1. The Government is committed to increasing credit flow to rural masses and all necessary steps would be taken to strengthen regional rural banks (RRBs). Finance Minister, Mr P. Chidambaram, gave this assurance during his address to the members of the Parliamentary Consultative Committee attached to his Ministry. He also said that the Government has decided to extend the Securitisation and Reconstruction of Financial Assets and enforcement of securities interest (SARFAESI) law to loans advanced by RRBs.
2.The $200-bn foreign exchange reserve continues to confound the Government, shoring up the value of the rupee against the dollar and eroding the competitiveness of Indian exports in international markets. Now, there has been a subtle yet significant change in the focus of the Reserve Bank of India in its latest Annual Policy Statement for 2007-08, from the recurrent theme of inflation targeting to the imperative to harnessing this huge foreign exchange corpus. This shift in focus is welcome on two counts. One, it is high time the huge potential that the foreign exchange offers was fully tapped. Two, from experience it has been observed that results of monetary measures come with a time lag, especially vis-à-vis inflation-targeting.
3. Three out of four CFOs (chief financial officers) say that companies should send to shareholders soft copies of financial statements, rather than the printed booklets. Almost one in two CFOs `strongly recommend' industry specific accounting standards. Over 90 % applaud the sarkar's e-initiatives such as MCA-21 as revolutionary. About 95% of the CFOs are interested in convergence with global accounting standards, mainly IFRS (International Financial Reporting Standards). And on whether the ICAI (Institute of Chartered Accountants of India) should be the sole standard-setter, there seems to be a consensus. These are among the findings of a recent survey conducted by Ernst & Young India, based on the views of 125 CFOs, of whom 78 per cent were from listed companies. "The most important point in the entire survey is the fact that though 62% of CFOs feel that CEO/CFO certification is a high-risk area, actually 81 per cent of them still feel that this should be mandated," says Mr R. Roy, Director, Ernst & Young India Pvt Ltd.
4. Dena Bank’s net profit for the fourth quarter ended March 31, 2007, dropped by 66.43%. Net profit for the quarter amounted to Rs 43.80 crs, down from Rs 130.47 crs in the corresponding year-ago quarter. The drop in the net profit was mainly due to the increase in provisions. It also wanted to clear up the balance sheet as far as NPAs are concerned.
5. The Tamil Nadu Chamber of Commerce and Industry has said that it is "shocked" by the decision of the RBI to consider the "illogical and ill-conceived" proposal mooted by its study group to charge fee on transfer of funds through paper-based cheques and drafts."We strongly object to the move intended to encourage bank customers to switch over to electronic fund transfers," said chamber President, Mr S. Rethinavelu, in a statement. "Bank already slap unreasonable charges for issuing demand drafts and even for the supply of cheque books to customers. If the suggestion made by the study group is implemented, it will be counter-productive and discourage customers from routing transactions through banks," the statement added.
6. The Employees Provident Fund Organisation (EPFO) would not ask its subscribers to return any extra interest paid to them following the amendment in rules permitting interest payment in the last notified rate to workers retiring before a formal notification of interest rate for the fiscal 2006-07 and part of 2007-08.
7. Centurion Bank of Punjab is setting up a trusteeship and estate management services company in association with certain legal luminaries. It will own 20-30% of the proposed company's stake, intends to offer a range of services, the market for which is expected to grow briskly in the days ahead. CBoP is roping-in one or more partners, outfits that specialise in legal and accounting work, which will hold the rest of the new venture's equity. The company, incidentally, has been named CERMA. The idea is to provide clients with solutions related to preservation of wealth over generations, an addition to the bank's efforts at providing conventional wealth management services. The legal firms that are expected to be part of the venture will provide critical services in this regard.
8. SBI Card has launched `Fuel Freedom', a feature that will allow its cardholders to enjoy zero per cent surcharge on purchase of fuel from any petrol pump in any city across the country. All petrol pumps charge 2.5% surcharge on fuel purchase through credit cards. The zero per cent surcharge will be applicable on fuel purchases ranging from Rs 400 and Rs 3,000.
9. ICICI Bank has become the first Indian bank to set up a branch in Qatar with a licence from the Qatar Financial Centre Regulatory Authority (QFCRA). The location for the branch will be Qatar Financial Centre in Doha.
10. Nabard Consultancy Services (NABCONs) has signed a memorandum of understanding with Rabo India Finance for advisory and co-financing of projects. The co-financing will be in agriculture, agro-processing, agri-infrastructure and renewable energy.
11. The investigative arm of the country’s anti-monopoly watchdog MRTPC has recommended action against two multinational banks for making false promises to their credit card customers and violating the RBI guidelines. In its preliminary report submitted to the monopolies and restrictive trade practises commission, the director general of investigation and registration (DGIR) said Citibank and HSBC have violated the rules framed by the RBI and caused loss to the general public. DGIR had found that both banks were allegedly delaying delivery of bills and realisation of cheques toward payment just to charge increased interest rate, late fee and fine, etc. Moreover, DGIR also said the two banks were doing credit card business in the country through direct sales agents, who were working either as independent contractors or on commission basis.
