23.02.2007

1. ICICI Bank has begun work on a 44-storey building in the Financial District on the outskirts of Hyderabad at Rs 1,000 crs.The project, which is being taken on an eight-acre site, once completed would employ 25,000 people.It is expected to house important tasks such as back-end operations and disaster recovery facilities. The Financial District has started attracting global corporate giants such as UBS and Franklin Templeton. The Financial District would emerge as the Wall Street of India. The State Govt. has earmarked over 100 acres,that would house banking, insurance, financial and allied Cos.
2. SBI plans to recruit staff for frontline operations. Around 3,000 to 5,000 frontline staff would be recruited in the next fiscal. The process of recruitment has already begun, and it may take a few months time. In its effort to reach out to in unbanked areas, SBI is planning to set up 1 lakh kiosks in rural areas. SBI also intends to introduce biometric cards in rural areas.It has released the SBI-Manipal University Combo Card at Manipal.
3. Karnataka Bank Ltd has launched a distinct savings bank account product under the name `S.B. Soulabhya'. The holders of `SB Soulabhya' account will have various privileges and can avail themselves of a host of services and facilities free of service charges. The new scheme provides facilities such as access to the bank's ATMs free of charge, anywhere cash withdrawals, anywhere cash deposit, debit card facility, Internet banking facility, mobile banking, demat account, cheque collection facility, multi-city cheque facility. It has opened its 405th branch at Panipat.
4. Indian Bank has opened a branch at Dharavi, Asia's largest slum in Mumbai, with core banking facilities and online ATM. The basic objectives are to bring people into the institutional framework and provide all banking products such as "no-frills" savings bank account, small overdrafts, general credit cards and life and medical insurance for promoting viable economic activity. The branch has 6417 no-frills account and has mobilized Rs 51.60 lakh. Apart from traditional banking products, the bank also plans to offer pension and mutual fund products.
5.SBH has decided not to increase the existing rate of interest on both housing and education treating them under the priority sector loan category. The bank has revised the BPLR by 50 bps, up from 12% to 12.5%, effective from February 19.
6. Vijaya Bank has announced its decision to increase its benchmark prime lending rate to 12.25%t. The increase of 50 bps will be effective from Feb 15.
7. Centurion Bank of Punjab has raised the PLR by 100 bps to 14.50%, from March 1.
8. UTI Bank Ltd will raise up to Rs 970 crs in one or more tranches by issuing upper Tier II debentures and/or subordinated Tier II debentures. Latter would not exceed Rs 303 crs. 9. Dr P.J. Nayak will continue as CMD of UTI Bank for two more years, effective from August 1, 2007 to July 31, 2009.

Tides of 22.02.2007

1. UCO Bank is to have a new Chairman and Managing Director in Mr Allen C.A. Periera, who is now Executive Director, Oriental Bank of Commerce. Mr Periera would come in the place of the incumbent CMD , Mr V. Sridar, who is to superannuate in July.
2. Solar energy has caught the fancy of banks as an area to enhance their loan portfolio. With the government encouraging banks to offer loans for solar energy systems counting this as priority lending in an effort to popularise renewable energy products, the demand for loans for solar energy products has increased considerably. Canara Bank was one of the pioneering banks to participate in the Solar Water Heating Programme of the Ministry of New and Renewable Energy. About 10 PSBs, four non-banking financial corporations, two private banks and 10 scheduled co-op banks participate in this programme.
3. Infrastructure Development Finance Company Ltd (IDFC), Citi Group Inc, India Infrastructure Finance Company Ltd (IIFCL) and Blackstone Group have come together to launch `the India infrastructure financing initiative.' This is a collaborative effort to deploy about $5 billion in capital for infrastructure projects within the country. The plan is to deploy about $2 bn in equity capital and $3 bn in long term debt financing with maturities exceeding 10 years. The equity-financing programme would be managed by IDFC and would invest in green field and brown field operating projects primarily in roads, power, airports, ports and industrial and commercial infrastructure. IDFC, Citi and Blackstone would together invest $250 mn, while the balance is to come from reputable international investors as well as selected domestic institutional investors, including IIFCL. The debt financing would be channelled through IIFCL in several tranches over the next three years for projects appraised by IDFC and also certain banks/financial intermediaries.
4. ICICI Bank is to raise interest rates on home loans for new customers. It may also look at increasing deposit rates in the wake of some liquidity tightening by the RBI in the form of CRR hike. It expected the incremental credit disbursals of the bank to grow by at least 20%. He also said that the fee-based incomes of the bank would continue to be strong.
5. HDFC Bank has signed a memorandum of understanding with an Italian bank, Banca Monte dei Paschi di Siena, to offer banking services to each other's corporate customers engaged in business activity in their respective countries. The two banks will assist their customers on commercial (imports and exports, including shipment services, payment orders, among others) and financial transactions (investment activities, foreign direct investments, pre-export financing and trade financing) between Italy and India. The services will include remittances and bank guarantees.
6. The Corporation Bank Officers' Organisation conducted a symposium on `Whither reforms in banking?' in Mangalore on February 17. The symposium included an interactive session with the members of the Independent Commission on Banking and Financial Policy (ICBFP).

