Tides of 14.11.2006

1. The National Bank AG, Germany, will set up a `competency centre' in Germany that would facilitate the German business community to start operations in India. The competency centre would help Indian agencies in hiring labour, provide legal assistance, identify partners and bankers. The National Bank has over 100,000 SME customers and a good number of them are interested in doing business with India.
2. UTI Bank Ltd has raised $46 mn as capital through issuance of hybrid tier I bonds in the international markets as part of its medium term note programme for € 1 bn. The transaction is priced at 7.16%. It is the only bank in India to have raised capital through both hybrid tier-I and upper tier-II instruments in foreign currency. The bank had earlier raised $150 mn by issuing upper tier II bonds in August 2006.
3. Bank credit increased by Rs 11,847 crs to touch Rs 16,55,567 crs for the fortnight ended October 27, 2006. This included food credit, which increased by Rs 3,188 crs to touch Rs 36,633 crs and non-food credit, which increased by Rs 8,659 crs to Rs 16,18,934 crs. Total accommodation provided by SCBs to commercial sector in the form of bank credit and investments in shares, debentures, CP etc, was Rs 16,99,865 crs for the fortnight.
4. Indian Bank stood first in extending credit linkage to the SHGs in the State of Tamilnadu and had disbursed loans to the tune of Rs 189.12 crs to the SHGs so far during the current fiscal. Only 30% of the countrymen were having access to the banking services.
5. PSBs hoping to go public have to clean up their books and reduce their bloated equity base. The likes of Indian Bank, Central Bank of India, United Bank of India and Punjab & Sind Bank are in the process of doing just that. They do this in two stages. In the first stage, they ask the Government to write off the accumulated losses against the capital infused by the Government. In the second stage, a portion of the remaining equity (after the write-off) is converted into preference capital that will carry an interest rate of about 8%, subject to government approval. By doing this, banks hope to make themselves more palatable to potential investors.
6. United Bank of India has signed an MoU with the West Bengal Govt. for extending home loans to government employees. Housing loans will be available to those who have completed at least one year's continuous service in a regular post. The quantum of loan will vary depending on the purpose. For purchase of a house, for instance, a loan up to 75 times of an employee's basic pay will be provided. Initially, loans will be sanctioned from 15 link branches in Kolkata and 56 link branches in districts. The bank has introduced `United Griha Suraksha Scheme', through which insurance coverage is provided. The agreement, will help strengthen its retail loan portfolio.
7. Canara Bank is expected to secure rating of "Baa2" by international rating agency Moody's that is currently one notch above India's sovereign rating. It has informed the domestic stock exchanges that it is also expected to secure a "BBB" rating from Fitch another international rating agency. Both these ratings put the bank in the investment grade slot. Investment grade is also the rating for Tata Steel.
8. OBC will take a decision on raising interest rates by the end of the month, even as it considers reducing exposure to some sectors of the economy.