Canara Banks CanChamp Deposit Scheme

SB CANCHAMP DEPOSIT SCHEME Basically an SB deposit for children WHO CAN OPEN Children upto the age of 12 years (i.e. till 11 years, 364 days) WHAT IS THE MINIMUM DEPOSIT Initial deposit can be any nominal amount with a minimum of Rs.100/- RATE OF INTEREST As applicable to SB deposits. Presently 3.5% per annum CHEQUE BOOK Cheque books are not issued under the scheme JOINT ACCOUNT Joint accounts cannot be opened under the scheme OTHER FACILITIES • Nomination facility is available • C-Net Banking facility is available (For view only) • Loan eligibility card for educational loan as per the then prevailing educational loan scheme • Attractive Savings Box to cultivate the habit of savings among children • Attractive photo folder cum personal details with 16 pouches to store photos of the child and record memorable moments • Free collection of cheques/DDs gifted to the child upto Rs. 25,000/- per annum (In Indian Rupees or foreign currency) • Conversion of the account into regular SB account after the child attains majority

State Bank of Patiala offers e-trading

The State Bank of Patiala has launched a 3-in-1 account e-trading facility in association with SBICAP Securities Ltd. It is an online trading facility which will allow the account holders of the bank to trade on BSE and NSE - equity and derivatives segment without the hassle of running around to a broker’s office for placing orders. SBICAP will provide demat account and trading account to the bank’s account holders. Apart from account holders of State Bank of Patiala, SBICAP already offers its e-broking services to the account holders of State Bank of Indore and will extend similar services to the account holders of other SBI associate banks in the near future.

Award for Canara Bank CMD

The Hyderabad-based Institute of Practical Accountancy (IPA) has conferred ‘Lifetime Achievement Award’ on Mr B.N. Rao, Chairman and Managing Director, Canara Bank, for his professional excellence and contribution to the banking and financial sector. Prof K.C. Reddy, Chairman of AP State Council of Higher Education, presented the award to Mr Rao.

Allahabad Bank cuts home loan rates

Allahabad Bank has reduced interest rates on fresh housing loans under various maturity buckets by 1 per cent, both on fixed and floating schemes.

Bank as a neighbour

A survey by market research firm IIMS Dataworks shows that Indian consumers rarely distinguish between banks in their decisions to opt for the one over the other. They go for the bank that comes their way, for one reason or the other. "Only very high income groups make a choice to go to a particular bank, others just walk into the nearest bank branch,” says K C Chakrabarty, chairman and managing director, Punjab National Bank (PNB). About 60 per cent of the working population still do not have bank accounts, he added. While State Bank of India (SBI) dominates the mind space almost as a singular monolith, PNB’s brand recall seems to be in line with its status as the second largest public sector bank in the country. Among the relatively low income segments, the only private bank that has any significant brand recall is ICICI Bank

Bank of Maharashtra in pact with LIC

Bank of Maharashtra in association with Life Insurance Corporation of India has launched two products, Maha Suraksha Deposit Scheme and MahaGrih Suraksha scheme. Under the Maha Suraksha Deposit Scheme, deposit holders get life cover under a one-year renewable term insurance plan of LIC of India. Deposit account holders between 18 and 59 years of age, who opt for the scheme, would be eligible for an insurance cover of Rs 1 lakh on life, at a low premium. The Maha Grih Suraksha Scheme provides life insurance cover to the housing loan borrowers of the bank through LIC under “Group mortgage redemption assurance scheme” (GMRA).

Indian Bank revises rates on term deposits

Indian Bank has revised the interest rates on domestic term deposits with effect from September 1. Interest rate for the 7-14 days period for an investment of Rs 15 lakh is at 3.5%, while that for the same period for Rs 15 lakh to less than Rs 1 crore is at 4%. Interest rate for the 30-45 days period upto Rs 1 crore is at 4.5%. The bank has fixed interest rate on deposits for 46-90 days for Rs 15 lakh at 5.25% and for Rs 15 lakh to less than Rs 1 crore at 5.75%. Term deposits for 91-179 days for investment upto Rs 1 crore is at 6.5% and that for 180-364 days is at 7%. For a period of one year to less than three years, the interest rate is at 9%. For 3 years to less than 5 years, the interest rate is at 8.75% and for five years and above at 8.50%.

PSB Director resigns

Punjab and Sind Bank (PSB) Director, Mr Harcharan Singh Josh, has resigned from the board of the bank, which is fully state-owned. The Government order accepting his resignation was received by the bank a few days ago, sources in the Board said. Mr Josh, who was one of the five non-official directors in the bank’s board, had a face-off with the PSB Chairman, Mr R.P. Singh, over alleged favouritism in sanctioning Rs 150 crore loan without collateral and at lower interest rate to Orbit Resorts expansion project. The PSB Chairman had contended that politically affiliated directors were attempting to frustrate the debt recovery measures of the bank.

India's sub-prime market proves a prime opportunity

Like the US, India too has a subprime market and it is booming. The success of early entrants like Citi Financial and GE Money has encouraged several others to enter the consumer lending business, nearly half of which is a sub-prime market. These include players like HSBC (Pragati Finance), Stanchart (Prime Financial), Fullerton India, DBS Cholamandalam and Indiabulls. Industry sources say Barclays, Deutsche Bank and AIG are eyeing the segment, which includes private lenders like ICICI Bank and HDFC Bank, which entered in 2004. What’s attracting them is an estimated $10-11 billion market for unsecured credit, which is growing at 25-30 per cent, according to Citi Financial Managing Director Sandeep Soni. The smaller players are growing at 50 per cent or more. "It’s an untapped market. There’s an opportunity to expand the market like in telecom," said Rajeev Yadav, head of personal loans at GE Money. A typical sub-prime customer is the self-employed, neighbour-hood retailer or a trader who needs credit to buy goods and grow their business. He may be filing a tax return (most show an income of Rs 70,000-80,000), but it doesn’t truly reflect his cash flows. "Many of these people do huge business in cash; there’s no way it can be registered on paper. If he maintains an average bank balance of Rs 2,000-3,000 and that’s increasing or services an EMI of Rs 1,500 on credit card or another loan, it shows he has cash flows. Banking tells us about a guy’s character, about his cash flows."

Demand for home loans slowing down

The demand for home loans has slowed down over the past few months due to rising property prices and high interest rates. The number of applications for home loans and registrations of new flats have come down, say bank officials and analysts. The stricter prudential norms for the real estate sector have pushed up property prices across the country. According to Mr Sunil Rohokale, General Manager, Mortgage Finance and Real Estate, ICICI Bank. “Interest rates have increased by 250-350 basis points in the last 18 months. Also, the property prices have increased by as much as 40-50 per cent in the same period. Customers have been hit by a double whammy,” he said. Mr H.N. Sinor, Chief Executive, Indian Banks’ Association, said that there is need for some kind of relaxation of the prudential norms with regard to sectors such as housing, as the sector is seeing a slowdown.

SBH deposit mop-up drive

State Bank of Hyderabad (SBH) will launch a nation-wide ‘Deposit Mobilisation Utsav’ from September 1. During the one-month programme, an additional interest of 25bps per annum would be offered on all term deposits for a period of one year and above. Coinciding with the campaign, the bank would also be launching two new deposit products - Recurring Deposit Plus and Current Account Plus. These account-holders would be offered free Internet banking facility, free ATM/debit card, free multi-city cheques, and free accident insurance cover. The bank had set a goal of opening more than three lakh new accounts during campaign and mobilise over Rs. 3,500 crore of deposits.

Bank of Baroda cuts home loan rates

Bank of Baroda reduced the rate of interest on housing loans up to 50 basis points. The bank said the new rates would be applicable to all new housing loans sanctioned on or after September 1, 2007. The new floating rates for loans up to Rs 20 lakh range from 10 to 11 per cent for periods from five years to 25 years. For loans of above Rs 20 lakh, the rates vary from 10.25 per cent to 11.5 per cent. In case of fixed rate option, the revised rates on loans up to Rs 20 lakh range from 11.25 per cent to 12.5 per cent for periods from five to 15 years. For loans of more than Rs 20 lakh, the rates are between 11.5 and 12.75 per cent. The reduction in rates is merely to realign with the market.

Canara Bank bags SME award

The Centre has conferred the first award under 'National Awards for Excellence in Lending to Micro and Small Enterprises for the year 2006-07' on Canara Bank. The award instituted by the Ministry of Micro, Small and Medium Enterprises was in recognition of the bank's performance in lending to micro and small enterprises sector during the year 2006-07. The award was presented by the Prime Minister, Dr Manmohan Singh, in New Delhi to Mr MBN Rao, CMD of Canara Bank. The bank increased its lending to micro and small enterprises (MSEs) by Rs.3,261 crore during the year, recording an impressive growth of 49.48 per cent over March 2006.

