Tides of 30.07.2007

1. Union Bank of India (UBI) is eyeing a slice of the reverse mortgage pie and expects to finalise the product details in about two months.The bank is undeterred by concerns expressed about growing delinquency in personal and housing loan repayments and plans to have 33 Retail Asset Branches (RABs) that would deal with a slew of products, before the end of the current fiscal.

2. In the wake of inflation moderating, the Confederation of Indian Industry has suggested that the monetary tightening measures introduced earlier by the RBI to contain inflation be eased.The non-food credit offtake during the period March 31 and May 25 reduced significantly. The non-food credit outstanding during this period declined by more than two per cent to Rs 18,41,656 crore as on May 25.The total bank credit also registered a similar downward movement.

3. ICICI Prudential Life Insurance has increased its capital base by Rs 300 crore to Rs 2,372 crore. The capital has been infused by the promoters ICICI Bank and Prudential plc, in the existing proportions of 74:26 respectively. The additional capital will be used to fund the high up-front expenses and meet the solvency norms. It will also enable ICICI Prudential to continue driving its expansion strategy over the next year, which includes opening new branches and offices across the country as well as scaling up operations.

4. Select branches of Indian Bank will work on all seven days of the week for a few months to sanction education loans to meritorious students, said the bank’s Chairman and Managing Director, Mr M.S. Sundara Rajan. Addressing newspersons on Saturday, he said that as counselling for admission to higher education courses would be completed shortly, the bank anticipated a large number of applicants for education loans.

5. SBI’s performance looks spectacular, although the gloss has much to do with a relatively poorer performance a year ago. At that time (quarter ended June 2006), profits had dipped 35 per cent to Rs 799 crore due in part to a drop in treasury income and the presence of a tax refund in the earlier year).On the average most banks have reported a 35 per cent growth in profits this quarter, riding on the back of a fairly consistent increase in interest income.

6. Backed by a strong growth in net interest income and other income, Bank of Baroda posted 102.6 per cent growth in its net profit for the quarter ended June 30, 2007, at Rs 330.84 crore from Rs 163.32 crore in the corresponding quarter of the previous year.The other income went up by 64.38 per cent to Rs 370.19 crore from Rs 225.20 crore. Net interest income was up 15.5 per cent to Rs 958.6 crore from Rs 829.9 crore.Total income for the quarter grew by 37.94 per cent to Rs 3,024.8 crore (Rs 2,192.87 crore). The net interest margin was at 3.2 per cent (3.19 per cent). The bank has set a target to keep its NIM over 3 per cent. Operating profit was up 28 per cent to Rs 644.46 crore (Rs 503.52 crore). Its capital adequacy ratio (CAR) stood at 14.33 per cent.

7. A consortium of lenders led by State Bank of India has committed Rs 7,793 crore to Guru Gobind Singh Refinery Ltd, which is setting up a 9 million tonne refinery at Bhatinda in Punjab.
The company is a joint venture between Hindustan Petroleum Corporation Ltd (HPCL) and Mittal Energy Investments Pvt Ltd, Singapore. HPCL and Mittal Investments will be equal partners in the company (49 per cent each). The remaining 2 per cent will be raised from financial investors.The project, which has a debt equity ratio of 1.5:1, envisages an outlay of Rs 13,789 crore. The entire debt is designated in Indian rupees.

8. The country’s forex kitty swelled by $3.087 billion to $222.043 billion for the week ended July 20 on continuous RBI intervention in the forex market and revaluation of non-dollar currencies, especially the euro against dollar. The reserves had gone up by $4.12 billion to $218.956 billion for the week ended July 13. Foreign currency assets rose $3.087 billion to $214.79 billion, said the RBI’s Weekly Statistical Supplement.

9. J&K Bank on Friday reported a 33.44 per cent increase in net profit for the quarter ended June 30 to Rs 83.24 crore compared with Rs 62.38 crore recorded in the same period last year.
Interest earned for the quarter under review stood at Rs 575.05 crore as against Rs 454.65 crore in the same period last year. The 33 per cent growth in net profit in the first quarter has been driven by a 32 per cent increase in advances and about 113 basis points increase in yield on advances from 9.1 per cent to 10.23 per cent.

