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.