State Bank of Hyderabad to recruit 2,000

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

Private banks likely to quit auto loan business

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

Opening Savings Bank Account

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

Bank schemes for Nano

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

Banks prefer ‘safe’ customers for personal loans

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

Andhra Bank to hire over 1,000

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

Cautious banks want FD to issue Credit Cards

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

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

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

PNB’s second branch in Hong Kong

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

SBI staff defer Strike on 8th and 9th April

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

Hitches mark first day of free ATM usage

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

Indian Bank, LVB cut term deposit rates

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

United Bank likely to go for IPO in 6 months

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

TMB cuts domestic deposit rates

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

Central Bank of India Recruits

Central Bank of India has invited applications for the post of Clerks. Total vacancies available is 850. You have to apply online. The Website will be open for registration from 14.02.2009. Last date for applying is 14.03.2009 and tentetive date of exam is 24.05.2009. You can visit www.centralbankofindia.co.in for more details

Toll Free number for MSME customers

United Bank of India has a toll free number for its MSME customers. You can also use it. 1800 345 3344

Life insurance foray by UBI and BOI

Two major public sector banks, Union Bank of India and Bank of India have joined their hands along with The Dai-ichi Mutual Life Ins. Co., of Japan to provide Life Insurance to public. The compnay will be called Star Union Dai-ichi Life Insurance. And here is the rest of it.

Special Housing Loan Scheme

As per the directives of RBI the Public Sector Banks have formed Special Housing Loan Scheme for borrowers availing housing loans till 30.06.2009. These loans are available with a host of features. But the scheme is available for those purchasing first house and upto limit of Rs.20 lakhs only. The rate of interest for loans upto Rs.5 lakhs is 8.50% p.a fixed for 5 years. The rate of interest for loans from 5 to 20 lakhs is 9.25% p.a. fixed for 5 years. After five years borrower has the option to continue the loan under fixed option or floating option. And there will be no processing charges on the loans and pre-payment penalty is also not there. And added to this the borrower will get free insurance cover.

Indian Overseas Bank is recruiting Officers

Indian Overseas Bank has invited applications for the post of Probationery officers -Scale I - Vacancy 1250. Last date for application is 16.02.2009. for more details contact www.iob.in

Syndicate Bank is hiring Clerks,Officers

Syndicate Bank has invited appications for the post of HR/IR officers-Scale II- Vacancy 55.Probationery Officers -Scale I - Vacancy 1300. Clerks- Vacancy 400. Last date for application is 27.02.2009. for more details visit www.syndicatebank.in

United Bank of India Recruitment

United Bank of India is recruiting Security officers under Scale II. Number of vancancy is 10. Last date of receipt of application is 16.02.2009. for more details visit www.unitedbankofindia.com

Corporation Bank Recruitment for Clerks

Corporation Bank is recruiting clerks. Number of vacancy 425. Vancancy in the states of Andhara Pradesh, Goa, Gujarat, Karnataka, Maharashtra, Tamil Nadu. You have to apply online. Opening date for ON-line registration is 07.02.2009. Closing date of online registration is 07.03.2009. Last date for receipt of printout is 14.03.2009. for more details visit www.corpbank.com

30.12.2008

PNB slashes prime lending rate to 12%

Anticipating a further reduction in interest rates by the central bank, Punjab National Bank on Monday announced a 50 basis points cut in its benchmark prime lending rate from 12.5 per cent to 12 per cent with effect from January 1, 2009. With this, PNB’s lending rates will be the lowest among its peer banks. Currently, State Bank of India’s BPLR is the lowest among public sector banks, at 12.25 per cent. Bank of Baroda and Bank of India had last week announced cut in BPLR by 75 basis points to 12.5 per cent with effect from January 1. PNB had earlier cut BPLR from 14 per cent to 13.5 per cent with effect from November 1, 2008, and further to 12.5 per cent from December 1, along with reduction in retail lending rates. PNB is hopeful of maintaining its Net Interest Margin at 3.4-3.5 per cent, despite the reduction in rates, Dr Chakrabarty said. The cost of funds will go down by 100 basis points by the middle of next year,” he said. PNB also announced a cut in deposit rates by 100 basis points, from 9.5 to 8.5 per cent, for deposits of one year to less than three years. The aggressive reduction in deposit rates is corresponding to the cut in lending rates, he said. The bank also reduced interest on floating rates housing loans and fixed rate car loans by 50 basis points. Mumbai-based Dena Bank, too, announced a reduction of 75 basis points in its BPLR from 13.5 per cent to 12.75 per cent and a reduction of 25 to 100 basis points in deposits across maturities, with effect from January 1, 2009.

IDBI Banks cuts deposit rates

IDBI bank has reduced the interest rates on retail term deposit by 50-150 basis points in the maturity period of 46-90 days up to 10 years, with effect from January 1 and also realigned its maturity buckets. The bank is introducing a longer maturity term deposit of 1,100 days with interest rate for normal depositors at 9.5 per cent per annum and at 10 per cent per annum for senior citizens instead of the existing 890 term deposit. The new deposit is also available from January 1.

Banks resposible for delivery of ATM pin, card

In case of misuse of debit cards, banks cannot escape responsibility by saying that they have delivered the card and the personal identification number (PIN) at the address mentioned in the application. A bank customer has approached the Ombudsman with a complaint about withdrawal of funds through unauthorized use of his card. Though he did not receive the card, he found that Rs 25,000 was debited from his account. The Ombudsman, said that the card and PIN should have been delivered to the complainant in person or to his authorised representative only under his proper acknowledgement. The Ombudsman asked the bank to not only reimburse the Rs 25,000 withdrawn from the complainants account but also pay interest at savings bank rate and an additional amount to meet the expenses relating to follow-up of the complaint.

PSU banks’ unsecured loans up 41% in FY08

Unsecured loans by public sector banks grew 40.9% in FY08, higher than the growth recorded by private sector banks which collectively recorded a 39.7% growth during the same period. These loans typically comprise a host of personal loan products that are riskier than secured loans. They are predominantly advances to individuals and include small-ticket education loans, credit card receivables, loans against salaries and consumer durable loans. Notably, among the banks with a perceptible portfolio of unsecured loans, many smaller banks- private and public-have more than doubled their unsecured loan portfolio, like Allahabad Bank (140%), Central Bank of India (104%), Indian Overseas Bank (106%), Karur Vysya Bank (101%) and Catholic Syrian Bank (144%). As a whole, the banking sector extended Rs 5,72,160 crore as unsecured loans in FY08, up 41.6% from Rs 4,04,067 crore in FY07. In line with the industry trend, new-age banks like ICICI Bank (31%) and HDFC Bank (40%) also have recorded a steady growth of their unsecured loan portfolios. These loans carry higher risk weights but are often extended at a significant premium to the benchmark prime lending rates of a bank.

ATMs on wheels to help banks expand reach

Technology is expected to be a key enabler in meeting the banking needs of a large section of the population in India. Despite the large network of banks spread across rural areas, more than 50% of the population does not have access to formal financial services. With the RBI's directive for financial inclusion, banks are trying to reach the unbanked areas through channels such as biometrics, smart card technology and handheld devices. These technologies are helping banks expand both in urban and rural markets. One such interesting service is providing banking services at the doorstep through mobile automated telling machines (ATMs). The vans are equipped with a 42-inch plasma TV with a DVD player which can be used by the bank for informing its customers about various products and offerings. Services being offered on mobile ATMs include cash withdrawal, fund transfer, cash against credit cards, mobile recharge, balance inquiry, mini statement and utility payments.

