Tides of 31.03.2007

1. The country's foreign exchange reserves surged by $1.789 bn to touch $197.746 bn in the week ended March 23, 2007. The reserves have increased by over $3.3 b in two consecutive weeks. During the week ended March 16, the reserves had touched $1.547 bn to $ 195.957 bn.

2. Bank of Baroda has identified Legal & General, the UK-based life insurance company, as partner for its life-insurance venture. Legal & General has over 10% of market share in the UK. The bank will hold 50% stake in the proposed venture while Legal and General will hold 26%. The Bank will shortly identify the third partner in the joint venture and will apply for approvals to the RBI and the IRDA. The insurance venture will have an initial capital of about Rs 200 crs.

3. Select branches of SBI that normally conduct Government business will remain open on Saturday, which is a holiday under the Negotiable Instruments Act. These branches will entertain customers to facilitate remittance of both direct and indirect taxes by assessees.

4. In yet another attempt to ensure price stability, the RBI upped the repo rate by 25 bps from 7.50% to 7.75 % and the Cash Reserve Ratio (CRR) by 50 bps to 6.50% in two phases effective April 14 and take out Rs 15,500 crs from the system. Also, banks will be earning less on CRR with the RBI snipping interest rate to 0.5% pa from the present 1% effective April 14. Banks earn nothing on the minimum CRR of 3% and will now get less on the extra 3.5%. The move may not hit bank balance sheets for the fiscal ended March 31, 2007, as the twin RBI announcements came after banking hours on Friday.

5. Interest rates are sure to harden, say bankers reeling from the RBI's `triple whammy'. The central bank's hike in repo rate by a quarter percentage point to 7.75%, increase in the Cash Reserve Ratio by 50 bps to 6.50%, as well as the cut in interest (from 1% to 0.5 %) on eligible CRR balances will push up interest rates for consumers and hurt the profitability of banks.

6. The first to announce a hike was Yes Bank, which raised its prime lending rate (PLR) by 75 bps to 14.75%, effective April 1. This is in accordance to the prevailing market conditions and today's hike in CRR and repo rates. This is despite the fact that the bank has negligible retail assets and capital markets exposures which are subject to higher provisioning. Lending rates of most private banks are at 14-14.75%, while the public sector banks price loans at 12.25-12.50%. The prevailing deposit rates are at about 9-9.5%. Bankers feel another hike in PLR is on the anvil. Banks are expected to see a drop of around 6-8% in their profits, said analysts.

7. United Bank of India has launched `United Bank Socio-Economic Development Foundation' - a trust aimed at promoting developmental activities for the underprivileged. The bank, will adopt a more proactive strategy for social development. It is now assisting many SHGs in various form, including helping some of them to market their products. A corpus of Rs 2.5 crs has been set up for the Foundation.

8. The Allianz group, the German financial services major, is leaving no stone unturned to secure a banking licence from the RBI through its subsidiary, Dresdner Bank. The move follows the RBI’s rejection of the group’s proposal to let Dresdner Bank predominantly use the Allianz brand in India. The RBI had declined to issue a banking licence to Dresdner Bank, which was seeking to operate under a joint brand called Allianz Group Dresdner Bank. The group’s intention was to focus on the name Allianz and not Dresdner, and capitalise on the Allianz brand awareness in India because of its insurance ventures – Bajaj Allianz General Insurance and Bajaj Allianz Life Insurance Company.

9. Syndicate Bank has entered into a MOU with Credit Analysis and Research Ltd (CARE), a credit rating agency, to jointly conduct rating of small and medium enterprises. The bank will make available affordable, transparent, comprehensive and reliable rating services to enhance credit acceptance and other services. The bank will make use of independent and objective opinion offered by rating agency for evaluating infrastructure, corporate and other loan exposures of Syndicate Bank.

10. The government is likely to cap foreign direct investment (FDI) in credit information bureaus at 49%, as it prepares guidelines for entry of foreign companies in this sector. The sector has become attractive due to the booming retail financial services market.

11. India will be receiving a soft loan of Rs 6,916 crs from Japan this fiscal for 11 projects in power, forestry, urban transport and port sectors. India will pay 1.3% annual interest on the loan for the general projects, except for Visakhapatnam port expansion project and Bangalore distribution upgradation project for which interest rate would be 0.75% a year. The repayment period will be 30 years for the general projects and 15 years for other projects.

Tides of 30.03.2007

1.With pressure mounting on net interest margins (NIM), banks have begun quietly withdrawing from the bulk deposits markets. Bulk deposits are placed by corporates and large entities including State Governments, for maximising treasury earnings. Since the beginning of this year, most of the public and private sector banks had feverishly jostled with one another to garner bulk deposits. The intense competition pushed up rates for one-year bulk deposits as high as 12 %. As a result, accretions of wholesale deposits with the banking sector increased. Aggregate deposits are around Rs 25 lakh crs. Time deposits comprise of about Rs 21 lakh crs, with at least 35% coming from large corporate deposits.

2. Ask new banks if they are walking away with manpower from old private banks ,and you get a different perspective. No, they are not necessarily getting everyone they want only from the old banks, they often get them from each other. In their case, employees quit and join other new banks or foreign banks. So, the problem is universal. Interestingly, no one in the new banks is complaining. There is a part-resigned acceptance of high attrition as a fact of life. And some see positive merits in a certain amount of regular churn. For instance, Mr K. Ramkumar, General Manager, Human Resources, ICICI Bank, the largest private bank in the country, says, "A 20% attrition rate is in fact good. There are other sectors such as couriers and BPO where the attrition rate is higher than 50% but they are still growing”.

3. Karnataka Bank Ltd will raise Rs 150 crs via issue of tier-II bonds,unsecured redeemable non-convertible subordinated (tier-II) bonds (series I) in the nature of promissory notes/debentures for cash.

4. Indian Overseas Bank got back its Bangkok branch into its fold, 34 years after it set up the branch and lost it to a newly set up entity called Bharat Overseas Bank Ltd. Back in 1973, soon after IOB was nationalised, Thai authorities objected to the Bangkok branch being a part of a public sector undertaking. Accordingly, the branch was taken over by a special purpose vehicle, Bharat Overseas Bank Ltd, in which seven banks had stakes. Last year, a reversal of the event happened. IOB bought out the six other partners and is in the process of merging BhOBL with itself. The Thai authorities have agreed to let the Bangkok branch be a part of the public sector IOB.

5.The Ahmedabad based Self-Employed Women's Association (SEWA) operated Shri Mahila SEWA Sahakari Bank Ltd. has got the RBI’s approval to open three more branches in Ahmedabad city. The bank also plans to open up its branches in smaller cities like Rajkot, Vadodara, Surat and Bhuj within a span of three years.

6. ICICI Securities Limited, which is authorised to undertake Primary Dealer business, has been renamed as ICICI Securities Primary Dealership Limited with effect from March 1, 2007.

7. PNB has reduced education loan rates of its existing schemes by up to 1.25% effective from April 1.It has reduced interest rates on education loan up to Rs 4 lakh under 'PNB Vidya Lakhshya Purti Schemes' by 1.25% to 11.50 % while under 'PNB Sarvotam Sikhsha Scheme' by 0.5% to 10.50%. The interest waiver of 1% will be offered provided it is serviced regularly during the study period. The bank has taken this step to make affordable education loan to student.

8. In a bid to cater to the growing needs of the small and medium enterprises (SME) segment in northern region, the SME Rating Agency of India Ltd has announced plans to set up four offices in Punjab, Chandigarh, Uttarakhand and Jammu and Kashmir.

