Friday, July 23, 2010

Customers of other banks to get facility of paying LIC premium via mobile phone

Life Insurance Corporation of India (LIC) policyholders having bank account in other banks apart from Corporation Bank, in which LIC owns a stake, will be able to pay their insurance premiums through mobile phones. Till now the account holders of Corporation Bank were able to pay premiums on select LIC policies through mobile phone.

In an interview with the Wall Street Journal, TS Vijayan, LIC chairman, said, “We are in discussion with two to three banks; if you have a bank account with them, through mobile you will be able to transfer (funds).” He said most probably the facility be rolled out some time this year.

With Corporation Bank, LIC tied-up for this facility two year ago and the customers who sign up for bank’s mobile payment services are able to use this facility.

The customer sends a text message to a given number and once the payment gateway verifies his or her details from LIC, the premium is deducted from the customer’s account. Payment of unit linked insurance plans cannot be made through mobile phone.

In July 1995 LIC introduced its first information communication technology (ITC) facility by offering online service to its policy holders. Through this service policyholders can receive immediate policy status reports, their payments are promptly accepted also get revival and loan quotations on demand.

Then, the company started using interactive voice response (IVR) service which enabled customers to get information on the next premium due, policy status, loan amount, maturity payment due, accumulated bonus etc. through their mobile phones in 59 centers across the country.

Thursday, July 22, 2010

Bank official of nationalized bank booked for duping customers of Rs 2.4 lakh

The bank officials of a nationalized bank were booked by Samarth police following directives of the court. The officials have been charged of cheating the two customers of the bank by transferring Rs 2.4 lakh from their account to another account without informing them.

The incident took place at the Nana Peth branch of the bank between year 2004 and 2008.

Inspector B B Ingale (crime) told TOI that the bank customers Rejesh Navlakha (41) of Lullanagar lodged a complaint in the court and the court had directed the police to file a complaint against the bank officials.

Ingale told Rajesh and his brother Sandip had deposited Rs 1.2 lakh each in a fixed deposit account for three years in 2004.

In January 2008 when their fixed deposit got matured they went to the bank to get their money, they were told that their account has been closed. Ingale added, "When they demanded the reason under the right to information (RTI), the bank informed that their Rs 2.4 lakh had been transferred to a loan account, which happened to be their relative's."

Ingale further told, "We have registered the complaint against the bank officials under sections 409 (criminal breach of trust by banker) and 418 (cheating with knowledge that wrongful loss may ensure to person whose interest offender is bound to protect) of the IPC. We have asked the officials to submit all documents regarding the case with the police."

Tuesday, July 20, 2010

BoB will open seven new branches in North

Bank of Baroda (BoB) will be opening seven new branches in Punjab, Haryana and Himachal Pradesh. SK Goel, deputy general manager, Bank of Baroda and regional head, Chandigarh region comprising Punjab, Himachal, Haryana, Jammu and Chandigarh informed that new branches of BoB will be opened at Ropar, Muktsar and Dhuri in Punjab, Saha, Karnal and Pinjore in Haryana and one in Kullu, Himachal Pradesh.

Goel said, in Chandigarh region bank already has 102 branches and with addition of seven new branches to its fleet, the number will swell to 109. He said that bank is celebrating its foundation day so, as part of the celebrations it will be opening 61 new branches all over India. BoB at present has more than, 3,100 branches in India and 81 branches abroad in 21 countries.

“All the new branches will provide core banking solutions including internet banking, housing loan, automobile loans, education loan, agriculture loans, exporters and finance to medium and small industry etc. ATM cards, credit and debit cards, lockers etc. These branches would also take care of mutual funds and life insurance requirements of customers through its subsidiaries”.

He added during the financial year 2009-10 bank did more than Rs 4,00,000 crore business and in Chandigarh region it did business of more than Rs 8,500 crore. He said for 2010-11 financial year bank has set a target of doing a business of Rs 11,000 crore from this region.

Friday, July 16, 2010

Dhanalakshmi Bank will now be spelled as Dhanlaxmi Bank

Dhanalakshmi Bank, a private sector lender has rechristened the banks name as 'Dhanlaxmi Bank'. A special resolution was passed by the shareholders of the bank.

The filing said, "...Passed the special resolution for changing the name of the bank from the present 'The Dhanalakshmi Bank' to 'Dhanlaxmi Bank'."

The bank did not give any reason for going ahead with the name change.

The shareholders of the bank passed another resolution for issuing 2.10 crore equity shares to institutional buyers and investors.

They also took decision to seek a dividend of around 10 per cent, subject to approval of the Reserve bank. Earlier in a meeting held on May 11 the board of directors had recommended a 10% dividend.

