How do banks calculate interest on your savings bank account ?

The Annual Review of RBI Monetary Policy on 21st April 2009 touched one important aspect that is calculation of Interest on amount kept by you in your Savings Bank account with the Bank. The RBI has directed the banks to calculate the interest on daily balance. Now the banks are offering 3.50% interest on your balances kept in your Savings Bank account. But the calculation of interest reduces the effective interest paid by the bank to you. The banks calculate interest on the minimum balance between 10th and last day of the month. And this interest is paid to you twice in a year once in February (for the period from August to January) and in August ( for the period from February to July). The example below tells you how the banks calculate the interest; Bank: ABC Bank Account Holder : Mr.X Account Number : 12345 Date Balance 01.08.08 Rs.5000 08.08.08 Rs.25000 12.08.08 Rs.200000 19.08.08 Rs.150000 21.08.08 Rs.50000 28.08.08 Rs.3000 So for the month of August interest will be Minimum balance between 10th and 31st will be Rs.3000 So, Principle X Rate of Interest X Days -------------------------------------------------- Days in a year X 100 = 3000 X 3.50 X 31 ------------------------ 36500 = Rs.8.91 If the interest is calculated on daily balance as directed by RBI, interest will be 01.08.08 tl 07.08.08 = 6 days X Rs.5000 =30000 08.08.08 to 11.08.08= 4 days X Rs.25000 = 100000 12.08.08 to 18.08.08= 6 days X 200000 = 1200000 19.08.08 to 20.08.08 = 2 days X 150000 = 300000 21.08.08 to 28.08.08 = 7 days X 50000 = 350000 29.08.08 to 31.08.08 = 3 days X 3000 = 9000 Total Product 1989000 for 31 days So, 1989000 X 3.50 -------------------------- 36500 = Rs.190.72 See the huge difference for just one month. The major beneficiary will be the customer as he will get interest for variations in balance through out the month. Earlier, banks were taking the minimum balance between 10th and last day, whatever the large amounts you have deposited between 10th and withdrawn subsequently before last day was not earning you anything. But now you get interest on that balance also. But the bankers will be worried as they have to fork out high interest on your deposit

Guidelines soon on pre-paid payment instruments

The Reserve Bank of India plans to permit scheduled commercial banks with the eligibility criteria to issue all categories of pre-paid payment instruments and eligible non-bank entities, including NBFCs, to issue semi-closed instruments. The move is to promote cashless transactions. The Reserve Bank had earlier placed the draft guidelines for issuance and operation of such instruments in public domain for wider dissemination and feedback. Instruments such as smart card, Internet account, mobile account and mobile wallet could be some of the pre-paid payment instruments, the RBI Deputy Governor, Ms Shyamala Gopinath, said.

‘No prior approval needed to set up offsite ATMs’

In a move that would allow banks to expand their ATM networks more easily, the Reserve Bank of India has done away with the requirement of prior regulatory approval for setting up offsite ATMs. RBI had earlier dispensed with the requirement of obtaining regulator permission for onsite ATMs (ATMs at branch premises).

ICICI Bank cuts lending, deposit rates

ICICI Bank on Tuesday announced a 50 basis points cut in its corporate and retail lending rates with immediate effect. The bank also said it is cutting fixed deposit rates across various tenors by 25 to 50 basis points, with effect from April 24. ICICI Bank cut its Floating Reference Rate (FRR) for consumer loans, including home loans to 13.25 per cent from 13.75 per cent. All existing floating rate customers will be benefited by the reduction in the FRR. The bank also cut its Benchmark Advanced Rate, for its corporate customers, to 16.25 per cent from 16.75 per cent

RBI's Annual Policy Statement - 2009-10

Consistent with the current assessment of macroeconomic and monetary conditions, the Reserve Bank has decided to: 1) reduce the repo rate under the LAF by 25 basis points from 5.0% to 4.75% with immediate effect. 2) reduce the reverse repo rate under the LAF by 25 basis points from 3.5% to 3.25% with immediate effect. 3)keep the CRR unchanged at 5.0% of net demand and time liabilities (NDTL).

