Tides of 25.05.2008

1. Stung by protests from farmers, politicians and even a section of its own employees, State Bank of India on Wednesday hurriedly withdrew its controversial decision to suspend financing of farm equipment, primarily tractor loans. “We regret that our circular dated May 16, 2008, concerning tractor loans has been misunderstood and has given rise to concern. The circular is withdrawn with immediate effect,” SBI Chairman OP Bhatt said in a statement.SBI, the largest bank in the country, had issued a circular to its branches asking them to stop disbursals for new tractor loans, citing a spike in bad loans in this segment. The decision sparked criticism and protest from political parties, farmers' groups and industries, especially tranctor manufacturers, that could be hit by any slowdown in lending to farm sector. Anup Banerjee, a deputy managing director at SBI, said the circular has created some misunderstanding among the people.

2. Debit cards, instant like cash but seen as safer than credit cards, are turning into an aggressive mode of payment for e-commerce transactions. As many as 7,000 online transactions are being done on an average every day through debit cards, echoing a global trend.

3. Following the announcement of the Agricultural Debt Waiver and Debt Relief Scheme by the Union Government today, banks have started collecting details about the loans disbursed and the eligible borrowers. As per the scheme, banks have to display the list of the eligible borrowers in their branches by June 30 and issue eligibility certificates as soon as possible. This will make it possible for farmers to borrow fresh loans for the next season, starting July.Banks will also have to post one or more grievance redressal officers in their branches.

4. Punjab National Bank on Friday said that it does not envisage any problems in the implementation of the farm debt waiver and debt relief scheme announced by the Government.
“The guidelines issued on Friday have removed all doubts and are sufficiently clear. Imlementation of the scheme by June 30 should not be a problem,” said Dr K.C. Chakrabarty, Chairman and Managing Director of the bank, told Business Line.

5. The country’s foreign exchange reserves increased by $1.381 billion to touch $314.081 billion for the week ended May 16, 2008, according to the RBI’s Weekly Statistical Supplement.
This is the second week in a row that forex reserves have increased. In the previous week, the reserves had increased by $200 million to $312.7 billion.During the week under review, foreign currency assets increased by $1.342 billion to $304.118 billion, primarily due to a currency revaluation effect. The dollar was steady to weak, against the euro, during that week.

6. Concentrating on its core business without compromising on margins helped City Union Bank (CUB) post a 42 per cent increase in profits at Rs 102 crore for the fiscal ended March 31, Mr S. Balasubramanian, Chairman, said today. He said the bank had given a consistent performance on all parameters and its fee-based income had also grown to Rs 62 crs from Rs 38 crs in 2006-07.

7. The net profit of Federal Bank has registered an increase of 25.73 per cent touching Rs 368.05 crore as on March 31, as against Rs 292.73 crore achieved in the previous year.

8. LIC is eyeing at more than doubling its income from rented building property in the eastern zone to an estimated Rs 50 crore in the next two years. The rental income from LIC’s buildings has increased almost four-fold over the last five years and next year itself the earnings may reach the Rs 30-crore mark, he said. The Corporation had earned Rs 22 crore this financial year from its properties.LIC has almost 187 property documents in the eastern Zone comprising West Bengal and the states of North East, each property document consisting on an average of four-five buildings. In Kolkata alone, there are 81 buildings under LIC’s ownership including five heritage buildings.

9. Doha Bank is gearing up for a big splash in India—it intends to pick up stakes in Indian banks, strengthen its recently-acquired stock and commodity broking company, set up a non-banking finance company, an asset management company and get into non-life insurance business.
“We have a cash surplus of $800 million,” says Mr Raghavan Seetharaman, Group CEO, Doha Bank, adding “we are looking at acquisitions globally.”

10. Canara Bank has received the ‘best bank’ award from Kerala’s Kudumbasree Mission for 2007-08.The award is in recognition of the bank’s performance in areas of poverty eradication and housing development for the poorer sections of the society in the State, according to a release from the bank.The bank has been ranked first for the ‘Bhavanasree’ micro-housing scheme of Kudumbasree and the Poverty Eradication Mission of the State Government. The bank disbursed loans worth Rs 508 lakh under the category to the members of the Kudumbasree’s community-based organisations.

Tides of 18.05.2008

1. Punjab National Bank registered posted over two-fold jump in net profit to Rs 544 crore for the fourth quarter ended March 31 on the back of better recovery and improved margin. The bank had a net profit of Rs 238 crore in the fourth quarter of 2006-07. The total income of the bank rose to Rs 4,417 crore for the fiscal ended March 31, up by 19 per cent, from Rs 3,713 crore in the year-ago period.Besides, improvement in net interest margin, the sharp rise in the profit is also due to the fact bank has changed the accounting policy and have written back provisions in excess of Rs 500 crore on account of pension liability, which was provided in the first three quarters. However, to replenish the pension liability, the bank has made provisions from reserve under the new accounting policy. And in turn also revalued some of the fixed assets such as building of the bank.

2. Minister of state for communications and information technology Jyotiraditya Scindia has urged Finance Minister P Chidambaram to raise interest rates on post-office savings schemes to make them more attractive investment instruments.“Unless interest rates of small savings schemes are revised upwards, there may not be any change in the present situation due to which post office small savings schemes will keep losing their attractiveness rapidly,” Scindia said in a letter written to Chidambaram last week.A study carried out by Associated Chambers of Commerce and Industry (Assocham) has showed that total receipts under the small saving schemes during the financial year 2006-07 were worth Rs. 1,37,560 crore against Rs. 1,73,283 crore in the previous year. This was much lower than total saving bank deposits with commercial banks that stood at Rs. 6,55,274 crore at the end of 2006-07.“The main cause of concern is present interest rates due to which investors of these schemes are facing financial loss,” Scindia said.

3. The Export-Import Bank of the US (US Exim Bank) has set a target of granting $6 billion (over Rs 25,000 crore) through letters of credit (LoC) to Indian carriers for acquiring aircraft from US producers. The US Exim Bank provides credit assistance to projects against imports from the US. The loan values are tied directly to purchase of US goods and services.The bank is also offering pre-approved LoCs of $2.2 billion (over Rs 9,200 crore) to eight Indian financial institutions for onward lending against imports from the US. “Our commitments to aircraft purchases from India will rise in the future. We are planning to offer LoCs of $6 billion to airlines in India for buying aircraft from the US,” US Exim Bank Chairman and President James H Lambright said here today.

4. Citigroup Inc on Friday said it intends to shed $400 billion of assets over the next two to three years, in a drive to become more efficient. In slides posted on the largest U.S. bank's web site, Citigroup said it has about $500 billion of "legacy assets." It said it expects to reduce this amount to less than $100 billion within two to three years.Citigroup also said it is targeting annual net revenue growth of 10 percent from core operations. It said this includes increases of 7 percent from card operations, 8 percent from consumer banking, 9 percent from both securities and banking and from wealth management, and 14 percent from transaction services.

5. The financial crisis in the US is taking a toll on India’s infrastructure funding. The much-hyped India Infrastructure Initiative, which was announced by the government in February last year, has hit a roadblock with US-based private equity company Blackstone, a key sponsor of the programme, backing out. The Central government’s plan involved creating a $5-billion corpus for infrastructure funding through a collaboration between Citigroup and Blackstone from the US and Infrastructure Development Finance Company Ltd (IDFC) and India Infrastructure Finance Company Ltd (IIFCL) from New Delhi.About $3 billion of this was to be channelled as debt assistance to infrastructure projects, while rest would take the equity route.

6. The country’s foreign exchange reserves rose by $200 million to $312.7 billion for the week ended May 9, according to the RBI’s Weekly Statistical Supplement.In the previous week, the reserves had fallen by $371 million to $312.5 billion.During the week under review, foreign currency assets increased by $200 million to $302.776 billion, primarily due to a currency revaluation effect.Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies (such as euro, sterling, yen) held in reserves. The euro and the yen were weak against the dollar, during the week in question.Gold and SDRs remained unchanged at $9.427 billion and $18 million, respectively. The country’s reserve position in the IMF stood at $479 million.

7. Banks started charging a service fee of Rs 100 for every forex transaction of $10,000 and above and Rs 50 on transactions of less than $10,000 from May 16, following the notification by the government to levy service tax. Banks will now have to levy a service tax on this fee. A forex dealer with a public sector bank said that this was decided at a meeting organised by the Indian Banks’ Association, on Thursday.As per the government notification the service tax was to be levied on the gross value of the transaction, as there was no service charge. But this would have worked out to be very costly for banks, as the margins on the foreign currency transactions are not very high. So, banks have decided to charge a service fee and levy tax on that fee.
Typically, all inter-bank transactions are above $10,000. Only in case of customer transactions the amount may be lower, the bank official said.

8. A circular from ICICI Bank to its customers, informing the need to maintain a minimum quarterly average balance of Rs 10,000 in the savings account, effective from July 1, is felt to be discriminatory by the small retail investors in the city. The circular issued on April 7 informed the customers of the increase effected in the minimum quarterly average balance in the savings account from Rs 5,000 to Rs 10,000 and the need to maintain the same from July 1 onwards. Retail i nvestors registered with ICICI Direct.Com, who earlier were allowed to open 3-in-1 account for trading, banking and demat purposes, requiring a minimum balance of Rs 5,000 in their savings account, say the account, for them, has been mainly for trading and the proposed move is discriminatory.

9. Lakshmi Vilas Bank's `Technology Centre' was inaugurated in Chennai this morning by the Reserve Bank of India Regional Director, Mr F.R. Joseph. The centre is expected to be the nerve centre for the entire IT operations of the bank. It has online monitoring features for its network, applications and various production servers. Mr Joseph also launched the IP phone facility. The LVB Managing Director, Mr V.S. Reddy, said more technology- driven products would be unveiled soon.

10. Citigroup has no plans of exiting its consumer finance business in India even though there are bad debts, Mr Sanjay Nayar, CEO of Citi India, said.“We have a large portfolio in Citi Financial which offers finance to low and middle-income consumers. We are not exiting the business but there will be some repositioning, re-segmentation of some consumer base,” said Mr Nayar.

