Federal Bank offers 10% on 1000-day Resident, Non-Resident deposits

http://www.financialexpress.com/news/federal-bank-offers-10-on-1000day-resident-nonresident-deposits-deposits/981488/

Kerala-based private sector lender Federal Bank on Monday offered an interest rate of 10 per cent for resident and non-resident deposits for 1,000 days' maturity, effective from July 30 through August 17.

The bank is to open its 1000th branch on August 17, and to celebrate the landmark, special interest rate is on offer, it said

Highlights of First Quarter Review of Monetary Policy 2012-13

http://www.thehindubusinessline.com/industry-and-economy/banking/article3706968.ece

Highlights of the ‘First Quarter Review of Monetary Policy 2012-13’, announced by the RBI today:

* RBI leaves key interest rate unchanged

* Statutory Liquidity Ratio (SLR) cut to 23% (from 24%)

* Growth projection lowered to 6.5%, from 7.3%

* March-end inflation pegged at 7%, up from 6.5%

* Containing inflation remains main focus

* Situation in the euro area continues to cause concern

* CAD, fiscal deficit pose risk to economic stability

* Asks government to cut fertiliser and fuel subsidy

* Open market operations to continue to inject liquidity

* Mid-Quarter Review of Monetary Policy on September 17

* Second Quarter policy review on October 30

Ratios and Rates - as on 31.07.2012 - CRR, SLR, Repo, Bank Rates

Bank Rate :  9.00 %
Repo Rate : 8.00 %
Reverse Repo Rate : 7.00 %


Cash Reserve Ratio (CRR) : 4.75%
Statutory Liquidity Ratio (SLR): 23.00% (Reduced from 24%)

Monetary policy: RBI leaves key rates unchanged; surprises with SLR cut

http://www.thehindubusinessline.com/industry-and-economy/banking/article3706546.ece

The RBI has maintained status quo and left its key policy rates unchanged.

The repo rate remains at 8 per cent. The RBI had given a hint of this even yesterday while releasing its review of macroeconomic and monetary developments. Practically throwing up its hands, it had laid the onus on the Central Government to do the needful on the fiscal side.

It had noted that "monetary policy space needs to be created through fiscal adjustment and structural measures to improve supply conditions and boost the investment climate, so the revival is supported in a non-inflationary manner".

The RBI, however, threw in a surprise cut in the Statutory Liquidity Ratio (SLR) of scheduled commercial banks from 24.0 per cent to 23.0 per cent of their net demand and time liabilities with effect from the fortnight beginning August 11, 2012.

The policy actions are expected to anchor inflation expectations and maintain liquidity to facilitate smooth flow of credit to productive sectors to support growth, the central bank said.

100 ‘Talking ATMs’ for visually impaired from UBI

http://www.thehindubusinessline.com/industry-and-economy/banking/article3704262.ece

Union Bank of India (UBI) plans to open nearly 100 “talking ATMs” for visually impaired customers across the country in 2012-13, Mr D. Sarkar, Chairman and Managing Director, said here on Monday. So far, UBI has four such ATMs – in Mumbai, Lucknow and Gujarat — and their usefulness has prompted the bank to increase the number.

In a talking ATM operated by a visually challenged person, the ATM’s monitor screen remains blank. The customer is provided with a headphone to listen to the instructions and follow them accordingly.

Muthoot Finance net rises 29% at Rs 246 cr

http://www.thehindubusinessline.com/industry-and-economy/banking/article3703847.ece

Muthoot Finance on Monday reported 29 per cent growth in net profit at Rs 246 crore during the first quarter ended June 30.

Total income grew by 41 per cent at Rs 1,294 crore, retail loan assets under management decreased by Rs 1,337 crore to Rs 23,336 crore, a decline of five per cent.

The RBI restrictions in March this year with regard to the maximum loan that could be given against the value of the gold jewellery pledged did create concern, he said.

Results of various Banks - Q1 - list 2

Bank of Baroda net profit up 10% in Q1

Bank of Baroda posted a measly 10 per cent growth in first-quarter net profit as the bank set aside more money to cover bad loans. For the April to June period, the bank net profit rose to about Rs 1,139 crore from Rs 1,033 crore, a year ago.

IOB Q1 net up 13.5% at Rs 233.43 cr

Indian Overseas Bank (IOB) today reported a 13.5 per cent increase in net profit at Rs 233.43 crore for the first quarter ended June 30, 2012. The public sector bank’s net profit was Rs 205.58 crore during the same period last fiscal.

Allahabad Bank net up 23% on core operations

Backed by growth in core operations and improved recovery, Allahabad Bank posted a 23 per cent rise in net profit during the first quarter of this fiscal. Net interest income grew 11 per cent to Rs 1,306 crore.