SIB exceeds NPA recovery target by 50%

South Indian Bank has not only managed to contain fresh NPAs but has exceeded its NPA recovery target by 50 per cent. The bank has recovered Rs 150.95 crore, against its annual recovery target of Rs 100 crore Stating that the bank had managed it at a time when serious concerns were voiced about the asset quality in banks, its Managing Director and Chief Executive, Dr V.A. Joseph, said “it is a real challenge at times such as this. Dun & Bradstreet has identified us as the ‘Best Bank’ in asset quality (in the private sector category) and we are determined to maintain the title”. The bank’s gross NPA declined to 1.85 per cent at the end of the third quarter of the just ended fiscal compared with 2.53 per cent a year ago. Its net NPA fell by 0.1 per cent to 0.39 per cent as at end December 2008 compared with 0.49 per cent during the corresponding period of the earlier fiscal.

OBC cuts deposit rates

Oriental Bank of Commerce has reduced its term deposit rates by 25-100 basis points across various maturities. The revised rates will be applicable from April 21. For bulk deposits (Rs 1 crore & above) with maturity of 1 year & above, the interest rate has been reduced from 7.5 per cent to 6.5 per cent per annum. In case of deposits less than Rs 1 crore, the interest rate has been reduced to 8 per cent from 8.25 per cent for the time bucket of 1 to less than 2 years.

Shikha Sharma is new MD and CEO of Axis Bank

The board of Axis Bank on Monday appointed Ms Shikha Sharma, Managing Director, ICICI Prudential Life Insurance Company, as the bank’s new Managing Director & CEO. The appointment, however, did not find favour with the current Chairman & CEO, Dr P.J. Nayak, who quit in protest. Ms Sharma’s appointment, which will be for a period of 5 years, beginning August 1, 2009, is subject to RBI clearance and shareholders approval. Dr Nayak, who has been at the helm of Axis Bank for close to a decade, reportedly wanted an experienced internal candidate to take charge of the bank. He had three more months to go before retirement. Besides Ms Sharma, the other contender for the top position at India’s third largest private sector bank was Mr Hemant Kaul, Executive Director, Axis Bank. Mr V. Vaidyanathan, Executive Director, ICICI Bank, is tipped to take over from Ms Shikha Sharma as the Managing Director of ICICI Prudential Life Insurance Company. Axis Bank reported a growth of 61 per cent in net profit at Rs 581 crore for the fourth quarter ended March 31, 2009, against Rs 361 crore in the same quarter last year, aided by growth in its fee income and trading profits.

RBI defers foreign bank liberalization

The Reserve Bank of India (RBI) has decided to put on hold a proposal to allow foreign banks to operate in the domestic market and buy private banks in the wake of the global financial turmoil that fell some banking giants. The central bank is expected to announce this when the annual monetary policy review is to be unveiled. The RBI was expected to allow foreign banks to acquire stakes in Indian banks from April 2009 as part of the second phase of the banking sector’s opening up plan, termed ‘Roadmap for presence of foreign banks in India.'

BoB to finance Nano loan

State-owned lender, Bank of Baroda, has launched a scheme for financing of Nano car booking advance, under which any one can book a Nano car by availing 100% finance for booking amount from the bank. Upfront charges for a loan of Rs 95000 required for booking of smallest variant of the car is kept at a bare minimal of Rs 2999 which also includes interest for 90 days on the financed amount of Rs 95000.

RBI widens scope of unsecured loans

The RBI tightened the prudential norms for unsecured loans and asked banks to treat the value of all rights, licences and authorisations as unsecured advances and not as tangible securities. Starting April 2009, the RBI has asked banks to disclose the amount of such advances for which intangible securities such as charge over the rights, licences, and authorisations have been taken along with the estimated value of the collateral. Separate disclosures also need to be made in the notes to accounts, the RBI said. The move would result in higher risk weight and increase the provisioning requirement for banks.

SBI mulls further cut in lending rate

State Bank of India (SBI) said that it was examining the possibility of another round of reduction in its benchmark prime lending rate (BPLR), while adding that it was offering the cheapest rates across loan categories. At the same time, the bank’s chairman OP Bhatt told that funds mopped up at higher rates between October and December, and lower credit demand, were putting pressure on SBI’s net interest margins. “In the fourth quarter, NIM (net interest margin) would have dropped to around 3 per cent, from 3.16-3.17 per cent earlier. But we are hoping to keep it at around 3 per cent during the current financial year… Any small variation in margins has a large impact on the balance sheet,” he said.

