Tides of 16.11.2006

1. Syndicate Bank has launched a new product `Synd Gold Express' for giving quick service to its jewel loan customers. Special counters will be opened in select branches. The entire process will be completed within 10 minutes. The bank has designated 11 of its branches in Tamil Nadu for this scheme.
2. Banks have appealed to the RBI to relax its recent stipulation making issue of passbooks compulsory and free-of cost to savings bank account holders. Some banks, particularly large private and foreign banks, are of the view that this adds to their cost. While PSBs issue passbooks, large private and foreign banks issue only statements.
3. Bonds remained range-bound supported by the global crude oil price retreat, but high credit offtake prevented yields from softening in the current busy season. Traders, however, remained tense over repeated statements from the Finance Ministry over the proposed thrust on lending to physical infrastructure sectors and fiscal tightening. In fact, the Finance Ministry is for greater bank finance availability to the physical infrastructure sector, especially power, roads, shipping and ports. This would cause a further acceleration in the credit growth from the current 30 per cent on a year-on- year basis. The proposal when materialises is likely to choke off credit taps to housing /real estate sectors and open the same to the physical infrastructure sectors.
4. Prudential ICICI Asset Management Company, expects interest rates to increase a little further from now to February or March next year, as liquidity gets tighter.
5. Information security needs to be recognised as a separate function such as marketing, human resources or accounting, especially in banking, according to Mr Anoop Narayanan, Security Consultant, First Legion Consulting. People are the internal source of frauds and in spite of the best technologies available, the biggest threats - human frauds, incompetence and errors - make it impossible to implement these technologies.
6. Mason & Summers Leisure Pvt Ltd has entered into a strategic partnership with ICICI Bank, to market the Bank's Travel card for Indians traveling abroad. A virtual replacement for paper currency or traveler's cheques, the card comes with six foreign currency denominations, the US Dollar, Canadian Dollar, Great Britain Pounds, Swiss Francs, Euro and the Australian Dollar. The travel card is equipped with security features, and is the only card that offers comprehensive insurance features and international medical and travel referral service.
7. Exim Bank has entered into a loan agreement for Japanese yen equivalent to $100 mn with the Japan Bank for International Cooperation in Tokyo. The proceeds of the financing will be applied towards strengthening Indo-Japanese business relationships, Indo-Japanese joint ventures and subsidiaries both in India as well as overseas and other eligible uses.
8. Bankers expect their derivative business to grow by 20-25% in the current fiscal as more and more Indian corporates are going for this financial tool to hedge their foreign exchange and interest rate risks.

Tides of 15.11.2006

1.The credit flow to the SMEs from PSBs has recorded a significant rise as on end-September 2006. PSBs have shown a 26.44% year-on-year growth in credit to the SMEs.. This is much higher than the targeted 20%.
2. Bankers, stung by the revised draft guidelines on priority sector lending, want the RBI to change the way it sets priority sector lending targets. They feel RBI should shift to incremental disbursement targets from the current prescription of lending a certain percentage of net bank credit. It would be more practical if the RBI prescribes priority sector targets in terms of incremental disbursements, several bankers said. Foreign banks would be the worst hit if revised draft gets finalised without amendments as they would have to bear nearly half of the burden of the expected increase in flow of bank credit to priority sectors. The increase in directed lending is expected to be over Rs 50,000 crs.
3. Allahaband Bank, IOB, Karnataka Bank, Dabur Investment Corporation and Sompo Japan Insurance Inc have signed a shareholders’ agreement to form a new non-life JV insurance company to be called Universal Sompo General Insurance Company Ltd.
4. The Union Cabinet has approved the conversion of 71% of Central Bank of India’s equity capital into preference shares, a move that could hit a hurdle at RBI. Another wholly owned government bank, United Bank of India’s proposal to covert 78% of its Rs 1,532 crs equity capital has already been blocked by the RBI as the central bank is considering putting a ceiling of 40% of equity capital for issue of preference capital in its proposed guidelines. The RBI is yet to issue rules for amendments approved by Parliament to the Nationalisation Act, allowing banks to issue preference shares.
5. RBI has issued an instruction to the effect that agency banks should not make any deduction of tax at source where the depositor is filing Form 15H or Form 15G of a certificate under Sec. 197(1) of the Income Tax Act 1961.
6. The Insurance Regulatory and Development Authority has relaxed guidelines on application of KYC (know your customer) norms for purposes of the Anti-Money Laundering Guidelines in the case of general insurance companies to reduce operational difficulties in the finalisation of insurance contracts.
7. Except Federal Bank, Catholic Syrian Bank, South Indian Bank and Dhanalakshmi Bank, the private sector banks have been rather reluctant in providing education loans in Kerala in 2005-06. According to the latest report of the State Level Bankers' Committee, private sector banks altogether gave loans for Rs.61.66 crs to 3,721 students in the State in 2005-06. This comes to only around 10% of the total disbursement of Rs.617.23 crs to 33,338 students by the banks in the State that year. Federal Bank assisted 2,542 students with a sum of Rs.34.85 crs, while Catholic Syrian Bank chipped in with an aid of Rs.13.49 crs to 676 students. South Indian Bank gave loans to 235 students (Rs.6.4 crs) and Dhanalakshmi Bank 202 students (Rs.4.98 crs). New-generation banks such as CBOP, HDFC Bank, IndusInd Bank and ICICI Bank had not entertained any loan application from students.

Tides of 14.11.2006

1. The National Bank AG, Germany, will set up a `competency centre' in Germany that would facilitate the German business community to start operations in India. The competency centre would help Indian agencies in hiring labour, provide legal assistance, identify partners and bankers. The National Bank has over 100,000 SME customers and a good number of them are interested in doing business with India.
2. UTI Bank Ltd has raised $46 mn as capital through issuance of hybrid tier I bonds in the international markets as part of its medium term note programme for € 1 bn. The transaction is priced at 7.16%. It is the only bank in India to have raised capital through both hybrid tier-I and upper tier-II instruments in foreign currency. The bank had earlier raised $150 mn by issuing upper tier II bonds in August 2006.
3. Bank credit increased by Rs 11,847 crs to touch Rs 16,55,567 crs for the fortnight ended October 27, 2006. This included food credit, which increased by Rs 3,188 crs to touch Rs 36,633 crs and non-food credit, which increased by Rs 8,659 crs to Rs 16,18,934 crs. Total accommodation provided by SCBs to commercial sector in the form of bank credit and investments in shares, debentures, CP etc, was Rs 16,99,865 crs for the fortnight.
4. Indian Bank stood first in extending credit linkage to the SHGs in the State of Tamilnadu and had disbursed loans to the tune of Rs 189.12 crs to the SHGs so far during the current fiscal. Only 30% of the countrymen were having access to the banking services.
5. PSBs hoping to go public have to clean up their books and reduce their bloated equity base. The likes of Indian Bank, Central Bank of India, United Bank of India and Punjab & Sind Bank are in the process of doing just that. They do this in two stages. In the first stage, they ask the Government to write off the accumulated losses against the capital infused by the Government. In the second stage, a portion of the remaining equity (after the write-off) is converted into preference capital that will carry an interest rate of about 8%, subject to government approval. By doing this, banks hope to make themselves more palatable to potential investors.
6. United Bank of India has signed an MoU with the West Bengal Govt. for extending home loans to government employees. Housing loans will be available to those who have completed at least one year's continuous service in a regular post. The quantum of loan will vary depending on the purpose. For purchase of a house, for instance, a loan up to 75 times of an employee's basic pay will be provided. Initially, loans will be sanctioned from 15 link branches in Kolkata and 56 link branches in districts. The bank has introduced `United Griha Suraksha Scheme', through which insurance coverage is provided. The agreement, will help strengthen its retail loan portfolio.
7. Canara Bank is expected to secure rating of "Baa2" by international rating agency Moody's that is currently one notch above India's sovereign rating. It has informed the domestic stock exchanges that it is also expected to secure a "BBB" rating from Fitch another international rating agency. Both these ratings put the bank in the investment grade slot. Investment grade is also the rating for Tata Steel.
8. OBC will take a decision on raising interest rates by the end of the month, even as it considers reducing exposure to some sectors of the economy.