Tides of 29.03.2007

1. HDFC Bank is set to push sales of retail gold products through at least 100 new outlets in 2007/08. It sells gold coins and bars ranging from 2.5 grams to 50 grams across more than 500 branches spread in the country and plans to widen the variety.

2. Finance Minister P Chidambaram said that RBI should take steps necessary to moderate inflation without affecting growth.

3. The Malaysian subsidiary of Dutch investment bank ABN Amro may launch an Islamic banking unit in Kuala Lumper as it expands its Ilamic finance business. The bank will create the subsidiary when its Islamic banking business is ‘big enough’.

4. Private sector lender IndusInd Bank Ltd is looking for a foreign partner to set up a capital market subsidiary to offer wealth management services to Indians living abroad. The bank also plans to set up an insurance broking venture and an offshore banking unit (OBU), besides taking a 20-30% stake in an asset reconstruction company.

5. Yahoo Inc plans to offer unlimited e-mail storage to its roughly quarter of a billion users, starting in May. The world's biggest e-mail service is scrapping its free e-mail storage limit of 1 gigabyte, or about a bn bytes of data, responding to explosive growth in attachment sizes as people share ever more photos, music and videos via e-mail. Microsoft has a 2 gigabyte free e-mail storage limit, while Google caps its Gmail service at 2.8 gigabytes.

6. Global financial firms in fast-growing but restrictive India are making small investments and growing organically in the hope of some bigger action when foreign ownership limits are reviewed in 2009. From banks and brokers to insurers, fund managers and exchange operators, foreign firms want some of the business that boosted the profits of banks like Citigroup and Standard Chartered in India by between 18% and 30% in 2005/06.

7. Citigroup Inc executives are putting the finishing touches to a restructuring plan that is likely to involve around 15,000 job cuts and a charge against earnings of more than $1 bn. The financial company expects to unveil the plan by the time it reports its first-quarter results on April 16, the day before Citigroup's annual meeting.

8. India would remain the largest recipient of the Japanese ODA assistance for the fourth consecutive year in 2007, promoting economic and social development as well as cementing Japan-India Strategic and Global Partnership. India is one of the most important countries of Japan's economic cooperation programme.

9. Encouraged by the huge opportunities offered by the booming Indian market, UAE banks are looking at Asia's second-fastest growing economy for expansion. Armed with huge surplus liquidity, the UAE banks, who are facing profitability crunch in their home market, are looking for growth prospects elsewhere.A country of 4 million people, the UAE, say some analysts, is overbanked with 47 banks.

10. ABN Amro Bank has acquired 2 mn shares or a 0.91 % stake in India Cements to raise its stake to 5.09%.

11. Observing that terrorists primarily use hawala channels to route their funds, government has said even the banking channels were a 'significant route' for movement of money by these elements. As per available reports, terrorists and terrorist organisations active in India are using different channels to fund their operations. They route their funds mainly through hawala and other informal means. Banking channels are also a significant route for movement of funds by such elements. The government was pursuing a multi-dimensional approach to deal with terrorist operations and supporting states to neutralise their activities.

12. Indonesia, for the first time, will host the Asian Bankers Summit established eight years ago. The event would be held at Shangri-La hotel here from March 25 to 28, where the world bankers would present an ‘Outlook’ on the industrial finance services in the country. The growth prospect of industrial finance services in Indonesia is above the average regional growth of 17 countries.

Tides of 28.03.2007

1. Corporation Bank has declared an interim dividend of 40% for 2006-07. It said April 10 has been fixed as the record date for the purpose of payment of interim dividend.

2. A bank job was seen as the passport to safety and security in an uncertain world. Naturally, once you got into a bank job, you stayed with it till retirement. That's history. Bankers, even those at lower levels, are moving places. And it is happening across banks. Old private banks that were relatively insulated from this phenomenon till recently are now facing this new challenge. Banks such as Lakshmi Vilas Bank, Karur Vysya Bank and City Union Bank among others have been seeing more exits in their middle and lower cadre than what they saw a couple of years ago. This is clearly seen from the increased number of job interviews being conducted by these banks. Local bank officials said they were losing people to new generation banks such as ICICI Bank, HDFC Bank, UTI Bank, among others.

3. To facilitate Government transactions and meet the probable rush of taxpayers by March 31, RBI has taken the following steps. All the regional offices of RBI and branches of agency banks conducting Government business will extend the banking hours and keep their counters open from March 26 to March 31 to facilitate receipt of taxes. Further, these offices will keep their counters open on March 31, even if it is declared a holiday and conduct transactions.

4. Union Bank of India has launched its first centralised processing centre for retail, in South India at Saifabad in Hyderabad. It has identified Hyderabad, Bangalore, Ernakulam and Chennai for the centre. Hyderabad has now come up with one and in the rest of the cities, the centre would be ready in the first week of April. The objective of this centre was quick disbursal of loans for retail products. The centre is expected to receive, on an average, 200 loan application forms on any working day. This single-window clearance would help sanction loan fast in 48 hours particularly to reduce housing loan sanction turnaround time, he said. On the very first day of inauguration it had sanctioned and disbursed loans worth Rs 7.49 crs for various retails products, which include home loan, personal loan, two and four-wheelers.

5. The All Indian Bank Officers Association (AIBOA) has decided to launch action programmes in the country for regulated working hours. The bank employees, especially officers, are experiencing massive work pressure and there is no system of regulated working hours for them since the initiation of economic reforms in the country. This phenomenon, coupled with non-recruitment of staff, has forced the bank officers movement to fight for regulated working hours.

6. For depositors of several co-operative banks that have been liquidated, the wait for return of their deposits seems an indefinite one. Although the Deposit Insurance and Credit Guarantee Corporation (DICGC) provides a cover of up to Rs 1 lakh for every depositor of a bank that is being liquidated, the depositors have not received any relief yet. This is because the liquidators have not provided the insurer the required details. The total deposits stuck with these cooperative banks are estimated at Rs 400 crs.

7. Vijaya Bank’s plans to acquire a bank may materialise by 2009. The bank is looking at acquiring a bank with network in the western or northern parts of the country as it aims at strengthening its position in these regions. The bank is not yet to set its eyes on any bank. It could be a public sector bank or even a private bank. Vijaya Bank, with 962 branches, is looking at strengthening its position in the western and northern parts of India and for that the bank is planning to acquire an existing bank.

8. It could be a major jolt for cooperative banks in the country. The Bombay High Court has ordered that the recovery certificates issued by the joint registrar of cooperative societies under section 101 of the Maharashtra Co-operative Societies Act cannot be considered as a decree of a civil court and hence cannot be executed through a court. The judgment was passed in a case filed by Greater Mumbai Cooperative Bank against Satguru Construction Company and its director Gopal Khetan and Vijay Khetan. Early this year, the high court had issued arrest warrant against the directors for non-payment of dues to the tune of Rs 80 lakh. Satguru Construction had challenged the issue of the warrant.

9. Most public sector banks are anticipating a much slower growth in net profit in the fourth quarter of 2006-07. A year-on-year increase of 10% in net profit is expected as higher provisioning, particularly on standard loans to sensitive sectors such as real estate and capital market, would negate most of the gain on account of expansion of loan portfolios. RBI had doubled the provisioning requirement on standard loans to capital market, real estate, personal loans and credit card receivables to 2% in its third quarter review. Banks would be required to make an additional provisioning of Rs 2,500 crs on loans to sensitive sectors, totalling around Rs 2,50,000 crs.

