Friday, June 20, 2008

FM launched microcredit scheme for slum dwellers

As per government of India press release finance Minister, Shri P. Chidambaram along with Chief Minister, NCT of Delhi, Smt. Sheila Dixit launched, a Pilot Microcredit Scheme for slum dwellers of Ekta Vihar in Delhi under which loans will be provided to them at reasonable rates of interest. Under this scheme the slum dwellers will be able to take loans for retail trade, auto rickshaws and other vehicles, home improvement, education and other purposes. The loan beneficiaries will also be able to obtain life insurance cover from LIC. This scheme have great prospective to improve the prosperity and opportunities of the slum dwellers and its successfulness will enable to extend its implementation in other slum areas, both in Delhi and beyond. There are around 4 million slum dwellers in Delhi, the majority of them have been debarred from the benefits of India's economic growth and are unable to access financial services.

The Pilot Scheme has been prepared after having discussion with select Public Sector Banks and an NGO the ASHA Community Health and Development Society, working for the health and development of slum areas to provide micro credit to slum dwellers in Ekta Vihar. The Scheme is part of the Government plan to improve the level of financial inclusion in the country.

The public sector banks that are part of this scheme are: Andhra Bank, Bank of India, Canara Bank, Indian Overseas Bank, Punjab National Bank, and State Bank of India, Syndicate Bank, UCO Bank and Vijaya Bank. Life insurance cover to the slum dwellers is being provided by the Life insurance Corporation of India.

Thursday, June 19, 2008

UBI not to hike lending rates but might review incase of increase in CRR

The Reserve Bank of India has raised repo rate to control rising inflation. Due to rising pressure banks have started considering hiking the lending rates as well as depositing rates. Though, United Bank of India (UBI) in view of rising pressure in the net interest margins still have not made up its mind to hike the lending rates at the moment but might review its decision if the apex bank further increases the CRR.

"It is increasingly becoming difficult to maintain the interest rate structure, considering the immense pressure in the NIM. As of now we can adjust the price as most of the lending rates are below the PLR (Prime Lending Rates), however question remains for how long we would be able to sustain with this," said PK Gupta, Chairman and Managing Director, UBI.

The CMD also stated that the bank’s credit off take has been slower as compared to the March, 2008 levels.

"There has been a decline in the credit off take compared to the last quarter," he said.
"Logically speaking, there would be a slow down in the credit off takes on the account of the higher interest rates," he added.

According to the sources closely related to the development of the bank stated that bank has gained particularly in the corporate advances and home and auto loan segments.

"We are experiencing a poor credit growth since March, and the corporate lending has suffered the most during this period," the executive from the bank said.

In the mean time UBI has increased interest rates on domestic term deposits by 25 to 50 basis points.

The new deposits rates for the one year time span has been increased to 8.5 per cent while for the period between two years to three years it will be 8.75 per cent, compared to 8 per cent earlier.

Wednesday, June 18, 2008

Canara, HSBC and OBC life insurance co starts its operation

Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd, a partnership between two nationalized banks -- Canara Bank and Oriental Bank of Commerce and HSBC Insurance (Asia Pacific) Holdings Ltd, the Asian insurance arm of HSBC, started its operations from its headquarter in Gurgaon. On the first day Union Finance Minister P Chidambaram gave away the first 8 policies of the company to underprivileged children at a function.

The new company is capitalized at Rs 325 crore ($81 million). In this partnership Canara Bank has the major stake of 51 per cent in the company; HSBC and OBC have 26 per cent and 23 per cent respectively. In the beginning the company has launched 8 types of life insurance policies with a mix of traditional and unit-linked schemes. The company’s main focus will be on the banc assurance model. The company has an exclusive customer base of 40 million customers and a nationwide network of 4,000 branches.

Tuesday, June 17, 2008

StanChart offers unique risk cover for lost credit card

In case you loose credit card then it adds up to your worries especially fraudulent purchases. Now if you are StanChart credit cardholder then there is a good news for you.

Standard Chartered Bank has signed an agreement with Tata AIG General Insurance Company Ltd to provide a risk cover the Plus Extended Protection Plan for lost cards that will protect customers against fraudulent transactions. This is first of its kind service being offered by the bank in the domestic credit card industry.

This risk cover for lost cards will bring big relief for the cardholders who are already burdened with high interest rates. Under the risk cover lost cards will now be insured against any misuse, the insurance cover will be valid for any fraudulent transaction on a card up to 12 hours prior to the customer reporting the loss.

