Bank Strike on 28th Feb.2012

All the Central Trade Unions ( BMS- INTUC- AITUC- HMS- CITU- AIUTUC – AICCTU – TUCC – UTUC – LPF – SEWA ) have jointly given a call for General Strike on 28th February, 2012 against the anti-labour and anti-worker policies of the Government with the following issues and demands: 1) Concrete measures to contain price rise 2) Concrete measures for linkage of employment protection with the concession / incentive package offered to the entrepreneurs 3) Strict enforcement of all basic labour laws 4) Universal security cover for the unorganized sector workers without any restriction and creation of a National Social Security Fund with adequate resources in line with the recommendation of NCEUS and Parliamentary Standing Committing on Labour 5) Stoppage of disinvestment in Central and State Public Sector undertakings. 6) No contractorisation of work of permanent / perennial nature and till then payment of wages and benefits to the contract workers at the same rate as available to the regular workers of the industry / establishment. 7) Amendment of minimum Wages Act to ensure universal coverage irrespective of the Schedules and fixation of statutory minimum wage at not less than Rs. 10,000 per month with indexation. 8) Removal of all ceilings on payment and eligibility of Bonus, Provident Fund; Increase in the quantum of Gratuity. 9) Assured Pension for all 10) Compulsory registration of trade unions within a period of 45 days and immediate ratification of ILO Conventions No. 87 and 98. Bank Strike: Five lacs of bank employees under the banner of AIBEA support these demands and has decided to join the strike call. AIBEA will also focus its following demands on the occasion of the strike: Oppose implementation of Khandelwal Committee recommendations Oppose Banking Law ( Amendment ) Bill and other reform measures Oppose outsourcing of regular bank jobs Demanding stringent measures to recover bad loans in banks Oppose undue delay in settlement of pending demands We oppose Khandelwal Committee recommendations The Government appointed the Khandelwal Committee on staff related matters and this Committee has given various anti-employee recommendations like: Abolition of industry-wise common Wage Revision Settlement existing since 1966 and introduce bankwise wage revision Abolition of existing uniform wage pattern for bank employees/officers and introduce differential incentive based salary Free hand to managements to outsource all regular banking jobs and give them on contract basis. No recruitment of clerks in Metro/Urban areas. Compulsory rural service of 3 years for clerical staff in Banks Minimum qualification for recruitment of clerks to be Graduation Minimum qualification for recruitment of subordinate employees to be 10th Std Reduction in promotional opportunities for clerical staff All these are anti-employee measures and hence UFBU opposes the same We oppose Banking sector reforms: Banks represent the hard earned savings of the people of this country. The total Deposits in the Banks today have crossed Rs. 55 lacs crores. Hence the Banks have to be strengthened so that the problems that the Banks faced in USA and other countries faced are not faced by our Banks. But unfortunately, the Government is bent upon liberalizing our banking sector. Some of the measures are: Amending Banking Regulations Act and Bank Nationalisation Act Reduce Government’s Equity Capital in Government/nationalised Banks. Availing Loan from World Bank to contribute to the capital of Banks. Merger of Public Sector Banks Allowing more Foreign Capital in our Banks Allowing more voting rights in Banks for foreign capital Encouraging private capital in nationalised Banks Allowing corporate houses to start their own Banks Write off of huge bad loans of corporate sector Converting Bad Loans of defaulting companies as capital investments of Banks in the same defaulting company. All these measures are against the interest of our banking sector and hence UFBU opposes the same. We oppose outsourcing of regular bank jobs: The Bank managements, in violation of the existing bilateral settlement, are attempting to outsource all regular bank jobs to private contract agencies. This will affect the job security of the employees and job opportunities for the young educated youth. This will also endanger the interests of the bank customers as many banks have bitter experience with the contract employees in various countries. We demands stringent measures to recover bad loans: Bad Loans/NPAs in the Banks are increasing. In the last one year, Rs. 70,000 crores of bad loans have been added. Pepople’s money is being looted by the corporates. Government must take stringent measures to recover these bad loans. We demand immediate settlement of our Demands: Many important issues like implementation of mutually agreed scheme on compassionate ground appointments/financial compensation to family of deceased employees, regulated working hours for officers, adherence to stipulated working hours for clerks, introduction of 5-Day banking, improvements in pension scheme for retired employees, improvement in Staff Welfare Schemes, etc. are pending for a long time without any solution.

Do you know?

You can avail additional deduction of Rs.20000 from your income under section 80 CCF by subscribing to notified long term infrastructure bonds. This deduction is in addition to Rs.100000 you get under section 80 C for Provident Fund Contribution, LIC premium Payment, NSC, ELSS, Tuition Fee etc. So in total you can reduce your total income by Rs.120000 under above.