Corporation Bank posts 5% growth in first quarter net profit

Corporation Bank’s net profit nudged up marginally by five per cent in the first quarter as it set aside higher amount to cover bad loans. For the April to June quarter, the public sector bank’s net profit rose to about Rs 370 crore from Rs 351 crore in the corresponding period a year-ago.

What's at stake for Vijay Mallya if Kingfisher fails?

http://www.moneycontrol.com/news/business/what39s-at-stake-for-vijay-mallya-if-kingfisher-fails_737113.html

If liquor baron Vijay Mallya's Kingfisher Airlines fails, lenders owed USD 1.4 billion may end up with a small stake in his spirits business, a modest office building, the carrier's brand, and not a lot else.

A USD 16 million beachfront villa in Goa, where Mallya throws parties and shoots his Kingfisher swimsuit calendar, is owned by his UB Holdings Ltd (UBHL) and pledged as collateral to State Bank of India, Kingfisher's lead bank. But Mallya's UB Group wants to swap the villa for another asset and says it has the right to do so. SBI is resisting.

Through interviews with bankers, lawyers, and others in the financial industry, as well as information provided by the company and publicly available data, Reuters has pieced together what parts of Mallya's empire are at risk if Kingfisher falls.

While Kingfisher has never made a profit, it grew quickly to become India's No.2 airline by domestic market share. It has since been knocked back to sixth, crippled by high debt and fierce competition.

Banks have guarantees of more than USD 1.2 billion from Mallya and his holding company, but collecting on them could prove difficult, and most of Mallya's lenders, mainly state banks, would pursue that only as a last resort, people familiar with the matter said.

No shares or other assets were directly pledged to banks against specific loans, according to Kingfisher.

Know A/C Balance by sending missed calls - Facility by PNB

http://www.thehindubusinessline.com/industry-and-economy/banking/article3699906.ece

Punjab National Bank has introduced a new facility which enables its customers to know their savings account balance by sending ‘miss calls’.

The customers have to give a miss call on the call centre number of the bank 1800 180 2222 or 0120-2490000 for less than three rings from their registered mobile numbers. Immediately, their accounts balance will be sent as an SMS to their mobile phones.

New Core Banking Solution for pensioners - from SBH

http://www.thehindubusinessline.com/industry-and-economy/banking/article3700104.ece

State Bank of Hyderabad has launched a core banking solution-linked service for subscribers of the New Pension Scheme of the Government. 

The service would give make it easier for subscribers of the pension scheme to make contributions as it can be linked to bank accounts online. 

The prospective pension scheme subscribers can enrol themselves at branches of SBH. Mr M. Bhagavantha Rao, Managing Director, SBH, formally inaugurated the service at the NPS unit in the Gunfoundry branch here on Friday.

Mobile Banking - Transaction amount treble to Rs 286 cr in May

http://www.business-standard.com/india/news/mobile-banking-deals-treble-to-rs-286-cr-in-may/180603/on 

Banking transactions through mobile phones have more than trebled to Rs 286 crore during May on account of a higher number of users with hand-held devices.

The value of such transactions stood at Rs 91 crore in May 2011, according to the Reserve Bank.

The number of bank transactions through mobiles also grew over two-and-half times to 3.34 million in May, 2012 from 1.28 million in May, 2011.

As number of mobile phone subscribers are growing rapidly, banks in collaboration with telecom companies are seeking to develop an alternate channel for the delivery of banking services as a part of the financial inclusion programme.

As on May 31, 2012, the RBI has permitted 69 banks to provide mobile banking services to their customers. 

Over Rs 2,400 cr lying in inoperative bank accounts: RBI

http://www.thehindubusinessline.com/industry-and-economy/banking/article3699720.ece

More than Rs 2,400 crore is lying as unclaimed deposits in the over one crore bank accounts across the country, the RBI has said in an RTI reply.

According to the data revealed by the RBI, the State Bank group has over Rs 233 crore unclaimed funds in its 10 lakh accounts, public sector banks over Rs 1,900 crore in about 86 lakh accounts, private sector banks over Rs 233 crore in more than 14 lakh accounts and foreign banks over Rs 69 crore in over 46,000 accounts till December 31, 2011.

The RBI in a circular had asked banks to treat savings as well as current accounts as inoperative or dormant if there are no transactions in the account for over a period of two years, it said.

According to the RBI, there should not be any charge for activation of an inoperative account and the bank’s interest on savings accounts should be credited on regular basis whether the account is operative or not.

If a fixed deposit receipt matures and proceeds are unpaid, the amount left unclaimed with the bank will attract savings bank rate of interest, the RBI told activist, Mr Subhash Agrawal, in response to his RTI query.