10. Karnataka Bank Ltd has posted a net profit of Rs 51.79 crore for the first quarter of the current financial year as against Rs 36.78 crore in the corresponding period of the previous year, recording a growth of 40.81 per cent. The increase in net interest income and higher yield on advances contributed for the growth in net profit. The net interest income rose 30.51 per cent to Rs 124.4 crore (Rs 95.32 crore).

11. With the change at the helm, there has been a shift in gears. The new Chairman and Managing Director of Indian Overseas Bank, Mr S.A. Bhat, intends to go slow on activating the bank’s financial services subsidiary, which recently obtained the RBI’s nod for stock broking activities. At a press conference here, he said that the bank would not begin stock broking activities. Other financial services such as wealth management and merchant banking could well be provided by the parent bank.

12. In an effort to help NRIs in buying homes, HDFC has opened special counters at its offices in Coimbatore, Erode, Palakkad and Salem. Trained counsellors would help the customers in property search, explain the different products available and provide them advice on legal and technical issues. In a release, HDFC said since their holiday season coincided with HDFC’s ‘Monsoon Festival’, customers who apply for loans on or before August 14 and availing themse lves of disbursement by August 31, would be offered special interest rates.The special NRI counters would function from July 27 to August 5.

13. The initial public offering of Central Bank of India was subscribed 61.94 times. Bids were received at lower end of the price band of Rs 85 – 102. A total of 495.4 crore bids were received against the issue size of 8 crore equity shares.

Tides of 27.07.2007

1. Dena Bank registered a 201 % growth in its first quarter net profit at Rs 55.58 crore, against Rs 18.49 crore in the corresponding quarter of the previous year. The growth in net profit is due to a rise in operating income. “Interest and non-interest income have shown strong growth this quarter”.Interest income Net interest income grew by13.85% to Rs 224.69 crs from Rs 197.36 crs a year ago. Total income for the quarter ended June 2007 increased 30% to Rs 702.42 crs, compared with Rs 539.61 crs in the year-ago period.

2. ING Vysya Bank has reported a net profit of Rs 25.32 crore in the first quarter (Q1) of the current financial year 2007-08 (FY08), a 71.2 per cent increase over Rs 14.79 crore in Q1 of FY07.The bank’s gross income in Q1 FY08 was Rs 486.38 crore up from Rs 364.07 during the corresponding quarter of the previous year. The rise in gross income was driven by a rise in interest income. Interest income rose to Rs 428.47 crore from Rs 321.19 crore driven by improved credit offtake. Advances increased 23.3 per cent to Rs 11,810 crore from Rs 9,578 crore.

3. The Reserve Bank of India has imposed a penalty of Rs 10 lakh on Catholic Syrian Bank Ltd for non-adherence to Know-Your-Customer norms and AML standards while opening and operating certain accounts and failure of the bank’s internal control systems in detecting the irregularities. The RBI had earlier issued a show-cause notice to the bank and on a careful examination of the bank’s reply, the RBI found that the violations were conclusively established and the penalty was accordingly imposed.

4. Bank depositors put a bulk of their money in short-term deposits, especially below one year. Driven partly by the incentive of higher rates for such deposits offered by many banks during the past year, depositors have parked their money across different periods starting from a fortnight to a year and more. Banks offered a rate of 9.5 per cent to 10.5 per cent for deposits of periods ranging from 12 months to 18 months through last year.

5. What if you lose your ATM card and even before you realise it, all your money is drawn and someone just walks away with all that you so dearly earned and saved since years? Banks such as HDFC, HSBC and State Bank of India have taken a step to prevent such frauds and thefts in their ATMs. Some of them have already installed ATMs with anti-fraud mechanism. NCR Corporation, a major player in the field of ATM manufacturing, has introduced a Fraudulent Device Inhibitor to put a check on the rise in the number of frauds. The company is in talks with a couple of private and public sector banks to install ATMs enabled with the device .

6. Bank of India has registered a 51 per cent growth in Q1 net profit at Rs 315 crore, against Rs 209 crore in the corresponding quarter of the previous year. Increase in both interest and non-interest income and higher non-performing assets (NPA) recoveries have boosted profits. Net interest income increased 23.7 per cent to Rs 947 crore (Rs 765 crore). Non-interest income rose 23 per cent to Rs 381 crore (Rs 311 crore).The bank’s net interest margin (domestic) went up from 2.95 per cent to 3.06 per cent. However, net interest margins of foreign businesses declined to 1.2 per cent from 1.3 per cent.

