Tides of 18.04.2007

1. PSBs enjoy a unique legal status by virtue of an Act of Parliament, The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980.Banks are neither incorporated nor registered under the Companies Act, 1956 as they are corresponding new entities of banks that were registered under the Companies Act, before nationalisation. The Banking Companies Act provides for a mechanism through which a bank's board of directors is appointed, nominated and elected from various constituents of shareholders.Section 9(3) of the Banking Companies Act, amended in 1994, provides for:
(a) not more than two whole-time directors, to be appointed by the Central Government after consultation with the RBI ,
(b) one director who is an official of the Central Government,
(c) one director who is an officer of the RBI, to be nominated by the Centre on the recommendations of the RBI,
(d) not more than two directors to be nominated by the Centre from SEBI, Nabard or public financial institutions specified from time to time under Section 4-A of the Companies Act and other institutions established or constituted by or under any Central Act or incorporated under the Companies Act and having not less than 51% paid-up share capital held or controlled by the Central Government,
(e) one director from among the workmen,
(f) one director from among the non-workmen,
(g) one director who is a chartered accountant with not less than 15 years' experience,
(h) not more than six directors to be nominated by the Centre, subject to Section 9(3). Clause (i), which says that where the capital issued by the bank is (1) not more than 20 per cent of the total paid-up capital, there need be not more than two directors, (2) more than 20 per cent but not more than 40 per cent of the total paid-up capital, not more than four directors, and (3) more than 40% of the total paid-up capital, not more than six directors to be elected by the shareholders, other than the Central Government from among themselves.
2. Buoyed by strong growth in fee income and improvement in net interest margin, UTI Bank has posted a 39.65% growth in net profit to Rs 211.89 crs for the fourth quarter ending March 31, 2007, against Rs 151.73 crs for the corresponding quarter of the previous year.The rise in net profit was mainly because it could increase the share of demand deposits by 40%, which helped it to maintain the cost of rising interest rates and pass on the burden of rising interest rates to the customers. This helped it to maintain its net interest margin.
3. In a bid to de-centralise operations further, the South Indian Bank opened its 12th regional office at Palakkad in Kerala. The need for the new regional office emerged from the phenomenal growth of the bank as well as the need to provide faster service to its increasing clients. With the support of the valued clients and cooperation of over 4,000 members of staff, the bank could achieve what was planned at the beginning of the last fiscal - Rs 20,000 crs in total business, 475 branches in 23 states and union territories, 175 ATMs and implementation of 100% core banking solutions in all its branches and offices.
4. Indian Overseas Bank has secured the RBI's approval for starting a financial services subsidiary. IOB would invest Rs 50 crs in IOB Financial Services Ltd, the company that will be set up to provide services such as stock broking, depository participant, wealth management, distribution of third-party financial products and, at a later stage, investment banking.
5. Corporation Bank is foraying into the sale of 20 gm gold coin (plain make) on the occasion of this Akshaya Tritya. The pricing of the coins is on a daily basis. At present, the bank is selling gold coins of 2 gm, 5 gm, 8 gm and 50 gm.The 2 gm and 5 gm coins are basically positioned as personal gift items to family and friends, and the 8 gm coins are sought to be marketed as milestone mark amongst corporates and also as a business achievement incentive.The 50 gm gold coins, along with newly launched 20 gm gold coins, are positioned as an investment option to HNIs (50 gm) and upper middle class (20 gm).
6. Oriental Bank of Commerce has signed an MoU with India Post to extend rural credit in Chandrapur and Warora districts in Maharashtra; and Mapusa, Vasco and Vadgaon districts in Goa.In the pilot project, the bank will provide short-term consumption credit worth Rs 20,000 per beneficiary. The loans will be collateral-free and not require a guarantee. The repayment period will be up to two years. Post-offices will identify prospective borrowers, assist in the filling up of loan application forms and forward them to the bank branch concerned for disbursement. The bank will pay a commission of Rs 600 per loan to India Post and also decide on the status of the loans.
7. Thiruvananthapuram district has recorded a credit-deposit (C-D) ratio of 76% at the end of the calendar year 2006, which is much high above the State average.
8. The Ministry of Finance has ruled out any immediate plans for a merger of four associate banks of the State Bank of India with the parent bank.There was no such proposal pending before the Government or SBI at present. Speculation of a possible merger of the banks has met with stiff resistance from the SBI staff.
9. To facilitate easy exchange of coins, the RBI is organising coin melas in Hyderabad. The exchange of coins facility will be available to the general public at Rythu Bazars in Yerragadda on April 17, in Alwal on April 18 and in Dilsukhnagar on April 19, between 11 a.m. and 3.30 p.m. The RBI is also making arrangements to distribute coins through select branches of commercial banks.
10. UTI Bank's board has not decided on a new chairman and managing director for the bank.The RBI had denied approval for the re-appointment of Dr P.J. Nayak, CMD, whose term ends on July 31.RBI has proposed a split in the office of Chairman and Managing Director in line with the recommendations of the Dr Ganguly Group Report on Corporate Governance. The RBI has sought a revised proposal from the bank on whether Mr Nayak should be reappointed either as Chairman or as Managing Director.
Mr Nayak has informed the RBI and the Remuneration and Nomination Committee of the board of the bank that it would not be possible for him to function in a "different and lesser capacity" and, therefore, cease to be associated with the bank after his current term with the bank expires.
11. Finance minister P Chidambaram will discuss with chiefs of state-owned banks how they propose to raise capital, given the fact that implementation of the new Basel II norms are round the corner and that credit continues to grow at faster pace. The meeting between the FM and bank chiefs is schedule on April 19 in New Delhi.
12. UTI Bank has decided to go in for a fresh equity issue in the current financial year. The bank is looking at raising around Rs 2,000 crs either through a domestic issue or global depository receipts in order to spruce up its tier-I capital base.
13. Issuing fresh guidelines to tackle the security threat, the RBI has permitted banks to break open a locker if it remains unoperated for over one year.In case the locker remains unoperated for more than one year, the bank would have the right to cancel the allotment of the locker and open it, even if the rent is paid regularly. Banks, however, will have to give notice to the customer asking the reason for the inoperation of the locker before opening it. The RBI has asked banks to insert a clause with this note in the locker agreement.
14. Bank of Baroda's (BoB) international business grew by 71% in the financial year 2006-07 while its total business grew by more than 30%.The bank had least exposure to capital market and real estate, sectors that would be affected by the recent interest rate hike. Interest rate hike on home loans is at the bottom of the bank's priorities. The bank had recently raised home loan rates by only 0.50% as compared to its PLR being raised by 0.75%.BoB's home loan grew at 41% last financial year.
15. Banks are considering setting up a domestic card payment settlement company, called India Pay, that would rival global payment systems Visa and MasterCard.At present, all card-based transactions are settled through the global payment network of Visa and MasterCard. The plan, taken up under the aegis of the IBA, comes amid estimates that payments through cards would increase three-fold over the next five years.In 2005-06, the total spends at point-of-sale (POS) terminals crossed Rs 55,000 crs. As many as 18 million credit cards and more than 60 million debit cards were issued in that year.Every transaction involves payment of an interchange charge to MasterCard or Visa for settlement, which amounted to about $50 million during the year. A domestic card payment settlement company would save the outgo on commission paid to Visa and MasterCard.
16. Nearly 4,000 clerical cadre and staff have sought early retirement from State Bank of India, under the exit scheme for reasons ranging from lack of future career prospects to difficulty in coping with intense work pressures.At present, the total staff strength of the bank is about 1,60,000 and about 4,000 employees have already put in applications for separation. The scheme closed in March 31, 2007 coinciding with the end of financial year 2006-07.The maximum response (approximately 700) to the scheme came from officers from the Maharashtra and Goa circles, which have the largest share in SBI’s business, and corporate office. The employee (clerical and other staff) strength in the circle and head office is about 15,000.

