Thursday, December 31, 2009
There have been instances where mobile banking has proved to be the convenient medium for information. In one such instance Mr N. Ramesh, a staffer of Infosys received the SMS - “Your account is debited by Rs 15,000.” Bank timely action saved N. Ramesh from losing Rs 2.5 lakh in his ICICI Bank account. One of his servants has fraudulently used his debit card.
In another incidence Mr H.V. Murthy, would have transferred Rs 5,000 to his son's account who study in BITS, Pilani- Goa campus, but he got held up on the highway on his way to Visakhapatnam due to the Telangana trouble.
In such type of incidence mobile banking has been very useful in saving money of the bank customers, as banks alerted their customers on time which saved them from losing their money.
In India around thirty-two banks have got approval for offering mobile banking services, out of these 21 banks have started offering these services.
The banks who have initiated these services are mostly private banks and these banks are in the process of introducing new technologies to improve services, on the other hand some of the public sector banks have started following the private banks.
The Reserve Bank of India is also encouraging the general public to use mobile banking services in view of this, to boost these offering, the RBI has few days back increased the cap on daily mobile transactions to Rs 50,000 from the earlier limit of Rs 5,000.
A spokesperson from ICICI Bank told Business Line, “We have witnessed an increasing trend of customers registering for mobile banking.” In 2003 bank had launched mobile banking facility for its customers and since then it has been offering various mobile banking options, now eight million customers have registered for mobile banking services.
ICICI Bank has various options, from simple SMS alerts to a rich client-based application, iMobile, through which customers can practically do all Internet banking transactions using mobile phones. The spokesperson informed, “We would like to enhance the number of transactional services to make mobile a main banking channel for customers.”
Mr. Sanjeev Patel, EVP & Head, Direct Banking channels, HDFC Bank informed HDFC Bank customers carry out both types of financial transactions fund transfers and merchants payments. Thus both type of financial transactions done stands to equal. He said, “The balance enquiry and mini statement constitute 98 per cent of the non-financial Mobile Banking transactions.”
He stated, HDFC Bank has over five million registered users and it will continue to introduce new services such as banking for unbanked/rural customer, secure online payments using ‘card on mobile', etc, apart from extending the existing services under NetBanking suite on the mobile.
Now public sector banks (PSBs) have started looking at this as a value addition to their services. Amongst PSBs State Bank of India is the first one to introduce mobile banking facility and has seen a sharp increase in customers registering for mobile banking. Last fiscal there were around 6,000 bank customers using mobile banking services.
By September bank’s mobile banking using customer base increased to over 51,000. Bank witnessed increase in the number of transactions also it increased from about 68,000 to over 5.5 lakh during the same period. Mr Shiva Kumar, Chief General Manager, SBI, Hyderabad, informed, “It is growing because of inherent advantages.”
A senior official of Allahabad Bank pointed out many of the public sector banks are focusing on rural customers and large number of rural customers are not aware about mobile banking services this could be reason behind the slow growth of these banks.
Recently, while speaking at the India Telecom conference earlier this month, Dr K.C. Chakraborty, Deputy Governor of RBI said, “We recognize that mobile phone can be an important mode for propagation of financial inclusion in the country. The coverage of mobile phones and the use of such instruments by all section of the population can be exploited for extending financial services to the excluded populations.”
He also pointed out that banks are mostly setting eyes on high net worth customers who book their airline tickets and do large ticket transactions through mobile banking. He asked, “Why are banks not facilitating low value transactions”? He said now banks should take up a challenge to encourage low value transactions through these services.
Tuesday, December 29, 2009
The car maker in a statement said as per the agreement Axis bank is one of the preferred financier of Honda Siel Cars India (HSCI).
HSCI Director (Marketing) T Natsume informed, "With this tie-up Honda Siel and Axis Bank have agreed to pool their resources together to make accessible organized finance at competitive rates to our dealers and customers across the country for purchase of Honda cars."
Axis Bank has also agreed to provide finance to the dealers of Honda Siel on their vehicle stock as well as provide retail finance for auto loans.
Expressing views on the MoU, Axis Bank executive director (Retail Banking, SME and Agri) SK Chakrabarti said, "This agreement will further give us the opportunity to provide our customers more value added services at competitive rates and expose them to our various offerings. This partnership with Honda Siel will benefit the Honda Siel dealers' network as well as the retail auto loan customers."
Axis Bank has a network of 938 branches widespread across 583 cities all over India.
Monday, December 28, 2009
As per existing norms the bank branch situated nearest to the permanent residence of the applicant has to sanction the education loan. But the question of proximity has created confusion amongst the bank branches where in places many bank branches exist.
According to note the unwillingness shown by many banks in giving education loans is putting deserving candidates in to problem they have to run from one bank to the other. On the other hand the banks which are willing to give loan to students are flooded with loan applications and also have to take up application of those students who are coming from areas close to the branches of the ‘reluctant’ banks.
The note added due to this unhealthy relationship is getting created between banks, besides inconvenience the students are facing in getting education loans.
This issue brought in to notice of SLBC by the Lead Bank Manager of Ernakulam district, and has requested SLBC to issue specific guidelines in this matter to remove confusions in sanctioning education loans.
The note also stated even the rate of interest charged on education loans vary from bank to bank. Generally nationalized banks charge a lower rate of interest than private sector banks. Thus deserving candidates are forced to go in for high-interest education loans because they are staying closer to bank branches charging high interest rates.
The note has requested to provide rationalized interest rate on education loans to overcome this problem.
After the guidelines were issued by the Indian Bankers’ Association (IBA) earlier, some of the banks have reduced the amount of education loans for nursing students. This is also the reason for student’s agitation against some of the banks. At this the IBA, re-looked into the matter and allowed the banks to follow the fee structure approved by various State governments. Though some of the banks have to still issue the appropriate guidelines to their branches in this regard, the note said.
Monday, December 7, 2009
According to recent study conducted by ET Intelligence Group, Karur Vysya Bank is positioned among the 10 top banks in three of the four main parameters. As per financial strength the bank is positioned at 4th place 6th on efficiency and 7th in terms of shareholder's return. Bank is fundamentally strong as well as good in terms of rewarding its shareholders.
Banks net interest margin (NIM) is reported to be in excess of 3% in the last nine financial years. Only few of Indian Banks have been able to achieve this feat. The Indian Banks average return on assets (RoA) stood at 1% in FY 2009, whereas Karur Vysya Bank has posted 1.5% RoA, which means the bank positioned very high in regard to utilization of its assets.
Moreover banks net non-performing assets (NPA) stood at 0.25% of net advances at the end of FY 2009 which shows bank performs well on the quality of the assets also. There are only three banks - Punjab National Bank, Andhra Bank and Indian Bank which have reported better asset quality than Karur Vysya Bank. In FY 2010, the asset quality has further improved as net NPA was just 0.22% of net advances at the end of Sept'09 quarter.
Thus the bank’s performance has been praiseworthy in the current fiscal. Its loan book has grown much faster than the other banks in the industry. By the end of Sept'09 year-on-year basis its loan book had grown by 23.2% as against of just 13% growth in the gross bank’s credit in the same period.
The more praiseworthy fact is its net interest income has increased by 28.6% y-o-y in the six months ending Sept'09. Interest expense is deducted from interest earned to calculate net interest income. Last year when interest rates had moved up banks spreads had shrink, due to which most of the banks up till now, had reported flat net interest income in this fiscal. In such condition, Karur Vysya Bank 29% growth in net interest income shows its buoyancy in tough times, which in turn has helped it in protecting its spreads. However bank has reported 74% growth in its profits in the first half of the current fiscal.
Even more praiseworthy is the fact that its net interest income has grown by 28.6% yo-y in the six months ending Sept'09. Net interest income is calculated by deducting interest expense from interest earned. As interest rate shot up last year, banks witnessed shrinkage in spreads. As a result, most of the banks have reported flat net interest income in this fiscal so far. In such a situation, 29% growth in net interest income shows Karur Vysya Bank's resilience in tough times, which has helped it in protecting its spreads. The bank posted 74% growth in its profits in the first half of the current fiscal.
Currently bank stock is trading at 1.5 times its book value which is close to all-time high valuations. Also at current prices its dividend yield amounts at 3.2%. Therefore the conservative investors can invest in this stock to earn profit. Bank’s valuations are in comparison to its peers like Federal Bank, City Union Bank and South Indian Bank. Moreover its dividend yield is highest among its peers. From this valuation it becomes clear that Karur Vysya Bank provides unique combination of reasonable valuations, high dividend yield and growth potential.
