Tides of 7.08.2015

1.  Karur Vysya Bank, which will turn 100 in July next, is looking to emerge as a strong SME bank. It wants to project the bank as a niche player in the SME banking space and  in tune with this vision of carving a niche for itself as a “Specialised SME Bank”.  KVB has been developing products and packages designed for specific trades.“We have worked out product packages for maximum number of business activities, including supply chain finance. The package so devised will help various trades operate without our intervention,” Mr.Venkatraman, MD & CEO said.

2.  The stress in the banking sector may require banks to raise up to Rs. 1 lakh crore ($15.7 billion) of capital over and above the Basel III requirement to manage the risks from their loan exposure to debt-laden companies, according to India Ratings and Research.Of that, public sector banks, which dominate India’s banking sector with more than 70% market share, will need Rs. 93,000 crs to deal with stressed loans. That may “significantly increase” the Government’s equity injection requirements in Sstate-owned banks, as against Rs. 70,000 crore already announced “We expect private sector banks and large (State-run banks) to be better placed in handling potential credit cost hikes from these large stressed corporates, given their sufficient operating and capital buffers,” it said. The agency analysed 30 large and most-exposed companies, each with individual debt of over Rs. 5,000 crore, aggregating to 7-8 % of the overall bank credit.

3.  Attracted by associate company Can Fin Homes’ robust top0line and bottom-line growth as well as the rising dividend trajectory, Canara Bank is planning to up its stake in the company by up to 5 per cent every year over the next few years.In the last eight financial years, CFHL’s loan book and net profit have increased at compounded annual growth rates of 23 per cent and 17%, respectively.As of June-end 2015, the Bengaluru-headquartered public sector bank owned 43.46 per cent stake in CFHL, which the bank had promoted in 1987.

4.  The Reserve Bank is examining the issue of expansion of offices of banking ombudsman and ‘it will take a holistic view at an appropriate time in this matter’.The status of implementation of awards issued by these offices is also being monitored on an ongoing basis, according to a top Reserve Bank official.Banks are being constantly reminded about the need to comply with the awards, according to a communication to Samir Ghosh, Convener, United Forum of Reserve Bank Officers and Employees.Earlier, the forum had written to the Reserve Bank Governor saying the office of the banking ombudsman should be made accessible to small banking customers in the metros as well as in smaller cities and towns.This had become imperative with the induction of at least 12 crore new account holders, mostly below poverty line, under the Jan Dhan Yojna programme.As they engage in banking activities, complaints on services are also expected to increase manifold, the forum had said in the letter. There is also a need to expand and revamp the banking ombudsman scheme as it is a ‘very customer and consumer-friendly mechanism’.

5.  The Insurance Regulatory and Development Authority of India (IRDAI) will notify the final corporate agency norms under bancassurance within three weeks, according to Chairman TS Vijayan.Speaking to newspersons after formally launching the sale of insurance policies of HDFC Life through Common Service Centres (CSCs) here on Thursday, he said the Gazette notification will give some time for transition and the new norms will be effective from April 1, 2016.In its draft norms issued earlier, the regulator has proposed to allow banks to tie up with three insurers each in life and non-life sectors for corporate agency. Currently, banks are permitted to function as corporate agency for only one insurer each in life and non-life sectors.On the growth of the insurance industry, Vijayan said all would depend on the growth in gross domestic product. “Around 15 per cent growth will be good for FY16,” he added, when asked on projections for this year.