7. Punjab National Bank (PNB) expects to register a 20 per cent increase in net profit this fiscal on the back of a stable interest rate environment and higher business turnover arising from economic growth. For the first quarter ended June 30, 2007, it has reported 15.7 per cent increase in net profit to Rs 425.07 crore compared with Rs 367.52 crore in the same period last year. This bottomline growth came even as the net interest margin (NIM) saw a decline from 4.07 per cent as on March 30, 2007 to 3.82 per cent as on June 30, 2007. “In a competitive environment, high NIMs are not sustainable. Do not ridicule a bank just because its NIM is coming down. Even though its NIM has come down, the Bank has increased its net profits by 15.7 per cent. It wants to maintain our NIM at 3.75-3.8 per cent levels.

8. Backed by a growth in its fee-based income, IndusInd Bank has posted a 65.04 per cent growth in its net profit for the quarter ended June 30, 2007 to Rs 13.22 crore from Rs 8.01 crore in the corresponding quarter of the previous year. The fee-based income was up 53.34 per cent to Rs 22.28 crore (Rs 14.53 crore).

Tides of 18.07.2007

1. One of the most prominent developments in Indian banking in the recent past has been the rapid growth of the retail loan portfolios of private sector commercial banks. The growth posted by some of the private sector banks has been such (a near doubling of retail credit in around two years which shows an annual rate of growth of around 35 %) as to overshadow the more modest attainments on this front by other b anks — particularly the public sector banks. It has also created the perception that overall economic conditions have so changed that a major shift in business strategy (such as the dominant focus on retail banking as against wholesale banking) is quite inevitable and the future lies only in retail banking expansion.

2. Concerned over the retail deposit chase at high rates of interest, the Union Finance Ministry has asked public sector banks (PSBs) to focus on raising low-cost funds, particularly current account and savings account (CASA).Barring a handful of PSBs, most large banks currently have a CASA base of barely 20 per cent. The Ministry, at a meeting with top bankers, has conveyed that it wanted this ratio to be raised to 35 per cent of their respective demand and time liabilities, said the head of a PSB who attended the meeting. Among the banks that are close to the Ministry’s prescribed CASA, include Central Bank of India and Vijaya Bank.

3. If you are a regular customer of Net banking and receive any mail from your bank asking for information update or reconfirmation of your particulars, think twice before clicking on the mouse. The mail could be originating from a proxy bank intending to access your confidential information, cautions Mr Patrik Runald, Senior Security Specialist, F-Secure Labs, Malaysia.“Globally, accessing confidential account information through proxy banking has been on the rise and given the pace at which the banking sector is growing in India, attempts are already being made to crash into banking information of netizens in India.

4. The Finance Minister, Mr P. Chidambaram, said on Monday that all the 29 Regional Rural Banks (RRBs) with negative networth would be recapitalised by March 2010. This is however subject to the nod of the States’ which have a 15 per cent stake in each of the RRBs.“We intend to write to the State Governments and ask them to contribute their share in the recapitalisation. Where State Governments agree to bring in their 15 per cent contribution, those RRBs would be recapitalised immediately,” Mr Chidambaram told reporters after his nearly four-hour long meeting with the Chairmen of RRBs here on Monday.Of the 96 RRBs, 29 have a negative networth. The total fund requirement for recapitalisation has been estimated at about Rs 1,850 crore.

5. Foreign companies will have much easier access to Indian capital markets. The government on Tuesday eased guidelines for Indian Depository Receipts (IDRs), doing away with turnover-based ceilings and relaxing the requirement for foreign companies to have a profit and dividend track record for five years. The rules are intended to bring the Indian stock market norms for foreign companies in step with global markets. The new provisions will deepen the stock markets and also result in slowing the build-up of foreign exchange reserves.

6. KV Kamath, managing director & CEO, ICICI Bank, said interest rates are expected to come down in the next three months—or by the time the next mid-term credit policy is announced.
Speaking to reporters here on Tuesday, Kamath said interest rates have reached a level where cost to borrowers has gone up 33%, leading to a slowdown in credit off-take. The demand for funds will taper off significantly over the next few months, predicted Kamath, who is also the vice-president of CII.

7. The new generation private sector UTI Bank has finally received unanimous approval from its shareholders to raise equity capital of over $1 billion through a mix of global depository receipts (GDRs), qualified institutional placement (QIP), and a preferential allotment to promoters, using both the domestic and overseas routes.