Tides of 17.04.2007

1. Know Your Customer is the mantra banks are chanting, but what of the ways of the banks? Does the average customer know the intricacies of banking operations? Banking has gone hi-tech, but that has not made bank operations transparent. Indeed, many of the creative practices are conveniently blamed on the nameless, voiceless computer.
2. The Government of Singapore holds 2.55% of Indian bank's shares. The Monetary Authority of Singapore (MAS), Singapore's central bank, holds another 1.4%. Together, they hold close to 4%stake in Indian Bank, or roughly 20% of the bank's floating stock.The Singaporeans are in good company, for the FII holding in the bank has been rising. On February 23, the day the public-issued shares were allotted, FII holding in the bank was 6.83%. As on April 13, FII holding stood at 11.68%, which is more than half the floating stock of the bank.
3. Public sector banks' move to raise bulk deposits at higher interest rates in March may come under Government scanner.A number of PSBs had gone in for such a strategy to tide over their fund crunch in the last quarter of the fiscal 2007-08.The Finance Minister, Mr P. Chidambaram, is likely to take up the `bulk deposits' matter during his meeting with Chief Executives of PSBs here on April 19.Indications are that the impact on profitability due to this move would be discussed. Bulk deposits had to a large extent helped the banking industry in accelerating its deposit growth during the fourth quarter of 2006-07.
4. SEBI has capped mutual funds' exposure to short-term bank deposits at 15% in order to ensure that the money they have collected are deployed in line with investment objectives.The regulator, which has referred to clause 8 of Schedule VII of SEBI (Mutual Funds) Regulations, 1996 (pertaining to investment in short-term deposits of scheduled commercial banks, pending deployment), has issued a set of guidelines for parking funds in such deposits."Short term" will be treated as a period not exceeding 91 days, SEBI has stated, adding that no fund can put more than 15 per cent of its net assets in deposits of all scheduled commercial banks put together.This, however, may be increased to 20%, provided the trustees give prior approval.
5. Banks with a pan-India branch network are leveraging their distribution strength and wrangling out hefty premiums from the second-rung insurance multinationals which are eager to break into the Indian market.Earlier, it was the Allahabad Bank-led non-life insurance venture, where Japanese insurer Sompo paid a premium Rs 22 per equity share of Rs 10 each for its 26% stake. E&Y had acted as consultant for the Allahabad Bank-led consortium. Allahabad Bank was followed by Bangalore-based Canara Bank, which is understood to have got an one-time payment of around Rs 120 crore from HSBC for its proposed life insurance joint venture.More recently, it was Bank of Baroda, which partnered UK Insurer Legal & General for life insurance. Although, the figures are not public, the market speculation has it that BoB has got around Rs 220 crore for partnering L&G.With other PSU banks setting the trend, it is now the turn of Bank of India and Union Bank of India to seek a premium. Dai Ichi Mutual Life Insurance of Japan is likely to pay a premium per equity share for its 26% stake in the proposed life insurance JV with Bank of India (BoI) and Union Bank of India.
6. A weak dollar may not be a good news for the central bank. For the RBI, which holds a bulk of its foreign currency assets in US dollars, a weak dollar or a strong rupee also poses an additional challenge in treasury management since the returns are not attractive in a depreciating currency.With the rupee making one of its fastest gains against the dollar, the returns on reserves could come under pressure, if the central bank continues with its current mix of currency reserves which is known to be very dollar-centric. A senior treasury official with a private sector bank said, “The trend in the currency markets indicates that the dollar is no longer a preferred currency, and it is right time to sell dollars and move to more stronger currencies.”
7. Dena Gujarat Gramin Bank (DGGB) has managed to bring down its present gross non performing assets (NPAs) by 1.40 % compared to previous year through an enhanced focus on debt recovery.

Tides of 16.04.2007

1. India's foreign exchange (forex) reserves have crossed $200 billion, from a near-zero position less than two decades ago. Though our current reserves are just about a sixth of what China holds.
2. TMB has revised upwards its prime lending rate from 12 %to 13 %pa with effect from April 9, resulting in a hike of 1% in all categories of advances uniformly across the board. The bank now offers home loans at 10%(for loans up to 60 month instalments) and car loans at 10.50% up to Rs 15 lakh. Two-wheeler loans are offered at 10.50%.
3. The growing economy, skyrocketing salaries and mushrooming professional courses have made Indian students a bankable lot. Banks report that around 80 per cent of education loans sanctioned for professional courses are within the country while the rest is for overseas education.SBI, one of the biggest players in education loans, has registered a 30% growth in its education loan portfolio in 2006-07 at Rs 3,220 crs, a jump of Rs 800 crs.
4. When the definitive history of money and banking in India is written, 2006-07 would easily rank among its most eventful years. For, the fiscal just ended has witnessed a credit and monetary expansion binge that is unprecedented in both absolute as well as relative magnitudes.During 2006-07, banks lent out an additional Rs 410,285 crs, which is an all-time record. Further, their outstanding fiscal-end credit as a proportion of deposits (C-D ratio) touched 74.13%, the highest since the 74.99% level of 1976-77. Significantly, the C-D ratio had, only in 1998-99, plunged to an all-time-low of 51.66%!
5. Just before every credit policy announcement, there is always some speculation about a possible increase in savings bank interest rates.Another policy is just a few days away and there is hope of slight relief in the offing for over 300 mn savings bank (SB) account holders in the country. Currently, they get 3.5% pa for their money. These rates are a vestige of the administered interest rate regime. It's stayed that way for a while now, even as every other form of money has earned more for lenders.Although the SB rates are at 3.5%, the actual yield is lower at about 2.8 %, given that banks pay interest on the lowest balance maintained by account holders between the 10th and last day of a month.
6. PNB plans to enter into more partnerships to offer online share trading facility to over 3.5 crore customers. It wants to enter into more such tie-ups and looking at atleast 5-6 more.The idea is to provide more choices to its customers. It does not want to restrict their choice to one or two online trading service providers.
7. In its bid to become a global face of Indian banking, Bank of Baroda plans to expand its international operations.It is opening 10 new overseas branches in the next three months at Johannesburg, UK, Ghana, Bahrain, Australia, Qatar, Tanzania, Botswana and Port of Spain.It will establish subsidiary firms in Ghana, Port of Spain and Botswana to undertake banking operations there, while it will have full-fledged branches or representative offices in Australia, Qatar and Johannesburg.
8. SBI has purchased a one-fifth equity ownership in start-up warehouse manager National Bulk Handling Corporation Ltd (NBHC), until now a wholly owned subsidiary of Financial Technologies which makes software that help brokers, traders and exchanges in online trading of equity, debt and commodities.

