rate to 5.25 per cent, the second reduction in three months.

Strike call by bank unions forum

The United Forum of Bank Unions (UFBU) has called upon its member units to strike work for two days on February 25 and 26 to express their protest against the delay in settlement of the long pending demands of the bank employees. The demands, among others, include the proposal to stop merger of public sector banks, the option to join a pension scheme, compassionate appointments, filling up of permanent vacancies through recruitment, putting an end to outsourcing of bank jobs, and early settlement of wage revision. The UFBU has also urged its members to be ready to go on an indefinite strike from the last week of March if these demands still remained unresolved

BoI to raise about Rs 1,360 cr

Bank of India has said its board has approved a proposal to raise about Rs 1,360 crore through an issue of 3.78 crore equity shares. In a notice to the BSE, the bank said it will issue the shares at a price of Rs 360 per share of face value of Rs 10, issued at a premium of Rs 350 per equity share, aggregating to Rs 1,359.81 crore. SBI Capital Markets Ltd, A.K. Capital Services Ltd, Edelweiss Capital Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, JM Financi al Consultants Pvt Ltd, Kotak Mahindra Capital Company Ltd and Motilal Oswal Investment Advisors Pvt Ltd were the book running lead managers to the issue.