`Tides of 2.05.2008

1. Reserve Bank on Tuesday asked banks to review lending to traders of agri commodities and advances against warehouse receipts to ascertain finances are not being used for hoarding which can fan inflation."Right now we do not have any evidence. We have asked the banks to review their lending (to traders) so that we know that they are not taking undue advantage of bank finances," RBI Governor YV Reddy said at his customary post Annual Monetary Policy news conference.Through the review, the apex bank seeks to compare if there has been any significant rise in lending in these categories compared to that in previous years.
2. Bankers on Tuesday dubbed as "sensible" the marginal increase in statutory deposits - CRR - announced by RBI, saying the system had good liquidity but most of them would wait to decide on hiking lending rates."It is not my sense that interest rates should rise," market leader SBI said, while the largest private bank ICICI said it would "wait and watch" - a view shared by most of the bankers."Ultimately interest rates are subject to demand and supply. Liquidity is good... I would wait and watch," said KV Kamath, CEO and MD of ICICI Bank.HSBC India CEO Naina Lal Kidwai felt that "some banks might pass it on to the customers. HSBC would decide on its interest rates in about two-weeks."Bankers were unanimous that RBI's policy was aimed at balancing growth and containing inflation and would not hurt the industry much.

3. Unfazed by the downturn in recent IIP numbers, Mr K.V. Kamath, Chairman and Managing Director, ICICI Bank, who took over the CII President’s chair on Thursday, brushed off apprehensions of an impending slowdown in the manufacturing sector. Instead, for him, a definitive source of the situation on the ground were the quarterly results that companies put out and, what he terms, the “customer mood meter”. “I have never gone wrong with the mood meter in my last 12 years. When you meet ten customers and gather their mood, it tells you where we are going. I knew when Indian industry was coming under pressure in the 90s and when they were in dire situation in 2000 and 2001.

4. The fourth quarter of the last fiscal was a relatively lacklustre one for public sector banks.
For the 14 banks that have released their numbers, there has been an 11 per cent growth in profits. The picture might have been much worse but for the much higher profits posted by a few banks such as Bank of India and Corporation Bank. Lack of pricing power or the inability to pass on higher costs was visible.

5. Indian Bank, a public sector bank, plans to shed high-cost deposits of about Rs 2,000 crore during the first quarter of the current fiscal, its Chairman and Managing Director, Mr M.S. Sundara Rajan, has said. “Our endeavour would be to ensure that we don’t have any exposure to high-cost deposits in the coming days. We will come out of it this year. Repaying high-cost deposits will help protect my net interest margin.

6. A hike in CRR by 25 bps to 8.25 per cent in addition to the 50 bps hike announced a fortnight ago reiterates RBI’s continued focus on balancing inflation expectations through active liquidity management, says Mr Rana Kapoor, Managing Director & CEO, YES Bank. This is aimed to use liquidity management mechanism to anchor inflation expectations, while maintaining the growth momentum undisturbed by holding interest rates steady. Hardening inflation and moderating growth amidst global uncertainties spelt a tightrope walk for the RBI. It has once again managed to achieve a fine balance between inflation and growth objectives, he said. “The decision to wait for the impact of supply related initiatives by the Government and measures relating to the cash reserve ratio to pan out is prudent ,” he said.

Tides of 28.04.2008

1. ICICI Bank, India’s second largest bank, reported profits for the fourth quarter and for the financial year 2007. Net profits for the quarter ended March 31 was up by 39 per cent to Rs 1,150 crore and for the full year it was up 34 per cent at Rs 4,158 crore. The bank has also hiked the dividend payout to shareholders to 110 per cent (Rs 11 per equity share) from 100 per cent paid last year. However, growth in advances and deposits have not kept pace with the kind of increase shown in previous years.

2. HDFC Bank has posted about 37 per cent rise in net profit at Rs 471 crore for the quarter ended March 2008, which is in line with the market expectation. The bank announced an enhanced dividend of 85 per cent for 2007-08, against 70 per cent for the previous fiscal. “The results are in line with the market expectations in the key areas like revenue, profitability and margin. Though the market was expecting the bank to maintain net interest margin (NIM) at 4.3 per cent like it did in October-December 2007 quarter, it has actually improved the performance,” said Bhavesh Shah, Vice-President:Research of Asit C Mehta.

3. Oriental Bank of Commerce has reported a net loss of Rs 99.4 crore in the fourth quarter ending March 2008 as against a net profit of Rs 54.9 crore in the corresponding period of the previous year, largely on account of higher provisioning on account of merger of erstwhile Global Trust Bank. The bank was supposed to write off Rs 1225 crore of losses on account of merger of since 2005. It had already written off Rs 738 crroe till March 2007 and in 2007-08 it had written off balance Rs 487.72 crore, of which Rs 241.7 crore was slated for 2008-09. And large part of this – Rs 304 crore – was written off in fourth quarter, resulting into a net loss of Rs 99.4 crore.

4. The State Bank of India, India’s largest public sector bank, is likely to make a provision of Rs 40 crore in the quarter ending March 31, 2008, for potential losses in derivatives trading. The bank is expected to announce its fourth-quarter results on May 2. The bank's clients were likely to face Rs 700 crore losses in currency derivative trading for the year ended March 31, 2008, OP Bhatt, chairman SBI, told reporters in Mumbai on Wednesday. Indian companies took to buying forex derivative instruments to hedge against foreign currency exposure when the rupee started appreciating last year.

5. Polaris Software Labs plans to focus on tier–II banks this fiscal to improve margins. “The tier-I story is established. We would now like to look at tier-II,” said Mr Arun Jain, Chief Executive Officer of the company, in a conference call with analysts. There are 1,000 tier–II banks in the world and the company plans to look at this pool for new clients, he explained.“These banks are more secure than large banks when it comes to issues like sub-prime crisis,” he said. Working for them would mean Polaris would avoid being hit by the sub-prime crisis and associated risks. Currently, 10 of the top 20 large banks in the world, each with IT assets worth $5-10 billion, use Polaris’ Intellect banking suite of products. The company expects the product, which contributed 19.6 per cent to revenues for 2007-08, to make leeway into the tier-II segment this fiscal. “More and more product implementation will hold up our margins,” Mr Jain said.

6. Having hitherto concentrated on traditional industrial growth segments, State Bank of Mysore is now eyeing other potential growth areas for better reach.Its Managing Director, Mr P.P. Pattanayak, admitted that the bank neither had a strong presence here nor was its growth rate high. “We were all along concentrating on industrial hubs such as Erode, Tirupur, Avinashi and Salem. We now see this region (Coimbatore) growing rapidly, especially in the services space and have also perceived a strong need for banking services. We have therefore decided to offer and improve our services in this belt,” he said.

7. Talks for the 9th bipartite industry-level wage settlement between Indian Banks’ Association (IBA) and the bank unions will commence in Mumbai on May 5.The previous wage settlement, which was entered into in June 2005, lapsed on October 31, 2007. The 8th industry-level wage settlement was valid from June 2002 to October 31, 2007. If a new settlement is arrived at between the IBA and bank unions, it is expected to be valid for a five-year period from November 1, 2007. The first industry-level wage settlement was entered in 1966.

8. IDBI Bank reported a 15 per cent increase in net profit at Rs 245 crore for the fourth-quarter ended March 31, 2008, against Rs 214 crore in the corresponding quarter last year, due to higher interest income and fee income. The bank’s board has recommended a dividend of Rs 2 for the fiscal 2007-08.

9. Canara Bank has begun exploring foreign joint venture opportunities for its nine subsidiary companies. This follows the successful tie up with Robeco of Netherlands and HSBC for its asset management and life insurance business, respectively.The insurance business is expected to begin operations shortly. Speaking to journalists here on Saturday, the Canara Bank Chairman and Managing Director, Mr M.B.N. Rao, said, “We would like to unlock value in each of these subsidiaries.” The subsidiaries include Canbank Factoring Ltd.He said the bank had seamlessly migrated to the Basel II capital adequacy regime. The bank now intended putting in place advanced risk management architecture and for the purpose, plans to move into the advanced indicator approach, he said.

10. Canara Bank reported a net profit of Rs 1,565 crore or 10.15 per cent over the last financial year, and has recommended a dividend of 80 per cent to its shareholders. The bottom line growth was partly achieved by a cash recovery of Rs 1,030 crore this year. The bank also managed to contain its provisions for investment depreciation. The bank’s provisions were at Rs 1,054.37 crore, down from the previous financial year’s Rs 1,241.66 crore.

11. Aided by a sharp jump in treasury profits, better NPA management and a surge in core business operations, Corporation Bank on Saturday reported a 37.09 per cent rise in net profit for the financial year ended March 31, 2008 at Rs 734.99 crore against a net profit of Rs 536.14 crore in the previous year.For the period under review, the bank’s treasury profits (net of depreciation) were Rs 140 crore, which represented a 105 per cent increase over treasury profits of Rs 68 crore in 2006-07. In 2007-08, Corporation Bank provided a lower amount towards bad debts at Rs 123 crore (including agriculture) against Rs 186 crore allotted in the previous year. Moreover, the net interest income increased by 139.55 crore during the year ended March 2008, representing a 10.70 per cent increase.

12. Vijaya Bank is on track for meeting its September deadline for compliance with Basel II guidelines.Accordingly, the bank reported a 9 per cent growth in net profit for the financial year 2007-08 at Rs 361.26 crore and high provisions for depreciation on investments. The bank made a provision of Rs 272.12 crore for depreciation of its marked to market investments double the previous financial year’s figures. The bank also reported a dividend of 20 per cent.

Tides of 22.04.2008

1. Rabobank, the Netherlands-based financial institution, is planning to set up a $100 million private equity fund in India which will focus on the agriculture value chain. The plan to set up an agri-focussed fund is a logical extension of more than a century old tradition of backing the food and agribusiness by Rabobank.

2. Axis Bank today reported a 70.56 per cent increase in net profit during the fourth quarter of 2006-07 to Rs 361.4 crore mainly due to a steady rise in interest and fee income. The private bank announced a dividend of 60 per cent for the year ended March 2008. The diluted earnings per share (EPS) were at Rs 31.31 compared with Rs 22.79 at the end of March 2007. During 2007-08, the bank¡¯s net profit rose 62.52 per cent to Rs 1,071.03 crore as against Rs 659.03 crore during the previous financial year. The private bank ended the last financial year with a capital adequacy ratio of 13.73 per cent compared with 11.57 per cent in 2006-07. The increase in profits during the fourth quarter is despite non-tax provisions more than doubling to Rs 164.22 crore on account of provision of Rs 72 crore for mark-to-market losses on six derivatives transactions and a Rs 20 crore provision for depreciation in its credit-linked notes portfolio.