Tides of 15.04.2007

1. SBI Funds Management Pvt Ltd - investment managers for SBI Mutual Fund has tied-up with Citibank, to increase the reach of investors across the country. In the initial phase, the SBI MF - Citibank tie-up, shall offer an opportunity to invest in two of SBI Mutual Fund's equity funds, MSFU Contra Fund and Magnum Global Fund and its fixed maturity plans - liquid funds.
2. RBI has said that consistent with the Reserve Bank of India (Amendment Act), 2006, no interest will be payable on CRR balances of banks with effect from the fortnight beginning March 31, 2007.
3. The merger of Lord Krishna Bank with the Centurion Bank of Punjab is in doldrums, as the case pending with the Kerala High Court is likely to prolong further.Umesh Pai, a shareholder of LKB and the original petitioner, had challenged the resolutions and proceedings of the bank’s AGM before the High Court. Justice M N Krishnan has posted the case for further hearing on 25th May.Meanwhile, the scheme of amalgamation approved by the boards of both the banks and the AGM will expire by 30th April, 2007. The boards recently extended the scheme for a further period of 3 months effective from 1st May, 2007.Legal sources have opined that the extension would not be valid unless approved by a fresh AGM. But sources at the bank said that the last AGM had given prior approval to extend the scheme unless it were not to be in effect by the deadline.
4. The activists of the Republican Party of India have threatened to launch agitation against various branches of the ICICI Bank in western Maharashtra in protest against the bank’s policy to deny loans to politicians, journalists, advocates and police.The ICICI Bank’s policy to deny loans to the four constituents came to light when a loan proposal of one Sanjay Gaikwad of Satara was duly forwarded with the requirements and papers but was rejected by the concerned bank manager who clarified that the proposal is rejected on the ground that he being brother of the RPI’s Satara district chief Ashok Gaikwad belongs to the political class and according to the bank’s policy loans are not to be given to politicians along with the other three constituents.After the clarification, the RPI activists entered the Satara branch of the bank and smashed computers, glass windows and furniture on Saturday. While the bank's officials did not lodge complaint to the police, the latter took note of the incident and have lodged the case under the charges of unlawful assembly and smashing of the material.Satara police confirmed they have recorded the offence and have started further inquiry with statements of the banks’ officials in the branch which is attacked by the RPI activists.The RPI chief of the Satara unit Ashok Gaikwad has reiterated that the aggressive action was a reaction against the bank’s policy to deny loans to politicians, journalists, advocates and police who are vital organs of the democracy.
5. Plastic money is catching the fancy of the Indian consumers. Payments through credit and debit cards have increased by 24 % to Rs 44,819 crs up to February this year compared with Rs 36,133 crs in February 2006, according to data from the RBI. Customer payments through electronic channels have increased by 57 % to Rs 2,10,473 crs. Electronic fund transfer has increased by about 24%to Rs 68,832 crs. Customers are increasingly using plastic money to purchase air tickets, wine and dine and also for other leisure needs. Spends on fashion and lifestyle products comes next.
6. Banking transactions executed at a branch will cost a bank around Rs 40. In metros, this cost goes up to Rs 70 as the real estate cost is very high. While if the transaction is routed through an ATM, the cost comes down to Rs 18. Usage of a credit or debit card at a point of sale terminal brings down the cost further to Rs 1.Bank customers now pay their utility bills and other monthly obligations such as equated monthly installments on loans, life insurance premiums through electronic clearing system (ECS). ECS is an electronic channel for retail payments.
7. A mid-sized new private sector bank is hiring around 1,400 sales personnel on a temporary basis to expand its reach to 250 new cities and towns.Temporary staffing (temping in the staffing parlance) has become the catch-phrase among new private sector banks, foreign banks and general insurance companies as they seek to tap the expanding market outside the metros. It is estimated about one lakh temporary sales personnel would be hired by banks and general insurers by the end of 2007.
8. Banks will now have to insist on complete information about customers wishing to transfer funds both locally and overseas. In its latest notification on wire transfers, RBI has stated that this move would help prevent criminals and terrorists from having access to wire transfer services.RBI has mandated that all cross-border wire transfers must be accompanied by accurate and meaningful originator information. Also, information accompanying such transfers must contain the name and address of the originator and the corresponding account number. In the absence of an account, a unique reference number, as prevalent in the country concerned, must be included.
For domestic wire transfers, RBI requires all transfers of Rs 50,000 and above to be accompanied by complete originator information. However, if a bank has reason to believe that a customer is intentionally structuring wire transfers to below Rs 50,000 in order to avoid reporting or monitoring, the bank must insist on complete customer identification before effecting the transfer.However, settlements where both the originator and beneficiary are banks or financial institutions, they are exempted from these requirements.
9. The rush for depositing dividend cheques by investors in Mumbai, has led to a staggering of clearing operations of the RBI. The system has been reeling under the pressure of heavy cheque volumes since the onset of the new fiscal. This has been largely aggravated by the huge dividend issuances by companies, apart from a spate of public holidays. On an average, sources at RBI said that the month of March saw an average of 6,75,000 cheques being processed on a daily basis. Now, as against this, the month of April has already seen average daily volumes rising to nearly 12 lakh cheques.
10. Even as Banks try to keep interest in stocks alive and make money amid hardening interest rates, a new capital rule proposed by the regulator could force them to hit the equity market in a big way.A RBI draft note circulated among banks suggests that the banking sector may be required to raise at least Rs 25,000 crs from the stocks and bond markets to fulfil the proposed capital condition. It could also slow down the fierce loan growth since most banks will be left with lesser resources to finance companies.The key change indicated by RBI involves a significant increase in risk weightage on a big chunk of unrated loans in banks’ books. Current rules say for every Rs 100 a bank lends, it must have a capital of at least Rs 9, which means a risk weightage of 100%. As against this, the note has now proposed a weightage of 150%, which would mean a capital requirement of Rs 13.5 for every Rs 100 loan. This would apply to all unrated loans above Rs 10 crs.
11. Commercial banks have increased international liabilities to almost double the level of their international assets, according to the latest RBI figures.As of the end September 2006, while international assets amounted to $35,491 mn, international liabilities amounted to $72,945 mn. RBI attributed this mismatch to `deployment of the funds mobilised from abroad, in the domestic market in domestic currency. In rupee terms, international liabilities of banks increased by Rs 14,236 crs (4.4%) and Rs 46,127 crs (16%) at end-September 2006 over the position in the previous quarter and a year ago, respectively.