It had also asked the banks to make efforts to find the whereabouts of the customers or legal heirs in respect to existing accounts which have already been transferred to the ‘inoperative accounts’ ledger.

Maruti Q1 net profit dips 23%

http://www.moneycontrol.com/news/results/maruti-q1-net-profit-dips-23_736789.html

India's largest car maker Maruti Suzuki India today reported a 22.84% fall in its net profit for the quarter ended June 30, at Rs 423.77 crore. The company had posted a net profit of Rs 549.23 crore in the corresponding period last year, Maruti Suzuki India (MSI) said in a statement.

The net sales during the first quarter, however, increased by 27.53% to Rs 10,529.24 crore from Rs 8,256.58 crore in the year-ago period, it added.

During the April-June period, MSI sold a total of 2,95,896 vehicles compared to 2,81,526 units in the same period last year, up 5.10%.

RBI against bank licences for corporates

The dreams of big industrial houses and non-banking finance companies (NBFCs) to set up commercial banks are unlikely to materialise as the Reserve Bank of India (RBI) is against giving banking licence to any of them for the time being.

Read full story : 

http://www.financialexpress.com/news/rbi-against-bank-licences-for-corporates/979474/

Adopt e-documents to help exporters, banks urged

http://www.thehindubusinessline.com/industry-and-economy/article3692856.ece

Banks must adopt the electronic Bank Realisation Certificate as this will reduce transaction costs for exporters and make them competitive, said Mr S.R. Rao, Commerce Secretary, Ministry of Commerce.

This involves electronic transmission of documents and details on foreign exchange realisation on exports from banks to the Directorate General of Foreign Trade (DGFT).

“The Government has a firm endeavour and commitment to make our exports competitive vis-à-vis competition from other markets. Policy attempts are being made to reduce transaction costs substantially,” said Mr Rao.

Currently, exporters get a manual certificate from banks. “eBRC will not only bring down transaction costs but it will also reduce paper work. It will be particularly useful for small exporters,” said Mr Rao.

SBT drive for SMEs - OTS

http://www.thehindubusinessline.com/industry-and-economy/banking/article3692927.ece

State Bank of Travancore (SBT) has launched a one-time settlement (OTS) campaign for repayment of non-performing accounts in the micro, small and medium enterprises (MSME) segment.

The scheme is applicable to all sub-standard assets (in default for more than 12 months) without collateral backing.

It is also applicable for doubtful or ‘loss assets’ (loss identified but not written off) as on March 31, 2012, as defined in the MSMED (MSME Development) Act 2006.

All MSME borrowers can avail this special opportunity and settle their outstanding with the bank, a bank spokesman said here.

There is also an additional incentive of 15 per cent and 10 per cent discount on the OTS amount arrived for borrowers who make full payment respectively within one month or three months from the date of approval of the OTS.

The last date of receipt of application by branches is August 31. More details can be had from the nearest branch or the MSME department at the SBT head office (phone no: 0471-2353658).

SBI bond sale sees largest ever orderbook

http://www.financialexpress.com/news/sbi-bond-sale-sees-largest-ever-orderbook/979695/

The Pratip Chaudhuri-led State Bank of India (SBI), India's largest lender managed to achieve the lowest ever coupon for an Indian issuer for a 5-year tenor after its much awaited bond priced 375bp over treasuries overnight.

That came on the back of an orderbook as large as USD6.8bn, the largest SBI has ever seen on a dollar bond despite the negative headlines about the economy.

But that achievement was soured by a less than a stellar performance in the secondary market this morning. The bonds went to as high as 380bp but rebounded and are currently back to re-offer level.

That trade also triggered selling in the Indian banking sector with spreads marked 3-5bp wider to factor in more supply.

Results of various Banks - Q1

PNB net rises 12.7% in Q1

Punjab National Bank today reported a 12.7 per cent increase in net profit for the quarter ended June 30 at Rs 1,246 crore (Rs 1,105 crore).

ICICI Bank standalone net profit up 36% in Q1

ICICI Bank has reported a 36 per cent rise in net profit to Rs 1,815 crore on a standalone basis for the first quarter of FY13.

Central Bank of India net profit up 20%

Central Bank of India’s first-quarter net profit grew by about one-fifth as the bank earned a higher interest on its advances. For the April to June quarter, the bank’s net profit grew to about Rs 336 crore from Rs 281 crore, a year ago.

Bank of India profit rises 71% to Rs 887 cr

Lower provisioning helped Bank of India report a 71 per cent jump in the April-June period net profit at Rs 887 crore as compared with Rs 517.5 crore in the year ago period.

Vijaya Bank Q1 net up 54% on lower provisioning, higher interest income

Lower provisioning for NPAs and higher net interest income lifted Vijaya Bank’s first quarter net profit by 54 per cent to Rs 111.36 crore.

