Corporation Bank wins award for taking tech to rural areas

Contrary to popular belief, it was a public sector bank that walked away with the award for the best use of information technology in retail banking at the IBA & TFCI: Banking Technology Awards 2007, held on January 9, in Mumbai. Corporation Bank was the winner in this category, followed by Axis Bank as the runner-up. Corporation Bank has also taken technology to rural areas by introducing RFID/Smart Card based authentication devices that are operated by the business correspondents (BCs) at identified villages. The BCs serve as literal extension counters of the bank at these villages by providing basic banking services to people in rural areas

ICICI to list four subsidiaries

ICICI Bank will list at least four of its subsidiaries, starting with its brokerage arm ICICI Securities, and the process would commence within six months, Managing Director and Chief Executive Officer K V Kamath said. Noting that ICICI Securities could be the first of the lot to hit the capital market, he said it could be soon followed by two insurance arms - life insurance unit ICICI Prudential and general insurance arm ICICI Lombard - and the bank’s housing finance arm. Kamath said there could be two more probable listings - that of mutual fund arm and private equity business ICICI Ventures, but they could take some time.

Cabinet to talk SBS-SBI merger this Thursday

The proposal for merger of State Bank of Saurashtra (SBS) with the State Bank of India (SBI) will be taken up by the Cabinet on January 10. “Once the Cabinet approves the terms and conditions for the SBS merger with SBI, it will set the tone for merger of the rest of the associates with the parent. Internally, it is envisaged that the merger with all the subsidiaries will be completed by the end of 2008. There are HR issues but they are not intractable,” a top official of the SBI group said. The merger of SBS with SBI will be completed on January 27. Meanwhile, it is expected that top officials from the six associate banks will meet on January 25 to pass an in-principle resolution for merger with SBI. The SBI-associates merger will entail providing for pension benefits for all employees. At present, employees have only two benefits: gratuity, and pension or provident fund. However, SBI provides all three benefits to its employees. “There is unlikely to be a major burden on the parent bank to provide the third benefit. It is a windfall for the associates’ employees who will now enjoy the third benefit,” a top official in the SBI group said. SBI will have to factor in changes in the accounting standards (AS-15) that mandate a provision for pension liabilities going forward. Banks have sought to stagger the provision over a period of five years starting April 2008. It’s not clear who among the unions will head the resolution of industrial disputes post-merger.

SBI, ICICI extend festive loan offer to January 31

State Bank of India (SBI) and ICICI Bank have extended their limited period festival offers, providing lower interest rates on new home and other retail loans, till January 31. SBI reduced interest rates on new home, car, truck and farm equipment loans by 50 to 200 basis points from October 8, 2007, as a special offer. On October 10, 2007, ICICI Bank, the largest private sector lender, cut interest rates on floating rate home loans by 50 basis points to 11 per cent and on other retail loans by 25-50 basis points.

SBI may offer employees stock purchase plan

While State Bank of India informed the BSE that its central board would meet on January 14 to consider issue of increase in the issued capital via the rights issue and Employees Stock Purchase Scheme, the announcement turned out to be a pleasant surprise for the bank’s employees. Mr. Prakash Gangal, Secretary, All India State Bank of India Employees Federation said ‘we had asked for Employee Stock Option (ESOP) or some quota for employees at concessional rate on November 26. The management had then stated that the matter would have to be referred to the Government and did not commit anything. Even last week, when we followed up on this issue, we learnt that they had not heard from the Government. We are pleasantly surprised now. We will have to wait and watch," he said when sought for his comment. He, however, pointed out that such of those who already had some shares of the bank would be eligible to apply for rights shares.

Licence to open bank branches may go

The mandatory licensing requirement for Indian banks to open branches may be done away with. The department of financial services is taking up the matter with the Reserve Bank of India (RBI) as banks are no more shying away from opening branches in semi-urban and rural areas. The likely relaxation, however, will not apply to foreign banks. “There is a case made out for dispensing with the mandatory licensing requirement with certain transparent safeguards to ensure an equitable distribution of bank branches in the urban and rural areas,” an official source said. RBI might make it mandatory for banks to open one rural or semi-urban branch for every new urban branch that is opened, added the source. Citing a recent speech of RBI Governor Y V Reddy that “many banks now find that branches in semi-urban and rural areas are also commercially viable”, official sources said the entire policy followed by RBI on opening new branches needed to be revisited. Many public and private sector banks have been demanding the removal of the licensing system, which comes in their way to expand organically in a rapid manner. The department has sought views from public sector bank chiefs in this regard.

Bank of Rajasthan divesting 10% stake to raise Rs 167 cr

Jaipur-based private lender Bank of Rajasthan is set to divest nearly 10 per cent stake in the bank to raise upto Rs 167 crore. "The bank will allot shares and convertible warrants to four private equity players - Glasia Mauritius II Ltd, BNP Paribas S A, Shree Naman Developers and Darashaw & Company, who will together invest nearly Rs 167 croe," a source said.