An anonymous senior official working with a foreign bank said, “Assets under management of Rs 13,000 crore will surely put Kotak in the top two, if not the number one player in the space”.
Mostly private banks very rarely disclose information about their assets under management, but players like DSP Merrill Lynch, Deutsche Bank and Kotak Mahindra Bank have always been recognized as key players in this segment. But, both DSP Merrill Lynch and Deutsche Bank do not disclose their assets under management as a matter of policy.
Kotak Mahindra Bank categorizes its private banking clients, as individuals having capacity to invest surplus of over Rs 5 crore (or $1 million). The same trend is followed by other banks also.
Mr Jayaram said in the past year also, Kotak’s client base in the private banking business was quite big and the at present bank is having a clientele base of 1,500 from net worth families. He added, “There is a large base of HNIs in the country. This has been rising and will be on the rise. There are more people being added to the universe every year, and it’s a function of the way India is progressing”.
In the next few years bank will be looking for expansion of their business in the private banking sector.
On the other hand wealth managers believe Indian HNIs are searching for alternate asset classes.
Mr Jayaram said, “Initially, this was a space where there were very few asset classes. But the new generation of HNIs is moving away from just equity and fixed income into other asset classes like real estate, commodities, private equity and structured products”.
He also believes that newer and younger HNIs are ready for aggressive expansion into new asset classes, to get higher returns. According to geographical location these banks get largest clientele base of HNIs from Mumbai, Delhi and Bangalore.
Thursday, December 3, 2009
The Reserve Bank of India (RBI) has given approval to state owned lender UCO Bank to open 82 new branches across the country by the end of this financial year. At a customer’s meet Chairman and Managing Director SK Goel said, “These branches will be in addition to the 2,078 branches which UCO Bank has at present”. The bank has also drafted a plan for the renovation of its 400 branches.
Goel stated, “We are going for a makeover of our branches in rural areas. The bank aims to offer an ambience which will make our rural customers feel at home”.
He also resolved financial inclusion in Himachal Pradesh and Orissa, in these states bank has the lead responsibility. Goel told bank has achieved 100 per cent financial inclusion in Himachal Pradesh.
He said the RBI had set up an independent agency to check the genuineness of the claims made by UCO regarding financial inclusion in Himachal Pradesh.
While in Orissa, Goel informed in 13 districts of the state bank has achieved 100 per cent financial inclusion.
He added, “We are aiming to make Orissa the second state in the country to achieve 100 per cent financial inclusion and we want this to happen as soon as possible.”
As per agency’s reports, in Himachal Pradesh has achieved 99.4% financial inclusion and the people left out in the state are the migrants who had come to the state for a short duration, he said.
Tuesday, November 24, 2009
Kotak Mahindra Bank Executive Vice-Chairman and Managing Director Uday Kotak told, "Investors based in the Middle East can now access information on various investment opportunities available in India through our representative office."
Currently Kotak Group has made its presence in New York, London, San Francisco, Mauritius, Bahrain and Singapore. It is offering service to around 65-lakh customers.
According to release Kotak Mahindra Financial Services is a wholly owned unit of Kotak Securities, has received approval papers for setting up an office in the Dubai International Financial Centre.
Monday, November 23, 2009
However after a break in 2008 and early 2009 the employment prospects are improving and income becoming steady, a gradual increase in demand for houses can be seen. The banks festive home loan schemes have helped in stimulating the recovery.
Albert Tauro, chairman and managing director, Vijaya Bank pointed out, "There has been some pick-up in retail demand following the introduction of festival home and car loans at attractive interest rates which is improving the credit offtake scenario".
The big lenders such as State Bank of India and ICICI Bank are betting on this opportunity to grow their retail loans, especially home loans, to support their overall credit expansion. Home loans cover at least 6-10% of the total credit portfolio of most of the banks.
As per the latest RBI data the year-on-year growth of bank’s total loans has declined to single digit and as on October 30 it was just 9.5% as against 28.4% a year ago.
According to RBI's macroeconomic report as on August 28, the total outstanding housing loans of banks amounted to Rs 2.85 lakh crore, or 10.8% of total loans.
For the fiscal 2009-10, in the first eight months home loans had increased by 4.5%. While in July-September most of the banks had reported at least 20-25% growth in their home loan, and are hoping to see a similar trend in the coming quarters.
Bank of Baroda chairman M D Mallya, last week had informed that the bank’s home loans has grown by 25%. According to S L Bansal, general manager -- retail banking, Union Bank of India’s home loan book has registered a growth of 24-25%.
On the other hand Housing Development Finance Corporation, the country's largest home loan lender is already flooded with loan applications, a joint manager director Renu Karnad informed.
Karnad said, "The segment where we are seeing good demand is in the price range of Rs 30-50 lakh in metros and bigger towns and around Rs 20-25 lakh in smaller towns."
The banks are getting large number of loan applications and bankers are likely to disburse the loans to the applicants in the coming months, thus giving boost to the overall disbursals of banks. Also there has been increase in the demand for home loans as banks have extended their special home loan schemes under which they are offering lower fixed rates, therefore banks are trying to cash in the increasing demand.
Recently State Bank of India has extended its special 8% home loan scheme up to March 31. Every month SBI is disbursing loans of around Rs 2,000 crore, chairman O P Bhatt had said on October 31.
After SBI, Corporation Bank has also extended its scheme to March 31 whereas Axis Bank has recently announced a special scheme under which it will offer loans at 8%. The Union Bank of India has launched a scheme under which the borrowers will have to pay 8.5% fixed rate for the first three years.
But sharp increase in property prices can cause risk to the rising demand in home loans. While HDFC's managing director Keki Mistry think property prices have to reasonable then only the rising demand can become a concrete boom. . "People do not buy houses just based on interest rates," Mistry said on Monday.
In major metropolitan cities the property prices have already started moving up, in Mumbai and New Delhi property prices have raised sharply. "We are seeing some pick-up in demand for home loans. But for this demand to sustain, builders will have to maintain prices at current levels, else demand will get diluted," Punjab National Bank's chairman and managing director K R Kamath said.
On the other hand some bankers say in most of the areas the rise in property prices is not sharp, and might not affect the demand. The another risk to the rising demand is the expected turn in interest rate cycle as the Reserve Bank of India is preparing strategy to withdraw the accommodative policy. But some of the bankers say the impact on banks' lending rates of the monetary policy withdrawal will be visible only by March-end.
According to Bansal of Union Bank of India, "I don't think it (rates) will go up much. If rates go up, it will be mostly in February or March. And I don't think property prices will go up in a big way. The government is investing in affordable housing also". Although rising home prices might pinch buyers' pockets but affordable home loans appear to stay for long period.
However there are fears that rapid expansion of home loan at the time of potential rise in housing prices might also increase banks’ non-performing assets (NPAs). For instance, in July-September State Bank of India has seen a sharp rise in its net NPAs , mainly due to its retail portfolio. The banks’ net NPAs have increased to 1.73% by September from 1.55% as of June 30.
Well in the coming quarters demand for home loans is expected to remain strong. But bankers have to maintain asset quality as they give home loan to stimulate credit off take.
Friday, November 13, 2009
Only small section of Indian people, especially living in rural areas is digital populace comfortable with modern technology such as mobile banking.
K Ramakrishna, chief executive, Indian Banks’ Association, in his speech at a Skoch summit in New Delhi said, “According to recent survey, close to 70 per cent of world’s population is analogue and only 15 per cent of world’s population is digital native. In such a scenario, adoption of mobile banking services as tool for financial inclusion is not going to change the scenario overnight and it would require sustainable effort to achieve the goal of financial inclusion”.
However in India around 50 per cent of mobile phone users do not have a bank account and this further hinders the mobile banking popularity. The bankers informed the other model in which reporters are to publicizing banking through news and articles have also suffered lack of trust. M V Tanksale, executive director, PNB told, “Many business correspondent do not enjoy the confidence of villagers. As a result, they (villagers) do not hand over their savings to such correspondents and that in turn is hampering the speed of financial inclusion”.
According to latest figures around 50 per cent of India’s population is still unbanked. Although majority of PSU banks, who are working on financial inclusion programs, have been able to open 33,024,761 no-frills accounts till March 2009.
In expo held at Bangalore, over 45 of city’s top developers had participated in the expo which showcased over 250 projects. In the expo over 25,000 units were for sale, this was the largest property expo ever organized in Bangalore before.