Insurer accountable to the insured for act of agent: Consumer forum

http://www.thehindubusinessline.com/industry-and-economy/banking/article3687586.ece

When an insurance company accepts without demur personal cheques of its agents, after the agent had collected premium from the insured favouring himself in the first instance, it cannot subsequently wriggle out of its commitment to the insured.

The National Consumer Disputes Redressal Commission in Bajaj Allianz Insurance Company Ltd v. Sali Thomas found the argument of the appellant—insurer, that it was not responsible for the actions of its agent in not paying the premium collected in his personal name and deposited in his personal bank account, untenable after having acquiesced in the act by accepting the first few instalments.

The insurer’s plea that the agent was no longer its employ when the third and the last instalment was collected by him once again in his personal capacity did not wash with the Commission. Had it put its foot down on the pernicious practice of the agent collecting premium in his personal name and then issuing his own cheque to the insurer, its stand would have been tenable. The commission pointed out that the insured obviously cannot be faulted because the insurer had fostered the notion that the agent had apparent authority to collect cheques in his personal name by condoning this act earlier.

Revised RBI norms: Indirect agriculture lending target - difficult to achieve

http://www.thehindubusinessline.com/industry-and-economy/banking/article3687583.ece

Achieving the indirect agriculture lending target under the revised Reserve Bank of India guidelines on priority sector lending may prove to be an uphill task for banks.

The reason: loans for food and agro processing units will now be classified under the Micro and Small Enterprises (MSEs) category, provided the units satisfy the investments criteria prescribed for the latter.

A manufacturing unit is classified as a micro enterprise if investment in plant and machinery does not exceed Rs 25 lakh. If investment in plant and machinery is more than Rs 25 lakh but less than Rs 5 crore then a unit is classified as a small enterprise.

The annual targets for both direct and indirect agricultural lending are set at 13.5 per cent and 4.5 per cent of (adjusted) net bank credit (obtaining as on March-end of the preceding year), respectively.

The repercussion of this move will be felt by banks if they are not able to build up their indirect agriculture lending by March-end 2013 to the prescribed level.

They will have to make up for shortfall, if any, in the indirect agriculture lending target by parking funds in low-yielding deposits with National Bank for Agriculture and Rural Development/ Small Industries Development Bank of India/ National Housing Bank.

So far, banks have been comfortably meeting the indirect agriculture lending target as it included loans to food and agro-based processing units with investments in plant and machinery up to Rs 10 crore.

HSBC to get 23 Royal Bank of Scotland branches

http://www.business-standard.com/india/news/hsbc-to-finally-get-23-royal-bankscotland-branches/481463/ 

After two years of negotiations, the Reserve Bank of India is set to allow HSBC to acquire 23 of the 31 branches in India of Royal Bank of Scotland.

The HSBC-RBS deal, announced in July 2010, was part of RBS’ strategy to retreat from some businesses outside its home market.Though RBI had cleared HSBC’s acquisition, it had not allowed the RBS branches to be a part of the deal. RBI had asked RBS to surrender the branch licences while selling its business. As a result, the deal, supposed to be completed by September 2011, got delayed.

HSBC had insisted the transaction would not be viable if it did not get a majority of the branches. RBI has now agreed that HSBC can take over the 23 branches but in a staggered manner — that is, seven to eight each year. 

The RBI decision will eventually take HSBC’s branch count in India to 73, helping it consolidate as the second largest foreign bank in the country, in terms of network.

SBI's USD 1 Bn international bond issue opens

http://www.financialexpress.com/news/sbis-usd-1-bn-international-bond-issue-opens/979377/0

State Bank of India today launched an international five-year bond sale programme to raise at least USD one billion.

A benchmark bond issue typically aims to raise more than USD 500 million. 

The issue's investment bankers include Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank, JP Morgan and UBS. SBI launched a marketing campaign for its benchmark bond issue on July 16 in Hong Kong, Singapore, London, New York, Los Angeles, Boston, Frankfurt and Zurich.

The bank has a board mandate to raise USD 10 billion from overseas markets over the next few years, and it has a headroom to raise nearly USD 7 billion more since it has raised USD 4 billion.

The senior notes offering, which has been rated as 'BBB-' by Standard & Poor's, is a dollar-denominated issue. Giving the 'BBB-' rating on the SBI bond sale, S&P had earlier said this reflects the long-term counterparty credit rating on the bank.

SBI's move to raise overseas funds comes in the wake of the recent RBI steps to stem the falling rupee value measures to encourage foreign debt inflows.

SBM - Q1 Result

State Bank of Mysore posted 38 per cent lower net profit for the April-June quarter at Rs 39.79 crore (against Rs 64.28 crore a year ago), mainly due to higher provisioning. 