FW: Eco Briefs - 28 & 29.12.08

NPA management biggest challenge for banks in 2009

After the global financial turmoil in 2008, Indian banks begin the new year with a lurking fear that their Non Performing Assets (NPA) would go up with their portfolios coming under severe stress. There is already a visible strain on consumer, credit card and vehicle loan portfolios and many banks have taken conscious decision to scale down their advances to risky sectors. Some banks have also revised their credit growth targets downwards as the year has come to a close. "The ongoing financial crisis has had its toll on export-related sectors like IT, textile and SMEs. This may indirectly impact banks' asset quality. There is, therefore, a pressing need to ensure adequate risk-management mechanisms to overcome this challenge," State-owned Bank of Baroda's (BoB) Chairman and Managing Director M D Mallya, said. Gross NPAs of commercial banks in FY'08 escalated by Rs 6,136 crore, according to figures released by RBI. Though there was no need to be unduly alarmed, banks need to follow certain standard parameters to ensure the quality of their lending portfolios, Mallya said. Similar view was echoed by ICICI Bank's CEO-elect Chanda Kochhar who said the lender has taken a conscious decision "to follow certain parameters" to ensure asset quality.

Selling agents look for jobs as banks cut back on retail loans

High interest rates and the economic slowdown have forced banks, especially the private and foreign players, to scale down loan growth to check delinquencies. As a result, direct sales agents (DSAs), who were responsible for originating over 30 per cent of retail loans, have been badly hit. Banks like ICICI Bank have become extremely selective about offering retail loans, especially unsecured ones, and smaller players like Development Credit Bank have virtually stopped lending. Most foreign and private sector banks have stopped small-ticket personal loans and consumer durables financing is hard to come by. While banks are not lowering interest rates to discourage borrowers, they have also tightened credit appraisal rules, resulting in many more loan proposals being turned down. The change in strategy is also showing in the bank’s financial statement, with direct marketing expenses falling 62 per cent to Rs 145 crore during the quarter ended September 2008, against Rs 385 crore in the same period last year. All this means that there is little left for outside agencies. So, many DSAs, who were drawing between Rs 5,000 and Rs 10,000 a month in addition to commission on every loan sold, are now effectively jobless. With projections not looking too optimistic over the next few quarters, the DSAs are now looking at other options to survive.

ICICI may cut rates by 50-75 bps in Jan

ICICI Bank, the country’s largest private sector bank is all set to cut interest rates by 50-75 basis points across the board, making home and car loans cheaper in the new year. According to a senior banker, the rate cut will happen “very soon”-possibly early next month. Current home loan rates across various banks average around 10.5% for sub-Rs 20 lakh loans and around 12% for above Rs 20 lakh loans. Car loans average around 12.5-16% depending on loan profile and kind of model chosen.

RBI may cut repo, reverse repo rate anytime now, say bankers

With the inflation declining even below the RBI's comfort levels, the Reserve Bank is likely to cut the lending rate for banks and reduce the amount banks need to keep with the Central Bank 'anytime from now' to support demand, bankers have said. "A 0.5-1 per cent cut in the reverse repo rate could be expected anytime now following the sharp decline in inflation numbers. This would be needed to support the falling demand in different sectors owing to a global economic slow down," HDFC Bank's Deputy Head of Treasury Ashish Parthasarathy said.

‘RBI should pay interest on CRR in excess of 3%’

As a part of special packages announced by the RBI and the centre, the domestic banking industry, particularly the public sector banks are playing a major role in tackling the economic slowdown and ensuring that fund flow is available for the needy sectors. Allen C.A Pereira, chairman & managing director, Bank of Maharashtra said, banks have decided to provide a liberal package upto June 30 2009 for housing loans and to micro, small and medium enterprises (MSME) sectors. Deposit growth is moderated. Due to higher spread between interest rate of savings bank accounts and term deposits, customers prefer to place their savings mainly in term deposits. This has affected the growth of current accounts and savings account (CASA) deposits. Recent reduction of about 50 basis points in interest rates on term deposits will have a marginal effect on growth of term deposits. Interest cost of resources has increased. Banks are still keeping CRR of 5.5%, which is not earning any interest. We feel, RBI should pay interest on cash reserve ratio(CRR) in excess of 3%. This may partly compensate the banks in times when they try to operate on lower margins to stimulate flow of credit to productive sectors.

SBI Web site hacked, but no data loss

The menace of hacking has come to haunt India’s largest bank, State Bank of India. The bank’s Web site was paralysed on Christmas Eve as hackers, believed to be from a foreign country, broke through the bank’s stringent IT defences. “Attempts were made to disrupt the system from outside the country. However, there was no loss of data,” said Mr R.P. Sinha, Deputy Managing Director (Information Technology), SBI.

Farm debt relief evokes lukewarm response

Banks such as Union Bank of India and IDBI Bank have been taken by surprise at the ‘not so good’ response of large farmers to the one-time settlement scheme under the Government’s Agriculture Debt Waiver and Debt Relief Scheme, 2008. Nearly 40 per cent of these banks’ eligible farmer-borrowers, who own over 5 acres of agricultural land, are believed to have not coughed up even the first instalment towards one time settlement in order to avail themselves of the 25 per cent rebate on their loan overdues. Under the scheme, the government gives 25 per cent rebate on the overdue loan amount if farmers bring in the balance 75 per cent for one-time settlement.

SBI to launch mobile banking in Jan

The country's largest lender, the SBI, is all set to launch its mobile banking services in January. SBI has selected 383 out of 700 ATMs located in various railway stations for the installation of mobile-banking services. Apart from reservation of railway tickets, these kiosks would provide online banking services such as fund transfers, transaction/balance enquiries, payment of utility bills, inter-banking fund transfers through RTGS, NEFT and others.

RBI eyes inflation, raises CRR

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

New actuaries on bank pension

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

ICICI Bank doubles balance for SB account

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

Corporation Bank launches reverse mortgage plan

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

Banks open wallets as IIM aspirants fret over fee hikes

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

PNB to go solo on credit card before November

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

Banking ombudsman receives most complaints relating to credit cards

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

Banks see loss in quicker IPOs

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

Corporation Bank goes to Dubai in May

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

Recruitment

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HSBC loses disc with data on 370,000 customers

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

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

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

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

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

Govt should sell stakes in banks: Rajan panel

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

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Treat currency notes with respect, pleads RBI

For most, Indian currency notes are associated with goddess Lakshmi who represents all forms of wealth. Yet, banknotes are subject to abuse and defacement to such an extent that ensuring supply of good quality notes is one of the biggest headaches for the Reserve Bank of India (RBI). A couple of years ago, the central bank won a major victory in preserving currency notes by finally getting banks to stop stapling them into bundles. While banks are directly accountable to the central bank, getting the general public to change their ways is proving to be quite a challenge. RBI has been trying to sort this through coinisation. But the problem with coinisation is that inflation in metal prices has been very sharp in recent years, forcing RBI to increase the base metal component in coins. Another problem with banknotes is that technology-savvy fraudsters and hostile governments have increased the prevalence of fake notes. Between April 2006 and March 2007, 1.04 lakh pieces of fake currency valued at Rs 2.31 crore were detected by banks. This has prompted RBI to increase the level of safety features making printing of new notes costlier than ever before.