In accordance with the expo bank has extended the maximum tenure of the repayment period to twenty five years, of the standard home loan. While in another variant of the home loan product called the step down product, the bank has a provision, the customer whose combined family income is higher then he will have to pay higher EMI and in case family income reduces over a period of time then EMI will be lower. Also the customer gets the option to repay back the whole amount of the loan before its maturity and bank will not charge any prepayment penalty.
Bank sources informed similar expos will be organized by the bank at major locations across the country and this special offer on interest rates for home loans will be offered till December 10, 2009 only. Home loan borrowers can avail power plus home loans at an interest rate of just eight per cent for the first year. From the second year bank onwards bank will offer floating rate of interest based on the bank’s mortgage reference rate. As per the current MRR, the rate for the second year and thereafter, the rate charged will be 8.75 per cent for loan amounts up to Rs 30 lakhs and 9.25 per cent for loan amounts above Rs 30 Lakhs.
Bank has made special arrangement of on the spot approval for the prospective buyers who wish to take loan at the Home for All Expos, and the loan processing fees will be waved off.
Manju Srivatsa, president retail banking, Axis Bank told, “The Home for All Exposition provides a platform to bring the buyer and seller together and to offer prospective home buyers easy financing all under one roof. We are confident that the expositions will get a tremendous response for home buyers.”
Wednesday, November 11, 2009
For this bank has already appointed consultants who will be redesigning bank’s 38-year old logo with a view to increase the visibility. JM Garg, chairman and managing director of the bank, has confirmed about the developments to FE.
Garg informed, “We got an approval to alter the font size as well as the colour shades of our existing logo in the recent board meeting of the bank”. He added at present bank is not going to change its entire logo.
The new structural changes in its design are likely to increase the brand image of the bank. But Garg did not reveal any details related to the expenses the bank will incur towards its partial re-branding exercise.
The current logo of Corporation Bank was integrated in 1972 when the name of the bank was changed from Canara Banking Corporation (Udipi) Ltd to Corporation Bank Ltd. In the recent years, the other Indian banks who have changed its logo or underwent a re-branding exercise include UTI Bank, Saraswat Bank, Dhanalakshmi Bank and IndusInd Bank.
The bank has finalized a foreign partner for its proposed foray into non-life insurance business. Garg, did not reveled the name of the prospective foreign partner but told FE, “We have almost finalized a foreign partner for our proposed venture in non-life insurance.” Garg informed a consultant has been appointed for this by the bank and within six months it will be submitting a report.
Garg completely denied the media report that his bank is looking to venture in life insurance business.
According to BoM release the loans sanctioned up to December 31, 2009 will get the benefit of rate reductions.
After revision the bank will be offering home loan up to Rs 30 lakh at a fixed rate of 8 per cent for the first two years, 8.5 in the third year, 9.5 per cent in the fourth and 9.75 per cent in the fifth year.
The release stated after the fifth year, the rates will be reset as per the benchmark prime lending rate of the bank.
On loan above Rs 30 lakh, for the first two years the bank will offer rate of 8.25 per cent, then for the third year the rate will be 9 per cent and subsequently for fourth and fifth years the rate will be 9.75 per cent.
"We have got Sebi approval for starting our merchant banking business. We have also zeroed-in on an existing asset management company in which we intend to take a major stake," Dhanalakshmi Bank's Managing Director and CEO Amitabh Chaturvedi, told PTI here.
He told Parag Kothari will be looking after merchant banking business. Parag Kothari has recently joined the bank from Cholamandalam.
He added currently no separate subsidiary has been formed and a division within the bank will be seeing the merchant banking business. He said, "This will add to our bouquet of services."
He told in the beginning bank has plans to start businesses such as lead- managing public issues, deal structuring, QIPs and stake-sale, among others.
Regarding banks venture into mutual funds, Chaturvedi said bank has finalized on an existing player and in this bank might be holding either a 49 per cent or 51 per cent stake.
He added, "Negotiations are in the final stages".
Before, bank had short-listed four MF players for either a buy-out or a stake-buy.
Friday, November 6, 2009
Corporation Bank Chairman and Managing Director J M Garg told, "We have launched the loan syndication business and have also taken up a proposal for a Rs 500 crore loan. The bank expects to increase its fee-income from the segment".
Loan syndication means pooling of advances by a group of lenders to alleviate risks.
He informed, for general insurance business, the bank is planning to form a separate subsidiary in a joint venture partnership, for this it has appointed a consultancy to search for a suitable partner.
Garg said, "We are thinking of setting up a subsidiary for the non-life insurance business. We have appointed a consultancy and the process is expected to take around six months time".
Garg informed to grow its banking business, bank’s main focus will be more on increasing its non-interest income and current, savings account growth. The bank hopes to increase its CASA by 30 per cent in the current fiscal.
He added bank has also set a target to grow its loan segment by 22 per cent in FY10, whereas the deposit base is likely to grow by 23 per cent during the period.
At present the net interest margin of the bank is 2.3 per cent, hopes to increase to 2.4-2.5 per cent in the second half of the financial year, informed Garg.
Garg pointed out by the year-end bank’s total business is likely to grow to Rs 1,50,000 crore from Rs 1,33,456 crore.
Tuesday, November 3, 2009
Some of the banks such as Citibank, HSBC, Corporation Bank, Deutsche Bank and HDFC Bank are offering cash backs or reward points. Although some of the offers have got closed on October 31, but few of the schemes have been extended up to the end of 2009.
Ravi Subramanian, head of consumer assets, HSBC, informed, "Points and cash backs bring loyalty for a card company. Reward points are good for inducing spends, and cash backs work in the short run."
Subrat Pani, head of the credit card division at Kotak Mahindra Bank, while explaining why schemes are in full bloom said, "When new card acquisitions have slowed down, you have to focus more on the existing base."
The credit card holders should be careful, before going for these offers they should read the fine print of cash back schemes. In the fine print banks mention the limitation on the amount of purchase and on the cash back or points per transaction on a per month basis. According to the promotional material of a credit card, "The minimum transaction amount for cash back on fuel and telecom is Rs500, and Rs1,000 for other categories. The maximum cash back per transaction is Rs150 and maximum cash back per month per customer is Rs500". As per this amount restriction, it might not be the right decision to make purchases to earn cash back.
According to another card issuer cash backs is offered only if used "for purchases worth Rs250 or more before your second statement is generated". In case you do not know about your bill generation cycle and do purchasing after that period, your cash back will be invalid.
Regarding reward points banks advertise of doubling the number of reward points, as compared to earlier, but card holders should make note of the conversion ratio of rupee per point as some of the banks have reduced it.
Past eight months back, most banks offered 40paise per reward point. Now the ratio has been reduced to 20-30paise, informed a banker. But banks deny this.
Friday, October 30, 2009
However stamp paper vending was officially stopped by banks from October. According to a letter sent to the stamps and registration department, the banks will not do fresh printing of the papers anymore.
Inspector general of registration and commissioner of stamps K R Niranjan told The Times of India, "Banks will not print stamp papers and will clear the stocks. We have made alternative arrangements to supply stamp papers at sub-registrar offices. A stamp certificate will be given for the money deposited which will act as a stamp paper till we introduce e-stamping".
After the much-hyped Telgi stamp paper scam, government authorized four banks - State Bank of Mysore, State Bank of India, State Bank of Hyderabad and Corporation Bank- to sell stamp papers in the denominations of Rs 20, Rs 50 and Rs 100. Among these banks SBM used to sell a large number of stamp papers. These stamp papers of lesser value are used for writing agreements, affidavits and mortgage deeds.
The SBM official told, the government had requested the bank to continue to print stamp papers up to March 2009 to keep e-stamping rolling. But when the implementation got delayed, the bank was asked to continue issuing stamp papers from April to June, which was later extended till September.
The printing of stamp papers is a high security risk job so the banks require three months to print the papers.
Shastri Nagar Crime Inspector Mathiarasu told S Geetha, a local resident living on First Main Road filed a complaint about her stolen credit card. Her husband, Shankar, is an engineer and worked in a Gangotri Thermal Plant in Jharkhand. Geetha owned a Bank of Baroda ATM card, which she lost on September 30 while returning from T Nagar to Adyar. More than 10 days had passed that she realized that she had lost her card. As on Sunday bank is closed, next day when she went to the bank, she found that Rs 1.35 lakh had been withdrawn from her account. She filed a complaint of lost credit card at the Shastri Nagar police station.
A special police team headed by Mathiarasu investigating the case found that the withdrawals have been done at ATM centers of several banks in Thuraipakkam area. The team on scrutinizing the CCTV tapes obtained from ATM centers found that at one ATM center, the thief first used his own card to withdraw Rs 300 cash before using the stolen one.