Total income rose 33 per cent over last year to Rs 1,566.7 crore (Rs 1,176.26 crore). 

Operating profit was Rs 298.57 crore (Rs 255 crore). Interest income grew 22 per cent to Rs 1435 crore. 

In a stock exchange filing, the bank said it had made an NPA provisioning of Rs 196.9 crore during the quarter, which was well above the Rs 100 crore it provided for a year ago. 

Gross NPA was at 4.67 per cent (Rs 2.83 per cent) and net NPA 2.43 per cent (1.42 per cent).

Reserve Bank eases derivatives exposure guidelines for banks

http://www.financialexpress.com/news/reserve-bank-eases-derivatives-exposure-guidelines-for-banks/978480/

The Reserve Bank of India (RBI) on Monday eased the norms for banks to restructure derivatives contracts by allowing them to partially or fully terminate the contract before maturity.

Such termination would not be treated as restructuring of the contract provided all other parameters are unchanged, the central bank said. Therefore, banks need not settle mark-to-market value at the time of termination through cash, RBI said.

‘In such cases, if the MTM value of the derivative contract is not cash settled, banks may permit payment in instalments of the crystallised MTM of such derivative contracts (including Forex Forward Contracts),’ the central bank said in a notice. The RBI has allowed banks to recover the mark-to-market hit in instalments from their clients, subject to some conditions.

The central bank said that banks must have a board approved policy for the same.

Indian Bank makes Rs 32-cr provision for Air India loan

http://www.thehindubusinessline.com/industry-and-economy/banking/article3682518.ece

Indian Bank has made a provision of Rs 32 crore against its Rs 800-crore loan to Air India, the bank’s Chairman and Managing Director, Mr T. M. Bhasin, said at a press conference here today.

He said the bank was required to make Rs 8 crore of provision for each of the four quarters of the year, but it decided to take the entire provision in the first quarter itself.

Except for Air India, the bank has no other exposure to the aviation sector.

Banks go slow on film financing

http://www.thehindubusinessline.com/industry-and-economy/banking/article3679196.ece

Film financing has slowed down in the last two years with banks treading a cautious path.

Due to unpredictable revenue streams, banks and financial institutions are not financing individual film projects but taking exposure at the corporate level.

Industry analysts also say that the tiff over the revenue-sharing pattern had halted many movie releases leading to higher default on loans by distributors.

Exim Bank (Export Import Bank of India) has reduced its exposure to film financing to Rs 200 crore from a peakof Rs 350 crore in 2007-08. The financial institution has financed close to 135 Indian films since it got active in film financing in 2004.

Foreign banks ask for more branches

http://www.business-standard.com/india/news/foreign-banks-ask-for-more-branches/481251/

Large foreign banks in the country are grappling with the revised priority sector lending targets as these lenders do not have adequate branch presence to meet the new guidelines. Many of them fear stress on their profitability as their risk management frameworks are not customised to manage farm loans and advances to weaker sections of the economy.

“We have priority sector targets in many countries where we operate. But in India, the challenge is different. The regulator wants us to lend to sectors where we have limited or no expertise,” said a senior executive of a large foreign bank, who did not want to be named. “Our processes are not in tune to manage the risks in these portfolios. It’s going to be difficult to meet these new guidelines.”

On Friday, the Reserve Bank of India (RBI) released the revised guidelines on priority sector lending, which mandated higher target for foreign banks with 20 branches or more in the country. These banks need to lend 40 per cent of their net credit to the priority sector instead of 32 per cent earlier. They will also have sub-targets and get five years time (starting from April 2013) to meet the new guidelines.

Currently, four foreign banks — Standard Chartered Bank, Hongkong and Shanghai Banking Corp, Citibank and Royal Bank of Scotland — have more than 20 branches in India. For foreign banks with less than 20 branches, the priority sector target has been kept unchanged at 32 per cent with no sub-targets.

SBBJ - Q1 - Results

State Bank of Bikaner and Jaipur (SBBJ), the associate bank of State bank of India, reported a 31 per cent growth in net profit to Rs 168 crore in April-June period for FY2012-13 due to higher interest income and from other income. Net profit in the year-ago period was at Rs 128 crore.

Net Interest Income (difference between interest earned and interest expended) rose by 33 per cent to Rs 656 crore from Rs 493 crore in Q1FY’12.

Other income during the quarter increased by 63 per cent to Rs 154 crore (Rs 94 crore in Q1FY12) due to higher government commission. Operating profit jumped by 61 per cent to Rs 469 crore (Rs 291 crore).

Net Interest Margins increased by 48 basis points to 3.90 per cent from 3.42 per cent in Q1FY’12.

