Tides of 29.03.2008

1. The Union Finance Minister, Mr P. Chidambaram, today made out a case for banks paying higher wages to its employees. While speaking at the inauguration of Union Bank of India’s 100 per cent Core Banking Service, “ employees are the ones who contribute to the profits of the banks, and therefore, are entitled to a share of the profits. The more profitable the sector, the wages should be higher. "The Minister said that the bank managements and unions must resolve their differences and talk things out.

2. State Bank of Hyderabad is planning to open 50 new branches and 250 ATMs in the next financial year.

3. Syndicate Bank will open two more branches in Hyderabad in Vanasthalipuram and Uppal soon. This would take the total number of branches in Hyderabad to 54. "We have done Rs 7,000 crore business in Hyderabad region this year. Our target is Rs 10,000 crore business next fiscal year,"

4. HSBC Bank in India will be hiring over 3,500 this year to support its expansion programmes in retail, small and Medium Enterprises (SMEs) and corporate banking sectors. The bank, which has been traditionally hiring from its competitors, will now focus on alternative channels of recruitment by sourcing people from sectors such as retail, Fast Moving Consumer Goods (FMCG) and telecom.

5. Sundaram BNP Paribas Mutual has tied up with Central Bank of India to form a strategic distribution alliance. Under the MoU signed by them, Central Bank of India will distribute the entire bouquet of Sundaram BNP products.

6. India’s first live corporate debt trade facilitating platform called ‘Dome’ has been launched by Derivium Capital and Securities Pvt Ltd. A web-based platform, ‘dome’ in its launch phase is a live corporate debt market and other debt market reporting system.The purpose of the platform is to increase transparency and faster dissemination of market information, quotes and trade levels, according to promoters Mr Kunal Shah and Mr Ashish Ghia, technocrat entrepreneurs.

7. Corporation Bank and Reliance Communications have joined hands to provide seamless mobile banking service to their customers across the nation. A joint press release said here that it was for the first time that Reliance Communications is offering such a service to a public sector bank.
Corporation Bank account holders using Reliance mobile phones can now request for various information on their accounts such as balance enquiry, last three transactions, funds transfer, cheque status, request for new cheque book, etc. This service obviates the need for any keywords for SMS or remembering any number as the application itself takes care of everything. Users have to click on Reliance Mobile World (R World) on their mobile phones and choose the finance section and subsection `MBanking'. Then they have to select Corporation Bank from the lists of Banks.-

8. Banks are finding that they have to let go of a few more of their chosen providers of financial services. These service providers to whom banks have outsourced some jobs have been slapped with charges of wrongful ‘acts’ of commission and their services have since been terminated.
The Indian Banks’ Association (IBA) has invited the attention of member banks to a second list of such service providers whose services have been terminated for various reasons by individual banks and reported to it in compliance with the specific RBI Circular No RBI/2006/167 of November 3, 2006.

9. The Reserve Bank of India has asked banks make their own assessment of their various risk exposures, through a well-defined internal process, and maintain an adequate capital cushion for such risks. The RBI on Thursday issued guidelines on the Pillar 2 of the Basel II Framework. Pillar 2 deals with Supervisory Review Process (SRP). The objective of the SRP is to ensure that banks have adequate capital to support all the risks and also to encourage them to develop and use better risk management techniques for monitoring and managing their risks.

10. City Union Bank has announced the launch of Wealth Management Services for its clientele. Other services such as online trading in shares, debit cards from VISA, online utility payments and travel bookings will commence shortly.Shri N. Kamakodi, Executive Director, City Union Bank Ltd, said that the service was being targeted at its ‘middle-class and reasonably affluent’ customers, rather than high networth individuals. He said that the service would be extended to semi-urban and rural areas, which are currently not getting such services.

Tides of 23.03.2008

1. ICICI Bank UK Plc, a wholly-owned subsidiary of India's largest private sector bank, has opened its ninth British branch in Leeds, a large city in Yorkshire. With assets of about $115 billion and a market capitalisation in excess of $30 billion, ICICI's presence currently spans 19 countries.