Stanchart Chartered’s general manager (credit cards and personal loans), R. L. Prasad, said in a statement, “We receive several reports of lost cards in a month. The product will ensure protection to our valued customers against any fraudulent use.”

Standard Chartered Bank, which contends against aggressive players such as ICICI Bank, Citibank, the State Bank of India and ICICI Bank in the credit card segment, hopes that this move will help it to reach out to people who are reluctant to apply for credit cards because of risks.

Gaurav D. Garg, managing director of Tata AIG General Insurance Company Ltd, said, “People are moving away from conventional modes of payment and a large number are opting for cards. This product seeks to encourage the confidence of the people who use credit cards.”

Standard Chartered said under this cover in the event of fraud, customers will receive a reimbursement up to Rs 50,000 per occurrence. The plan also covers ATM assault and robbery insurance, lost wallet protection, purchase protection and home protection.

At present Standard Chartered has 90 branches in 33 cities in the country and has a combined customer-base of around 21 lakh. In the recent times the credit card base in India has expanded as banks have turned aggressive and the plastic culture spread among individuals.

According to recent figures available the total outstanding in India stands at over Rs 19,000 crore. As per Reserve Bank of India data, there are 2.6 crore credit card users in India with ICICI Bank being the market leader.

Most of the credit card companies offer insurance, in the form of a “credit shield” where part of an individual’s outstanding is paid if the cardholder dies or is permanently disabled.

Monday, June 16, 2008

Saraswat Bank to take over three cooperative banks this financial year

Saraswat Bank Director Ekanath K Thakur told the reporters that it will be taking over three cooperative banks in this financial year with this the total number of its acquisition will go to eight.

The three banks are The South Indian Cooperative Bank, Amaravati Cooperative Bank and Sirushi Cooperative Bank in Karnataka. He said, "We hope to complete the acquisition of The South Indian Cooperative Bank by August. The Reserve Bank has been informed about it."

Previously bank had taken over Maratha Mandir Cooperative Bank, Mandvi Cooperative Bank, Nashik People's Cooperative Bank, Annasaheb Karale Janata Sahakari Bank and Murgharajendra Sahakari Banki.

Saraswat Bank's net profit for the year-ended March, showed an increase of 30.34 per cent to Rs 202.26 crore against Rs 155.18 crore a year ago.

"This is the first time, we are crossing the Rs 200 crore marks in the bank's 100 year history," he said.

The bank's total business went up by 23.43 per cent for the reporting year to Rs 18,879.13 crore against Rs 15,295.40 crore a year ago.

Thakur informed that Saraswat Bank's return on assets have gone ahead that of State Bank of India and ICICI Bank, i.e. it was 1.71 per cent for the reporting year against SBI's 1.01 per cent and ICICI's 1.12 per cent.

Thursday, June 12, 2008

Banks soon to announce hike in interest rates

Banks will be soon announcing hike in rates in view of hike in the repo rate by 25 basis points to 8% by the Reserve Bank of India (RBI). Interest rates will be moving upward soon.
OP Bhatt, chairman, State Bank of India, the country’s largest bank, said: “We have called a meeting of our ALCO on Friday and may take a decision on our lending as well as deposit rates. The repo rate hike by the RBI has definitely put pressure on the pricing of our money.”

On the other side the country’s second largest lender ICICI bank is not in a hurry to do anything at present. Chanda Kochhar, joint managing director, ICICI Bank said, “The liquidity situation continues to be neutral. ICICI Bank will monitor the impact of this hike and take a decision at an appropriate time”.

MV Nair, CMD, Union Bank of India said: “I think overall, the interest rates will move up now due to the RBI step. We will take a call when our ALCO meets next week.’’

RBI has increased only the repo rate and left the reverse repo rate untouched; bankers believe that RBI has given a clear-cut signal that banks should manage their own liquidity. “If they borrow from the RBI, it will be costlier now. By doing it, the RBI has just adopted one of its many tools in the direction of controlling inflation,’’ he said.

MBN Rao, CMD, Canara Bank, said: “Immediately there may not be any impact on our lending rates, but in the short term, inter-bank lending rates like call money may be affected, which may move on the higher side.’’

Most of the bankers expected hike in repo rate. Rao said RBI announcement has come at the right time when inflation had exceeded the limit of 8% and money supply is on the higher side.