Tuesday, July 13, 2010

Banks request RBI to announce sunset clause till June30, 2011

Yesterday bankers had met the Reserve Bank of India (RBI) officials and have requested to announce the sunset clause via a fiat with June 30, 2011 as the deadline. They said such a short time for switching over to base rate can get involved in litigation of clients, especially those that have taken loans for big projects, might refuse to move to new base rate system from the previous benchmark prime lending rate system at the time of annual renewal of loans.

Therefore it is expected that the RBI might soon announce a one-year sunset clause to help banks move all their existing loans to the new base rate-linked lending regime.

Mr O. P. Bhatt, Chairman, State Bank of India said RBI is scrutinizing the pros and cons of the proposed sunset clause thus the announcement is likely to be made soon. Mr Bhatt, who is also Chairman of the Indian Banks' Association, was addressing the media after bankers had given their feedback to the RBI top brass for the quarterly review of the Monetary Policy, scheduled to be released on July 27.

Dr K. Ramakrishnan, Chief Executive, IBA informed that issue on dealing with corporate debt restructuring (CDR) under the base rate regime was also taken up for discussion.

Banks offer concessions and waivers on interest rates, rescheduling repayment, and converting debt into equity to the corporate to help them in getting back to business via debt restructuring. During the discussions bankers said although, they are not allowed to lend below the base rate, but RBI should make some provision to allow them to reduce interest rate to the base rate level or lower as the recompense clause under CDR which will help in offering concessions.

Since May-end banking system has been experiencing liquidity tightness, bankers point out by end of July it is likely to improve.

“Liquidity is expected to improve by July-end and beyond,” said Mr Bhatt. Another banker pointed out unless credit demand move upwards, banks will not raise deposit rates.

Friday, July 9, 2010

Cooperative Bank to open more branches

Sri Gokarnanath Cooperative Bank Ltd is opening its 13th branch at Regal Plaza, on Mission Street. The branch will be inaugurated by former union minister B Janaradhan Poojary on Friday. The bank started operations as a cooperative society at Kudroli area in 1925, and then in 1971 it was upgraded in a town cooperative bank.

A Shivananda Karkera, president of the bank told reporters since its set up, bank has been catering to the needs of backward and economically weaker sections of the society by providing them with group financial lending. The bank as per permission granted by the Reserve Bank of India aims to open one branch each year. He said, "RBI allows a bank of our nature to add 1 per cent of its existing branches in the form of new branch."

For the last 47-years bank has been earning profit continuously and has provided dividend to its members. In 2008-09 bank had declared a dividend of 20 per cent and earned a profit of Rs 93.86 lakh during 2009-10. The bank’s capital adequacy ratio is 19.37 per cent, which is above RBI norms, and it showed losses of 0.6 per cent. The bank as per audit classification has been rates A category bank, informed Karkera.

In the near future bank will be computerizing all its branches and administrative head office in a phased manner. At present out of 12 branches 7 are computerized. Kumble Sundar Rao, president, Karnataka Yakshagana Bayalatta Academy will be inaugurating the safe lockers at the new branch. K N Vijayaprakash, commissioner, MCC will inaugurate the computerized office. B R Bhat, general manager, Corporation Bank will preside.

Thursday, July 8, 2010

Andhra Bank joint venture subsidiary in Malaysia to start operations in 3 months

Andhra Bank, a public sector lender banking subsidiary in Malaysia will start operations in the next three months.

Chairman and Managing Director RS Reddy told Business Standard informed, “In all probability, we will register the subsidiary and start operations in two-three months.”

The bank will start the subsidiary in association with Bank of Baroda (BoB) and Indian Overseas Bank. Through the subsidiary bank is expected to cater the Indian population in Malaysia. Andhra bank has a 25% stake in the venture which comes to Rs 104 crore.

The bank has obtained clearance from both the Malaysian Central Bank as well as the Reserve Bank of India for subsidiary. Reddy told, BoB already has a representative office in Malaysia therefore the formalities for subsidiary will be completed smoothly.

Reddy added, in Malaysia out of the 8% of the population, about 2.1 million people are of Indian origin and the subsidiary will be catering to their financial needs. Apart from this, the bilateral trade between India and Malaysia is also increasing and now it stands at about $10 billion

The IndiaFirst Life Insurance Company, an insurance joint venture (JV) of Andhra Bank, BoB and Legal and General Plc of the UK, has started sale of insurance policies through their branch outlets. In the venture Andhra Bank has invested Rs 60 crore for 30% stake.

A senior official of the bank told, up till now AB had 19,689 policies and has collected a premium of Rs 53.44 crore, earning a commission of Rs 2 crore.