Took a loan from a PSU bank? rejoice your decision

If you have taken a loan from a public sector bank, it is certainly the time to rejoice your decision. For, you have an edge over the consumers who have taken loans from private sector banks, as you can now avail cheaper loans. While public sector banks, after recently being exhorted by finance minister P Chidambaram, have slashed their benchmark prime lending rates by 50 basis points (some banks have done it in two phases) private sector banks, except Axis Bank, have refused to budge. The public sector and private sector banks have taken different stands on reduction of lending rates. KV Kamath, managing director and chief executive officer of ICICI Bank had said he did not expect the country's central bank to ease key rates soon. "Till we have clear signals we keep rates steady,'' he said adding that the bank would wait and watch. Aditya Puri, managing director of HDFC Bank said the days of cheaper loans are over unless something changes very drastically. To check inflationary pressure, the central had kept the short term lending rates steady at 7.75% in the quarterly policy review on January 29 but Reddy had opined that commercial banks could lower rates

LVB launches ‘floating rate’ deposit scheme

Lakshmi Vilas Bank (LVB) has launched the “Lakshmi Floating Rate Deposit” scheme. The scheme is designed to suit the needs of bulk depositors, high net worth individuals and those that look to earn market-related income without the hassles and uncertainties of deposit renewal from time to time in a changing deposit interest rate scenario. The minimum tenure and amount is fixed as five years and Rs 1 lakh, and in multiples of Rs 10,000 thereafter. The interest rate would be equivalent to the prevailing five-year FD.

High value payments only thru e-transfer

All payments of Rs 1 crore and above will be done only electronically, starting April 2008. In a notification issued today, the RBI said that such high value payments would have to be done using any Real time Gross Settlement (RTGS) System or National Electronic Fund Transfer (NEFT) or System and Electronic Clearing Service (ECS). This applies to payments between banks, primary dealers, non-banking finance companies and payments in the money market, Government securities market and foreign exchange market

Free ATM usage from April 2009

Banks are free to decide on service charges to be levied for cash withdrawal using credit card in India and for withdrawal of money in ATMs abroad. The RBI had stipulated charges for using other banks’ ATMs in India. It had notified that banks should reduce service charges to Rs 20 per transaction carried out on other banks’ ATMs. Banks would not be able to charge their customers more than Rs 20 for cash withdrawal from other banks’ ATMs effective March 31, 2008 and would also have to waive off all charges effective April 2009. Transactions such as a simple balance enquiry from other banks’ ATMs have to be made free-of-cost with immediate effect.

ICICI Bank's overseas loss not to hit rating: Fitch

International rating agency Fitch on Saturday said the $264-million loss suffered by ICICI Bank on overseas investments will not affect its credit rating. "The provisioning requirements disclosed by ICICI Bank for mark-to-market (MTM) losses on its international investments portfolio is unlikely to impact the bank's capital ratios in any significant manner or affect its credit ratings," Fitch said. ICICI, earlier in the week, revealed that the bank along with its subsidiaries, accounted for a $189-million MTM loss till December 2007, which further increased by $74 million by January 31. The losses, Fitch said, reflect the widening credit spreads in the international markets, with a greater impact on ICICI's $2.2 billion credit derivatives portfolio compared to its fixed income portfolio. The overseas investments were acquired as part of ICICI's international business thrust and formed 15 per cent of the consolidated total investment portfolio at March end 2007, it added.

HDFC readies plan to lend against agri land

HDFC has put up a proposal before five or six state governments, including Punjab and Karnataka, to allow mortgage against agriculture property. It is fixing up parameters like fertility of the soil, quality of produce and financial record of farmers for providing loans. If it gets the governmental nod for the proposal, farmers having at least 7 acres of land would be eligible for this scheme. HDFC joint managing director Renu Sud Karnad says, “We have asked for their permission. We are looking at states where the land is more fertile, like in case of Punjab. Around 72% of India lives in rural areas and we see this as a huge potential. With these new initiatives, I think we should be able to fund almost 20% of the rural farmers.” On the other hand, agri experts opine that this will not be of any help to the small and micro farmers as they have very small land holdings. Indian Society of Agriculture Economics president SS Johl said. ”Still I feel, banks should be made to follow some conditions. Like - a house and at least five acre property of the farmer should not be mortgaged by any bank. Rate of interest should be the prime lending rate , in addition to maximum of 4% on it. If the repayment is double the capital borrowed, it should be considered as money paid back to the bank by the borrower. If banks agree to this, the state government should not have any problem in allowing them to mortgage the agriculture property of farmers.”

Banks step up vigil against card frauds

Even as the use of plastic money increases, the number of frauds is also on the rise. Over the past three years, the number of credit card frauds has gone up by 80 per cent. Recognising this, the Reserve Bank of India and banks are taking steps to educate customers about frauds that may happen via Internet and while using credit cards. The total number of frauds has gone up from 12,374 in 2005 to 21,687 in 2006, and 22,280 in 2007. In the case of credit card frauds, the number has gone up from 8,789 in 2005 to 17,268 in 2006, and 17,294 in 2007. One reason for this is credit card transactions are growing much faster than other transactions, said Mr Hemant Kaul, President, Retail Banking, Axis Bank. Axis Bank recently launched ‘Visa Platinum Credit Card’ based on the EMV (Europay, MasterCard, Visa) standard, with an embedded chip to store the cardholder’s information in encrypted format to provide security against possible misuse in the form of counterfeiting and skimming. The chip sends a secret message to authenticate every transaction, making it difficult for a fraudster to steal the information. ICICI Bank takes precautionary steps like sending an SMS to customers on every transaction made on their credit card.

SBI opens 10,000th branch

Puduvayal (loosely translates as ‘New Farm’) is a small town (85 km from Madurai) in the Chettinad region of Sivaganga, a southern district in Tamil Nadu. The State Bank of India opened its 10,000th branch here, on Sunday morning. Mr P. Chidambaram, Finance Minister, said “The State Bank of India becomes only the second bank in the world to have more than 10,000 branches, after China’s ICBC.” Mr O P Bhatt, Chairman of SBI, said the new branch was sanctioning Rs 4 crore worth of loans - agricultural, educational and housing loans - from the new branch. He said that the SBI group had opened 1,000 branches this year. SBI plans to open at least 2,000 branches in rural India in the next two years.

Narayana Murthy to join HSBC board

Global banking giant HSBC said Infosys' Chief Mentor, Mr N R Narayana Murthy, will join its board in May with an annual remuneration of ₤65,000 (about Rs 52 lakh). "Mr N R Narayana Murthy (61) has been appointed a Director of HSBC Holdings plc with effect from May 1, 2008. He will bean independent Non-Executive Director," HSBC said in a regulatory filing. The appointment shall be for an initial three-year team.

