1. A high-powered study by the Planning Commission has suggested the government bring its holding in public sector banks to below 51 per cent and also enhance foreign ownership in the insurance industry from the current 26 per cent. The ability of the state-run banks to raise capital for growth would be severely constrained unless the government’s holdings were allowed to fall below 51 per cent, the Planning Commission study on the services sector said.
"It would be appropriate to consider the evolution of a path towards reduction of government ownership in a manner that minimises dislocation among various stakeholders," the report said.
"It would be appropriate to consider the evolution of a path towards reduction of government ownership in a manner that minimises dislocation among various stakeholders," the report said.
2. Citigroup, battling to restore profit after a record loss, will set up an independent credit-card unit and overhaul consumer banking along geographical lines," two people with direct knowledge of the plan said. "Steven Freiberg, the current co-head of consumer banking, will run the card unit," the people said, asking not to be identified before an announcement that may come as early as on Monday. "The rest of the consumer group, mainly bank branches and non-bank lending, will be led by five regional heads," the people said.
3. The standoff between monetary authorities of India and Singapore seems to have eased with the Reserve Bank of India (RBI) taking the lead in fulfilling its promise to sanction the agreed eight branches to the DBS Bank in India on Tuesday.It is for the Monetary Authority of Singapore (MAS) for reciprocate by granting approval to State Bank of India (SBI) and ICICI Bank, largest Indian banks in Public and private sectors respectively, the preferred bank status. ICIC Bank has confirmed there was nothing new on the issue.
4. As many as 30 public sector banks and financial institutions, which insisted in converting their loans to the once-troubled IFCI Ltd into equity, have taken hit of nearly Rs 800 crore as its shares have fallen 60 per cent in just two months.The irony is that, in some cases, the shares have not even been credited to their account, but under the mark-to-market norms for listed securities, these banks and financial institutions have to write off huge losses incurred before the close of the financial year. The biggest loser is Life Insurance Corporation of India, which converted debentures worth Rs 507 crore into equity, has seen the value of its holding erode more than Rs 300 crore.
5. Employees of City Union Bank are all set to get stock options soon. The Kumbakonam headquartered private bank has already got an in-principle nod from the Reserve Bank of India for introduction of the Employee Stock Option Scheme.The bank now awaits the consent from its shareholders. The Extraordinary General Meeting (EGM) of the bank is slated for April 26.
It has taken the cue from the new generation banks. ESOP has become the order of the day and our introduction is an extension of the logic.”
It has taken the cue from the new generation banks. ESOP has become the order of the day and our introduction is an extension of the logic.”
6. Bank customers may soon be able to negotiate for settling their debts using the expertise of banks themselves. The Reserve Bank of India has suggested that banks should set up financial literacy and credit counselling centres, which can help borrowers in negotiating with banks for restructuring debts. While these centres may initially be funded by banks, banks should maintain an arms-length relationship with the centres, said the RBI. In a concept paper, issued on Thursday, the RBI said that banks can set up Financial Literacy and Credit Counselling Centres (FLCCs). Banks may set up trusts or societies for running these FLCCs. While the FLCC may include respected local citizens on the board of such a trust, the RBI has warned that serving bankers should not be included in the board.
7. Bank of Maharashtra has opted out of its proposed joint venture with the Chennai-based Shriram Financial Services Holdings Pvt Ltd and Sanlam Ltd of South Africa for the general insurance foray.
8. A Planning Commission-appointed High Level Group on services sector has made a case for the abolition of bank branch licensing, phasing out of directed priority lending by banks and gradual reduction in the statutory liquidity ratio (SLR) requirement for banks.
Currently, banks have to keep 25 per cent of their net demand and time liabilities in government securities as SLR requirement. Last year, the Government empowered the RBI to specify the SLR to be maintained by banks.The report of the High-Level Group has favoured alignment of banks’ cash reserve ratio (CRR) over time with global benchmarks. The Group was established to comprehensively examine the different aspects influencing the performance of the services sector and suggest short-term and long term policy measures to improve and sustain its competitiveness in the coming years.
Currently, banks have to keep 25 per cent of their net demand and time liabilities in government securities as SLR requirement. Last year, the Government empowered the RBI to specify the SLR to be maintained by banks.The report of the High-Level Group has favoured alignment of banks’ cash reserve ratio (CRR) over time with global benchmarks. The Group was established to comprehensively examine the different aspects influencing the performance of the services sector and suggest short-term and long term policy measures to improve and sustain its competitiveness in the coming years.
9. South Indian Bank (SIB) plans to expand presence in North India and aims to more than double the number of branches in this region over the next five years, its Chairman Dr V. A. Joseph, said.“We want to add another 150 branches in North India by 2013. In this period, we want to increase the total number of branches of the bank to 750 from the current 500 branches”, he told Business Line during his recent visit to the Capital.Currently, SIBhas 100 branches in North India out of total network of 500 branches. The bank is targeting business of Rs 75,000 crore by 2013 — a business of Rs 100 crore from each of the 750 branches.
10. Corporation Bank’s business, as per provisional and un-audited figures, exceeded Rs 95,000 crore as on March 31 2008, as compared to Rs 72,000 crore as on March 31, 2007. A bank release said here on Wednesday that with this business the bank has clocked the annual growth of 32 per cent. Buoyed by the strong growth, the bank is now advancing the earlier projected target date for crossing the milestone goal of Rs 1 lakh crore of business from March 2009 to the middle of the year.