10. The Financial Express unveils the much-awaited line-up of India’s Best Banks for 2005-06. An annual and rigorous number-crunching exercise undertaken with Ernst & Young (E&Y), this year’s rankings feature some of the sector’s biggest names. So, while Canara Bank, Corporation Bank, and Indian Overseas Bank are the top three among 28 public sector banks, ICICI Bank, Yes Bank and HDFC Bank head the list of seven new generation private sector banks. Karur Vysya Bank, Federal Bank and Karnataka Bank are toppers among 19 old private sector banks and Citibank, Bank of America and HSBC lead the rest among ten foreign banks. The survey excludes banks with five or less branches either in 2004-05 or 2005-06.

Tides of 27.03.2007

1. It was back in October 2006 that the RBI announced that it would allow an increase in the extent to which banks could borrow overseas, through the external commercial borrowings (ECB) route. In the `Mid-term review of Annual Policy for 2006-07' of October 2006, the RBI had said that it would allow banks to borrow through ECB upto 50 per cent of their tier-I capital, but this would include borrowing to give export credit. Earlier, banks were allowed to borrow 25 per cent of their tier-I capital, but excluding any loans taken for onlending to exporters. It's four months down the line; the RBI is yet to formalise guidelines for this, in the absence of which banks will not be able to utilise the enhanced ECB facilities. This delay has irked bankers. Several bankers were waiting eagerly for the guidelines. There is a good demand for enhanced ECB from banks and the delay is not being helpful.

2. IndusInd Bank plans to raise above Rs 130 crs through global depository receipts, on the Luxembourg Stock Exchange. The bank will issue close to 30 mn shares, which will bring down the promoters' stake from 31.3% to 28%.

3. Bajaj Allianz Life Insurance Company has hiked its capital base by Rs 130 crs to Rs 700 crs. The pace of growth will accelerate tremendously and this infusion of capital will enable it to continue with expansion plans and achieve sustained growth. Bajaj Allianz Life is currently present in 900 towns and has two lakh agents. The company has crossed over Rs 7,000 crs of new business in five years of operations and over 30 lakh policies have been sold.

4. The Kerala Government will amend the Money-lenders Act to deal with the private banks that operate in violation of rules in the State. The Act would contain provisions to curb exploitation by hire-purchase companies also.

5. Cartridge World, printer cartridge refilling services brand, has tied up with SBI, to fund prospective franchisees to expand the company's operations in India. The SBI tie-up franchisees can approach the bank for loans at convenient terms that can further speed up the process of making Cartridge World's technology and quality of products and services available to consumers. It has opened stores in three major cities of India and received overwhelming response. Its target is to have over 250 Cartridge World stores across the country by 2010.

6. In an era when companies across the board are tapping customer convenience, Andhra Bank and Kingfisher Airlines have come up with a novel idea. As per a MoU signed between, you can swipe your debit/ATM card into one of the bank's 500 usual or biometric ATMs anywhere in India and control the payment procedure for procurement of a Kingfisher ticket. The service will be available not just to the account holders of the bank but to Visa cardholders of any bank. All one needs to do is to dial the airline's toll-free number, or any other number of the call centre, and give the basic details of the itinerary, the date and sector of travel. The traveller will be given a booking reference number, also called BRN. The traveller can then visit an Andhra Bank ATM and follow the procedure after selecting the airline ticket booking option. At the end of it, he/she will receive a transaction slip that can be used to collect the ticket or boarding pass from the airline's office at the airport.

7. Syndicate Bank has entered into an MoU with CARE, one of the leading credit rating agencies in the country. The MoU was signed today to utilise the services of CARE for supporting SMEs by making available affordable, transparent, comprehensive and reliable rating services to enhance credit acceptance.

8. After meeting with the Prime Minister and Government officials to " review plans in India", Mr Charles Prince, Chairman and CEO of Citigroup, seemed upbeat on the India story. He said the group would be increasing headcount in the country, and ramping up operations, particularly in developing infrastructure and expanding presence in the rural markets. On the infrastructure front, Citigroup has recently launched a $5-bn fund, of which $1 bn will be raised in the next couple of months. The fund, aimed at financing infrastructure development projects in the country, would be a combination of debt and equity, and would be utilised across various sectors such as telecom, power, oil and gas. On the group's penetration into the rural markets, Mr Prince said that they would focus on micro finance and look at innovative ways for distribution.

Tides of 26.03.2007

1. With corporates on a roll, India’s importance for global banks has grown manifold. India is now the 10th largest profit contributor for Europe’s most-valuable bank HSBC in ’06 up from No. 16 in ’05. Though for smaller multinationals such as Standard Chartered India has always been a significant market it is gaining significance among big players as well. HSBC India reported a growth of 85% in the profit before tax to $393 mn (Rs 1,739 crs) compared to $212 mn (Rs 938 crs) in 2005. India has reported the highest growth in organic profits among emerging markets like Mexico, Middle East and Brazil where profits grew 9%, 25% and 30% respectively. China has reported a growth of 112% to $708 mn.

2. Syndicate Bank has relaunched its oldest deposit scheme, Pigmy, with many new features. The bank has named it as Pigmy Plus 2007. It will also continue the earlier scheme as Pigmy 1928. It hopes that Pigmy Plus 2007 will help to shore up core deposit base of the bank. It is aiming at a deposit of at least Rs 2,000 crs annually through both the schemes. The bank has been collecting an average Rs 1,000 crs through the earlier pigmy deposit scheme.

3. South Indian Bank implemented the core banking solution (CBS) in all 475 branches in the country. The bank has used the banking software of Infosys — Finacle — as its CBS. Its other CBS partners were Wipro and HCL.

4. The total demand for micro-credit in India is pegged at Rs 3.6 lakh crore as against Rs 20,000 crs the microfinance institutions offered at present, according to Dr Vikram Akula, Chief Executive Officer of SKS Microfinance. The potential to be tapped was huge. There were 15-crore poor households in the country. The average credit needs for a household were estimated at Rs 30,000. Even if one puts the inaccessible and unqualified households aside, the potential size would be Rs 3,40,000 crs.At present, most of this credit need was being attended to by local moneylenders and other informal sources.

5. Ernakulam has attained the status of 100% banking habit district and this is the second district in Kerala to attain the distinction, the first being Palakkad. The State PWD Minister, Mr T.U. Kuruvila, said that the banks should make loans affordable to common men by simplifying security norms and provide loans on personal security. Accounts alone could not serve the poor, affordable short-term loans should be provided. Scheduled banks helped society from exploitations of the private banks in the country.

6. In a significant move to help the farmers of Uttar Pradesh, the SBI and Nabard have joined hands to establish a “Farmers’ Club”. The club aims at enhancing the bargaining power of the farmers and artisans besides reaching out to the rural masses.

7. The International Monetary Fund (IMF) has advised the RBI to continue with its monetary tightening policy to control inflation which remains way above the central bank’s comfort level of 5-5.5 %.

8. The past four years have seen the vehicle finance market grow two and a half times, with rising income levels and easy availability of finance driving the demand for cars and rapid economic growth raising the sales of commercial vehicles.The total outstanding loans are likely to touch Rs 1,10,000 crs at the end of 2006-07 this month, up nearly 27 % from Rs 86,870 crs at the end of March 2006.

Tides of 25.03.2007

1.In a bid to contain possible asset-liability mismatches, public sector banks have begun capping their bulk deposit acceptances. Bankers said that there was no Reserve Bank of India fiat on such capping. Most of the banks that have capped bulk deposits have done it voluntarily. The caps are in the range of 30-35 % of their net liabilities.