Loan waiver could be blessing in disguise for banks: experts

Contrary to the widespread consternation regarding the extent of the massive hit which banks, particularly in the public sector segment, will have to take, on account of Chidambaram’s populist waiver of Rs 60,000-crore of farm loans, tax experts feel banks may actually benefit out of all this. According to tax experts, banks will collectively get tax breaks to the tune of Rs 20,400 crore, when they waive Rs 60,000 crore of overdue loans. They will also get a chance to clean up their balance sheets by way of writing off bad loans. The general perception is that the government would compensate the banks for the losses which, prima facie, would be a maximum of Rs 39,600 crore after taking into account the benefits of tax exemption. Tax experts believe that banks would need to provide for a much lesser amount as the major part of it appears to have been provided for. Banks would automatically get another Rs 30,000 as repayments of loans on account of OTS (farmers can avail of the scheme by paying 75% of the loan and get a rebate of 25%). This would be cash inflow and allow banks to give fresh loans. “Technically, not all overdues are non performing assets. Overdues become NPA if repayment is not made for three months. These are largely sub-standard assets and banks need to follow a less stringent provisioning norms for such assets. We have just begun our calculation and a clearer picture would emerge in a couple of days,” a top banker said. Therefore, banks would need to make a fresh provisions against the amount waived and take a hit on the profitability.

'Loan waiver sends wrong message to borrowers’

The repayment culture gets badly impacted and it would be several years before some semblance of loan discipline can be restored. To fulfil their mandatory obligations banks might implement the scheme of waiver and even may disburse fresh loans and oblige the government in reaching the revised target of Rs 2,80,000 crore. It would, however, be a task for the managements to inculcate and sustain the culture of recovery amongst their field staff. From the farmers’ perspective too, the scheme has too many flaws. First, it sends a message to the honest borrowers, for the umpteenth time, that they have been unwise in repaying their loans. Second, the farmers who have invested their own resources or borrowed from money lenders, with no borrowings from the banks, stand to lose out. Third, the conscious and genuine farmers who have invested more of their savings than borrowings would be deprived of the benefit from this generous scheme

Prompt payers may feel cheated: Experts

Mr M. Srinivas Achar, President of the All-India Areca Growers’ Association, said that both those who had made prompt repayments and who had not availed themselves of loans would feel cheated. “Banking discipline may be lost in future with such loan waiver move,” he said. Prof N.K. Thingalaya, noted rural banker, said that waiver of loans was undesirable. Though banks would not be losing financially, those who have made prompt repayment will be affected morally.

4 cr farmers to benefit from debt waiver scheme

The Finance Minister has proposed that all agricultural loans distributed by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and overdue as on December 31, 2007 will be covered under debt waiver and debt relief scheme. For marginal farmers and small farmers there will be a complete waiver of all loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008. He has also called for completing the implementation of the two schemes by June 30, 2008. For other farmers, there will be a one time settlement (OTS) scheme for all loans that were overdue for the above period. Under the OTS, a rebate of 25 per cent will be given against payment of the balance of 75 per cent. Agricultural loans which were rescheduled and are restructured during 2004-06 as per the RBI guidelines will also be eligible for a waiver or an OTS on the same pattern. The total value of overdue loans being waived is estimated at Rs 50,000 crore and the OTS relief on the overdue loans is estimated at Rs 10,000 crore

Loan waiver: Bankers await the fine print

Bank stocks fell in the wake of the Finance Minister’s announcement but recovered when he clarified that the Government would bear the cost of the loan waiver. According to Mr K. Ramakrishnan, Chairman and Managing Director, Andhra Bank, this move will not hit the profits of banks. “As the money will come from the Government, banks will not lose a single penny. This will benefit banks, as the loans will be off our books. The outstanding that the borrower has to pay will now be paid by the Government,” he said. Mr Ajay Bagga, CEO, Lotus India Asset Management Company, said. “It represents a write off of nearly 4 per cent of outstanding bank loans and 25 per cent of outstanding agricultural credit. Since this money has already been consumed, it will not create any fresh purchasing power immediately, though over time, the principal and interest servicing payments will flow into consumption,” he said. Mr Viren Mehta, Partner, Financial Services, Ernst & Young, said: “The aggregate profits of all scheduled commercial banks in India for FY2005-06 and FY2006-07 was in the range Rs 24,000 crore and Rs 31,000 crore, respectively. Therefore, it should be considered as a foregone conclusion that the Government will provide support for the debt relief. Whether this is in terms of hard cash or some other mechanism and over what period would the support be provided is something that requires clarity.” For the fiscal 2008-09, a provision of Rs 16,000 crore has been made for continuing with the interest subsidy for short-term crop loans. The target for agriculture loans for 2008-09 has been set at Rs 2.8 lakh crore.

Budget-2008

Two things stand out prominently in the Finance Minister, Mr P. Chidambaram's 2008-09 Budget - a substantial relief to farmers from indebtedness and a bonanza of sorts for the salaried class. The agriculture loan waiver scheme outlined by him in Parliament on Friday would cost Rs 60,000 crore, but there is no provision in the Budget for this, suggesting that the burden would fall on the banking sector for now. For individual taxpayers the Finance Minister has raised the threshold limit for tax to Rs 1,50,000 a year from the current level of Rs 1,10,000, which translates into a straight gain of Rs 4,000 per annum for all tax-payers. He has gone ahead to alter the slabs as well, with the 10 per cent rate kicking in at the Rs 1,50,000 to Rs 3,00,000 slab, 20 per cent at Rs 3,00,000 to Rs 5,00,000 and a 30 per cent tax on income exceeding Rs 5,00,000 per year. For women taxpayers the threshold limit has been raised to Rs 1,80,000 from Rs 1,45,000 and for senior citizens from Rs 1,95,000 to Rs 2,25,000 per annum. For senior citizens, another relief could be in the form of clarifications on the reverse mortgage scheme intended to benefit them in their old age. The scheme, where one could mortgage the house to the bank in lieu of a steady inflow or lump sum amount, has not taken off in the absence of clarifications on the likely tax implication. Mr Chidambaram made it clear that reverse mortgage would not amount to "transfer" and the stream of revenue received by the senior citizen would not be "income". The corporate sector has not been a direct beneficiary this year - corporation tax rates and the surcharge remain unchanged. But there are indirect benefits, in the form of across-the-board reduction in Cenvat (excise duty) rate from 16 to 14 per cent, which should spur demand and, with more money in the hands of the taxpayer, more sales hopefully. Indian industry would also continue to enjoy the same level of protection against competitive imports with unchanged peak customs duty of 10 per cent. The auto sector has already raised a toast as excise on small cars and twoand three-wheelers and also buses and chassis has been lowered from 16 to 12 per cent and the pharma sector has given its thumbs up to the Budget as excise for all goods manufactured by this sector would see a cut from 16 to 8 per cent. Corporate debt instruments stand exempt from tax deduction at source.

Federal Bank’s money transfer facility for NRIs in US

Federal Bank, on Wednesday, launched Fed-India remit service (FIRSE), the Web-enabled money transfer facility between the US and India, targeted at the NRI population. The traditional means of money transfer, through issue of cheques and drafts, used to take close to a month and at a cost to the customer. The telegraphic transfer used to be fast but entailed a service charge of between $25-50 (Rs 1,000-2,000) per transaction. Now, a similar facility is being offered free to Federal Bank NRI customers in the US. A couple of new generation private banks, which are offering similar services, are charging a fee for the same. And the bank is the first among the old generation private sector banks to offer such a facility. Federal Bank uses 128-bit encrypted technology offering 100 per cent security to both the remitter and recipient.

Union Bank to use 3i Info tool

3i Infotech has entered into an agreement with Union Bank of India to implement AMLOCK, the company’s anti money laundering software.