SBBJ’s advances and deposits during the quarter grew by 21 per cent and 20 per cent respectively.

Net non performing assets (NPAs) increased by 2.31 per cent from 1.21 per cent in the same quarter last year.

New CDR norms to erode PSBs’ profitability by up to 18%: Report

http://www.thehindubusinessline.com/industry-and-economy/banking/article3677736.ece

The new corporate debt recast (CDR) norms issued by the Reserve Bank last week will have a massive impact on the profitability of State-run banks to the tune of 18 per cent, says a report by Standard Chartered Securities.

However, the report says, the impact on private sector banks will be minimal, up to 2 per cent in profit terms.

State-run banks together had a CDR book of Rs 1,17,100 crore as of FY12, according to the report. In FY12 alone, they added Rs 62,800 crore in restructured assets.

The new provisions, under which banks will have to provide additional 3 per cent in the first year and 5 per cent in the second year, will see this increasing by Rs 3,500 crore.

SBI will have to make Rs 930 crore additional provisioning at 3 per cent incremental coverage, which will bring down EPS growth (FY12) to 34 per cent from 42 per cent. As of March 12, SBI had a restructured loan book of Rs 31,160 crore with the FY12 CDR book totalling Rs 8,400 crore.

The new guidelines proposes 5 per cent provision on restructured loans up from the current 2-5 per cent in a phased manner over two years.

Cost of printing Currency Notes

http://www.thehindubusinessline.com/industry-and-economy/banking/article3662736.ece

It costs the government nearly one rupee to print a currency note of Rs 10 denomination. And, Rs 1.79 to make a Rs 100 currency note.

SBI plans Lead Management System (LMS) for Associate Banks

http://www.thehindubusinessline.com/industry-and-economy/banking/article3666419.ece

State Bank of India plans to roll out ‘Lead Management System’ (LMS) in its five associate banks to help them garner more business.

Under LMS, customers of associate banks can not only access details of products of their respective bank from SBI’s helpline number, but they can also register for further contact by an expert from the bank.

According to a bank statement, the expert will call the customer, resolve the doubts and queries, and help him select a product. LMS is currently available to all SBI customers.

The associate banks of SBI are: State Bank of Bikaner and Jaipur; State Bank of Hyderabad; State Bank of Mysore; State Bank of Patiala; and State Bank of Travancore.

SBI’s helpline offers account-related information, hot listing and tracking of ATM cum debit cards, information about products and services, and registering of complaints.

Though the associate bank customers have been enjoying SBI’s helpline facilities since February, they do not have access to LMS.

Priority Sector Lendings - Revised Guidelines

http://www.rbi.org.in

The highlights of the revised priority sector guidelines are:

• Overall target under priority sector is retained at 40 per cent as suggested by Nair Committee.
• The targets for both direct and indirect agricultural lending are kept unchanged at 13.5 per cent and 4.5 per cent of Adjusted Net Bank Credit, respectively.
• The following important activities, among others, form part of priority sector lending as per the revised guidelines:
  • Loans to Micro and Small Service enterprises up-to 1 crore and all loans to Micro and Small manufacturing enterprises
  • Loans upto 25 lakh for housing in metropolitan centres of population above 10 lakh and 15 lakh at other centres.
  • Loans to Food and Agro processing units.
  • Loans to individuals for educational purposes including for vocational courses upto 10 lakh in India and 20 lakh abroad.
  • Loans for housing projects exclusively for economically weaker sections and low income groups, provided the cost does not exceed `5 lakh per dwelling unit.
  • Loans to distressed farmers indebted to non institutional lenders.
  • Overdrafts upto 50000/- in No-Frills account.
  • Loans to State Sponsored Organisations for scheduled castes and scheduled tribes.
  • Loans to individuals for setting up of off-grid solar and other off-grid renewable energy solutions for households.
  • Loans to individuals other than farmers upto 50000/- to prepay their debt to non- institutional lenders.
• Foreign banks having 20 or more branches in the country will be brought on par with domestic banks for priority sector targets in a phased manner over a maximum period of 5 years starting April 1, 2013. They will be required to submit an action plan for achieving the targets over a specific time frame to be approved by RBI.
• The foreign banks with less than 20 branches will have no sub targets within the overall priority sector lending target of 32 per cent. This is expected to allow them to lend as per their core competence to any priority sector category.
• Bank loans to Primary Agricultural Credit Societies (PACS), Farmers' Service Societies (FSS) & Large Adivasi Multi-Purpose Co-operative Societies (LAMPS) ceded to or managed/controlled by such banks for on-lending to farmers for agricultural and allied activities are included under direct agriculture.
• Investments by banks in securitised assets, outright purchases of loans and assignments to be eligible for classification under priority sector provided the underlying assets qualify for priority sector treatment and the interest rate charged to the ultimate borrower by the originating entity does not exceed Base Rate of such bank plus 8 per cent per annum.

