Saraswat co-operative bank to open nine new branches

The Saraswat Co-operative Bank is the biggest cooperative bank in the country, will be opening nine new branches. Bank has got licenses for opening nine more branches. According to bank sources majority of the new branches will be opened in Mumbai, however bank has received license to open a branch each in New Delhi, Bangalore and Udupi as well.

At present bank have 170 branches spread over five states. Recently bank acquired few sick cooperative banks told its total business-deposits plus advances-will cross the Rs 20,000 cr mark by the end of December. The bank said over the last couple of years it has acquired Maratha Mandir Co-operative Bank, the Mandvi Co-op Bank and Nashik Peoples Co-operative Bank which were running in loss, has been turned into profit-making ones in a short period.

Corporates reinvesting at current rates with banks

The banks are offering interest rates on short and medium-term deposit rates anywhere between 10 and 11 per cent for slabs between one year and 499 days. Therefore corporates have started terminating past deposits and reinvesting them at current rates.

Bankers say that many of the banks are experiencing this situation. Also, corporates, are buying bank certificates of deposits at rates of about 9 and 10 per cent as they have burnt their fingers in the mutual funds.

Even the RBI data points out that the re-pricing is becoming obvious. According to RBIs weekly statistical supplement the gross deposit accumulation have reached to Rs 3.2 lakh crore so far this financial year. However, time deposit accumulation for the same period was Rs 3.9 lakh crore.

According to Bankers some of retail depositors are also resorted to re-pricing their deposits so that they can take advantage of the higher interest rates, meaning that at least Rs 70,000 crore was reinvested. Bankers say that this kind of re-pricing has pushed up the cost of working funds for the banks.

At present cost of working funds for the banks is well over 7 per cent. The reason behind this is that the component of high cost resources in the banking system is on the increase. Around 30-35 per cent of the banking sector’s deposits are valued upwards of 9 per cent. Besides, some of the CD liabilities of the banks are also taken at very high costs.

For instance since the beginning of this fortnight, the 12-month CDs are valued at close to 10.3 per cent. CDs comprise one component of the bulk deposits with the banks. Actually banks and corporates are getting around the Finance Minister’s fiat against bulk deposits through CD floats. This is because, CD pricing is market- determined. This implies that CDs are placed with the lowest bidders. While in the bulk deposits, corporates call for the bids and the deposits are placed with the highest bidder.

Therefore, more and more public sector companies are resorting to subscribing to bank CDs to maximize their returns on investments. As a result, few banks are in a position to bring down their lending rates, below the current level. The lending rates are high is evident from the fact, that “Triple A” rated corporates are increasing short-term resources at rates as high as 13.5 per cent or just 25 basis points above the current prime lending rate of 13.25 per cent.

Nevertheless, bankers added, as more investors are returning to bank deposits as a safe investment, therefore rates will come down in the coming months. They say that in spite of the high CD rates at present, they are at least 200 basis points lower than the rates of August and September last.

Andhra Bank 527 branches rolled out to core banking

Andhra Bank had shifted its first branch to Core banking solution on March 31 this year following the line on Tuesday bank announced the migration of 527 branches to Core Banking Solution (CBS) that account for 34 per cent of the bank's total business, Andhra Bank General Manager Rakesh Sethi said.

Bank has planned to roll out all its branches to Core Banking solution by March 31 next year.

At present banks CBS branches are located in 143 cities and towns with 77 per cent of all metro branches and 56 per cent of all urban branches already been migrated to CBS.

Pvt Banks increased margin money on four wheeler

For many of us buying a first car is always has a great emotional value. The interest rates have hiked so much that it has become difficult to buy a car but this is just one side of the story. If we see the other side which is adding up to the high cost of the four wheeler is the margin money which needs to be brought in upfront. Private sector banks without announcing have hiked the margin requirement by 10 percentage points in the past few weeks.

According to few dealers hike in margin money has made it difficult to get a car loan through. For a compact car (B Segment), lenders are demanding 10% to 15% as margin money while earlier it was only 5% or so. For a mid sized sedan (C-Segment car), the margin money requirement has been hiked to 20% from 10% and for a utility vehicle 25% is being demanded from the earlier 15%.

However the commercial banks are lending up to 85% of on road price (dealer price plus road tax and insurance). "The problem here is paper work consumes a week to 10 days," dealers said.

Thus this means a car buyer has to shell out Rs 60,000 upfront for a compact car as against Rs 20,000 earlier and increases correspondingly for bigger cars. Up till now car financiers used to finance up to 100% of on road price of car.

"This is not all. In most cases, car financiers have brought in tighter disbursal norms, making a purchase a Herculean task. I know of a case in Coimbatore, where a buyer was asked to show property in his name to avail of a loan for a small car. And more so, after all paper work, the lender disbursed only 85% of the car value," sources said. But a section of market thinks that rising interest rates in fact don't hurt sales that much. They say that a 50 basis points or half per cent increase on a one lakh rupee car loan for a time of three years will translate into a monthly of a mere Rs 36.

"For a first time buyer, there is a lot of emotional accomplishment of owning a car, therefore he will try and stretch himself. But, where he is getting stumped now is on margin payments," an official with private bank said. "Car financiers are hiking interest rates and increasing margin payments which are affecting the already damp sentiment. We hope to see drop in domestic sales, because of this situation," Arvind Saxena, senior vice-president, marketing, Hyundai, said.

Dental Insurance – Some basic ideas

Dental insurance is one of the most popular forms of insurance nowadays. First of all, we should know the concept of dental insurance. Dental insurance is a form of insurance where an individual purchases a dental insurance plan through payment of a yearly or monthly premium to a dental insurance provider. Subsequently, the dental insurance provider offers dental insurance coverage for dental expenses. In simple words, if the insured person bears any dental expenses within the insurance term, those expenses would be reimbursed by the dental insurance provider.

The majority of health insurance programs offered at the present time are inclusive of dental insurance. Therefore, there is normally no requirement to purchase a dental insurance policy separately. When your health insurance or medical insurance does not offer dental insurance, you may receive dental insurance as a component of your medical insurance by means of raising your premium by a nominal value. In this kind of a dental insurance program, you can also avail tax benefits. In the U.S., the health insurance premium paid by you is immediately deducted from your taxable earnings. In this manner, you finish up paying lower taxes.

Family dental insurance offers dental insurance to the whole family. This is a more beneficial form of dental insurance than individual dental insurance because family dental insurance is relatively low-priced in comparison to individual dental insurance. In a family dental insurance program, if the number of heads goes up, then the premium per individual goes down since the risk becomes distributed.

When your company is offering dental insurance, in that case there is nothing better than that. You must opt for this form of insurance when your company is offering it because your employer pays the greater portion of the premium and you pay the rest.

Researches have also demonstrated that people carrying dental insurance plans have the trend of having improved dental health since they prefer precautionary dental checkup. This is advantageous because poor dental health might spoil your appearance and add to your expenses.