Tides of 13.11.2006

1. Micro-credit of up to Rs 50,000 has been included in the priority sector for the first time. It is provision of credit and other financial services to the poor in rural, semi-urban and urban areas. RBI has also proposed redefinition of exposure to small scale industries, which will qualify for priority sector lending.
2. Catholic Syrian Bank is in talks with Mauritius-based investors for privately placing a 15% stake in the bank to raise about Rs 35 crs.
3. ICICI Bank MD & CEO K V Kamath has said that there is need for level playing field for banks to compete with other institutions, such as mutual funds and insurance companies, for mobilising more deposits. A level playing field will enable banks to have their rightful share of deposits. And for this, a facilitating environment is needed.
4. Postmen will now also sell bank loans. This will soon begin on a pilot basis through post offices in Maharastra and Goa, amid concerns of RBI that the use of intermediaries, such as post offices and others, raises the issue of agent-related risks. The post offices in the two states will provide banks intermediary services, such as preliminary processing of loan application by way of identification of customer, verification of address, assessing creditworthiness and credit-recovery mechanism. The proposal to launch a pilot scheme for the general purpose consumption credit to the farming community utilising network of post offices in the Maharashtra Circle has been cleared under the aegis of the the IBA.
5. Commercial banks, co-operatives and RRBs have up to October 31 this year claimed Rs 874 crs from the RBI and Nabard for providing 2% interest relief to farmers for Kharif and Rabi 2005-06. About Rs 1,700 crs had been placed at the disposal of RBI and Nabard for the 2% interest subvention announced by the Government. The commercial banks have so far claimed Rs 375 crs, co-operatives Rs 365 crs and RRBs Rs 134 crs.
6. Forex reserves increased by $24 mn to touch $167.116 bn for the week ended November 3. This is the third week in a row that the country's forex reserves saw accretions. In the earlier week, forex reserves were at $ 166.482 bn. According to figures from the SEBI, the week under review also saw good FII inflows into the domestic equity market at $450.2 mn. Foreign currency assets increased by $155 mn to touch $160.391 bn.
7. Detariffication in the insurance industry would expand the scope of distribution as pressures on margins demand cost-effective and innovative methods to sell the products to supplement the traditional modes of distribution. Not just telemarketing other but other modes of distribution as well, channels such as bancassurance, SMS, telephones, Internet and worksite marketing would emerge.
8. HDFC Ltd is organising a four-day property show beginning Nov. 11 at Swabhumi, Kolkota, which will showcase "dream homes" by prominent property developers such as Shapoorji Pallonji and Unitech. The event is being organised to "provide a platform where customers can meet about 25 developers showcasing more than 37 projects and choose a home for themselves". More than 8,000 apartments with one-to-three bedrooms, "mass housing" and villas will be on display.

Tides of 11.11.2006

1. The Aditya Birla group has readied a blueprint for India’s second-largest retail rollout with Rs 15,000 crs investment in over 6,000 stores in three years, a plan that is much larger than what was anticipated by industry analysts and peers. Among new groups entering retail, the Birla plan is next only to Reliance Industries’ Rs 25,000 crs corpus for 10,000 stores by 2011. Even as the Birlas are finalising their roadmap, the first 11 Reliance outlets opened to the public in Hyderabad.
2. The finance ministry is working out the modalities for sale of RBI ’s stake in SBI to the government. Based on SBI’s current market price, the government will have to fork out nearly Rs 350 bn to buy RBI’s stake in India’s largest commercial bank.
3. The average net NPA of listed PSBs has fallen to 1.11% at the end of September 2006 from 1.19% a quarter earlier and 1.33% at the end of 2005-06. Eleven PSBs now have less than 1% net NPAs compared with 10 on March 31, 2006. Of the 11 banks, Andhra Bank has lowest NPA of 0.10 % followed by PNB (0.18%), SBM (0.38%), Corporation Bank (0.48%) and OBC (0.50%).
4. About 150 employees of the erstwhile United Western Bank, which merged with IDBI Bank, have sought an early retirement under the one-month window available .
5. RBI deputy governor, Rakesh Mohan, has said corporates in the coming years would face greater competition for bank credit as banks explore emerging avenues such as retail, SMEs etc.
6. Allahabad Bank, IOB, Karnataka Bank, Dabur and Sompo Japan Insurance have executed a shareholders' agreement for the formation of a non-life joint venture insurance company. The company will be called Universal Sompo General Insurance Co. Allahabad Bank will hold 30, while IOB and Karnataka Bank will own 19% and 15%, respectively. Dabur Investment Corporation will hold 10 %, while the Japanese partner will hold 26%.
7.South Indian Bank is all set to announce its tie-up with UTI MF for selling the latter's mutual fund products. It has already tied up with other mutual fund companies such as Franklin Templeton, Tata, Sundaram and Reliance over the last one month. To cross sell such products, the bank has roped in 50 marketing staff (on contract).
8. Priority sector advances by commercial banks are set to rise with the RBI shifting the base for arriving at the quantum of loan funds. The targets and sub-targets under priority sector lending would be linked to adjusted net bank credit (net bank credit plus investments made by banks in non-SLR bonds held in Held to Maturity category) or credit equivalent of off-balance sheet exposures, whichever is higher, as on March 31 of the previous year. Earlier, the 40% norm was linked to net bank credit only. By tagging non-SLR bonds and off-balance sheet exposures, banks may have to lend more to agriculture, micro credit, small scale and micro enterprises.
9. BOI and UBI have tied up with infrastructure financial services provider Infrastructure Development Finance Company Ltd (IDFC) for loan syndication. The two banks will also work together in international operations, to offer cash management services and in training. Under the arrangement with IDFC, both banks will facilitate joint identification, marketing, appraisal and underwriting of project finance. This will provide a single point contact for the borrowers. The two banks have set a target of Rs 11,500 crs for projects in the next 4-5 months and hope to handle 60 projects worth Rs 45,000 crs in the next one year.