Tides of 16.07.2007

1. Recapitalisation of Regional Rural banks with negative net worth is likely to come in for some elaborate discussion here on Monday, when the Union Finance Minister, Mr P. Chidambaram, meets the Chairmen of RRBs from all over the country. Of the 96 RRBs, 29 RRBs comprising 11 amalgamated and 18 standalone RRBs have a negative net worth. The total fund requirement for recapitalisation of these 29 RRBs has been pegged at Rs 1,814.86 crore.

2. The High Powered Committee on Mumbai as International Financial Centre has made interesting recommendations, but it is difficult to say at this point if they are feasible politically and technically. For even as Mumbai has to become an IFC, India has also to be competitive.

3. Aviva Life Insurance is planning to join hands with the cooperative banks in India to expand its reach besides augmenting its direct sales force significantly.

4. While piloting the SBI (Subsidiary Banks Laws) Amendments Bill 2006 in Parliament, the Finance Minister had declared that the merger of the associate banks with SBI was not being considered as these banks had special regional character and the aspirations of the people of the regions were involved.

5. The increase in cost of deposits and its consequent pressure on operating margins notwithstanding, Corporation Bank reported a 22.79% rise in net profit for the first quarter ended June 30, 2007 at Rs 177.11 crore compared with Rs 144.24 crore recorded in the same quarter last year. Most of the net profit this quarter came from our core banking operations. The growth in net profit is mainly due to higher volumes. Its margins are under pressure. The Bank is not able to pass on increase in cost of deposits fully to the borrowers.

6. Allahabad Bank has registered a 56.26% growth in net profit at Rs 200.4 crore during the first quarter of 2007-08 from Rs 128.25 crore in the corresponding period last year.
The net profit growth was powered by improved NPA (non-performing asset) management, higher income from operations and cost control.Total income during the first quarter stood at Rs 1,535.1 crore (Rs 1,095.2 crore), up 40.17 per cent.Total business currently stood at Rs 1,03,379 crore, comprising Rs 62,819 crore deposits and Rs 40,560 crore advances.

7. IDBI Bank has tied up with Sumitomo of Japan for trading in carbon credits. IFC and Sumitomo would help find buyers in various geographies.This is at least the fourth tie-up the bank has entered into for trading in carbon credits. Earlier, in October 2006, IDBI Bank had tied up with MITCON Consultancy Services Ltd of Pune. MITCON has expertise in project identification and registration of clean development mechanism (CDM) projects with the United Nations Framework Convention on Climate Change.

8. Public sector banks’ (PSBs) lending to minorities is set to once again come under Government scanner. These banks have now been asked to submit to the Government the status of their branch opening efforts in the 121 minority dominated districts of the country.Official sources said that the Finance Minister, Mr P. Chidambaram, is expected to personally review this issue during his meeting with the Chief Executives of PSBs here on August 1.The Government has been advising the PSBs to step up lending to minorities under priority sector. In particular, they have been asked to open more branches in minority dominated districts (as identified by the Ministry) of the country.Besides reviewing the action taken report in respect of decisions taken in the last meeting of April 19, Mr Chidambaram is also likely to evaluate the financial performance of PSBs for the year ended March 31, 2007.

9. Vijaya Bank would be opening its first overseas branch shortly and had already got the RBI assent for the same.The overseas branch would be set up either in Dubai, Hong Kong or in Malaysia.The bank had plans to increase its number of branches to 1,050 by March 2008 and of them at least 30-32 branches would set up in Karnataka. The bank had already received licences for setting up 25 branches.

10. The Central Board of Direct Taxes (CBDT) plans to extend the refund banker scheme to Chennai, Kolkata, Mumbai and Bangalore from September. At present, the scheme is operative in Delhi and Patna. Under the scheme, a scheduled bank is authorised to issue refund instruments on behalf of the income-tax department. In the case of Delhi and Patna, SBI was authorised to issue refund ins truments on behalf of the tax department.

11. Corporation Bank, presented a final dividend cheque of Rs 41 crore to the Union Finance Minister, Mr P. Chidambaram, in New Delhi recently. With this the total payout as dividend for the financial year 2006-07 comes to 90%.

