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.