Tides of 10.11.2006

1.SBT has raised Rs 200 crs through issue of unsecured non-convertible subordinated perpetual bonds by private placement. The bonds, rated `AAA' by Crisil and CARE, carry a coupon rate of 9.34% payable annually for the first 10 years. This would be stepped up to 9.84% for all subsequent years, if the call option is not exercised by the bank at the end of the tenth year.
2. Worried over paucity of credit availability to the physical infrastructure sector, the Union Ministry of Finance has begun persuading banks to rebalance their lending portfolios. Rebalancing of credit portfolios entails shifting from some sectors to infrastructure lending, where term credit was most required. In fact, the Finance Ministry is extremely unhappy with the current phase of high non-food credit, which was largely fuelled by retail credit, including housing and real estate.
3. The Finance Minister, Mr P. Chidambaram, has urged PSBs to take a "good hard look" at how to grow their deposits to match the growing credit needs of the productive sectors of the economy. He also advised the PSBs to re-balance their loan portfolios as a "pre-emptive" measure to head-off a possible concern on liquidity.
4. The RBI is likely to restrain banks from converting more than 40% of their equity into preference shares. At present, there is no such restriction. The move comes in the backdrop of several state-owned banks seeking government approval to convert a significant chunk of their equity into preference capital to boost their EPS ahead IPOs. A recent proposal by United Bank of India to convert Rs 1,200 crs of its equity ,over 78% of the total paid-up capital of Rs 1,532 crs, into preference shares, was shot down by the apex bank. The move would have helped United Bank reduce its capital to Rs 332 crs and shore up its EPS substantially.
5. India may be `the world's second-fastest growing economy'. But that may mean nothing to nearly half of India's 1.1 billion, because they `have no access to loans and insurance,' notes www.chinapost.com.tw in a report dated November 6.
6. RBI has effected a change in the cheque clearing system in Kolkata. The revised procedure has been in place since mid-October. The introduction of the new mechanism has not effected overall clearing operations.
7. PNB has initiated various steps to widen its presence in Kerala, which inter alia includes opening of new branches and increasing the number of core banking solutions branches.
8. Lakshmi Vilas Bank has effected an upward revision in its FCNR (B), NRE and RFC deposit scheme with effect from November 1. South Indian Bank and central bank of India have also hiked their rates.
9. American Express has announced the launch of `The Platinum Club', a premium service aimed at the rapidly-growing affluent consumer segment in India. Members of the club would automatically receive the new American Express Platinum Card, their key to the host of membership benefits. Membership to the club would be available for a lifetime foundation fee of Rs 50,000.
10.ATMs will be installed at the Tiruchirapalli, Thanjavur, Chidambaram, Villupuram, Myladuthurai and Pondicherry (Puducherry) railway stations as per a MoU signed with SBI.

Tides of 9.11.2006

1. In a move that may impact foreign banks that have significant retail exposure in the country through the NBFC route, the RBI, in a draft circular, said banks must not hold more than 10% stake in a deposit-taking, NBFC. Housing finance companies have, however, been exempted.
2. Since the last mid-term review of the annual monetary policy, the Indian economy has continued to expand with the capital market having re-ignited its excitement. Business investment has grown at a solid pace, supported by growth in turnover, rising backlogs of orders for capital goods and higher rates of profitability. As the second quarter results have indicated, India Inc remains in good financial health with favourable credit conditions. This continual growth expectation has underlined the confidence evidenced in the current mid-term review.
3. Reliance Retail, the 100% subsidiary of Reliance Industries, on October 28 unveiled Reliance Fresh, the first of its multi-format retail foray involving an investment of Rs 25,000 crs.
4. India Inc continues to be in robust health. A study of 762 major companies, which have declared their first-half results, shows their aggregate net profit increased by 31.2% in April-September 2006.
5. Deutsche Bank, Germany's biggest bank, plans to move thousands of jobs to India.
6. With the apex bank putting across draft guidelines to curtail the regulatory arbitrage enjoyed by bank-sponsored non-banking finance companies, banks are going back to their drawing boards and revisiting plans for setting up NBFCs.
7. Microcredit, an important initiative aimed at financial inclusion, has proved to be a profitable business proposition both in short and long terms for commercial banks globally with micro-entrepreneurs gradually becoming part of their active clientele. Delivering a special lecture on global experiences of inclusive growth initiatives at the Bancon-2006, Mercedes Benavides, manager, Global Network for Banking Innovation in Microfinance, Women’s World Banking, while citing the experiences in Latin America, said more and more commercial banks are now entering the microfinance sector with the benefit of access to lessons learned by microfinance institutions in this area. She also said the top performing MFIs the world over are achieving high growth and profitability.
8. MetLife India Insurance Co Pvt Ltd has entered into a bancassurance tie-up with UTI Bank. This is MetLife's fourth bancassurance tie-up after J&K Bank, Karnataka Bank and Dhanalaxmi Bank. The bancassurance tie-up with UTI Bank will complement MetLife's 10,000 strong agency force. While agents form one half of our sales push, bancassurance forms the second half.
9. Kotak Mahindra Bank has opened its retail banking branch in Kottayam. The bank has 82 branches in 57 locations in the country.
10. State Bank of Bikaner and Jaipur is planning to add one more branch each at Tirupur and Coimbatore. It is also contemplating to open a regional office at Chennai to monitor its branches in the South.
11.SBI may raise another Rs 1,000 crs to Rs 2,000 crs as tier-II capital during the current fiscal to fund business growth.

Tides of 8.11.2006

1.SBT has announced a sharp increase in the interest rates for FCNR and NRE term deposits.
2.IOB has increased its interest rates on FCNR deposits with effect from November 1, 2006. CUB and KVB too have hiked these rates.
3.HDFC Bank has won the Nasscom best user award for IT.
4.Banks need to be responsive to the changing environment and the needs of their customers to be in the race, according to the Karnataka Bank Chairman, Mr Ananthakrishna. Karnataka Bank is talking to a group of financial institutions in India and Japan to form a joint venture for promoting non-life insurance products. The talks are at an advanced level and the joint venture might become a reality in a couple of months.
5.BOI, Visakhapatnam zone, is planning to open 3/4 more branches in Visakhapatnam and the two Godavari dts. The zone, comprising seven coastal districts from Srikakulam to Guntur, has 47 branches, has a business of Rs 1,567 crs and earned an operating profit of Rs 32 crs.
6.BOB has plans for major overseas expansion and is set to commission its ninth overseas branch in London in 2007. It is looking at setting up branches in Canada, West Indies, New Zealand, Bahrain, Qatar, China and South Africa. It is now scouting for joint venture partners for life insurance foray, and foreign partners for bank's asset management, credit card businesses, and share broking and online trading business arms. It launched its 11th retail loan factory at Hyderabad. The loan factory is an innovative retail delivery model designed to provide a unique experience to the bank's customers, adding to their convenience.
7.`Financial inclusion' is an issue laden with a legacy baggage dating back to 5,000 years and presents us with complexities that calls for a Herculean effort to get sorted out, said Dr K. C. Chakrabarty, CMD, Indian Bank.
8.While banks have been talking extensively about technology-based approach towards financial inclusion, they are yet to build a suitable technology infrastructure. This seemed to be the observation of the panelists during a session on `Technology solutions and process management' at Bancon 2006. While bankers conceded that technology was only an enabler and not a plug-and-play solution in banking, they appeared to concur with the view that there was a need to map business architecture to technology.
9.Delivering the valedictory address at BanCon 2006, Dr Y. V. Reddy, said: "Banks should move to the masses as a natural process of financial inclusion". This included taking deposits from rural and semi urban regions in the country. He said: "Financial inclusion should be treated as a business investment." Bankers should focus on small loans to the farm sector and small and medium enterprises and smaller liabilities. This was because most of the large corporates have "disintermediated" and have begun to directly access the financial markets.
10. The Chairman of the Economic Advisory council to the PM, Dr C. Rangarajan, has opposed reduction of interest rates to self help groups in the country. Delivering the special address at Bancon 2006, he said: "They (SHGs) should be provided credit at moderate rates of interest. But lowering the rate of interest defeats the very nature of these groups."The SHG concept has worked well so far. However, he said that they needed to move forward. SHGs currently cover about 32.96 mn households.