3. The liquidity in the system continued to remain surplus. The Reserve Bank of India absorbed around Rs 18,000 crore from the system. The hike in cash reserve ratio (CRR) comes into effect from April 26 and the system will thus remain in surplus mode till then, said a dealer. Call rates fell to a low of 2 per cent before closing the day at 5.75 per cent. The mutual funds are flush with funds and thus the collateralised borrowing and lending obligation (CBLO) rates fell to a low of 1.10 per cent. The government expenditure and the RBI’s intervention in buying dollars to stem the rupee appreciation are the major source of revenue for the markets.

4. The Reserve Bank of India (RBI) proposes to come out with prudential norms for reverse mortgage loans to safeguard banks in a falling real estate market. The prudential norms are likely to be announced in the forthcoming annual monetary policy of RBI on April 29. Reverse mortgage allows senior citizens with inadequate income sources to mortgage their own homes for a monthly stream of income for up to 15 years. It involves a senior citizen borrower mortgaging the house to a lender, who then makes periodic payments to the borrower during the latter’s lifetime. It is a way of monetising the owner’s equity in the house.

5. Karnataka Bank will take up the matter of bringing in a fresh investor at its next board meeting scheduled for April 24. The move comes on the back of the Reserve Bank of India (RBI) rejecting the Mangalore-based private sector lender’s proposal to rope in Washington-based International Finance Corporation (IFC) as an equity investor through a preferential allotment of shares.

6. tepid response to the Employee Stock Purchase Scheme (ESPS) has forced State Bank of India (SBI) to relax the one-year lock-in period norm under the scheme. After raising about Rs 17,000 crore through a rights issue, the country’s largest commercial bank had offered its shares to employees at a price of Rs 1,590 apiece. This was also the price for the rights issue. The number of shares that an employee is eligible for under ESPS is linked to his or her position in the bank hierarchy. Starting with 20 shares for award staff, entitlement rises to a maximum of 1,500 for the chairman.

7. State Bank of India (SBI) and ICICI Bank, the nation’s two biggest banks, will be worst hit by the central bank’s decision to increase the amount of cash they must hold with it, according to a Goldman Sachs Group report. The Reserve Bank of India (RBI) said on April 17 it would raise the cash reserve ratio (CRR) to tackle inflation, which is running at a three-year high. Banks, already facing slower loan growth with interest rates at the highest in six years, would see earnings and returns fall by 1 per cent to 2.7 per cent, the Goldman analyst said.

8. Axis Bank today said it has made provisions of Rs 71.97 crore during the fourth quarter of 2007-08 for six foreign exchange derivatives transactions that have been repudiated by two of its customers. While the bank has 188 derivatives transactions with an aggregate mark-to-market (MTM) loss of Rs 673.55 crore at the end of March 2008, there are six transactions where companies are not unwilling to honour the contract. Of the 188 deals, 113 are outstanding transactions dealing in foreign exchange derivatives where the aggregate MTM loss is Rs 547.72 crore.

9. Standard Chartered is poised for an expansion unprecedented in scale and one that will transform the bank by giving it a sizeable presence in the rural areas, including a consumer finance brand. Already the largest foreign bank in India, Standard Chartered has sought the Reserve Bank of India’s permission to open 100 rural branches, which are in addition to its annual plan of 40 new branches and 300 ATMs this year, which it has submitted to RBI for approval.

10. The Hyderabad High Court yesterday said that the ICICI Bank cannot treat as non-performing assets the amount of money Hyderabad-based NCS Sugars owes the bank on account of losses on foreign exchange derivatives. However, the court did not restrain the ICICI Bank from proceeding against NCS Sugars on other issues. The next hearing of the case NCS and ICICI Bank, which are locked in a legal dispute over losses incurred by the former on derivatives products, is scheduled for next week. When contacted, NCS Sugars executives declined to comment.

Tides of 18.04.2008

1. The Reserve Bank of India on Thursday increased the Cash Reserve Ratio – the share of deposits that commercial banks must hold in cash with the central bank – from 7.5 per cent to 8 per cent, in a bid to curb inflation by leaving less money with spenders. The 50-basis-point hike, which will come in two equal tranches effective April 26 and May 10 respectively, will result in sucking out Rs 18,500 crore from the banking system. It may increase cost funds for commercial banks, forcing them to increase interest rates they charge on loans to consumers.

2. India's wholesale price index rose 7.14 per cent in the 12 months to April 5, a government official said on Thursday. This is lower than the previous week's annual rise of 7.41 per cent and just below a median forecast of 7.19 per cent in a Reuters poll of analysts.

3. Interest rates on home and retail loans are expected to rise, as a fallout of Reserve Bank today announcing a 0.5 per cent hike in Cash Reserve Ratio (CRR) to squeeze money supply to rid the economy of inflation.The CRR, the amount of funds banks are required to park with the apex bank, has been raised to 8 per cent to suck out Rs 18,500-crore liquidity from the system.
Since banks would be left with less cash to lend and have to source funds at a higher cost, including by raising deposit rates, they may increase lending rates that will in turn temper demand and cool inflation that is at a three-year high of 7.14 per cent.The CRR would be hiked by 0.25 per cent from April 26 and by an identical percentage from May 10.Year-on-year inflation, which was 3.83 per cent during the last credit policy in January, had gone up to 7.41 per cent on March 29 before marginally falling to 7.14 per cent on April 5.

4. A plan by India’s capital markets regulator to reduce the time it takes to list stocks after an initial public offering (IPO), from 21 days to seven days, will deal a significant blow to bankers to the share sales who enjoy the so-called float money on which they do not pay any interest.
Typically, the time between an investor putting in money for investing in an IPO and getting a refund after the shares are allotted, is three weeks and the bankers to the issue enjoy this money free for that period. Most IPOs are subscribed many times over and the banks have enjoyed this huge free float. According to Delhi-based primary market data provider Prime Database, a set of domestic and foreign banks active in this space could have gained at least Rs 2,300 crore in 2007-08 from this float. In 2006-07, banks have made Rs 630 crore from this business. A Mint analysis of IPO subscription data, provided by Prime Database, shows that 76 IPOs last year collected more than Rs 6.3 trillion, from retail investors, high net worth individuals (HNIs) and qualified institutional investors (QIBs) and the money was kept with banks for 14-35 days.

5. To take on competition from private and foreign banks head on, SBI Card is firming up plans to distribute credit cards from the State Bank of India's branches from June. "We are working closely with State Bank of India to leverage the branch channel for increasing the company's reach and expand customer base substantially," SBI Card Chief Marketing Officer Nirupam Sahay told PTI.The company is a joint venture between between State Bank of India and GE Money.Currently, the company is operating from its own outlets and the tie up would offer huge business growth potential for the company, he said.

6. HDFC Bank has unveiled plans to foray into Bahrain by the middle of the year, following Bank of Baroda's re-entry into the Kingdom after 18 years. According to a media report, HDFC Bank announced plans to raise $ 1 billion through a medium-term note issue to fund its overseas expansion plans, beginning with Bahrain.Bahrain has been the hunting ground of Indian banks since there are 300,000 Indians working in the Gulf state and the country's authorities are liberal in issuing news licences.BoB and HDFC joined the list of Indian banks eyeing Bahrain. India's leading bank - State Bank of India and the country's largest private sector bank, ICICI, already have operations in Bahrain.

7. In a move to help CEOs of small and medium enterprises sharpen their skills and knowledge, ICICI Bank on Tuesday launched a programme SME CEO Knowledge Series in collaboration with CyberMedia. The programme envisages to provide a platform to the CEOs of various SMEs for interacting with experts of various fields including human resources, finance and entrepreneurship. For this purpose it has identified clusters in 26 cities across the country.
The bank has already conducted the programme at a leather cluster in Agra, ICICI Senior General Manager and Global head SME Vijay Chandok told reporters here."The SME CEO Knowledge series will enable us to cater to the entrepreneurs at the root level," he said.
A host of SBI branches are being identified for issuance of credit cards and the initiative would be operational by June, he said.The company is also planning to launch new products specifically for the SBI Branch channel.

8. Market regulator SEBI said on Friday it will issue guidelines on real estate mutual funds in the next 15 days, enabling retail investors as well to access the realty market which has witnessed a boom in the last few years."SEBI is ready with guidelines on real estate MFs that could be issued any day. The outer time limit to issue guidelines is 15 days," Securities and Exchange Board of India's whole time member TC Nair told reporters in New Delhi.Speaking at a conference on Real Estate Mututal Funds, organised by Assocham, he said all legal issues including accounting and valuation have been resolved and norms could be issued anytime. SEBI board has already given its nod, he said.

9. Family Credit, a non-banking finance company fully owned by Societe Generale Consumer Finance, France, is planning to ramp up its India operations by doubling its branches.The Kolkata-based NBFC would add 35 new branches to its existing 36 branches by end of December 2008, Mr Parthanil Ghosh, Country Head (India), Family Credit, told Business Line here.
“Though our network is now present across the country there will be more focus on tapping the South Indian market over the next two years,” Mr Ghosh said.Plans were afoot to open new branches in the tier-II and tier-III towns, he added.

10. Some corporates who filed cases against banks after they suffered losses on currency derivative deals, are willing to settle out of court, as court may take a long time to settle these cases, said Ms Chanda Kochhar, Joint Managing Director, ICICI Bank.She said there is no systemic risk from currency derivatives transactions and the estimated loss is not very large compared to the total cash flow of corporates. Speaking to presspersons on the sidelines of a banking seminar, Ms Kochhar said that it is unfair to take a general view that many corporates did not understand the derivatives deals. “The corporates were aware. More than 80 per cent of the corporates involved who have exposure to currency derivatives are mid and large corporates. Sometimes there are profits and sometimes there are losses,” she said.

Tides of 4.04.2008

1. A high-powered study by the Planning Commission has suggested the government bring its holding in public sector banks to below 51 per cent and also enhance foreign ownership in the insurance industry from the current 26 per cent. The ability of the state-run banks to raise capital for growth would be severely constrained unless the government’s holdings were allowed to fall below 51 per cent, the Planning Commission study on the services sector said.
"It would be appropriate to consider the evolution of a path towards reduction of government ownership in a manner that minimises dislocation among various stakeholders," the report said.