PSU banks to cut PLR by 75 basis points, interest rate to soften by 25-50%

After having a meeting with Finance Minister P Chidambaram all the PSU banks have decided to cut their prime lending rates by 75 basis points. Therefore interests rates are likely to get soften as the cut can be between 25-50%. Moreover credit guarantee on loans would be extended to Rs one lakh crore and deposit rates will be reduced by 50 basis points.

Earlier, Finance Minister P Chidambaram had held a meeting with top executives of PSU banks to review the liquidity situation and performance of lenders. The meeting was organized after the leaders of the Indian industry had met Prime Minister Dr. Manmohan Singh and demanded for steps to improve liquidity and move to create environment favorable for lowering of interest rates.

The meeting was attended by the SBI Chairman O P Bhatt, PNB chief K C Chakrabarty, Bank of Baroda Chairman M D Mallya, Canara Bank head A C Mahajan, UCO Bank CMD S K Goel and top officials of the Finance Ministry and Reserve Bank of India (RBI).

Earlier on Sunday, Chidambaram said that he would ask the public sector banks to think about lowering lending rates to ease the liquidity crunch in the country.

While expressing RBI's latest policy package as right step to instill more liquidity in the system, Chidambaram said, "I am happy with the policy package announced by the RBI. When it announced its (peak season) policy on October 24, the RBI had promised swift action in case it is necessary to infuse more liquidity."

Previously on Saturday, the RBI had announced a slew of measures to instill liquidity in the system.

The apex bank had slashed the repo rate by 50 basis points to 7.5 per cent and the cash reserve ratio (CRR) by 100 basis points to 5.5 per cent and the statutory liquidity ratio (SLR) by 100 basis points to instill an additional Rs 85,000 crore into the system.

Before in October, the RBI had infused an additional liquidity of Rs.1, 85,000 crore in the view of global financial crisis.

Banks change fixed rate by invoking reset clause

Banks due to liquidity crunch are under pressure to protect their margins and are required to review the pricing and structure of loans. Earlier loans which had a fixed rate of interest were considered to be insulated from interest rate vagaries.

Banks are under pressure to protect their margins and need to review the pricing and structure of loans. Previously, loans carrying a fixed rate of interest were considered to be insulated from interest rate vagaries. Therefore they are supposed to remain neutral to the changes in the market rates of interest. Hence increase in the interest rates, have entailed a loss of banks.

Banks have introduced the reset clause in their fixed home loan documents to result in change in the interest rate at a future date. A reset clause permits banks to review rates at the end of certain number of years. In the housing loan agreements the reset clause is either explicitly or implicitly. The clauses come into effect at the time of increase in the interest rates. Effectively, this makes the fixed rate loans equivalent to floating rate ones.

The reset clause also enables banks to revise their interest rates on the loans in case of certain circumstances. Under this clause the banks have the discretion to increase the interest rates in case the market rates increase. This gives the banks a escape against interest rate increases at a future point in time. But it is a disadvantage for the borrower.

The interest rate on fixed is higher than the floating rate because there is an additional element of risk, which the bank has to bear in the future. Generally, people opt for fixed rate loans when the interest rates are low therefore they prefer to lock-in the interest rates for the long term. Originally, banks were offering these loans without any apprehensions of any radical increases in interest rates in the future. But, as the interest rates started going up, banks are introducing the reset clause.

However the interest rate reviews and hikes can be linked to various factors - the prime lending rate (PLR) of the bank, money market conditions and so on. Furthermore, the increases might apply to select borrowers - loans above a certain amount or loans for certain tenure. The tenor of review and increase in the interest rates may be mentioned - once in a quarter or once in six months.

Recently the interests rates have gone up subsequently therefore banks are increasingly introducing the reset clauses to increase the interest rates on the fixed rate loans as well.

Banks not offering loans for gold purchase

In India it is a festival time and the celebrations are on full swing new clothes to buy, new appliances, even buying a new car. At this time banks also promote gold coin purchases at bank branches. But most of the banks have not included loan offer for purchasing of gold or gold jewellery in their portfolios.

However Indian Overseas Bank and Corporation Bank are offering loans to purchase gold and platinum jewellery, some banks like Canara Bank are offering discounted loan offer for purchases.

According to industry experts these products are not consumer friendly. "Banks currently offer loan for gold purchases to only government employees or those who have a salary account with them. The loan is available only for buying gold bars, not jewellery," says Keyur Shah, associate director of the World Gold Council.

Though the World Gold Council is having talks with several banks and national gold jewellers for making available gold purchases via equated monthly installments (EMIs).

"In times of volatility and global crises, gold jewellery purchases on EMI would be beneficial. We have been talking with banks and national players to offer gold on EMI," says Shah.

He raised a question, "Affordability is a factor in gold purchases. When loans are available to purchase consumer durables, home, etc, why not for gold?"

Bankers stated that high risk is involved in the yellow metal. An anonym’s bank official stated, "The prices are volatile and, in case the person defaults, it is not as easy to recover a gold asset as it is to recover a home or vehicle."

But Shah is not convinced about this. He added, "If security and risk can be taken care of in the white goods industry, it can be taken care of in the gold industry as well".

Jewellers pointed out that they haven't seen too many purchases by takers of gold loans as the loans are not consumer friendly.

"Banks have restrictions for offering gold loans. Unlike a personal loan or a consumer durables loan, a loan for buying gold jewellery is not sustainable. Unlike a television, which sees a significant drop in value once it is purchased, in the case of gold, the value may even increase after it's bought. Gold is a liquid asset and can be moved and so structuring a product may not be possible," says V Govindraj, VP, integrated retail services at Tanishq.

To get a gold loan, for amounts beyond Rs 50,000, a security such as LIC policy, Kisan Vikas Patra, National Savings Certificate has to be kept with the bank. Therefore if you are looking for taking a loan of Rs 1 lakh, up to Rs 50,000 it will come without security and a security has to be submitted for the balance Rs 50,000.

However jewellers themselves have found an easier way, which operates like the loan facility. Rajiv Popley, director of Popley Group, says, "We have been offering the EMI facility for gold purchases for the past five years through credit cards. We have a tie-up with Citibank and ICICI Bank, under which the EMI facility can be utilized. Most people take this facility."

"There is no down payment required and the interest charged is 0% for three months," explains Popley. "Buying gold is a spontaneous decision and the EMI on credit card facility can be utilized in seconds, while the bank loan is a tedious process. No one would undergo a tedious process when the shopping is spontaneous," he elaborates.

Nevertheless, the EMI on credit card facility that many people are using for gold purchases might not be as low-cost as it appears. Banks are usually charging an interest rate of around 1.5-3% per month, as well as the processing charge for the EMI on credit card facility. Therefore, for a six month EMI option, you will end up paying around 8-9% more than the purchase price. In this world everything has price.