The Sub-Prime Drama

In India, banks have what is called a Benchmark Prime Lending Rate (BPLR) which is supposed to be the basic lending rate beyond which markups are added for borrowers with lower credit rating. Sub-PLR rates, i.e. rates lower than this BPLR, are offered only to the top class borrowers. In the USA, however, the best rates are offered to 'prime' borrowers and it is the sub (below) prime borrowers who are quoted rates with a premium or markup loaded, depending on their credit rating. Therefore, sub-prime refers to the (lower) quality of the borrower and this kind of borrower is usually charged a higher rate than a 'prime' (best) borrower. According to Wikipedia, subprime lending, also called B-Paper, near-prime, or second chance lending, is a general term that refers to the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history. It is risky for both lenders and borrowers due to the combination of high interest rates, poor credit history, and murky financial situations often associated with subprime applicants. A subprime loan is offered at a rate higher than A-paper loans due to the increased risk. Subprime lending encompasses a variety of credit instruments, including subprime mortgages, subprime car loans, and subprime credit cards, among others. The term "subprime" refers to the credit status of the borrower (being less than ideal), not the interest rate on the loan itself. Generally, subprime borrowers will display a range of credit risk characteristics that may include one or more of the following: i) Two or more loan payments paid past 60 days due in the last 12 months, or one or more loan payments paid past 90 days due the last 36 months; ii) Judgment, foreclosure, repossession, or non-payment of a loan in the prior 48 months; iii) Bankruptcy in the last 7 years; iv) Relatively high default probability as evidenced by, for example, a credit bureau risk score (FICO) of 660 or below (depending on the product/collateral), or other bureau or proprietary scores with an equivalent default probability likelihood. About 21% of all mortgage originations from 2004 to 2006 were subprime, up from 9% between 1996 and 2004, as per chief economist for Moody's Investors Service. Subprime mortgages totaled $600 billion in 2006, accounting for about one-fifth of the U.S. home loan market. Many of the sub-prime mortgages were offered at special schemes offering below-market rates for the first few years of the mortgage but escalating thereafter. Consumers took these mortgages hoping that they could refinance them after a few years at an affordable interest rate. On the other side of these transactions, rapid developments in financial engineering allowed mortgages of all types to be packaged into pools and sold as high-yielding securities to a range of investors from third-tier banks to sophisticated hedge funds. Thus both homeowners and buyers of such securities got caught in this cycle. The tricky part was that after a few years, the artificially-low mortgage rates were required to reset to levels more in line with current market rates, which, in all likelihood, would be higher than the initial low rate levels. If house prices continued to increase, homeowners would still find it profitable to refinance their mortgages at affordable interest rate levels. However, beginning in late 2006, the realty bubble started to burst. Two events that were assumed to have a low probability in a booming market in fact happened: first, interest rates increased and second, home prices began falling. This led to sub-prime mortgages resetting at shockingly high rates, with homeowners missing payments and banks foreclosing accounts. On the other hand, banks and other financial institutions holding the mortgage-backed securities incurred losses and had to sell their assets. It is estimated that in the next five years $1 trillion in adjustable rate mortgages will reset, with sub-prime mortgages making up the majority. Resets of mortgages this year are estimated to occur at rates that are about four percentage points higher than the current rate on 30-year home loans. The virtuous cycle of mortgages turned sour. Banks and other institutions cut back their lending, not only for mortgage-related activities, but also for other activities, as liquidity fell. As the impact spread from the US to Europe and then globally, central banks rushed to inject liquidity into their respective markets in order to stem the tide. The US Federal Reserve Board announced a half a percentage point cut in the discount rate (the rate at which it lends to commercial banks) to 5.75 per cent on August 17 alongwith other measures to boost liquidity. The impact of this crisis has been felt as far as in India, where the stock market showed a steep fall from around mid-July'07 onwards (Sensex on 16 July'07 was 15,311, dropping to 14,195 by 17 Aug'07) as FIIs starting drawing down their investments in emerging markets to create enough cash for meeting their obligations in the US market. However, it is to RBI's credit that the early actions taken by it to stem credit to the booming real estate market in India by raising provisioning requirements and risk weights, besides warnings about heating up of this sector, stopped banks from overextending themselves to this sector like US banks. Rising property rates as well as interest rates on housing loans also contributed towards lowering excess demand, especially from second time home loanees. The Indian banks having branches abroad were also not much affected as their exposure to mortgage backed securities had been quite low. Ultimately, fund flows to the Indian stock market will improve as the fundamentals of the Indian corporate sector continue to be good. Meanwhile, the fall in the stock markets had the side-effect of weakening the (appreciating) rupee to over Rs 41 levels against the US$, and this would be welcomed by the Indian IT majors and other exporters like the textiles sector, as their dollar-denominated pay cheques will now fetch them a higher revenue.

Investing in Bank Deposits

Investing in Bank Deposits The easiest way all do is to deposit their money in bank fixed deposits. Because they feel it is the safest and easiest method to grow their money and also it is highly liquid. Banks normally give interest ranging from 3% to 10% per year (approx.) on the deposits kept by public. The senior citizens will get higher interest ranging from 0.5% to 1.0%. The rate may vary from time to time. The rate of interest also varies with the period of deposit. The higher the period higher will be the interest. But recently this trend has changed. Now the banks fix their rate of interest based on their assets and liabilities so you may get higher interest for shorter period and lesser interest for higher periods. Some banks also give floating rate (the rate of interest varies when bank raises or lowers the interest) but this concept has not find good response from public. Here the banks normally give two options. You can get simple interest or you can get compound interest. When you opt for simple interest you may get interest at Monthly, Quarterly, Half yearly or Yearly intervals. Normally banks give quarterly interest. If you opt for monthly interest you will get discounted rate. This type of deposit is suitable for those who want to get fixed monthly income like senior citizen or when you have fixed monthly commitment that can be met by this interest. (like monthly rent, school fees etc.) Other way is when you do not opt for above you should go to compound interest, here the interest is added to principal and interest portion also starts to earn interest. This type is suitable for those who want to get lumpsum amount after a period like for education, marriage etc. Other very good deposit is Recurring deposit, here you can invest small amount monthly for a period ranging from one year to ten years and get lumpsum at the end of the term. This is novel scheme for salaried class as they can save small and get big. Higher the period greater will be the amount you get back. Drawback: 1. The maximum period of deposit will be for 10 years. 2. Tax will be deducted at source if the interest earned on your deposit exceeds threshold limit fixed by income tax department which is Rs.10000 per year. If you want not to deduct tax you must submit form 15H/G every year. 3. Thinking that the rate of inflation is 5% the return you will get on these deposits is very minimal. 4. Interest earned on deposit will be added to income in hands of assesse and tax will be paid by him. 5. Now many banks are charging 0.5% to 1% for prematurely withdrawing your deposits thus lowering your yield. Plus Points: 1. Rs.100000/- per year exemption can be got under sec.80CCC of IT act. 2. Highly liquid. 3. Repayment risk is minimal. 4. Loans can be taken in case of need. Calculations: Rs.100000/- invested in Fixed deposit for 5 years at 10% p.a. at quarterly interest option will fetch you Rs.150000/- (principle plus interest) effective int. 10% Rs.100000/- invested in Compounding interest scheme for 5 years at 10% will fetch you Rs.163862/- (principle plus interest) effective int. 12.77% Rs.1000/- invested per month in Recurring deposit at 10% will fetch you Rs.12665/- for 1 year (prin. Plus int.) effective int. 10.38% Rs.77908/- for 5 year (prin. Plus int.) effective int. 12.77% Rs.205569/- for 10 year (prin. Plus int.) effective int. 16.85%

Govt should cut stake in banks to below 51%

The Indian Banks’ Association has made a representation to the government proposing consolidation of public sector banks as well as dilution of government holding to below 51%. “Even with a 33% or 26% holding, the government will be the single largest shareholder, thereby giving it total control,” said IBA chief executive HN Sinor. However, if that happens, the government will lose the right of appointment, which will rest with the Reserve Bank of India (RBI) thereafter.

YES Bank bets on mobile phone for micro-fin biz

YES Bank is looking at using mobile phone as a platform to enhance the reach and bring down the cost of micro-finance. The bank along with Accion, the US based micro-finance agency, plans to tie up with a global software provider in order to find a software solution for the same. “We will pass on the cost benefits to our customer by bringing down the interest rates on micro-finance,” said Mr Somak Ghosh, President, Corporate Finance and Development Banking, YES Bank. “We are in advanced stages of talks and are hopeful of launching the product by the end of this year or by March 2008,” he said. He felt it would bring down the cost of operations by about 30-35 per cent. The bank also plans to lend it to other banks and micro-finance institutions. The bank plans to launch more products such as medical loan, emergency loan, special events loan and home improvement loan from the second and third year based on its experience and the track record of its clients.

Andhra Bank drive on ‘kiddy bank’

Andhra Bank is very aggressive on the ‘kiddy bank’ account. Andhra Bank has this year commenced a month-long ‘AB Celebrations 2007’ drive to create awareness about the various products and services offered. At one such meeting, its Deputy General Manager (Chennai Region), Mr P.N. Murthy, gave away the ‘kiddy bank’ doll, which, according to him, was the USB product of Andhra Bank. While asking the child to put his/her savings into it, Mr Murthy also informed the gathering about the secret lock in the doll. “This can be opened only at the branch where the account is held.” It is now targeting schools for popularising this product.