Ministry, RBI differ on NPA classification

The Finance Ministry has taken the view that advances to infrastructure projects that face completion delay exceeding a year need not be classified as non-performing assets (NPAs) by banks so long as the interest component on the loan was being serviced. This stance is, however, in contrast to the Reserve Bank of India (RBI) guidelines that require advances to infrastructure projects delayed by more than a year to be classified as NPAs even if interest was being paid on time. Official sources said this issue had come up for discussion at the meeting that the Finance Minister, Mr P. Chidambaram, had with chief executives of public sector banks (PSBs) on Friday. Indications are that the RBI may again be requested to review the guidelines. “Our view on this is that the account cannot be classified as NPA in situations of delay over one year if the interest is serviced,” a senior Finance Ministry official said.

Canara Bank may make an acquisition this year : Rao

Canara Bank has hinted that during the current year it may acquire a bank which can increase its footprint in the North and West India. "We are still examining it (possibility of acquisition). Definitely in the current year we should see some action," the Canara Bank CMD, Mr B N Rao, said. "We are strong in the South. But actually lot of growth is taking place in the North and the West." While making an acquisition, Canara Bank would prefer a bank that has a good footprint in these areas, he said.

Bank employees to strike work on Jan 25

About a million employees and officers from various banks in the country will go on day-long strike on January 25 to protest against the planned merger of associate banks of State Bank of India with their parent bank and press for resolution of their unmet demands including early settlement of wage revision, and extension of one more option to join pension scheme This decision emerged at a meeting of the United Forum of Banking Unions (UFBU) here in the Capital today, according to the UFBU Convenor, Mr C.H.Venkatachalam. The strike call for January 25 coincides with the meeting of the boards of six associate banks on the same date to consider in-principle nod for their merger with SBI. Besides the strike call for January 25, the UFBU has also decided to go for two days of strike on February 25 and 26. “If our demands are not met by then, we will go on an indefinite strike from last week of March 2008,” Mr Venkatachalam said.

SBI hikes rates on deposits of up to 2 years maturity

State Bank of India on Thursday hiked rates on fixed deposits of up to two years maturity. This is the second time in less than a month that the bank is hiking its deposit rates. The interest rates have been hiked by between 0.5 and one percentage point with immediate effect. SBI would now pay 7 per cent on 91-180 day deposits, which is 175 basis points more, and 7.5 per cent on 181 days to less-than-a year deposits, an increase of 100 basis points. It would now offer interest of 8.75 per cent on deposits of 1 year to two years, which is a 50 basis points increase on its earlier maturity slab of 1 year to 549 days and a 25 basis points hike on 550 days deposits.

United Bank sets aside Rs 250 crore for IT

United Bank of India (UBI) has committed an investment of Rs 250 crore on information technology for the next financial year. The investment will cover a massive roll out of core banking solutions (CBS), on line share trading facility, phone banking and cash management services among others. P K Gupta, chairman and managing director, UBI, said, “The main challenge in the coming year would be the application of technology for business growth.” “All these initiatives are a part of our vision to emerge as a dynamic, techno-savy, customer-centric, progressive and financially sound bank,” said Gupta. The bank has roped in Tata AIG Life Insurance Company as a strategic partner for its life insurance venture and launched a child insurance scheme in December 2007. “We are going to launch some exclusive products in this area,” he added.

CorpBank to add 100 branches in 2008

Corporation Bank will be opening 100 new branches in the calendar year 2008 with focus on western and northern regions of the country. The bank has already received the approval from the Reserve Bank of India for its biggest expansion initiative, Mr B. Samba Murthy, Chairman and Managing Director, Corporation Bank, told after the inauguration of its 950th branch in the country at Film Nagar (Hyderabad) on Wednesday. “We are now looking beyond Karnataka and would like to tap the market potential in the western and northern regions. This is in line with our aim of crossing one-lakh-crore mark in our business in 2008,” Mr Murthy said. By May 2008, the number of branches would be 1,000 and the remaining branches would be added by December this year, he said. The bank is building on its new format branches which house ‘CorpInvest Shoppe’ to cater to varied investment needs of the customers. “With the opening of today’s branch, we now have three new format braches. We plan to add another 37 before the year-end,” he said. The bank has also launched its ‘Branchless Banking’ at Shankarpalli near here to conduct transactions through biometric smart card with the help of a business correspondent

SBI lures CAs, lawyers with hefty pay package

State Bank of India (SBI) is recruiting chartered accountants (CAs) at the entry level on contract by offering a salary that is considered hefty by public sector bank standards. The country’s largest bank will also dangle a carrot in the form of loyalty bonus on completing a certain number of years in service to CAs in an attempt to retain them. The CAs would be placed in departments such as risk management, treasury, accounts and compliance. During the probation period of six months, CAs will get a lump sum payment of Rs 50,000 a month. After completion of the probation, the salary will increase to Rs 9 lakh a year, which will be split into two components - 70 per cent fixed pay and 30 per cent variable pay. “Our experience has been that many professionals leave mid-way even when on contract. We want professionals to remain with us and that is the driving factor behind the decision to offer loyalty bonus,” a senior SBI official said. The direct recruit in the law officer category will get a maximum of Rs 3.5 lakh a year as salary. For them (law stream), the bonus will be paid at the rate of 20 per cent of the total remuneration. The bank expects to induct over 10,000 employees in the current financial year.