No Loan growth target for Public Sector Banks

http://www.business-standard.com/india/news/no-loan-growth-target-for-psbs/480936/

Public sector banks will not have to focus on their top line growth, as there will be no targets for them to meet credit and deposit growth for the current financial year. Instead, the finance ministry has asked the government-owned banks to focus on increasing efficiency and bringing down non-performing assets. Banks will now have targets on lowering the number of loss-making branches and cutting bad loans of regional rural banks.

At the beginning of every financial year, the government-owned banks indicate their targets to the finance ministry in statements of intent. The statements consist of parameters such as business growth, low-cost deposit growth, net NPAs, net profit, etc. Banks state their targets in each of the parameters in the financial year. Their performances are reviewed at the end of the financial year.

Now, the finance ministry wants banks to focus on increasing their profitability and improving the asset quality. As a result, some new parameters would come in. The finance ministry is holding meetings with each PSB bank chairman to finalise the targets. 

Will get to the bottom of HSBC issue, says Home Secretary

India will get to the bottom of alleged violation of safety compliance on money laundering and terrorist financing by HSBC staff in the country, a top Government official has said.

An investigation report of the US Senate Permanent Sub-committee has revealed that the banking major had failed to prevent money laundering by drug cartels and terrorist into US and other countries. It has been found that HSBC’s anti-money laundering compliance department, which included employees in India, was highly inadequately staffed.

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http://www.thehindubusinessline.com/industry-and-economy/banking/article3658677.ece

No loans for students under management quota: FinMin

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The Finance Ministry has clarified that students enrolled under management quota will not be eligible for bank loans.

Backing an earlier decision by the Indian Banks’ Association (IBA), the Minister of State for Finance, Mr Namo Narain Meena, has said that the “Model Educational Loan Scheme” is only for meritorious students.

The IBA had decided to allow loans only to “meritorious” students. The move had created a controversy as the matter was raised in Parliament. Some MPs had written to the then Finance Minister, Mr Pranab Mukherjee, to reconsider the decision.

“As per the scheme, the assessment of the educational loan is based on the employability and earning potential of the student upon completion of the course,” Mr Meena said.

Last year, the IBA issued a circular to all the member-banks a circular modifying the guidelines for disbursing educational loans. It had stated that students getting admission under the management quota were not eligible for loans.

The move is likely to impact 15 per cent admissions in professional educational institutions. It’s also being pointed out that students in minority-run institutions may be denied loans based on this circular.

FCNR, NRE, NRO Deposits in a nutshell

The Foreign Currency (Non-Resident) Accounts (Banks) scheme covers deposits the following currencies:

Pound Sterling, US dollar, Canadian dollar, Australian dollar, Euro and Japanese Yen - which are accepted from non-resident individuals of Indian nationality or origin (Non-resident Indians).

FCNR(B) deposits can be made for a minimum of one year and a maximum of five years. Both principal and interest are payable in foreign currency.

Rupee loans can be taken in India against the security of FCNR(B) deposits. Foreign currency loans can also be taken at select branches of Indian banks abroad against the security of FCNR deposits.

Non-Resident (External) Rupee Account (NRE Account) can be opened/maintained in the form of savings, current, recurring or fixed deposit accounts. Such accounts can be opened only by the non-resident himself and not through the holder of the power of attorney.

Balances held in the NRE account are freely repatriable. Accrued interest income and balances held in NRE accounts are exempt from income-tax and wealth tax, respectively.

Non-Resident Ordinary Rupee Account (NRO Account) NRO can be opened / maintained in the form of current, savings, recurring or fixed deposit accounts. These accounts are denominated in rupees.

NRIs/Persons of Indian Origin can remit from the balances held in their NRO account an amount not exceeding $1 million per financial year, subject to payment of applicable taxes.

Non-resident deposits: Banks barred from giving staff extra interest

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Banks cannot give additional interest rate benefit of one per cent per annum to their own staff on deposits under FCNR (B), NRE and NRO accounts, according to the Reserve Bank of India.

In a notification, the RBI said, “On a review, it has now been decided that banks should not allow the benefit of additional interest rate on any type of deposits of non-residents.

“Accordingly, the discretion given to banks to allow the benefit of additional interest rate of one per cent per annum as available to bank’s own staff on deposits under FCNR(B)/ NRE/ NRO accounts stands withdrawn.”

FinMin asks PSBs to restrict bulk deposits to 15%

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The Finance Ministry has asked public sector banks (PSBs) not to accept bulk deposits beyond 15 per cent of total deposits to improve asset-liability management.