Five-day work for StanChart staff

Standard Chartered Bank employees would work five days a week from September 1, a move which, the foreign lender said, aimed at ensuring work-life balance among the staffers. All the 5,500 employees in the consumer bank division would come under the new work schedule. The bank started implementing the five-day week in phases. In the first phase, 2,000 staff in the wholesale banking, corporate divisions and support functions came under the norm. The bank has, however, ensured its business hours continues to be the same and the “customer delivery” is not affected.

Indian Bank revises deposit rates

Indian Bank on Tuesday revised interest rates on fixed deposits, effective from September 1. Interest rates on term deposits of tenure one to less than three years have been revised to 9%. Fixed deposits of 3-5 years would now draw an interest rate of 8.75%. A maturity period of over five years would attract a rate at 8.5%. The short-term deposit rates of tenure 180-364 days and 91-179 days has been fixed at 7% and 6.5%, respectively.

PSU banks face staff crunch at senior levels

Mumbai-based Bank of India, faced with an impending talent crunch at the top, has started grooming 70 assistant general managers and deputy general managers to takeover from the current crop of general managers, all of whom would retire by 2012. With one in every eight public sector bank officials set to retire over the next three years, public sector banks would soon be hard-pressed to fill the vacuum in their senior managements. While 13 per cent of the 2.5 lakh officers currently employed would retire over the next three years, only 8.7 per cent of the 4.7 lakh clerks and sub-staff would reach the end of their service by then. The departure of a large number of officers for greener pastures, has only added to the woes of these banks. A K Khandelwal, chairman and managing director, Bank of Baroda, had estimated that public sector banks were losing 1,000 officers every year to their private and foreign counterparts. “Why should all the public sector banks have the same salary structure. They should be allowed to target cost to income ratio and the board can then decide on the salary structure. They should also be allowed to give employees’ stock options,” M V Nair, chairman and managing director, Union Bank of India, said.

Banking services at doorsteps

The District Collector, Mr S.S. Jawahar, launched ‘Canara Gramin Vikas Vahini’ scheme at Thottiyapatti village, 40 km West of Madurai recently, in an effort to take banking services to doorsteps in remote villages, under a nationwide scheme initiated in June. Executed through a van service equipped with public address system, the branch manager travelling in the van has the authority to sanction spot loans for eligible candidates, who could come and collect the amount the next day at a nearest branch, according to Mr Murugaprabhu, Senior Manager, Canara Bank. Apart from carrying requisite forms to open bank accounts and pamphlets on different schemes, the van will carry the latest farming techniques developed by agricultural colleges. The villages would be intimated in advance of the visit and would operate on a fixed schedule, round the year.

Now, IndusInd Bank launches exercise to change its name

After the UTI Bank’s move to change its name to Axis Bank, its now turn of IndusInd Bank to go in for a new name. The bank, which wants to consolidate its presence in the private sector banking in India, has already launched exercise for the same. It has so far considered various names such as Indus Bank, the Plus Bank, the Right Bank and so on.

Centurion- LKB merger okayed

The Reserve Bank of India has sanctioned the scheme of amalgamation of Lord Krishna Bank Ltd with Centurion Bank of Punjab Ltd, said a press release from RBI. The scheme will come into force with effect from August 29. All the branches of Lord Krishna Bank will function as branches of Centurion Bank of Punjab effective August 29.

State Bank of Patiala’s scheme

State Bank of Patiala (SBP) has launched ‘SBP-Smart Deposit Scheme’ (term deposit and special term deposit) for a maturity period of 455 days. The deposits would provide an interest of 9.5 per cent per annum for general public and 10 per cent per annum for senior citizens.

State Bank of Saurashtra to be merged with SBI

SBI has decided to merge State Bank of Saurashtra, a wholly owned associate bank, with itself. The boards of both SBI and State Bank of Saurashtra have given an in-principle approval to the merger proposal, a senior SBI official confirmed on Saturday. SBI will now have to get approvals from both the Government, the majority owner of the bank holding 59.73 per cent stake, and the Reserve Bank of India. State Bank of Saurashtra is the smallest among the seven associate banks of SBI, in terms of networth. SBI’s controlling interests in the associate banks range from 75 per cent to 100 per cent. State Bank of Saurashtra (SBS) has a branch network of 460 and SBI officials said once the merger is approved, consolidation of the branch network for eliminating duplication of branches in the same geographical area would start in six months. SBS reported a net profit of Rs 87.4 crore in 2006-07, a jump of 45.4 per cent from Rs 60.1 crore in the previous year. The bank has paid-up equity capital of Rs 314 crore. SBS’ total deposits stood at Rs 15,804 crore while total advances were at Rs 11,081 crore. A senior SBI official said State Bank of Indore could be the next bank on the radar in the consolidation process as it is the smallest bank after State Bank of Saurashtra

Canara Bk plans open offer for Can Fin Homes

The board of directors Canara Bank, which met recently, approved a proposal to make an open offer for Can Fin Homes. The bank will acquire shares so as to hold 51% stake in Can Fin Homes in order to convert the sponsored entity into a subsidiary. Necessary permissions have been obtained from the Reserve Bank of India (RBI) and the ministry of finance.

Indian Bank to hike stake in NSE

Indian Bank, one of the leading state-run lenders in southern India, will increase its stake in the National Stock Exchange (NSE). At present, the bank holds 0.52% stake in NSE, the country’s largest bourse in terms of turnover

Public sector banks want to use more profits for staff rewards

Public sector banks have pitched for the right to use up to 5% of their net profits for compensation purposes. As of now, the government policy allows them to use only up to 1% of their profit to compensate performers. Speaking at an HR conference organised by Indian Banks’ Association (IBA) on Friday, Bank of Baroda CMD Anil Khandelwal indicated that IBA has made such a proposal. He further said the restriction to use only 1% of profit has not yielded proper results. Though public sector banks are still giving huge competition to private and foreign banks, rigid compensation packages are the biggest disadvantage they face in attracting and retaining talent. Canara Bank chairman and managing director MBN Rao raised concerns over PSBs being constrained by “structured compensation packages with limited flexibility”. Mr Rao, who is also the IBA chairman, further said, “PSBs need to find ways to nurture their available talent base rather than hiring fresh talent.” Mr Khandelwal said, “Nationalised banks are losing more than a thousand employees to private and foreign banks every year. Union Bank CMD MV Nair said it was the time to take a call on whether all PSBs should have the same salary structure. Most felt that serious engagement of employees, providing ownership and instilling a feeling of institutional pride in them were the main ways of employee retention, apart from compensation. Mr Chakrabarty felt there should be a common objective that the CEO of the bank as well as the head of human resources work towards, which should be effectively communicated to every employee of the organisation

Bank staff to strike on Sep 12

The United Forum of Bank Employees will spearhead a nationwide strike on September 12 for additional pension benefits and protest against outsourcing activities of banks. The forum is represented by 8.5 lakh nationalised bank employees. The protest is being supported by one crore signatures to be presented to Prime Minister Manmohan Singh. While unions are quiet on the service issues plaguing state-owned banks, the four bank officers unions and five bank workmen’s union have decided to jointly highlight how government’s banking policy is hurting the interests of the nation.

New priority sector lending norms for RRBs

The Reserve Bank of India (RBI) has issued revised priority sector guidelines for regional rural banks (RRBs) to increase lending under financial inclusion. The banks will have to ensure that 60 per cent of their advances are towards priority sectors such as agriculture, small industries and retail trade. Of the total priority sector advances, at least 25 per cent (that is 15 per cent of the total advances) should be advanced to weaker sections of the society. The revised guidelines have taken effect immediately.

Banks to start new pension plan

In their first step towards introducing a pension scheme based on defined contribution, public sector banks have in-principle decided to introduce such a scheme for new recruits in the officer cadre. The cost of servicing the present “defined benefit” pension scheme has been mounting, with banks having to make provisions to the extent of 32 per cent of the employee’s annual salary. Under the government’s defined contribution pension scheme, the employee has to compulsorily contribute 10 per cent of the basic pay and dearness allowance every month. This contribution has to be matched by the employer. The income that the employee receives is not fixed and depends on the returns earned on the funds contributed towards pension. For higher returns employees, can increase their contribution, even as the employer’s contribution remains fixed.

Farm loans up to Rs 50 k may get service tax waiver

Small and marginal farmers availing agriculture loans up to Rs 50,000 need not pay any service charge and need not deposit land documents at bank branches. These are some of the recommendations of the group set up by the Reserve Bank of India to examine the procedures and processes of agriculture loans. For loans exceeding Rs 50,000, the service charge should not exceed 0.25 per cent of the loan limit per annum, said the group’s report. The group has suggested that the Nabard should issue and circulate the mandatory application forms among banks. The form should be simple, user- friendly and should use the local language. The report also suggest that all loans having credit limit of up to Rs 50,000, should be disposed off within a fortnight and those with credit limits up to Rs 3 lakh, within four weeks.

All borrowers to get documents in loan agreement

It is now mandatory for banks to provide a copy of the loan agreement including all enclosures to the borrower. The condition would apply for all loans across the board, said a senior RBI official. Banks usually furnish these documents only at the request of the borrowers. Banks also provide a copy of all the documents to their corporate or big-ticket size customers.