Tides of 21.02.2007

1. ICICI Prudential Life Insurance, the frontrunner among the private insurance companies in the country, has performed exceedingly well during the initial three quarters of the current financial year, issuing over 1.1 million policies and could garner Rs 2,722 crs in new premium. Further, 300 more branches had been added during the period, taking the total to 470. It has been a landmark year for the company. We have 9% of the overall life insurance market, with LIC being the dominant player. But in private insurance segment it has 29%.
2. The country's forex kitty rose by $5.031 bn in the week ended Feb 9, to touch $185.078 bn on strong FII inflows into the domestic equity and debt markets.The forex reserves have risen for the fifth consecutive week. This is the highest accretion to the forex kitty in a single week in the recent past.
3. The decision of the RBI to give `SLR status' to recapitalisation bonds given by Govt. to various banks, will help Indian Bank immensely, because the bank sits on a huge pile of such bonds, worth about Rs 3,800 crs.
4. PNB has launched a new scheme under the name of `PNB Sampurn Rin Yojana' to supplement farmers' incomes. Under the scheme, farmers are provided with credit for meeting expenditure on growing crops, rearing animals and for purchase of farm assets like tractors, pump sets and farm equipment. Besides, loans are also provided for non-farm sector activities like processing, storage, post-harvest technology.
5. The Debt Recovery Tribunal (DRT) was inaugurated at Madurai, following the establishment of a Bench of the Madras High Court a few years ago. It is the fourth in the State and 33rd at the All-India level.
6. CBI is introducing a deposit scheme - Cent Super - from Feb and will remain open till March 31. The deposit will be accepted for a fixed period of 555 days, with the minimum amount being Rs 25,000. The rate of interest will be 9.25%, with an additional half a per cent to the senior citizens. For premature withdrawals, the interest payable will be one per cent less than the rate applicable for the period the deposit has remained with the bank.
7. The Indian Banks' Association (IBA) launched a pilot project on trade finance using the structured financial messaging system (SFMS). This system is presently confined to payment and settlement systems applications such as real time gross settlement (RTGS), national electronic funds transfer (NEFT) etc. It will enable domestic banks do away with paper-based handling of letters of credit while negotiating bills and cut costs. The SFMS messaging format will be put on the INFINET network connectivity set up by the Institute for Development and Research in Banking Technology (IDRBT) of the RBI. It is quite similar to SWIFT in terms of messaging format and protocols with the only difference being additional security measures like `checker and maker'.Close to 10 branches each of ten banks such as ICICI Bank, SBI, UBI and Central Bank of India have joined the soft launch of the project.

Tides of 20.02.2007

1. UTI Bank launched UTI Bank Gift Card, a rupee denominated, non-re-loadable card,based on the VISA platform with a validity of 2 years. The minimum load amount will be Rs 1,000 and in multiples of Rs 100 up to a maximum load amount of Rs 50,000. A customer buying the card has to pay 1% of the amount loaded on the card or Rs 100, whichever is higher. The card can be used in India at over 1,30,000 visa-enabled merchant outlets. It will be sold to the customers as an alternative to cash, gift cheques or gift vouchers. It can also be purchased by outsiders.
2. Vijaya Bank will soon raise capital of about Rs 500 crs to fund business growth. It will be a mix of tier-I and tier-II capital. Under tier-I, debt offering is planned. The bank has enough headroom to raise tier-II capital. After it raises capital of about Rs 500 crs, its capital adequacy ratio is likely to improve from 11.37% to about 12%.
3. To help the banking sector meet the requirement of the fast-growing economy, the Confederation of Indian Industry has stressed on more fiscal reforms in the forthcoming Union budget. The chamber has demanded exemption for the banks from collection of TDS as they face an inconvenience in the form of collecting TDS certificates.
4. TMB will be opening nine more branches before the end of March. Of this, seven will be in Tamil Nadu and one each in Andhra Pradesh and Rajasthan. Additionally, three extension counters are to be upgraded into branches.
5. IOB, BOB and Union Bank have cut interest rates on foreign deposits of various maturities, effective February 1.
6. PNB may directly place equity shares with qualified institutional buyers (QIBs) for raising fresh tier-I equity capital in the next fiscal to fund business growth.
7. Gross bank credit increased by Rs 9,012 crs and stood at Rs 17,66,491 crs for the fortnight ended January 19.
8. UCO Bank is planning to start its representative office in Guang Zhou province of China by the end of February. To start with, all the business mobilised through the Chinese office would be transferred to UCO Bank's Hong Kong office. Currently, it has four overseas branches, two in Singapore and two in Hong Kong.
9. Indian Bank has increased its benchmark prime lending rate (PLR) by 50 bps to 12.5% from Feb 1. The bank had increased deposit rates by 25-50 bps.Its spread will remain the same even after the increase in PLR and deposit rates.