“Yes, it will help control inflation to a certain extent. But our worry is what will happen if inflation continues to be above 8% for some more time in future. While Canara bank’s 20% portfolio was in the lending sector, 31% portfolio was in the investment side which it can bring down by 6% to absorb the repo rate hike,” he explained. “This I can do even without passing it on to our customers,’’ he said.

For the time being home loan borrowers may not be hit by the hike. Keki Mistry, vice-chairman, HDFC, said: “We will... not do anything immediately and will watch the market for a week or two before revising our home loan rates. Actually, we will see our cost of funds before taking a call on interest rates.’’

Even the industry chambers did not expected the hike. Commenting on the increase in the repo rate by the RBI, Ficci said that the 25 basis point increase in the repo rate was expected as inflationary pressures were building up and inflation had touched 8.24% for the week ending May 24, 2008 .

However Ficci, is still repeating its stand that interest rate hike at this point is not advisable particularly when the tightening monetary policy stand of the RBI has had an adverse impact on industrial growth.

Larsen & Toubro chief financial officer YM Deosthalee said: “A 25 basis point increase in repo rate had already been discounted. This was expected, considering the pace at which inflation is rising. RBI had to take some action to control it. Investments are made over a long duration and are not decided on the interest rates prevailing at a point in time. So, I don't think we will see any cutback on capex plans by Companies.

“Basically, capital goods Companies decide to invest on the basis of capacities and take a long-term view. Companies in the consumer credit or retail business may feel the impact.''

Meanwhile Lehman Brothers Holdings Inc., Standard Chartered Bank and ICICI Securities are expecting inflation rate to rise by 9.5 %, the highest since 1995. Inflation is currently at 8.24%, near a four-year high. The increase in fuel prices announced on June 4 will be reflected in price data due for release on June 20....

Wednesday, June 11, 2008

State-run banks charge their customers to cover costs for various services

There is a perception that private sector banks charge more for customer service than the state-run banks which has proved wrong.

Recently Reserve Bank of India (RBI) conducted a survey to the study the fees levied by the banks on their customers. According to the survey report for services such as mailing a cheque book, monthly accounts statement or collection of outstation cheques, most public sector banks are charging their customers more than their private sector counterparts.

An RBI official whose name has been kept anonymous told, “We carried out this exercise as customers complained that banks are going overboard with courier and postage charges”. “Our aim is to ensure that charges are reasonable and are decided by market forces and competition. For banks, interest should be the main source of income and not these service charges,’’ he added.

The report stated most of the public sector banks recover actual costs from their customers for delivery of cheque books and account statements at their homes and some banks for instance, Chennai-based Indian Bank has extra charges for sending a statement. Bank charges Rs23 to send a statement to its customers’ homes in addition to the actual postage. It even charges Rs12 for emailing a statement.

While leading private banks such as ICICI Bank Ltd, HDFC Bank Ltd, Axis Bank Ltd and Kotak Mahindra Bank Ltd are providing such services free. Even Citibank NA, Hongkong and Shanghai Banking Corp. Ltd (HSBC) and Standard Chartered Bank do not charge a fee to send statements to customers’ homes.

The public sector banks such as State Bank of Bikaner and Jaipur, a State Bank of India associate levies a courier charge on customers on collection of outstation cheques. The public sector banks charging fees for the service also vary according to the denomination of cheques. On the other hand private banks have uniform charges irrespective of the value of a cheque.

Earlier, the central bank had prepared an internal report on “reasonableness of bank charges” in which it was stated that providing cheque books, pass books or bank statements, and automated teller machine (ATM) cards as basic services. The report said collection of local and outstation cheques must also be treated as a basic service, sending a signal to commercial banks on what it considered to be essential and low-cost services.

“The central bank is not here to prescribe any rates,” said the RBI official. “However, we will, at regular intervals, ensure that they are reasonable. We believe in moral persuasion. If banks don’t get the message, we could look at issuing a notification, like we did in the case of ATM services,” said the RBI official.

Recently the central bank instructed banks to limit charges for withdrawal of cash from the ATMs of other banks at Rs20 per transaction, from Rs55 earlier. The new rates came into effect from March onwards. RBI also suggested that cash withdrawals from any bank’s ATM should be made free from April 2009. The central bank made balance enquiries at all ATMs free in spite of the protest by some banks.