The police traced his address and picked up the suspect from Kelambakkam. During the interrogation police came to know about his details that his name was Tirupathi, aged 29, son of Krishnamurthy of Jolarpet and was working at construction site in Adyar. Police arrested him and remanded to judicial custody.
Thursday, October 29, 2009
Axis Bank sources stated it has done away with MICR cheque clearing after cheque truncation process, as it was a paper-based cheque clearing process. With this the cheque processing time has reduced and operational efficiency has increased. This has also enabled in improving risk management and control.
Charanjeev Singh, vice president Information Technology, Axis Bank informed, "We carried out a detailed vendor selection process evaluating more than a few vendors and found Polaris cheque truncation solution unique and customized to Indian banking. It has rich functionality and ease of use".
According to Axis Bank sources in the beginning the Intellect BPS platform has been set up for cheque truncation in NCR region. Using this platform bank is able to process one lakh cheques a day. Also, the bank has extended the pr-built solutions, which have been provided as part of the common Intellect BPS platform, to its trade finance and credit card processing services. The application has been modified according to Axis Bank’s requirements. With the set up of trade finance solution at bank branches it has become easy to capture information.
In the back office also the same solution has been set up, to process letters of credit and trade bills for India and foreign countries. Also in the back office the set up of credit card processing solution has changed the whole process to paperless through its document management and workflow capabilities. According to bank sources the platform has made possible to streamline its processes through centralized operations across its back offices in India.
Singh said, "Polaris' Intellect BPS gave us a better perspective of business and technology in terms of the reusable framework. We recognize Polaris' domain expertise and their ability to add value to us at strategic level".
Wednesday, October 28, 2009
The SIB through its 134 authorized branches offer this service, the bank sources informed.
V.A. Joseph, managing director and chief executive of the bank informed, “This scheme will empower subscribers to plan their retirement and pension. This is a good investment tool”.
NPS is a social security scheme and the employees falling under the age group of 18-55 are eligible for this scheme.
The scheme has been executed by the Pension Fund Regulatory and Development Authority (PFRDA).
Last week, SIB launched this service for its NRI customers and the service was launched by Oscar award winner Resul Pookutty.
SIB in the first quarter this fiscal had posted the highest ever quarterly net profit of Rs.60.11 crore as against Rs.38.62 crore reported during the same period in the last year, accounting the growth of 55.64 percent.
Recently the bank has been honored with the 10th “Financial Express” Awards for “India’s Best Banks” in the traditional banks’ category.
Monday, October 26, 2009
First week of October saw slow down in loan growth by 10.8% from 29.5% a year ago as against the central bank’s estimation of 20% expansion for all of fiscal 2010.
In policy review the Reserve Bank of India (RBI) has to first look at the sluggish credit growth before taking a call on reversing its accommodative policy. If the loan growth had been in accordance to the RBI’s estimated lines then clearly there would have been a rate hike, stated economists. RBI will be making its quarterly announcement on 27 October.
Although the loan growth has been slow but banks’ investment in bonds has grown 40.9% in the past one year until October in comparison to a mere 3.2% last year the reason is the banks have bought debt with no takers for loans.
According to bankers now the credit will start picking up. M.V. Nair, chairman of the Indian Banks’ Association (IBA) pointed out the apex bankers will try to influence as firms are coming back for loans as lenders have started offering loan at “an affordable rate”.
Nair stated, “We are seeing proposals going up significantly in the past one or two months, which shows that the confidence level of the firms is increasing”.
Up till now borrowers have been complaining that banks’ have been unwilling to give loan and about their risk aversion.
“Lenders have sanctioned Rs3,200 crore to double our cement capacity to 24 million tonnes in three years and we will draw money in phases,” said Puneet Dalmia, managing director, Dalmia Cements (Bharat) Ltd, the second largest cement maker in south India.
Binani Cement Ltd is also likely to draw money from banks. The company is planning to to build a 2.5-million-tonne cement plant in Gujarat. “The lenders have sanctioned Rs400 crore and we will draw it as soon as we get the limestone licence from the government of Gujarat,” said M.K. Chattopadhaya, chief financial officer of Binani Cement.
Generally when the economy growth is slow, firms usually try to cut down their costs by cutting inventory and capital expenditure plans and this directly impacts bank loan growth. As per IBA study the cost of borrowing for firms, as a percentage of gross profit, has dropped from an average of 35% in the third quarter of fiscal 2009 to 23% in fourth quarter.
Certainly, low credit growth does not essentially points towards the weak industrial activity. On the other hand Indian firms are raising money from capital markets and through introduction of shares with institutional investors, which in turn has reduced their dependency on the banking system. According to analysts this is going to continue as long as the equity market is doing good business.
Though sanctions have been given, but companies did not move ahead with new projects between October 2008 and April this year due to global economic recovery and its effect on domestic consumption remain uncertain.
However they have started taking loans for their infrastructure projects and fresh loan applications for utilities, road and power projects are also increased.
M.D. Mallya, chairman and managing director of Bank of Baroda, “Infrastructure projects are spread over years and loans sanctioned to them are not availed in the same year. Existing projects were already availing loans sanctioned to them earlier”. “Now new sanctions are also picking up in this sector.”
Andhra Bank chief R.S. Reddy told that his bank’s credit growth was 32% in the first half and in the second half “it should increase even more.”
“Almost all of the peer public sector bank chairmen I interact with tell me that their loan growth has been at least 18%,” said K.R. Kamath, chief of Kolkata-based Allahabad Bank.
Now almost all public sector banks claim that lending to the industries is steadily moving while the foreign private banks lending process is slow.
Neeraj Swaroop, regional chief executive (India and South Asia), Standard Chartered Bank, stated his bank is one of them.
“We are going slowly on unsecured loans; this is our business model,’’ said Swaroop.
Paresh Sukthankar, executive director, HDFC Bank Ltd stated, “We are seeing a pickup in retail and corporate credit’’.
Dhanalakshmi Bank Managing Director and CEO Amitabh Chaturvedi told reporters, "We are planning to launch our venture capital fund in the first-quarter of the next financial year while the asset management company will be floated in the last quarter of this fiscal".
He told bank is hoping to receive regulators approval for both its businesses by December.
He informed Dhanalakshmi Bank will be first floating a wholly-owned venture capital company which will launch the venture capital fund.
Chaturved told the bank has to yet finalize the business model of the venture capital fund and added that, "the initial corpus of the fund will be $150-million."
He declined to reveal any further details and said, "The AMC business would be through a joint venture with an existing player".
Dhanalakshmi Bank with an aim to establish itself to a pan-India bank from a regional bank, it is planning to re-work on its branch and ATM networks across the country.
At present the bank has a strong base in the southern part of the country, and has 207 branches which include 26 extension centers.
"We want to have a pan-India presence and hence will be opening 66 branches across the country by the end of 2009," Chaturvedi said.
Out of 66 branches, Dhanalakshmi Bank has recently opened 27 branches in states such as Rajasthan, Punjab, Uttar Pradesh, Gujarat and Andhra Pradesh, among others.
"We presently have 78 ATMs and in the next 10 days we will be launching 100 more across the country," he said.
"We are on a growth path and will create a solid institution at Dhanalakshami Bank," Chaturvedi said.
Regarding RBI's monetary policy which is to be announced later this month, he said that no major announcement is expected.
"There is enough liquidity in the system and credit has just started picking-up. I do not expect any rate change in the policy," Chaturvedi said.
Not only the people living in urban and semi-urban areas, even the farmers and rural folk are taking loan against gold ornaments as it is a simple process in comparison to long complex and expensive procedure involved in mortgaging property to get loan.
Recently a newly married couple was spotted at the South Delhi branch of a non-banking finance company that had come to take loan against the bride’s gold ornaments for their week-long honeymoon to Mauritius, the picturesque Indian Ocean Island that lies east of Madagascar. Regarding this bride’s logic was that as she is not going to wear all of the ornaments she has received during her wedding, so they have decided to take loan against the jewelry for the trip. Both the newly-weds are well-employed therefore they will return the principle along with interest within a month of receiving their salaries.
From the above instance it is clear among the Indian middle and upper middle classes the resistance for gold is fading away also because of the record price rise of the yellow metal, which in turn has led to increase in disbursals of such loans mainly by NBFCs such as 122-year-old Kochi-based Muthoot Finance.