Tides of 11.07.2007

1. The Tatas are picking up a stake in the Mumbai-based Development Credit Bank (DCB), which could just fall short of the 5-per cent mark. The investment is being routed through the newly formed Tata Capital Ltd, a company created to give an added focus to the group’s presence in the financial services business.

2. IRDA has cancelled the direct insurance broker licence of New Delhi-based Paramount Insurance Brokers Pvt Ltd.

3. RBI Governor, Dr Y.V. Reddy, called on the Union Finance Minister, Mr P. Chidambaram, at the latter’s North Block office here.Indications are that the discussions, which lasted over two hours, centred around issues such as rupee appreciation and its impact on exporters, inflation situation in the economy and policy initiatives that may be required at the Central Bank’s forthcoming quarterly review of monetary policy on July 31.

4. Driven by a surge in other income and healthy growth in deposits and advances, HDFC Bank posted a 34.2 % rise in net profit. The bank’s net profit for the first quarter ended June 30, 2007 was at Rs 321.23 crs against Rs 239.3 crs in the corresponding quarter of the previous year.

5. The net profit of South Indian Bank has grown by 102 per cent to Rs 30.37 crore during the first quarter of the current financial year, from Rs 15.05 crore in the previous year. The total income grew by 41.85 per cent to Rs 322 crore (Rs 227 crore) and the gross profit was up at Rs 53 crore (Rs 42 crore).

6. Corporation Bank will take up an aggressive branch expansion plan for regions other than the South, its traditional bastion. The bank is weighing the possibility of widening its network further, especially to areas where it needs to markedly scale up presence. The idea is to penetrate markets that have displayed positive signs in terms of generating fresh business.

7. The Karnataka State Financial Corporation has come out with a one-time settlement scheme for small and tiny borrowers for loans of up to Rs 10 lakh. The State Government has extended budgetary support of Rs 54 crore for the settlement. The scheme would allow settlement of loans that have turned to non-performing assets till April 2006. Under the scheme, the interest dues by the KSFC would be compensated by the State Government.

8. Standard Chartered Bank has announced that it had set up its global private banking hub in Chennai, under its wholly owned, captive, BPO subsidiary, Scope International Private Ltd.
The bank has private banking operations in ten cities across the globe (more coming up) and the Chennai hub would handle all the transaction processing. Scope was initially set up as a cost arbitrage opportunity by offshoring processes, but “has evolved into a centre of expertise, providing risk-controlled process efficiency.” Today, it processes 80 million transactions for Standard Chartered Bank annually.

9. Reserve Bank of India is likely to transfer its stake in National Bank for Agriculture and Rural Development (Nabard) to the Government, after completing the SBI equity transfer.Highly placed Nabard officials said that the discussions were still underway on the methodology for transfer. The RBI holds 72.5 % stake in Nabard or Rs 1,450 crore of the paid-up equity of Rs 2,000 crore. The remaining 27.5% or Rs 550 crore is held by the Centre. Nabard has an authorised capital of Rs 5,000 crore. The stake transfer proposal comes as Nabard enters its 25th year of operations.

10. ICICI Prudential Life Insurance has opened a representative office in Dubai. This is ICICI Prudential’s second overseas office, after its first one in the Kingdom of Bahrain.The company hopes to cater to the vast Non-Resident Indian population in the Gulf.

11. While plastic cards can open the doors of any commercial establishment, there are still many who prefer thick wads of currency on their person. The amount of cash people flush out of ATMs (automated teller machines) is 44.4 % more than what is spent on credit cards. A recent industry survey shows that ATM withdrawals account for Rs 65,000 crore as against Rs 45,000 crore swiped away on credit cards. However, purchases on debit cards were only Rs 12,000 crore, despite debit cards far outnumbering credit cards.The number of debit cards in circulation is close to 60 million and credit cards only 26 million. The total transaction on the cards as a whole during the year is said to be close to Rs 1,25,000 crs.