Banking operations paralyzed due to two day strike

Public sector bank employees went on two day strike which paralyzed the banking operations across the country. Over one million employees stayed off from work.

A two-day nationwide strike was called by the United Forum of Bank Unions. The employees are protesting against bank mergers and are demanding a wage revision. Due to two-day strike customers faced difficulty as they were unable to carry out their normal banking transactions. Several bank branches remain closed in Mumbai and other cities.

Due to strike an automated teller machines (ATMs) of most lenders, including State Bank of India, Punjab National Bank, Canara Bank, Bank of India and Corporation Bank, ran out of cash at certain locations and customers were unable to withdraw cash. The other banking transactions like clearing operations, real time gross settlement (RTGS) and forex transactions were also hit by the strike.

According to Lalit Nagda, the general secretary of the Maharshtra State Federation of Bank Unions in Mumbai alone, transactions worth more than Rs 35,000 crore were hit because of the strike. The union also participated in the strike along with the eight associations that had called the strike.

“Everyday 300,000 to 350,000 instruments are traded in Mumbai,’’ he added.

United Forum of Bank Unions Convenor C H Venkatachalam said if the Indian Banks’ Association (IBA), the apex body of banks, did not attended to their demands in due time the agitation would be intensified further. He informed that banks can go for more than a two-day strike next time.

A bank union controlled by the Bal Thackeray-run Shiv Sena did not participated in the strike as it was not invited to participate in the initial round of discussions for the protest.

However the treasury operations of banks were not affected by the strike as officers were not a part of the stir.

A senior executive at Union Bank of India said but, volume of transactions in the money market was down due to an overall liquidity crunch.

There was around 23 per cent of attendance of total 39,000 employees of Central Bank of India. The All India Bank Officers Confederation told that no transactions took place on the second day.

A few branches, like the Nariman Point branch, of Union Bank of India employees had not participated in the strike so the banking operations were carried out partially.

South Indian Bank Launched Convenience Banking Product for salaried employees

South Indian Bank (SIB) launched a latest product for convenience banking, “Group Salary Savings Account” (GSSA). The product is a premium savings account designed to meet the needs of salaried employees and their employers.

Bank sources informed that the corporates, firms and such others who have opened accounts with any of the 511 CBS branches, the salaries of their employees will be distributed by the bank, hassle-free and free of any bank charges. The employer will be benefited in as the distribution of salary of would be easy to any employees/any single employees who are/is working even in far-off places where SIB has no presence,

The product was jointly launched by Dr V.A. Joseph Chairman & CEO of the Bank and Mr. M. P. Gopala Krishnan, President, CMS Trust. In his inaugural speech Dr. Joseph said, ''This convenience banking product, which is designed for the convenience of both employers and employees, leverages the bank's strong technology platform, which connects all the 511 branches and 26 extension counters of the Bank under Core Banking Solutions network offering anytime banking to its customers. GSSA can be opened with zero balance”.

The Chairman and CEO of the Bank also stated, “South Indian Bank, being a customer – oriented Bank is striving hard to render personalized customer service using the latest technological capabilities. The technological capability of the Bank was recognized when the Bank could bag the banking technology excellence award from IDRBT which is the technical arm of RBI. The service quality of the Bank has also been recognized when the Bank was selected in the ‘Outlook Money – C Fore’ survey as the best private sector Bank in India in the service quality segment.”

Dr. Joseph also informed about the facility recently started for online booking of offerings, free of bank charges, through South Indian Bank payment gateway. It is the first bank to start online booking by the customers of the bank who are devotees of Guruvayur Sreekrishna Temple which is described as the Dwaraka of South India. NRIs are also using this facility to affect offerings, hassle –free with greater transparency and security at the click of a button, either for themselves or their aged parents resident in India.

The Chairman while concluding his inaugural speech said, “South Indian Bank had completed on 26.03.07 the project ‘SIBertech’ by introducing a centralized Core Banking Solution in technology partnership with Infosys Technologies when many banks had not even started implementation of CBS. SIB had started this project in 2001 to render personalized customer service. The new product now launched would confirm this belief”.

Bank has launched convenience banking product after doing deep research so that banking for employers and their employees, could be made extremely easy and comfortable. The features include: -

Free International ATM-cum-Debit Card for which annual maintenance charges are not collected

Free of charges online booking of offerings for Lord Sri Guruvayurappan, free of bank charges

No charges on withdrawal of cash from the ATMs of other Banks (As charges would be borne by SIB)

Free utility payment and e-commerce services

No stipulation on minimum balance

The depositor enjoying many freebies can earn the usual SB interest

The depositor can operate his SB account –during his travel/temporary transfer /transfer- hassle-free

The account can be closed /transferred to another branch with out any charge

Free of cost cheque leaves (subject to limits in each category)

Free fund transfer facility through RTGS/NEFT/Fast Money /DD

Customers of this feature-rich Savings Bank account will also get the facility to open Depository account and also enjoy mobile banking facility.

Mr.George Davis Thottan,General Manager and Mr.P.J.Jacob,Deputy General Manager & Regional Head also gave speech on the occasion .

AP govt to provide bank loans to empower women

Andhra government is providing bank loans of Rs one lakh crore at a low interest rate of three per cent in the next five years to improve economic status of women.

Chief Minister Y S Rajasekhara Reddy while communicating with people’s representatives at his camp office said that government is firm with its decision to change the economic status of at least one crore women through this effort.

UPA Chairperson Sonia Gandhi is visiting the state where she will address a conference on Women Empowerment at Triputi, Reddy reviewed the arrangements.

He said 'Pavala Vaddi' scheme, was launched to make women self-reliant, and this scheme has made women financially disciplined.

HSBC bank to pay compensation for ‘defaming’ defaulter

Some of the banks have made practice of making a defaulting customer's name online. The state consumer commission terming this practice as highly offensive and uncivilized, has directed banks not to use this method.

Commission president Justice JD Kapoor has directed the RBI governor to issue instructions to all banks to stop this unfair trade practice. He said that the banks should not post the customer's name on website and to other banks.

The commission president passed this judgment during the hearing of a case, filed against the Hong Kong & Shanghai Banking Corporation (HSBC) Ltd. The commission president has directed the HSBC bank to pay a compensation of Rs 12,000 to one Atul Kumar for blacklisting him and posted his name on Satyam website even when he had paid the amount outstanding against his credit card. "Every bank is supposed to assess the credibility of a person independently as and when he applies for a credit card or loan and not on the basis of record of any other bank," said Justice Kapoor.

He added: "Undue demands are raised by banks against credit card holders or disputes crop up over the outstanding amount. In that case, it is unfair to taint the image of the person by circulating his name online or among other banks. The bank has no business telling the world at large that a person has defaulted or gone bankrupt."