2. Citigroup, battling to restore profit after a record loss, will set up an independent credit-card unit and overhaul consumer banking along geographical lines," two people with direct knowledge of the plan said. "Steven Freiberg, the current co-head of consumer banking, will run the card unit," the people said, asking not to be identified before an announcement that may come as early as on Monday. "The rest of the consumer group, mainly bank branches and non-bank lending, will be led by five regional heads," the people said.

3. The standoff between monetary authorities of India and Singapore seems to have eased with the Reserve Bank of India (RBI) taking the lead in fulfilling its promise to sanction the agreed eight branches to the DBS Bank in India on Tuesday.It is for the Monetary Authority of Singapore (MAS) for reciprocate by granting approval to State Bank of India (SBI) and ICICI Bank, largest Indian banks in Public and private sectors respectively, the preferred bank status. ICIC Bank has confirmed there was nothing new on the issue.

4. As many as 30 public sector banks and financial institutions, which insisted in converting their loans to the once-troubled IFCI Ltd into equity, have taken hit of nearly Rs 800 crore as its shares have fallen 60 per cent in just two months.The irony is that, in some cases, the shares have not even been credited to their account, but under the mark-to-market norms for listed securities, these banks and financial institutions have to write off huge losses incurred before the close of the financial year. The biggest loser is Life Insurance Corporation of India, which converted debentures worth Rs 507 crore into equity, has seen the value of its holding erode more than Rs 300 crore.

5. Employees of City Union Bank are all set to get stock options soon. The Kumbakonam headquartered private bank has already got an in-principle nod from the Reserve Bank of India for introduction of the Employee Stock Option Scheme.The bank now awaits the consent from its shareholders. The Extraordinary General Meeting (EGM) of the bank is slated for April 26.
It has taken the cue from the new generation banks. ESOP has become the order of the day and our introduction is an extension of the logic.”

6. Bank customers may soon be able to negotiate for settling their debts using the expertise of banks themselves. The Reserve Bank of India has suggested that banks should set up financial literacy and credit counselling centres, which can help borrowers in negotiating with banks for restructuring debts. While these centres may initially be funded by banks, banks should maintain an arms-length relationship with the centres, said the RBI. In a concept paper, issued on Thursday, the RBI said that banks can set up Financial Literacy and Credit Counselling Centres (FLCCs). Banks may set up trusts or societies for running these FLCCs. While the FLCC may include respected local citizens on the board of such a trust, the RBI has warned that serving bankers should not be included in the board.

7. Bank of Maharashtra has opted out of its proposed joint venture with the Chennai-based Shriram Financial Services Holdings Pvt Ltd and Sanlam Ltd of South Africa for the general insurance foray.

8. A Planning Commission-appointed High Level Group on services sector has made a case for the abolition of bank branch licensing, phasing out of directed priority lending by banks and gradual reduction in the statutory liquidity ratio (SLR) requirement for banks.
Currently, banks have to keep 25 per cent of their net demand and time liabilities in government securities as SLR requirement. Last year, the Government empowered the RBI to specify the SLR to be maintained by banks.The report of the High-Level Group has favoured alignment of banks’ cash reserve ratio (CRR) over time with global benchmarks. The Group was established to comprehensively examine the different aspects influencing the performance of the services sector and suggest short-term and long term policy measures to improve and sustain its competitiveness in the coming years.

9. South Indian Bank (SIB) plans to expand presence in North India and aims to more than double the number of branches in this region over the next five years, its Chairman Dr V. A. Joseph, said.“We want to add another 150 branches in North India by 2013. In this period, we want to increase the total number of branches of the bank to 750 from the current 500 branches”, he told Business Line during his recent visit to the Capital.Currently, SIBhas 100 branches in North India out of total network of 500 branches. The bank is targeting business of Rs 75,000 crore by 2013 — a business of Rs 100 crore from each of the 750 branches.

10. Corporation Bank’s business, as per provisional and un-audited figures, exceeded Rs 95,000 crore as on March 31 2008, as compared to Rs 72,000 crore as on March 31, 2007. A bank release said here on Wednesday that with this business the bank has clocked the annual growth of 32 per cent. Buoyed by the strong growth, the bank is now advancing the earlier projected target date for crossing the milestone goal of Rs 1 lakh crore of business from March 2009 to the middle of the year.

Tides of 29.03.2008

1. The Union Finance Minister, Mr P. Chidambaram, today made out a case for banks paying higher wages to its employees. While speaking at the inauguration of Union Bank of India’s 100 per cent Core Banking Service, “ employees are the ones who contribute to the profits of the banks, and therefore, are entitled to a share of the profits. The more profitable the sector, the wages should be higher. "The Minister said that the bank managements and unions must resolve their differences and talk things out.

2. State Bank of Hyderabad is planning to open 50 new branches and 250 ATMs in the next financial year.

3. Syndicate Bank will open two more branches in Hyderabad in Vanasthalipuram and Uppal soon. This would take the total number of branches in Hyderabad to 54. "We have done Rs 7,000 crore business in Hyderabad region this year. Our target is Rs 10,000 crore business next fiscal year,"

4. HSBC Bank in India will be hiring over 3,500 this year to support its expansion programmes in retail, small and Medium Enterprises (SMEs) and corporate banking sectors. The bank, which has been traditionally hiring from its competitors, will now focus on alternative channels of recruitment by sourcing people from sectors such as retail, Fast Moving Consumer Goods (FMCG) and telecom.

5. Sundaram BNP Paribas Mutual has tied up with Central Bank of India to form a strategic distribution alliance. Under the MoU signed by them, Central Bank of India will distribute the entire bouquet of Sundaram BNP products.

6. India’s first live corporate debt trade facilitating platform called ‘Dome’ has been launched by Derivium Capital and Securities Pvt Ltd. A web-based platform, ‘dome’ in its launch phase is a live corporate debt market and other debt market reporting system.The purpose of the platform is to increase transparency and faster dissemination of market information, quotes and trade levels, according to promoters Mr Kunal Shah and Mr Ashish Ghia, technocrat entrepreneurs.

7. Corporation Bank and Reliance Communications have joined hands to provide seamless mobile banking service to their customers across the nation. A joint press release said here that it was for the first time that Reliance Communications is offering such a service to a public sector bank.
Corporation Bank account holders using Reliance mobile phones can now request for various information on their accounts such as balance enquiry, last three transactions, funds transfer, cheque status, request for new cheque book, etc. This service obviates the need for any keywords for SMS or remembering any number as the application itself takes care of everything. Users have to click on Reliance Mobile World (R World) on their mobile phones and choose the finance section and subsection `MBanking'. Then they have to select Corporation Bank from the lists of Banks.-

8. Banks are finding that they have to let go of a few more of their chosen providers of financial services. These service providers to whom banks have outsourced some jobs have been slapped with charges of wrongful ‘acts’ of commission and their services have since been terminated.
The Indian Banks’ Association (IBA) has invited the attention of member banks to a second list of such service providers whose services have been terminated for various reasons by individual banks and reported to it in compliance with the specific RBI Circular No RBI/2006/167 of November 3, 2006.

9. The Reserve Bank of India has asked banks make their own assessment of their various risk exposures, through a well-defined internal process, and maintain an adequate capital cushion for such risks. The RBI on Thursday issued guidelines on the Pillar 2 of the Basel II Framework. Pillar 2 deals with Supervisory Review Process (SRP). The objective of the SRP is to ensure that banks have adequate capital to support all the risks and also to encourage them to develop and use better risk management techniques for monitoring and managing their risks.

10. City Union Bank has announced the launch of Wealth Management Services for its clientele. Other services such as online trading in shares, debit cards from VISA, online utility payments and travel bookings will commence shortly.Shri N. Kamakodi, Executive Director, City Union Bank Ltd, said that the service was being targeted at its ‘middle-class and reasonably affluent’ customers, rather than high networth individuals. He said that the service would be extended to semi-urban and rural areas, which are currently not getting such services.

Tides of 23.03.2008

1. ICICI Bank UK Plc, a wholly-owned subsidiary of India's largest private sector bank, has opened its ninth British branch in Leeds, a large city in Yorkshire. With assets of about $115 billion and a market capitalisation in excess of $30 billion, ICICI's presence currently spans 19 countries.

2. The World Bank on Wednesday approved a $600-million loan to power transmission giant Power Grid Corporation of India (PGCIL) to strengthen the electricity transmission system to increase reliable power exchange between regions and states. The Power System Development Project -IV of PGCIL aimed at reducing transmission losses would help cut cost of energy through further investments in transmission systems. The project is expected to allow the transfer of power from surplus hydro electric power states to power deficient regions and help creating power generation facilities.

3. Health is wealth - and that's certainly the case for Indian life insurers. Nearly 40 days after their entry into the long-term unit-linked health insurance business, the two life insurers - Life Insurance Corporation of India (LIC) and Reliance Life Insurance Company Limited - have been logging good business. The Asian insurance giant LIC averages around 1,200 policies per day.According to him, LIC has sold 50,000 policies till date at an average premium of around Rs.10,000 per policy. Given the poor penetration of health insurance products achieved by the 13 non-life insurers in India, LIC's achievement is quite commendable.Speaking about Reliance Life's experience in selling its Reliance Wealth + Health Plan, its CEO P. Nandagopal said, "The retail response is very, encouraging, especially from the southern markets. The average premium per policy is Rs.15,000."Reliance Life launched the policy soon after LIC came out with its health product.

4. The country’s foreign exchange reserves went up by $3.028 billion to $306.488 billion for the week-ended March 14. The increase is mainly on account of revaluation of currency assets.
The dollar had depreciated against major currencies during the week under consideration. Euro and yen gained against the dollar. The euro surged to $1.5554 on March 15, while the yen also appreciated against the greenback and was seen trading below ¥100 against the dollar.
The foreign currency assets grew by $3.025 billion at $296.496 billion. Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.The reserves had increased by $2.225 billion at $303.460 for the week-ended March 7.

5. The growth in the retail customer base and better use of technology are likely to boost the business of Bank of Maharashtra by 24 per cent during the current financial year. Mr M. D. Mallya, Chairman and Managing Director of Bank of Maharashtra, told Business Line on Friday that the bank had targeted a business of Rs 70,000 crore for the current financial year, and it is likely to end up with Rs 71,000 crore. Deposits would be around Rs 41,500 crore and advances would be Rs 29,500 crore. “The growth in deposits would be about 22 per cent and advances around 26 per cent. The business growth will be around 24 per cent,” he said.

