1. Two-wheeler finance has hit a roadblock as banks are pulling out their retail presence from dealerships. After Citibank, the country’s second largest bank ICICI is learnt to have dismantled staff from the retail counters, compelling the dealers to search for alternative modes to make finance available for their prospective customers. Enquiries at various dealerships in the city revealed that the bank had shut its shop at the showrooms. While ICICI Bank says that it is changing the model of its two-wheeler financing, dealers and industry officials view the step as a subtle way to sharply reduce their lending by limiting access to customers at the showrooms.
2. Hongkong & Shanghai Banking Corporation Ltd (HSBC) sees profit growth in its Indian operations moderating in percentage terms in calendar year 2008 on the back of some slowdown in retail credit due to hardening interest rates and difficult collection environment. “Our (Indian operations) profit before tax grew 24 per cent in January-June 2008. I see some moderation in profit growth (in percentage terms) for the entire 2008. Last year, we had high double-digit growth. In 2008, we expect double-digit growth, but not as high as last year,” Ms Naina Lal Kidwai, Country Head, India, HSBC.
3. The Federation of Indian Chambers of Commerce and Industry task force on non-banking financial companies (NBFCs) said that the sector should be treated at par with banks.It has recommended measures, including the setting up of a debt recovery tribunal, removing restrictions on overseas borrowings and on issuing hybrid financial instruments for meeting regulatory capital needs. “It is time that they (NBFCs) are not looked upon as weak links in the system and are given a regulatory treatment in keeping with that perception,” the former SBI Chairman, Mr M.S. Verma, who headed FICCI’s task force on NBFCs, said while releasing the panel’s report.
4. Union Bank of India and IndusInd Bank have hiked their prime lending rates by 75 basis points. This will lead to a hike in the interest rates of floating loans.Union Bank of India raised its benchmark prime lending rate to 14 per cent from 13.25 per cent with effect from August 8. IndusInd Bank raised its PLR to 17 per cent from 16.25 per cent. These are the latest among several banks that have increased prime lending rates, after the Reserve Bank of India increased key rates in the first quarter review of its annual Monetary Policy, last month.A press release from Union Bank of India here on Wednesday said the increase would impact advances with floating interest rate structure linked to BPLR. However, existing home loans will not be impacted by the hike. In order to encourage education loans, the bank has exempt education loans from the hike, the release said.In case of IndusInd Bank, all loans except those under the consumer finance division would be impacted by the hike, said a senior official from the bank.
5. Tamilnad Mercantile Bank (TMB) is setting up a separate overseas credit cell to ensure expedite quick delivery of credit to exporters. The cell, to be headed by an Assistant General Manager is being set up at the head office with the aim to double the clientele base in forex business.
6. In discussions with some shareholder groups , Lakshmi Vilas Bank agreed to withdraw its proposal for a Rs 250-crore Qualified Institutional Placement (QIP) issue. Sources told Business Line today that it was also agreed that after the Annual General Meeting on August 14, Lakshmi Vilas Bank will invite Federal Bank to take a seat on its board. Federal Bank has 4.99 per cent holding in LVB.This development is seen as the first step towards an eventual merger of LVB with Federal Bank, which has made no secret of its intention to take over LVB and a few other banks in the region. Federal Bank has 4.99 per cent in South Indian Bank and has recently bought a similar holding in Catholic Syrian Bank.The decision to withdraw the QIP was prompted by a representation made by one Mr K.R. Pradeep, whose family and associates have 5 per cent stake in LVB.
7. For banks that hoped to make their balance sheets presentable in the second quarter, the Reserve Bank of India has quietly slipped a spanner in the works.Most banks had hoped to convert their weak bottom lines into profits, by writing back provisions on non-performing loans. Bankers had hoped to offset losses on the large depreciation provided on their investment portfolios in the first quarter, by writing back provision on overdue farm sector non-performing assets. Post-farm loan waiver, these advances had ceased to be NPAs though the payment from the government will be over three years. The total farm loan waiver package is about Rs 72,000 crore. The entire compensation payout is expected to be completed only by July 2011. The RBI in a notification on July 30 mandated that banks would not be allowed to write back the provisions made on the overdue farm loans. Instead, the RBI’s notification said that the write-back of the provisions would be permitted only after full settlement of the waiver scheme. This was because a provision represented a permanent loss to the bank’s balance sheet on account of delayed cash flows.