2. The World Bank on Wednesday approved a $600-million loan to power transmission giant Power Grid Corporation of India (PGCIL) to strengthen the electricity transmission system to increase reliable power exchange between regions and states. The Power System Development Project -IV of PGCIL aimed at reducing transmission losses would help cut cost of energy through further investments in transmission systems. The project is expected to allow the transfer of power from surplus hydro electric power states to power deficient regions and help creating power generation facilities.

3. Health is wealth - and that's certainly the case for Indian life insurers. Nearly 40 days after their entry into the long-term unit-linked health insurance business, the two life insurers - Life Insurance Corporation of India (LIC) and Reliance Life Insurance Company Limited - have been logging good business. The Asian insurance giant LIC averages around 1,200 policies per day.According to him, LIC has sold 50,000 policies till date at an average premium of around Rs.10,000 per policy. Given the poor penetration of health insurance products achieved by the 13 non-life insurers in India, LIC's achievement is quite commendable.Speaking about Reliance Life's experience in selling its Reliance Wealth + Health Plan, its CEO P. Nandagopal said, "The retail response is very, encouraging, especially from the southern markets. The average premium per policy is Rs.15,000."Reliance Life launched the policy soon after LIC came out with its health product.

4. The country’s foreign exchange reserves went up by $3.028 billion to $306.488 billion for the week-ended March 14. The increase is mainly on account of revaluation of currency assets.
The dollar had depreciated against major currencies during the week under consideration. Euro and yen gained against the dollar. The euro surged to $1.5554 on March 15, while the yen also appreciated against the greenback and was seen trading below ¥100 against the dollar.
The foreign currency assets grew by $3.025 billion at $296.496 billion. 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.The reserves had increased by $2.225 billion at $303.460 for the week-ended March 7.

5. The growth in the retail customer base and better use of technology are likely to boost the business of Bank of Maharashtra by 24 per cent during the current financial year. Mr M. D. Mallya, Chairman and Managing Director of Bank of Maharashtra, told Business Line on Friday that the bank had targeted a business of Rs 70,000 crore for the current financial year, and it is likely to end up with Rs 71,000 crore. Deposits would be around Rs 41,500 crore and advances would be Rs 29,500 crore. “The growth in deposits would be about 22 per cent and advances around 26 per cent. The business growth will be around 24 per cent,” he said.

6. The Finance Bill, 2008 has cleared the air for senior citizens resorting to reverse mortgage of their residential houses — no tax either on account of capital gains or on the lump-sum or periodic payments received from bank or financial institution. There is now complete relief for senior citizens resorting to reverse mortgage — no financial commitments and no tax commitments either on the transaction. They could not have asked for more except perhaps something that would lessen the pain brought by their conscience being tugged.

7. In a bid to increase their auto loans portfolio, public sector banks are offering lower interest rates and organising special campaigns. This could help revive the demand for auto loans, which has been slowing down, said bank officials.While the State Bank of India is organising a special car rally for its customers, the Bank of India and the Union Bank of India have reduced the rates on car loans. Car and commercial vehicle asset segments comprise one-third of total retail loans for the entire banking industry, said a recent report from rating agency Crisil. Most public sector officials admit that car loans form a minor part of their retail loan portfolio, as private banks and NBFCs hold a major chunk of the market share. The average rate of interest charged by public sector banks for auto loans is 11-12 per cent, depending on the amount and duration of loan.

8. Encouraged by the tax exemptions to reverse mortgage loans announced in the Union Budget 2008-09, Andhra Bank will be launching a reverse mortgage product in the first week of April.
“Our product was ready many months before the Bdget and we were waiting for clarification on the income tax aspects of reverse mortgage loans. As there is no confusion now, we will be launching the product probably on April 1,” Dr K. Ramakrishnan, Chairman and Managing Director, Andhra Bank .

9. Karnataka Bank installed a coin vending machine at Kodialbail branch in Mangalore. This is in pursuance of the measures initiated by the Reserve Bank of India to ensure that adequate number of banknotes and coins are put in circulation so as to cater to the needs of people over a huge geographical area. The bank plans to extend the facility to other branches in and out of Mangalore.