2. RBI has instructed banks to furnish data on frauds, thefts and burglaries on a quarterly basis to the regional offices of the Urban Banks Department. Cases of online fraud and identity theft (also known broadly as phishing) come under the purview of this notification. The premier bank’s recent directive is a follow-up to its master circular on “Frauds - Classification and Reporting” for Primary (Urban) Co-operative Banks, issued in 2003. There are more than seven million phishing attempts every day, according to security company Symantec, of which 84% are targeted at banks and financial institutions. In recent years, HDFC Bank, ICICI, SBI and more recently UTI Bank have been the target of phishing attacks. Phishing is a form of online identity theft where consumers’ personal identity data and financial account credentials are stolen by third parties. Phishing involves sending “spoofed” e-mails that direct consumers to websites designed to trick them into entering sensitive information such as usernames and passwords.

3. The top management at Dhanalakshmi Bank is working overnight to chalk out a recast plan. A committee to explore various options to boost the bank’s net worth to Rs 300 crs from the existing Rs 125 crs has been formed. Sources indicate that the bank was looking at raising around Rs 150 crs through a combination of rights issue and allotment to qualified institutional buyers. The bank is in talks with AIG Private Equity. Mr P Raja Mohan Rao, a businessman from Andhra Pradesh, is the largest shareholder in Dhanalakshmi Bank with 36.39% stake.

4. The possibility of merger of SBI with its associate banks is unlikely to happen in the near future. The prospect of consolidation is getting brighter, but it is unlikely happen in near future. Before the merger so many statutory things including due delligence will have to be undertaken. Nothing is going to happen before 18-24 months.

5. Catholic Syrian Bank’s capital raising plans appear to have hit a roadblock. RBI is not willing to clear the bank’s proposal to make preferential allotment of about 15% stake in the bank to Asian private equity firm, AIF Capital Development. The Foreign Investment Promotion Board (FIPB) has cleared the proposal but the RBI guidelines restrict any single private equity firm’s holding in a private sector bank to 5%.

6. UTI Bank, a strong mid-sized private bank, today said it expects its loan portfolio to grow 30-40% in 2007-08 and it might raise Rs. 554 mn during April-September. After strengthening core banking business, the bank will enter insurance and other financial services in a couple of years. It is also on an expansion drive overseas and will concentrate on the United Kingdom, Africa and central Asia going forward.

6. The Karur Vysya Bank Limited, a leading private bank, has achieved Rs 1,078 crs in net-owned funds. Talking to Business Standard, P T Kuppuswamy, chairman of the bank, said with the allotment of rights issues completed on February 24, 2007, the bank has become the first private sector bank in Tamil Nadu, and the third in the country, after Federal Bank and Karnataka Bank, to achieve the landmark Rs 1,000 crs target. The aggregate business of the bank has already touched Rs 16,700 crs by January-end. He was hopeful that the bank would have Rs 17,000 to Rs 17,500 crs of total business by the end of this fiscal. The bank was able to surpass the target for the current year, which was Rs 15,753 crs, as it could garnered substantial business volumes in the northern and western regions of the country, where the bank had opened 20 new branches this fiscal. It opened 26 new branches across the country this fiscal. 266th branch of KVB, its 27th branch this fiscal, was opened at K K Nagar in Trichy. Before the end of March this year, the total number of its branches would touch 270.

Tides of 24.03.2007

1.More and more private sector banks are likely to stress on extending agricultural credit after the budget's emphasis on lending for rural development, say bankers. However, such lending is unlikely to form a chunk of the bank's portfolios.

2.The public sector banks, with their branch network in rural areas, already have a major presence in the agricultural credit business. Though private sector banks such as HDFC Bank, ICICI Bank and Centurion Bank of Punjab have come forward to lend to the rural masses, they are still selective in the sanctioning of credit. Agriculture lending is unlikely to become a large proportion of HDFC Bank's asset book, a bank official said. While the bank does see commercially viable lending opportunities in this segment, it is likely to remain selective in this space. Other private banks agree. "It is true that priority sector advances will be high on our agenda now. We plan to increase our agricultural portfolio to nearly 1,000 crs from Rs 400 crs now. However, we will mainly cater to small and medium farmers. Our focus will be on lending to farms, livestock and crop loans for short and medium terms," said Harpreet Singh, business director of wealth management, distribution of loans, Centurion Bank of Punjab.

3. ICICI Bank, the country's largest private sector bank, has a different approach to rural lending. It plans to go through micro-finance institutions in order to finance farmers and small shops. "We have now started focussing on rural development by lending for small shops in rural areas. Finance for hire-purchase schemes for agricultural machinery and implements, and loans for construction and running of storage facilities will also be given," said Rajiv Sabharwal, senior general manager and head of retail assets, ICICI Bank.

4. Forex reserves rose by $1.547 bn to $195.957 bn in the week ended March 16. This was mainly due to appreciation of non-dollar currencies against the dollar and net FII inflows into the domestic equity market. Foreign currency assets increased by $1.545 bn to $188.603 bn. The reserves had declined marginally by $224 mn to $194.410 bn, during the week ended March 9.

5.Reserve Bank of India will present the "Annual Policy Statement for the year 2007-08" on April 24.

6. In a move to cope with the rush of tax payers as the fiscal year nears its end, special clearing (with return clearing) will be conducted "in the evening or night of March 30 and March 31. This will be conducted with the approval of the president of local clearing houses run by the RBI or agency banks, keeping in view the operational convenience at the local centres. This is so to ensure that the clearing instruments received from members of public are realised and credited to the government account by March 31.

7. NCR Corporation, a company that manufactures automated teller machines, has secured a contract from Hong Kong and Shanghai Banking Corporation to manage its off-site ATM centres in the Western and Southern regions of India. NCR will provide first and second-line maintenance, caretaker services, site maintenance, consumables supply and management besides cash replenishment services, said a news release from the company. The contract will ensure that the bank does not have to spend time and in-house resources on day-to-day operational management of its ATM network.

8. Emerging and mid-size biotechnology companies wanting to set up business in Maharashtra will likely have better access to venture capital funding, loans, and financial advice from three banks in the State. The Maharashtra Government has signed a MOU with SBI, PNB and YES Bank for this purpose. The MoU will provide a framework for banks to provide funding to companies which want to set up their units in the biotechnology parks run by the Maharashtra Industrial Development Corporation.

9. While the concept of a centralised credit processing cell (CCPC) is not new, Oriental Bank of Commerce has for the first time initiated a CCPC for a cluster of branches.

10. With a view to facilitating faster processing of credit proposals, it had started four such CCPC at the regional level.But this is the first time it has opened one for a cluster of 6 branches covering Coimbatore, Tirupur, Karur and Erode in this region. It would wait and watch the progress for replicating this in other parts of the country.On the launch day, the bank disbursed loans to the tune of Rs 70 crs to 32 beneficiaries. OBC plans to have 10 more CCPCs before the close of the next fiscal.

11. The Kerala High Court has directed the Director General of Police to see that the Federal Bank employees who would go on an indefinite strike from Monday do not cause any obstruction to the free entry and exit of the officials and staff of the bank willing to work and also to the customers in all the branches in the State.

12.The recent increase in interest rates may marginally reduce the net interest margin of some banks in the fourth quarter this fiscal, but is unlikely to have a major impact on their profitability, say bankers and analysts. Net interest margin is the difference between what the bank pays for deposits and borrowings and what they earn on loans and investments. It is also referred to as "profit margin on money" and higher the margin the better for banks' profit.

13. UTI Bank Ltd has opened a branch in Hong Kong with plans to offer a range of products to corporates and individuals. The branch will concentrate on activities such as corporate finance, trade finance and retail banking.