George Alexander Muthoot, managing director, The Muthoot Group , which claims to be the country’ s largest lender against gold stated, “Apart from the price rise, the social stigma earlier attached to gold loans has almost totally disappeared and they are now widely recognized as acceptable means of raising funds for meeting urgent requirements by all segments of society”. According to a staffer from an NBFC people thinking attached to pledging gold has changed due to Hindi film industry and serials which has inexorably portrayed women parting with their gold as a deep tragedy.
Now more and more people are taking loan against gold to finance their children’s education, particularly for meeting donation demands, which a bank will not entertain, car purchases, holiday trips or even to put up margin money for a home buy as the
tenure of such loans is typically up to three or six months.
Also taking loan against gold is more advantageous than taking personal loans as the interest rate on such loans is low (Muthoot, for instance, has a base rate of 13% while banks are known to charge PLR + 200-400 bps — a bp is one-hundredth of a percentage point — for personal loans, which could work out to as high as 15-16% on an annualized basis), non-penalty for pre-payment, hassle-free documentation and speedy disbursal of the loan.
Anil Rego, CEO of Bangalore-based financial planning firm Right Horizons says, “Borrowing against their gold jewellery is an option that individuals falling in the middle-income category are increasingly looking at”. “The primary reason is that the gold rate has shot up, and, second, they are realizing that the interest rate is lower than unsecured loans. In addition, the cash crunch arising out of the global slowdown has resulted in people considering this option.”
although NBFCs such as Muthoot and Manappuram are most popular avenues for gold loans than banks, as banks lack their gold assessing capabilities, but according to a senior PSU banker this year banks have witnessed a rise in disbursals as well as the number of accounts.
Manappuram, whose web site classifies it as the country’s largest listed and highest credit rated gold loan company, has witnessed a 15% year-on-year increase in the number of persons taking gold loans during the first six months of the current fiscal to 105,265, and a 28% increase in disbursals to Rs 2,105 crore. During the same period, Muthoot has saw a robust 75% increase in the number of persons taking gold loans at 35,000 and an 81% increase in the amount disbursed at Rs 9,091 crore.
HDFC Bank, a private lender is also actively promoting gold loans, has seen its business grow by over 60% year-on year in this segment. “There has been a change in the mindset of customers opting for gold loans with borrowers being more open to pledge their jewellery and taking loans against the same to meet their short-term financial requirements,” reiterates Biju Pillai, business head (PL, LAS, GL, Home Loans), HDFC Bank.
According to AC Mahajan, CMD, Canara Bank, “The recent spurt in the prices of gold has increased the eligible amount of loan and helped in boosting agri loans against the pledge of gold. Such loans are primarily used for composite needs of raising crop and meeting consumption needs, which are normally given by way of kissan credit card”.
The amount of loans disbursed by NBFCs such as Muthoot and banks such as HDFC bank ranged from Rs 50,000 to Rs 3-4 lakh and Rs 25,000-10 lakh respectively. Mr Muthoot while confirming said, “The higher the per gram rate the higher is the interest rate and vice versa on the advance”. In this the banks and NBFCs to be on safe side also keep a reasonable margin in the event of non-payment of interest by the borrower.
In this fiscal year through October standard gold of 99.5% purity prices has averaged Rs 14,903 per 10 gm so far, up 21% from the average rate of Rs 12,349 in the year-ago period. The rise has followed the international rate, which last week had hit a record high of $1070.40 an ounce due to a steadily weakening dollar due to the mounting deficit in the US and increased fund deployment in riskier assets across the globe in light of easy monetary policies.
Wednesday, October 21, 2009
Bankers told the refinancing of bank loans is done by placing non-convertible debentures and bonds with insurance companies and mutual funds at low rates. Also some of the foreign banks are also choosing top corporate debt for refinancing existing bank debts. In this financial year till now around Rs 75,000 crore has been raised through bond issues.
Out of this, only one third of the issues were of banks. The rest of the issuers are all of corporates mostly at coupons ranging from 7.5 per cent to 10.25 per cent. The top public and private corporates that had floated short term debt – of 18 month tenures – had raised funds at the low rates. While for the longer tenures the rates had remained at spreads of about 150 basis points over comparable sovereign yields for “Triple A” rated borrowers. But at these spreads also the rates were quite low than bank lending rates, however some public sector banks have been lending at discounts to the prime lending rates (BPLR) of about 11.25 per cent of as much as 100 basis points. For instance, cement major ACC’s Rs 300-crore five-year bond offering was priced at 8.45 per cent.
Bankers added the refinancing has further compounded to high liquidity within the banking system. The high liquidity was obvious from the way out to the reverse repurchase window that is currently upwards of Rs 1 lakh crore a day. Bankers told due to some “big ticket” pre-payments their earnings were getting impacted. On the other hand banks were already struggling with very low incremental credit deposit rates of barely 19 per cent.
The PSU banks do not prefer refinancing because of low ratios and the consequent drop in earnings. It has been in 2004 the PSU banks had held out the threat of pre-payment penalties.
Bankers say this time the pre-payment penalties are proposed to cut their costs. This means the penalties can be as high as two per cent of the outstanding principal. The proposed penalties will be almost equivalent to those levied by foreign and domestic private banks.
Although some PSU banks are offering concessions, includes lending rate resets, when the effective cost of working funds drop. In the last quarter banks weighted average cost was about 6.5 per cent. After a change in a net interest margin of 3 per cent, the officials say the lending rates can be around 9.5 per cent. Bankers added, in the third quarter, it is expected that the weighted average costs is likely to dip further by another 50 basis points. They said, “If there are no exits, this drop in costs will also be passed to good quality borrowers”.
After the revision of rates the deposit rates for a maturity period of 15-days to 45-days and 45-days to 90-days are being offered at 3 per cent as against 4 per cent and 4 per cent instead of 5 per cent.
The release stated for a maturity period of 91-days to 179-days bank has reduced the rate by 0.75 per cent from 6 to 5.25 per cent.
While for a maturity period of 180-days to less than one-year, the rate has been reduced by 0.25 per cent from 6.50 per cent to 6.25 per cent.
However for maturity periods of 3-years but less than five-years and 5-years and above up to and inclusive of 10-years the bank continue to offer the rate of 7.50 per cent and 8 per cent, respectively.
The release stated the new rates will come into effect from 12th, October, 2009.
But now due to the scarcity of trained staff bank has slowed down its expansion plan, earlier bank had planned to open 500 new branches during the current fiscal.
The bank’s Chairman and Managing Director MV Nair in an interview told Business Standard, “These are difficult times. So, we want to save cost. In addition, though we are hiring, it takes time before the staff is properly trained to be posted at new branches”.
In June 2009 the bank’s operating expenses registered high at Rs 543 crore as against Rs 416 crore in June 2008 which is an increase of 35 per cent year-on-year. It is believed that the increase might be due to implementation of project Nav Nirman, this scheme was launched by Nair to place the Union Bank among the top three public sector banks by 2012.
The Union bank was one of the few banks who have plans to expand their branch network. The other banks are who plan to add more than 500 branches in 2009-10 are State Bank of India, ICICI Bank and IDBI Bank.
However these three banks are working on their expansion plans.
An IDBI Bank executive said, “Recruitments are less costly now. In addition, it is a good time to enter into property lease agreements as rates will go up soon”. IDBI Bank has planned to add 200 new branches between April and December this year, and will open the remaining branches in the fourth quarter. By the end of March, the former development financial institution had 595 branches.
ICICI Bank country’s largest private sector bank has obtained approval from the Reserve Bank of India for the opening of 580 new branches in 2009-10, is also trying to keep costs low while going ahead with its expansion plans.
The ICICI Bank sources said with the opening of new branches, bank will get current and savings account deposits or the low-cost deposits, the thrust areas identified by the new management.
To keep control on its cost bank will not be adding to its existing base of 35,000 employees. Also some of the branches are being restructured to decrease the size. According to two senior executives the size will be in accordance to the business expected from the branches. An executive informed, "For smaller centers, the area of the branch and number of staff there will be lower than what it would have been in the larger centers".
ICICI Bank Executive Director K Ramkumar informed, "We have transferred a lot of middle management people to go to the branch leadership areas with their number being 350-450. This will result in our branches being manned by reasonably senior people".
Thursday, September 17, 2009
He said the new branches to be opened will be over and above the existing 11 branches of IDBI in the state.
The branch was inaugurated by PR Das, Chairman of the Orissa State Financial Corporation (OSFC). Panda said, “The IDBI may also set up a branch at Angul soon”. He told out of the 10 branches proposed to be set up, four of then will be opened by the end of this month while the other six branches will be opened later.