Tides of 8.07.2007

1. Kerala is just a few notches away from achieving total financial inclusion with the latest count at 97.5 %.This emerged at the meeting of the State Level Bankers Committee (SLBC) held here on Friday. The target date for achieving the milestone was June 30 this year.The meeting also discussed the annual credit plan for 2007-08 for the State with the disbursement to the priority sector having been fixed at Rs. 30,017 crore. Out of this, the target for the agriculture sector is Rs. 11,597 crore and for the small-scale industries sector Rs. 4,754 crore.
2.Regional rural banks (RRBs) will have to enter into suitable tie-up arrangements with their sponsor banks for opening and maintaining FCNR-B deposit accounts by non-resident Indians and persons of Indian origin (PIO).The tie-up will enable necessary support and expertise to the RRBs in putting through the transactions regarding acceptance of FCNR (B) deposits.“Since the RRBs may not have well-developed treasuries to manage the foreign currency liability or risk, they may enter into suitable tie-up arrangements with their sponsor banks,” according to the Reserve Bank of India notification.
3. Forex reserves have increased by $937 million to $213.486 billion for the week-ended June 29 on strengthening of non-dollar currencies against the greenback.The reserves had increased by $1.534 billion to $212.549 billion for the week ended June 22.Foreign currency assets rose $936 million to $206.114 billion, said the RBI’s Weekly Statistical Supplement.Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.
4. IFCI Ltd has reported a net profit of Rs 246.86 crore for the quarter ended June 30, 2007 on net sales of Rs 349.95 crore. This standalone result for the quarter was stated in a communication sent by the company to the National Stock Exchange. IFCI had recorded a net loss of Rs 15.61 crore on net sales of Rs 252.01 crore in the same period last year.
5. Crisil has got a nod from its board of directors to incorporate a company to undertake credit information business subject to due diligence and regulatory approvals.In a BSE announcement, it said that its board meeting on Friday has approved the proposal. “This is just to create an enabling environment before planning to set up a credit information bureau to assess the credit risks of borrowers at individual levels.
6. South Indian Bank and Oman International Exchange, have signed an agreement for enabling online fund transfer facility for non-resident Indians working in Oman. It would facilitate the transfer of funds through the Oman International Exchange to all the branches of South Indian Bank instantaneously. The facility under the brand name, “SIB Express” utilises the bank’s ‘Finacle’ backbone.
7. Syndicate Bank today announced the launch of sale of gold coins under the brand name “Syndsona” through its 104 select branches spread across eight States. The coins in denominations of 4 gm, 8 gm and 10 gm in tamper proof card with 999.9 purity certificate will be sold through its designated branches. The bank has imported the gold coins from Switzerland and a tie-up arrangement should enable the bank to offer very competitive rates to its customers, a bank re lease said. The bank had tied up with the existing clients and corporates for the sale of gold coins and has sold 50 kg of gold on the first day itself.
8. Gross bank credit increased by Rs 2,186 crore and stood at Rs 18,95,801 crore for the fortnight ended June 22, according to the Reserve Bank of India’s Weekly Statistical Supplement.The gross bank credit was inclusive of food credit which increased by Rs 514 crore to touch Rs 43,956 crore, and non-food credit which increased by Rs 1,671 crore to Rs 18,51,845 crore.The food credit had gone down by Rs 1,422 crore to Rs 43,442 crore for the fortnight ended June 8 while non-food credit went up by Rs 8,517 crore to Rs 18,50,174 crore.
9. The Kerala Government is keen on entering the banking industry, according to the Finance Minister, Dr Thomas Isaac.
10. ayments made by a credit card, a debit card and use of an electronic clearance system (ECS) through a bank account would now fall outside the scope of expenditure disallowance by the taxman even if the amount involved exceeded Rs 20,000.The Central Board of Direct Taxes (CBDT) has now spelt out the circumstances in which disallowance cannot be made by the assessing officer under Section 40A (3) of the income-tax law. This provision relates to expenses or payments not deductible in certain circumstances.
11. A slight breather has come for those seeking to apply for a home loan. ICICI Bank has cut its floating rates on home loans by upto 50 basis points or 0.5 per cent. On fresh loans, for upto Rs 20 lakh, the rates have been slashed by 25 basis points or 0.25 per cent.However, the rate cut is just a correction and it is unlikely that other banks will follow suit.

Tides of 5.07.2007

1. There are happy tidings for the country’s financial inclusion policy. In a recent speech in London, Ms Usha Thorat, Deputy Governor, RBI, revealed that between March 2006 and 2007 as many as 60 lakh no-frills bank accounts were opened. New account holders should be enabled to have access to an array of banking products, so that there is also financial deepening.