Complainant Atul Kumar had filed a petition before the commission after his card was deactivated and his name was blacklisted on Satyam's website by the bank. After returning from abroad after trip in 2005, he found that the bank had deactivated his card. The bank gave the reason for its action that Rs 46,000 was outstanding against his credit card. By May 2005 he made a payment of Rs 40,000, in spite of which the bank did not activate his card and in its place blacklisted him.

CSB offers festive offer launched gift card

The Catholic Syrian Bank (CSB) to mark the starting of festival season has launched a unique user friendly Gift card ‘CSB Uaphaar’. The card was launched at a function by Malayalam filmstar, Innocent.

Speaking at the occasion, the Bank’s Chairman and CEO, Mr R Venkataraman, said the card, will have a 3 year validity period, and will be available in denominations starting from Rs 500 (in multiples of Rs 100 thereafter) to Rs 20,000.

The card can be used at all VISA accepting merchant outlets; will also allow multiple usages till the entire amount is completed. He said bank is 87-years old and has been carrying out operations through 363 branches out of which 60 have been networked. Another 100 branches will soon be covered under this.

Last year bank earned Rs 36 crore profit and intend to distribute 30 per cent dividend. He added this year bank’s business is expected to cross Rs 11,500 crore this year.

Till now CSB has launched mobile ATMs in seven cities. The Chief General Manager of CSB, Mr V P Iswardas, also spoke on the occasion.

On the occasion of launch of card Mr Dominic Savio K L, Principal of St Alberts Higher Secondary School, Ernakulam, was presented the first card by Mr Venkataraman.

Union Bank to extend its branches overseas

In next year more foreign banks will be setting up their branch network in India. The nationalized banks are updating themselves technically in order to be able to compete with the foreign banks. Moving on the same line the Union Bank of India has declared its major plan to transform itself into a global bank and to place itself in the top league by 2012.

Following this the banks main aim is to achieve the business of Rs two lakh crore in the financial year 2008-09. The bank has also taken the permission from RBI to open 500 branches across India.

Mr M. Nair, chairman and managing director of Union Bank, said that, "We are initializing the process of transformation, as a first step we have changed the logo. The new logo represents the commitment of good service and the passion to work. It symbolizes our desire to strive for achieving the growth. We will be spending Rs 85 crore on brand value in this financial year."

He added, "We are also planning to boost the business in the sectors of insurance and mutual fund products. In the next six months the bank is expected to launch the insurance and mutual fund products".

In relation to this the Union Bank has upgraded on technological level and has provided the core banking solution service at all 2,400 branches. The bank has plans to open branches overseas in Australia, Indonesia, UK and Canada.

Already, bank has set up a branch in Hong Kong and representative offices at Shanghai and Abudhabi.

Core banking a challenge and solution for banks to changing needs

Today banking industry has achieved more scope on the technology front than ever before. Earlier banks were just business enabler; IT is now a business driver for the banking sector. With the help of IT banks have been able to implement Core Banking Solutions (CBS). CBS is an automation of banks across multiple delivery channels. Under CBS banks are able to achieve a centralized processing mechanism and in turn provide an ‘anytime anywhere’ service to their customers. However, core banking applications have a set of challenges as well.

With an increasing competition and changing market dynamics, banks have been forced upon to keep updated themselves for newer obstacles every now and then. Besides this fresh regulations and compliance requirements, industry consolidation, delivering cost effective products and services, maintaining secure data platforms, meeting ever increasing customer demands and other strategic issues, all these factors have made banking far more complex than it used to be in the past. Therefore to handle the increasing transaction volumes and do away with issues hanging around the current systems, banks require the right CBS in place.

Banking industry is getting globalize therefore banks need flexible, customer centric core banking environment which should be equipped with multi-currency and multi-lingual features. For instance, Canara Bank recently implemented CBS at as many as 1000 branches, which is one of the largest implementations in the banking industry and has included agricultural loans, loan processing, foreign exchange and service branch functionality. This step has helped the bank to move in line with the changing market scenario.

Currently, out of the total IT spending taken on by banks, about 75 per cent go toward maintenance of existing systems and certain that the business of the bank goes through smoothly. Therefore, a major amount of expenditure involved in upgrading core banking architecture is something many banks may not be able to afford at present. To gain a periphery over their competitors and attend to customer demands effectively, banks are required to take balanced steps by replacing old systems with new platforms, without giving up on existing core banking modules which may still cater to changing needs. Although considerable progress in CBS implementation by banks has taken place but there is much more ground left to be covered.

Indian banks show better growth in loan segment than last year

Replying to the question on interest rate, whether growth in loans sector has gone down with the hike in interest rates the Reserve Bank of India (RBI) deputy governor V. Leeladhar said growth in loans by Indian banks has been better as compared to the last year.

He said the credit growth has been healthy although the pace of retail lending has slightly slowed down, he added that farm loans are expected to pick up.

"The growth of advances is far better than what it was last year. Something like 26 per cent against 20 per cent, which we have been projecting," he said in Bangalore.

In July RBI raised its key lending rate to a seven-year high of 9 per cent to control in double-digit inflation.

He said due to higher rates credit growth might slow down, though that could not yet be determined.

According to RBI data loans disbursed by Indian banks as at Aug 1 were 25.8 per cent which is higher than a year earlier.

On being asked whether banking sector reforms to allow foreign competitors to buy local banks will be unveiled next year, Leeladhar in a reply said it will all depend on the review.

He added, "I can't foresee what will be the findings of the review".

Banks raise fees to keep bottom line growing

Banks have started raising the charges of fee-based products to keep the end result growing. Banks are raising fees of usage of ATM & credit card facility, locker services, demand draft (DD), cheque issue and internet banking facilities. Banks are raising charges fearing about slowdown in growth and profitability due to high borrowing costs.

ICICI bank country’s largest private sector lender and Bank of India (BoI) public sector lender have already raised the rates of some of these products and it is being expected that sooner other banks will be following them. For some of these products the fees has been increased by up to 50%, while many free services will now become charged services. You may get details of updated rates for ICICI home loan here and also all the important documents needed to get approval fast.

ICICI bank official said, “We have to raise the charges to keep up with the quality of services we provide”. Official said the hike will be applicable for both — Indian and NRI customers.

The charges raised for the services by ICICI Bank include issuing of cheque books, demand draft and cheque collecting facilities while increasing the penalty for return of cheque due to financial or non-financial (technical) reasons. From now consumers will have to pay for even irresponsible use of their debit card as ICICI Bank will be slapping a penalty if there is rejection of transaction at any ATM.

Bank will be also charging Rs 100 as penalty for de-hotlisting of cards (getting the card unblocked). On premature closure of an account, it will be charging a fine of Rs 500 instead of the previous charge of Rs 250. Bank will be taking charges from consumers for issuing of new user-ID and PIN for internet banking usage.

On the other hand Bank of India has revised the locker charges in addition to the charges for other services. “We have revised the service charges with effect from August 14 and the details will be available soon,” Bank of India CMD T Narayanswamy told ET. He added that the fees has been raised selectively and not “across the board.”