6. The Finance Bill, 2008 has cleared the air for senior citizens resorting to reverse mortgage of their residential houses — no tax either on account of capital gains or on the lump-sum or periodic payments received from bank or financial institution. There is now complete relief for senior citizens resorting to reverse mortgage — no financial commitments and no tax commitments either on the transaction. They could not have asked for more except perhaps something that would lessen the pain brought by their conscience being tugged.

7. In a bid to increase their auto loans portfolio, public sector banks are offering lower interest rates and organising special campaigns. This could help revive the demand for auto loans, which has been slowing down, said bank officials.While the State Bank of India is organising a special car rally for its customers, the Bank of India and the Union Bank of India have reduced the rates on car loans. Car and commercial vehicle asset segments comprise one-third of total retail loans for the entire banking industry, said a recent report from rating agency Crisil. Most public sector officials admit that car loans form a minor part of their retail loan portfolio, as private banks and NBFCs hold a major chunk of the market share. The average rate of interest charged by public sector banks for auto loans is 11-12 per cent, depending on the amount and duration of loan.

8. Encouraged by the tax exemptions to reverse mortgage loans announced in the Union Budget 2008-09, Andhra Bank will be launching a reverse mortgage product in the first week of April.
“Our product was ready many months before the Bdget and we were waiting for clarification on the income tax aspects of reverse mortgage loans. As there is no confusion now, we will be launching the product probably on April 1,” Dr K. Ramakrishnan, Chairman and Managing Director, Andhra Bank .

9. Karnataka Bank installed a coin vending machine at Kodialbail branch in Mangalore. This is in pursuance of the measures initiated by the Reserve Bank of India to ensure that adequate number of banknotes and coins are put in circulation so as to cater to the needs of people over a huge geographical area. The bank plans to extend the facility to other branches in and out of Mangalore.

10. The rights issue of State Bank of India was oversubscribed. This is based on provisional data, as the bank is still in the process of collating detailed information. The amount collected through the issue, which closed on Tuesday, is about Rs 600-700 crore more Rs 16,736.31 crore the bank had hoped to raise. The issue opened for subscription on February 18. SBI had priced the shares for the rights issue at Rs 1,590 per share.

Tides of 16.03.2008

1. The country’s foreign exchange reserves increased by $2.225 billion to $303.460 billion for the week ended March 7 on account of revaluation of currency assets, said dealers. The reserves had gone up by $6.625 billion to touch $301.235 billion for the week ended February 29, said the Weekly Statistical Supplement from the Reserve Bank of India. The foreign currency assets grew by $2.221 billion at $293.471 billion. Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves. The reserves in gold remained unchanged at $9.558 billion while that in IMF went up by $4 million at $431 million.
2. Vijaya Bank today signed a memorandum of understanding with credit rating agency, Crisil, for rating its corporate customers. A bank release said here corporate customers would now be able to have their loan exposures rated by Crisil at a concessional fee. The release said that the rating would be mutually beneficial to both bank and the customers, after migration to the Basel II regime. Vijaya Bank is expected to become Basel II compliant from September. Well rated borrowers would be in a position to borrow at lower rates.
3. Non-food credit increased for the fortnight ended February 29 by Rs 39,988 crore to touch Rs 22,06,902 crore, according to the Reserve Bank of India’s Weekly Statistical Supplement.
4. India is getting ready for the reverse mortgage market, but it could be sometime before demand for the product begins to emerge. Given the population’s age profile, family system or living arrangement and geographic dispersal of the target group, it could be early days in India for the reverse mortgage market, according to a report from Celent, a Boston-based financial research and consultancy firm.
5. The Syndicate Bank Staff Association (SBSA) has urged the Centre to publish a white paper on merger of banks saying that this phenomenon has become a daily affair.Mr K.S. Bhat, All India Secretary of SBSA, said that bank mergers were taking place without any blueprint ad principle. The current merger process, he said, “has no far-sightedness and is against the principle of Mass Banking”.The Indian Banks Association’s stand before the negotiation table with UFBU is absolutely wrong and unbelievable, he remarked.
6. Write-downs from sub-prime-tied securities will probably rise to $285 billion, or $20 billion more than S&P’s forecast of $265 billion, two months ago, according to the global rating agency Standard & Poor’s. However, the agency said write-downs by the world’s financial institutions on debt linked to sub-prime mortgages might end soon. “The valuation write-downs of sub-prime asset-backed securities (ABS) — primarily collateralised debt obligations (CDOs) of ABS but also sub-prime residential mortgage-backed securities (RMBS) — could reach $285 billion for the global financial sector,” said the report.
7. State Bank of Hyderabad (SBH) will raise Rs 900 crore capital through upper tier II and tier I route in about a week to meet the Basel II compliance requirements by the end of this month and for operational flexibility.“The formalities are under way and we hope to complete the process by March 24,” Mr Amitabha Guha, Managing Director, SBH.
8. United Bank of India is tying up with Kotak Mahindra to sell mutual funds. UBI currently has tie-ups with five asset management companies, including UTI, HDFC, Franklin Templeton, Reliance and ICICI Prudential for selling mutual fund schemes. “The tie up with Kotak Mahindra has been finalised and we will sign an MoU with them within two-three weeks. It will ink similar deals with four other companies shortly.
9. IDBI Capital Market Services Ltd, a financial services provider, and Union Bank of India on Thursday announced a strategic tie-up to offer the former’s online trading platform to the bank’s customers. Through this tie up, the bank’s customers can invest in equities, mutual funds and initial public offers using the online trading platform of IDBI Capital.
Any customer of Union Bank, at any of its CBS branches, can use this online trading platform from any place through Internet.
10. A year ago, ICICI Bank’s Managing Director, Mr K.V. Kamath, said the investment pipeline of corporate India was of the order of $400 to $500 billion (or about Rs 20 lakh crore). About six weeks ago, he revised that estimate to about $750 billion (Rs 30 lakh crore). He also added that a bulk of this would come from companies themselves. And, importantly, added that the Indian growth story would continue for another 15 years.

Tides of 21.02.2008

1. Bank funds are getting cheaper. The country’s largest bank, State Bank of India, cut its interest rates for the second time in less than ten days. Several other banks including Union Bank of India, Bank of India and Canara Bank also followed suit. SBI announced a 0.25 per cent reduction in its benchmark prime lending rate, on Wednesday . The bank’s BPLR will be 12.25 per cent with effect from February 27.Union Bank cut its BPLR by 50 basis points from 13.25 per cent to 12.75 per cent.Canara Bank cut its BPLR by 25 basis points to 12.75 per cent.
Bank of India also cut its PLR by 50 basis points.

2. Turnaround time is not a term that is used only in logistics and shipping industry. Bankers too have started using them frequently in relation to customer service.The Union Bank of India’s CMD Mr M.V. Nair, is on a project called ‘Nav Nirman’ that aims at improving turnaround time in his bank. The basic focus of the ‘Nav Nirman’ is to re-write the fundamental architecture of the bank to bring customer to the centre.He says, “The large business of any bank falls into four categories. They are: retail, SME sector, corporate sector and rural sector. And the needs of these four segments are different.”In the retail sector, there are two groups. One, is the old generation customer who would like to have personal banking at the branch level and the other is the new generation customer. The latter group may not like to visit the branch. They are online and want technology to deal with the product. In this regard, the bank has set up retail asset branches where it commits a turnaround time for the sanction of certain loans. This has to be given by technology and people. The bank has already announced a turnaround time of 48 hours for the sanction of educational loans. “This cannot be done unless you fundamentally change the architecture. That is what ‘Nav Nirman’ aims at,” he said. He explains how the changes will go beyond the financial architecture and affect even the physical lay-out.
He says, “First when you enter the branch, you will have ATMs and kiosks where transactions are done. I am also trying to implement passbook writers for updating passbooks. They can complete all their transaction in the first stage itself. We will call this as the transaction area. The advantage is that even though the branch may be closed, the transaction area will be open all 24 hours. You can do 80 per cent of the job in the transaction area.“After the transaction area, the branch area will come where the customer will get the teller and the product display. Once technology is used, you have more online data transaction, call centres, and CBS. Then the branches will be become freer. Then the next challenge is to connect with customers. To do this, nearly 5,000 officers of the bank were put on a two-day training programme where the bank tied up with different universities.”

Tides of 19.02.2008

1. Payments of Rs 1 crore and above between banks, NBFCs, primary dealers and any other entities regulated by the Reserve Bank of India may be allowed only through electronic mode from April 1. All such payments above the cut-off point done between parties regulated by the RBI should be through Real Time Gross Settlement or National Electronic Fund Transfer.
The new guidelines will also be applicable to participants in the RBI-regulated markets such as foreign exchange, money and Government securities markets.

2. Banks will now have to make withdrawals from ATMs free of charge for their own customers. Requests for balance enquiries would have to be made free to customers of other banks as well. In a draft circular, the RBI has asked banks to implement these changes with immediate effect.
For use of other bank ATMs for cash withdrawals, the RBI has asked banks not to charge more than Rs 20 with effect from March 31, 2008. This will also gradually be made free of charge by April 1, 2009.

3. Individuals who do not have an individual proof of residence can now open an account with any bank by producing the utility bill of a close relative as a proof of residence along with a declaration from the relative, said a notification from the Reserve Bank of India.The utility bill, which is an important source of address proof, is generated in the name of the person owning the residence. There are instances where a wife staying with her husband or parents staying with their son, or children with parents find it difficult to open account in some banks as the utility bills required for address verification are not in their name.

4. The Union Bank announced the opening of five fully computerised branches in the districts of Vizianagaram and East Godavari, according to a press release here on Monday. The new branches are situated at Bobbili, Salur and Parvatipuram in Vizianagaram district and Kakinada and Rajahmundry in East Godavari district.

5. Canara Bank launches online trading facility at select CBS brancjes.

6. The Reserve Bank of India has cleared the branch licence of Swiss bank UBS AG, which was put on hold following investigations into certain fund transactions.

7. The officers and staff of State Bank of India will observe a two-day strike on February 25 and 26 in support of various demands.

8. Tuticorin-based Tamilnad Mercantile Bank has got licences to open branches at 17 new locations in the country.

9. Banks are going slow on lending for purchase of two-wheelers. Such lending has seen a decline of more than 15 per cent over the past year, said officials from banks which are active in this segment.