2. With a view to addressing a variety of challenges faced by micro-finance institutions, National Bank for Agriculture and Rural Development (Nabard) has decided to evolve a model institution that ensures transparency in accounting disclosure and coercive-free recovery methods.While Nabard subscribed to 51% for this, the rest would be contributed by banks and State Governments.

3. Now one can buy jewellery not only on credit and but also pay in interest-free monthly instalments. Gitanjali Gems Ltd has in partnership with ICICI Bank launched ‘Jewellery Credit Card’ first of its kind in India. Purchases of Gitanjali products made by using the newly launched gold credit card will be eligible for discounts (5% on purchase up to Rs 10,000 and 7.5% beyond Rs 10,000). At the same time, the invoice value can be paid in interest-free EMI for three months/ six months.

4. Banks have started lowering bulk deposit rates (typically Rs 15 lakh and above). According to bank officials, some have even slashed it by 2 percentage points and may lower it further. But bankers are not sure if the trend will translate into similar downtrend in retail deposits or lending rates immediately.

5. Urban co-operative banks (UCBs) with a capital adequacy ratio not less than 9 per cent and with net non-performing assets (NPA) below 10% can now open new branches and extension counters (EC). The banks will also be required to fulfil certain other eligibility criteria for opening of new branch and extension counters, according to Reserve Bank of India notification.

6. The Chairman, Economic Advisory Council to the Prime Minister, Dr C. Rangarajan, has underlined the need to modify the country’s credit and financial services delivery system to achieve greater financial inclusion.This, he said, called for institutional changes, and innovative ideas to link bank branches with millions of farm households and other approaches will have to be thought off.

7. State Bank of India plans to formally launch an online share trading facility for its customers in Delhi on Wednesday. This facility would however be available at select branches only.

8. Tired of receiving calls for a new credit card or an attractive loan offer on phone? A customer unwilling to receive such calls can now heave a sigh of relief with the Reserve Bank of India asking banks not to engage telemarketers (DSAs/DMAs) without a valid certificate from the Department of Telecommunications.“Banks should not engage telemarketers who do not have a valid registration certificate from DoT, Government of India, as telemarketers,” said a RBI notification.

9. Centurion Bank of Punjab plans to raise Tier-I capital of about Rs 500 crore through qualified institutional placement of equity shares. This approval is subject to shareholder, regulatory and statutory approvals as applicable, said a statement from the bank. The capital adequacy ratio for the bank stands at 11.1 per cent, with Tier-I capital of about 9.9 per cent and Tier-II capital of about 1.2 per cent. The proposed exercise would enable the bank to sustain its growth a nd build on the business volumes and profitability over the ensuing quarters, said the statement. “This resolution is an enabling resolution for raising capital in the future, and the bank does not necessarily have to raise this capital immediately,” it said. Centurion Bank said it will finalise the specific timing for raising such capital from time to time and would do so when required.

Tides of 3.07.2007

1. Reliance Money, an Anil Dhirubhai Ambani Group venture, launched a ‘security token’ to counter the growing threat of hackers and phishers in online trading. It has given out 1-lakh gadgets free-of-cost to its customers over the past two months and hope to distribute more in the coming months. 6-digit code The device has a six-digit code that changes every 32 seconds. Even if somebody gets hold of the trader’s password and username, they will not be able to access the account since the code of the security token is essential in logging in. With a battery life of five years, this almond-shaped security token is small enough to fit in to a palm and easy to operate. It can be blocked like any mobile phone in case of theft or misplacement. Though HSBC was the first Indian company to launch this product, Reliance is the first to introduce it in online trading.

2. ABN Amro Bank has registered 59 % growth in net profit to Rs 385.35 crs in 2006-07 against Rs 241.68 crs in the previous year, on the back of a rise in interest and fee-based income. Turnover increased by 36% to Rs 32,077 crs (Rs 23,539 crs). Advances rose 22 % to Rs 18,387 crs (Rs 15,073 crs), while deposits increased 34.85 % to Rs 15,998.30 crs (Rs 11,863.77 crs). Total income went up by 52.23% to Rs 3,027 crs (Rs 1,988 crs), while other income increased 23% to Rs 753 crs (Rs 612 crs).

3. Karnataka Bank Ltd has raised Rs 120.5 crs through unsecured redeemable non-convertible subordinated (Tier-II) bonds. The issue of unsecured redeemable non-convertible subordinated (Tier-II) bonds (series I) in the nature of promissory notes/debentures of Rs 10 lakh each for cash at par aggregating Rs 75 crs (with an option to retain over subscription up to Rs 75 crs) has been closed for subscription on June 30.