Tuesday, June 10, 2008

South Indian Bank tie-up with Birla Sun Life Mutual Fund to distribute 'Century SIP'

South Indian bank has a strong presence in Kerala with about 300 CBS branches, signed an agreement with Birla Sun Life Mutual Fund for making easy online Mutual Fund investment and utility bill payments by its net banking customers. Speaking at the inaugural function held at Taj Residency, Ernakulam ,Mr.M.Valsan, Executive Director of South Indian Bank told that with this arrangement large number of NRI customers and young account holders of the bank will be highly benefited.

Mr.Valsan added being a tech-savvy Bank with a CBS network of 502 branches, it has an aim to offer more and more convenience and novelty in banking to its customers.

Mr.Kalpen Parekh,National Head-Sales of Birla Sun Life Mutual Fund ,Mr.Alex Mathew,General Manager, ,Mr.C.J.Jose Mohan ,Dy.General Manager and Mr.A.Narendran Asst.General Manager of South Indian Bank were also present and spoke on the occasion.

Birla Sun Life Mutual Fund in the past few years has emerged as one of India’s leading Mutual Funds managing assets of a large investor base, is now offering a range of investment options which include diversified and sector-specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a vide range of debt and treasury products and offshore funds.

Birla Sun Life-AMC will be bearing the cost of insurance of the’ Century SIP’ products. Minimum/maximum eligibility for insurance cover is 18 years/below 46 years and the cover continues up to the age of 55. Whereas insurance cover is not provided by other companies if SIP stops before maturity, for investors in ‘Century SIP’ of Birla Sun Life, insurance cover continues even if SIP stops before maturity.

Systematic investing is very similar to a Recurring Deposit with a Bank. It is a very wise method of investing pre-determined amounts of money to get regular benefit from the stock market instability. Investing under ‘SIP’ is quite convenient and hassle-free with automatic investments by giving a one-time instruction. It is also light on the wallet as the lowest amount of investment is Rs 1000 per month.

Thursday, June 5, 2008

HSBC India: Lending rates to remain “flat” in the near-term

According to top banker banks lending rates do not seem to come down they are likely to remain “flat” in the near-term. HSBC India Chief, Naina Lal Kidwai said "Lending rates do not look like going down — I expect them to remain flat in the near-term."

Regarding longer-term she said at present it is difficult for her to comment as rate movements will depend upon several factors. She added, "but I don't see them moving down."

She further added the spate of hikes in the cash reserve ratio (CRR) which was effected by the Reserve Bank of India over the last one year has started reflecting in cost of funds increasing as the cost of funds for banks is increasing.

She stated the CRR hikes have impacted in terms of both cost of money and liquidity.

"There is an impact on the liquidity position (following the 0.75 per cent hike in CRR effected recently by the BRI)," Kidwai said.

Tuesday, June 3, 2008

Banks to open next-gen banking outlets to lure younger lot

The basic need for banking transaction is an ATM machine. But now banks in order to lure and pamper their customers especially young, trendy and tech savvy students, professionals and entrepreneurs, several banks are opening next-gen 24/7banking outlets of 300 to 500 sq ft. These banking lounges will have facilities like LCD TVs, libraries, Wi-Fi internet access and coffee bars.

Bank of Baroda has already set up its new-era branches named "Ur Zone" in Bangalore and Pune. M D Mallya, CMD, Bank of Baroda told that the new –era branch is a fusion of hi-tech and high-touch banking self-service facility.

He said, "We have already opened next-gem branches in two cities. By the end of this year we plan to open more such outlets in all metros." Through these lounge branches exclusive products and hassle-free services are being offered like single loan application, built-in overdraft facility and products of liquidity and high returns.

"After the opening of our Bangalore branch, we see an increase in the number of new accounts especially among youngsters," he says.

A spokesperson from SBI said, State Bank of India under its business process re-engineering program has renovated several of its branches built on an area of 3,000 sq ft to 5,000 sq ft "We are creating 24/7, dedicated, 300 sq.ft lounges with access to ATM, internet banking, phone banking and other kind of hi-tech transactions in a couple of months. All branches in Bangalore will have this facility, apart from other metros and later in tier II cities."

Vijaya Bank and Canara Bank too have plans to scheme into similar initiatives. Prakash P Mallya, CMD of Vijaya Bank informed, "If market demands we will look at specialized branches exclusively to attract young crowd. But before that we need to do a lot of homework, to open state-of-the art smart branches."

Canara Bank has plans to set up branches with self-assist centers in the lobby where customers can do their banking on their own having a couple of smart, well-groomed professionals who would guide customers with their queries. However, private banks like YES Bank are already offering such services. YES Bank has an exclusively designed area called Knowledge Cafeto, which is Wi-Fi enabled. These cafes have space for business discussions, advisory services and research options.