LIC picks up additional 5% stake in Dena Bank

Dena Bank issued 5% equity in favour of LIC of India on Preferential Allotment. With this the total holding of LIC in Dena Bank stood at 6%. And the government stake is reduced to 55%. The move has come after government which is cash strapped to infuse fresh equity to the government banks requested LIC to pick up the stake. The deal is valued at around Rs.125 crore.

CSIS

CSIS Central Scheme of Interest Subsidy for Education Loans It is well known fact that education is one of the major concerns of the government and nobody should be denied of education only because he is poor. To help the economically weaker section students the central government has introduced an interest subsidy scheme. The Central Government has introduced a scheme to provide Interest Subsidy upto moratorium period of educational loans availed by economically weaker section of students for their technical/professional studies in India conducted by recognized institutions from scheduled banks. The period of moratorium means Course period plus one year OR six months after getting the job which ever is earlier. Economically Weaker Section students means students whose family/parental income from all sources is less than Rs.4.5 lakhs per anum. The income assessing authority will have to be notified by each state as per directives of Ministry of HRD, Government of India. Majority of states have declared Income certificate issued by Tahsildar is valid income proof. The student will get full interest subsidy on his loan amount till course period plus one year or six months of getting job whichever is earlier. The student will also be eligible for getting 1% interest subsidy that he is getting for prompt repayment of interest debited during the month on his education loan account within 30 days of debit. Applicability of student: 1. Economically weaker section students 2. Studies in India 3. Professional and Technical studies 4. From recognized institutions 5. Loans taken from Scheduled Banks 6. Only for students who have taken professional/technical courses after 10 + 2 Interest subsidy if available only once for a student either for graduation or postgraduation. But when the student undertakes integrated course then CSIS is applicable in that case. The subidy will not be available once the student discontinues the course OR expelled from the college or disciplinary grounds. But where the student discontinues the course due to medical reason and if he provides sufficient proof for the same the CSIS can be given. The marks card of the student who had availed CSIS scheme bears a Tag to the effect that the student is covered under CSIS scheme to check for the regular repayment and the employers can identify the loanee. Canara Bank will be the Nodal Bank for the scheme. The Government will request for claim in specified formats. All banks will forward their claims to Canara Bank in those formats which in turn will be claiming it from the Government and the received subsidy will be distributed to member banks as per their claims. Applicability of the Scheme: The scheme is implemented from 2009-10 i.e., from 1st April 2009. All loans taken wef 1st April 2009 which fulfills the conditions set out under the scheme will be covered under CSIS and also the loans sanctioned before 1st April 2009 where part disbursement is made on or after 1st April 2009 which fulfills the scheme guidelines will be covered under the scheme to the extent released after 1st April 2009. The role of Student: 1. If you have taken loan from any scheduled bank and you fulfill the conditions set out to get subsidy kindly visit the bank branch where you have taken education loan to get full scheme guidelines. 2. Provide income certificate to bank authorities as per the formats provided by bank and as per the income assessing authority for your state (mostly Tahsildar). 3. Sign agreement along with your parent and bank to get yourself covered under the scheme. 4. Now you are covered under the scheme. The role of Bank: 1. If any student approaches you kindly verify if he can be covered under the scheme by going through guidelines. 2. If he can be covered then get Income certificate from the student (income of parent/family) 3. Get the agreement as set out by Ministry of HRD, Government of India duly signed by student and his parent. 4. Send the claim (half yearly/ yearly) as called by Nodal Bank (Canara Bank) or your Controlling Office. 5. On receipt of the claim kindly credit to loan account of student.

Bank Stocks

The closing price of Bank Stocks on NSE as on 03-Feb-2012 (Value in Rupees) Allahabad Bank 173 Andhra Bank 110 Axis Bank 1099 Bank of Baroda 763 Bank of India 349 Canara Bank 483 Central Bank 86 Corporation Bank 430 Federal Bank 403 HDFC Bank 506 ICICI Bank 915 IDBI Bank 100 Indian Bank 234 Indian Overseas Bank 88 IndusInd Bank 299 ING Vysya Bank 326 Kotak Mahindra Bank 517 Oriental Bank of Commerce 288 Punjab National Bank 962 State Bank of India 2103 Syndicate Bank 101 UCO Bank 72 Union Bank of India 229 Yes Bank 345

Base Rate

Base Rate is introduced in Indian banking system wef 01.07.2010. The base rate relates to interest charged by the banks on their advances. Before introduction of base rates Indian Banks used to give loans to corporates at very low rates. The amounts involved were also huge. Hence RBI felt the need to floor the rate charged by banks hence base rates were introduced. The base rates relates to the minimum rate that the bank can charge on any loan to anyone. They cannot lend below that rate. The banks were given freedom to fix their base rate based on their cost of funds, liquidity position etc.