10. The Government of India’s subscription to the rights issue of State Bank of India will be against the issue of ‘Special Marketable government securities’ and not SLR (Statutory Liquidity Ratio) Marketable Securities.The SBI said it will issue a corrigendum to its Letter of Offer for the rights issue, intimating its shareholders of the change.The bank has also informed SEBI of the matter

Tides of 14.02.2008

1. HDFC Bank has entered into a $7.4 million, three-year strategic Enterprise Level Agreement with Symantec for IT compliance, enterprise security and storage management solutions. Symantec would provide consulting, implementation services, set of security and storage solutions and services. The IT Compliance Solution would help the Bank to automate and standardise processes for compliance with laws, regulations and frameworks including SOX, Basel II, COBIT, ITIL and ISO 27001.

2. The bancassurace business of Life Insurance Corporation of India (LIC) is on a steady growth, thanks to the growing interest of many banks in enhancing the fee-based income.
Led by Andhra Bank in the number of policies and first premium income, 26 banks in the country are currently eyeing a niche in bancassurance by selling insurance products of the State insurer.

3. City Union Bank, has received licence from the Reserve Bank of India to open 40 more branches. These are to be opened within one year. In conformity with the RBI’s guidelines, the bank will ensure that half the new branches will be in under-banked areas. At least four branches will be in rural areas. Officials of City Union Bank had told Business Line that the bank would like to get into Rajasthan, UP and Haryana.

4. Public sector banks (PSBs) have urged the Finance Minister, Mr P. Chidambaram, to exclude them from the ambit of transfer pricing provisions under the income tax law. They have also sought exclusion from the purview of Section 40A(2) of the income tax law, which empowers an assessing officer to disallow deduction of any expenditure incurred between related parties and considered by the officer as excessive or unreasonable having regard to the fair market value of the goods, services or facilities.

5. Smaller banks by and large seem to wait for the biggies to effect a change in the interest rate before taking the plunge.Mr K.V.S. Manian, Head of Retail Liabilities and Branch Banking, Kotak Mahindra Bank, said “we have not made up our minds yet on the rate cut. It will stay put for now”.He admitted to the credit off-take being slow on the home loan front compared to the past, but on the car and personal loans front, ‘there has been no problem’, he said.

6. Swiss bankers’ association (SBA) wants Indian banks to locate and operate in Switzerland. The trade association also wants Swiss banks to be able to open branches and get licence here little bit more easily than it has been in the past.Making a case for more transparency and predictability in the procedures for entry of Swiss banks into India, Mr Pierre G Mirabaud, Chairman of SBA, told Business Line in an interview here that the changing environment (away from public sector dominance) in India and the involvement of multiple agencies sometimes made it difficult for foreign players to get a licence and locate here.

7. HDFC Bank has incorporated ‘jitter-enabled’ card readers in all its 1,910 ATMs in order to prevent skimming or capturing of card details by fraudsters.

8. The IBA has invited the attention of member banks to a list of financial service providers whose services have been terminated for various reasons by individual banks and reported to it in compliance with specific RBI guidelines. The grounds of termination of services range from submission of forged documents indicating dishonesty and lack of integrity, leakage of customer data, failure to meet statutory liabilities, to involvement in frauds.

9. Public sector banks (PSBs) on Tuesday urged the Finance Minister, Mr P Chidambaram, to restore tax exemption on income received by the banks from their long term financing of infrastructure projects.

10. Anticipating opportunities in India after 2009, foreign banks are queuing up to open offices in India.Two foreign banks have recently announced their plans to start operations here. Royal Bank of Canada, the largest bank in Canada, inaugurated its representative office in Mumbai on February 1. It will provide capital market products, wealth management, correspondent banking and trade finance services.On February 6, Glitnir, the Northern European bank headquartered in Iceland, also announced that it would be filing applications with the Reserve Bank of India to open a representative office here.

Tides of 11.02.2008

1. To prepare the organisation for the next 10 years, it is essential for Union Bank of India to prepare its people first, according to its Chairman. In this regard, the bank has come out with a unique model, where it picked up 30 officials in the age group of 30 to 40 years for a year-long training at its training college in Bangalore. “It is like a capsule MBA programme. Thirty of them were given 15 projects. These projects are those which the bank wants to implement in future. They work on these projects. I personally monitor them,” he said, adding that these officers also come up with very good ideas in their projects.Now the second batch is under going training. Every year, it will train 30 such officers.

2. After having scored a first with its Qualified Institutional Placement (QIP) issue, Bank of India (BoI) is looking to expand into allied businesses such as mutual funds and wealth management. The bank is also considering acquiring a small overseas bank if the price is reasonable, said Mr T.S. Narayanasami, Chairman and Managing Director. In January, the Finance Minister had asked nationalised banks to look into various options, including QIP, to raise tier-I capital to meet the Basel-II norms, which would be implemented from April for banks having overseas branches. Syndicate Bank and UCO Bank are other public sector banks that might be considering raising capital through the QIP route instead of a follow-on public offer.

3. South Indian Bank ltd has formulated a plan for the next five years and is awaiting the board’s approval. It would increase its business three-fold by March 2013, from the current level of Rs 24,500 crore. It also plans to add 250 branches during that period, taking the total branch strength to 750, and increase its ATM network to 500 from the current 202.

4. The awareness about insurance is quite high in India. Around 78 per cent of households are aware of insurance products. However, ownership of insurance products is low — only 24 per cent households in the country own a life insurance cover”, the survey by Max New York Life-NCAER on `How India Earns, Spends and Saves’ said. The survey, which is based on figures for 2004-05, pointed out that bulk of the urban households (90 per cent) are aware of the life insurance policies and their benefits.

5. Kotak Life Insurance (KLI) will open 100 more branches on a pan-India basis, taking the total network of branches to 210 by March 2009. Of this, 40 branches would come up in the current financial year itself, said Shekhar Bhandari, senior vice-president (sales). The company has adopted a state-wise business development strategy on the basis of business potential in various states and selected 5 states for the purpose.

6. India's foreign-exchange reserves rose $4.36 billion to a record $292.7 billion in the week ended February 1, the central bank said. Foreign-currency assets increased by $3.5 billion to $283 billion, the Reserve Bank of India said in an e-mailed release in Mumbai. The nation’s special drawing rights with the International Monetary Fund were held at $9 million. Its reserves with the IMF fell by $11 million to $423 million, while gold reserves rose $871 million to $9.2 billion. The reserves comprise overseas currencies, gold and special drawing rights with the IMF.

7. ICICI Bank is still awaiting Reserve Bank of India’s final norms on bank holding companies.

8. In a bid to establish a toehold in the overseas market, the Oriental Bank of Commerce is planning to set up a representative office in the UAE in the next six months. It has already got RBI approval and is seeking regulatory permission from the UAE authorities for opening an office in Dubai.

9. State Bank of Travancore, an associate of India's largest public lender SBI, will open its representative office in Dubai to provide services to NRIs in the UAE. SBT has already got the approval of UAE Central Bank for the move and is expected to open the representative office in two months, SBT General Manager (international banking) A K Basu said.

10. The Delhi Consumer Commission today imposed a Rs 10-lakh fine on ICICI Bank for refusing credit card to a lawyer for a "negative profile" profession. However, the bank refuted the charge that it was not giving credit cards to advocates and said it would appeal against order before an appropriate forum. The Commission asked the bank to deposit Rs 10 lakh in the State Consumer Welfare Fund, and pay Rs 50,000 as compensation to the complainant.

Tides of 9.02.2008

1. Exporters reeling under the dollar slide could be in line for a slew of reliefs in the Foreign Trade Policy coming up next month.The steps being contemplated by the Commerce Ministry range from possible reimbursement of, or rebate on, some of the taxes incurred on export production; to zero duty EPCG (export promotion capital goods) scheme in place of the five per cent concessional duty, possibly for the first time. These and a dozen other sops are being considered to mitigate exporters’ losses due to the rupee’s 11 per cent appreciation against the dollar, according to a note circulated by the Commerce Minister, Mr Kamal Nath, at a meeting organised by the Federation of Indian Exporters’ Organisation.

2. Punjab National Bank has commenced cheque truncation system (CTS) in the National Capital Region (New Delhi). The system has gone live in 10 branches of PNB in New Delhi.The Reserve Bank of India had initiated steps for implementation of cheque truncation system in NCR, New Delhi. Ten banks including PNB had joined the project. By March 2008, CTS is likely to be made live in all the branches of PNB in NCR (New Delhi) area, a release issued by the bank said. Under the CTS, image/s of the instrument and the corresponding data contained in MICR line will be captured and used for settlement amongst banks and payment of cheques. Inter-city collection/clearance of cheques is also expected to be brought under CTS, which will enable reduce collection time significantly.

3. The growth in non-food bank credit has shown a slowdown in the recent past, illustrating RBI’s concern that banks have not expanded credit despite comfortable liquidity conditions. The outstanding amount of non-food credit as on January 25, 2008 was at Rs 21,42,494 crore, an increase of Rs 37,259 crore against Rs 21,05,235 crore as on January 4, while the growth was higher at Rs 53,050 crore during the December-January period, according to the weekly figures released by RBI. The amount outstanding as on December 7, 2007 was Rs 20,52,191 crore.

4. Bank unions have objected to the formation of the proposed National Payments Corporation of India (NPCI) without taking into account the assurances given in Parliament by the Union Finance Minister, Mr P. Chidambaram. Responding to the public notice relating to the formation of NPCI, where names of nine individuals have been mentioned as applicants, the United Forum of Bank Unions (UFBU) has now conveyed to the Government that mere mention of individual names as applicants for setting up the corporation gives a very “misleading picture” about the ownership of the proposed corporation.

5. The Rs 16,700-crore rights issue of State Bank of India is likely to open on February 18. Official sources said that the country’s largest commercial bank would go ahead with the rights issue as planned, despite the recent turbulence in the capital markets.SBI is offering one share of Rs 10 each for every five held at a price of Rs 1,590 per share. The Government, which currently holds 59.73 per cent stake in SBI, plans to issue bonds worth Rs 10,000 crore to the bank towards its share in the rights issue.The rights issue is likely to be open for a month for subscription.Indications are that the Government would subscribe to the rights offering on the last date of the issue.