Tides of 14.04.2007

1. The High Powered Expert Committee (HPEC)headed by Mr Percy Mistry, a former World Bank economist, which included 15 top names in the financial sector released its report on making Mumbai an international financial centre. It got wide media coverage, though mixed. . As press reports suggested, Mr Chidambaram had high expectations from the report and spoke passionately in his Budget speech (2007-08) about Mumbai emerging a global financial centre.t is not the case that Mumbai does not have the potential to play a bigger role in international finance. The issue is over its current status and the ability of financial system to cope with the global market.Over time, Mumbai may truly be transformed into an IFC even as the economy touches higher levels and financial market deepens. It is equally important that the regulatory framework undergoes changes in tandem, both to facilitate this transformation and to shield it from the buffeting foreign winds.
2. Banks are continuing with the derisking of their investment portfolios despite the beginning of the lean season.Top bankers said that they have decided to continue with containing the average maturity of their respective investment portfolios of both government and non-government securities to about two years.The average maturity profile covers investments in both in held-to-maturity and in the marked-to-market categories. In the case of private sector banks, the average maturity profile is underone year.This move was largely in anticipation of further liquidity tightening in the weeks ahead.
3. The Finance Minister, Mr P. Chidambaram, has made good his budget speech promise to senior citizens. The National Housing Bank has come up with draft norms for reverse mortgage, an idea whose time the Finance Minister seems to think has come in India as well. Briefly, reverse mortgage enables a senior citizen sitting on a hot property to unlock its innate illiquid potential into a series of monthly or quarterly or even a lumpsum payment without any obligation to the lending financial institution during his lifetime. His/her inheritors would however have to pick up the tab, including the accrued interest lest the lending financial institution sells the property to settle the dues thus piled up by the senior citizen. Conceptually, reverse mortgage is a welfare measure reaching out to senior citizens who are either neglected by their wards or are too self-respecting to depend on them for financial support and sustenance.
4. LIC has registered a whopping growth of 118.6% in its first premium income in 2006-07 at Rs 39,541 crs against Rs 18,085 crs in the previous year. In the previous year-2005-06- the corporation had seen a growth of 48.6%. The corporation sold 3.82 crore new policies in the recently concluded fiscal against 3.15 crore policies in the previous year.
5. In keeping with the Budget proposals for developing an exchange-traded market for corporate bonds, the SEBI has permitted the BSE and the NSE to set up corporate bond trading platforms from July 1.The BSE and the NSE will make use of their existing infrastructure, with necessary modifications, for setting up these platforms.The platforms will be available from 10 a.m. to 5.30 p.m. on all trading days.To begin with, the trade matching platform will be order-driven, with essential features of the over-the-counter (OTC) market.
6. Increase in interest rates and the RBI's actions to reduce liquidity in the system will lead to a slowdown in credit growth.According to a ratings round-up by Crisil, banks will find it difficult to pass on the higher cost of funds as borrowers increasingly look at alternative sources, such as overseas borrowing and convertible bonds.Crisil believes the profitability of financial sector entities may be affected, going forward.
7. PNB haslaunched three new products and services including an innovative reverse mortgage scheme by the name `PNB Baghban' for senior citizens.The other two are
"Wealth Management Services' and a `Floating Rate Fixed Deposit Scheme.As part of the celebrations of its 113th Foundation Day, PNB has also opened 113 new outlets including 35 automated teller machines (ATM) and 18 new branches in various parts of the country.

Tides of 13.04.2007

1. The mutual fund industry has to focus more on retail clients to expand further, said Mr Mukul K. Gupta, Chief Executive Officer, Birla Sun Life Mutual Fund. Although the industry saw substantial growth over the past two years, most of the money came from the top 15 cities or so. With at least 10-15 asset management companies looking to set up shop in India over the next 12-15 months, the industry would see increased competition with the new players also concentrating on the existing centres; hence, there is a need for players to expand geographically especially in the retail space.

2. The Bombay Stock Exchange today said it has received expression of interest from 20 parties for picking up 41% stake in the exchange at a price of Rs 5,200 per share. The interested investors include domestic financial institutions, domestic corporate houses, high net worth individuals and foreign funds. SBI, the largest financial institution, is said to be one of the bidders. Earlier this year, BSE, which is the oldest exchange in the country, sold 10 per cent of its stake to the German exchange operator Deutsche Börse (5%) and Singapore Exchange Ltd (5%) for Rs 189 crs each at a price of Rs 5,200 per share.

3. Nabard will extend capital or equity support to micro-finance institutions through its Micro Finance Development and Equity Fund. It has sanctioned Rs 1 cr to three MFIs each. The new scheme will facilitate MFIs to leverage funds from commercial banks, donor agencies and others, and help provide a range of micro-financial services at affordable costs to the poor. The scheme aims at providing promotional, equity, capital and revolving fund assistance to banks, NGOs, SHG Promoting Institutions and MFIs.

4. The ubiquitous post office may, in the coming days, begin to offer home loan products, with the postal department looking to enter into distribution partnership with home loan major HDFC. They may also distribute non-life insurance and other annuity products of private insurance companies. The Postal department already has distribution partnerships with various organisations like Oriental Insurance, State Bank of India, among others.

5. Private life insurance companies are upset over the Pension Fund Regulatory and Development Authority (PFRDA) plan to go exclusively for public sector pension fund manager (PFM) to manage the new pension scheme (NPS). The process of selecting the three PFMs would soon get started and completed within eight weeks. Only public sector asset management companies would be allowed to participate in the bidding process. The three PFMs are expected to manage the contributions made to the NPS by the new recruits of the Central and State governments effective from April 1, 2004.

6. Union Bank of India has raised its benchmark prime-lending rate by 75 bps to 13.25% from 12.50 %, effective April 11. The bank had last raised its prime-lending rate in February 2007 to 12.50% from 12%.The hike in interest rates will impact advances with floating interest rates linked to BPLR but will not apply to the extant housing loans on a floating rate basis.

7. Bank of India has hiked its benchmark prime-lending rate by 75 bps to 13.25% (12.50%), effective April 13. "Certain categories of advances like agriculture and SME with limits up to Rs 10 lakh, existing home loans that are linked to BPLR, all educational loans existing and also the new ones will not be affected by this increase. It had last hiked its PLR in February by 50 bps.