Defaulters Photos to be published in newspaper

Are you aware that while signing loan documents banks take a undertaking from you which allows them to publish your photo in whichever mode they like if you default your loan payments. This also allows them to share data with CIBIL and RBI. They can also share your information with any one. Hence Beware. Now, banks are thinking to publish the photos of defaulters in the newspaper.

SB interest calculation

Interest on Savings Bank account is now being calculated on day end balance from 1st April 2011. Thus ending menthod of calculating SB interest on minimum balance during the month from 10th to last day.

Bankers you will surely need this

Auto Classification of Assets

Have you taken any loan from the bank and not so prompt in making repayment, then be cautious as the banks have introduced Auto Classification of its advances as per RBI's Directives. Auto classification means the system automatically downgrades/upgrades your account based on your repayment and the repayment terms of the bank. Till now banks were doing it manually and there were chances that the branch did not make your account as Non-Performing Asset even if your loan is overdue for more than 90 days as stipulated by RBI. Now the system automaticlly does the things and hence more transperancy in NPA declaration by the banks. All banks are mandatorily switched to Auto Classification from December 2011.

Recruitment for Punjab and Sind Bank

Government Sector bank, Punjab & Sind Bank has called applications to fill various vacancies for its offices all over India. Clerks : 300 posts in various states (UR-158,OBC-70, SC-56, ST-10), Pay Scale : Rs. 6200 – 23900, Age : 18-28years Probationary Officer : 450 posts, Pay Scale : Rs. 14500 – 25700, Age : 30 years Hindi Officer : 10 posts, Pay Scale : Rs. 14500 – 25700, Age : 30 years Security Officer : 25 posts, Pay Scale : Rs. 14500 – 25700, Age : 30 years Agriculture Field Officer : 100 posts, Pay Scale : Rs. 14500 – 25700, Age : 30 years Chartered Accountant : 30 posts, Pay Scale : Rs. 19400-28100, 32 years EDP Officer : 50 posts, Pay Scale : Rs. 19400-28100, 32 years Forex Officer : 25 posts, Pay Scale : Rs. 19400-28100, 32 years Forex Officer : 10 posts, Pay Scale : Rs. 25700 - 31500, 35 years EDP Officer : 10 posts, Pay Scale : Rs. 25700 - 31500, Age : 35 year Start of the reciept Online applications : 09/10/2010 Last date for Receipt of Application : 08/11/2010 for more details kindly visit the link below;

How do banks calculate interest on your savings bank account ?

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

Guidelines soon on pre-paid payment instruments

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

‘No prior approval needed to set up offsite ATMs’

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

ICICI Bank cuts lending, deposit rates

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

RBI's Annual Policy Statement - 2009-10

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

SIB exceeds NPA recovery target by 50%

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

OBC cuts deposit rates

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

Shikha Sharma is new MD and CEO of Axis Bank

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

RBI defers foreign bank liberalization

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

BoB to finance Nano loan

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

RBI widens scope of unsecured loans

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

SBI mulls further cut in lending rate

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

Bank of India cuts deposit rates

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

Debar loan defaulters from contesting elections: AIBEA

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

Rating agencies, banks differ over loan defaults

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

RBI for ramps at ATMs, banks

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

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

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

IOB to absorb 75% employees of Shree Suvarna Sahakari Bank

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

National Award For Canara Bank

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

Recruitment in United Bank of India

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

Lenders to have final say in NPA classification: HC

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

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

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

State Bank of Hyderabad to recruit 2,000

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

Private banks likely to quit auto loan business

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

Opening Savings Bank Account

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

Bank schemes for Nano

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

Banks prefer ‘safe’ customers for personal loans

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

Andhra Bank to hire over 1,000

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

Cautious banks want FD to issue Credit Cards

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

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

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

PNB’s second branch in Hong Kong

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

SBI staff defer Strike on 8th and 9th April

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

Hitches mark first day of free ATM usage

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

Indian Bank, LVB cut term deposit rates

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

United Bank likely to go for IPO in 6 months

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

TMB cuts domestic deposit rates

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

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.

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Corporation Bank, Union Bank of India and SBI are recruiting. Visit their websites for more details.

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.