Commercial banks are making efforts to maintain their profits, after the recent hikes in key policy rates by RBI. The net interest margins (NIM) is falling down due to high cost of borrowing. Due to this increasing pressure, most of the banks have reported a single-digit growth in net profit for the first quarter of the current fiscal. It is being considered the high rate scenario is going to persist as there are no chances of RBI to relax the monetary measures in the near future.

SIB launched S. B. account for NRI a Novel Convenience Banking Product

South Indian bank launched a premium S.B. account for NRI customers of the bank. The S.B. account was launched by Mr.M.K.Abdullah, the earliest NRI customer of the bank and Chairman of the EMKE Group (which employs more than 20000 Indians in 25 countries). At the time of launch the First Diamond Account passbook to Mr.Edwin Tharakan a prominent NRI. The function was presided by Dr.V.A.Joseph, Chairman and CEO of the Bank.

The pioneering product has value added features outlined for NRIs to make it extremely easily and comfortable. The account holder has to maintain an average balance of Rs 50,000/ only. The scheme has following features:


* Free and unlimited Any Branch Banking (ABB) facilities.

* Free and unlimited fund transfer to any other bank account in India through

RTGS and NEFT by debit to NRE accounts.

* Free and unlimited purchase of Drafts/Payment Orders by debit to NRE accounts.

* Free International ATM-cum-Debit Card for which annual maintenance charges are not collected.

* Free withdrawal of cash through other Banks’ ATMs in India.

* Free fund transfer facility through Internet Banking.

* Free utility payment and e-commerce services for Internet Banking customers.

*Free SMS facility and no annual maintenance charges.

The account holders will be able to avail the facility of Banking (ABB) and can withdraw cash and deposit cheques for collection at any branch of the bank. Customers will also be able to issue ABB cheques which are payable at par at all branches of the Bank. The feature-rich Savings Bank account is available at all the 511 branches of the Bank which has set up one of the largest CORE banking branch net work in India in the private sector.

In his launch speech Mr.M.K.Abdullah stated that as a satisfied NRI client of the Bank for more than thirty years he has been satisfied with the services offered by the bank and has been observing the excited performance of SIB in the arena of NRI services .He added the he has no doubts about the popularization and acceptance of the new product by the NRIs the world over.

Presiding over the function, Dr.V A Joseph, Chairman and CEO of the Bank, stated, “South Indian Bank, being a customer – oriented Bank is striving hard to render personalized customer service using the latest technological capabilities. The technological capability of the Bank was recognized when the Bank could bag the banking technology excellence award from IDRBT which is the technical arm of RBI. The service quality of the Bank has also been recognized when the Bank was selected in the ‘Outlook Money – C Fore’ survey as the best private sector Bank in India in the service quality segment.” Dr.V A Joseph informed that Hadi Express Exchange in Dubai to which South Indian bank is providing management support has received licenses to open 3 more branches at Dubai, Abu Dhabi and Rasal Khaima. Through Hadi Express Exchange NRIs in Bur Dubai and Sharjah are already being served.

Funds remittance done through the branches of Hadi Express Exchange is credited online to the accounts of the customers within 30 minutes for which the beneficiary gets an SMS. “SIB Express”, is the online delivery channel of SIB’s NRI services has received high admiration from the customers in the Gulf who number more than 1.65 lakh. Dr Joseph also gave details of the facility recently started for online booking of offerings. The facility is being offered free of bank charges , through South Indian Bank payment gateway-the first bank to go online booking -by the customers of the bank who are devotees of Guruvayur Sreekrishna Temple which is described as the Dwaraka of South India. This facility can also be utilized by the NRIs to give offerings, hassle –free with greater transparency and security at the click of a button ,either for themselves or their aged parents .

“South Indian Bank had completed on 26.03.07 the project ‘SIBertech’ by introducing a centralized Core Banking Solution in technology partnership with Infosys Technologies when many banks had not even started implementation of CBS. SIB, which is affectionately called by NRIs as the “Bank for the Pravasis” had started this project in 2001 mainly for the convenience of the NRIs.The new product now launched would confirm this belief”, the Chairman concluded his speech.

On the occasion Mr.H.Suresh Prabhu ,Executive Director ,Mr.Cheryan Varkey,Chief General Manager,Mr.Alex Mathew, General Manager and Mr.C.J.Jose Mohan , Dy. General Manager were also present and gave the speech..

Allahabad bank hikes BPLR leave existing housing, personal loans

On Friday 8 August 2008 Allahabad bank raised its benchmark prime lending rate by 50 basis points to 14%. After the hike in bps rates, bank gained 1.40% to Rs 65.20 at 13:43 IST on BSE. The bank announced the hike during trading hours on 8 August 2008.

On the other hand BSE Sensex was losing by 103.25 points, or 0.68%, to 15,014. On BSE shares were trading at 1.09 lakh in the counter. In the past one quarter the scrip in an average daily had a volume of 2.77 lakh shares. Now updated interest rate for Allahabad Bank is available at one click so check them today.

During the day stock had gained at Rs 65.50 and downfall at Rs 62. Earlier stock had gained a 52-week high of Rs 143 on 3 January 2008 and a downfall of 52-week low of Rs 53.10 on 2 July 2008. Allahabad bank has an equity capital of Rs 446.70 crore and the face value per share is Rs 10.

The current price of Rs 65.20 discounts its Q1 June 2008 annualized EPS of Rs 8.36, by a PE multiple of 7.80.

Bank sources said the existing housing loan, personal loan; education and car/auto loan customers will not be affected with the hike in benchmark prime lending rate (BPLR). It further added that the housing loan up to 30 lakhs will not be affected by the hike in BPLR.

Earlier in Q1 June 2008 Allahabad Bank's net profit fell 53.4% to Rs 93.36 crore on 20.5% growth in operating income to Rs 1849.63 crore as compared to Q1 June 2007.

Allahabad Bank is providing treasury and banking operations including accepting deposits, lending loans and to provide other financial related services.

Government of India has a stake of 55.23% in Allahabad Bank

Suvarna Bank depositors to write letter to RBI for merger

Shree Suvarna Sahakari Bank depositors, account holders and members' action committee held a meeting at Sambhaji Park in which they decided to send postcards to the Reserve Bank of India (RBI) for seeking its help. In the meeting around 200 depositors were present.

In the meeting members decided to send postcards to RBI in which they will be requesting it to settle the issue once and for all by way of the merger of the bank with some other bank. In the meeting committee representative Vilas Lanke appealed to the depositors to send letters to the RBI. He told DNA that over 1,000 depositors and members and account holders will be sending letters to the RBI urging it to sort out the issue.

On September 14, 2006 RBI imposed a moratorium and suspended its board of directors after which bank has been facing a crisis.