Bank mergers may affect insurance distribution scene

Bank mergers in India are likely to impact the insurance sector as many insurers have selected banks as their bancassurance partners. Bancassurance is the sale of life, pension and investment products through the branch network of a bank. The recent merger announcement of HDFC Bank and Centurion Bank of Punjab is expected to impact the business of Aviva Life Insurance and ICICI Lombard General Insurance Co. Centurion Bank is the bancassurance partner for these two insurers. The arrangements might be discontinued because HDFC Bank sells life and non-life insurance policies of group companies HDFC Standard Life Insurance and HDFC General Insurance. Insurers find recruiting and training individual agents a time-consuming and costly process. There are also issues like agency attrition and small-sized policies procured by agents. V Srinivasan, chief financial officer of Bharti Axa Life Insurance, said that the one bank-one insurer concept was not right and would lead to skewed scenario. A bank should be allowed to be a broker and sell the policies of different insurers, he said.

PSBs must clear education loans in one month, says FM

Finance minister P Chidambaram on Tuesday said that the public sector banks (PSBs) are required to clear education loans within 15-30 days and they should also institute an online system to clear such loans. This will enable students to download the loan application form, apply online and learn the status of their loan application, he said adding the facility is now provided by all major public sector banks.

Motilal Oswal, IDBI Bank team up for online trading facility

Motilal Oswal Securities Ltd and IDBI Bank on Tuesday announced that they were entering into a strategic alliance to provide online trading facility to the bank’s customers. IDBI customers now have the option of investing in equities, derivatives and IPOs using Motilal Oswal’s online trading platform. On the trading front, Motilal Oswal will provide the bank’s customers instant order/trade confirmation, single margin for equity/IPO/derivatives, “buy now sell tomorrow” and “after market hours” order placement facilities and margin benefit on hedged positions. Corporation Bank has tied up with IL&FS, Religare and Reliance Money; Asit C. Mehta has an arrangement with Union Bank while Bank of India has tied up with Anand Rathi. This is the second such partnership that Motilal Oswal has got into; where last year it had tied up with SBI Bank.

Corpn Bank ATMs at MRPL outlets

The Mangalore-based Corporation Bank and Mangalore Refinery and Petrochemicals Ltd (MRPL) have decided to leverage their respective strengths to provide a bouquet of services to customers in the fuel retail segment. MRPL, which has the approval from the Government to open 500 retail outlets, is planning to open 25 retail outlets under the brand name ‘HiQ’ by December, and Corporation Bank will have the choice of setting up of ATMs at the ‘HiQ’ retail outlets. Mr B.R. Bhat, General Manager (IT), Corporation Bank, and Mr Sanjay Grover, General Manager (Retail Sales), MRPL, said that the two will leverage their strengths to generate greater opportunities from each contact they have with the individual customer.

Staff liabilities may bleed small PSBs

Public sector banks will need to fully deploy an RBI escape clause in provisioning requirements for employee liabilities to ensure their costs do not soar by at least Rs 800 crore each this fiscal. These banks are planning to introduce additional retirement benefits that could cost them up to Rs 25,000 crore. This is more than half their estimated gross profit for this fiscal at Rs 42,000 crore. The proposed package for employee benefits includes pension, provident fund and gratuity. Banking sources said liabilities could vary from Rs 800 crore to Rs 1,000 crore for each bank, depending on employee strength. To make full provision for employee-related costs in a single shot in one year could push a large number of banks into the red. They are, therefore, keen to use the breather provided by RBI on the accounting standards on employee benefits. The AS-15 norm allows them to spread the full provision for staff-related liability over five years. One PSU bank CEO said that while State Bank of India and Canara Bank, which have net profits of Rs 4,541.31 crore and Rs 1,421 crore, respectively, could afford to make provisioning for employee-related costs in one shot without any major impact on their bottom lines, mid-sized banks like Oriental Bank of Commerce and Corporation Bank, with net profits of Rs580 crore and Rs 536 crore, respectively, may need to space out the liabilities. The cost for banks would soar by an additional Rs 5,000 crore in case the government decides to provide an option to all employees to move towards pension benefits in lieu of provident fund. Of the 7 lakh people employed by the 27 public sector banks, about 3 lakh are covered under provident fund.

HDFC Bank, Centurion boards approve 1:29 share swap ratio

Shareholders of Centurion Bank of Punjab would be eligible to exchange 29 shares into one share of HDFC Bank. This follows the board of directors of the two banks approving on Monday a share-swap ratio of 1:29. HDFC Bank’s share closed at Rs 1,422.70, down by 3.5 per cent while Centurion Bank ended the day at Rs 48.25, lower by 14.45 per cent on the BSE on Monday. The entire process of the merger would take about four months for completion. The merged entity will be known as HDFC Bank. Mr Rana Talwar, Chairman of Centurion Bank, has been offered a seat on the Board as non-executive director and Mr Shailendra Bhandari, Managing Director, Centurion Bank, has been invited to join as the Executive Director on the board post merger. “The near-term impact on HDFC’s financials would be moderately negative considering the relatively poor financials of Centurion Bank. It would take HDFC Bank a while to leverage the branch network of Centurion Bank to improve its financials, said Mr Vaibhav Agrawal, Senior Analyst-Banking, Angel Broking Ltd. The draft scheme of amalgamation, the due diligence report and any other matters as required will be considered by the board of HDFC Bank at its meeting scheduled on February 28.

Uco Bank to clean up balance sheet

Kolkata-based Uco Bank has put some Rs 264-crore of nonperforming assets (NPAs) on the block to clean up its balance sheet. This was indicated by Uco Bank chairman & managing director SK Goel. Out of this, around Rs 100 crore of bad loans are likely to be sold off by March 31. Overall, Uco Bank is struggling with bad loans totalling Rs 1,664 crore. “NPAs with a minimum size of Rs 5 crore have been identified for putting on the block,” Mr Goel said. “The bank has recently finalised deals to transfer NPAs to the tune of Rs 44 crore to a few to asset reconstruction companies (ARCs). Negotiations are on for selling off another Rs 60-70 crore of NPAs this fiscal. Talks are at an advanced stage,” Mr Goel said. It is understood that companies like Asset Reconstruction Company (India) Ltd (Arcil), Arsec India Ltd, Pegasus Asset Reconstruction Co have evinced an interest for taking over part of Uco’s bad loan portfolio. This selling off exercise would help the bank. Out of the total NPA, Rs 400 crore is in the agriculture sector and another Rs 450 crore is in the retail segment. It has identified nearly 1.80 lakh bad loan accounts, including nearly 1.44 lakh small accounts. Besides transferring bad loans to ARCs, it has also started negotiating with default borrowers directly to recover bad loans. It has recovered some Rs 213 crore during the first half to September 30, 2007. It is looking to recover another Rs 300 crore by March 30, 2008.

HDFC Bank, Centurion boards okay merger plan

The boards of HDFC Bank and Centurion Bank of Punjab have approved in principle a merger between the two banks. The boards of both banks will again meet on February 25 to consider the share swap ratio after the receipt of the valuation reports. Mr Deepak Parekh, Chairman, HDFC, the promoter of HDFC Bank, said: “We get scale…we will get about 400 branches at one go. Today, size is important in the banking sector. They (Centurion) have good presence in Punjab - thanks to Bank of Punjab, which was merged with Centurion. Similarly, they have a large branch network in Kerala following the merger of Lord Krishna Bank. This would help us leverage the NRI business and probably tap opportunities in the Gulf.”