LS passes Bill to replace SBI Ordinance

The Lok Sabha on Monday (20.08.07) passed a Bill to replace the Ordinance promulgated on June 21 to facilitate the Centre’s buyout of the Reserve Bank of India’s shareholding in SBI. On June 29, the Centre acquired 59.73 per cent stake of RBI against total payment of Rs 35,531.33 crore drawn from the Consolidated Fund of India

Central Bank of India lists at 28% premium

Central Bank of India listed at Rs 130 - a 27.5% premium to its issue price of Rs 102 per share. The stock touched a high of Rs 132, and a low of Rs 125 in early trades.

SBI tying up with post offices

The country's largest commercial bank, State Bank of India (SBI) has chalked out an innovative strategy to widen its network and reach out to the remotest villages of India. It has decided to tie up with post offices for this purpose

UCO Bank to sell off Rs 500-cr bad loans

UCO Bank, which is sitting on an Rs 1,285-crore pile of non-performing assets, will put up about Rs 500 crore of the stressed assets next month for bidding by various asset reconstruction companies (ARCs). Stressing that the bank would sell the loans only if it got a fair price, the bank’s Chairman and Managing Director, Mr S.K. Goel, told that there would be no let-up in efforts to effect recoveries . He said that two General Managers and about 300 of the bank’s staff had been put on the task of making recoveries.

FIIs hit ceiling in 10 state-run banks

Foreign institutional investors’ investments in three more public sector banks - Andhra Bank, Indian Overseas Bank and Canara Bank - are nearing the 20 per cent ceiling specified by the Reserve Bank of India (RBI). The FII holding in these three banks went over 19 per cent in the June 2007 quarter, taking the total number of banks, where FIIs are barred from making fresh purchases, to 10. The list comprises State Bank of India, Punjab National Bank, Union Bank, Bank of Baroda, Allahabad Bank, Oriental Bank of Commerce and Vijaya Bank. Among private sector banks, FIIs has hit the ceiling in ICICI Bank and Centurion Bank of Punjab.

SBH defers public offer

The State Bank of Hyderabad, which planned a public offer during the second quarter of the current fiscal, has put on hold its proposed IPO and has decided to take a final call in December. “We will review the proposal in December. Currently, it is put on hold,” Amitabha Guha , the managing director , State Bank of Hyderabad said. This follows the instruction from the State Bank of India to all its associate bank not to indulge in such exercise pending their merger with SBI. “With every passing day the possibility of merger is getting brighter”, Guha added.

Barclays unveils platinum debit card

Barclays India has launched the ‘Barclays Platinum Debit card’, which is an international debit card with a host of benefits. This includes cash withdrawal facilities and benefits on dining, golf, travel, shopping and other services. Barclays’ customers can spend up to Rs 1 lakh on their card per day and withdraw the same amount from an ATM per day.

HSBC India goes in for a down-to-earth transformation

HSBC Bank's image in India is undergoing a change. Nowhere is this more evident than in the bank’s increasing focus on the small and medium enterprise segment as well as retail borrowers. “We are serving all ends of the spectrum,” says Ms Kidwai. “We have coined a brand of products called HSBC Pragati Finance - basically consumer finance. Today we are among the top three lenders in the country in this space. We are disbursing about 15,000 loans a month.” These small-ticket loans (less than Rs 50,000 per loan) are given without a security. Explains Ms Kidwai, “We have taken a view to giving it without collateral. What good is the security? What do we do with a durable like a scooter or television? We are really looking for the willingness to repay. Not too many banks lend unsecured loans of this order.” “If a borrower’s record improves with us, he or she will get lower interest rates,” says Ms Kidwai. Those rates are currently in the region of 32 per cent to 48 per cent per annum.

PSBs may get the golden option to raise money

The government may have to consider the golden share option for public sector banks to help them raise extra capital from the markets. This is among several proposals being debated by advisers to the government as part of a strategy to strengthen the capital structure of these banks. Golden share means vesting a share or a set of shares with extraordinary rights to block any move made by a board of directors to alter a bank’s structure, like transforming a public sector bank into a private sector one, even if the government holds minority stake in it. The proposal is a re-run of a plan mooted by the previous NDA government to dilute government equity in banks from 51% to 33%.

Bank of India cuts term deposit rates

Bank of India has cut the interest rates on rupee term deposits by 10 to 50 basis points across various maturity periods. The revised rates on deposits having maturity of two years to less than three years would be 9 per cent (9.5 per cent), three to less five years 9.25 per cent (9.6 per cent) and five years and above 9.5 per cent (9.6 per cent). Senior citizens will now get additional 0.5 per cent above the card rates for maturity of six months and above on all deposit schemes uniformly.

Karur Vysya plans multi-city savings deposit scheme

The Karur Vysya Bank (KVB) a leading private sector bank in south India, will launch a new multi-city savings deposit scheme that will enable account holders operate accounts in any select city without incurring additional charges. The bank chairman PT Kuppuswamy said the scheme - sb freedom account, would be made operational before July 15 in 20 select cities in the first phase and subsequently extended to more cities. Waiver of bank charges for collection of local and outstation cheques, cheques and dividend warrants, issuance of demand drafts without commission rates, free funds transfer within KVB accounts were some of the key features of the scheme, he said. Kuppusamy said KVB planned to open 25 branches before the end of this fiscal.

Govt wants SBI to gain scale via merger of 4 subsidiaries

The government wants the State Bank of India to acquire its smaller associates to achieve scale and size. The government is working on a proposal, along with the SBI management, to merge four of its subsidiaries - the State Banks of Saurashtra, Mysore, Indore and Bikaner & Jaipur - with SBI to help increase its assets size by nearly Rs 1 lakh crore. However, leaving the bigger associates - such as the State Banks of Patiala, Travancore and Hyderabad - out of the merger will not serve the purpose of achieving size, insiders say. The seven associates put together have assets of over Rs 3.5 lakh crore. Associate banks such as the State Bank of Patiala, Travancore and Hyderabad, which have a strong legacy in their regions, will not be merged with the bank, sources in the government said. “It is possible that the smaller associate banks which do not have a strong regional presence will merge with the parent bank,” a source said.

KVB unveils triple `S' scheme

Karur Vysya Bank has unveiled the triple `S' - Spouse Senior Citizen Deposit Scheme. The scheme is applicable to term deposits opened in the joint names of husband and wife (where one is a senior citizen). In the event of the demise of either of the partners during the pendency of the deposit, the surviving spouse would be eligible to receive one per cent additional interest over the card rate of special interest offered to senior citizens from the date of the original deposit till maturity.

Canara Bank's new loan scheme

Canara Bank has launched a retail loan for financing tax return preparers selected by the Ministry of Finance. The loan scheme, called Canara Guide, was introduced to provide self-employment opportunities to unemployed or partially employed graduates all over the country. Under the scheme, up to Rs 60,000 would be sanctioned at interest of one per cent below the benchmark prime lending rates of the bank, with a repayment period of 60 months. A margin of 15 per cent would have to be brought in by the borrowers. The preparers would also be entitled to a six-month repayment holiday

Call for more ATMs as bank queues top frustration chart

In a ‘Queue Frustration’ survey by NCR-ACNielsen in five metros Mumbai, Delhi, Kolkata, Chennai and Bangalore, queues in banks have been identified as the most frustrating among the set of all queues. Queues in the ticketing counter centres rank only second whilst bill payment queues rank third, followed by shopping malls and airport queues respectively. Delhi ranks the highest in the number of people stuck in bank queues. Across the other metros, around 37% of the respondents in Mumbai, 34% in Bangalore, 29% in Kolkata and 25% in Chennai face similar queue problems in the banks. A large number of them, around 68% indicated opening up of ATMs as a viable solution to this problem. In specific metros like Delhi, Kolkata, Bangalore and Chennai, more than 70% of the respondents opted for increasing the number of ATMs whilst in Mumbai, only around 45% of them opted for an increase in the number of ATMs.

ICICI Bank issue subscribed 2.74 times on Day 1

ICICI Bank's follow-on public offer of about 9.88 crore shares was subscribed 2.74 times on the first day of the issue, according to data from the NSE Web site. Bids were received across the price band of Rs 885-950 for the issue, which closes on June 22.

RBI launches multi-lingual site

The Reserve Bank of India launched a multi-lingual site-carrying information in 13 languages. The site includes recent instructions of the RBI on customer service, frequently asked questions, lending rates of banks, banking ombudsman scheme, Right to Information Act and links to commercial banks' Websites. the site can be accessed at www.rbi.org.in/ commonperson or from the quick link 'for the commonperson' on the home page of the main RBI site.

Get online, not in line, to pay tax

Paying taxes has never been simpler with the authorities introducing online payment. The procedure for payment of taxes online is simple. To start with, you need to log on to NSDLTIN website (www.tin-nsdl.com) and click on the ‘e-Tax-online payment’ option. You will then be directed to a list of banks that provide the e-tax payment facility. Depending upon the bank you hold an account with, you need to click on the option and choose the tax challan applicable in your case. On opting for the challan type applicable, particulars such as the permanent account number (PAN) or tax deduction account number (TAN) as may be applicable, name and address of the taxpayer, relevant assessment year, type of payment and name of the bank will be displayed. Once the process is complete and the bank processes the online transaction, you will be issued an acknowledgment indicating the challan identification number (CIN). After a week of making the payment, the status of the payment may be verified at the NSDLTIN website under section ‘Challan Status Inquiry’.