As per the figures released by the Reserve Bank of India (RBI) in August the non-food has grown by only Rs 330 crore, which includes loans to farmers, individuals as well as businesses, but the credit given to the Food Corporation of India (FCL) for grain procurement.
The loans given to FCL are termed as food credit, which accounts for another Rs 220 crore. Thus as on August 28, bank total outstanding accounted to Rs 28,07,582 crore which is an increase of Rs 5,612 crore over the previous fortnight. Although the fortnightly increase is sharp but it has helped in balancing the dip in previous 15 days. On current levels, the annual year-on-year (y-o-y) growth stands at 14.09%, which is much lower than RBI’s comfort level.
However as on August 28 the bank investments in government and other approved securities amounted to Rs 13,69,461.21 crore increased by Rs 23,267 crore over the previous fortnight’s levels and up by 33,860 crore over the July-end levels. Staurt Davis, CEO India, HSBC speaking on the sidelines of a FICCI-IBA seminar, said, “At the moment, loan growth is still relatively modest. Companies are ensuring that their balance sheet is in order. At this stage of the business cycle, normally cash position is harder.”
While Bank of Baroda chairman and managing director, MD Mallya said a pick-up can be expected in the retail loan in the forthcoming festive season. He stated, “Besides, one normally sees a credit pick-up in the busy season beginning October. Another factor is that banks have seen a huge growth in sanctions and one could see these sanctions being availed in the second half. With the signs of industrial revival, there could be an additional demand for credit”.
Mr Davis pointed out that HSBC loan book growth is much dependent on the ratio of recovery in the US, the UK and Europe as it propels the export market worldwide. However some of the banks at individual levels, especially the public sector banks have witnessed their loan book grow include the State Bank of India, Union Bank, Canara Bank and Bank of Baroda, among others. Some of the banks loan book has grown due to increase in demand from the retail sector, and other saw growth in loan book due to strong demand from infrastructure and other core sectors. While for some it was due to combination of both. Therefore the total deposits organized by banks accounted to Rs 40,81,669 crore as on August 28, which is up by Rs 21,616 crore over the previous fortnight’s levels.
Thus the deposit demand was up by Rs 319 crore, and the term deposits grew by Rs 17,897 crore.
Thursday, September 10, 2009
At present there is low credit demand therefore companies are getting into practice of getting a loan sanctioned from big banks such as State Bank of India, and using this to strike for better deal from another bank, mainly smaller public sector and private banks. Due to this the major banks have decided to give short-term loans.
A senior executive with a public sector bank pointed out, “The ticket size is small because there is little demand for the loans for capital expenditure. So, there is little choice but to give short-term loans or put in other clauses”.
Normally banks reset interest rates after a year, but now they are working on the option of as early as three months, although in some cases the review of the rate is done after six or nine months, the executive director of a mid-sized public sector bank informed.
In the recent months up to August 15, 2009 there has been drop in the credit demand moreover in the same period last year the growth rate has declined to 15 per cent from nearly 25 per cent.
Simultaneously, banks are full with liquidity but have less option of lending as the Reserve Bank of India (RBI) is offering only 3.25 per cent under the reverse repo window which banks used to draw out excess liquidity.
Up till now on a regular basis, since the last five months, banks have been investing over Rs 1,00,000 crore with RBI.
It was also expected that the record government borrowing, accounting at Rs 4,51,000 crore for the current financial year, is going to put pressure on the corporate sector’s fund-raising plans, on the other hand companies have not been lining up capital expenditure because they have surplus capacity. Due to which the interest rates have remained soft.
Further with inflation expected to rise due to a low base effect and a rise in commodity prices, interest rates are expected to get harden. Bankers are expecting RBI to reverse its soft rate regime favoritism as soon as the growth picks up. “Bankers are unable to assess when the bias would change and therefore they are resorting to these methods,” a senior executive at a European financial services major informed.
Another bank executive stated, “There will be a problem if the reset clause is invoked only after two or three years. It is better for the banks to have the set clause every three or six months. Resets should take place more quickly as interest rates will harden in six to nine months”.
Another banker pointed out 80 to 85 per cent of his bank’s lending is linked to the benchmark prime lending rate (BPLR). In case there is increase in BPLR the interest rate on a loan will also go up. However the government is insisting on ensuring a low rate regime, thus banks are not keen in using BPLR as the only benchmark.
IDBI Bank had applied for license in January this year while Union Bank of India submitted its application with the regulator in February.
According to official sources all these proposals are in the final stage of clearance.
The banks are expected to get license in the course of year and after getting the approval they can start asset management informed sources.
On the other hand Axis Bank country’s third largest private sector lender has already received the approval from the regulator to start asset management business.
The Union Bank of India will be setting up an asset management firm with KBC Group of Belgium. In this joint venture the Union Bank will own 51 per cent stake and is expected to start operations in the current fiscal.
However the IDBI Bank has got the broad approval for the setting up of the asset management company either as a wholly-owned subsidiary or as a joint venture.
At present there are five mutual funds including Baroda Pioneer Mutual Fund, Canara Robeco Mutual Fund, ICICI Prudential Mutual Fund, Principal Mutual Fund and SBI Mutual Fund either fully or partly owned by Indian banks in the partnership with foreign companies.
By the end of July the combined average AUM of the 30 fund houses amounted to Rs 5,38,736.43 crore, the monthly AUM figures of many fund houses were not available.
Last month, an increase of nearly five per cent to Rs 6,70,936.61 crore was seen in the total average AUM of 35 fund houses as per the data available on the website of the Association of Mutual Fund of India (AMFI).
In July an increase in the average AUM of fund houses was observed included Canara Robeco MF, Deutsche MF, IDFC MF, Religare MF and LIC MF.
While an additions of Rs 5,168.20 crore was seen in some of the fund houses like HDFC MF assets under management (AAUM), while ICICI Prudential MF's AUMs witnessed a growth of Rs 3,159.09 crore in July.
Wednesday, September 2, 2009
R K Dubey, PNB General Manager (Delhi Circle) informed, ''We plan to cross the figure of 550 ATMs in Delhi by the end of current financial year''.
The bank has recently set up seven ATMs, after this the total number of PNB’s ATMs in Delhi has increased to 332. From these seven ATMs, five have been installed at different metro stations.
He said, ''For the convenience of general public commuting in metro trains, PNB has opened 31 ATMs in different stations and is going to open another 11 ATMs at metro stations very shortly.''
He informed, for the convenience of commuters 12 ATMs have been opened at different Northern Railway Stations in Delhi.
At present assesses for whom the provision of Section 44AB of Income Tax Act, 1961 is applicable are paying their taxes online. Besides these, there are approximately around 20 million individual income tax payers in India. This initiative has been taken with an aim to provide convenience service to those who at present are paying taxes through challans.
On the other hand the CorpBank customers are first required to register at their branch to avail this facility. Therefore due to some reason the tax amount can not be credited, the transaction amount will be re-credited to customers account immediately. The bank will send SMS to all the customers. The taxpayer will also receive email containing tax paid details and the receipt on payment of his tax in the ATM.
Thursday, August 13, 2009
Recollecting the initiatives taken up this year to set the bank on the ‘transformation path’, the Chairman and Managing Director R.S. Reddy informed that 121 branches will be opened by August 15 and about 100 by March 2010, besides setting up 50 ATMs.
He said, “Also, we will open 100 branches every year to ensure equitable distribution of branches across the country”.
Along with this the bank has a target of doing a business mix of Rs.1,30,000 crore by March 2010, at a growth rate of 30 per cent and Rs.1,50,000 crore by September subsequently. The bank with a view to upgrade its brand image, ‘Dolle - The Dolphin’ has been recently introduced as its mascot, to spread the clear message that the bank is friendly intelligent and responsive.
Mentioning about the impressive results attained for the first quarter, Mr.Reddy notified that the net profit witnessed an extraordinary growth from Rs.77 crore to Rs.256 crore redeploying a growth rate of 230 per cent.
“The total income grew by 38 per cent while the total expenditure was contained at 31 per cent. The Capital Reserve Adequacy Ratio (CRAR) improved to 14.75 p.c., while the Non-Performing Assets (NPA) were pegged at just 0.22 per cent of the net advances, putting the bank among the best in the country”.
While the Tirupati zone is on the edge of attaining a business level of Rs.3690 crore by the end of the current fiscal.
As for overseas business bank has signed a MoU with Bank of Baroda and Indian Overseas Bank for launching a banking subsidiary in Malaysia, having a growing economy with large Indian population.
