Tides of 2.09.2015

1.  Banks could soon lose some of their freedom to fix lending rates. To ensure that lending rates are more sensitive to changes in monetary policy rates, the Reserve Bank of India on Tuesday issued draft guidelines, prescribing a uniform method by which banks will have to arrive at interest rates for loans. Although the proposed move could ring in transparency in the pricing of loans, banks are expected to oppose it.On its part, the RBI said it will encourage banks to move, in a time-bound manner, to the so-called marginal cost of funds-based determination of minimum lending rates.

2.  Fitch Ratings on Tuesday downgraded Punjab National Bank and affirmed ratings on nine other Indian banks.The long-term Issuer Default Ratings (IDR) on State Bank of India (SBI), Bank of Baroda, Bank of Baroda (New Zealand), Canara Bank, IDBI Bank, ICICI Bank and Axis Bank have been affirmed at ‘BBB-’.“PNB’s Viability Rating (VR) has been downgraded by one notch to ‘BB’ to reflect the growing risk to the bank’s capital position from its mounting stock of stressed assets, which has risen at a faster rate than its capital replenishment,” Fitch said in a statement.The downgrade also reflects Fitch’s expectation that capital buffers are unlikely to improve significantly even though the State is likely to inject capital into PNB in the financial year ending March 30, 2016 (FY16), with the bank’s large stressed assets stock potentially taking longer to resolve than that of its peers.Indian Bank’s rating has been affirmed at ‘BB+’ with the outlook being stable.

3.  In a redesigned organisation structure, YES Bank is looking to accelerate its retail and small and medium enterprises (SME) business in the next five years.In addition to branch, business and retail banking roles, Senior Group President Pralay Mondal will now also head the commercial and rural banking businesses, the bank said in a statement. The organisational re-design has been done along three pillars — expanding the sales distribution network; enhanced product offerings, such as credit cards and home loans for customer engagement with end-users; and customer service and operations. The urban branch banking business will be managed through a two-part regional management structure — with the northern and eastern regions being headed by Narendra Dixit, and the western and southern zones by Akshay Sapru.

4.  Corporation Bank has recorded a big increase in ATM income. “Income from ATMs has shot up 60 per cent over the last year,” the bank’s Chairman and Managing Director SR Bansal said.While stating that the bank has made its ATMs more vibrant now compared to the past, he said “despite being headquartered in Karnataka, we did not have an ATM at Chamundi Hills until recently.“No sooner had we installed an ATM than we realised there were as many as 245 hits a day, of which 230 were of other bank cards.”The CMD has since brought ATMs under his direct supervision and keeps a tab on the functioning of all ATMs.He has made branch managers caretakers of ATMs located at the respective branches and in the vicinity, as well as appointed IT officers stationed at zonal offices to function as channel managers.The ATM network, he said, is expected to reach 3,000 in a couple of days, up from 2,990 now.E-lobbies have also caught on in a big way. The first e-lobby at Dharmasthala will become operational by the end of this month, he added.The bank also plans to open two e-lobbies in Tirupur soon.

5.  IDFC Bank, a recent entrant into the Indian banking sector, plans to open 400 branches in the next three-four years, its Managing Director Rajiv Lall said. Three-fourths of the new branches will come up in rural India, he added.“We are convinced that with the combination of technology and changes in regulations, this business (banking) will give us the moral purpose of delivering on financial inclusion and will also be adequately profitable,” Lall said.

6.  Karnataka Bank is targeting Rs. 615 crs of MUDRA loans for the current financial year, according to P Jayarama Bhat, MD & CEO of the bank.Launching the MUDRA (Micro Units Development and Refinance Agency) card in Mangaluru recently, he said that Karnataka Bank is actively participating in the Pradhan Mantri Mudra Yojana (PMMY) scheme.To further ease credit dissemination, the bank has launched MUDRA card. He said that MUDRA card, which can be used on the RuPay platform, will be issued to micro-entrepreneurs who take working capital finance up to Rs. 10 lakh under PMMY.