Tides of 8.02.2007

1.IDBI Bank auctioned off its 1,04,381 sq ft property on Boat Club Road, an up-market residential locality in Chennai, for Rs 175 crs. The property was bought through an electronic auction by a `high net worth individual' whose name was not disclosed.
2. Allahabad Bank proposes to open more branches in the southern region. Right now, the bank has only 82 branches in Tamil Nadu, Kerala, Andhra Pradesh and Karnataka out of a total branch network of 2,046 all over the country. It has only five branches under CBS but the plan is to cover as many as 400 by 2007-08 and a total of 900 by March 2009.
3. TMB has introduced a new deposit product called "TMB 555 Deposit Scheme" and increased interest rates on various deposit periods with effect from February 2. Under the scheme, the bank accepts deposits for 555 days only and offers the higher rate of interest (up to 9.75%) for a shorter term. It also offers 9.25% to general public and 9.75% to senior citizens. The effective annualised yield works out to 9.96% to general public and 10.53% to senior citizens. The minimum deposit amount is Rs 10,000 and in multiples of Rs 1,000 thereafter. There is no ceiling for maximum amount of investment. The scheme will be in force up to March 31.
4. The representatives of Reserve Bank Employees Union and Reserve Bank Workers' Union, in a deputation to the Regional Director of RBI, expressed their anguish over the management's decision to effect substantial hike in the allowances of officers ranging from Rs 500 to Rs 5,000 pm, without implementing any hike in the allowances of class III and class IV employees, who together comprised 75% of the bank's workforce.
5. NCR Corporation-India has received the contract to set up 3,000 ATMs for SBI and its associate banks. "This is probably the largest project of its kind. It will be providing the hardware, setting up the kiosks as well as managing the ATMs.
6. ICICI Bank hiked interest rates on all advances including home loans by 1%.This comes just a day after the FM Mr P. Chidambaram, asking public sector banks to keep interest rates on home loans untouched. The revised benchmark advance rate of ICICI Bank will be 14.75%pa, effective from February 9.
7.The Finance Ministry expects the PSBs’ overall credit exposure to small and medium enterprises (SMEs) to exceed the targeted growth of 20% this year. SME credit of these banks stood at Rs 1,73,460 crs as on Dec 31, 2006, which is a 28.30% increase over the credit level of Rs 1,35,200 crs as on Dec 31, 2005.
8. To get over tight liquidity, banks are increasingly opting for cheaper refinance from Nabard and SIDBI to fund the farm sector and small-scale enterprises. Refinance portfolio of SIDBI has shown an increase of about 7-8% as on Jan 31 over the previous year as banks feel refinance rates are attractive. There has been a good demand from major PSBs.
9. To check any possible interference of depositories in the management of banks, issuing American Depository Receipts or Global Depository Receipts, the RBI has advised banks to furnish a copy of each of the depository agreements entered into.
10. South Indian Bank unveiled its new corporate logo, the symbol of two hands strongly clasping on to the pillar that is the South Indian Bank. The hands depicted in the logo represented the loyal customers on top and the bank employees below. The new logo will project the significance of the transformation to the public around the world. It is a positive sign of change that has re-energised our staff members and caught the attention of our customers who understand that South Indian Bank is dedicated to relationships built on trust. The visual identity of the bank consists of cardinal red and white colours.
11. SBI plans to raise up to $700 mn of Tier-II capital before the end of the current fiscal. It will be a mix including long term debt.
12. Agriculture credit flow during 2005-06 has surged to Rs 1,80,486 crs, reflecting 128% of the target of Rs 1,41,000 crs that was set for that year. Agriculture credit flow target for 2006-07 has been pegged at Rs 1,75,000 crs.