Tides of 7.11.2006

1. The issues of slipping marketshare and not-so-satisfactory record with regard to customer service dominated the discussion the SBI Chairman, Mr O.P. Bhatt, recently had with 14 Chief General Managers, each heading a circle. The meeting was held in Kolkata for the first time. The two MDs and all the DMDs, among other senior officials, were also present. The meeting noted with concern that the SBI, both as an entity and as a group, was fast losing market share. The group's market share declined from more than 30% to around 25% in the past few years, while SBI's own market share dropped from around 25 % to 21%.
2. Swiss banking major Credit Suisse today announced plans for India, which include re-activating its brokerage in the country as it proposes to build an 80-member strong team for its various business activities.
3. SBI has adopted a strategy of reducing the portfolio of large corporate loans, which are lent at rates much below the bank’s prime lending rate (PLR).
4. BoI is planning a big push in funding contract farming initiatives. The bank’s agri technical team is assessing the contract farming funding proposals. It is targeting agricultural areas of south Gujarat and Mehsana in north Gujarat. The companies concerned are also directly involved in the export of agricultural products. The bank the sixth-largest in terms of assets in the country is in talks with four major corporates to lend Rs 400 crs for their proposed contract farming activities in Gujarat.
5. Foreign and private banks showed signs of panic today by rushing in the market to swap dollar funds to create rupee funds. There is a scramble among banks to raise short-term deposits as they expect liquidity to go down substantially in the coming weeks, said a treasury head of a nationalised bank. Bankers also added that bulk deposit rates for one-year deposits have also shot up to 8.50-8.75% against the average industry rate of 8-8.50%. The rate on bulk deposits changes daily unlike the retail rates.
6. Central Bank of India is awaiting the central government’s go-ahead to convert part of Rs 1,124 crs bloated equity base into preference shares. This conversion will help the bank improve its earnings per share and command good premium while floating the public issue. The bank expects to reduce its capital base up to 60 % in order to have equity base of below Rs 500 crs.
7. The SBI and ICICI Bank, at the 61st and 66th positions, respectively, are the only Indian banks that figure in the global 100 most valuable banking brands list for 2006 published by the UK-based brand valuation agency Brand Finance and The Banker magazine.
8. Both Yes Bank and Exim Bank today signed an MoU with CII - Godrej Green Business Centre (GBC) to promote small and medium enterprises in auto ancillary, textiles, gems and jewellry, media and entertainment and life sciences and biotech sectors. The objective of the MoUs is to promote green enterprises among the SMEs to make their products export-worthy. The green enterprises are typically energy efficient and help in sustaining the natural resources. The tie ups with the banks will essentially focus on the facilitation of such small and medium units. The financial institutions will focus on developing renewable energy and sustainable infrastructure among SMEs.
9. Dhanalakshmi Bank nearly tripled its net profit to Rs.7.02 crs for the half-year that ended September 30, 2006 as compared to Rs. 2.38 crs in the year-ago period, registering a growth of 195%. The total income of the bank rose by 12.3% to Rs. 129.44 crs as on September 30, 2006.

Tides of 6.11.2006

1. OBC inaugurated its new centralised credit-processing cell at Hyderabad. The bank has similar cells in Ghaziabad, Mumbai-North and New Delhi regions. These cells are meant to cater to the requirements of borrowers with credit limits of Rs 50 lakh and above. The cells are expected to ensure speedy disposal of credit proposals, simplify administrative processes, expedite credit decisions and enable direct interaction with prospective borrowers. The cell at Hyderabad processed 30 cases for an aggregate amount of Rs 719.55 crs. On the inaugural day, the bank made sanctions to 11 borrowers amounting to Rs 83.55 crs. These credit proposals cover SSI, SME, export, highway projects, housing, power, spinning mills and other industries.
2. The Finance Minister, Mr P. Chidambaram, is to meet Chairmen of Public Sector Banks on November 6. He will use the meeting to review the financial performance of the banks in the first six months of the current fiscal and also the flow of credit to various sectors of the economy. This meeting comes close on the heels of the RBI 's move of October 31 to hike repo rates by 25 bps.
3. Standard Chartered Bank has launched SCB Gold Debit Card, with an annual fee of Rs 799. The card has an enhanced spending limit of Rs 95,000 for each purchase and ATM cash withdrawal.
4. Andhra Bank is hosting the Bankers' Conference this year in Hyderabad from November 3-4, with organisational support from the Indian Banks' Association (IBA). The Union Finance Minister, Mr P. Chidambaram, will inaugurate the conclave of the chiefs of Indian public, private and foreign banks, with the RBI Governor, Dr Y.V. Reddy, participating in the key deliberations. The conclave, with the theme `Inclusive Growth — A New Challenge', is aimed at meaningful discussions and deliberations on various aspects of the Indian banking industry with key focus on inclusive growth. The conclave is expected to provide a major direction to Indian banking, to support the pursuit of balanced and widely dispersed economic growth and development.
5.Highlighting the role of microfinance sector in expanding the reach of banking facilities, Prof. Thingalaya has said the services of the regional rural banks could be utilised better for this purpose.
6.IBA finds a major business opportunity in inclusive growth, the latest priority on the economic development agenda, and does not consider it a mere social responsibility. According to Mr K. Ramakrishnan, CMD of Andhra Bank the host of Bancon-2006, almost 52% of the rural population still has no access to formal banking. Stating that inclusive growth as a development strategy was quite successful in East Asia, he said a similar strategy was being contemplated in India to ensure that economic development benefits the poor.