Mr Reddy said the booming India-centric trade and the high margins are the two factors which secured the deal in their favor. The plan to make presence in Malaysia was to ensure that the capital of Rs.400 crore required to open the subsidiary will be met by the three banks.
On May 2, 2008 Pokar had deposited a cheque for the amount of Rs 4,94,350 for encashment in his account at Axis Bank’s Baner.
On checking his account he found the cheque amount was not credited to his account therefore he gave a written complaint to the bank on May 17. Pokar informed, "Initially, the bank gave me in writing that I had an 'un-authorized' counter-foil of the cheque. Later on the bank changed its stand and again sent me a letter stating that the cheque was misplaced by their officials". He said, "The bank had received the cheque and I had the counter foil with me, which later helped in filing a petition against the bank".
Besides this bank had also informed him that the cheque was sent by Andhra Bank, Ghole road branch and Pune People's Co-operative Bank -Model Colony had also cleared the same.
Pokar’s counsel Rohan Nahar in court said, it shows clear-cut negligence on part of the bank. He added, “As Pokar had not received the cheque amount even after a year of the incident, we pleaded before the court to not just refund the amount but also pay him 12 per cent interest rate from May 4, 2008 till the bank repays the amount along with a compensation of Rs 10,000".
On the contrary, the legal counsel representing Axis bank as per the order appeared before the court only twice to get time to file a written statement from the Bank's side. After that the counsel on behalf of the bank did not appear before the court.
Sulabha Joshi and Pradip Gaikwad of consumer court panel issued orders to that the bank has to refund the cheque amount with past and future interest at nine per cent per annum from May 6 till paying the amount (approximately Rs 5.61 lakh). The order issued also stated that as the cheque was not encashed in favor of Pokar and 'therefore apparently there is deficiency in service'. Pokar informed, "While the bank has to make the payment within two months from receiving the order, I have not yet received the money after one month of issuing the order".
Tuesday, August 11, 2009
According to bank release in the initial stage bank has tied-up with 10-exchange houses in the Gulf for speed remittances and DD drawing. After doing tie-up with MoneyGram, NRIs will be able to send funds to their family members or relatives in India, easily and speedily from across the globe. MoneyGram International enables the consumers to safely send their money across the world in as little as 10 minutes. MoneyGram has a network of 180,000 agent across the globe located in 190 countries and territories.
The release stated MoneyGrams convenient and reliable network offers services like retailers, international post offices and financial institutions. The bank release stated to get the funds the remitter has to visit any of the agents of MoneyGram and fill-in the remittance form and give the equivalent foreign exchange including the agent fees. The form is processed according to the anti-money laundering guidelines, and then the remitter informs the receiver in India about the remittance details and especially the 8-digit reference number. The receiver in India has to visit the designated Corporation Bank branch with two security requirements – the 8-digit transaction reference number and a photo identification proof and fill-in a money received form. To know about other details and conditions one can visit bank’s website.
Thursday, August 6, 2009
Latest the bank has opened its 300th branch in Kerala, with which the number of branches has increased to 546, along with fast expansion of network in the north. Last year bank had opened a branch in Jammu and over the past few months new branches have been started at Faridabad, Najafgarh and Indirapuram. Other than these places bank is likely to open branches at Shillong, Meerut, Bhilai and Jamshedpur, among other locations.
SIB managing director V A Joseph informed ET, “We are planning eight more branches in and around Delhi and with a string of new branches across the country in the recent past, we are now present in 25 states”.
By March 2010 the number of branches will reach to 575 after the opening up of 29 more branches but SIB is not satisfied with its current network of branches, it has made a 4-year plan which will take bank branch network to 750 by 2013. out of the 250 branches which will be opened between 2010 and 2013, around 150 branches will be opened in the north of the country, publicizing the brand name of the bank.
Mr Joseph pointed out, “We are adding branches at a quick pace, but fact remains that a vast section of the people in the country is still to have any reasonable access to a bank branch”.
As per bank’s plan, by 2013 bank has set a target of attaining a business of Rs 75,000 crore, spreading a branch network of around 750, same number of ATMs to be installed and increase an employee strength of 7,500.
Mr Joseph informed bank will continue the recruitment process by employing around 600 staffers per year leading up to 2013 to attain the employee level of 7,500 by that year.
For the first quarter of the current fiscal SIB registered a net profit of Rs 60.11 crore which has increased by 56% from the Rs 38.62 crore net profit in the corresponding period last year.
As the date is approaching banks are receiving thousands of requests for additional authentication. Some of the banks are allowing customers to create passwords on their websites and others are sending fresh user IDs and passwords to customers via post. Some of the private banks like Citibank have allowed their customers to use net banking password as their password for online shopping transactions.
ICICI Bank spokesperson informed, ‘‘we have already started the process of making the consumer aware of the service using text message alerts, e-mails and advertisements. Having started the process much ahead, we are well equipped to implement the process fully’’.
ICICI bank has taken extra measures. At the time of generating 6-digit PIN as an additional security layer, it also asks its customer to type a message, known as personal assurance message (PAM) on the same web-page. Only customers will have PAM information. From now whenever you type your credit card number on merchant’s website, it will take you to the bank’s website where you will be required to type in PIN to complete transaction.
Prabhu Rangam, AGM (IT), State Bank of India, informed, ‘‘SBI has already accommodated the required change. Our debit cards are PIN based, so they may not require another layer of security.’’ The SBI credit card customers will have to apply for PIN.
According to industry observers currently due to RBI directive there might be decline in online transactions which will affect the growth of e-commerce industry but in few months of time it will help the industry to grow faster as it will prevent online frauds.
Friday, July 31, 2009
On the other hand RBI governor D Subbarao is definite about the cut in lending rates even though the policy rates are not revised. He pointed out, “There is scope for reduction of lending rates within the policy rate adjustment already done by RBI... The lending rate should have come down to 9.5% but they are now at around 10.5% and above so there is scope for banks to reduce lending rates. We have also said that as deposits contracted at higher rates mature and get repriced, the cost of funds will go down for banks and they can reduce lending rates further”.
But a host of bankers on Tuesday communicated to the governor that it is not possible for them to bring down lending rates from their current levels. At the time of interaction with the RBI governor, CEOs of some of the bigger banks informed that net interest margins are under pressure. They also said that although banks have reduced the interest rates for borrowers, corporates have abstained from reducing the cost of their products.
Bankers informed RBI it is clear from the first quarter results that companies expenses on account of ‘interest paid to lenders’ have declined over the preceding and year-earlier quarters, which indicates that the cost of funds for corporates has come down.
MV Nair, CMD of Union Bank of India told ET, “Banks have passed on the benefit of easing interest rates to borrowers”. “Going forward, interest rates are not likely to fall from their current levels.”
Chanda Kochhar, MD & CEO, ICICI Bank, said, “We have cut our prime lending rate by 1.5%, the maximum by any private sector bank. Going forward, the rates would be dependent on credit growth. The rates currently are likely to be stable with a very minimal downward bias.”
Neeraj Swaroop, regional CEO (India & South Asia), Standard Chartered Bank added, “Over 90% of our lending is not linked to BPLR and judging our interest rates by BPLR doesn’t reflect the actual situation. Our rates have come down as much as the market rates have come down. We keep reviewing our BPLR from time to time.”
However, some anonymous bankers, informed reduction in lending rates is likely to happen but marginal at 25 bps. M Narandran, ED, Bank of India pointed out, “We do not expect any changes in interest rates immediately. Historically, there is a time lag in terms of repricing of deposits. Therefore, a reduction in lending rates can happen only at a later date. Meanwhile, we feel that rates have almost bottomed out, given that inflation is expected to rise in the second half coupled with high chances of pick-up in credit”.
Majority of the bank CEOs told the governor that credit has risen. According to private and foreign bankers BPLR has lost its relevance. An official from Axis Bank said, “The borrower owes us no loyalty. If our rates are not competitive, they will go to some other bank. There are very few loans which are linked to the BPLR”.
Bhegade informed the general body meeting will be attended by district guardian minister Ajit Pawar, the issue of funds of Rs 279.95 crore that the bank is yet to receive from the Union and the state governments under the debt waiver and relief schemes will also be taken up in the meeting.
Bhegade informed, "There are other important issues of loan disbursement to self-help groups which will be discussed during the meeting. The bank is planning to offer loans to self-help groups with zero per cent interest and also to other like farmers."
Explaining further, he said SHGs have small capital income, thus it becomes difficult for SHGs to manage if any interest burden is put upon it. He added, "To encourage them for the first few years, the bank is planning to give loans without any interest. But, the final decision would be taken at the meeting with the consent of the members".