8. An infrastructure project that requires bank finance can now delay production by a year from the scheduled date of completion. The loan will be treated as a substandard account if the delay is beyond a year. (Against 6 months earlier)Earlier infrastructure projects were given a six months extension. "If the date of commencement of commercial production extends beyond a period of one year after the date of completion of the project, as originally envisaged, the account should be treated as sub-standard. The revised instructions come into force with effect from March 31," said an RBI notification. Factors beyond the control of the promoters may lead to delays in project implementation and involve restructuring or re-schedulement of loans by banks.

9. With the government withdrawing the blanket pass-through taxation status of private equity(PE) funds based in the country, domestic funds appear to be rejigging their portfolios smartly. ICICI Venture made a partial exit from seven listed companies in its portfolio in on March 28, all through bulk deals with UBS Securities. The PE fund would have raised anywhere between Rs 150-200 crore through the partial exits. The new tax regulations governing the pass through status of PE funds came into effect from April 1.

Tides of 12.04.2007

1. The Securities and Exchange Board of India (SEBI) must be complimented for pioneering the idea of rating equity. Last year, SEBI ushered in an optional rating regime for IPOs. It has now removed the option, thus making the rating of IPOs mandatory.

2. Yes Bank has entered into a bancassurance partnership with Agriculture Insurance Company of India (AIC) for distribution of agriculture insurance products.

3. Public sector banks (PSBs) have begun pushing for a revision in the savings bank (SB) deposit rates in bid to curtail disintermediation of low-cost deposits. Banking sources said that this issue would be raised at the meeting between the Union Finance Minister, top honchos of PSBs and officials of the Reserve Bank of India (RBI) on April 19. Currently, only the savings bank deposit rate is administered by the RBI. This rate stands at 3.5%. Sources said the savings rate has remained low, despite the upward momentum in interest rates. In fact, some of the bankers said that the effective yield available to the savers was less than 3% on an annualised basis or less than half the annual inflation target of 5%.

4. Union Bank of India plans to ramp up its retail bullion business. The bank conducted a test run in October 2006 for gold coins and was a huge success. The bank plans to capitalise on the forthcoming festivals of Vishu and Akshaya Tritiya to formally roll out the business. It plans to market the coins through 100 select branches located in key residential and market areas.

5. ABN AMRO Bank has hiked the interest rate on fixed deposits to 10.25 % from 8 %, effective April 9. The revised rate will be applicable on deposits (minimum of Rs 10,000) with a tenor of 400 and 188 days. The bank has also increased the interest rate on 99-day deposits from 7.25% to 9.5%. The scheme is open to both existing and potential customers of the bank.

6. The All-India State Bank Officers' Federation is opposed to the proposal to merge the four subsidiaries in the SBI, "as it is a retrograde one which will lead to reduction in the number of branches and other undesirable effects."

7. Public sector banks are likely to take it easy this financial year. With the hardening of interest rates and the Reserve Bank of India’s clear indication to go slow on credit growth, banks may be forced to project lower targets for 2007-08. According to government sources, the finance ministry may accept modest projections. This is a major shift from the ministry’s stand in the last financial year when it did not allow banks to project lower targets in their statements of intent. Credit growth in 2006-07 was more than 30%, while deposits grew about 20%. But high inflation and the fear of the economy overheating have prompted the RBI to take stringent monetary measures that might impact growth too.

8. ICICI Bank, the largest lender to microfinance institutions (MFIs), is stepping up its direct term lending to meet the funding needs of MFIs until it resumes the flow of funds under the partnership model of micro lending.

9. Apnaloan.com, a online market portal for loan products, plans to add more services to its portfolio with a view to becoming a one-stop solution for potential loan seekers. The portal will soon venture into services like education loans, SME loans and risk-based products like health insurance and auto insurance.

10. Currently Apnaloan.com offers loan solutions, including personal loans, car loans, home loans and credit cards.

11. The Aga Khan Fund for Economic Development-promoted Development Credit Bank (DCB) is all set to go rural after achieving the priority sector lending target in 2007-08.. The Mumbai-based small private bank has been falling short of the requirement of having to lend 40 % of their total advances to priority sectors which include agriculture and home loans.

12. The growing Indo-China trade and a large retail market in the communist nation is enticing Indian banks to tap opportunities in the fastest growing economy. ICICI Bank, and Bank of Baroda are planning to scale up their operations in China. At present, ICICI Bank and Bank of Baroda have representative offices in China. ICICI Bank has a representative office in Shanghai since October 2003. ICICI Bank has applied to the RBI seeking its approval to upgrade its operations in China to a branch. Bank of Baroda expects to convert its representative office to a branch by July, subject to regulatory approvals. Public sector Bank of India has a branch presence in the special economic zone at Shenzhen in China.

13. The Kolkata-based Allahabad Bank’s credit portfolio jumped 41% in 2006-07, which also helped reduce its gross non-performing assets (NPAs).

Tides of 11.04 2007

1. The Indian Overseas Bank Officers' Association conducted a free medical camp in Delhi for the welfare of officers and their family members. The medical camp was organised on the occasion of the 40th year celebrations of the Association.

2. The proposal to collect 35% income tax from the co-operative banks will hit them hard and the Union Finance Minister should rethink it or at least reduce the burden on the banks, according to Mr P. Raghunadha Rao, Chairman of the Kanakamahalakshmi Co-operative Bank, here and the Vice-Chairman of the AP State Co-op Urban Banks' Federation Ltd.

3. Standard Chartered Bank (StanChart) will lead arrange India Infrastructure Finance Co’s (IIFCL) $500-mn external commercial borrowing (ECB) plan. The resources will be raised for a period of 10 years.

4. ICICI Bank has been fined HK$ 40,000 (Rs 2.2 lakh) by the Securities and Futures Commission (SFC), Hong Kong, for dealing in securities without a licence between June 15, 2004 and March 8, 2006. The bank has been allowed to maintain its banking licence in Hong Kong. The bank would also have to reimburse the investigation costs to the SFC.

5. Even as the RBI works on long-term plans to replace physical cheque clearing with electronic clearing its existing clearing capabilities are being put to severe tests by rising volumes. A surge in volumes is turning out to be too much for the clearing system to handle leading to delays. Since the beginning of the new financial year starting April 1, cheque volumes have nearly doubled. Now, do not be surprised if your banker takes an additional two-three days for clearing your cheques, given that he is faced with the issue of adjustment of volumes. On an average, sources at the RBI explained that the month of March saw an average of 6,75,000 cheques being processed on a daily basis. Now, as against this, the month of April has already seen average daily volumes rising to near 12 lakh cheques.