Later on, the co-operative department appointed an administrator and an inquiry was carried out regarding the financial irregularities.

The bank had build up losses to the tune of over Rs 350 crores. Saraswat co-operative bank has given willingness to the merger after the release of Suvarna Bank's financial reports this year.

In fact there have been reports of willingness of Indian Overseas Bank (IOB) in April and May regarding the merger.

Lanke told Saraswat Co-operative Bank last fortnight had placed their plan of merger before the depositors.

He also sought clarity on media reports that the IOB was keen on acquiring the bank.

He said that the depositors consent was not taken on this issue and demanded that if at all IOB wanted the merger; they must also inform people about their plan.

StanChart will soon review its BPLR

A top bank official of Standard Chartered Bank informed that soon bank might be reviewing its benchmark prime lending rates (BPLR).

Earlier in late July the private lender had increased its BPLR by 1.25 per cent to 14.25 per cent. Standard Chartered Bank India Head Neeraj Swaroop told reporters that bank might review its BPLR in view of the changed environment.

Following the Reserve Bank hiking its key rates earlier this week in the last two to three days host of banks have raised their lending rates.

Swaroop further added that apex bank might go for further monetary tightening in the coming months due to the prevailing high inflation rate, which currently stands at 11.98 per cent. Swaroop added StanChart’s lending portfolio being very small, the bank has not seen any delinquencies in the corporate segment. However in consumer finance, bad loans have increased marginally.

Possibilities of impact of higher interest rates on small and medium enterprises are being seen.

Swaroop added due to high interest rates, SMEs can face pressures as they don't have a unique business model.

Giving his views on the consolidation of the Indian banking industry the StanChart official said that consolidation in the domestic banking sector should be done both within the public sector segment as well as between public and private sector banks.

Commenting on takeover of a domestic bank by a foreign one, Swaroop said, a takeover by a foreign bank is just change of ownership and it will not contribute much to the consolidation process in the system.

Union Bank Hong Kong first branch opened

Union Bank of India in a bid of opening its branches overseas opened its first branch in Hong Kong. Through its branch bank will be offering a variety of products and services to corporate and individual.

The bank is looking at the possibilities of opening branches in countries, in the geographical boundaries of Africa, Asia, Europe, North America and Oceania.

In a statement released by the bank said the overseas branch at Hong Kong and the representative office in Shanghai will help the bank to look at opportunities from the growing Indo-Chinese trade relations.

The Hong Kong branch main aim will be to target major business in wholesale banking, syndication, trade finance and other trade related businesses and retail banking.

Currently Union Bank is having representative offices at Shanghai, PRC and Abu Dhabi, UAE. Bank did total business of USD 44800 million as of Mar. 31, 2008, with an asset base of USD 30926 million.

High court direct state govt. to review its recommendation of loan against land

Jharkhand High Court passed a judgment in which it has directed the state government to make amendments in its scheme. According to the government scheme tribals of the state can mortgage to obtain loan against their property.

In its order the court has instructed the government to review its recommendation that prohibits tribals to pawn their lands to obtain personal loans. In an oral observation the court said state should certain that the interests of the tribal are protected. Court has also instructed that government should see that tribals do not mortgage their entire lands for loans as it can lead to a possibility of losing entire land for not paying up the dues.

The court gave the judgment in view of the issue raised by one Felix Tamba in public interest litigation after a government circular proposed by the land and revenue department which stated that members of Scheduled Tribes will not be able to secure loans in lieu of their land.

Tamba, a tribal, stated the circular will have a negative effect on the interests of the community. Tamba in his appeal stated that if the tribals won’t be able to secure loans by mortgaging lands, this will affect the future of tribal students.

Banks advised to escalate unresolved complaints from call centers

Being a credit card holder you must have received calls from your banks call centre executive to remind you about your due payments. But if you have any grievances and register your complaint with call centre there is no one to solve your problem. You even don’t know whether you complaint is being forwarded to the bank. As a result you have to go through frustration as you don’t know whom to approach for getting your dispute resolved.

On receiving numerous complaints from cardholders, the Reserve Bank of India has conducted a study of the credit card operations in the country based on the nature of grievances received. Through survey RBI received set of recommendations, based on which the central bank has issued fresh directives to banks on their credit card operations.

RBI has made it mandatory for banks to set up a mechanism so that unresolved complaints are transferred from a call centre to a higher authority.

One of the recommendations made is that banks should have a mechanism to automatically transfer unresolved complaints from a call centre to higher authorities, if intervention of higher authorities is required. RBI has accepted this recommendation and has instructed banks to set up such mechanism and inform the public about this through their websites.

Other suggestions include installation of closed circuit television cameras at all ATMs to establish the identity of the person withdrawing cash. Banks have also been suggested to include security features such as photo credit cards and laminated signatures on them.

RBI has instructed banks to take clear instructions from their customers before sharing their information with other agencies. Banks have to explain the intention for sharing their information sharing. Customers should also be informed that their decision will have any bearing on their credit card application

For providing the protection to the customers from liability in respect of lost cards, the central bank has suggested that banks should introduce group insurance covers that will provide protection against liabilities arising out of lost cards. But, the insurance cover cannot be forced onto cardholders and only those customers who agree to bear the cost of the premium should be provided an appropriate insurance cover in respect of lost cards.

Banks charge higher interest rates from cardholders on account of his payment/default history should be made known to the cardholder. For this purpose, banks have been asked to ensure transparency in levying such differential interest rates and banks should publicize through their website interest rates charged to various categories of customers.

IOB to open bank in Malaysia

During the release of first quarter performance at a press conference Indian Overseas Bank (IOB) Chairman and Managing Director S. A. Bhat informed that bank is planning to open a banking company in Malaysia in association with Bank of Baroda and Andhra Bank. In the press conference Mr. Bhat told the minimum capital for the banking venture will be $100 million (Rs. 400 crore), with IOB contributing 30 per cent and the balance by the two bankers. He informed that the banking company will be operational by the end of the current financial year, subject to necessary formalities.

Chairman informed that bank has plans to open two more overseas branches — one in Sydney (Australia) and the other in Houston (U.S.), — besides a representative office in Dubai.

By the end of June 30 bank has done a total business of Rs. 1, 48,420 crore, representing a growth of 24.9 per cent over the same period last year. Giving out the figures he said deposits have rose by 21.1 per cent to Rs. 85,000 crore, advances showed a rise of 30.5 per cent at Rs. 63,419 crore.

Mr Bhat said whereas the working profit for the first quarter has declined sharply to Rs. 241.18 crore from Rs. 409.17 crore because of loss booked on account of inter-segment category transfer of securities and loss on sale of securities and provision for wage arrears, due to the possible increase in salaries of staff.

Consumer court says banks are liable in cheque forgery cases

A Mumbai resident Jehangir Gai filed a case in the consumer court against a bank for negligence and deficiency in service. In his complaint he alleged that his cheque book was misused and fraudulently Rs 40 lakh was withdrawn from his account when someone forged his signature on the cheque leaves.