6. The South Indian Bank has opened its regional office in Kolkata. The regional office was opened by Dr G.D. Gautama, Principal Secretary to the Government of West Bengal. With this, the number of regional offices of the bank will go up to 13, a press release issued here said. Dr V.A. Joseph, Chairman and CEO of SIB, who presided over the function, said the Kolkata region of the bank is expected to be the gateway to the North Eastern States. The bank has already opened one branch at Guwahati in Assam and has plans to open more branches in the North-Eastern region.

7. Bank of India has said its board has approved a proposal to raise about Rs 1,360 crore through an issue of 3.78 crore equity shares. In a notice to the BSE today, the bank said it will issue the shares at a price of Rs 360 per share of face value of Rs 10, issued at a premium of Rs 350 per equity share, aggregating to Rs 1,359.81 crore. SBI Capital Markets Ltd, A.K. Capital Services Ltd, Edelweiss Capital Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, JM Financi al Consultants Pvt Ltd, Kotak Mahindra Capital Company Ltd and Motilal Oswal Investment Advisors Pvt Ltd were the book running lead managers to the issue.

8. Syndicate Bank has decided to raise its additional capital through the qualified institutional placement route instead of the follow-on public offer programme planned early this year. Syndicate Bank’s move followed the Government’s recent liberalisation permitting public sector undertakings/enterprises to raise capital through placement with placements of equity with qualified institutional buyers (QIB).

9. State Bank of Travancore (SBT) has received approval from the Central Bank of the United Arab Emirates to open a representative office in Dubai.

10. Till the end of January ICICI Lombard has done about Rs 1,100 crore. It hopes to finish with Rs 1,700 crore for this year and have a target of Rs 2,500 crore for the next fiscal. It has done about Rs 440 crore in private cars, about Rs 440 crore in commercial vehicles and about Rs 100 crore in two wheelers.

Tides of 4.02.2008

1. Kotak Mahindra Bank may get more than a 51 per cent stake in the Ahmedabad Commodity Exchange (ACX). ACX has chalked out a Rs 50 crore business plan which aims at offloading a 51 per cent stake to Kotak Mahindra Bank for Rs 321 a share.Members of the exchange will hold the remaining 49 per cent equity in the newly corporatised exchange.

2. GE Money India is looking for a strategic partner to drive scale just as it did with the State Bank of India (SBI) for its card business. It is trying to replicate its card model in its joint venture with Wizard Home Loans, a non-banking finance company from Australia. After credit cards and home loans, GE Money is now seeking a partner for its personal loans and mortgage portfolio, housed in a fully-owned subsidiary. The company has brought back veteran Iqbal Singh to lead its business in India.

3. Under its “Industry-Academia Partnership” programme, ICICI Bank is in discussions with three leading universities of the West Bengal to launch banking and insurance courses. while the proposal to start the course with Calcutta University had been more or less approved, the dialogue was on with Burdwan University, said K V Kamath, managing director and CEO, ICICI Bank on the sidelines of a seminar on entrepreneurship development in Kolkata on Friday.
The bank was also in discussions with Jadavpur University to roll-out similar courses.

4. ICICI Bank was looking at growing by 30 per cent on a year-on-year basis in its small and medium enterprises (SME) customers portfolio, with more focus on providing customised solutions for the SMEs. Talking at the sidelines of the Tieger08 organised by The Indus Entrepreneurs (TiE), ICICI Bank managing director and chief executive officer K V Kamath told Business Standard that it was adding 1000 SME customers every day to its already existing 1 million SME clients. The focus was on encouraging online transaction options for SME clients more than funding SME ventures. ICICI had many private equity players and venture capital funds in the market for that, he added. Kamath remarked that there will be more equity participation in small and medium enterprises.

5. IOB has set a revenue target of Rs 10,000 crore from its overseas expansion, slated to take place over the next year. IOB is currently logging revenues of Rs 5,000 crore from operations out of its 11 overseas branches. The bank will soon open a representative office in Dubai, besides branches in Vietnam and New Zealand. Transaction oriented products were to emerge as a key driver in the years to come.

6. Insurance has become the proverbial goose laying golden eggs for public sector banks which are foraying into the sector in a big way. This year, at least eight public sector banks are set to scrap their existing bancassurance tie-ups with insurers. They are: Bank of India, Union Bank, Karnataka Bank, Allahabad Bank, Indian Overseas Bank, Bank of Maharashtra and Federal Bank. Other banks, which are planning to start their own insurance companies, are Punjab National Bank, Dena Bank and Bank of Baroda, according to industry sources. The banks are all set to explore the insurance sector after collecting new business premia of about Rs 75,000 crore (both in life and non-life segments) in the last nine months of the current financial year.

7. Crisil has placed its ratings on the debt programmes of GE Money Financial Services Ltd (GEMFSL) and GE Money Housing Finance (GEMHF) on ‘Rating Watch with Developing Implications’. This action follows US-based GE Capital Corporation’s stated intent to dilute 100 per cent stake in GEMFSL and GEMHF by inducting a partner. At present, Crisil has ratings of ‘AAA/Stable/P1+’ and ‘P1+’ on the debt programmes of GEMFSL and GEMHF, respectively.
These ratings centrally factor in the continued management, funding, and operational support that the two entities derive from GECC. The extent of divestment by GECC in GEMFSL and GEMHF is yet to be finalised.

8. City Union Bank posted 83.12 per cent growth in net profit to Rs 25.38 crore for the third quarter ended December 31, 2007, compared with Rs 13.86 crore in the same period a year earlier. Total income during the third quarter rose 59.75 per cent to Rs 176.14 crore from Rs 110.26 crore in the corresponding quarter of the previous financial year. Interest income rose 55 per cent to Rs 154.84 crore from Rs 99.40 crore, while other income rose 96.13 per cent to Rs 21.30 crore from Rs 10.86 crore in the year-ago period. The bank’s operating profit rose 60.07 per cent to Rs 43.22 crore from Rs 27 crore posted in the third quarter of the previous financial year. Net interest income was up 24.57 per cent to Rs 49.34 crore from Rs 39.60 crore a year earlier. It is planning to open 50 new branches and 40 offsite ATMs this year. Currently, it operates 180 branches and 75 ATMs across the country.
9. Bank customers can buy movie, airline tickets using mobile phones. Standard Chartered Bank has tied up with PayMate, which has arrangements with 700 establishments across the country, for accepting payments via mobile phones. The UK bank’s customers can also book movie and airline tickets and transfer money through cell phones. PayMate is a mobile payment service in India, which enables online transaction of money via mobile phones to shop for gifts, buy movie and airline tickets, send flowers pay utility bills, subscribe to newspapers and magazines, among other things. PayMate also has a tie-up with 3,000 online merchants and 100 multiplexes across the country.

10. Andhra Bank reported a 16.69 per cent increase in net profit to Rs 159.02 crore for the quarter ended December 31, 2007, compared with Rs 136.27 crore in the corresponding period the previous year, on the back of a steep rise in profits from treasury operations. Total income grew 33 per cent to Rs 1,233.34 crore for the quarter under review compared with Rs 926.92 crore in the year-ago period. Treasury income grew 23.08 per cent, compared with 36.55 per cent registered by other banking operations during the same period. However, treasury operations registered over 400 per cent increase in gross profit while other banking operations reported a marginal dip. Other income, which also constitutes fee-based income, was up 29.33 per cent to Rs 147.65 crore during the three-month period, compared with Rs 114.16 crore in the corresponding quarter of the previous year.

Tides of 1.02.2008

1. A 25 per cent increase in net interest income and a doubling of ‘other income’ helped City Union Bank post a net profit of Rs 25.38 crore for the third quarter of the current year, 83 per cent higher than in the corresponding quarter last year.‘Other income’ was aided by commission income from selling Life Insurance Corporation’s products. In the nine months up to December, City Union Bank collected Rs 17 crore of first premium, compared with Rs 15 crore for the whole of last year. (Forty per cent of the first premium collected is the commission.)

2. Lakshmi Vilas Bank’s net profit increased by 23 per cent to Rs 3.82 crore for the quarter ended December 2007 against Rs 3.10 crore during the same period of the previous year. Its total income grew by 16.8 per cent to Rs 143.06 crore (Rs 122.5 crore) and other income by 35 per cent to Rs 41.32 crore (Rs 30.63 crore). Its total business during the first three quarters of the current fiscal rose to Rs 8,879 crore (Rs 8,098 crore).

3. YES Bank has reported 13.25 per cent rise in net profit for the third quarter ended December 2007 to Rs 54.24 crore as against Rs 47.89 crore reported in the corresponding quarter a year ago. Total income for the quarter was up 115.5 per cent at Rs 443.18 crore compared (Rs 205.69 crore) While total advances for the bank grew by 79.1 per cent to Rs 8,598 crore (Rs 4,800 crore), total deposits grew by 103.8 to Rs 11,129 crore (Rs 5,461 crore).

4. United Bank of India has posted a net profit of Rs 74.70 crore during the quarter ended December 31, 2007 compared with Rs 69.76 crore in the same period of last year, posting around nine per cent growth. Cumulatively, i.e., in first nine months, the net profit at Rs 307.21 crore (Rs 231.84 crore in nine months last year) posted a growth of 32.5 per cent on year-on-year basis.

5. Dhanalakshmi Bank has posted a 77 per cent increase in its net profit for the quarter ended December 2007. Its net rose to Rs 5.53 crore in the just ended quarter compared to Rs 3.11 crore during the same period of the previous year. Its income from operations increased by 24 per cent to Rs 77.31 crore (Rs 62.31 crore) and other incomes shot up by Rs 4.12 crore to Rs 8.67 crore. Segment-wise revenue break up reveals that the treasury income swelled from Rs 21 lakh for the quarter ended December 2006 to Rs 3.79 crore during the same period of 2007.

6. Since its inception in September 2005, the SME Rating Agency of India Ltd (SMERA) has credit rated 1,400 small and medium sized companies. The demand for its services, as revealed by the trend in number of companies rated, is growing. In the first six months of 2005-06, SMERA rated 101 SMEs. In the next full year, it did 445 companies. In the current year upto January, the agency has rated another 850 companies. It expects to rate at least another 350 companies before the year is out.The trend indicates that SMEs are finding that getting a rating from the agency helps. Sometimes a rating helps in getting bank funds at a slightly lower rate of interest, but more often than that, it gives the lender a higher level of comfort. A rating has also helped some companies to boost their image and secure more business.