8. To have an “area approach” for targeted and focused banking, the Lead Bank Scheme (LBS) was introduced in 1969, based on the recommendations of the Gadgil Study Group. The banker’s committee, headed by F. S. Nariman, concluded that districts would be the units for area approach and each district could be allotted to a particular bank which will perform the role of a Lead Bank. As a consortium leader, the Lead Bank would co-ordinate with government office s, banks and other stakeholders, undertake planning and formulation of Annual District Credit Plans through Block and District Consultative Committees and help in synergising all efforts to fulfil Plan priorities and district-specific requirements. The objectives of achieving 100 per cent financial inclusion, strengthening the microfinance and cooperative sector, and liberating the rural masses from the debt-trap, are possible only with a revitalised lead bank scheme, says VINOD R. RAO.
9. Standard Chartered Bank India has reported an 89 per cent jump in operating profit at $606 million in the first half of the calendar year 2008 from January to June, against $320 million in the corresponding period of the previous year. The bank now contributes 23.4 per cent of Standard Chartered Group’s global profit and is its second largest market next to Hong Kong.The results include the proceeds from the sale of the bank’s asset management business which contributed $146 million as well as a robust increase in income.Standard Chartered Bank had sold its mutual fund business to IDFC in March this year.Excluding the sale of the AMC, Standard Chartered Bank has seen a 44-per cent growth in profit at $460 million.
10. HDFC Bank is expecting a 35-per cent growth in its credit card portfolio this year despite concerns over the impact of increasing interest rates.“We are number one currently on an incremental basis in the issue of new credit cards and are very positive about this segment growth over next two years,” Mr Parag Rao, Head (Product, Portfolio & Service Delivery, Credit Cards) HDFC Bank, told Business Line over phone from Mumbai.As on date HDFC Bank has 4.2 million credit cards. The year-on-year growth for the last two years was about 35 per cent. “We are confident of maintaining it this year too,” Mr Rao said.Out of 4.2 million, 70 per cent of the cards are with the internal customers of the bank while the rest are in the open market base. On the strategy of the bank in its credit card business, the official said it would be an entry product after a savings account with the bank for many people.
2. Hongkong & Shanghai Banking Corporation Ltd (HSBC) sees profit growth in its Indian operations moderating in percentage terms in calendar year 2008 on the back of some slowdown in retail credit due to hardening interest rates and difficult collection environment. “Our (Indian operations) profit before tax grew 24 per cent in January-June 2008. I see some moderation in profit growth (in percentage terms) for the entire 2008. Last year, we had high double-digit growth. In 2008, we expect double-digit growth, but not as high as last year,” Ms Naina Lal Kidwai, Country Head, India, HSBC.
3. The Federation of Indian Chambers of Commerce and Industry task force on non-banking financial companies (NBFCs) said that the sector should be treated at par with banks.It has recommended measures, including the setting up of a debt recovery tribunal, removing restrictions on overseas borrowings and on issuing hybrid financial instruments for meeting regulatory capital needs. “It is time that they (NBFCs) are not looked upon as weak links in the system and are given a regulatory treatment in keeping with that perception,” the former SBI Chairman, Mr M.S. Verma, who headed FICCI’s task force on NBFCs, said while releasing the panel’s report.
4. Union Bank of India and IndusInd Bank have hiked their prime lending rates by 75 basis points. This will lead to a hike in the interest rates of floating loans.Union Bank of India raised its benchmark prime lending rate to 14 per cent from 13.25 per cent with effect from August 8. IndusInd Bank raised its PLR to 17 per cent from 16.25 per cent. These are the latest among several banks that have increased prime lending rates, after the Reserve Bank of India increased key rates in the first quarter review of its annual Monetary Policy, last month.A press release from Union Bank of India here on Wednesday said the increase would impact advances with floating interest rate structure linked to BPLR. However, existing home loans will not be impacted by the hike. In order to encourage education loans, the bank has exempt education loans from the hike, the release said.In case of IndusInd Bank, all loans except those under the consumer finance division would be impacted by the hike, said a senior official from the bank.