“Ten per cent is the bulk deposit above the card rate and 5 per cent is the CDs (certificate of deposit). With an overall cap of 15 per cent banks have flexibility,” the Department of Financial Services Secretary, Mr D K Mittal, said on the sidelines of FIEO meet here.

A circular in this regard has been issued by the Ministry to the banks recently.

“It has a huge risk to us as a banking system. I don’t want to comment on that,” he said when asked for the response of the banks on that.

However, bankers are of view that putting a ceiling on the bulk deposits would reduce the flexibility to cut retail fixed deposit rates in a declining rate cycle. This would mean pressure on NIMs (net interest margin) of public sector banks.

According to some statistics, State Bank of India, Allahabad Bank and Indian Bank have bulk deposits lower than 15 per cent of their total deposits.

However, Canara Bank has bulk deposit of 43 per cent, followed by OBC at 28 per cent of the total deposits as of March 2012.

7 district co-op banks in Kerala join NABARD core banking drive

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Seven district cooperative banks have joined the core banking solution project phase II of the National Bank for Agriculture and Rural Development (Nabard).

They are based in Thiruvananthapuram, Kollam, Kottayam, Idukki, Kasargod, Kozhikode and Wayanad districts, a spokesman for the regional office of Nabard said.

SERVICE PROVIDER

Wipro will be the service provider. The project will be launched on August 1 and completed across 344 branches of these banks by March 31, 2013.

A total of 163 State and Central cooperative banks have joined the initiative of core banking solution (CBS) for cooperative banks.

CBS MIGRATION

These are drawn from the 10 states of Punjab, Haryana, Gujarat, Maharashtra, Uttar Pradesh, Chhattisgarh, Madhya Pradesh, Bihar, Tamil Nadu and Karnataka.

An estimated 5,543 branches of these banks would migrate to the CBS platform once the roll out is completed expectedly by December 31.

SBI to stop appointing individual business facilitators

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State Bank of India plans to discontinue the practice of appointing individual business facilitators.

The bank has close to 10,000 individual facilitators enrolled under its countrywide network. This apart, the bank uses the services of a large number of business facilitators enrolled under various institutions such as India Post and some NGOs.

The business facilitators are responsible for identification of potential borrowers, data collection and creating awareness about savings. According to a senior bank official, the individual facilitators were not serving the cause of financial inclusion and there were also instances of malpractices in their operations. This apart, market sources said that in most cases, the facilitators were not able to provide business commensurate to their commission, thereby impacting the bank’s margins.

“These ‘facilitators’ are mere information providers. They give business leads to the branch for further processing. In a number of cases, there were issues of moral hazards as these facilitators were not following the correct practices,” the official said.

The bank is finding it increasingly difficult to keep a check on such individual facilitators. It has also decided to terminate the services of existing individual facilitators on expiry of their agreements.

State Bank group opens financial literacy, counselling centre

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The State Bank group has opened a financial literacy and credit counselling centre at Citizen Service Centre, Tank Bund, here.

The centre, headed by an experienced/retired officer, would offer free counselling in person or over telephone/email on aspects such as calculation of interest on deposits, advances or loans, nomination facility, customer rights and fair practice codes, preparation of debt restructuring plans and service charges.

State Bank of Hyderabad, State Bank of India and their sponsored regional rural banks in Andhra Pradesh had earlier established a joint society called ‘Runa Viveka Aacharana’ with its headquarters at head office, State Bank of Hyderabad here, to establish financial literacy and credit counselling centres (FLCCs).

According to the Reserve Bank of India’s model scheme, lead banks will have to open FLCCs in district headquarters, mandals and towns in a phased manner.

With this opening of new centre, the State Bank group had completed the target of setting up FLCCs in 12 lead districts in which it was operating, the release added.

Axis Bank net jumps 22% in Q1

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Axis Bank has reported a 22 per cent increase in net profit at Rs 1,154 crore during April-June 2012-13 against Rs 942 crore in the year-ago period.

Net Interest Income rose 26 per cent to Rs 2,180 crore (Rs 1,724 crore during Q1FY12). The Net Interest Margin was 3.37 per cent in Q1FY13 compared with 3.28 per cent during Q1FY12.

Other income, comprising fee income and trading income, rose 14 per cent to Rs 1,335.51 crore (Rs 1,167.87 crore).

Year-on-year, deposits increased 21 per cent to Rs 2,22,631 crore (Rs 1,83,597 crore) and advances were up 30 per cent to Rs 1,71,146 crore (Rs 1,31,900 crore).

Shares of the private sector bank were trading at Rs 1,025.65 per share on the BSE at 2.20 pm, down 1.88 per cent over the previous close.