10. The rights issue of State Bank of India was oversubscribed. This is based on provisional data, as the bank is still in the process of collating detailed information. The amount collected through the issue, which closed on Tuesday, is about Rs 600-700 crore more Rs 16,736.31 crore the bank had hoped to raise. The issue opened for subscription on February 18. SBI had priced the shares for the rights issue at Rs 1,590 per share.

Tides of 16.03.2008

1. The country’s foreign exchange reserves increased by $2.225 billion to $303.460 billion for the week ended March 7 on account of revaluation of currency assets, said dealers. The reserves had gone up by $6.625 billion to touch $301.235 billion for the week ended February 29, said the Weekly Statistical Supplement from the Reserve Bank of India. The foreign currency assets grew by $2.221 billion at $293.471 billion. 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. The reserves in gold remained unchanged at $9.558 billion while that in IMF went up by $4 million at $431 million.
2. Vijaya Bank today signed a memorandum of understanding with credit rating agency, Crisil, for rating its corporate customers. A bank release said here corporate customers would now be able to have their loan exposures rated by Crisil at a concessional fee. The release said that the rating would be mutually beneficial to both bank and the customers, after migration to the Basel II regime. Vijaya Bank is expected to become Basel II compliant from September. Well rated borrowers would be in a position to borrow at lower rates.
3. Non-food credit increased for the fortnight ended February 29 by Rs 39,988 crore to touch Rs 22,06,902 crore, according to the Reserve Bank of India’s Weekly Statistical Supplement.
4. India is getting ready for the reverse mortgage market, but it could be sometime before demand for the product begins to emerge. Given the population’s age profile, family system or living arrangement and geographic dispersal of the target group, it could be early days in India for the reverse mortgage market, according to a report from Celent, a Boston-based financial research and consultancy firm.
5. The Syndicate Bank Staff Association (SBSA) has urged the Centre to publish a white paper on merger of banks saying that this phenomenon has become a daily affair.Mr K.S. Bhat, All India Secretary of SBSA, said that bank mergers were taking place without any blueprint ad principle. The current merger process, he said, “has no far-sightedness and is against the principle of Mass Banking”.The Indian Banks Association’s stand before the negotiation table with UFBU is absolutely wrong and unbelievable, he remarked.
6. Write-downs from sub-prime-tied securities will probably rise to $285 billion, or $20 billion more than S&P’s forecast of $265 billion, two months ago, according to the global rating agency Standard & Poor’s. However, the agency said write-downs by the world’s financial institutions on debt linked to sub-prime mortgages might end soon. “The valuation write-downs of sub-prime asset-backed securities (ABS) — primarily collateralised debt obligations (CDOs) of ABS but also sub-prime residential mortgage-backed securities (RMBS) — could reach $285 billion for the global financial sector,” said the report.
7. State Bank of Hyderabad (SBH) will raise Rs 900 crore capital through upper tier II and tier I route in about a week to meet the Basel II compliance requirements by the end of this month and for operational flexibility.“The formalities are under way and we hope to complete the process by March 24,” Mr Amitabha Guha, Managing Director, SBH.
8. United Bank of India is tying up with Kotak Mahindra to sell mutual funds. UBI currently has tie-ups with five asset management companies, including UTI, HDFC, Franklin Templeton, Reliance and ICICI Prudential for selling mutual fund schemes. “The tie up with Kotak Mahindra has been finalised and we will sign an MoU with them within two-three weeks. It will ink similar deals with four other companies shortly.
9. IDBI Capital Market Services Ltd, a financial services provider, and Union Bank of India on Thursday announced a strategic tie-up to offer the former’s online trading platform to the bank’s customers. Through this tie up, the bank’s customers can invest in equities, mutual funds and initial public offers using the online trading platform of IDBI Capital.
Any customer of Union Bank, at any of its CBS branches, can use this online trading platform from any place through Internet.
10. A year ago, ICICI Bank’s Managing Director, Mr K.V. Kamath, said the investment pipeline of corporate India was of the order of $400 to $500 billion (or about Rs 20 lakh crore). About six weeks ago, he revised that estimate to about $750 billion (Rs 30 lakh crore). He also added that a bulk of this would come from companies themselves. And, importantly, added that the Indian growth story would continue for another 15 years.