Tides of 23.03.2007

1. The Canara Bank Institute of Information Technology (CBIIT), which imparts free training in computer packages to economically backward meritorious students, is completing six years of service. The institute provides three-month full-time course in software and hardware as also lessons in communicative English and behavioural aspects. The centre has trained 1,066 students, with 95 per cent of them being placed with computer firms at Technopark here as well as in overseas locations.

2. After remaining at the nine-year high for two days, call rates eased to close at 10-15% on 22.03.2007 against the previous close of 60%. The bank union's calling off their strike and RBI's notification allowing the utilisation of funds from RBI's repo window in the call money market has worked positively. The Call rate may go below 10%. Banks borrowed Rs 39,550 crs from the RBI through its repo window. In the first one-day repo auction, the RBI received and accepted 34 bids for Rs 29,035 crs, there was no reverse repo bid in the first one day.

3. In a big relief to millions of customers, United Forum of Bank Unions, an umbrella body of nine employees’ and officers’ unions, today called off the proposed three-day strike from March 28. The strike call was withdrawn after a discussion of the forum with the Indian Banks’ Association (IBA), which assured to consider a pension option for bank staff among other demands. Earlier in the day, the forum representatives met Finance Minister P Chidambaram to draw his attention to the issues pertaining to the public sector bank staff. The main demands of the unions are — a pension option besides the existing provident fund, compassionate appointments, no outsourcing of normal banking services and fresh recruitment.

4. The country’s ten largest banks have told the RBI that the continued tightness in lendable resources might compel them to slow credit growth substantially in 2007-08. This outlook on medium-term credit exists even as overnight call money rates rose to a decade’s high of 75 per cent in intra-day trading, before closing at 40%. These highs follow the demand for funds to meet advance tax payments, government bond auctions and the impact of increases in the cash reserve ratio, the amount of cash the RBI requires banks to keep with it as a measure to reduce liquidity in the system. To ease liquidity exigencies at some banks, the RBI today allowed banks with excess investment in government bonds to borrow from it and on-lend it in the inter-bank market.

5. RBI had five months ago cautioned banks that it was undesirable on their part to chase liquidity at expensive interest rates. Banks, which over-leveraged themselves to meet high credit demand, are now finding tightness disrupting their operations, albeit marginal. Lendable resources have become scarce compelling some of the banks to borrow money for up to one year on interest rates as high as 12 per cent. These banks are so desperate for funds since yesterday that the overnight call rates have touched near decade highs.

6. Deputy Governor of RBI V Leeladhar has strongly criticised Indian banks for not implementing various technology measures initiated by the banking regulator. The banks have failed to effectively implement ‘real time gross settlement’(RTGS), a payment and settlement system through national electronic fund transfer (NEFT), thereby not making use of the technology available to help customers as well as increase their own business.

7. Vijaya Bank is planning to set up 350 new ATMs across the country during the next fiscal. The bank currently has 170 ATMs. This apart, it has begun negotiations with other banks for sharing of the ATM network.

8. Top bankers have said the rate war among banks, which has pushed up interests on deposits to as much as 9 and 9.5%, have increased the cost of deposits for lenders.

9. RBI is planning to create a regulatory framework to monitor factoring business in the country. The move comes close on the heels of the RBI receiving five applications for licence from international companies who want to set up factoring business. Factoring is selling of a company’s accounts receivables at a discount to an entity which assumes the credit risk. This entity makes upfront payment to the exporter, freeing it from the job of getting payments from the buyer. The recovery of payment for bills becomes a lookout of the factor.

10. Individuals account for 77% of savings bank deposits, forming the mainstay of banks’ credit operations, but they get a raw deal from both the banks as well as the government. This was stated by K J Udeshi, chairperson of Banking Codes and Standards Board of India (BCSBI) and former RBI deputy governor, in her address to depositors on the occasion of the world consumer rights day today. She felt there is no reason for banks to continue the practice of paying the 3.5 % interest on savings account balances only on the minimum balance during the period from the tenth to the end of every month. “In these days of electronic wizardry is it necessary to continue to follow this methodology for the ease and convenience of banks at the cost of the depositor?” Udeshi asked. The effective interest paid on savings account balances is as low as about 2.8%. This is because the manner of calculation of interest excludes a part of the deposits. She said these low-cost funds were leveraged by banks and lent at high rates of interest which is a main source of their profits. According to statistics published in the RBI bulletin in July 2006, as on March 31, 2005, savings bank deposits amounted to Rs 472,147 crs, forming 26% of total deposits of scheduled commercial banks.

11. IndusInd Bank, is planning to raise around Rs 140 crs through global depository receipts (GDR) by March-end. The bank will issue close to 30 mn shares which will listed at the Luxembourg Stock Exchange. CLSA has been appointed as the lead manager to the issue. The fresh infusion of capital will bring the promoter holding down to about 28% from 31.3%. The major shareholders in the bank are IndusInd International Holdings Ltd which holds around 23% stake , IndusInd Ltd 5.34% and De Five Mauritius Holdings Ltd 2.41%. This issue will enable the bank to boost its capital adequacy ratio to 11.25% from 11.10%. It is also planning to raise Rs 50 crs through issuance of lower tier II bonds.

22.03.2007

1. Canara Bank has opened 125 ATMs across the country on a single day. The ATMs have new value-added features like mobile top-up, VISA money transfer, cheque deposit, e-ticketing and easy access to more than 14,000 ATMs of different banks across the country.
2. RBI is on track for implementation of Basel II guidelines by March 2008 for Indian banks with global presence and foreign banks operating in the country. RBI's Deputy Governor Mr V. Leeladhar said, "There are some challenges that needs to be overcome by the banks." Among these, he said, were corporate ratings. All the four credit rating agencies had conveyed that the infrastructure for corporate ratings were in place.Besides, he said, Indian banks needed to have risk management tools in place, instead of relying on RBI's circulars for the purpose. He said that the RBI, as the regulator, had set up a core team for monitoring banking institutions once the guidelines came into effect. Indian banks had made good progress since 1990, when financial sector reforms were initiated. Non-performing loans, despite the shift to the 90-day norm, was less than 3 % compared to 15% in 1990. The average capital-to-risk weighted assets of the banking sector was 12.3% currently as against 1996 figure of 8.7%. Moreover, as on December 2006, there were only 25 banks in the country that were short of the prescribed Rs 300 crs net worth; foreign banks incidentally comprised 17 of them. These banks had submitted a road map for achieving complying with the net worth guidelines.
3. The 475th branch of the South Indian Bank at Ranchi has been opened. It has established a large network of core banking branches in the private sector, next only to ICICI Bank and HDFC Bank. Dr V.A. Joseph, Chairman and CEO of the bank, said during the opening that Jharkhand is the 23rd State that SIB was venturing into. It was poised to achieve Rs 20,000 crs in total business as on March 31 this year.
4. IDBI Capital Market Services Ltd has signed a memorandum of understanding with Oriental Bank of Commerce (OBC) to offer e-trading services through www.IDBIpaisabuilder.in. The portal allows online investment in equities, mutual funds and initial public offerings. Facilities of investing online in equity on the BSE and the NSE, F&O (NSE), mutual funds (including SIP facility), portfolio tracker, two equity trading platform to all customers and custom stock screener are among the features on offer.
5. Canara Bank's business growth target for the current financial year was on track, with credit growing at 20% this year. With the GDP growth in the 9-10% trajectory, loan off take has also grown. Deposits this year was growing at 18% this year and only a small component was bulk deposits. This year, the bank was optimistic of meeting its business target of Rs 2.3 lakh crs. The Bank reiterated its interest in inorganic growth opportunities.The preference was exclusively for banks operating in the western and northern regions.
6. Kotak Mahindra Bank said it plans to raise $45 mn (Rs 200 crs) by issuing bonds to International Finance Corporation, the private sector arm of the World Bank Group. The private sector bank will issue upper tier II subordinated bonds by way of debentures with a final maturity of 15 years. The investment will help the bank augment its capital base and enhance the bank's long term funding resources. It will increase the bank's lending to small and medium enterprises, and for individual housing, said a statement from IFC.
7. A creditor was entitled to proceed against the borrower in accordance with the provisions of the Securitisation and Reconstruction of Finance Assets and Enforcement of Securities Interest (SARFAESI) Act without the withdrawal of the OA (original application) pending before the Debt Recovery Tribunal, the Madras High Court has ruled. Rejecting the contention of the borrower (Kamaldeep Synthetics Ltd, Chennai) that notice for possession of security under Section 13(4) of the Act could be issued by creditor bank (Industrial Development Bank of India, Chennai) only after reasons for non-acceptance of objections were communicated by bank, the First Bench said that the borrower was unable to demonstrate prejudice or loss that was likely to be caused to him by reason of possession notice given.