Software tool for reverse mortgage products

Cashing in on the banking community's enthusiasm for reverse mortgage products, Nucleus Software plans to launch a reverse mortgage solution for banks and financial organisations in the next three months. The reverse mortgage solution is being offered as an upgrade of Nucleus' `FinnOne' range of lending solutions and hence does not require additional efforts on the part of banks and financial institutions to integrate it with existing systems

IDBI opens centralized treasury

Industrial Development Bank of India (IDBI) inaugurated a centralized treasury, which will act as a single point reference on interest and exchange rates for all its 434 branches. The treasury will deal the bank's investment portfolio, government securities, corporate bonds, money market, forex and will also provide proactive cash and interest rate risk management services. The IDBI Chairman and Managing Director, Mr V.P. Shetty, said. With the fixed income, equities, money market, foreign exchange and derivatives desks under a single roof, the information flow and decision-making will be seamless.

ICICI issue price band at Rs 885-950

ICICI Bank has fixed a price band of Rs 885-950 per share for its follow-on public issue of shares. At the lower end of the band, the issue price would be at a 2.5 per cent discount to the stock's closing price on Friday (Rs 908) on the BSE; at the higher end, it would be at a premium of 4.6 per cent to the last traded price. The book-building issue starts on June 19 and closes on June 22. Retail bidders, including existing retail shareholders, will be allotted shares at a discount of Rs 50 per share to the issue price. The bank plans to raise Rs 10,062 crore (including a green shoe option of Rs 1,312.5 crore) from the domestic stock market. ICICI Bank will raise an equivalent amount through an issue of American Depository Shares.

After core banking, PSU banks open call centres for better customer reach

A number of public sector banks are in the middle of setting up call centres this fiscal. This follows the implementation of core banking solution, which provides a centralised database and allows banks to deploy this new channel for customer service. The country’s largest bank, State Bank of India, which already has a call centre, is planning to expand its capacity in a big way. Union Bank of India, Punjab National Bank, Corporation Bank and Bank of India are in the final stages of setting up their captive BPOs, senior officials from these banks. So far, banks like SBI, Corporation Bank and Bank of India had outsourced call centres, which largely handle product and ATM-related queries. “In the next three months, we plan to introduce a few more products on the call centre platform,” according to a senior SBI official. Corporation Bank, the first public sector bank to bring all branches on the core banking platform, has a call centre, which services its credit and debit card clients. “The blueprint is ready for our own customer-management call centre, which we will launch soon,” said a high-ranking Corporation Bank official

ING Vysya new offering for high-income group staff

ING Vysya Bank launched a new product targeting the high-income group employees called `Orange Salary Account'. Mr Vaughn Nigel Richtor, Managing Director, ING Vysya Bank, said, "The product is ideally suited to customers who are not inclined to visit the bank's branches for operating their account but prefer to operate it from their home or office." The key features of the Orange Salary Account are customers can maintain a zero balance account, get an international debit card and also free unlimited ATM transaction at ING Vysya Bank and over 20,000 other bank ATMs. The account holder also gets free issue and usage of personalised multi-city cheques and also personnel assistance service at select centres. The bank is targeting employees working in software and ITes sector, MNCs and top-end corporates in Hyderabad, Bangalore and Delhi

Direct forex trading: YES Bank joins the band

More corporate entities can now conduct forex transactions directly instead of instructing their banks to do so. This follows YES Bank announcing the launch of direct foreign exchange trading service for corporate clients. Union Bank and, more recently, Standard Chartered Bank had earlier announced such a facility for their clients. All the three banks have signed up with Reuters for Reuters Trading for Foreign Exchange (RTFX) - an electronic trading platform. "The customers will also be able to chat with the bank dealer," said Mr Ajay Mahajan, Group President, Financial Markets, Institutions and Investment Management, YES Bank. The bank has 500-550 corporate customers. There is no additional cost to the customers for using the system

SBI stake transfer Ordinance

The Union Cabinet approved the promulgation of an Ordinance to enable the transfer of Reserve Bank of India's entire shareholding in the State Bank of India to the Central Government. Informed sources said that the Ordinance route is being adopted to bring necessary amendments to the State Bank of India Act, 1955 as the Government is keen to complete the transaction before June 30.

ING Vysya's new savings scheme

ING Vysya Bank has launched a scheme known as `Freedom Savings Account.' The features of the account are a zero quarterly balance requirement and a zero penal charge for non-maintenance of minimum quarterly balance. The account holders would also be eligible for an international debit card. The account features would not be restricted to just salary earners, but would be available to all general customers of the bank. The account comes with an annual fee of Rs 1,000.

City Union Banks New Deposit Scheme

Its called CUB 500. The deposit is for 500 days. The interest payable is 10.75% p.a. for senior citizens its 11.00% p.a.. The minimum deposit to be kept is Rs.10,000/- and the Maximum is Rs.2,00,00,000/-. The deposit is effective from June 11,2007.

Dena Bank is Recruiting

Dena Bank is recruiting Clerks and Offiers for its various offices across India. For more details and application forms kindly visit www.denabank.com

Lending target: RBI raises loan limit for poor

Reserve Bank on Wednesday raised the limit of loan under the Differential Rate of Interest (DRI) scheme from Rs 6,500 to Rs 15,000 and for housing loan from Rs 5,000 to Rs 20,000 per beneficiary. This assistance under the scheme is provided by the banks to low income groups at a concessional rate of interest 4 per cent. The target for lending under DRI scheme will continue to be one per cent of the previous year's total advances, RBI said in a notification. The decision follows the announcement made by Finance Minister P Chidambaram in his budget speech to raise the ceiling on DRI scheme.

Money transfer: A cash lifeline for the rural poor

After two days of driving almost 700 km on rough rural roads, a team of managers from money transfer company Western Union belatedly arrived at the town of Gorakhpur in Uttar Pradesh, India's most populous state. Before Western Union opened a branch in the area, the villagers "had huge difficulties in receiving money", said Mr. Kapur,. There are 65,000 bank branches in India, but these are concentrated in urban areas, and about 80 per cent of India's 1.1 bn citizens lack access to financial services. India, however, is the world's largest recipient of remittances, according to the World Bank. Inward remittances from Indians working overseas surged from $2.1 bn in 1990-91 to $26.8 bn in 2006-07. Remittances can play a large role in driving income to impoverished areas and reducing poverty. Western Union is aggressively expanding in India to capture a share of this booming business by adding locations, offering faster and cheaper services than local banks and launching innovative marketing campaigns.

Pay your Advance Tax

15 th June is last day to pay your Advance Tax

Opening Savings Bank accounts (SB)

Different banks requirements are different for opening a SB account. But broadly we can state the requirements as below; 1) Duly filled account opening form. 2) Passport size photograph of person opening account. 3) Identity Proof ( Election Card, PAN Card, Passport or any card bearing Photograph of the person) 4) Address Proof ( Election Card, Passport, Electricity Bill, Telephone Bill or any bill containing address of the person) 5) Introduction by an existing account holder. 6) Initial Deposit. • What does account opening form contains ? It usually contains Name of person, Name of father/husband, Address, Date of Birth, PAN number details/F60 details, Education, Profession, Income, Movable and Immovable assets, Family details, Nomination details and many more. • Photo, Identity Proof, Address Proof are required to confirm the identity/ residence of the person. • Proper Introduction is obligation on the part of bank. • Initial deposit varies from bank to bank. Some banks open Zero balance accounts. Public sector banks require less initial deposits compared to their Private sector counterparts. • Many banks offer add on facilities with your SB account like ATM Card, Internet Banking, Tele Banking, Personalised cheque book, Multicity cheque book, Insurance at nominal rates/free insurance etc. Why does Banks are keen to garner more Savings Bank accounts? The banks are keen to have more and more SB accounts because: 1. Their customer base expands, which in turn provides them opportunity to cross sell their products. 2. These are low cost deposits. So the cost of deposits of the bank comes down with aggressive addition of SB accounts. 3. These are stable deposits unlike the bulk deposits where there is always threat that the depositor can close or transfer deposits.

ICICI Bank Follow On Public issue

ICICI Bank will raise Rs.8750 crore in domestic stock market through follow-on public issue. This is out of Rs.20125 crore which the bank plans to raise in domestic market and foreign market ( American Depository receipt or ADR). The bank has decided to reserve 5% in the present public offer for existing shareholders. The retail bidders will get 5% discount to offer price and also the payment is staggered one i.e., bidder need not pay full amount with application. The funds raised will be used for future growth needs of the bank.

Bank Stock News

Bank of Rajasthan said its shareholders have approved a bonus issue, wherein 2.69 crore shares of Rs 10 each will be allotted in a ratio of 1:4. Pursuant to the recommendation of the board of directors, shareholders have accorded their approval to the bonus issue at the extra ordinary general meeting (EGM) on Monday.

haiTechnorati Profile

New Deposit

Bank of Baroda has increased its interest rate to 9.5 % on Fixed Deposits. This is a unique scheme which offers higher interest rates to customer for a short period of one year. The major attraction is that the scheme provides for investing for any amount as low as Rs.1000 and there is no lock-in period. The scheme takes effect from 18.05.07.Senior Citizens will get an additional 0.5% on fixed deposits under the scheme i.e.10 % p.a. Dena Bank launched a new Deposit scheme " Dena Diamond Deposit Scheme" to mark its 70th Foundation Day on 26th May 2007. The new scheme offers the depositors an opportunity to earn higher interest rate of 9.60 percent for deposits of maturity period of 700 days. The senior citizens will get 10.10 percent interest in this scheme. The minimum amount of deposit is Rs.10,000/-.The scheme also has a special feature of part withdrawal in multiples of Rs.5000/-.