Bank of India cuts deposit rates

Bank of India has cut deposit rates on domestic rupee term deposits by 25 to 100 basis points, across various maturities, with immediate effect. The revised interest rates will be applicable only on fresh deposits and on renewal of maturing deposits with effect from April 15. The bank also waived the penalty on premature withdrawal of all domestic rupee term deposits with effect from December, 2008, irrespective of date of deposit and amount

Debar loan defaulters from contesting elections: AIBEA

Should wilful defaulters of bank loans be barred from contesting Parliamentary elections? All India Bank Employees Association (AIBEA) has moved the Election Commission of India (ECI) to debar such candidates from contesting the general elections. It underscored the fact that the raw material for making loans to borrowers comes from depositors (public money) and it is important that recalcitrant borrowers who are in the fray be reined-in. Pointing out that banks and notified financial institutions report the details of wilful defaulters with outstandings of Rs 25 lakh and above to the Reserve Bank of India on a quarterly basis, Mr Vishwas Utagi, Secretary, AIBEA, said the Election Commission can easily filter out candidates who have been declared wilful defaulters by banks, by referring to the RBI’s list.

Rating agencies, banks differ over loan defaults

Bank loan rating, as per Basel II norms, is proving to be a bone of contention between rating agencies and banks. While credit rating agencies do not brook even a day’s delay in loan repayment, it is normal practise for banks to give companies the long rope of 90 days after the expiry of the due date when it comes to recognising a default The issue has come to the fore with Basel II norms on capital adequacy for banks kicking in from April 1. Under these norms, all corporates with borrowing of more than Rs 10 crore must be rated. As per RBI guidelines, from April 1, 2009 onwards all fresh sanctions or renewals in respect of unrated corporates that have bank loans of more than Rs 50 crore, will attract a risk weight of 150 per cent. This would push up capital costs for banks. On the other hand, exposures to corporates that have quality ratings would entail much lower risk weights, between 20 and 100 per cent, depending on the rating. This would result in ‘capital relief’ for banks.

RBI for ramps at ATMs, banks

In a move to make bank ATMs more disabled-friendly, the Reserve Bank of India has asked banks to provide ramps at ATMs and bank branches so that they can be accessed easily by the handicapped RBI has also asked banks to ensure that the height of the ATM should be such that it can be accessed by a wheelchair user. The central bank has also asked the banks to ensure that at least one-third of the new ATMs installed are talking ATMs with Braille keypads. It has advised banks to place the ATMs in consultation with other banks to ensure one such ATM is available in each locality.

PNB ties up with SMC, Networth Stock Broking for online trading

Punjab National Bank (PNB) on Monday entered into a tie-up with SMC and Networth Stock Broking Ltd, two brokerage houses, to provide online trading services in equities, commodities and mutual funds among others to its customersThis alliance would give a “3-in-1 account offering” comprising of savings account, demat and trading account together. PNB Chairman & Managing Director, Dr K.C. Chakrabarty, said the bank aims to have 15 crore customers in the next five years from the current level of about 3.8 crore. “Of this 15 crore customers, we hope at least 20 per cent of them would trade in equities through our e-trading facility. We want more of our customers to invest in equities and hence this alliance.”

IOB to absorb 75% employees of Shree Suvarna Sahakari Bank

The Indian Overseas Bank will absorb 75% of the 340 employees of the failed Shree Suvarna Sahakari Bank (SSSB), an urban cooperative bank, once the takeover is completed on April 15. The rest have either taken voluntary retirement or have been denied absorption as they are facing criminal investigations. All the employees will be inducted at the base level that is the level of the fresh recruits. IOB chairman and managing director SA Bhat said the public sector bank will open branches at the 12 existing locations of SSSB’s branches, nine of which are in Pune.

