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 The strike call was withdrawn after a discussion of the forum with the Indian Banks’ Association (IBA), which assured to consider a pension option for bank staff among other demands.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.