News

State Bank of Travancore (SBT) has launched a new loan scheme for pensioners from military and related services. The scheme titled `Jai Jawan pension loan', will cover pensioners who retired at an early age from armed forces, paramilitary forces, coast guards, Rashtriya Rifles, CRPF, BSF, ITBP, etc. The scheme provides for loan of up to Rs 2 lakh or 48 times the monthly pension, whichever is lower Utkal university, Bhubaneshwar, is tying up with the country's largest private sector bank ICICI to impart training to students in banking, insurance and finance related aspects. The two entities will shortly sign a Memorandum of Understanding (MoU) to introduce a one-year diploma course on banking, insurance and finance. The course would be sponsored by ICICI. With ICICI planning to expand its operations in Bhubaneswar to a large extent the need for expert hands might have prompted the bank to sponsor such a course. Initially the course would admit around 25-30 students. Students passing out from the course would be recruited by the ICICI bank. The financial market will soon see the country’s biggest junk loan deal. State-owned Indian Bank has decided to sell all its bad loans at one shot. The Chennai-headquaterted bank has put on block its entire distress loan portfolio amounting to Rs 1,500 crore. Indian Bank chairman and managing director KC Chakrabarty said, “We have received bids on the auction of Rs 1,500-crore bad loans. The bank will shut the asset recovery cell which would free around 250 people. These officials would then be deployed for marketing other products.” Sources said that the bank had received five bids, including three from asset reconstruction companies. These are ICICI-promoted Arcil, UTI-promoted Asrec and the privately-held Pegasus Assets Reconstruction. Till now, the single-biggest bad loan transaction was from ICICI, when the country’s second-largest bank sold over Rs 1,400 crore to British bank Standard Chartered. Bidders said Indian Bank has indicated that it would prefer not to receive the entire income upfront from the bad loans selloff. Instead, the bank would like to receive the income over a couple of years In a rising interest scenario, these banks which engaged in a neck-to-neck battle for gaining more deposits finally landed up managing close to 29% of the software services giant’s monies tied up as bank deposits. Infosys redeemed its holding of Rs 684 crore in liquid funds in FY07, while deposit accounts rose to Rs 4,827 crore in the same year as against Rs 2,735 crore in FY06 - showing a 76.48% year-on-year rise. Infosys expanded the relationship with banks like Bank of India (Rs 504 crore), Bank of Baroda (Rs 503 crore), Punjab National Bank (Rs 179 crore), SBI (Rs 151 crore) and Bank of Maharashtra (Rs 51 crore), which gained as a result. In FY06, Infosys had placed funds with two PSU banks - Corporation and Canara Bank. While in the case of Corporation Bank, the quantum of deposits rose to Rs 302 crore in FY07 from Rs 126 crore in FY06, there was a marginal dip in the case of Canara Bank to Rs 503 crore in FY07 against Rs 504 crore in FY06.

Sunday Special

National Electronic Funds Transfer System (NEFT) This is a nationwide funds transfer system to facilitate transfer of funds from any bank branch to any other bank branch. But not all the bank branches are its members. As on January 31, 2007, 18500 branches of 53 banks are participating. The system uses the concept of centralized accounting system. Each participating bank has to designate one branch at Mumbai to handle NEFT transaction. All the transactions originated by that bank has to be routed through and all the transactions to be responded by that bank has to be routed through that designated branch. The funds are available to the beneficiary on the same day or the next day depending on the time of settlement Process Flow: • The Remitter fills in the NEFT application form giving the particulars of the beneficiary (Bank Branch, Beneficiary’s name, Account type and Account number) and authorizes the branch to remit the specified amount to the beneficiary by raising a debit to the remitter’s account. • The remitting branch prepares a Structured Financial Messaging Solution (SFMS) message and sends it to its service centre of NEFT. • The service centre forwards the same to the local RBI (National Clearing Cell, Mumbai) to be included for the next available settlement. • The RBI at the clearing centre sorts the transactions bank-wise and prepares accounting entries of the net debit or credit for passing onto the banks participating in the system. Thereafter, bank-wise remittance messages are transmitted to the banks. • The receiving banks process the remittance message received from RBI and affect the credit to the beneficiaries account. As of now, NEFT is settled in six batches at 0930,1030,1200,1300,1500 and 1600 hours on weekdays and 0930,1030 and 1200 on Saturdays. At present there is no Value Limit for individual transactions and RBI has waived the processing charges till March 31, 2008. Levy of service charges by banks is left to the discretion of the respective banks. Another important aspect NEFT uses is IFSC codes ( Indian Financial System Code) which is an alpha numeric code designed to uniquely identify the bank-branches in India. This is 11 digit codes with first 4 characters representing the banks code, the next character reserved as control character (presently 0 appears in the fifth position) and the remaining 6 characters to identify the branch. The IFSC codes will normally printed on Cheque Book or Pass Book or the customer can call his bank branch and get the same. Sending remittances abroad using NEFT is not possible but one can send/receive funds from/to NRI accounts subject to applicability of provisions of FEMA. In case of non-credit or delayed credit you can contact your branch or if the issue is not resolved satisfactorily, the Customer Service Department of RBI may be contacted on cgmcsd@rbi.org.in or write to The Chief General Manager, Reserve Bank of India, Customer Service Department, 1st Floor, Amar Building, Fort, Mumbai-400001 For any other queries you can visit RBI web site www.rbi.org.in

Reslut

IndusInd Bank has reported a net profit of Rs 21.4 crore in the fourth quarter of 2006-07, against a loss of Rs 62.4 crore in the previous year on lower provisioning. The Managing Director, Mr Bhaskar Ghose, said all the key ratios of the bank were looking better. Net interest margin for the quarter fell to 1.63 per cent, against 1.82 per cent in the corresponding quarter of the previous year. Mr Ghose said that the bank had shifted its focus from wholesale banking to a balanced combination of corporate loans, vehicle finance, and other retail advances. Vehicular finance contributes a significant chunk of the bank's portfolio at 55 per cent. In 2006-07, deposits grew by 18 per cent to Rs 17,645 crore from Rs 15,006 crore. Advances were up 19 per cent to Rs 11,084 crore against Rs 9311 crore in the previous year. Cost of deposits moved up to 6.73 per cent (5.87 per cent) while the yield on advances was slightly higher at 9.76 per cent (9.44 per cent). Net Non-Performing Assets ratio increased to 2.47 per cent (2.09 per cent).

Awards

Private sector Federal Bank has been adjudged the 'most efficient bank' in the large banks category by the 'Business Today-KPMG survey', 2006-07. The survey, which covered 78 scheduled commercial banks in the country, has analysed the growth, size and strength of the financial institutions under the category. The bank recorded an all time high net-profit of Rs 292.73 crore for March 2007. The total business stood at over Rs 36,480 crore and the return on assets recorded 1.3 per cent. The non-performing assets of the bank recorded 0.44 per cent, one of the lowest among the banks in India.

News

Bank of Baroda intends to open ten overseas branches this year, the Chairman and Managing Director, Dr A.K. Khandelwal, told. These will be at Port of Spain (Trinidad & Tobago), Accra (Ghana), Bahrain, second branch in Johannesburg (South Africa), ninth in UK, second in Tanzania, second in Botswania, eighth in Kenya, Canada and one representative office in Australia. In addition, a joint venture company, along with Punjab National Bank and Andhra Bank would be set up in Malaysia, he said. Overseas branches contributed 20 per cent to the bank's total business of Rs 2.09 lakh crore last year. A third of its profit of Rs 1,026 crore came from overseas operations.

Bank Stock News

Private sector lender City Union Bank is planning to raise over Rs125 crore by allotting equity stakes to a clutch of domestic and foreign investors, including Larsen & Toubro, LIC, and the Netherlands-based Nederlandse Financierings. Around 15 lakh shares are proposed to be allotted to state-run LIC and 3 lakh shares to L&T on a preferential basis at Rs169.15 per share raising Rs30.44 crore

Result

Centurion Bank of Punjab recorded a 7.6 per cent rise in its net profit to Rs 28.01 crore in the fourth quarter ended March 31, 2007 against Rs 26.04 crore in the corresponding quarter previous year due to a strong growth in advances. The bank experienced a 72-per cent growth in advances to Rs 11,221 crore, and 58 per cent rise in deposits to Rs 14,863 crore during the quarter. The net interest margin stood at 4.38 per cent (5.07 per cent) in the quarter due to rising interest rates. During 2006-07, the net profit was up by 38 per cent to Rs 121.38 crore against Rs 87.8 crore in the previous year. Catholic Syrian Bank has posted a 210-per cent increase in the net profit to Rs 19.07 crore for 2006-07, compared with Rs 6.14 crore the previous year. The board of directors has recommended a dividend of 15 per cent. Net NPAs were reduced to 1.98 per cent (2.78 per cent). The bank also recorded capital adequacy ratio of 9.58 per cent against the RBI-stipulated norm of nine per cent. Total deposits grew to Rs 4,748.60 crore (Rs 4,288.85 crore), while advances rose to Rs 3,012.64 crore (Rs 2,694.87 crore).

