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.