Meanwhile bank is expecting to earn a commission of about Rs 20 crore by collecting a premium of around Rs 250 crore.

For the next five years, Andhra Bank has set a target of achieving annual growth rate of 25 per cent, regarding this Reddy said with return on equity being 29.99 per cent the bank’s internal growth alone will help in meeting the target.

He said, last year, bank had registered a net profit of Rs 1,046 crore. After payment of dividend over Rs 760 crore was added to the Tier-II capital, “which will support the 25 per cent growth strategy,” he said.

Andhra Bank had got Rs 1,000 crore from the central government for which the bank will be issuing perpetual non-cumulative preference shares to increase its capital. Reddy added, capital is not a big issue for the bank as it already has a capital adequacy ratio of 14%.

Andhra Bank is planning to open 120 more branches in 2010-11 out of which it plans to open 50 branches outside Andhra Pradesh.

The bank is also working on increasing the share of fee-based income in the total from 12% to 15% in the current year and 18 per cent in 2011-12. Last year, bank fee –based income amounted to Rs 965 crore.

Tuesday, July 6, 2010

Banks witness robust farm loan recovery after extension in debt relief scheme

The debt relief scheme has helped banks in speedy recovery of agricultural loans. As a result, in the last quarter agri non-performing assets (NPAs) of most of the banks has reduced.

Earlier in union budget 2010-11 Finance Minister Pranab Mukherjee had announced extension of debt relief scheme. Mukherjee extended the debt relief scheme of 2008 by six months to June 30, 2010, as in some states the condition of farmers was very bad due to drought and in some other parts of the country there was severe floods.

According to State Bank of India, country’s largest lender official, it is expecting its agricultural NPA to come down by in the last quarter. As on March 2010, agricultural loans accounted for nearly 10 per cent of the bank’s loan book. While it’s gross NPA ratio declined to 3.05% from 2.86% last year because of fresh loans turning bad.

Another public sector bank, Bank of India outstanding of agricultural loan stood at about Rs 388 crore under the debt relief scheme is expecting 60% recovery of the loan amount. M Narendra, executive director of Bank of India said, "We deployed special officers for farm loan recovery under the debt waiver scheme. The harvest has also been much better."

United Bank of India is also expecting more than 50 per cent recovery of farm dues in the last quarter. K R Kamath, chairman and managing director, Punjab National Bank said, "There had been significant recovery under the debt relief scheme, as the recovery mechanism was intensified."

Earlier under the debt relief scheme the farmers who have more than 2 hectares of land were given time up to December 31, 2009 to pay 75 per cent of their over dues. Also banks and lending institutions were allowed to recover less than 75% of the debt amount as one-time settlement (OTS) system, provided they bore the difference, as government announced to compensate only 25 per cent of the amount under debt relief.

At this most of the banks waived another 25% of dues, as a result borrower had to return only 50% of the dues.

However the government said it will not pay interest for the six month extension and only reimburse the 25 per cent amount to lending institutions as per the delayed reimbursement scheme.

A bank executive told, last year the farm loan recovery was very low due to factors like drought and anticipation of further relief in farm loans. The recovery dropped by 50% as compared to the previous year.

Friday, July 2, 2010

Foreign lenders too announced their base rates

As the Indian public and private sector lenders have announced their base rates, foreign lenders have also opted to set their base rates at least 50-100 basis points (bps) lower than the Indian banks.

Amongst the foreign lenders in the country Citibank and Standard Chartered Bank have set their base rate at 7.25 per cent, same as HDFC Bank. Their rate is 25 bps lower than the country’s largest lender State Bank of India (SBI). On the other hand HSBC, the third largest foreign lender in the country has set its base rate at 7.0 per cent while Deutsche Bank has set to a lower competitive rate at 6.75%.

However all the other major public sector lenders - Bank of Baroda, Bank of India, Punjab National Bank and Union Bank of India have set their base rate at 8%.

A senior executive of a foreign bank said, “Given the size of our balance sheets, there is no question of a rate war with domestic banks. Our base rates reflect the area of the market that most foreign banks operate, which is at the short end.” “Most foreign banks are not active in the term loan market or infrastructure loans.”

Some of the foreign banks in the country have much lower cost structure in comparison to their public sector counterparts. For instance, as of 31 March Standard Chartered Bank current account, savings account ratio stood at 60%.

Foreign banks balance sheet is much smaller in comparison to their domestic counterparts and they depend more on fee income for profits. Unlike Indian banks, they have restrictions regarding the number of branches they are allowed to open.

As of March 31, 2009, Citi, the largest foreign lender, domestic loan book accounted to Rs 39,919.94 crore as compared to ICICI Bank’s 2,18,310.85 crore at the end of the same period.