Tides of 20.03.2007

1. Catholic Syrian Bank has become a member of the National Financial Switch (NFS).The NFS comprises a national switch to facilitate inter-connectivity between the banks' switches, inter-bank payment gateway for authentication and routing of payment details of various e-commerce transactions and e-government activities, according to a company release. The NFS Network now connects 8,345 ATMs, which is the largest number of ATMs under a single network in the country. This initiative will facilitate CSB customers to utilise all the ATMs belonging to 24 major banks coming under NFS at moderate charges. VISA-enabled global support cardholders can withdraw cash from more than one million ATMs and shop at 24 million merchant establishments worldwide. CSB Global Support Card holders can make card-to-card money transfer utilising CSB ATMs.
2. Representatives of bank trade unions would be meeting the Finance Minister, Mr P. Chidambaram, with their demands for filling up the close to one lakh vacant posts in various banks and stopping the outsourcing of work. The trade union leaders would also discuss with the Finance Minister the possibility of providing a second retirement benefit for the employees who want to opt for the pension scheme. The meeting with Finance Minister has been fixed after the labour leaders met Prime Minister Dr Manmohan Singh to press for their demands. The discussions assume significance in view of the proposed three-day all India bank strike beginning from March 28 and coinciding with the closing of the financial year 2006-07.
3. Indbank, a subsidiary of Indian Bank engaged in merchant banking services, will be opening 10 branches across the country in 2007-08. The proposed new offices will be coming up in Hyderabad, Puducherry, Baroda, Kolkata, Vijayawada, Rajkot, Pune, Jaipur, Indore and Kochi. There are also plans to put up broking terminals at select branches for increasing the reach and operations.
4. Syndicate Bank intends to recruit between 1,500 and 2,000 agents to mobilise `pigmy deposits',a scheme under which agents go to customers' houses, as frequently as required, and collect deposits. At present, the bank has about 3,000 agents. The agents are paid a monthly salary of Rs 750 plus a performance-based incentive. The pigmy deposit scheme is an 80-year-old product, but is now being "re-launched" so as to re-invigorate the scheme. At present, Syndicate Bank has about Rs 1,000 crs of deposits under the scheme. It was a scheme aimed at financial inclusion, designed long before financial inclusion became a buzzword in the banking industry.
5. The 475th branch of UTI Bank was opened at Trichy Road in Coimbatore city. Four more branches have been proposed for Coimbatore and these would become operational within the next year.
6. The biggest problem with rural Bank branches is the uncertainty of power availability. Vijaya Bank is trying to solve this problem using solar power systems. Again, the bank has installed solar power systems (provided by Tata BP Solar Ltd) in 60 of its rural branches and "they are working extremely well". These systems cost only about Rs 5 lakh. With VSATs (of Hughes), the rural branches are also to be linked to the central server. All core banking facilities could be offered. Meanwhile, Vijaya Bank is talking to arrangers for raising capital. Its capital adequacy ratio is about 11.5%, and the bank intends to raise hybrid capital of around Rs 1,400 crs.
7. If banks want to sell third-party financial products (mutual funds, insurance) to its customers, its staff should be free enough to do that, right? How can a teller, for example, sell a mutual fund if he has to count a bunch of notes three times before giving it to a customer? Sensing a business opportunity here, CashLink Global Systems Pvt Ltd (CGS), the Hardware & Services arm of HMA Group, in partnership with De La Rue (world's leading currency printing and cash & secure transaction group) has introduced machines known as `Teller Cash Dispensers' in India. These dispensers cost about Rs 7 lakh a piece. The company expects prices to come down once banks start placing bulk orders. These cash dispensers help improve efficiency and boost productivity and make a teller an "investment consultant". "Tellers can now be empowered to play a vital role in marketing banking products and services, strengthen customer relationship and hence build a better brand rather than spending their time in mundane tasks of counting, verifying, storing and managing currency,". While on the security front, it reduces fraud and robbery, on the cost front, it reduces operating costs by increasing the speed and volume of transactions per teller.The product literature says that the machines can count up to 15 notes per second, "faster than the fastest ATM in the world". The software can work with any other software of the bank. The machines do not demand ATM-quality notes. Two tellers can share one machine. Currency notes can be loaded in cassettes that can be secured with an electronic key.
8. Bank of Baroda has declared an interim dividend of 30%, which comes to Rs 3 per share for 2006-07.
9. Bankers will be going on a three-day unpaid vacation from March 28 with 27 PSBs, including the country's largest bank, SBI, and many old private sector banks going on an all-India strike. If the bank holidays on March 27 and 31 are taken, it could be a five-day vacation for bankers while their customers will be left to curse their luck. Clearing operations will be impacted for around nine days from March 23 to April 1 due to the strike. The ATMs will be open but after one or two days cash will be exhausted. The main issues are job outsourcing, suspension of compassionate appointments and the choice of pension not being given to existing bank employees. Banking and treasury operations will be severely affected during the period.

Tides of 17.03.2007

1. Though nationalised banks are institutions under Union Government, they did not cease to be establishments for purpose of definition of term "industrial establishment" under the TN Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981, the Madras High Court has ruled. Hearing writ appeals by temporary sub-staff of State Bank of India challenging order of single judge holding that nationalised banks were exempted from operation of TN Shops & Establishments Act and hence they were not governed by Permanent Status Act, the First Bench, comprising Chief Justice Mr A.P. Shah and Mr Justice K. Chandru, held that the Permanent Status Act would apply to banks, including nationalised ones.
2. For the first time in eight weeks, India's forex reserves dipped $224 mn to $194.410 bn for the week ended March 9. In the last two months, the reserves had surged $17.7 bn primarily on RBI's intervention in the forex market. In the previous week, reserves rose $1.5 bn to touch $194.6 bn. Foreign currency assets dropped $224 mn to $187.058 bn during the week under consideration, said the RBI's Weekly Statistical Supplement.
3. The Lok Sabha has passed the Banking Regulation (Amendment) Bill 2007 through a voice vote to provide more operational flexibility to the RBI in the conduct of monetary policy. This Bill seeks to replace the Ordinance that was promulgated on January 23 to empower the RBI to specify the statutory liquidity ratio (SLR) without any floor.
4. ICICI Bank and supermarket chain Subhiksha have launched a pre-paid food card to be used as an alternative to the cash and meal vouchers. It is a solution that helps cut down the hassle of carrying cash. The pre-paid card, which is re-loadable on a monthly basis, will be accepted at all Subhiksha outlets in India and select restaurants. The card is first being launched in Delhi and would soon be available in Mumbai, Hyderabad, Bangalore and Gujarat.
5. Kotak Mahindra Bank Ltd has been authorised by RBI to undertake primary dealer (PD) business, effective March 20.
6. Syndicate Bank has launched a new scheme called Pigmy Plus 2007, a `no frills' savings deposit with a minimum contribution of Rs 5 per occasion and a deposit period of 72 months. The deposits can be converted into a term deposit at the customer's option after 12 months of opening the account, provided the balance outstanding in the account is Rs 5,000 or more.
7. Financial inclusion scheme, in which banking services are delivered at an affordable cost to the vast sections of the disadvantaged and low-income groups, has turned out to be a resounding success in Kodagu district of Karnataka. It was launched in Kodagu on August 14 last year. The scheme aims to bring the underprivileged, particularly in the rural segments, into the ambit of banking with the goal of helping them prosper by taking up various economic activities.
Andhra Bank has informed the BSE that the board of directors of the bank, at its meeting held on Thursday, has declared an interim dividend of 20%.