National Award For Canara Bank

Canara bank has won three national awards at the PRCI Awards 2009. Bank's House Journal won the gold Corporate Collateral Award. Bank has also won two silver Corporate Collateral Awards for best corporate ad and best corporate film

Recruitment in United Bank of India

Recruitment for Officer's post in United Bank of India United Bank of India, a premier Public Sector Bank, invites ONLINE applications from Indian citizens for the posts of Probationary Officer / Specialist Officer as indicated herein below: 1) SCHEDULE Opening Date for ON-LINE Application 30.3.2009 30.3.2009 Closing Date for ON-LINE Application. 27.4.2009 27.4.2009(For all applicants including those from Far-Flung areas)* Last date for receipt of “Print out of the System Generated Applications” 4.5.2009 4.5.2009 Last date for receipt of “Print out of the System Generated Application 11.5.2009 11.5.2009 ” from Far Flung areas. Date of written Test for Probationary Officers / Specialist Officers 21.6.2009 14.6.2009 * For candidates staying abroad and for those posting applications from Andaman & Nicobar Islands, Lakshdweep,Assam, Meghalaya, Arunachal Pradesh, Mizoram, Manipur, Nagaland, Tripura, Sikkim, Ladakh Division of J & K State, Lahaul and Spiti district and Pangi Sub Division of Chamba District of Himachal Pradesh. 2)NAME OF THE POST /VACANCIES : Total 1000 01 Probationary Officers JMGS I vacancy 900 age 21- 30 SPECIALIST OFFICERS : 02 Company Secretary SMGS-IV vacancy 1 age21- 40 03 Economist MMGS-III vacancy1 age21- 40 04 Statistician MMGS-III vacany 1 age 21- 40 05 Forex/Treasury MMGS-III vacancy 10 age21- 40 06 Chartered Accountant /CWA/CFA MMGS-II vacany 40 age 21- 35 07 Law Officer MMGS-II vacancy 15 age 21- 35 08 Risk Management MMGS-II vacancy 5 age 21- 35 09 Personnel / HR MMGS-II vacancy 15 age 21- 35 10 Official Language JMGS-I vacancy 12 age 21- 30 3)Pay Scale, Allowances and Perquisites as applicable: Scale Pay Scale (Rs.)* SMGS - IV 20480 - 24140 MMGS - III 18240 - 22280 MMGS - II 13820 - 19920 JMGS - I 10000 -18240*In addition, DA, HRA, CCA, Medical Aid, Hospitalization expenses, conveyance expenses LFC and retirement benefits are admissible as per the rules of the Bank. Perquisites like Quarter, Furniture etc shall be provided as per rules. 4. ELIGIBILITY CRITERIA: NATIONALITY/ CITIZENSHIP: A candidate must be either i) a Citizen of India or ii) a subject of Nepal or iii) subject of Bhutan or iv) a Tibetan refugee who came over to India before 1st January, 1962 with the intention of permanently settling in India or v) a person of Indian origin who has migrated from Pakistan, Burma, Sri Lanka, East African countries of Kenya, Uganda, the United Republic of Tanzania (formerly Tanganyika and Zanzibar), Zambia, Malawi, Zaire, Ethiopia and Vietnam with the intention of permanently settling in India. Provided that a candidate belonging to categories (ii), (iii), (iv) & (v) above shall be a person in whose favour a certificate of eligibility has been issued by the Government of India. A candidate in whose case a certificate of eligibility is necessary may be admitted to the interview conducted by the Bank but on final selection the offer of appointment may be given only after the Government of India has issued the necessary eligibility certificate to him/her. 5. RELAXATION IN UPPER AGE LIMIT: (In case of candidates belonging to the following categories) S No. Categories Relaxation by number of years 1. SC/ST by 5 years 2. OBC by 3 years 3. Physically Challenged by 10 years 4. Ex-Servicemen by 5 years 5. Persons domiciled in the state of J & K during the by 5 years. period from 01.01.80 to 31.12.89. 1. The relaxation in upper age limit is cumulative as per Govt. of India guidelines. 2. An ex- serviceman who has once joined a Government job on civil side after availing of the benefits given to him as an Ex-Serviceman for his re-employment, including a job in the Public Sector Undertaking ceases to enjoy exserviceman status for further employment. 3. All persons eligible for age relaxation under 5 above must produce the domicile certificate at the time of interview, from the District Magistrate in the Kashmir Division within whose jurisdiction he/ she had ordinarily resided or any other authority designated in this regard by the Govt. of Jammu & Kashmir, to the effect that the candidate had ordinarily been domiciled in the Kashmir Division of the state of Jammu & Kashmir during 1st January 1980 to 31st December 1989. 4. Above relaxations are available only if the candidates fulfill the various conditions prescribed in the Govt. of India orders and instructions in this regard. To claim age relaxation, reserved category candidates should submit a copy of the Community Certificate. 6). Minimum Educational Qualification, Post Qualification Work Experience as on 01-01-2009 Post Code/Name of Post 01 - Probationary Officers A graduate or Post graduate in any discipline from the recognized University with a minimum mark of 55% in either Graduation orPost graduation. 5% relaxation available tocandidates belonging to the SC / ST / OBC /PWD Category. Candidate must have successfully completed a computer course of at least 6 months' duration from any Institute recognized by Central/State Govt. / AICTE. 02 - Company Secretary Degree from a recognised University with ACS from the Institute of Company Secretary of India. LLB./LLM is desirable 03 - Economist Master Degree in Economics / Econometrics from a University / Institution recognized by UGC 04 - Statistician Post Graduation in statistics with minimum 55% marks from a recognized University / Institution (not correspondence course)by UGC 05 - Forex /Treasury 55% marks or its equivalent Grade in Graduation and CA / CFA / MBA (Finance) 06 - Chartered Accountant Qualified Chartered Accountant / Cost Accountant / CFA 07 - Law Officer Graduate Degree in Law (3 years or 5 years integrated course from a recognized University) 08 - Risk Management 55% marks or its equivalent grade in Graduation in Maths / Staistics / Economics or MBA 09 - Personnel /HR Full time MBA / Post Graduate Degree (HR /Personnel Management / Industrial Relations / Labour Welfare / Labour Law from a recognized University/ Institution 10 - Official Language Post Graduate Degree in Hindi and with English as a subject at Degree level or Post Graduate Degree in Sanskrit and with Hindi and English as subjects at Degree level. 7)Post Selection Process 01 Probationary Officers Written Test + Interview 06 Chartered Accountant Interview only. 02 Company Secretary Interview only. 07 Law Officer Written test + Interview/Group discussion 03 Economist +Interview/Group Discussion 08 Risk Management Written Test + Interview/Group Discussion 04 Statistician Written test+interview / Group Discussion 09 Personnel /HR Written test + Interview/Group Discussion 05 Forex/Treasury Interview only. 10 Official Language Written test + Interview/Group Discussion 8). Written Test : (i) The Written test will comprise of Objective tests consisting of Reasoning Ability, Quantitative Aptitude, General Awareness and English Language and also a Descriptive Paper on Professional Knowledge/Subject for Specialist Officers and General Topics for Probationary Officers. For further information visit www.unitedbankofindia.com