Tides of 4.11.2006

1. The stringent KYC norms had forced banks to put off many small customers or those aspiring to be part of the banking system. RBI has now done away with the requirement to follow the KYC norms for customers in cases where the outstanding balance is not more than Rs 50,000 and the maximum transaction is not more than Rs 2 lakh. In such cases, customers will need to provide just a photograph and self certification of address. However, as and when the transaction size and the balance increase beyond the limit, banks would be required to follow the normal KYC norms.
2. Indian banks have got a badly needed breather. They now have more time to gear up to meet more stringent norms on capital standards set out by the BIS. RBI seems to have taken a cue from some of its peers in the Asian region and some emerging market countries by pushing back the deadline for implementing the new capital standards called, Basel-II norms. The RBI has decided to postpone the deadline for implementing these norms by a maximum of two years until ’09. The regulator has said that foreign banks and those banks which have an overseas presence will be required to adopt the new capital accord by ’08, while others will be required to conform to the norms by ’09.
3. RBI has partially relaxed the branch licensing policy for UCBs after a three-year ban. Strong UCBs may also be able to bolster their capital funds by issuing perpetual debt instruments, special category shares and preference shares. All the 35 multi-state co-operative banks and financially sound co-operative banks in eight states that have signed an MoU with the RBI will be allowed to convert their extension counters into full-fledged branches. The move is expected to trigger the Maharashtra government to expedite signing of the MoU with RBI to end dual regulation of these banks.
4.IndusInd Bank Ltd has got approvals from the RBI to open 10 more branches, mainly in su and rural areas, and start 100 new offsite ATMs. The bank plans to open these branches by end 2007. At present, it has a network of 147 branches and 84 offsite ATMs.
5. Aided by a robust credit growth, BOM expects to post higher profits in the second half of the current financial year than the levels recorded in the first six months. The bank had registered a net profit of about Rs 121 crs in April-Sept, 2006. The bank expects to grow its advances to Rs 22,000 crs as on March 31, 2007, from a level of about Rs 17,000 crs as on March 31, 2006. Total advances as on September 30 this year stood at Rs 19,200 crs, which represents a 36.82% year-on-year growth. The bank has set for itself a business turnover target of Rs 1 lakh crs by 2009. The bank also plans to spend Rs 77 crs for bringing 600 branches under the core banking solutions (CBS) over the next two years.
6. Syndicate Bank has entered into a MOU with the Tirumala Tirupati Devasthanam for accepting devotees' offerings at any of its branches across the country, apart from its branches at Tirupati, Tirumala, Tiruchanoor and its overseas unit in London. Under the MoU signed with TTD, Syndicate Bank will issue pre-denominated receipts of Rs 101, Rs 501, Rs 1,001 and Rs 5,001 free-of-cost to any devotee.

Tides of 3.11.2006

1. The merger of Bharat Overseas Bank with IOB is likely to be complete by the end of this fiscal. The first stage of acquiring shares from other stakeholders is complete and the merger will form the second stage. It has applied to the regulatory authority of Bangkok for transferring the licence of Bangkok branch of BhOB in favour of IOB.
2. RBI lifted its short-term repurchase rate by a quarter of a percentage point to 7.25%, but left its other policy rates unchanged as it stepped up its fight against inflation pressures. It raised the repurchase rate, at which it adds overnight funds to the banking system, but left the reverse repo rate, at which it drains funds, unchanged at a 4-½ year high of 6 %. It also kept its bank rate, unchanged at 6.0% and its CRR steady at 5.0%.
3. Ever wondered why the average rate of interest on credit cards is around 34% per year, when the average rate on a home loan and personal loan is around 10% and 18% per annum, respectively? One reason is the higher risk of default that banks carry due to the completely unsecured nature of the credit card product. For example, in the US, the average interest rate for a 30-year fixed rate home loan is around 6% whereas the average credit card interest rate is around 14%. This means that, in the US, a credit card is about 2.3 times more expensive than a home loan on an average.
4. State-owned banks are losing out on what was at one time a captive and profitable avenue for lending/financing procurement of foodgrains. With food procurement and offtake being low so far this fiscal, the demand for credit to fund these operations has been tepid. A lower procurement and lower stocks would signal an easing of the food subsidy bill for the government, considering that costs on account of transportation and storage would be pruned.
5. How much can you get out of a rupee a year from now? Most consumers may not spare a thought speculating on where the wholesale price index (WPI) would go a year from now, but their perception of the future value of the rupee determines almost every economic decision. For the first time, RBI has started a regular survey for measuring inflationary expectations. From a regulator’s point of view inflationary expectation in the minds of the consumer is a crucial input for policy making.
6. Banks may not hike interest rates immediately either on deposits or on the lending side, following the hike in repo rate by RBI on Tuesday. But the signal they have received is look at better ways to manage the available resources.
7. Banks may now sport a more friendly face to customers and improve their transparency. The malpractices in the home loan market appear to have prompted the banking sector regulator to make it clear to banks that they need to be more fair and transparent in their dealings with customers. The rap on the knuckles for banks may have come after recent reports about the kind of practices adopted by banks in the booming home loan market. While some banks resorted to a hike in their PLR only once, when it came to home loans, they were quite agile.

Tides of 2.11.2006

1. OBC has announced a profit after tax (PAT) of Rs 310.75 crs for the quarter ended September 30, up 37.2% over the corresponding figure of Rs 226.51 crs for the previous fiscal. After writing-off Rs 61.24 crs against liabilities on account of the amalgamation with GTB, OBC's net profit for July-September 2006 stood at Rs 249.51 crs, 51% more than the Rs 165.27 crs for July-September 2005.
2. Strong growth in interest income has lifted the net profit of IOB by 25% for the second quarter ended September 30 to Rs 249.85 crs (Rs 198.49 crs). The net interest income was Rs 611.91 crs (Rs 517.3 crs) while the net interest margin stood at 4.01% (4.1%). Total deposits increased by 20.31% to Rs 57,018 crs while gross credit grew by 40.28% to Rs 41,141 crs.
3. Indian Bank has posted a 60% rise in net profit at Rs 169.19 crs (Rs 105.57 crs) for the quarter ended September 30. Total income increased to Rs 1,198.45 crs (Rs 941.47 crs). Net interest income was up by around 26% to Rs 453.72 crs (Rs 359.81 crs). Overall, the business of the bank grew 21.06%. Total deposits rose 16.4 % to Rs 44,124 crs (Rs 37,907 crs) and advances grew by 29.81% to Rs 26,193 crs (Rs 20,177 crs). The bank has shown consistent performance in priority sector lending. Total priority sector advances have grown by 30.87% during the half year.
4. YES Bank has reported a 50.8 % growth in net profit for the second quarter ending September at Rs 21.49 crs (Rs 14.25 crs). Total income increased by 182% to Rs 166.01 crs (Rs 58.82 crs) while total expenditure went up 261% to Rs 131.08 crs (Rs 36.34 crs). Other income increased to Rs 38.13 crs (Rs 21.88 crs). In terms of revenue, treasury brought in Rs 92.57 crs (Rs 20.50 crs). The NP was mainly due to the rise in net interest income and NII, which constitutes treasury, financial advisory, fee-income, among others.
5. PNB's profit after tax has risen 19.7% to Rs 505 crs for the three months ended September 30, as against Rs 422 crs for the corresponding quarter of 2005-06. Operating profit has also shot up by 30%, from Rs 684 crs to Rs 889 crs. For the half year ended September 30, 2006, the bank's PAT went up by only 11.8 % (from Rs 780 crs to Rs 873 crs), with operating profit, too, going up moderately by 3.9% ( 1,328 crs to Rs 1,379 crs).
6. Ahead of the credit policy tomorrow, the RBI has warned of inflationary pressures while demand for bank credit continued to hold strong in the second quarter of 2006-07. In its Macroeconomic and Monetary Developments Review released today, non-food credit grew 30.5% as on October 13 against 31.8% last year. Food credit declined Rs 7,246 crs reflecting, "lower order of procurement of foodgrains (less than around 15 %)." Funds to the industrial sector grew 27 %, while that to the agricultural sector went up by 37% as of end-June 2006. Retail lending rose by 47% with growth in housing loans placed at 54%. Loans to commercial real estate rose by 102%, said the RBI report.