News

Punjab National Bank has received the licence for opening a full-fledged branch in Hong Kong, said the Chairman and Managing Director, Mr S.C. Gupta. "We will be opening our Hong Kong branch before July 31," he added. PNB had recently operationalised its London subsidiary. The country's third largest public sector bank by business also plans to open an offshore banking unit in Singapore this fiscal. PNB has placed a bid with the Pension Fund Regulatory and Devclopment Authority (PFRDA) for managing the pension fund accruals of the Central Government employees under the New Pension System (NPS) RBI nod for delivering cash at doorstep - Now, you do not even have to drive to your nearest ATM to withdraw cash. Instead, you can call up your bank branch or make an online request and have the cash delivered right at your doorstep. Taking the doorstep banking service one step forward, the Reserve Bank of India has allowed banks to deliver cash at the doorstep of individual customers. The RBI decision follows the suggestions made by the Indian Banks' Association to extend this facility to individual customers. Earlier this facility was restricted to corporate customers Union Bank in overseas pitch - After opening representative office in Shanghai recently, the Mumbai-based Union Bank of India will set up three more overseas offices at Beijing and Guangdong in China and the UAE. It will also set up branches in Hong Kong and Doha within a few months. In addition, the bank is also looking forward to set up its branch in Singapore. The bank has received Reserve Bank of India (RBI) approval for opening branches in Hong Kong and Doha and also for its representative offices at Beijing, Guangdong and UAE, whereas RBI approval for the Singapore branch is still awaited. Tamilnad Mercantile Bank (TMB) has entered into an agreement with the Abu Dhabi-based UAE Exchange Centre LLC to offer money transfer and speed remittance services. Under this tie-up, non-resident Indians (NRIs) in the Gulf region can remit funds to India by sending rupee drafts drawn on the UAE Exchange Centre to any of the 182 branches of the bank. The speed remittance arrangement will provide web-enabled money transfer services to NRIs. The UAE Exchange Centre handled 4.51 million remittance transactions amounting to around Rs 16,000 crore during 2006-07. Foreign cos can open escrow accounts -- Reserve Bank allowed foreign companies to open escrow or special accounts in authorised banks for buying shares in Indian firms - a move that gives them more flexibility in acquiring domestic companies. In a notification, RBI said authorised banks may open escrow or special accounts on behalf of non-residents for the purpose of open offers, delisting offers and exit offers subject to Sebi regulations. The notification follows the central bank's announcement in the annual credit policy for 2007-08. As per the notification, these banks will not require prior approval of the Reserve Bank to open such accounts. Such accounts could be operated by persons appointed by the firms.

Bank Stock News

The board of directors of Punjab National Bank has declared a final dividend of 60 per cent, taking the overall dividend for 2006-07 to 100 per cent against 90 per cent in 2005-06 The board of directors of Karur Vysya Bank have proposed a dividend of 100 per cent for the fourth year in succession.

Result

Karur Vysya Bank has recorded an 18 per cent increase in net profit at Rs.160 crore for 2006-07 against Rs.135.35 crore in the previous year. The board of directors also proposed a dividend of 100 per cent for the fourth year in succession. The bank is targeting to reach deposits of Rs.12,000 crore and advances of Rs.9,020 crore by 2007-08. Currently KVB has deposits of Rs.9,340.29 crore while advances stood at Rs.7,040.48 crore A higher provisioning for standard assets and retirement benefits of employees besides depreciation in certain government securities portfolio has impacted Punjab National Bank's (PNB) fourth-quarter bottomline performance in fiscal 2006-07. However, net profit for the financial year 2006-07 increased 7 per cent to Rs 1,540 crore against Rs 1,439 crore in the previous year. The board of directors has declared a final dividend of 60 per cent, taking the overall dividend for 2006-07 to 100 per cent against 90 per cent in 2005-06. As a measure of prudence, PNB has also adopted the ICAI's revised AS-15 on retirement benefits, leading to additional provisioning of about Rs 200 crore. He added that interest rates are likely to soften in the next two-three months as demand for credit would be much lower in this period, which is usually referred to as slack season. Meanwhile, Mr Gupta said that PNB would raise tier-II capital of Rs 500 crore before June 30.

Bank Stock News

Central Bank of India has filed the draft red herring prospectus with SEBI for its proposed public issue. The bank is offering through the issue 80,000,000 equity shares of Rs 10 each through the book building route. This includes 4,000,000 shares reserved for the eligible employees. Central Bank said that it needed funds to augment its capital base to meet the future capital requirements arising out of the implementation of the Basel II standards and the growth in its assets, essentially its loan and investment portfolio, due to the growth of the country's economy and for other general corporate purposes

News

Union Bank of India has launched biometric cards to facilitate `door step banking' in rural areas. The bank has tied up with Financial Information Network and Operations Ltd (FINO) and Cashpor Micro Credit to launch a pilot project in Chahania Block in Chandauli district, Uttar Pradesh. So far, 1,000 smart cards have been issued in four villages and the aim is to issue 5,000 such cards initially. FINO will provide technical support, which will enable the bank to leverage on technology to serve its customers. Union Bank of India also has financial stake in FINO. A biometric card is embedded with an electronic chip and is the same size as a credit or debit card. It uses the customer's fingerprint as a bio-password card and also serves as an e-passbook to store data of all transactions. Financial services provider Financial Information Network and Operations Ltd (FINO) has announced its partnership with Indian Bank to offer smart card solutions to its rural customers. FINO will be providing the public sector bank 'no frill accounts' (zero balance saving accounts) for carrying out transactions on FINO Smart-Cards and POT Devices.

Statistics

Bank Rate 6% wef 29.04.2003 Cash Reserve Ratio (CRR) 6.5% wef 28.04.2007 Statutory Liquidity Ratio (SLR) 25% wef 22.10.1997

New Product

Karnataka Bank Ltd has introduced a new term deposit scheme - KBL-400 - with a higher interest rate offer, with effect from May 21. The new deposit scheme for 400 days carries 10 per cent interest. Senior citizens will get 10.50 per cent for their deposit of 400 days. The new scheme will remain valid for a limited period. The bank has also raised interest rate for deposits under `KBL Tax Planner' (meant for income-tax exemption) to 9.50 per cent (8.25 per cent) to general public and 10.25 per cent (9 per cent) to senior citizens

Result

City Union Bank has reported a net profit of Rs 71.81 crore for 2006-07, earning Rs 29.92 a share. Net profit was also 27.38 per cent higher than the Rs 56.37 crore achieved in the previous year. The board of directors has recommended a dividend of Rs 4 per share (40 per cent). The bank achieved total business of Rs 8,029 crore for the year, comprising Rs 4,699 crore of deposits and Rs 3,329 crore of advances. For the current year, the bank targets a total business of Rs 11,000 crore. Net NPAs stood at 1.09 per cent against 1.95 per cent a year ago. Capital adequacy ratio stood at 12.58 per cent. Return on average assets was 1.57 per cent and return on equity was 19.64 per cent. Federal Bank’s net profit for the quarter ended March 31, 2007 increased by 95 per cent to Rs 99.25 crore from Rs 50.73 a year earlier, while its profit for the year ended March 31 increased to Rs 292.73 crore from Rs 225.21 crore last year. Its net interest income was up 32.36 per cent to 227.96 crore in the fourth quarter from Rs 172.22 crore a year earlier, while other income rose 51.10 per cent to Rs 105.36 crore during the quarter from Rs 69.73 crore. The capital adequacy of the bank as on March 31, 2007 stood at 13.43 per cent. The bank is also in the process of reviving its subsidiary Fedbank Financial Services which will act as the direct selling agent of the bank.

Bank Stock News

Syndicate Bank has proposed a follow-on public issue of 8 crore equity shares in the current financial year for meeting its capitalisation requirements. The bank said in a stock exchange notification that the issue would be subject to approvals from the Government and the Reserve Bank of India. The pricing of the issue has not been decided, though it is likely to be at a discount to the market price In less than a month since the last bulk deal, over 7.5 lakh shares of Canara Bank changed hands. The deal happened in two tranches on the BSE with the first one of 4.04 lakh shares being bought at an average price of Rs 260 per share, totalling Rs 10.51 crore. The second lot was 3.5 lakh shares at Rs 267.5 per share totalling Rs 9.36 crore. “The buying must relate to the rising Nifty in the light of it having touched all-time highs. With inflation fears expected to abate over the next two to three weeks, many of the PSU banking counters would stand to benefit,” said Gaurang Shah of Geojit Financial Services. Despite the possibility of Dena-Canara Bank merger, some brokerages like Emkay Research have taken a contrarian call on the stock.