Tides of 2.01.2007

1. The Andhra Bank has set up five more ATMs in East Godavari - three more in Kakinada town and one each at Pithapuram and Samalkot. Opening five ATMs on a single day was a record for the bank and it was giving a lot of importance to customer service. It has lent Rs 100 crs to self-help groups of women in the district and the district was ranked number one in setting up SHGs in the State and the country. The efforts to strengthen the SHG movement would be continued, as the bank was the lead bank in the State.

2. City Union Bank's net profit has risen by Rs 1.43 crs to Rs 13.86 crs during the third quarter. It had incurred a one-time expenditure of Rs 4 crs towards provisioning for gratuity. This provision makes it appear as if our net is just marginally higher than the corresponding previous period. Total income rose by 20% to Rs 111.69 crs (Rs 92.93 crs), while total expenses increased to Rs 84.69 crs (Rs 66.83 crs). Interest income increased by 22% to Rs 99.40 crs (Rs 81.92 crs).

3. SBH, as part of its business process re-engineering, launched the fully computerised retail asset central processing centre (RACPC) in Abids in Hyderabad. The RACPC intends to increase customer satisfaction by offering world-class service levels. The Centre will handle the process, sanctions, account maintenance and disbursement of all types of retail loans.

4. IOB , which has seen a slight reduction in the share of low-cost deposits from 37.6% a year ago to 36%, has recorded a 41% increase in advances. Lower operating expenses and good treasury profits have led to a steady net profit growth.

5. In a major change of stance, RBI has confirmed Naina Lal Kidwai’s position as CEO of HSBC India, even while allowing her to continue on the global board of foods major Nestle SA. The RBI had earlier withheld Kidwai’s confirmation as CEO until she gave up her seat on the Nestle board, citing a potential conflict of interest.

6. India's wholesale price index rose 6.11% in the 12 months to January 20, higher than the previous week's annual rise of 5.95% due to a rise in prices of manufactured products and foods. The figure was higher than a forecast of 6.0%in a Reuters poll of analysts. The annual inflation rate was 4.24% during the corresponding week of the previous year.

7.Indian Bank has attracted huge response from investors across the globe for its first-ever Initial Public Offering intended to raise 174 mn dollars.

8. The Kerala State Focus Paper for 2007-08 prepared by NABARD projects a quantum jump in credit flow for the year 2007-08 under priority sector to an aggregate level of Rs. 31,691 crs comprising agriculture and allied activities (Rs.11762 crs), non farm sector and agro-processing (Rs.4895 crs) and services sector (Rs.15,034 crs). The ground level credit flow by banks in Kerala during the current year (2006-07) under priority sector is expected to be Rs. 24,212 crs.

9. Like many other feathers in its cap, Kerala can preen itself in scoring yet another brownie point on the banking front. A traditionally backward district such as Palakkad has become the first to achieve 100% `financial inclusion' in the country. The latest issue of the Kerala State Industrial Development Corporation (KSIDC), `Infinity' paints a graphic picture of the strides made in the banking sector in Kerala, which has an enviable Credit Deposit ratio of 67.32 and per bank branch population of 8,820. The total number of bank branches in Kerala is 3,225. Kerala has the best banking network in the country with 3,235 branches of commercial banks for its 3.18 crs population. As on March 2006, per bank population in the State was 8,820 (that is one branch for 8,820 people). If one takes into account the cooperative branch network also, there were only 5,362 persons per branch of bank (commercial and cooperative) in the State. Kerala's number of ATMs is also a record. The State has close to 1,600 ATMs, which is very high compared to other States. The State has 48 commercial banks; two regional rural banks, a State cooperative bank, 14 district cooperative banks and 61 urban cooperative banks. The primary service cooperative banks number 1,637 in the State.

10. All the banks in the country will go on a one-day strike on February 23 to show their solidarity towards employees of the Central Bank who have planned an indefinite strike from February 22 to protest the alleged highhanded behaviour of the bank’s management. The proposed strike is expected to impact the public offer the bank plans within the near future.

11. Banks see a drop in non-resident deposits as the RBI has lowered the interest rate ceilings on such deposits. The ceiling on interest rates that banks can offer on foreign currency non-resident deposits [FCNR(B)] and non-resident (external) rupee account [NR(E)RA] has been reduced by 25 bps and 50 bps, respectively, to manage liquidity concerns arising out of large capital inflows.