Tides of 9.03.2007

1. ING Vysya Bank has approved the raising of upper tier two capital through unlisted yen denominated bonds from the parent ING N V. The amount would be equivalent to Rs 100 crs and the bond would have a tenure of 15 years with a call option at the end of 10 years. ING is the first bank to raise capital funds through Yen bonds.

2. SBI, Madurai Zone signed an agreement with Southern Railway, for installation of ATMs in eight railway stations in Madurai division. The ATMs are to be installed in Madurai, Tirunelveli, Tuticorin, Dindigul, Virudhunagar, Kovilpatti, Kodai Road and Ambadurai. The Internet Ticketing Kiosk is also to be established in Madurai, Dindigul, Virudhunagar, Tirunelveli and Tuticorin as an add-on service to the train passengers.

3. PNB Housing Finance Ltd, a wholly owned subsidiary of the PNB, will be promoting cluster financing to facilitate housing loans while upping the disbursals from Rs 600 crs in the current year to Rs 700 crs in the forthcoming fiscal. To implement this strategy, the company will focus on tying up with leading builders across the country, and is already in talks with some builders in Pune, including Pride Purple, Kumar Developers and Lunkad Developers. It has also tied up with Tata AIG to insure the life of the borrower, and will also offer the single premium amount as loan. In addition, it has tied up with IFFCO Tokio to insure the property for the amount it will require to re-construct the house in case of damage, plus offer accident (disability) insurance cover to the borrower.

4. The growth of the non-life sector is on track and has not been blighted by the free-pricing regime, which came into being on January 1. Earlier, fire, engineering and motor lines were under tariff or administered rates. According to IRDA data, the gross premium underwritten by non-life insurers in January has registered a growth of 25.7% to Rs 2,202 crs against Rs 1,751 crs in the previous year. In the first ten months of the fiscal, the premium jumped by 23% from Rs 17,530 crs to Rs 20,378 crs.

5. IOB has decided to upgrade two of its extension counters in Mangalore to full-fledged branches.

6. ICICI Bank is seeing a slowdown in the growth of its retail loans to 20% this fiscal, against the previous year's jump of 40%. In the past five years, it has seen a growth of 40% in retail loans which has slowed down to 20% this fiscal. The interest rate increases through the year have reduced the incremental growth in disbursements. The growth of retail loans will, however, be sustained at 20-25 % next fiscal.

7. As part of its drive to offer computer-based new and innovative products, South Indian Bank has introduced the consumer friendly National Electronic Funds Transfer (NEFT) system. The NEFT offers an efficient, secure, economical, reliable and expeditious system to transfer funds from one customer account of a NEFT participant of a bank branch to another customer account of another NEFT participant bank branch anywhere in India. The NEFT system is in contract with the Real Time Gross Settlement System and settles transactions in batches.

8. UTI Bank has opened two new branches in Andhra Pradesh at Bapatla and Narsaropet. It has a network of 461 branches, 53 extension counters and 2,243 ATMs across the country. Its centralised database enables customers to operate their accounts from anywhere in the country.

9. PNB has come forward to supplement farmers' income by launching the PNB Sampurn Rin Yojana scheme. Under this scheme, farmers are provided credit for meeting expenditure on growing crops, rearing animals, purchase of farm assets like pump sets, tractors and other farm equipments. The bank has been ranked No. 1 among nationalised banks for giving agricultural credit to the tune of Rs 16,569.70 crs as on September 2006. As part of its social obligations, the bank runs training centres for farmers in different parts of the country.

10. In its bid to enhance presence in the southern region, Allahabad Bank has renewed its effort to acquire a bank with a good branch network. Its earlier attempt in this regard did not make much headway. Its attention has been drawn to two private banks on sale but the prices being quoted appear to be rather high. It is also open to acquiring a small public sector bank in the south and that such an acquisition will help achieve synergy in operation for both the banks.

Tides of 7.03.2007

1. Reserve Bank of India has cancelled the licences of Basavakalyan Pattana Sahakara Bank Niyamith, Karnataka and Umreth Peoples Co-operative Bank Ltd, Gujarat as they have ceased to be solvent. The Registrar of Co-operative Societies in Karnataka and Gujarat have been asked to issue orders for winding up and appointing liquidators for the banks. On liquidation, every depositor is entitled to repayment of his deposits up to a monetary ceiling of Rs 1 lakh from the Deposit Insurance and Credit Guarantee Corporation.

2. Micro-credit will have to play as critical a role in the urban context as in the rural areas if India aspires to make any positive impact on its citizens' economic well-being. It just requires a little bit of financial and business acumen to develop a model that will not only be profitable but also has a lasting social impact on the developmental agenda.

3. United Bank of India has rolled out its first Core Banking Solution (CBS) branch in the Capital. The bank has plans to extend the CBS facility to 600 branches throughout the country.

4. Canara Bank has roped in Ernst & Young to come up with a business plan for its proposed life insurance joint venture with HSBC Insurance and OBC. The consulting firm has also been mandated to obtain regulatory approvals for the venture.

5. Banks and financial institutions (FIs) will now have to put in writing the reasons for refusing all loan and credit card applications.RBI has issued guidelines for banks and FIs modifying the `Fair Practices Code for Lenders'.

6. UCO Bank is aiming to achieve business volume of Rs 1,000 crs by the end of the month (and the financial year) through its retail sales force from the current level of Rs 800 crs. The bank has its own retail sales force. There had been good response to the initiative of the bank to appoint retail sales force teams and so far such teams had been formed in 38 centres in the country, and three in Andhra Pradesh (Hyderabad, Vijayawada and Vizag). Such retail sales force teams would be appointed in six more centres by the end of the month. The bank would not appoint franchisees, or outsiders, for the retail sales force. It will rely entirely on its staff.

7. `Swift In Disposal Beyond Imagination' is the new avatar of the Small Industries Development Bank of India (SIDBI) and funds up to Rs 50 lakh are disposed within a week's time by the administration without recourse to an early legal processing. The increase in the outstanding from Tamil Nadu region from Rs 890 crs to Rs 1,245 crs in a short span is reflective of the change that the organisation has undergone in its mindset in facilitating growth.

8. RBI has warned banks about the potential risks of having a high concentration of wholesale deposits. The central bank in a notification has asked banks to put in place a comprehensive framework for Inter-Bank Liabilities (deposits) management.

9. The Finance Minister, Mr P. Chidambaram, will address the Central Board of Directors of the RBI on 9.03.2007.This as a customary post-budget meeting. Besides the state of the economy and its growth prospects, indications are that `inflation' and the steps taken by the RBI and the Union Government would come in for elaborate discussion at the meeting.

