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.