12. Royal Bank of Scotland Group, Santander Central Hispano and Fortis have thrown their hats in the ring to buy ABN Amro.
13. Buried in the figures released by the monetary policy document, there may be a hint of an aggressive cut in the statutory liquidity ratio (SLR) in the coming months. The SLR norm requires banks to invest at least 25% of their net demand and time liabilities (or customer deposits) in government bonds and other securities which meet the qualifications.
14. State Bank of Travancore has posted a net profit of Rs 326.28 crs for the year 2006-07, registering a growth of 26.13% over the previous year. It has declared a 100% dividend for the second year in succession. The interest income of the bank had gone up from Rs 2298.62 crs to Rs 2832.27 crs in the period. Net NPAs were brought down from 1.47% in 2006 to 1.08% this year. Total business increased by Rs 10,815 crs to Rs 56,504 crs at the end of the year. Total deposits grew by 19.19% during the period to touch Rs 30,984.01 crs and total advances recorded a growth of 31.38% to reach Rs 24,786.28 crs. The bank had successfully introduced an online remittance system which would enable NRI remittances from Gulf countries to be credited to their accounts in India within 24 hours.
15. Private and public sector banks are being formally directed to expand their branch network in minority concentrated districts across India, the number of which has now been increased from 44 to 103. Districts with 25% minority population are now minority concentrated districts and all these belts are outside Muslim majority J&K, Sikh majority Punjab and predominantly Christian Nagaland.
16. Yes Bank posted a 102% growth in profit after tax for the quarter ended March 31, 2007, to Rs 30.9 crs, as compared to a profit of Rs 15.3 crs reported in the corresponding for the previous fiscal. The bank reported a year-on-year profit of Rs 94.4 crs, up 71% from last year’s Rs 55.3 crs. The growth was led by a 205% year-on-year growth in interest earned by the bank, which rose to Rs 587.6 crs, as against Rs 192.8 crs reported last year. The bank’s operating profit for the quarter ended March 31, 2007 stood at Rs 59.8 crs, a 78% rise from the corresponding quarter in the previous fiscal.
17. RBI plans to introduce the differentiated bank licensing policy. This means that specific banking licences would be issued depending on the core activity of the bank. Thus some banks may have only wholesale banking licence under which they can offer loans to corporates and accept corporate deposits, but cannot accept retail deposits. A similar practice exists in developed markets like Singapore, London and Hong Kong. The supervision will vary from bank to bank depending on the type of licence the bank undertakes. RBI noted that in some countries separate norms exist between domestic and foreign banks on licensing policy, while some do not discriminate between foreign and domestic banks.
18. HDFC Bank has posted 30.53% increase in net profit at Rs 343.57 crs for the quarter ended March 31, as compared to Rs 263.21 crs for the same quarter last year. The total income of the bank grew by 41.69% to Rs 2,384.19 crs for the quarter ended March 31, from Rs 1,682.65 crs in the corresponding quarter a year ago. It has declared a dividend of Rs 7 on shares of Rs 10 each (70%) for this year. For the year ended March 31, the bank posted a net profit of Rs 1,141.45 crs against Rs 870.78 crs a year ago and the total income rose to Rs 8,405.25 crs from Rs 5,599.32 crs in the period under consideration in 2006.
19. The annual statement on Monetary Policy will be reviewed on a quarterly basis during 2007-08. RBI will come out with first quarterly review of its monetary policy on July 31.
20. Amid reports that some banks have hiked service charges, the Reserve Bank came to the aid of customers and asked banks not to charge exorbitant interest rates, including processing and other fees. Although, interest rates have been deregulated, rates of interest beyond a certain level may be seen to be usurious and can neither be sustainable nor in conformity with the normal banking prudence.
21. While further liberalising its overseas remittance scheme, RBI hiked the transaction limit for individual investors to 1,00,000 dollars in a year - a development that would lead to increased participation of Indians in foreign markets. The decision has come as a major boost for companies like Reliance Money, which has already tied up with UK-based online trading platform provider CMC Markets to provide offshore investment products to Indian customers. Besides, a number of other financial services providers and brokerages are expected to soon follow with similar products and tie-ups to tap Indian investors seeking to invest in foreign equity, commodities and derivatives markets.
22. Banks such as Citigroup, HSBC & Standard Chartered could hire over 50k employees in India in the next 3-yrs.
23. The proposed takeover of ABN Amro will help Barclays become a formidable force in India where it is still a fledgling player with big ambitions. India will also benefit from the thousands of jobs that will be outsourced into the country. Barclays agreed to buy ABN Amro at $91 bn in what is the biggest-ever financial services takeover. The merger would result in 12,800 job cuts worldwide and offshore 10,800 jobs to low-cost locations like India and Poland. India is already one of the biggest offshoring centres for ABN Amro with ABN Amro Corporate Enterprise Services (ACES), its offshoring venture in India, having a staff strength of 4,200. It is in the process of adding 2,000 more. Now following the merger, sources feel that around 10,000 new jobs could now come into India.