Tides of 6.03.2007

1.Punjab National Bank has paid 40% interim dividend amounting to Rs 72.90 crs for the financial year 2006-07 to the Central Government.

2. Birla Sun Life Insurance hopes to grab a fair share of the growing insurance market and be among the top three in two years. The accent would now be on aggressive growth. The life insurance industry is growing at 100%. We plan to introduce innovative products and expand our channel reach. The company has registered 40% growth in new business premium to Rs 579 crs in the first 10 months of the fiscal, against Rs 414 crs in the previous year.

3. City Union Bank, which recently got Rs 45 crs by giving a 9.99% stake to L&T, may go in for another round of funding, about Rs 400 crs in the second half of next yea. The bank was comfortably placed as regards capital adequacy. The funding would be to meet the long term targets the bank has set for itself, rather than to meeting any regulatory requirement. The bank aims to reach a total business of Rs 25,000 crs by 2010-11 (Rs 7,500 crs now), comprising Rs 15,000 crs of deposits and Rs 10,000 crs of advances. It wants its net worth to reach Rs 1,000 crs by that year (Rs 320 crs, now) and see its market capitalisation go up to Rs 2,500 crs (about Rs 350 crs).

4. The Chief Minister of Andhra Pradesh has assured the Deutsche Bank that the State would provide all the necessary infrastructure and manpower for their requirement, should they decide to set up their centre in Hyderabad. Manpower requirement would be met through linkages with the Jawahar Knowledge Centres, which has the capability to provide suitable students from engineering colleges.

5. Faced with sustained high credit demand, banks have now begun to slug it out for mobilising funds through bulk deposits. Some of the banks were offering rates of over 11% for raising large bulk deposits from corporates, insurance companies and public utilities for maturities of up to a year. In January, these rates were hovering around 9%. The high rates were offered mostly by some large private sector banks, in a bid to garner deposits. These rates are very close to the benchmark prime lending rates (BPLR) that currently ranges between 11.50% and 14%.

6. City Union Bank has introduced `CUB 399', a deposit scheme that would yield interest at 9.25% pa for the general category and an additional 50 bps (9.75%) for senior citizens. The duration would be for 399 days.

7. Canara Bank, HSBC Insurance (Asia Pacific) Holdings and Oriental Bank of Commerce have entered into a memorandum of understanding for jointly establishing a life insurance company in the country. While Canara Bank would hold a 51% stake in the proposed venture, HSBC Insurance (Asia Pacific) Holdings and Oriental Bank of Commerce would take 26% and 23% stake respectively in the joint venture. The joint venture would be the 13th company, apart from LIC, in the industry.

8. Allahabad Bank has opened its first overseas branch in Hong Kong. The branch is located at the Lippo Centre and will be serving both retail and corporate clients. As part of its China expansion plans, the bank has also opened a representative office in Shenzhen.

5.03.2007

1.Syndicate Bank is striving to enhance its customer base and do mass banking. The bank had in the last 11 months opened two million new accounts. Its total customer base has touched 19.5 mn and it is planning to add another 3 mn accounts in the coming fiscal.

2. Oriental Bank of Commerce , Canara Bank and HSBC are likely to come together for a new initiative on the insurance front. Sources said that a formal announcement is likely to be made in this regard on Monday in the presence of the Union Finance Minister, Mr P. Chidambaram.

3. Oriental Bank of Commerce has tied up with the Bhartiya Vikas Trust for the Solar Energy Promotion and Development Programme.Under SPDP, OBC and the BVT will train bank branch managers in financing solar energy projects; conduct entrepreneurship development programme and organise awareness camps at panchayat level. Sample solar installations would be provided free-of-cost to select villagers. Both have also agreed to set up a solar innovation and promotion centre in Rajasthan.

4. Although nationalised banks are institutions under Union Government, they did not cease to be establishments for purpose of definition of term "industrial establishment" under TN Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981, the Madras High Court has ruled. Hearing writ appeals by temporary sub-staff of SBI challenging order of single judge holding that nationalised banks were exempted from operation of TN Shops & Establishments Act and hence they were not governed by Permanent Status Act, the First Bench, comprising Chief Justice A.P. Shah and Mr Justice K. Chandru, held that the Permanent Status Act would apply to banks, including nationalised ones. Setting aside the order of single judge, the Bench directed the single judge to decide afresh the issue of permanency in accordance with law.

5. Syndicate Bank is using its five RRBs to reinforce itself in the rural areas. It has undertaken the effort of cleaning up the ponds in villages for a social cause. Last month, it asked each of the RRBs to clean 20 ponds each in a village. It has so far completed the work in 100 ponds. This has resulted in recharging the ground water sources and making good water available to the local populace. Having successfully completed the cleaning of 100 ponds in one month, the bank is planning to push the initiative in a big way. It intends to clean up more than 1,000 ponds in 2007-08. We are not looking for Government support or aid. Our intention is to rejuvenate the water resources and make water usable in India's villages.

6. India's biggest private sector bank, ICICI Bank Ltd, has decided to redefine itself to raise funds for its subsidiaries.The bank's board has approved a proposal to set up a new fully owned subsidiary, ICICI Holdings ,and transfer to the entity, its investments in the insurance and mutual fund subsidiaries. Ihe bank said its investments in ICICI Prudential Life Insurance Company, ICICI Lombard General Insurance Company, Prudential ICICI Asset Management Company and Prudential ICICI Trust Ltd would be transferred to ICICI Holdings, subject to the approval of the RBI and the IRDA.The new holding company may consider a public issue of its equity shares at an appropriate time, but the bank would retain the majority stake. It currently holds around 74% stake each in ICICI Prudential and ICICI Lombard and 51 % in ICICI AMC and ICICI Trust. The book value of the holdings is currently around Rs 1,950 crs.

7. The City Union Bank has introduced `CUB 399', a deposit scheme that would yield interest at 9.25% pa for the general category and an additional 50 bps (9.75%) for senior citizens. The duration would be for 399 days.There was good response for this limited period offer scheme rolled out on March 1. Basically, it is in the nature of a fixed deposit. Interest is payable monthly, quarterly, half-yearly, annual or on maturity depending on the option of the depositor. However, if a depositor opts to pre-close the account, no interest would be paid for the first 30 days and for the remaining period, but the bank would pay interest at 3.5% (Savings Bank rate). CUB 399 is an addition to its existing special deposit schemes - CUB 400+ and CUB 600+.

8. Karur Vysya Bank has launched KVB 600, a new deposit scheme targeted at senior citizens. Under the scheme, senior citizens would be paid interest at the rate of 10% pa (the annualised yield would however be around 10.68%), while the other depositors get 9.5% (annualised yield 10.11%) on deposits of 600 days tenure. While both the cumulative and fixed deposit options are available, the bank has fixed the minimum deposit at Rs 10,000.

9. The country's forex reserves rose $4.212 bn to $193.124 bn on strong FII inflows into the domestic equity market for the week ended Feb 23. Forex reserves have increased for the seventh consecutive week with foreign currency assets increasing by $4.213 bn to $186.128 bn. The reserves had climbed by $3.834 bn to $188.912 bn during the week ended Feb 16.

10. Vijaya Bank has now decided to raise capital only through a Tier-II bond offering. The bank had earlier indicated that it would raise capital of about Rs 500 crs through a mix of Tier-I and Tier-II capital. It had even looked at a perpetual debt instrument for raising Tier-I capital. It will hit the market before end March. It will be a mix of upper and lower Tier-II. It plans to raise at least Rs 300 crs. It would be a subordinated bond.