Kotak Mahindra bank opened 1st Priority Branch for its HNI customers

Kotak Mahindra Bank leading private sector bank opened its first Priority Banking Branch for its HNI & Priority customers at Juhu in Mumbai. The branch was inaugurated by Mr. KVS Manian, Group Head, Retail Liabilities and Branch Banking, Kotak Mahindra Bank & Mr. Paul de Voijs, MD of Volvo Car, India. The Branch is located at Maitri, Plot No 10 Road No.10 JVPD scheme, Juhu, Vile Parle (West), Mumbai 400049

Speaking at the inaugural function of the new priority branch, KVS Manian, Group Head, Retail Liabilities & Branch Banking, Kotak Mahindra Bank Limited said, “The launch of the Kotak Mahindra Bank, Juhu, and Priority Banking Branch is in line with our commitment to provide a complete suite of financial solutions that cater to diverse and growing needs of our HNI customers. The increasing customized financial needs have made it imperative to design and evolve our products and services to cater to the requirements of customer needs. The exclusive Priority Lounge- designed for our HNI & Priority customers – will enable them to experience banking, investment advisory services and other financial needs in an aesthetic and affluent environment”.

He further added, “With this launch, we have taken a step forward towards integrating and offering our customers financial products, safety and luxury, all under one roof. With a dedicated team in place, we intend to customize our services for all our HNI customers. We are looking forward to opening more such branches in the coming financial year.”

To celebrate the launch of the first Priority branch an event was organized displaying a perfect blend of financial services and exclusive lifestyle benefits. Event included newly launched Volvo S80 and Volvo XC 90 luxury cars, which were brought in for an exclusive test drive, for the first time in Mumbai. There was a special art exhibition also for HNI customers exhibiting collection of leading artists such as S.H. Raza, Francis Newton Souza, C. Douglas at Priority Lounge. The event was enjoyed by the customers more than a select range of wine and cheese.

Monday, June 2, 2008

Govt support merger of four RRBs

The central government is assisting merger of four regional rural banks (RRBs), in order to speed up unification among RRBs. Among RRBs merger Ratnagiri Sindhudurg Gramin Bank and Solapur Gramin Bank is in top priority and both the banks are being sponsored by Bank of India. As per government sources Jammu Rural Bank is being merged with Kamraz Rural Bank. Both the banks are being sponsored by J&K Bank and are located in Jammu & Kashmir.

According to sources Kosi Kshetriya Gramin Bank (KGB) and Uttar Bihar KGB, both located in Bihar were merged in May while processing of two other RRB mergers is being worked on. The main aim behind the RRB mergers is to strengthen the rural credit delivery system especially keeping in view the farm loan waiver, moreover the government is working on to ensure that rural poor don’t have to depend on money lenders.

The other banks which are in process of merger are Ballia KGB and Etawah KGB, both sponsored by Central Bank of India. Likewise, Lucknow KGB and Triveni KGB –– both are being sponsored by Allahabad Bank. These four RRBs are located in Uttar Pradesh

According to sources more mergers among RRBs is likely to take place during the current fiscal year. The government is selecting the banks for merger mainly having same sponsor and those located with the same state. In 2005 the process of structural consolidation of RRBs was started and from then the number of RRBs has reduced to 88 as compared to 196. the sources said more consolidation will further bring down the number.

Government sources said central government is encouraging expansion of RRBs and the consolidation process is being facilitated to ensure that these banks become capable to compete with other banks and be in good health for rapid expansion. Central government is giving more than Rs 100 crore for recapitalization of RRBs. This is additional to the Rs 303 crore released in March 2008.

The next grant of Rs 100 crore will benefit Bihar Kshetriya Gramin Bank, Vananchal Gramin Bank, Bangiya Gramin Vikash Bank and Samastipur Kshetriya Gramin Bank. According to government calculation, 27 RRBs need recapitalisation of Rs 1,795 crore. Out of which 11 have undergone mergers while the others are operating as stand-alone units.

From the time the government has started supporting consolidation of RRBs around 268 new branches have been launched recently. Till now Reserve Bank has cleared 554 out of 749 applications from this sector for new branches.

RRBs are owned jointly by the Centre, concerned state governments and sponsor banks. In which the Centre holds 50%, states have 35% and the balance 15% is with the sponsor bank.