SBI, ICICI Bank among top 100 global banking brands

Indian banks, barring SBI, and ICICI Bank, come a cropper in the global stage when it comes to their brand value, while their counterparts in China have fared better, according to the findings of a study. In a study by London-based consultancy Brand Finance, only two Indian Banks - the country's biggest lender SBI and ICICI Bank, the largest in the private sector, figure among the top 100 global banking brands. Compared to the Indian brands in top 100, three Chinese banks find a place in the top 25 brands. According to the study, SBI has a brand value of $2,852 million, while for ICICI Bank it is $2,603 million. Industrial & Commercial Bank of China has a brand value of $8,427 million, China Construction Bank is at $7,786 million, Bank of China at $6,741 million.

HDFC Bank, Centurion boards to consider merger

HDFC Bank and Centurion Bank of Punjab (Centurion) on Friday confirmed that they are considering a merger proposal. The boards of directors of both the banks are meeting separately on Saturday to consider “in principle” a possible merger. The boards will appoint independent valuers for deciding on the share swap ratio. After the merger, the combined entity would have a formidable network of over 1,100 branches with a pan-India presence. This would overtake ICICI Bank in terms of branch network (955). However, in terms of balance sheet size, ICICI Bank maintains its lead by a large margin. As on December 31, 2007, the balance sheet size of Centurion Bank of Punjab stands at Rs 25,403 crore and of HDFC Bank at Rs 1.31 lakh crore. ICICI Bank’s balance sheet stands at a much larger figure of Rs 3.76 lakh crore. Centurion has traditionally adopted the inorganic route to expansion. It took over BankMuscat’s Indian operations in 2003 followed by Bank of Punjab in 2005 and the Lord Krishna Bank in 2006. Centurion has a large presence in the North and a considerable exposure to the agriculture sector, thanks to its merger with Bank of Punjab in 2005. Centurion has 394 branches and 452 ATMs with employee strength of around 7,500. HDFC Bank has a branch network of 754 and is understood to have over 200 more licenses in hand. HDFC Bank has 1,906 ATMs in 327 locations

Corp Bank lifts Rs 300 cr from NPCIL for 9.87%

Corporation Bank has piped rival public sector banks in the race to pick up bulk deposits from Nuclear Power Corporation of India (NPCIL). Corporation Bank had bid 9.87 per cent for Rs 300 crore bulk deposits of one year duration from NPCIL and lifted the funds through placement of certificates of deposit. The effective cost after factoring in reserve ratios (cash reserve ratio and the statutory liquidity ratio) was likely to be about 40-50 basis points higher. Besides public sector banks, private banks were also in the fray for the bulk funds. Some of the private sector banks had bid even higher rates of over 10 per cent. The high rates were seen due to tight liquidity conditions as oil refiners were drawing down their credit lines, for funding their dollar purchases. Bankers said a slow down in capital inflows had also resulted in reduced RBI interventions in the foreign exchange markets leading to a shortage of rupee liquidity. Some bankers said that the high bids were also in expectation of firm call rates next month, when advance tax payments begin.

Cheque truncation to save time

Cheque Truncation Solution is a big milestone in the Indian banking industry. It enables cheque clearing on the same day, reducing floating time available for funds. The technology, being implemented from February 1 in the National Capital Region, enables banks to send images instead of paper cheques for clearing and settlement. The US-based NCR Corp was mandated by the Reserve Bank of India to prepare the truncation project for the capital region. In an interview to Prashant K Sahu, South Asia General Manager Navroze Dastur asserts that cheque truncation will benefit both customers and banks, and help reduce frauds. Instead of manually moving the cheque from one bank to another for payment, we would now use images. This will bring down the time required for processing. Earlier, it would take two to three days. Cheques would now be cleared on the same day or the next day, thereby bringing efficiency into the entire banking system.

RBI rejects more equity exposure

The banking regulator has rejected proposals by four banks - Bank of India, IndusInd Bank, Kotak Mahindra Bank and HDFC Bank - to increase their capital market exposure beyond the regulatory cap of 40 per cent of net worth on grounds of excessive market volatility. The RBI has the discretion to allow higher capital market exposure to banks with sound internal controls and robust risk management systems, but the banking regulator decided against exercising it. HDFC Bank had a capital market exposure of 70.58 per cent of its net worth at the end of November 2007. This was before the RBI changed the norms and capped the exposure at 40 per cent of net worth. The exposures of the other three banks were within the regulatory ceiling.

Banks told to reschedule poultry loans

In a major relief to the poultry industry that has been rattled by the bird flu crisis in the last few weeks, the Reserve Bank of India (RBI) has asked the banks to reschedule loans given to the poultry units across the country. RBI wrote to all scheduled commercial banks on Tuesday, providing guidelines to them to give a breather to the poultry industry. It asked the banks to convert principal and interest due (on working capital loans), instalments and interest on term loans due for payment on or after the onset of bird flu into term loans. The RBI suggested that the banks could consider December 31, 2007 as cut-off date for such conversion, and treat the rescheduled or converted loans as current dues. “The process may be completed by April 30, 2008,” Mr G. Srinivsan, Chief General Manager of RBI, said in the letter. After conversion, the borrowers would be eligible for fresh need-based finance. The relief would be extended to all accounts of poultry industry, which are classified as ‘standard accounts’ as of the cut-off date. The apex bank had issued similar guidelines to the banks in April 2006 to bail out the poultry industry.

Bank strike: Conciliatory talks on Friday

A final decision on whether bank employees would go ahead with their planned strike on February 25 and 26 is likely to emerge only after Friday, the day on which conciliatory talks are proposed to be held between Government, bank unions and the Indian Banks’ Association (IBA). Finance Minister, Mr P Chidambaram, is understood to have assured bank unions that he would advise IBA to enter into a time-bound dialogue with them to find expeditious solutions to their demands

Bank of Baroda seeks variable pay, incentives for officers

Bank of Baroda wants to have a separate salary structure for its officers. The bank is trying to be out of the industry-level-wage negotiation with the unions as it wants to introduce incentives and variable pay. The bank has not given the mandate to the Indian Banks’ Association to negotiate with unions for officers’ wage revision, but it has for salaries of the award staff (clerical staff). While acknowledging that securing Government approval may be difficult, Mr A.K. Khandelwal, Chairman and Managing Director, Bank of Baroda, said: “We have made an attempt to at least voice our feelings on this. We will be very happy if the Government wishes to try an experiment with Bank of Baroda and gives us permission.” The earlier wage agreement, between IBA and bank unions, for the period 2002-2007, was signed in 2005 and it ended on October 31, 2007. According to an IBA official, all other 27 PSU banks have given the mandate to IBA for negotiating salaries, except Bank of Baroda. So, it is unlikely that the Government will amend the banking regulations for one bank.

Canara Bank launches online trading facility

Public sector Canara Bank on Monday announced the launch of its online equity trading platform through its wholly-owned subsidiary Gilt Securities Trading Corporation Ld.(GSTCL). The online trading facility, to start with, will be available to all individual savings and current account holders in select CBS-compliant Canara Bank branches in India. It will be extended to all CBS branches in a due course. Besides the trading option, the portal would provide features such as market-related information research report, technical market analysis and sector watch.