Tides of 1.11.2006

1. India saw the number of ATMs grow to over 17,000 machines in ’05 from 1,500 ATMs in just five years. In the last one year, however, ATM sales in the country were down to about 2,000 pieces. Not because ATM market has saturated in the country, but because of regulations. In September last year, RBI stipulated that banks would have to take prior permission to set up offsite ATMs. ATM sellers thought booming economy, increasing card usage, rising customer expectations and cost savings for banks would keep the ATM growth going. For example, Venture Infotek in a survey on payment card industry said in ’05, “Five years from now bankers reckon that there will be roughly three ATMs for every one branch, which may result into around 70,000 bank branches and over 2,00,000 ATMs by ’10.” Today, China has 1,20,000 machines, and India just a sixth of that. You would expect India to have at least half the number of China’s ATMs. But ATM sales have actually slowed down now. At last count, 3,94,500 ATMs were currently deployed within the United States, of which approximately 1,94,000 or 49% are operated by independent sales organisations.
2. Indian banks can now look forward to an easy entry into the US financial market. The government has decided to move amendments to the Prevention of Money Laundering Act that will bring it more in sync with the demands of the US and EU about taking tougher action to block terrorist financing through banking channels. The demands had been affecting the global expansion plans of banks including the SBI and others, which are planning to set up more branches in these markets.
3. Total employment in 27 public sector banks (excluding IDBI, whose data are available for the last two years only) has declined by 1.4% in 2005-06, from 7.44 lakh in 2004-05 to 7.33 lakh. In fact, employment has declined in each of the last three years. In four years, between 2001-02 and 2005-06, employment in public sector banks has shrunk by 3%. Three big private sector banks, ICICI Bank, HDFC Bank and UTI Bank, together have increased their manpower by more than three and a half times from 13,189 in 2001-02 to 46,910 last year. In 2005-06 alone, employment in these banks have increased by 47.4%. Interestingly, although the employee strength of the PSBs have declined, their business have grown rapidly, indicating a rise in labour productivity. All 28 public sector banks have witnessed an increase in per employee business in 2005-06.
4. BoB is contemplating entering the stock-broking space and would prefer to acquire an existing firm with a wide network to foray into the business. It is already talking to broking firms which have a strong network. It is looking at an acquisition to have a 100 % management control. However, it is flexible on the structure.
5. UCO Bank has mooted a proposal to the Union Finance Ministry for the restructuring of its capital. Its present equity size is Rs 800 crs.
6. A book on 50 years of banking development in Karnataka, authored by Dr N.K. Thingalaya, economist, will be released on November 2. (Corp.Bank)

Highlights of RBI's Mid-term Review of Annual Policy for 2006-07

· Repo Rate increased to 7.25% from 7.0%.
· The flexibility to conduct overnight repo or longer term repo including the right to accept or reject tender(s) under the LAF, wholly or partially is retained.
· Reverse Repo Rate, Bank Rate and CRR kept unchanged.
· GDP growth forecast at around 8.0% during 2006-07.
· Inflation to be contained within 5.0-5.5% during 2006-07.
· Monetary and credit growth expected to be higher than the initial projections.
· ‘When issued’ trading to be extended to fresh issues of Central Government securities.
· Scheduled commercial banks and primary dealers to be allowed to cover their short positions in Central Government securities within an extended period of five trading days.
· Resident individuals would be free to remit up to US $ 50,000 per financial year as against the earlier limit of US $ 25,000.
· Foreign exchange earners may retain up to 100% of their foreign exchange earnings in their EEFC accounts.
· AD banks may borrow funds from their overseas branches and correspondent banks (including borrowing for export credit, ECBs and overdrafts from their Head Office/Nostro account) up to a limit of 50 % of their unimpaired Tier I capital or US $ 10 million, whichever is higher.
· Borrowers eligible for accessing ECBs can avail of an additional US $ 250 mn with average maturity of more than 10 years under the approval route.
· Prepayment of ECB up to US $ 300 mn without prior approval of the Reserve Bank.
· Authorised dealer banks may allow remittances on behalf of their customers up to 15% of the average annual sales/income or turnover during the last two financial years or up to 25% of their net worth, whichever is higher, for initial expenses, and remittances up to 10% of the average annual sales/income or turnover during the last two financial years for recurring expenses. They may also permit remittances for acquisition of immovable property for the overseas office, within these limits.
· The existing limit of US $ 2 bn on investments in Government securities by FIIs to be enhanced in phases to US $ 3.2 bn by March 31, 2007.
· The extant ceiling of overseas investment by mutual funds of US $ 2 bn is enhanced to US $ 3 bn.
· Importers to be permitted to book forward contracts for their customs duty component of imports.
· FIIs to be allowed to rebook a part of the cancelled forward contracts.
· Forward contracts booked by exporters and importers in excess of 50 per cent of the eligible limit to be on deliverable basis and cannot be cancelled.
· Authorised dealer banks to be permitted to issue guarantees/LCs for import of services up to US $ 100,000 for securing a direct contractual liability arising out of a contract between a resident and a non-resident.
· Lock-in period for sale proceeds of the immovable property credited to the NRO account to be eliminated, provided the amount being remitted in any financial year does not exceed US $ one mn.
· Banks, with approval of their boards, may formulate a transparent policy for providing One Time Settlement facility to those farmers whose accounts have been rescheduled/ restructured due to natural calamities as also those who have defaulted on account of circumstances beyond their control.
· For opening small accounts, banks need to seek only a photograph of the account holder and self-certification of address.
· Indian banks having presence outside India and foreign banks to migrate to the Basel II framework effective March 31, 2008 and other scheduled commercial banks to migrate in alignment but not later than March 31, 2009.
· Prudential limit on credit and non-credit facilities to Indian Joint Ventures/Wholly Owned Subsidiaries abroad to be enhanced to 20 % of unimpaired capital funds.
· Financially sound Urban Co-operative Banks (UCBs) registered in States that have signed MoU with the RBI and those registered under the Multi-State Co-operative Societies Act, 2002 to be allowed to convert existing extension counters into full-fledged branches.
· NBFCs to be allowed to issue co-branded credit cards with banks without risk sharing and to market and distribute mutual fund products.
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Tides of 31.10.2006