6. ICICI Bank and apparel discount chain Megamart joined hands to launch a co-branded credit card. The ICICI Bank Megamart co-branded credit card is a gold card with features like multiple reward points scheme that enable customers to earn six reward points for every Rs 200 spent at any Megamart outlets.

7. Standard Chartered Bank (StanChart) has picked up to 5% stakes in a few private sector banks, according to chief executive officer (India) Neeraj Swaroop. The CEO, however, did not disclose the details of such deals.

8. The Delhi High Court has asked the director of a private company to pay Rs five lakh towards payment of a loan to an advocate against whom she had issued three different cheques that bounced in January 2003.

9. It used to be that, for banks, only the colour of money was green. But no longer. Increasingly, banks are consciously lending to projects that are green (in the way they treat the environment), opening branches that are energy-efficient and environment-friendly and using recycled paper for printing cheque-books.

10. Pushing for consolidation in the banking industry, the finance ministry has asked the SBI to explore the possibility of merging its unlisted subsidiaries with itself, including State Bank of Hyderabad, State Bank Of Indore, State Bank of Patiala and State Bank of Saurashtra. This is because the government feels the process of merging an unlisted subsidiary would be easier. More so, since all the unlisted subsidiaries are wholly-owned by SBI, the process would be much faster even from the regulatory aspect.

11. The Reserve Bank’s efforts to squeeze out excess liquidity in the economy through hike in short-term interest rates is likely to impact quarterly earnings of banks and the rate, which is expected to remain slow in the first half of the current fiscal.

12. HDFC Bank was open to mergers and acquisitions, but it was not desperate as organic growth was fuelling its development healthily. It is open to acquisitions but given the healthy growth rate in the last few years, it is not desperate for acquisitions to fuel growth. The bank has been growing at between 25-30% pa over the past few years and since it was having a "good organic growth" it will go in for acquisitions only if there was real value in such a transaction. Any acquisition will have to ensure value to its business and its shareholders.

Tides of 10.04.2007

1. Hyundai Motor is expected to bring its instalment auto-financing unit Hyundai Capital Services Inc to India to service its expanding customer base. Hyundai's other financial arm is Hyundai Card, a credit card unit. In South Korea, Hyundai Capital Services owns over 60% of the market share of the domestic auto finance business.

2. Standard Chartered Bank, which is eyeing a stake in UTI Securities, will go ahead with its proposal to establish a presence in the securities broking space even if its plan does not work out. The bank, which is said to be in the race for UTI Securities along with several others, hopes to get its hands on the broking firm, which is at the moment controlled by Securities Trading Corporation of India (STCI). Citi, which also has a strong presence in the banking sector, is believed to be one of the players eyeing UTI Securities. STCI had last year taken over UTI Securities for Rs 265 crore from Specific Undertaking of Unit Trust of India.

3. Standard Chartered Bank has decided to launch private banking services in India as part of its plan to tap wealthy customers in a better manner. The banking group, which offers such services in some of its key markets, including Hong Kong, Singapore and Korea, feels private banking will help consolidate its presence in a country that currently contributes well over 12% of its overall revenues.

4. Standard Chartered Bank expects the final transfer of its asset management business to UBS to take place shortly. A remittance of about $120 mn, which will be reflected in this year's balance sheet, is expected to come in by way of the transfer.

5. Acer and ICICI Bank are now providing financing options for the purchase of IT solutions by the SMB (small and medium business), SME (small and medium enterprise) and education sectors. The Acer-ICICI financing option offers special loans, from Rs 30,000 onwards, for all office equipment at attractive interest rates. This tie-up facilitates easy buying and easy processing options, to help increase PC penetration in the SMB & SME sectors.

6. 2006 was a record breaking year for the auto industry. The industry posted its highest-ever sales of 1.3 mn vehicle units with a 24% year-on-year sales growth rate. Will the current fiscal see a repeat? No tax soaps were announced in the Budget 2007-08. No news for the auto industry was as good as bad or no good news as there were expectations from the Finance Ministry to push the current growth rate. Now comes higher interest rates with auto loans priced by banks at 15.5 % against 14.5%. Sales growth could drop to 12 % from 24%last year. Though corporates and high net worth individuals would not stall their purchases, it is the individual whose purchase decision may be deferred by a couple of months.

7. Oriental Bank of Commerce may raise up to Rs 500 crs capital during the first quarter of the current fiscal . This would be Tier-II capital. There is headroom for us to raise Tier-II capital. It will most likely tap the market with lower Tier-II bonds at an appropriate time. It has already obtained AAA rating from ICRA and CARE for the lower Tier-II bond offering, which is likely to be done on a private placement basis.

8. ABN Amro Bank is training NGOs to make the transition to micro-finance institutions (MFIs). It is focusing on micro-finance enterprise development in India. It is building the capacity of seven MFIs spread over Assam, Bihar and Uttar Pradesh. It hopes to build capacities of around 50 start-up MFIs over the next three years. Since 75% of the micro-finance activity is concentrated in four southern States, the bank is looking at the north and northeastern States to develop this programme.

9. HSBC is awaiting Government and RBI nod to expand its footprint in India through more branches and ATMs. It has 47 branches and about 160 ATMs in 26 cities and has applied for about 30 new branches and some 50 ATMs across the country, with a good chunk of them in the South India.

10. Centurion Bank of Punjab has hiked its prime lending rates by 50 bps to 15% pa, effective April 10. IOB has also hiked its PLR.

11. SIDBI has registered 80%growth in credit disbursement in Kerala in the last fiscal as it disbursed Rs 750 crs for the SME sector in the State against the Rs 479 crs in the previous fiscal.

Tides of 9.04.2007

1. All loans, including existing home loans, offered by SBI will be priced higher from Monday. This follows the 0.5% point increase in the benchmark Prime Lending Rate. The benchmark PLR (referred to as SBAR) has been revised upwards to 12.75% from 12.25% pa, effective April 9. Although the mark up in rates by SBI follows others such as ICICI Bank, HDFC and Bank of Baroda, the quantum of the increase has been lower than its peers, who have marked up their rates by 75 to 100 bps.

2. IDBI Bank Ltd has proposed setting up a private equity fund and a mutual fund as separate subsidiaries in a bid to become a complete financial powerhouse.

3. Centurion Bank of Punjab has launched a new service for high networth individuals. The service called `Centurion Elite' will offer wealth management, financial planning, free debit card with enhanced withdrawal limit of Rs one lakh per day and other privileged banking services. HNIs wanting to avail themselves of the service should have a minimum deposit of Rs 10 lakh but they can start by opening a savings account for a minimum of Rs one lakh.

4. India's foreign exchange reserves have vaulted by around $45 bn during the just ended fiscal 2006-07 to $199.179 bn, nearly kissing the $200-bn mark. The reserves stood at $154.209 bn at the beginning of the last fiscal. The forex kitty has seen a surge of $1.433 bn to $199.179 bn in the week ended March 30. During the previous week, the reserves expanded by $1.789 bn. Forex reserves have seen an accretion of around $4.7 bn in three consecutive weeks.