7. DSP Merrill Lynch Fund Managers on Thursday signed a distribution agreement with Oriental Bank of Commerce (OBC) to distribute its investment products especially mutual funds through the latter’s branch network.

8. Housing finance company HDFC said on Thursday that it has reduced its retail prime lending rate (RPLR) by 25 basis points, with effect from February 1. The reduction in rates will benefit all the existing borrowers. The HDFC’s current RPLR is 14 per cent, which would now come down to 13.75 per cent. For the new home loan customers, HDFC’s rate of interest under the Adjustable Rate Home Loan continues to be at 10.25 per cent.

9. Indian Bank has launched schemes to finance the small scale tea sector in the Nilgiris.
“Before March 31, it intends to improve its presence in the Nilgiri tea sector. Its package covers all players – growers, green leaf agents, women workers, factory owners, traders and auctioneers.”

10. Indian Overseas Bank (IOB) has reported a net profit of Rs 308.14 crore for the third quarter of the year compared with Rs 246.78 crore in the corresponding period of last year, a growth of 25 per cent. The profits came essentially from core operations—income from treasury operations, which was lower in Q3 last year.For the first nine months of the current year, the bank made a net profit of Rs 896 crore against Rs 718 crore in the same period last year.

Tides of 29.01.2008

1. Reliance Money is aiming to take up the distribution reach of the company to all the 5,645 tehsils of the country after having succeeded in mobilizing 10 lakh plus IPO applications for the Reliance Power that concluded recently.Reliance Money a subsidiary of Anil Dhirubhai Ambani Group Company, Reliance Capital and is into equity broking and distribution of IPO, mutual funds, insurance and other financial products.

2. The life of the central banker has never been more difficult and challenging.In the good old days, it was enough if he focused on the domestic economy, its growth prospects and inflation, while cocking an eye on the current account and exchange rate. Last week, the US Federal Reserve, in a rare move, cut its benchmark Fed Funds rate from 4.25 per cent to 3.5 per cent in one go. And this was even before Wall Street opened. The collapse of Asian and European markets before US trading began set off alarm – if not panic – bells in the Fed, prompting its pre-emptive action.

3. Kotak Mahindra Life Insurance plans to sustain a growth of around 100 per cent in new business premium over the next year.In the first nine months of the fiscal, the company has raked in new business premium of Rs 560 crore (in terms of annualised premium equivalent where single premium is given only 10 per cent weightage), which is a growth of 80 per cent against the previous year. The company has reported a net loss of Rs 67 crore in the first nine months of the fiscal.

4. The General Insurance Corporation of India (GIC Re) has inaugurated its branch office in London. The Finance Minister, Mr P. Chidambaram, who inaugurated the office described it as a “giant step” in the international expansion of GIC Re. A press release quoting Mr Chidambaram said, “It is our goal to make GIC Re a world-class reinsurer. It already offers reinsurance support to a 1,000 insurance companies”. The London branch is the second representat ive office of the reinsurer to be upgraded to a branch. Its Dubai office was upgraded to a branch in February 2007.

5. United Bank of India (UBI) proposes to launch what it calls ‘financial clinics’ one each in the four metros — Kolkata, New Delhi, Mumbai and Chennai — to push not only the bank’s own retail products but also mutual funds and insurance policies of other companies, and various other investment instruments. “However, the clinics will target mainly the elite customers; i.e. those who have at least Rs 1 lakh to spare, to advise them how to get the maximum value of their money and better returns.” Each clinic would be located in the bank’s respective regional office.

6. The BNP Paribas Group has injected around Rs 570 crore (€500 million) in its Indian operations in the recently concluded quarter.With this latest equity infusion, the capital base of the bank will be enhanced to Rs 1,600 crore, said a press release from the group.This is in addition to the group’s investment in various joint ventures in the country over the last three years.

7. Rise in retail prices of fuels could raise inflation from below 4%. In an indication that it may hold back a policy rate cut tomorrow, the Reserve Bank of India (RBI) on Monday said inflation in India was artificially “suppressed” as higher international oil prices have not been passed on to domestic consumers.

8. In a double whammy for two-wheeler makers, whose sales fell nearly 8 per cent in April-December last year, leading financiers have put their products in the high-risk category. The consequences have been dire. Leading outfits like ICICI Bank and HDFC Bank have raised the down-payment to 30 per cent — earlier, there were schemes against a down-payment of just Re 1 — and tightened lending norms, with the result that their exposure to two-wheelers has fallen nearly 20 per cent so far this financial year. Besides, finance companies are also trying to enforce belt-tightening at dealer outlets.

9. Bank of Baroda (BoB) will establish a wholly owned subsidiary in New Zealand to expand its footprint in the Asia-Pacific region. Initially, the public sector bank plans to pump close to $20 million (25 million NZD) in the new entity. BoB will first cater to the needs of the Indian diaspora in the New Zealand capital, Auckland, and then gradually expand its franchise and branch network. Operations will begin in early FY09. The bank is in the process of obtaining a ‘retail deposit taking’ banking licence from the Reserve Bank of New Zealand and completing other incorporation formalities. Fitch Ratings has assigned an expected long-term foreign currency issuer default rating of ‘BBB-’ (BBB minus) to proposed subsidiary in New Zealand.

10. National Housing Bank (NHB) is partnering US-based AIG United Guarantee, Asian Development Bank (ADB) and International Finance Corporation (IFC) to set up India’s first mortgage guarantee company. The company is likely to launch operations in March. According to the agreement arrived among the partners a few months back, NHB will hold 43 per cent stake, United Guarantee 41 per cent while ADB and IFC will hold 8 per cent stake each in the the joint venture company. “The shareholding requires internal approvals from each partner company. We will be approaching the Reserve Bank of India for registration after it releases the final guidelines for mortgage guarantee companies.”

Tides of 28.01.2008

1. The net profit of Federal Bank grew 22.7 per cent to touch Rs 102.92 crore for the third-quarter ended December 2007.The bank posted close to 50 per cent growth in interest and other income. Interest expenditure increased by over 67 per cent. The net interest margin was at 3.17 per cent and net interest income grew by 14 per cent.

2. Punjab National Bank (PNB) is in talks with Asset Reconstruction Company of India Ltd (Arcil) to shed some of its non-performing assets (NPAs) through this route. The bank is looking to pare its NPAs to one per cent of advances by end March 2008 from the level of 1.33 per cent as on end-December 2007.

3. The Asian Development Bank (ADB) will provide a $350 million loan to improve urban infrastructure and services in 31 towns and cities in Uttarakhand, which is one of the country's top tourist destinations. The Manila-based regional development bank has identified Uttarakhand as one of its priority States in India as its development was lagging behind other States. Improved urban services are needed to support tourism and industry - two economic sectors with substantial development potential in the State.

4. The accretion to the country’s foreign exchange kitty continued, as reserves increased by $3.169 billion to $284.898 billion, for the week ended January 19. The rise is mainly due to the central bank buying dollars in order to keep the rupee from appreciating as well as due to currency revaluation. The increase is less than the previous week’s rise of $5.47 billion, when the total foreign exchange reserves touched $281.73 billion.

5. Insurance fortnight is being observed in the Vishakapatnam branch of Dhanalakshmi Bank . It was inaugurated by Mr P. Krishna Prasad, of the Pydah Engineering College. He said the bank has tied up with Metlife for selling life insurance products and during the fortnight efforts would be made to make the customers aware of the necessity for insurance.

6. ING Vysya Bank’s net profit jumped 198 per cent for the third quarter of the current financial year to Rs 42.75 crore. The increase was partly driven by exceptional revenues of Rs 18.38 crore from sale of a non-banking asset. Gross profits in the third quarter were Rs 72.35 crore, up from Rs 21.32 crore.But gross revenues improved to Rs 528.06 crore from Rs 370.87 crore during the corresponding quarter of the last financial year. The improved gross revenues were driven by improved interest and fee-based incomes.

7. During the quarter ended December 31, 2007, UCO Bank posted a lower net profit of Rs 82.78 crore as compared to Rs 122.95 crore in the same period last year. It would attribute the drop to higher provisioning — Rs 22 crore in respect of some accounts which had been upgraded as per norm and another 34 crore on account of MAT. The operating profit during the period amounted to Rs 197.58 crore (Rs 231.38 crore).The net interest income amounted to Rs 378 crore (Rs 415 crore) and other income Rs 149 crore (Rs 113 crore). The treasury income was Rs 67 crore (Rs 24 crore) and fee-based income Rs 52 crore (Rs 46 crore). The net interest margin was 1.9 (2.42).

8. Taking a cue from the US Federal Reserve which cut the interest rates by 75 basis points, the Fedearation of Indian Chamber of Commerce and Industry and the Confederation of Indian Industry have urged the Reserve Bank of India to signal interest rates cuts by 25-50 basis points. “With inflation under control and hovering around three per cent, it is the right time for the RBI to cut repo and reverse repo rates that are currently at 7.75 per cent and six per cent respectively by 25-50 basis points to cover the relative competitive disadvantage India has on the macro economic fundamentals. “This move would strengthen the economic fundamentals and also boost investors’ confidence,” said the CII President, Mr Sunil Bharti Mittal, in a statement.

9.Punjab National Bank (PNB) plans to raise further capital of about Rs 1,500 crore before end-March to fund business growth. It will do it only through Tier-II capital as it has headroom there. It will not be through tier-I perpetual bonds. PNB has till date in the current fiscal raised Rs 1,100 crore through tier-I perpetual bonds. This includes the Rs 300 crore bonds raised last week at a borrowing cost of little over 9 per cent per annum.

10. Federal Bank opened its first overseas representative office in Abu Dhabi recently . The office was inaugurated by Mr Vayalar Ravi, Union Minister for Overseas Indian Affairs. Mr M. Venugopalan, Chairman of the bank, said with the opening of the office in the UAE, the bank would be providing single window facility to its NRI clients in the Gulf region. The UAE region also contributes 20 per cent of the deposit base of the bank at Rs 4,000 crore. “This is the first overseas effort of the bank to follow the customers to wherever they live. And moving closer to the customers has always been a top priority of the bank,” Mr K.S. Harshan, ED, said. With the introduction of the representative office closer to the NRI customers, the bank has targeted a growth in overseas business volumes of over 30 per cent from the region in the following years.