1. RBI is likely to defer the deadline for implementation of revised capital adequacy guidelines (Basel II) by six months to a year. The central bank is close to issuing the final guidelines. In the draft Basel II guidelines issued over a year back, the RBI had suggested March 31, 2007 as the date for banks to shift to Basel II capital adequacy norms. The central bank may also prefer a phased implementation of the Basel norms starting with foreign banks and internationally active Indian banks and then gradually moving to other banks. Banking sources said empanelment of rating agencies is understood to be a big hurdle in going ahead with Basel II norms as the current credit rating capacity is not enough to cover all loan accounts of banks. Banks would be required to have their loan accounts rated by rating agencies under Basel II for allocation of capital according to the perceived level of risk.
2. In what is seen as further tightening of the norms for non-banking finance companies, RBI has said that in case of change of management and control of an NBFC a public notice should be given by both parties - the acquirer as well as the acquiree.
3. UTI Bank has stirred a hornet's nest with a recent letter to UTI Mutual Fund regarding its plans to register the UTI Bank brand name after 13 years of existence. The bank was allowed to use the UTI name but had never formally registered it.
4. The aggregate interest cost of 419 major companies rose to Rs 2,488 crs in July-Sep 2006, a 23.1% increase over the same period's level of Rs 2,021 crs in the previous fiscal.
5. Karnataka Bank has posted a net profit of Rs. 59.61 crs for the second quarter ended September 30, 2006, as compared to Rs. 41.81 crs in the same period last year, registering an increase of 43%.
6. Seeking to boost its commercial relationship with India, Canada has demanded more access to 'key' markets in the country including in agriculture and retail sector.
7. Andhra Bank posted 10.19% rise in NP at Rs 146.77 crs for the quarter ended Sep 2006 against Rs 132.89 crs recorded during the corresponding period of the previous financial.
8. Allahabad Bank has posted a 24% rise in net profit at Rs 210 crs in the quarter ended Sep 30, 2006, compared with Rs 168 crs in the corresponding period last year.
9. Competition between banks is hotting up to open fresh bank accounts for state government employees. This has been triggered by a state directive urging government employees to get their salaries through the ECS. The cash salary system will be withdrawn soon. The West Bengal government has asked Allahabad Bank, SBI, UCO Bank, United Bank of India and West Bengal State Cooperative Bank (WBSCB) to open new salary accounts for state employees. There are nearly 3.9 lakh government employees across the state. Interestingly, the government has detected that most of its employees, especially in rural areas, do not have bank accounts, or accounts with ECS.

Tides of 30.10.2006

1. DCB Ltd made its debut on the stock markets today. DCB was listed at Rs 35.35, a premium of 35.96% over the issue price of Rs 26 on the BSE. DCB offered 7.15-crs equity shares aggregating Rs 186 crs. The issue was oversubscribed 35.68 times. It will strengthen the capital base of the bank and also help meet the capital adequacy norms under Basel II.
2.Commission earned on selling other companies' products (or third-party distribution business) is emerging as a new revenue source for many banks. The commission or fee is earned mainly through selling insurance products (both life and general) and mutual funds. HDFC Bank, earned about Rs 200 crs through sale of insurance products and mutual funds.
3. The net profit of SBI has fallen marginally by 2.53 % to Rs 1,184.49 crs (Rs 1,215.36 crs) for the second quarter ended Sep 30. The slight decline in profits follows higher tax provisions. Also, the bank did not enjoy the benefit of interest on income-tax refund at Rs 712 crs, available last year. For the first quarter ended June 30, the bank saw a 34.7% dip in net profit to Rs 798.57 crs (Rs 12,299.23 crs). Provisions have been placed at Rs 1,288.07 crs (Rs 767.56 crs).Net Interest Margin stands at 3.32% (3.13%). Deposits increased by 10.77% and cost of deposits declined to 4.51% (4.64%).
4. Growth in net interest income and operating profit have helped BOB to post a 11.31% rise in net profit at Rs 288.36 crs (Rs 259.07 crs) for the quarter ended Sep 30. Total income has increased to Rs 2,507.66 crs (Rs 2,003.59 crs). Other income has grown following a 19.4% rise in fee-based income, profit on exchange transactions and NPA recovery. The bank has cut its net NPAs to 0.77% (1.13%)
5. Development Credit Bank (DCB) is to double its balance sheet size by March 2008.
6. RBI is expected to announce a slew of measures to bring vibrancy into the debt market as part of its mid-term review of the annual monetary policy.
7.Morgan Stanley and Fidelity picked up over a 10% stake in Development Credit Bank which made its debut on the bourses recently.
8. BoB is open to sharing a majority stake in its asset management company with an undisclosed foreign partner for starting a joint venture in its AMC.
9. SBI Cards plans to launch cards in association with players in the healthcare industry such as pharmacy chains and hospitals. The first-of-its-kind credit cards would be launched in early 2007. Health is a sunrise segment. It expects card spends in this segment to go up. It will look at partners to tie up within the entire chain from pharmacy to clinics to pathology labs to hospitals. SBI Cards, a joint venture of SBI and GE Money, overtook Citibank to emerge as the second largest issuer of credit cards in September. SBI Cards had a credit card base of over 30 lakh at the end of September 30, 2006, against Citibank’s around 29 lakh. ICICI Bank, the country’s second largest bank, is way ahead of both with a card base of over 50 lakh.

Tides of 29.10.2006

1.The net profit of SBI has fallen marginally by 2.53 % to Rs 1,184.49 crs (Rs 1,215.36 crs) for the second quarter ended Sep 30. The slight decline in profits follows higher tax provisions. Also, the bank did not enjoy the benefit of interest on income-tax refund at Rs 712 crs, available last year. For the first quarter ended June 30, the bank saw a 34.7% dip in net profit to Rs 798.57 crs (Rs 12,299.23 crs). Provisions have been placed at Rs 1,288.07 crs (Rs 767.56 crs).Net Interest Margin stands at 3.32% (3.13%). Deposits increased by 10.77% and cost of deposits declined to 4.51% (4.64%).

2.Growth in net interest income and operating profit have helped BOB to post a 11.31% rise in net profit at Rs 288.36 crs (Rs 259.07 crs) for the quarter ended Sep 30. Total income has increased to Rs 2,507.66 crs (Rs 2,003.59 crs). Other income has grown following a 19.4% rise in fee-based income, profit on exchange transactions and NPA recovery. The bank has cut its net NPAs to 0.77% (1.13%)

3.Development Credit Bank (DCB) is to double its balance sheet size by March 2008.

4.RBI is expected to announce a slew of measures to bring vibrancy into the debt market as part of its mid-term review of the annual monetary policy.

5.Morgan Stanley and Fidelity picked up over a 10% stake in Development Credit Bank which made its debut on the bourses recently.

6.Andhra Bank posted 10.19% rise in net profit at Rs 146.77 crs for the quarter ended Sep 2006 against Rs 132.89 crs recorded during the corresponding period of the previous financial.

7.Allahabad Bank has posted a 24% rise in net profit at Rs 210 crs in the quarter ended Sep 30, 2006, compared with Rs 168 crs in the corresponding period last year.

8.BoB is open to sharing a majority stake in its asset management company with an undisclosed foreign partner for starting a joint venture in its AMC.

9.SBI Cards plans to launch cards in association with players in the healthcare industry such as pharmacy chains and hospitals. The first-of-its-kind credit cards would be launched in early 2007. Health is a sunrise segment. It expects card spends in this segment to go up. It will look at partners to tie up within the entire chain from pharmacy to clinics to pathology labs to hospitals. SBI Cards, a joint venture of SBI and GE Money, overtook Citibank to emerge as the second largest issuer of credit cards in September. SBI Cards had a credit card base of over 30 lakh at the end of September 30, 2006, against Citibank’s around 29 lakh. ICICI Bank, the country’s second largest bank, is way ahead of both with a card base of over 50 lakh.