News

Oriental Bank of Commerce said would start mobile banking facility for its customers in the next 2-3 months. It will be launched in another 2-3 months. The bank has already invited expression of interest from vendors. Besides, the bank is also in the process of extending its mobile top-up facility under which customer will get their mobile recharged by using ATMs. The bank has tied up with mobile service providers such as Airtel, Hutch, Reliance, MTNL, BSNL, Tata Indicom, etc. for this facility. The bank has applied for opening up a representative office in Dubai. ICICI Bank has stepped up its support to realty market in Mysore by launching a 48-hour home loan-processing scheme. The fast track scheme was introduced last week. Announcing its launch at the ‘My Realty-2007’, bank’s emerging market mortgage finance group national head Satish Kulkarni said, “If we do not do it (process within 48 hours), we will refund the processing fee.” He also said the bank would focus on Mysore in all its future property development cross-location events conducted regularly at leading centres across the country. The events are part of the bank’s retail property services in India Andhra Bank launched two mobile biometric ATMs and will soon expand them to other places. "Andhra Bank is the first bank in the country to launch mobile biometric ATMs. We will soon expand this to other places," Mr K. Ramakrishnan, Chairman and Managing Director, said at the inaugural function of the ATMs. The mobile ATMs would be moving in Hyderabad and Secunderabad on a particular route map with pre-announced timings from 6 am to 6 pm and would cover un-banked and under-banked areas. They would identify customers based on their finger print. However, the use of personal identification number is also accepted by the machines. For biometric access, customers have to register their fingerprints with the branch in which they maintain accounts.

Recommendations

HDFC Bank Report : First Global (May 17,2007) Rating : Outperform CMP : Rs.1072 First Global had moderated its rating on this stock a few quarters ago due to concern on branch expansion and sustainable growth, especially in the context of the stock’s valuations. The stock has just been a market performer since then. First Global thinks that the worst of the interest rate cycle is behind us. In any case, HDFC Bank is not too leveraged to the rate cycle, given its low duration investment portfolio. HDFC Bank currently trades at a forward P/E multiple of 22 of its FY08 earnings. The stock continues to be valued higher compared to the average P/E multiple of 19.9 at which Indian private sector banks are trading on their FY08 earnings. The stock trades at a forward P/B multiple of 4.4 its estimated FY08 book value, against 3.6 for private sector banks. However, considering the bank’s high asset quality, above-average return on equity and strong management. First Global expects the premium valuations to sustain. Hence, First Global is upgrading its rating on the stock to ‘moderate outperform’. State Bank of India Report : CLSA (May 14,2007) Rating : Buy CMP : Rs.1326 SBI’s Q4 FY07 reported earning grew 75% YoY to Rs.1,490 crore, but this included certain one-time adjustments like write-back of Rs.950 crore excess amortization on investment, Rs.170 crore interest on CRR balance, Rs.260 crore interest paid to the income tax department and early booking of dividend income. Adjusting for these (and one-time income booked in Q4 FY06), net income has grown 26% YoY led by 24% YoY topline growth and improvement in operating efficiency. Despite a moderation in retail credit growth, SBI’s loan growth was stable at 29% YoY, driven by corporate and agricultural credit demand. SBI (consolidated and adjusted for life insurance subsidiary), trades at 1.0x FY09E adjusted book. CLSA believes the stock, with its strong earnings growth trajectory (estimated to grow 18% p.a. for the next two years) and rising return on equity (estimated at 17% in FY09) could re-rate to 1.2x one-year forward. Its insurance subsidiary is valued at Rs.130 per share.

Bank Stock News

HDFC Bank Report : First Global (May 17,2007) Rating : Outperform CMP : Rs.1072First Global had moderated its rating on this stock a few quarters ago due to concern on branch expansion and sustainable growth, especially in the context of the stock’s valuations. The stock has just been a market performer since then. First Global thinks that the worst of the interest rate cycle is behind us. In any case, HDFC Bank is not too leveraged to the rate cycle, given its low duration investment portfolio. HDFC Bank currently trades at a forward P/E multiple of 22 of its FY08 earnings. The stock continues to be valued higher compared to the average P/E multiple of 19.9 at which Indian private sector banks are trading on their FY08 earnings. The stock trades at a forward P/B multiple of 4.4 its estimated FY08 book value, against 3.6 for private sector banks. However, considering the bank’s high asset quality, above-average return on equity and strong management. First Global expects the premium valuations to sustain. Hence, First Global is upgrading its rating on the stock to ‘moderate outperform’. State Bank of India Report : CLSA (May 14,2007) Rating : Buy CMP : Rs.1326SBI’s Q4 FY07 reported earning grew 75% YoY to Rs.1,490 crore, but this included certain one-time adjustments like write-back of Rs.950 crore excess amortization on investment, Rs.170 crore interest on CRR balance, Rs.260 crore interest paid to the income tax department and early booking of dividend income. Adjusting for these (and one-time income booked in Q4 FY06), net income has grown 26% YoY led by 24% YoY topline growth and improvement in operating efficiency. Despite a moderation in retail credit growth, SBI’s loan growth was stable at 29% YoY, driven by corporate and agricultural credit demand. SBI (consolidated and adjusted for life insurance subsidiary), trades at 1.0x FY09E adjusted book. CLSA believes the stock, with its strong earnings growth trajectory (estimated to grow 18% p.a. for the next two years) and rising return on equity (estimated at 17% in FY09) could re-rate to 1.2x one-year forward. Its insurance subsidiary is valued at Rs.130 per share.

Interest War

Corporation Bank is giving 9.75% pa for 500 days deposit. Canara Bank is giving 9.50% pa for 1 year deposit. Oriental Bank of Commerce is giving 9.75% pa for 400 days deposit. IDBI Bank is giving 9.50% pa for 500 days deposit. Senior Citizens will get 0.50% more for the above period. *some conditions apply. Contact your nearest branch for further details or visit their web site.

News

Bank of Baroda and Dun & Bradstreet have, on 16.05.2007, executed a Memorandum of Understanding (MOU), under which D&B will assign ratings to the Bank’s SSI customers under SCIC-D&B Performance & Credit rating at a subsidized fee. Central Bank of India have signed a Memorandum of Understanding (MOU) with Franklin Templeton Investments (India) for distributing laters products. Union Bank of India on 18.05.2007 has opened a representative office in Shanghai, Peoples’ Republic of China. Punjab National Bank and CRISIL have signed a Memorandum of Understanding (MOU) under which CRISIL will assign ratings to the borrowers of Punjab National Bank. Corporation Bank is launching its International Credit Card today. For further details on the card kindly contact toll free number 1800 226606

Recruitment

Vijaya Bank is recruiting 93 clerical vacancies all over India. The last date for submission of application is 26.05.2007 Kindly visit Vijaya Bank site for more details and application form.

Stock Market News

Karnataka Bank Ltd has announced a dividend of 35% for 2006-07. Goldman Sachs Investment has sold 5.83 lakh shares of Federal Bank at Rs.264.04 per share on 15.05.2007. State Bank of India has gained 15% to Rs.1327 for the week ended 18.05.2007 ICICI Bank has gained 12% to Rs.951 for the week ended 18.05.2007 HDFC Bank has gained 8% to Rs.1070 for the week ended 18.05.2007 HDFC Bank has announced plans to raise a total of Rs.4,200 crore through a combination of preferential allotment to its promoter group-HDFC- or through a domestic public offering or an offering in international market

Karnataka Bank Ltd.

The net profit of the bank stood at Rs.177.03 crore for the full year ended 2006-07 as against Rs.176.03 crore for 2005-06. The total deposits of the bank stood at Rs.14,037 crore and advances stood at Rs.9,552 crore. The net NPA of the bank stood at 1.22 percent and Capital adequacy stood at 11.03 per cent. The bank has proposed a dividend of 35% .

The BOGOF effect

B.Venkatesh (Business Line dated 20.05.2007) Consider this. You walk into a mall and find two stores that sell clothes. You can buy a shirt in the first store at Rs.750 and get one free. The other store sells the same shirt at 50 percent discount to the marked price of Rs.750. Which store would you prefer? If you are a typical consumer, you would prefer to go to the first store, which gives you a free shirt. Why ? The human mind is attracted to anything that is free. “Buy one get one free” (BOGOF) is a marketing strategy to persuade people to buy things. The alternative would be a price a product at 50 percent discount. When a product sells at a discount, it is natural for us to suspect that it is defective. We, therefore, do not prefer to buy such product, unless we want to go bargain hunting. It was this behaviour at work that my friend and I saw at a mall recently, where one store was attracting the crowd because it had adopted the BOGOF strategy. We display similar behaviour in the stock market. A one-for-one bonus share or stock dividend means you get one share free for every share held. There is great demand for stocks of companies that offer bonus shares. Do bonus shares enchance your investment value ? Not quite. The stock price represents the market’s perception of the company’s fundamental value. When the company issues bonus shares, it gives additional ownership from existing value. It is similar to you having two small slices of pizza instead of one large slice of the same pizza. Yet, people like to buy stocks that provide free shares-because of the BOGOF effect.

RBI extends forex holding period

Indians can now wait up to six months before exchanging foreign exchange received from non-residents or lying unused from an overseas trip. Until now, individuals were required to get foreign currency within as early as seven days for some payments. This step by RBI is viewed as step towards fuller capital account convertibility.

We are back:

Due to computer breakdown, no internet connection we were not in a position to update our blog for almost 3 months. Now things have been sorted out and blog will be updated regularly. sorry for the inconveniance.

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