5. Vijaya Bank proposes to enter into insurance business directly after it finalises its exit from the three-way life insurance joint venture that it had entered into along with Principal Financial Group of the US and PNB.

6. PNB plans to cut exposure to personal loans, including home finance, to bridge the gap between higher credit offtake and lower deposits. The bank is concerned over widening gap between resource mobilisation and credit expansion.

7. Bank of India said it will promote folk artistes in the country. It has planned to set up an art trust to provide patronage to the folk artistes and would work in cooperation with National Institute of Fashion Design and SIDBI for upgradation of their skills.

8. Armed miscreants looted Rs 1.75 lakh from PNB in naxalite-affected Imamganj bloc in Gaya district of Bihar. Five unidentified criminals raided the Raniganj branch of the PNB and decamped with Rs 1.75 lakh at gun point.

9. RBI was in the process of identifying illiquid government bonds for buyback and issuing liquid gilts. The aim behind this buyback was to make the gilt yield curve more liquid.

10. Dena Bank is aiming at further reduction in its gross non-performing assets (NPA) during the financial year 2007-08. The gross NPAs and net NPAs stood at Rs 857 crs and Rs 414 crs respectively. It has set a target to bring down our gross NPAs from the existing 4% to 2% this year.

11. Mid-corporates, small and medium enterprises (SMEs) and agriculture are driving SBI’s credit growth even as retail loans are losing steam. SBI ’s year-on-year credit growth has slowed to around 25% at the end of March 2007 from 29 % a year earlier. The slowdown in retail loans is sharper. The largest bank’s growth in retail loans has slowed to nearly 20% from 27% a year earlier.

12. Union Bank of India has scaled down its credit growth in 2006-07 to 16.5% as against 25% projected at the beginning of the year.

13. As many as 18 public sector banks have defaulted in filing their monthly statements of Banking Cash Transaction Tax (BCTT) collections till January, 2006-07. Under the BCTT scheme, banks are required to furnish branch-wise details of BCTT collected every month to Income Tax department.

14. International brokerage house Citigroup, Australia’s Macquarie Bank, Standard Chartered, France’s Societe Generale and Kuwait-based Global Investment House are in the race to acquire 49 per cent stake in UTI Securities, currently owned by Securities Trading Corporation of India (STCI). STCI, which bought 100% stake in UTI Securities for Rs 265 crs last year from Specified Undertaking of UTI (SUUTI), is looking to sell 49% stake to a strategic partner. As per the deal, STCI has a minimum lock-in of 51% stake in UTI Securities for three years, which ends in 2008.

Tides of 6.04.2007

1. Bank branches are no longer muggy halls with dull colours, long queues and grunting fans. It is all about air-conditioned halls, channel music, bright colours and swanky lounge areas. A customer of a new private sector bank said, "I don't want to be caught in a queue; in this branch I can sit in the meeting room and discuss the financial details with my bank manager. I can sip coffee and surf the Internet on my laptop at my bank branch. It feels good to be treated in that manner at my bank branch, after a tiring day at work." These branches are specially targeted at high-net worth individuals and mass affluent customers.It is basically a move to give the customers a comfort zone. It helps in retaining the customers. SBI has over 150 such branches across the nation and is in the process of upgrading some other branches as well. The UTI Bank branch at Andheri (Mumbai) has a business lounge, Internet access zone and a meeting room. The branch has special investment advisors and relationship managers to advise customers on financial matters.

2. State Bank of Hyderabad will be Basel-II norms compliant by September 2007. The bank, which completed 65 years today, is optimistic of achieving a business turnover of Rs 1 lakh crore by March 2008. The first branch of SBH was started at Gunfoundry, Hyderabad on April 5, 1942. It has a network of 965 branches and 400 ATMs. It has brought all its branches under core banking solution and is offering value-added services such as any branch banking and Internet banking.

3. Banks' term deposits swelled in the last three months, but bankers aren’t happy because the increase has come at the cost of low-cost current and savings account (CASA) balances. A large part of the accretion to fixed deposits till March 16, 2007 was on account of a flight of funds from the low-cost CASA.

4. Industrial and Commercial Bank of China (ICBC), which listed in October after the world’s largest initial public offering to raise $19.07 bn, sees India as a key potential market. Zhan Xiangyang, director general of the world’s third largest bank, with a market capitalisation of $183.85 bn.

5. Aggressive marketing of online services and a sharp growth in internet connections have seen the internet gaining popularity as a banking channel. But, while banks are extremely bullish about the development of this channel, they are discovering the challenge of protecting gullible customers from online fraudsters. The onus of fighting phishing is as much on the customer, or the prospective victim, as it is on the bank. However, banks are concerned that the negative publicity from phishing attacks could harm the development of this channel. Figures released by anti-phishing service provider RSA Consumer Solutions suggest that phishing attacks have grown by 41% internationally in the past 12 months.

6. The 280-year old British banking giant Royal Bank of Scotland is learnt to be considering applying for a banking licence in India.

7. India's largest commercial bank, SBI, hinted at a hike in its interest rates next week following the RBI move to raise the cash reserve ratio (CRR) and a key rate last Friday.

8. Faced with a chorus of protests from the corporate sector, the Finance Minister, P. Chidambaram, has called for a meeting of bankers and top officials of the RBI for a review of the recent monetary tightening measures. Top bankers said this was one of the rare occasions when the Finance Minister has called for a meeting with bankers on the eve of the lean season credit policy scheduled for April 24. Bankers said that none of them was expecting any rollback in the RBI monetary tightening measures. A top banker said, "At best, we may see the interest on CRR balances being restored."

9. Banks will soon get tied up explaining to customers why their loan request has been turned down, or so it appears. RBI has directed banks to reveal to the customer the reason for rejecting his loan request, irrespective of the amount and category. The amended code will be effective from April 30, 2007. The apex bank has taken these steps to make the lending operations of banks and financial institutions more transparent. It has asked banks to take steps for making customers aware of this regulation. Banks would be placing the notice on their websites and also sending circulars to their existing customers.

10. Union Bank of has upgraded and automated its 'Swift' messaging system to make international money transfers faster and less expensive at a number of its branches across the country. Using Turbo Swift system, the bank has converted its international transfers to an automated platform, replacing a previous system that required payment messages travelling over the Swift Network to be sent manually.
By switching to an automated system like TurboSwift, the bank will be able to support many of those services at a fraction of the previous time and cost. Installation of the system was completed in 12 days by Synergy Login Systems, BankServ's distribution and support partner in India.

“Read, every day, something no one else is reading. Think, every day, something no one else is thinking. Do, every day, something no one else would be silly enough to do. It is bad for the mind to be always part of unanimity."