Lenders to have final say in NPA classification: HC

In what would provide a major relief to banks who are plagued with fears of rising defaults and bad debt, the Bombay High Court has ruled that the decision of a bank in assessing a debt as bad is the final word for writing it off and claiming deduction on income tax (I-T). The high court delivered the judgement after hearing an appeal filed by the I-T department against deductions claimed by Oman International Bank. The court ruled in favour of the bank stating that the classification of bad debt is a commercial decision of the assessee (bank in this case) and once an entry is made in its accounts, it would be established as bad debt. The judgement was delivered in February this year. The onus is on the department to show that the debt is not bad if it is not satisfied with the reasoning of the assessee.

Banks may go slow on issue of debit-cum-ATM cards

The free use of any ATMs for cash withdrawal (since April 1) may have led to an unanticipated casualty: Banks are likely to go slow on the issue of debit-cum-ATM cards. According to top officials of different banks, a bank would end up paying anything between Rs 12 and Rs 18 for every transaction conducted on another bank’s ATM by its customer “This will mean a big hit on the banks as they cannot be passed on to the customers now. Even abroad, free transactions across ATMs are not offered for the same reason. I don’t see any reason for RBI’s rush to implement this from April 1,” the head of a public sector bank told. While big banks like SBI and large private banks may have lesser outgo, smaller banks with fewer ATMs may find it difficult to bear the cost of ‘foreign’ ATM transactions by their customers. As a way out, some banks may eventually become cautious about the number of new cards to be issued. “We are planning to discontinue giving ATM-debit cards to students and other categories who open loan accounts to cut costs,” an official said. The ATMs of many private sector banks - ICICI Bank, HDFC and Axis Bank, among some others - still continue to turn down transaction requests from customers of other banks, though they deny it officially. At present, a new ATM costs about Rs 8 lakh for installation and Rs 60,000-80,000 towards monthly maintenance expenses. This may go up depending on rentals or real estate prices going up.