According to Gai, the bank acknowledges that it hadn’t uploaded the consumer’s signature on its system. Due to this drift from their side the signatures on the cheques could not be verified.

Consumer organizations and bankers say that now day’s cheque frauds are very common and these happen when an individual is careless with his cheque book, or forget to cross a cheque leaf. Similarly there are rising instances of drop box cheque frauds too. Banking ombudsman official said, “Many banks don’t have the practice of listing cheques dropped in boxes’’.

Bejon Misra of Delhi’s Consumer Voice quoted another case where a cheque for Rs 10,000 bearing forged signatures was cleared by the bank staff without verification. The bank in a statement given in favor of its action said the complainant was negligent with his cheque book, and thus, it should not be held liable. But, says Misra, “the district forum held that the bank’s act constituted deficiency in service under the Consumer Protection Act.

The state commission concurred with the district forum’s views and dismissed the bank’s appeal with costs’’. Kirti Bhatt of Ahmedabad’s Consumer Education and Research Centre said if a signature is found to be fraudulent; it is banks liability to recoup the losses to the account holder. “There are a number of judgments (in such cases). Banks have argued that since a consumer has left the cheque book carelessly around, 50% of the losses should be borne by him. But courts have ruled that this doesn’t absolve the bank from the liability of verifying signatures.’’ In such cases consumers do not know whom to approach for redressal. Usually a criminal case is filed and requests the particular bank’s nodal officers and senior officials to investigate the case.

A senior banker explained that such cheques are sent for signature verification to the government examiner of questioned documents (GEQD). If the bank fails to provide redressal, the case is referred to the banking ombudsman. Ombudsman official clarified that consumers may note that cases where fraud is established are passed on the RBI’s department of banking supervision. They no longer come under the ombudsman’s purview.

“Otherwise, if there has been negligence on the part of the collecting bank, it is asked to do the needful, and the amount has to be made good.’’ Bankers and consumer organizations said, however, once a case has been filed in the criminal or consumer court, the ombudsman or RBI cannot intervene.

The ombudsman official explained cases of fraud can be minimized if a certain cheque truncation project, which is being tried out in Delhi, is extended elsewhere.

However the RBI website carries the explanation of this process it states that in this process, the physical instrument is truncated and an electronic image of the cheque is sent to the drawee branch along with the relevant information. Therefore extension of the physical instruments across branches would not be required, except in exceptional circumstances.

“Cheque truncation speeds up collection of cheques and therefore enhances customer service, reduces the scope for clearing related frauds, minimises cost of collection of cheques, reduces reconciliation problems, eliminates logistics problems etc.’’

Corporation Bank extends branchless banking facility to dairy farmers

Corporation Bank is stepping up its initiative of branchless banking units so that it can reach out the people living in unbanked areas. Working on this segment bank is gradually increasing the number of such units in rural areas. Besides this bank is extending the facility to dairy farmers and for making payments under the NREG (national employment guarantee) scheme.

Mr B. Sambamurthy, Chairman and Managing Director, in an interview to Business Line told that the number of branchless banking units have crossed 105 by the end of June. At the end of March this number was at 33. “We are planning to set up another 100 branchless banking units by the end of August,” he said.

Under this model the bank will be appointing a business correspondent in an un-banked area. The business correspondent will be given modern biometric smart cards and voice-guided systems to provide secure banking facilities to the rural populace without any barrier on timings.

In the first phase of the implementation of these units, the bank focused on some rural areas in Karnataka. In the future expansion, there is a plan to focus on rural areas in Chittoor and Coimbatore belts in Andhra Pradesh and Tamil Nadu, respectively. A majority of the proposed units will be set up in these areas.

Other than serving the individual villager through these units, the bank is also concentrating on other segments such as dairy farmers and NREG schemes.

Some parts of Andhra Pradesh dairy farmers and NREG beneficiaries are getting payments through Corporation Bank’s branchless banking units.

Mr Sambamurthy informed that the bank is carrying out branchless banking project with the National Dairy Development Board at Chittoor in Andhra Pradesh. Earlier, the dairy farmers, supplying milk to the dairies, were getting payments in cash. But under this project, the payment will directly get credited to the farmer’s account. The farmer can transact his/her account through branchless banking units.

He informed that due to this project there has been increasing demand for recurring deposits among the dairy farmers in Chittoor area. The payments of NREG scheme are also been given through these units.

Earlier, the payments to the beneficiaries, in both the cases, were made in cash.

StanChart launched Smart Credit Gold OD in six metros

Standard Chartered Bank foreign lender launched 'Smart Credit Gold Overdraft', to enable its customers to overdraw on their current accounts using a card attached to the account.

According to bank release customers will be able to access funds at an ATM machine using the card. The card can also be used like a credit card at any merchant establishment.

The release stated the overdraft amount can be repaid over a period of month as per the convenience of the customer.

StanChart's General Manger, Credit Card & Personal Loans, R L Prasad, said, "We have designed the overdraft with the aim of giving our customers the unique experience of using many products rolled into one. It's handy if you need cash and can repay it in the short term".

The key-features of the card are- card has higher credit limits, reward points and convenient to access to an open credit line, higher credit limits and reward points on spends and fuel surcharge waiver benefits among others.

According to bank release bank will be charging an annual fee of Rs 1,499 for the service. In the beginning the card has been in the six metros Mumbai, Delhi, Kolkata, Chennai, Bangalore and Ahmedabad.

At present StanChart is having network of 90 branches and nearly 2.1 million customers in the country.

OBC revises its PLR by 50 basis points

After the leading lenders like the State bank of India and PNB, another public sector lender Oriental Bank of Commerce (OBC) has revised its prime lending rates (PLR) by 50 basis points from 13.25 per cent to 13.75 per cent, to maintain its margin.

With the revision in lending rate PLR-related lending like floating home loan, corporate loan, car loan etc. will increase. Moreover, bank has also revised its deposits rates up to 50 basis points for some maturities. The new rates will come into effect from July 15.

Besides this OBC also launched special deposit scheme for senior citizens, under which bank offers to pay 9.55 per cent and 10.05 per cent. The scheme called Oriental Bank Akshay Kiran Deposit Scheme is for 500 days.

Bank has taken this decision following a RBI move to raise short-term lending rate (repo rates) and mandatory bank deposits with the central bank (CRR) by 50 basis points each to check rising inflation.

India will be joining anti-money laundering task force

Later in this year India is ready to join anti- money laundering task force Financial Action Task Force (FATF) which will help domestic banks access developed markets.

Till now the Indian banks - ICICI bank, Bank of Baroda and State Bank of India have been denied branch licenses by United States on the grounds that India was not a member of the FATF. Though these banks have been able to get temporary reprieve after the government and the Reserve Bank of India (RBI) withheld fresh branch permission to the likes of Citibank.