Tides of 5.04.2007

1. LIC Housing Finance has hiked its lending rates by 1.25% for floating and fixed rate loans. The floating rate has inched up to 11.25% onwards from the earlier 10 % and the fixed rate has increased to 11.75% onwards from 10.5%.

2. ICICI Prudential Life Insurance Company has infused Rs 245 crs and taken its capital base to a total of Rs 2,060 crs, the highest among the domestic life insurers. This was the fourth equity hike in the last financial year. The two promoters, ICICI Bank and Prudential plc, contributed to the capital in their existing proportions of 74:26, respectively.

3. Tirupur knitwear exporters said the surge in bank lending rates, following last week's RBI hikes on repo rates and cash reserve ratio (CRR), will adversely impact exports, especially garment shipments. The increased rate on borrowing would render exports uncompetitive as in most cases the garment exporters negotiate their export prices-based on the then prevailing production cost.

4. PNB has received an in-principle approval from the UK's financial sector regulator to operationalise its subsidiary in London. The bank would now be required to infuse an initial capital of £25 mn pounds (about Rs 225 crs) in the subsidiary, after which a formal licence would be given to start the subsidiary and open a branch there (most likely in Southall). The Financial Services Authority (FSA), which is the regulator of the UK financial sector, had set three conditions to get the subsidiary running: capital infusion, providing an internal auditor and appointment of an Executive Director.

5. Vijaya Bank has reported total business of Rs 62,232 crs for FY07, a 39% increase over FY06. The growth was well above the targeted Rs 55,000 crs for last financial year. Deposits showed 35% growth and advances grew 46% in FY07 over FY06. FY07 saw advances of Rs 24,852 crs and deposits of Rs 36,000 crs. About 31% of its deposits came from current and savings accounts during the period. In FY07, the bank made cash recoveries of Rs 288 crs, which is expected to contribute to its bottom line.

6. In an effort to check the misuse of export credit by small exporters who benefit from the interest rate arbitrage between low-interest currencies and the Indian rupee, the RBI has asked banks to ensure that the Foreign Exchange Management Act (FEMA) regulations are not violated during such transactions. An RBI directive has asked banks to be careful in giving guarantees against export advances and has told them to verify the exporter’s record to assess his ability to execute such orders. Many exporters with low export turnover were receiving large amounts as export advances in currencies with lower interest rates against domestic bank guarantees. The exporters were depositing such advances with banks in Indian rupee to take advantage of the interest rate arbitrage. Further, the guarantees were being issued even before the advances were received, with a condition that they would be operational only after getting the funds, the RBI said. The guarantees are issued at par value, against the discounted values of the export advances.

7. With an aim to improve the performance of its employees, Jammu and Kashmir Bank has announced a new package of incentives and promotion opportunities. The the employee-oriented issues must include recruitment, development and learning, work environment and communication, rewards and recognition, health, balancing work and personal life and financial security. The new package, 'Nai Subah', is aimed at initiating the much desired cultural change in the bank to make it an employer of choice. The incentives include skill advancement programmes, pay enhancement, mass promotions, an improved transfer policy, increase in variable and revamped performance management system, regularisation of all ad hoc employees, a new generation organisational set up and designations and foreign tours. Under the skill development programme, the bank would lay stress on behavioural and technical training and train its employees in new skills to keep with the industry, fine tune their job skills and learn to work independently.

8. The ICICI Bank will be locating the back office operations of the Southern region of the country in Hyderabad Financial District. The bank is constructing a 28-storied centre in the district at an investment of Rs 1,500 crs. The bank's Hyderabad facility, coming up in 8 acres, will accommodate 25,000 employees and is expected to provide indirect employment to nearly one lakh people.

9. BoB, the fifth largest bank in India, is realigning its operations into four business lines, retail, rural and agriculture, small and medium enterprises and corporate banking -in sync with market needs. The realignment envisages shifting of all mid-corporate and large corporate accounts from the banks’ retail branches to its wholesale banking branches. The decision to consolidate corporate accounts in about 10-15 branches has been influenced by experiences the bank had at branches with predominantly retail customers and only a few corporate accounts.

10. Central Bank of India, has finalised five merchant bankers for its initial public offer. The IPO, expected by end-May 2007, is expected to raise around Rs 1,000 crs equity capital. The bank has received all regulatory clearances for converting about 71% of its large equity base into preference shares. The proposal for conversion of shares, which was stuck at the RBI, was recently cleared by the government. The RBI was averse to allowing banks to convert 70% of their equity into preference shares. Earlier, the RBI had sought to put 40% cap on conversion of equity into preference shares. Central Bank officials said of the Rs 1,124.14 crs equity capital, Rs 800 crs would be converted into preference shares. The conversion will lower the bank’s paid-up equity capital to Rs 324.14crs, which will help the bank price its IPO better as its earnings per share improve. The bank has appointed IDBI Capital markets, Kotak Securities, ICICI Securities, Citigroup and Enam Financials as the lead book-runners.

11. The ICICI Bank will be establishing 14 finance chairs in 14 business schools across the country. Under this initiative, the Bank will sponsor the salaries of chair professor and an assistant professor at the B-school. The initiative might cost ICICI Bank over Rs 13 lakh considering the salary of a professor in these institutes is around Rs 50,000 and that of an assistant professor is over 35000. The chairs will be established to take up research activities in the field of finance. Few of the institutes where ICICI Bank would be establishing the finance chairs include SP Jain Institute of Management Research, Mumbai, Narsee Monjee Institute of Management Studies, Mumbai, Welingkar Institute of Management Studies, Mumbai, T A Pai Management Institute, Manipal and Sydenham College of Commerce and Economics. ICICI Bank is also said to be in talks with IIM Ahmedabad to provide them with support in finance content and curriculum development.

12. Crisil is organising a two-day executive training programme, `Real estate financing, the golden goose or Damocles' sword?" on April 20-21 at Hotel The Leela Palace, Bangalore. The workshop is designed for lenders / investors in real estate sector, real estate developers as also professionals from the legal / compliance department of banks.

13. The UTI Bank board will meet on April 17 to decide on P J Nayak's offer to step down as CMD after July 31 since RBI has turned down the bank's proposal to grant him a further two-year extension without splitting the CMD's post. UTI Bank has informed the Bombay Stock Exchange that it will make public its future course of action after the board meeting. On February 20, the bank's board had reappointed Nayak for a further two-year term starting August 1.

14. If there is one indicator that stock market analysts watch closely, it is advance taxes. That is because this number indicates what kind of financial results a company is likely to post. And these numbers have it that SBI has pipped LIC to emerge as the highest corporate taxpayer in the country. For 2006-07, SBI paid Rs 2,670 crs as advance tax a 71% growth over the previous year. LIC, on the other hand, paid Rs 2,000 crs in corporate taxes, up 11% over last year.