4. Centurion Bank of Punjab plans to raise Tier-I capital of about Rs 500 crs through qualified institutional placement of equity shares. This approval is subject to shareholder, regulatory and statutory approvals as applicable, said a statement from the bank. The capital adequacy ratio for the bank stands at 11.1 %, with Tier-I capital of about 9.9% and Tier-II capital of about 1.2%. The proposed exercise would enable the bank to sustain its growth a nd build on the business volumes and profitability over the ensuing quarters.

5. Punjab National Bank is considering merging its subsidiary, PNB Gilts, with itself. The bank feels that while subsidiary is profitable, the return on net worth is very small. PNB Gilts’ turnover of Rs 121 crs for the year 2006-07 was less than its paid-up equity of Rs 135 crs. Its net profit, Rs 16 crs, was only 3% of the net worth of Rs 506 crs. It has a 74.07 % stake in the Rs 135-crs paid-up equity of PNB Gilts.

6. After literacy and universal healthcare, it’s the turn of money matters and savings. Last week Kerala was declared the first ‘Total Banking State’ in the country. The plan to achieve that landmark feat was chalked out by the State Level Bankers’ Committee (SLBC) early this year. The target was to ensure that every household in the State would have at least one bank account and would be eligible for a general-purpose loan of up to Rs 25,000, following the Reserve Bank of India’s directive to bring people from all walks of life into the banking spectrum. The campaign focused on households that still lie outside the banking net, especially in the interior regions of Kerala.

7. Ten Indian companies have raised a total of $3.1 billion through issue of foreign currency convertible bonds (FCCBs) in the first half of 2007, as per the financial data released by Bloomberg on Sunday. The total volume of FCCBs issue is $4.8 billion. While Reliance Communications Ltd issued the largest FCCB of $1,000 million among Indian companies, Tata Motors Ltd stood at second position with an issue size of $490 million.The other companies include JSW Steel Ltd, Sterling Biotech Ltd, Adani Enterprises Ltd, Subex Azure Ltd, Orchid Chemicals & Pharmaceuticals, Rolta India Ltd, Rajesh Exports Ltd and Tulip IT Services Ltd. The data also revealed that zero coupon seemed to be a preferred mode by most.

8. Nabard is organising a ‘National Seminar on Agricultural Credit’ on the occasion of its silver jubilee celebrations on July 3 and 4. In the back drop of the massive credit requirements projected for development of agriculture sector in the Eleventh Five Year Plan by the Government, the seminar also intends to focus on the challenges facing Nabard in meeting the national goals.The seminar proposes to deliberate on some of the major issues daunting Indian agriculture such as production, productivity and technology, marketing, extension and risk management. The challenges in scaling up of micro finance, which is evolving as one of the major tools for alleviation of poverty, will be also deliberated in the seminar.

9. Crisil has assigned its first set of Bank Loan Ratings (BLRs) based on Basel II, the new regulatory framework on capital adequacy for banks. The banks will be able to use the ratings to determine risk weights for their loan exposures, said a press release from Crisil.The new guidelines on capital adequacy issued by the Reserve Bank of India require banks to link the minimum size of their capital to the credit risk in their portfolios which is a departure from the present framework, under which banks calculate the minimum size of their capital as a proportion of the entire loan portfolio, regardless of the degree of credit risk.The rating agency assigns BLR to various types of facilities provided by banks, such as working capital demand loans, cash credit, project loans, loans for general corporate purposes and non-fund based facilities. The ratings will be assigned on both long-term and short-term rating scales, similar to ratings for debentures and commercial paper respectively.

10. HDFC Bank Ltd has allotted 1.36 crore equity shares of the face value of Rs 10 each for cash at a premium of Rs 1013.49 per share to Housing Development Finance Corporation Ltd on preferential basis. Consequent to above preferential allotment of equity shares, it has raised Rs 1,390 crs.

11. Corporation Bank, which had an outstanding of Rs 269 crs in the education loan portfolio in the last fiscal, intends to disburse additional Rs 100 crs during the current fiscal.It has launched ‘Online request facility for CorpVidya (education loan product)’ in Mangalore.It has 16,571 CorpVidya accounts and the number of accounts has seen a good growth in the past two years.