5. Tamilnad Mercantile Bank (TMB) is setting up a separate overseas credit cell to ensure expedite quick delivery of credit to exporters. The cell, to be headed by an Assistant General Manager is being set up at the head office with the aim to double the clientele base in forex business.
6. In discussions with some shareholder groups , Lakshmi Vilas Bank agreed to withdraw its proposal for a Rs 250-crore Qualified Institutional Placement (QIP) issue. Sources told Business Line today that it was also agreed that after the Annual General Meeting on August 14, Lakshmi Vilas Bank will invite Federal Bank to take a seat on its board. Federal Bank has 4.99 per cent holding in LVB.This development is seen as the first step towards an eventual merger of LVB with Federal Bank, which has made no secret of its intention to take over LVB and a few other banks in the region. Federal Bank has 4.99 per cent in South Indian Bank and has recently bought a similar holding in Catholic Syrian Bank.The decision to withdraw the QIP was prompted by a representation made by one Mr K.R. Pradeep, whose family and associates have 5 per cent stake in LVB.
7. For banks that hoped to make their balance sheets presentable in the second quarter, the Reserve Bank of India has quietly slipped a spanner in the works.Most banks had hoped to convert their weak bottom lines into profits, by writing back provisions on non-performing loans. Bankers had hoped to offset losses on the large depreciation provided on their investment portfolios in the first quarter, by writing back provision on overdue farm sector non-performing assets. Post-farm loan waiver, these advances had ceased to be NPAs though the payment from the government will be over three years. The total farm loan waiver package is about Rs 72,000 crore. The entire compensation payout is expected to be completed only by July 2011. The RBI in a notification on July 30 mandated that banks would not be allowed to write back the provisions made on the overdue farm loans. Instead, the RBI’s notification said that the write-back of the provisions would be permitted only after full settlement of the waiver scheme. This was because a provision represented a permanent loss to the bank’s balance sheet on account of delayed cash flows.
8. To have an “area approach” for targeted and focused banking, the Lead Bank Scheme (LBS) was introduced in 1969, based on the recommendations of the Gadgil Study Group. The banker’s committee, headed by F. S. Nariman, concluded that districts would be the units for area approach and each district could be allotted to a particular bank which will perform the role of a Lead Bank. As a consortium leader, the Lead Bank would co-ordinate with government office s, banks and other stakeholders, undertake planning and formulation of Annual District Credit Plans through Block and District Consultative Committees and help in synergising all efforts to fulfil Plan priorities and district-specific requirements. The objectives of achieving 100 per cent financial inclusion, strengthening the microfinance and cooperative sector, and liberating the rural masses from the debt-trap, are possible only with a revitalised lead bank scheme, says VINOD R. RAO.
9. Standard Chartered Bank India has reported an 89 per cent jump in operating profit at $606 million in the first half of the calendar year 2008 from January to June, against $320 million in the corresponding period of the previous year. The bank now contributes 23.4 per cent of Standard Chartered Group’s global profit and is its second largest market next to Hong Kong.The results include the proceeds from the sale of the bank’s asset management business which contributed $146 million as well as a robust increase in income.Standard Chartered Bank had sold its mutual fund business to IDFC in March this year.Excluding the sale of the AMC, Standard Chartered Bank has seen a 44-per cent growth in profit at $460 million.
10. HDFC Bank is expecting a 35-per cent growth in its credit card portfolio this year despite concerns over the impact of increasing interest rates.“We are number one currently on an incremental basis in the issue of new credit cards and are very positive about this segment growth over next two years,” Mr Parag Rao, Head (Product, Portfolio & Service Delivery, Credit Cards) HDFC Bank, told Business Line over phone from Mumbai.As on date HDFC Bank has 4.2 million credit cards. The year-on-year growth for the last two years was about 35 per cent. “We are confident of maintaining it this year too,” Mr Rao said.Out of 4.2 million, 70 per cent of the cards are with the internal customers of the bank while the rest are in the open market base. On the strategy of the bank in its credit card business, the official said it would be an entry product after a savings account with the bank for many people.