State Bank of Hyderabad to recruit 2,000

State Bank of Hyderabad will recruit over 2,000 clerical and supervisory staff soon to support its expansion plans. The bank has written to its parent bank, SBI, to conduct the recruitment, Ms Renu Challu, Managing Director, SBH, told.About 1,500 vacancies are for clerical staff and the rest, officers. The bank, which crossed the landmark of Rs 1 lakh crore in its total business recently, will add 170 new branches. “Out of this, 100 would be in rural and semi-urban areas,” Ms Challu said. The bank’s credit grew by 21 per cent last year against the industry average of 17.28 per cent with a 34 basis point growth in the net interest margin at 2.77 per cent. The deposits were up 24 per cent in 2008-09. “We have restructured Rs 123 crore from 2,800 SME accounts by extending repayment and book date periods. Loans to the tune of Rs 201 crore are currently being restructured,” she said.

Private banks likely to quit auto loan business

Private banks have told the government that they will not finance purchases of commercial and passenger vehicles, as absence of clear guidelines from the Reserve Bank of India prevents them from repossessing vehicles from defaulting borrowers. This was conveyed by bankers at a recent meeting with RBI and finance ministry officials in the presence of auto industry representatives. Industry estimates auto loan portfolio of all banks put together at around Rs 1,00,000 crore.

Opening Savings Bank Account

Banking has started with the basic objective of collecting the savings of the people and giving loans to those who are in need of it. So to collect the savings of the people banks offer Savings Bank Account. Every bank offers savings bank accounts. Customers are benefited as they can save small sums of money whenever they have excess cash with them and they can always take it back. The banks are bound to repay the amount when the customer demands it. So this constitutes Demand Deposits of the Banks. Banks normally give interest on Savings Bank Deposits held by the customers as incentive for saving. The interest is meagre as on date the interest is paid at the rate of 3.50% per anum. So why people keep their money for such meagre interest ? * If the money is kept in home it will not earn any interest * If the money is kept at home the high chances are there that it may be used for one or other purpose * If the money is kept at home chances are also there that theft may occur * If the money is given to others chances are there they may not give it back * People want to save the money for future All these factors make people to keep their money in banks. So, what is the procedure to open Savings Bank accounts ? Following documents are required to open Savings Bank Account a) ID proof ( PAN Card, Election Card, Driving Licence, Passport etc) b) Present Address Proof ( Election Card, Telephone bill, Passport etc) c) Introduction by an existing a/c holder who is having account for past six months in the same bank. (some banks take passbooks with other banks as introduction) d) Initial Deposit (this varies from bank to bank and branch to branch. For public sector banks they insist Rs.500/- as initial deposit, private sector banks insist for Rs.1000 and above.Some banks also offer zero balance accounts) e) Duly filled application form f ) Passport size photo Along with savings account you will get following facilities (varies from bank to bank) a) Personalised cheque book b) Internet Banking c) ATM card d) Tele Banking e) Insurance free or on payment of nominal premium f) Multicity cheque / at par cheque g) Demand Drafts without commssion Some banks offer discounts ( in initial deposits and charges ) to students and pensioners. Some banks tie up with corporates and offer Zero balance account to its employees. Charges for Savings Bank account holders.(varies from bank to bank) a) Charges for non - maintenance of minimum balance b) Charges for non - operation of accounts for a certain period c) Charges for issue of cheque book ( above the minimum level prescribed by the bank) d) Charges for ATM card (Annual charges/Duplicate Card/Duplicate Pin) e) Charges for cheque returns f) Charges for cash deposit (above certain limit) So if you open account keep in mind the benefits and also the charges you will have to pay for the services.

Bank schemes for Nano

Just as the Tata Nano promises value for money with its low pricing, so do the various schemes of banks which are the preferred lenders for the car. As the schemes are almost uniform in their charges and interest rates, quick and efficient service is perhaps what can help a bank score over its competitors. The Nano loan schemes are led by public sector banks, with the big daddy, State Bank of India along with its associate banks setting the trend in terms of interest rates and down payment.Other PSU lenders include Central Bank of India, Union Bank of India, Indian Bank, Corporation Bank and Punjab National Bank. The private sector players include ICICI Bank and Kerala-based Federal Bank. SBI is offering a Nano booking loan product with a one-time upfront booking fee of Rs 2,999 for the base model (which has an ex-showroom price of Rs 1.2 lakh in Delhi), Rs 3,499 for the intermediate model (Rs 1.40 lakh) and Rs 3,999 (Rs 1.70 lakh) for the high-end model. In case the customer is allotted a Nano, then the booking loan can be converted to a SBI Nano car loan. The loan would be provided up to a maximum of seven years at 11.75-12 per cent interest. The margin requirement for the loans would be 15 per cent. Corporation Bank is also charging Rs 2,999 as down payment for the booking amount of the base model, Rs 3,744 for the second version and Rs 4,231 for the third version. The bank is offering 11 per cent in case the customer goes in for a car loan once he or she gets allotment.