10.RBI is likely to defer the deadline for implementation of revised capital adequacy guidelines (Basel II) by six months to a year. The central bank is close to issuing the final guidelines. In the draft Basel II guidelines issued over a year back, the RBI had suggested March 31, 2007 as the date for banks to shift to Basel II capital adequacy norms. The central bank may also prefer a phased implementation of the Basel norms starting with foreign banks and internationally active Indian banks and then gradually moving to other banks. Banking sources said empanelment of rating agencies is understood to be a big hurdle in going ahead with Basel II norms as the current credit rating capacity is not enough to cover all loan accounts of banks. Banks would be required to have their loan accounts rated by rating agencies under Basel II for allocation of capital according to the perceived level of risk.

11.In what is seen as further tightening of the norms for non-banking finance companies, RBI has said that in case of change of management and control of an NBFC a public notice should be given by both parties - the acquirer as well as the acquiree.

12.UTI Bank has stirred a hornet's nest with a recent letter to UTI Mutual Fund regarding its plans to register the UTI Bank brand name after 13 years of existence. The bank was allowed to use the UTI name but had never formally registered it.

13.The aggregate interest cost of 419 major companies rose to Rs 2,488 crs in July-September 2006, a 23.1% increase over the same period's level of Rs 2,021 crs in the previous fiscal.

14.Karnataka Bank has posted a net profit of Rs. 59.61 crs for the second quarter ended September 30, 2006, as compared to Rs. 41.81 crs in the same period last year, registering an increase of 43%.

15.Seeking to boost its commercial relationship with India, Canada has demanded more access to 'key' markets in the country including in agriculture and retail sector.

Tides of 28.10.2006

1. Indian Bank has launched a new `premium' current account with built-in `sweep' facility for corporates, traders, businessmen and professionals.
2. The Oriental Bank of Commerce, Indian Bank and Corporation Bank business alliance is looking to share payment modes and launch a joint credit card.
3. Corporation Bank has posted an increase of 20.27% in net profit at Rs 127.01 crs for the quarter ended September 30, as compared to Rs 105.60 crs for the same quarter last year. The total income increased 20.41% to Rs 945.54 crs for the second quarter ended September 30, from Rs 785.26 cr. for the corresponding quarter a year ago.
4. Allahabad Bank has posted 24.76% increase in net profit at Rs 210.03 crs for the quarter ended September 30, as compared to Rs 168.34 crs in the corresponding quarter last year. The total income increased by 19.16% to 1267.83 crs for the quarter ended September 30, as compared to Rs 1063.93 crs in the same quarter last fiscal.
5. The “sunrise” sector of microfinance, billed to have a potential of Rs 35,000 crs is likely to be regulated by the Nabard. This would mean a regulator for more than 400m Indians who are out of the banking system and who are currently being serviced by microfinance institutions. The microfinance bill, currently under review, is likely to be introduced in Parliament in the winter session.
6. For. reserves rose by $1.202 bn to $166.153 bn for the week ended Oct 20, due to a rise in foreign currency assets. In the previous week, reserves fell by $324 mn to $164.95 bn.
7. Higher interest income boosted the net profit of BOI by 61% to Rs 212.13 crs (Rs 132.18 crs) for the second quarter ended September 30. The bank trimmed its net NPAs by over 40% to Rs 788.75 crs (Rs 1,333.41 crs) with the net NPA as a proportion of total assets standing at 1.07% (2.25%). Net interest margin improved to 2.86% (2.34%).
8. Peerless General Finance & Investment Company Ltd, a major residuary non-banking company (RNBC), celebrated its platinum jubilee recently.
9. SBI has opened a branch at Singur (Hooghly district), the controversial location where the WB Government wants Tata Motors to set up a factory for producing small cars but faces stiff opposition from various quarters over the issue of handing over fertile farm lands for industrial purposes.
10. Gross bank credit has gone down by Rs 11,014 crs to Rs 16,43,720 crs as on Oct 13.
11.IndusInd Bank has launched "Indus GOLD Debit Card" in association with VISA at an annual fee of Rs 350 (plus service tax). The card has a daily withdrawal limit up to Rs 50,000 from ATMs.
12. The one-day nationwide strike called by the United Forum of Bank Unions hit banking services, including clearing operations across the country. Over 10 lakh employees and officers of nationalised banks stayed away from work.

Tides of 27.10.2006

1. RBI has said that ARCs will have to start operations within six months of receiving licences. The move aims to spur into action ARCs which have remained dormant for years after receiving licences. It said that those companies where the certificate of registration (CoR) is already issued, the deadline of six months would begin from the date of notification, which is October 19. RBI added that if any ARC was unable to commence operations within six months from receiving the CoR, they would be granted another six months, but not more than one year from the time the CoR was issued.
2. HDFC Bank, the country’s second largest private sector bank, has been rated higher than the largest commercial bank in the country, State Bank of India. International rating agency Moody’s Investors Service has assigned a “C-” financial strength rating (FSR) to HDFC Bank as against a D+ rating to SBI, which is one notch below. ICICI Bank, the country’s second commercial bank, was early this year upgraded from `D+’ to `C-’.
3. The tight liquidity conditions seen in the local banking system last week seem to be abating. With the festive season coming towards a close, liquidity has eased relatively. Although banks’ inability to estimate cash requirements forced them to keep off from lending to the central bank in morning sessions of liquidity adjustment, RBI was able to mop up Rs 16,000 crs in the afternoon session through reverse repo transactions.
4. Deprecating the strong-arm methods allegedly employed by private banks for recovering loan amounts, the Delhi High Court has dismissed an appeal by Standard Chartered Bank, challenging the order of a single judge who directed police to investigate complaints of such harassment of the family of a deceased credit card holder.
5. Andhra Bank has posted 10.19% increase in net profit at Rs 146.44 crs for the quarter ended September 30, as compared to Rs 132.89 crs for the same quarter last year. The total income increased 19.58 % to Rs 900.75 crs for the quarter ended September 30, from Rs 753.23 crs for the corresponding quarter a year ago.
6. ICICI Bank is expecting over 40% growth in its vehicle finance business at Rs 50,000 crs by March 2007. Its vehicle financing business is growing by over 40% y-on-y basis. It has over 40% market share in auto financing, expects the total book value of vehicle finance to increase to Rs 50,000 crs by March 2007 from Rs 34,000 crs as of March this year. The book value of the auto loan portfolio was at Rs 42,000 crs as of September 2006. The vehicle loan disbursement was Rs 20,000 crs in 2005-06, while the incremental loan disbursement is expected to be Rs 29,000 crs this fiscal. Meanwhile, ICICI Bank has tied up with Sixt India, a car leasing and renting service provider, for car leasing business in India. Under the arrangement, the bank will finance 100% value of cars bought by Sixt and Sixt in turn will lease the cars out to corporates for a certain period at a price of 60-80% of the cost. Sixt India plans to have a fleet of 3,000 cars by 2007 and 35,000 cars in five years.