Regarding the funds to be received from the state and Union governments, Bhegade stated after the Union government announced debt waiver and debt relief scheme in February 2008, the state government following on the lines of the Union government also announced a similar scheme for farmers in Maharashtra. "But, both the governments have released funds under the schemes partially," he said.
Bhegade informed, "The PDCCB and its allied co-operative banks and credit societies have cleared the debt accounts of farmers whose applications have been approved by the Union and state governments. Hence, those farmers are eligible for fresh loans. The bank has also disbursed loans to such farmers". "The approved amount under the Union government's debt waiver scheme was Rs 404.15 crore of which Rs 334.72 crore has been received by the bank. Of the Rs 120.78 crore under the debt relief scheme, the bank has not received a single rupee from the Union government."
Bhegade further added, "Under the debt waiver scheme of the state, the PDCCB has received Rs 52.82 crore, which is 100 per cent of the approved amount. But, in the debt relief scheme, of the approved Rs 110.91 crore, the bank has received only Rs 20.17 crore till date."
Bhegade explained, “Despite the gap in account, the bank has recorded Rs 20 crore net profits in the last financial year”.
Monday, July 27, 2009
According to bank release under this agreement Lakshmi Vilas Bank customer through PayMate platform can pay for utility bills, movie and flight tickets and make online purchases etc by using their mobile.
PayMate MD and Founder Ajay Adiseshann explained, "Our alliance with Lakshmi Vilas Bank will further bolster our payments ecosystem. Further, we are excited to bring mobile payments to LVB's customers and are confident that the sheer convenience of using their phones to make payments will drive the uptake and enhance customer satisfaction and loyalty".
Monday, July 13, 2009
Rana Kapoor, managing director and chief executive officer, Yes Bank, stated, “At present, our core strength lies in financing to companies — large, mid-sized as well as small. As far as our retail portfolio is concerned, we deliberately kept it low as there are too many banks providing such services. But as our presence grows, we will start focusing on the retail portfolio”.
When asked is the bank planning to foray into housing loan and car loan segments, Kapoor replied, “We certainly plan to foray into these two segments of retail lending. But before we go for it, we will try to increase our presence in across the country.”
Currently Yes Bank is lending mainly to big companies followed by mid-size companies and the small-scale sector. At present bank’s retail portfolio is merely 1% of its total loan portfolio, including mainly personal loans. In the business segment Yes Bank main focus is on the transportation sector, including roads and railways; power sector, mainly renewable energy; telecom and agri-infrastructure among others.
The bank is also planning to tap the capital market within a year by ensuing public offer, mainly to collect funds for its expansion plan.
The bank is in the process of expansion of its branch network and proposes to open about 130 branches by the end of the next year. Currently bank is having 120 branches and plans to open around 400 more branches by the end of 2012. By 2015, Yes Bank wants to increase the number of branches to 750.
The bank has also decided to hire at least 900 people, including 500 as managerial staff in the present financial year, after which its total employee strength will increase to 3,600. By 2015, bank aims to increase its employee strength by 10,000.
Thursday, July 9, 2009
Banks have asked for more time for the completion of the process of restructuring bad loans.
In the pre-Credit Policy meeting with the Reserve Bank of India officials, banks have requested for extension of the deadline for restructuring of bad loans to December 31. The original deadline was set for June 30.
Dr K. Ramakrishnan, Chief Executive, Indian Banks’ Association, said banks are finding it difficult to complete the restructuring process, as they have to process all proposals received till March-end. Especially loans given in group lending are difficult. Therefore banks have requested the RBI to extend the time till December 31 to complete the restructuring process, he said.
Last year, the RBI prudential guidelines on restructuring of advances were issued for the banks in order to help the industry overcome spill-over effects of the global downturn. The spill-over effects can be seen affecting the economy mainly from September 2008 creating pressure for the otherwise viable units/ activities.
As per the guidelines, special regulatory treatment was extended to commercial real estate exposures restructured for the first time as well as to exposures (other than commercial real estate, capital markets and personal/ consumer loans) which was feasible but were facing temporary cash flow problems and needed a second restructuring.
Bank chiefs who attended the meeting also explained to the RBI that credit growth is limp. However, there is more disbursal in the housing sectors. Funds are being taken by some mid-corporates for capex therefore credit offtake is likely to pick up over the next two quarters, Dr Ramakrishnan stated.
Bankers are positive that the 20 per cent credit growth, as predicted by the RBI in the annual monetary policy, will be achieved by the end of the fiscal.
Bankers have also asked the RBI to review at some of the provisioning norms. For instance, banks have requested for differential provisioning across various segments depending on the security, instead of a standard provisioning.
Banks, in the case of infrastructure projects also, have asked for relaxation in some of the provisioning norms in case the project is not ready on the date of completion. Dr Ramakrishnan pointed out in case the special purpose vehicle of a particular company defaults in a payment, then the whole corporate should not be treated as an NPA. Regarding the interest rate, the RBI has taken note of the periodic rate cuts announced by some banks.
Addressing the presspersons after the meeting, Mr O.P. Bhatt, Chairman, State Bank of India, said, “At the moment, the interest rate scenario is soft. May be for some industry players, softening could take place... small room is there. Six months down the line, when credit growth picks up and all the (government) borrowing takes place, it could stabilise there or harden.”
Dr Ramakrishnan said the RBI has also certain bank chiefs that the additional government borrowing will not put any restriction on liquidity.
Tuesday, July 7, 2009
Up till now the government had offered an interest rate financial support of 3% on short-term crop loans to farmers. This means it paid banks the difference between the actual loan rate of (10%) and the rate offered to the farmer. Now in the budget this subsidy has been increased to 4%, for which the government has set aside Rs 411 crore
MV Nair, CMD of Union Bank of India and chairman of IBA said, “This was one of the proposals made by the Indian Banks’ Association to incentives farmers who made payments on time, but did not get benefits of the FY09 Budget because the farm loan waiver was mainly aimed at those farmers who had not paid their dues to banks”. However last year Union Bank of India by itself had reduced interest rate by 50 bps to 6.5% for those farmers who repaid loans on time.
On the other hand country’s largest lender, the State Bank of India (SBI), witnessed rise of Rs 3,079 crore in the bad loans in the agriculture sector because of the Rs 71,000-crore loan waiver announced in last year’s Budget. As a result of this even those farmers who were not entitled to the waiver, stopped repaying loans, due to which NPAs for many banks moved up sharply.
AC Mahajan, CMD of Canara Bank, pointed out, “This move will bring more discipline among farmers to pay on time and will also reward prompt payment. This will also send out a message that they should not be misled by vested interests who lead them to believe in gains by non-payment of dues.”
Besides from the increased financial support, the government has also taken decision of extending the deadline for one-time settlement of farmers’ dues. In the last Budget, farmers with over two hectares of land were allotted a time period up to June 30, 2009, to repay 75% of their dues and an exemption for the rest. Now this period has been extended by six months to December 31, 2009.
Moreover to make possible for the students from economically weaker sections to take up higher education, the government has decided to provide full interest subsidy during the period of freeze. Under this loans will be covered taken by these students to pursue approved courses from recognized institutions in India.
Friday, July 3, 2009
Banks capital is the core measure to know about bank’s financial strength that includes largely of shareholders’ capital. The two of Indian banks – State Bank of India is positioned at 64th position and ICICI Bank Ltd is figured at 81st position among the top 100 by tier I capital.
While Punjab National Bank, HDFC Bank Ltd and Bank of India are positioned at 239, 242 and 263, respectively in the list to be published in the July issue of ‘The Banker’.
The latest list is being published after the financial maelstrom faced by the global banking industry last year where the US and Europe governments had to rescue banks by funding them with hundreds of billions of dollars.
As per the magazine records last year banking profits had declined by 85.3% from $780.8 billion in 2007 to $115 billion and return on equity had dropped from 20% to 2.69%.
According to capital strength JP Morgan Chase and Co., Bank of America Corp., Citigroup Inc., Royal Bank of Scotland Plc. and HSBC Holdings Plc. are the top five banks in the list. Among the five top banks, HSBC is the only banks that did not receive any government support.
The Banks which wedged to the basics, taking deposits and lending in their home markets, were the best. Industrial and Commercial Bank of China, followed by China Construction Bank and Spain’s Banco Santander SA attained maximum profits.
In a press statement magazine’s editor Brian Caplen told, “In future banks will be run much more conservatively”. “Regulators will require them to hold more capital and be less leveraged. This will reduce the profits of the industry as a whole but will bring about a safer banking system.”