Banks prefer ‘safe’ customers for personal loans

Alarmed over the growing number of defaults, banks have tightened personal loans and prefer to extend them only to their own customers. Till recently, personal loans, along with credit cards, were a priority in the retail portfolio of the banks in view of the higher interest they earned.Many banks are not even considering a personal loan application from a non-customer. “As they are non-secured loans, there are higher delinquencies in the industry in general. We are giving preference to our own customers with good track record,” Mr R.S. Reddy Chairman, Andhra Bank, told. While the banks are tight lipped about the exact rate of delinquencies, according to experts, they range between 4 and 15 per cent. While the public sector banks are charging around 15 per cent interest on the personal loans, in some private banks and non-banking finance companies it ranges from 22 per cent to beyond 30 per cent. Interestingly, the existing customers are also given incentives for prompt repayment.

Andhra Bank to hire over 1,000

Andhra Bank will recruit over 1,000 personnel in supervisory and clerical positions. This includes 100 marketing staff on contract, Mr R.S. Reddy, Chairman and Managing Director, Andhra Bank, told. Last year, the bank had recruited over 900 officers and clerks. “The hiring will be done at the earliest as we will be opening 110 new branches before June this year. We are also lining up some important product launches. For all, manpower is vital,” Mr Reddy said. The bank, which has crossed the Rs 1-lakh crore business mark last week, six months ahead of the target, aims to cross Rs 1.50-lakh crore business by September 2010. The credit offtake is healthy and Rs 23,000 crore has been sanctioned to the corporate sector last year. “Out of this, Rs 10,000 crore is yet to be disbursed. The infrastructure projects are doing well while the real estate is dull,” he said. While the yield on advances for the bank is over 11 per cent, the cost of deposits is lower than 7 per cent with over three per cent interest margins. To achieve greater operational efficiency, the organisational structure of the bank has been revamped. Five new zones have been created in addition to the existing 17 zones, he said.

Cautious banks want FD to issue Credit Cards

Stung by rising non-performing assets (15 per cent in some cases), several banks have now started issuing cards linked to fixed deposits (FDs). ICICI Bank, the biggest credit card issuer, has made it conditional for some of the credit card applicants, who do not meet the bank’s eligibility criteria, to open FDs under a scheme called Fixed Deposit Instant Credit Card. Axis Bank has also launched such a scheme Other banks said this product was a part of their offering, but they were not pushing it aggressively. In this scheme, banks ask applicants to open an FD account with an auto-renewal facility. The minimum amount is Rs 20,000 and the maximum Rs 3 lakh. The credit limit on the card is pegged at 85 per cent of the FD amount. If the cardholder fails to pay the outstanding amount on the credit card within 90 days from the date of the statement, the bank has the right to liquidate the FD and set off the credit card charges against it.

IOB eyes Rs 10,000 cr biz from Pune with Suvarna Bank in fold

The Indian Overseas Bank is targeting a business of Rs 10,000 crore from Pune alone during the current fiscal with the acquisition of the assets and liabilities of the Pune-based Shree Suvarna Sahakari Bank Ltd (SSSB). All 12 branches of the SSSB will begin operating as IOB branches with effect from April 16. A majority of the existing staff of 340 have opted to continue to work and will be employed as fresh recruits, with no seniority, Mr S.A. Bhat, Chairman and Managing Director, IOB, has said. However, none of the charge-sheeted employees will be absorbed, he added. “The Reserve Bank of India has not given permission to take over Suvarna Bank’s branches, so 10 branches in Pune and two in Mumbai will be among the 93 branch licences given to IOB during 2008-09,” Mr Bhat said. The IOB programme to achieve 100 per cent core banking by April-end will be extended to these as well. IOB’s existing 10 branches in the city have a customer base of 40,000 and did business of Rs 3,000 crore during the last fiscal. Suvarna Bank has a deposit base of Rs 700 crore, advances of Rs 400 crore and 3 lakh customers. According to the current assessment, SSSB has gross NPAs of Rs 320 crore. With provision of Rs 240 crore, the net NPAs stand at Rs 70-80 crore