But as per sources who have been involved in the negotiations with FATF India has completed all the formalities except one - to amend the Prevention of Money Launder Act (PMLA) – to include a host of offenses, such as insider trading and human trafficking, in the schedule of offences. An official said, "This was an oversight that will soon be taken care of." The Bill to amend the PMLA is expected to be brought in Parliament next month for discussion and the government will be able to share the provisions of the proposed law and win a membership.

The sources informed that the other six major fundamentals for a membership have already been identified. For instance, the FATF – that has 35 members, with India being an observer – wanted the government to establish a track of all foreign exchange transactions, including hawala.

While the RBI has put in place a trail by asking agents, including those for wire transfer, to keep records for a specified period of time, it has managed to convince FATF that it is not possible to track hawala deals as such transactions were illegal.

While the other five commandments have already been complied with as the government last year had notified changes to the rules related to the PMLA, specifying that suspected cases of terror financing would be part of the suspicious transaction reporting system.

The other four specifications are in position as soon as the PMLA come into effect. They included naming of enforcement agencies to deal with the notified laws and mandating ‘know your client (KYC)' norms that would be legally binding.

In fact the setting up of the Financial Intelligence Unit (FIU-Ind) two years ago was also part of the exercise to gain a membership of the elite group.

Traveller’s cheques put NRI into trouble

When people go abroad they prefer travellers’ cheques rather than carrying cash with them as travellers’ cheques are considered to be things of convenience. But recently there has been a case where a non-resident Indian (NRI) who had cme to Nagpur on a long vacation had to face difficulty.

Sameer Varma, a research scientist who lives in Albuquerque, New Mexico, had converted $ 3,000 (over Rs 1, 30,000) to travellers' cheques in the United States. On Saturday (July 12) on reaching Nagpur, he went to the Nagpur branch of Standard Chartered Bank for depositing them in his account.

Bank staff told Varma that as the bank's foreign cell was closed on Saturday, he should come on Monday. Varma deposited the travellers' cheques with the bank and returned home.

But on Monday when he went to the bank to withdraw money from his account, a big shocked awaited him. He was told by the bank staffer Ambarish Saraf that the cheques had been sent to Chennai from where they would be sent to United States for physical verification.” I was told I would get my money in a month," Varma recalls. Therefore he met some senior officials but in vain.

After some time, Amrut Bhalerao, Manager (Customer Relations) of Standard Chartered, rang up Varma and told him that the bank staff did not explained the issue to him properly. Bhalerao assured Varma that the encashment process will not take a month but will be done between three to nine days. He accredited the delay to strict norms in India about encashment of travellers' cheques.

Unhappy Varma then contacted The Times of India and narrated his story to them. Varma in an interview to TOI said that he had used travellers' cheques many times and they have been encashed within minutes.

Verma said, "Thankfully, my father had some ready cash at hand otherwise I would have been totally cash strapped. However, the banks' inexplicable mishandling of the case has spoilt my holiday mood".

Verma added, "If the bank encashes the cheques in a month's time, it will be of no use because I will be back in US by then. What I fail to understand is that last time when I had come to Nagpur, I had opened an account with Standard Chartered using travellers' cheques. At that time there was no problem".

When contacted, the correspondent contacted the bank official Amrut Bhalerao about the issue he said that he will explain the issue to the customer. He refused to elaborate as this correspondent does not have an account with his bank.

Union Bank offers cash withdrawals from ATMs free

Public sector Union Bank of India has become the leading bank in making cash withdrawals by its deposit holders from ATMs of other banks free. The bank has set an example for its private sector peers.

Earlier on March 10 this year, the Reserve Bank of India (RBI) had issued a notification that all scheduled commercial banks should not charge any service fee for withdrawals from other bank ATMs with effect from April 1, 2009.

Before this notification till March this year, banks were charging customers between Rs 10 and Rs 50 per transaction, including balance enquiry, if they used the ATMs of other banks.

From April 2008, the RBI through notification made balance enquiry from other bank ATMs free and the charge for cash withdrawal was capped at Rs 20 per transaction.

M.V. Nair, chairman and managing director of Union Bank of India explained, “Banks charge a fee on cash withdrawal from other bank ATMs because the second bank bears the cost of replenishing the cash withdrawn by the first bank’s account holders. The second bank charges this cost to the first bank, which in turn, passes it on to its ATM cardholders as service charge.”

He added, “But we have decided that the bank will shoulder this cost and our customers won’t have to pay any fee for cash withdrawal from other bank ATMs.”

Nair was addressing a banking seminar organized by the eastern regional council of the Federation of Chambers of Commerce and Industry.

The Union Bank of India, has brought all its 2,513 branches under the core banking solution platform which has made fund transfers through electronic modes such as RTGS (real time gross settlement) and NEFT (national electronic fund transfer network) free of cost.

The public sector bank will soon be launching a home search facility for its home loan borrowers. “We have tied up with more than 100 reputed builders across the country and are preparing a database inventory for their properties in different cities,” Nair said.

Canara Bank fourth Indian bank to open branch in China

Canara Bank has been granted license by the China Banking Regulatory Commission. Last week the commission has granted license to Bank of Baroda. Canara Bank will be converting its representative office in Shanghai, China’s commercial capital into a regular branch.

Canara bank is the fourth Indian bank to get the license from China Banking Regulatory Commission. Previously State Bank of India, Bank of India and Bank of Baroda had obtained license to open branches in China.

According to bank sources it will start its operations in China over the next two or three weeks after obtaining certain other licenses from local authorities for doing business.

Bank sources said it took nearly three years to get a license after it opened a representative office in Shanghai in 2005.

FM launched microcredit scheme for slum dwellers

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

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

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

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

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

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

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

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

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

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

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

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

Canara, HSBC and OBC life insurance co starts its operation

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

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

StanChart offers unique risk cover for lost credit card

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

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

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

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

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

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

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

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

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

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

Saraswat Bank to take over three cooperative banks this financial year

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

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

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

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

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

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

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

Banks soon to announce hike in interest rates

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Govt support merger of four RRBs

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

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

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

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

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

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

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

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

IOB to offer tax related services

Chennai-based public sector bank Indian Overseas Bank (IOB) went into a tie-up with Alankit Assignment Ltd (AAL) to provide various tax related services, a step to make customers interaction convenient and effortless. Bank sources said in the initial stage tax related services will be offered at its select branches to its account holders and general public.

Through this tie up customers will be able to use services like application for issuance or change request of permanent account number (PAN) and tax deduction and collection account number (TAN) and filing returns for tax deduction sources (TDS), tax collection sources (TCS) and various forms.

Y L Madan, executive director, IOB informed that at initial stage the bank will be setting up Alankit helpdesks at twenty branches in the four metros including Chennai, Bangalore, Hyderabad and Kolkata.

He added after seeing the customer response the facility will be extended to more branches.