Cash withdrawal from ATMs to be free

Banks will now have to make withdrawals from ATMs free of charge for their own customers. Requests for balance enquiries would have to be made free to customers of other banks as well. In a draft circular, the RBI has asked banks to implement these changes with immediate effect. For use of other bank ATMs for cash withdrawals, the RBI has asked banks not to charge more than Rs 20 with effect from March 31, 2008. This will also gradually be made free of charge by April 1, 2009. According to the RBI, some banks had suggested that instead of making the service totally free, number of free withdrawals in a quarter or a month can either be prescribed or left to individual banks. IBA had also suggested that the number of free transactions at ATMs of other banks be restricted to two per month. The RBI has, however, said that a cap on the number of free cash withdrawals in a month is neither desirable nor practical.

Large payments only thru e-mode from April

Payments of Rs 1 crore and above between banks, NBFCs, primary dealers and any other entities regulated by the Reserve Bank of India may be allowed only through electronic mode from April 1. Mr V. Leeladhar, RBI Deputy Governor, said here on Monday that all such payments above the cut-off point done between parties regulated by the RBI should be through Real Time Gross Settlement or National Electronic Fund Transfer. The new guidelines will also be applicable to participants in the RBI-regulated markets such as foreign exchange, money and Government securities markets. The move will not only reduce risk from moving large paper-based value retail payments to safer electronic modes, but will also bring greater efficiency and customer convenience to the payment systems.

Information on operation of ATMs not to be revealed under RTI

Citizens cannot invoke their right to information to compel commercial banks to share the details on operation of their ATMs, the Central Information Commission (CIC) has held. The Commission's observation came as it turned down an RTI application seeking certain information from the country's biggest lender SBI about the operation of its ATMs.

Standard Chartered asked to pay Rs 50,000 compensation

The Standard Chartered Bank has been asked by a consumer court here to pay compensation of Rs 50,000 to logistics firm Kuehne & Nagel (India) Ltd for clearing a bearer cheque of Rs 400,000 without comparing the authorised signatures. Despite guidelines issued by the Reserve Bank of India to all banks not to make payments against bearer cheques of heavy amounts above Rs 50,000, the bank cleared the cheque of Rs 400,000 without carefully comparing the signatures of the signatory with the specimen signatures, so the bank is held guilty for deficiency in service," Justice J D Kapoor of the Delhi State Consumer Disputes Redressal Commission said in his order.

Govt may bank on RBI to push SBS merger with SBI

To get around the legal hurdles in way of merger between State Bank of Saurashtra (SBS) with State Bank of India, the government is planning to ask the Reserve Bank of India to introduce a scheme for the merger. Under the State Bank of Saurashtra Act, RBI can frame a scheme to enable merger with SBI, said a source. The Cabinet was expected to take up the terms and conditions of SBS merger last month.The approval of the terms and conditions for this merger will be crucial because similar conditions will be relevant for the subsequent merger of the remaining subsidiaries of SBI. The law ministry is of the view that the government cannot issue an executive order and repeal the specific legislations governing some of these associates, since they were created by an act of Parliament. In addition, all subsidiaries are also governed by the SBI Subsidiaries Act, 1959. The government needs parliamentary approval to make such changes. Given issues of legal amendments and rationalisation of staff, among others, the government first wants SBS to be merged and then take the experience forward to merge other subsidiaries. Indications are that the employees are on board for the merger as employees of the subsidiaries will be treated at par with SBI employees and will be given the third retirement benefit too, in addition to two, as a result of the merger.

Canara to tap broking biz;SBI to scale up ops

Recognising the potential in the broking space, state-run Canara Bank is mulling a foray in the sector while State Bank of India has plans to scale up its business manifold by next year. Canara Bank, plans to foray into broking along with its wholly-owned broking subsidiary, Gilt Securities Trading Corporation. Presently, SBI's services in broking is limited to online equity tradingHowever, the bank will shortly enrich its portfolio by enabling customer-access to mutual funds and IPOs, a company official said. Kolkata-based United Bank is also understood to have zeroed in on leading broking firm IDBI Capital Markets as its partner from among a group of bidders, including Sharekhan. SBI started its broking operations in 2005 by partnering with Motilal Oswal and with its own subsidiary, SBI Cap Securities last year. Presently, SBI has a minimal presence in the segment, having only around 20,000 customers, but plans to scale up its business manifold by 2009.

Two-wheeler loans go scarce

Banks are going slow on lending for purchase of two-wheelers. Such lending has seen a decline of more than 15 per cent over the past year, said officials from banks which are active in this segment. According to them, high rate of delinquency among customers and the recent norms on appointment of recovery agents have forced banks to go slow in the two-wheeler segment. Centurion Bank, which is a major player, has reduced lending for two-wheelers by almost 50 per cent during 2007-08. Bankers say tighter recovery norms have given customers more scope for avoiding payments. ICICI Bank, the largest player in the segment, said it has stopped lending for two-wheelers in more than 100 locations. Another reason for the slowdown is the higher cost of living.

Coin-vending machine at Corp Bank

In view of the shortage of coins, the Corporation Bank has installed a coin-vending machine at its Car Street Branch in Mangalore. A bank release said here that this is the first of its kind initiative by any bank to mitigate the acute shortage of coins in the city. The coin-vending machine scans the note inserted into it for genuineness and then dispenses coins. There are two hoppers in the machine which can store three types of coins of denominations five, two and one. The General Manager, Mr B.R. Bhat, inaugurated the machine on Friday.

SBI single borrower exposure above RBI norm

State Bank of India's exposure to a single borrower is 16.3 per cent of its net worth, higher than the regulatory cap of 15 per cent, the bank disclosed in its draft red herring prospectus on Thursday. The bank, however, did not name the borrower. The bank, which is coming up with a rights issue, said in the prospectus that it has a high concentration of loans to certain customers and to certain sectors and if a substantial portion of these loans were to become non-performing, the quality of its loan portfolio could be adversely affected. Net non-performing asset of the bank was at 1.44 per cent in October-December compared with 1.45 per cent a year ago. "The 10 largest individual borrowers in aggregate account for 11.1 per cent of the bank's total exposure and its 10 largest borrower groups in aggregate accounted for approximately 18.3 per cent of its total exposure," the bank said. The largest borrower group accounted for 5.3 per cent of the bank's total exposure and for 50.1 per cent of its total capital funds

Centurion Bank bags awards

Centurion Bank of Punjab won two awards at the Global HR Excellence Awards 2008 given at the Asia Pacific HRM Congress held in Mumbai this week. A first time participant, Centurion Bank of Punjab, had sent entries in two categories of awards and won both of them against several hundreds of entries received from across diverse sectors.

RBI raises concerns over govt proposal on currency futures

The Reserve Bank of India has raised several concerns over the government’s proposal to use the existing infrastructure of stock exchanges for introducing currency futures. In its technical advisory committee meeting with market participants yesterday, RBI said that foreign exchange and related activities should be isolated from all other businesses of exchanges and for the participants in the market like banks or brokers. Further, any existing exchange, even if allowed to float a platform for currency futures, should have a diversified shareholding pattern. RBI said exchanges could float separate bourses for the currency futures business as it would become a wholly owned independent subsidiary with separate books. Further, banks who would be the major participants in the currency futures business are regulated by RBI.

Indbank opens trading cafe in Chennai

Indbank Merchant Banking Services (Indbank), a subsidiary of public sector Indian Bank, opened its first 'trading cafe' for stock trading in Chennai. It plans to open another 20 such cafes and 18 new branches during 2008-09 across the country.Indian Bank is the first public sector bank to open such a cafe for stock trading facility, A Subramanian, executive director, Indian Bank, said. Indbank plans to establish around 200 such cafes in tier-II and tier-III cities across the country in a phased manner. The cafes will be opened in residential areas and target mostly housewives and elders, who are largely getting into trading these days, in the middle income families, he added. Customers having a demat account with Indbank or with Indian Bank and a savings bank account with Indian Bank can trade through the cafe, he said.