PNB’s second branch in Hong Kong

Punjab National Bank (PNB) has opened its second branch in Hong Kong. The new branch is in the Kowloon area and will focus on retail banking operations.The formal inaugural function was presided over by the PNB Chairman and Managing Director, Dr K.C. Chakrabarty, and the Consul General of India, Mr L.D. Ralte. PNB had opened its first branch in Hong Kong in December 2007. This branch, located in the main Hong Kong island, is focusing on wholesale banking. The business of this branch crossed $1 billion in the first year of its operations itself. PNB has also started the process to upgrade its Shanghai representative office into a full-fledged commercial banking branch.

SBI staff defer Strike on 8th and 9th April

The SBI staff have called off their plan to strike the work on 8th and 9th April on the assurance given by management to resolve the issues.

Hitches mark first day of free ATM usage

On day one of free ATM usage across all banks, many customers returned empty handed as machines of many banks simply responded by saying ‘host is off line’. Non-payment of cash from the account of a different bank was also noticed today in some cases. The banks, the ATMs of which did not allow/are not allowing withdrawals from other bank accounts include State Bank of India, State Bank of Hyderabad, Axis Bank and HDFC Bank. When contacted, an HDFC Bank official said the transactions were interrupted for a couple of hours on Wednesday due to the annual closing. Interestingly, all banks are shifting the blame on ‘the bank at the other end’. A senior Andhra Bank official said he had no clue as to why it was happening. “However, as banks have to work out individual agreements with other banks for allowing free-usage of their ATMs, some might have temporarily halted the transactions. But this is not allowed as the RBI directive on free-ATM use has to be implemented,” he added.

Indian Bank, LVB cut term deposit rates

Indian Bank has cut its interest rate on FCNR (B) and NRE deposits with effect from April 1. For FCNR (B) deposits in US dollars, the revised interest rate is 2.97 per cent against 3.12 per cent earlier for deposits of one year and above but less than two years. For deposits over two years and less than three year, rate would be cut to 2.40 per cent from 2.69 per cent. Three years and less than four years the rate would be at 2.70 per cent. Deposits for four years and above but less than five years is fixed at 2.99 per cent from 3.40 per cent while it has been cut to 3.23 per cent for five years from 3.66 per cent. NRE term deposits have been cut to 3.72 per cent for one year and above but less than two years from 3.87 per cent. Banks has dropped it rates to 3.15 per cent from 3.44 per cent for two years and above but less than three years. For three years and upto five years the rates are at 3.45 per cent from 3.82 per cent. Lakshmi Vilas Bank has cut its on domestic term deposits from 25 basis points to 100 basis points depending on the maturity tenure with effective from April 2. For tenure of one year to less than two years it has been cut to 9 per cent from 9.75 per cent. In case of two years and less than three years, deposits rates have been cut to 9 per cent from 9.50 per cent.

United Bank likely to go for IPO in 6 months

United Bank of India plans to go in for an initial public offer in six-to-nine months with an equity issue of Rs 50-60 crore, according to the bank’s Executive Director, Mr T.M. Bhasin. At a premium of Rs 100 a share the bank would be able to mobilise close to Rs 500-600 crore worth Tier I capital. The restructuring would enhance the book value of the bank’s shares to Rs 84-85 (up from Rs 14 at present) and it would further improve to Rs 100 once the bank comes out with an IPO, he said. United Bank today announced reduction in interest rates on FCNR (B) and NRE deposits effective April 1.

TMB cuts domestic deposit rates

Tuticorin-based Tamilnad Mercantile Bank has reduced the domestic term deposit interest rates by 0.25to 1 percentage point on various maturities. Effective from Monday the rate has been reduced by 0.50 percentage point for the maturity period of 181 days and above, by 1 percentage point for the maturity period of 46 days to 90 days and by 0.25 percentage point for the maturity period of 91 days to 180 days. The revised rate of interest for deposits of one year and up to three years is 9.50 per cent and above three years, it is 9.25 per cent.