Dena Bank to auction NPAs

Mumbai-based Dena Bank will auction Rs 188.4 crore of its non-performing assets (NPAs) to bring down gross NPAs below 2.5 per cent by March 2008. “We have finalised a portfolio of 49 borrowers (including operating and closed units) with an aggregate principal balance of Rs 188.40 crore. These loans will be sold in either one or multiple tranches,” a senior bank official said. All of the loans are commercial. Chairman and Managing Director P L Gairola said, ”This process (auction) will help secure better value for these assets than sale through bilateral negotiations.”

More foreign banks keen to open offices here

Anticipating opportunities in India after 2009, foreign banks are queuing up to open offices in India. Two foreign banks have recently announced their plans to start operations here. Royal Bank of Canada, the largest bank in Canada, inaugurated its representative office in Mumbai on February 1. It will provide capital market products, wealth management, correspondent banking and trade finance services. On February 6, Glitnir, the Northern European bank headquartered in Iceland, also announced that it would be filing applications with the Reserve Bank of India to open a representative office here.

Dhanalakshmi rights issue from Feb 19

The rights issue of Thrissur-based Dhanalakshmi Bank will open on February 19 and close on March 19. he bank is aiming at raising Rs 200 crore through the issue at a 1:1 ratio. Each share will be sold at a premium of Rs 52, aggregating the offer price to Rs 62 a share.

Sabre likely to exit CBoP; ICICI, HDFC Bank, IDFC may join race

Centurion Bank of Punjab (CBoP) is back in news. The word is out that the private sector bank, where Rana Talwar’s Sabre Capital has the management control, is in talks with some of the financial institutions and large banks for a possible merger. However, indications are that CBoP is in no hurry to complete a deal. New generation banks like ICICI Bank and HDFC Bank are also believed to be interested in CBoP, but this was denied by ICICI Bank and HDFC Bank. ICICI Bank may have shown an interest to increase its presence in the North and pockets of southern India. For HDFC Bank, acquiring CBoP would give it a more extensive branch network than ICICI. Sabre’s moves may be driven by concerns that policy makers would take a long time in allowing foreign banks to acquire local banks.

FM asks banks to submit report on sugar package in 10 days

The finance minister, P Chidambaram, while meeting the heads of state-run banks in New Delhi on Tuesday, has asked the public sector banks to implement sugar package within 10 days and submit a report before the government. The Indian Banks' Association (IBA), the trade body of bankers, is going to discuss the issue at length during its forthcoming managing committee meet to be held on February 15 in Mumbai. More interestingly, the State Bank of India and few other state-run banks have already issued letters through their circles and regions to comply the government's instruction in this direction. As part of the sugar package that has been announced by the government, full interest subvention would be provided to all scheduled commercial banks, regional rural banks and cooperative banks for the total duration of the loan (four years including two years moratorium). The interest subvention would be limited to 12% per annum of which 5% would be met out of general budget provisions of the Centre and the remaining 7% from the Sugar Development Fund.

Govt holds interview to fill top bank positions

The government conducted interviews for the post of chairman and managing director of public sector banks, in which 11 candidates appeared. In addition, two deputy managing directors from Small Industries Development Bank of India (Sidbi) were also interviewed. The executive directors who appeared for the interview included RS Reddy, (Union Bank of India), KR Kamath and A Parulkar (Bank of India), SC Gupta, (Bank of Baroda), DL Rawal (Canara Bank) and JM Garg (Punjab National Bank). The two Sidbi deputy managing directors interviewed were Rakesh Rewari and Basant Seth. This is for the first time that officials from development finance institutions have been called for selection. Nine public sector bank heads are due to retire this year, starting with A K Khandelwal and C P Swarnkar of Bank of Baroda and Syndicate Bank, respectively, who will retire on March 31. The top jobs in Canara Bank, United Bank of India, Andhra Bank, Dena Bank, Corporation Bank, Vijaya Bank and Central Bank of India will also fall vacant during the course of the year. MD Mallya, CMD, Bank of Maharashtra, is expected to take charge as the head of Bank of Baroda, while Allahabad Bank Chairman AC Mahajan is tipped to head Canara Bank. Among executive directors, Allen Periera of Oriental Bank of Commerce is slated to join Bank of Maharashtra as its head. Periera was not interviewed this time around, as he had been selected as a prospective chairman in the previous round of interviews.

HDFC Bank ATMs upgraded

NCR Corporation has successfully upgraded 1,200 HDFC Bank automated teller machines (ATMs) with its ‘jitter-enabled' card readers that help make common types of skimming attempts ineffective. With this upgrade, all 1,910 ATMs of HDFC Bank are now equipped with ‘jitter-enabled' card readers.

ICICI Bank puts ‘high-risk’ loans on the block

ICICI Bank is understood to have sounded off a couple of foreign banks to buy out its Rs 2,000-crore small-ticket personal loans (STPL) portfolio, it is reliably learnt. Foreign banks such as Deutsche Bank, Standard Chartered and Barclays are understood to have been approached by the bank to pick the portfolio. ICICI Bank has decided to exit this ‘high-risk’ space a couple of months ago owing to the rising defaults in the segment. Currently, ICICI’s collection agency is handling the portfolio until it identifies a suitable buyer, it is learnt. The bank’s total STPL portfolio size is estimated to be around Rs 3,000 crore, of which the bank intends to sell Rs 2,000 crore. By acquiring the portfolio, new entrants in the retail banking space will be able secure a foothold in the market. Almost 70% customers in the portfolio will be good customers and it will enable the player to sell other products to the same customers.

'Staff crunch in public sector banks'

The public sector banks have a shortage of one lakh staff and the shortfall needs to be filled up immediately to cope with rapid expansion plans and provide better customer services. "People are retiring. And the banks also have rapid expansion plans. There is a staff shortage of around one lakh, including officers and other cadre," the General Secretary, All India Bank Officers' Confederation, Mr Amar Pal, said. The situation has come to such a pass that there has been virtually no recruitment for 20 years. Moreover, because of long-drawn recruitment process, it is found that many of those shortlisted for appointment have taken employment elsewhere, he said.

Union Bank imparting special training to officers

‘Plan for the future while competing in the present competitive environment’ is the strategy of Mr M.V. Nair, Chairman and Managing Director of Union Bank of India, for getting his organisation ready to face the challenges in the next decade In this regard, the bank has come out with a unique model, where it picked up 30 officials in the age group of 30 to 40 years for a year-long training at its training college in Bangalore. “It is like a capsule MBA programme. Thirty of them were given 15 projects. These projects are those which the bank wants to implement in future. They work on these projects. I personally monitor them,” he said. “Now the second batch is under going training. Every year, we want to train 30 such officers,” Mr Nair said. Fortunately, attrition at that level has been quite low. As of now, none from the first batch of officers has left. “This year, we are recruiting around 2,500 people at different levels. We also have put in place fast-track promotion process,” he said. Union Bank is planning to cover all its branches under core banking solutions (CBS) by the end of this financial year.

Govt fiat to bulk up PSBs

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

BoE cuts rates by 25 bps

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

Strike call by bank unions forum

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

BoI to raise about Rs 1,360 cr

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