Need Rs 3,000 cr to merge one associate bank this year: Pratip Chaudhuri

http://www.business-standard.com/article/finance/need-rs-3-000-cr-to-merge-one-associate-bank-this-year-chaudhuri-113062100972_1.html

The State Bank of India (SBI) today said it would need up to Rs 3,000 crore to merge one of its associate banks with itself, adding that one of these banks would be merged  this year.

Pratip Chaudhuri, chairman of SBI, told shareholders during the annual general meeting (AGM): “SBI will need Rs 1,000 to Rs 3,000 crore in capital if it were to merge one of its associate banks with itself.”

After the AGM, Chaudhuri told reporters a committee headed by S Vishvanathan, managing director (associates and subsidiaries) at SBI, is looking into all the aspects. “That committee would report to the board (and) then we will finalise the name.”

When asked whether it would be a listed entity or an unlisted one, Chaudhuri said: “We have an open mind.”

Currently, SBI has five associate banks – State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank of Patiala, State Bank of Travancore and State Bank of Mysore.

Out of these, State Bank of Hyderabad and State Bank of Patiala are unlisted while rests are listed.

Earlier there were speculations that bank might first prefer to merge unlisted entities first as they completely owned SBI. But Chaudhuri cleared the air by saying all aspects will be looked into and it has open mind over the issue.

Incidentally Chaudhuri had a key role in merging in another associate bank State Bank of Saurashtra in 2008 as its managing director. Seventh associate bank, State Bank of Indore was merged in 2010.

On SBI's own capital raising plans this year, he said a decision would be taken by next month.

According to Chaudhuri, the recent depreciation in rupee was a result of global phenomenon and not restricted to India. "I think it’s not a reaction to India, it’s a reaction overseas everywhere” he said.

“Some of the money is headed back to US (and) all the markets including England, Germany all have lost substantially," Chaudhuri said, adding that it affects India more because of our dependence on the inflows.

ICICI, Axis, HDFC Bank fined over Rs. 10 crore for violating KYC norms

http://profit.ndtv.com/news/industries/article-reserve-bank-fines-private-banks-over-rs-10-crore-for-violating-kyc-norms-323205

The Reserve Bank of India on Monday said it had imposed penalties on Axis Bank, HDFC Bank and ICICI Bank for violating guidelines related to details of customer identity known as "know your customer" rules.

The central bank investigated the banks following an investigation by an independent organisation, which had alleged widespread money laundering practices at their branches.

The RBI said it had not found initial evidence of money laundering against the three banks.

Axis Bank was fined Rs. 5 crore, HDFC Bank Rs. 4.5 crore and ICICI Bank, the country's second-largest lender, Rs. 1 crore.

Cheque bounce offence likely to go

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/cheque-bounce-offence-likely-to-go/articleshow/20420176.cms

The government will soon bring an amendment in the Negotiable Instruments (NI) Act that will restrict banks from dragging a person to court for an offence like cheque bounce. All such cases, after the changes are affected, will have to be decided only through arbitration , conciliation or settlement by Lok Adalats.

It is estimated that more than 30% of all the pending cases in courts across the country are either related to cheque bounce or traffic challans. The proposed amendment has been recently suggested by an inter-ministerial group (IMG), which was set up last year to make suggestions for necessary policy and legislative changes to deal with a large number of cases pending in various courts.

The law ministry is working closely with the finance and surface transport ministries to make suitable changes in the law and cases falling under both categories (cheque bounce and traffic challans) will be ineligible to be taken to courts unless some other criminal intent is alleged. The changes in the NI Act will make it compulsory for the disputing parties to resolve the matter through alternative dispute resolution mechanism. Amendments in the Motor Vehicles Act are suggested for cases related to traffic challans.

"The use of alternative dispute resolution mechanism on the lines of Section 89 of the Code of Civil Procedure , through arbitration; conciliation; judicial settlement including settlement through Lok Adalat of mediation may be made compulsory in cheque bounce cases by making suitable amendments in the negotiable instruments act," the IMG recommendation said.

The IMG report, being implemented by the finance ministry, said a summary procedure for dealing with cheque bounce cases as a schedule of procedure may be codified, and developed by the department of financial services. The same may suitably be incorporated in the Negotiable Instruments Act, it added. The existing rules for court fees do not take into account the amount involved in the cheque or volume of complaint cases. "The court fee may be made Ad-valorem to act as a deterrent for indiscreet and vexatious complaints ," the IMG has said. Provision may also be made for defaulting party to bear the cost of litigation in cheque bounce cases, it added. 

Don’t lend short for long-drawn projects, SBI chief tells associate banks

http://www.thehindubusinessline.com/industry-and-economy/banking/dont-lend-short-for-longdrawn-projects-sbi-chief-tells-associate-banks/article4766140.ece

State Bank of India (SBI) Chairman Pratip Chaudhury has cautioned associate banks against committing short-term funds for long-gestation projects.

He said this with specific reference to exposure to a series of big-ticket infrastructure projects in Kerala, where State Bank of Travancore (SBT), an associate bank, is headquartered.

BIG PROJECTS

Chaudhuri was here to attend the annual general meeting of the associate bank and also a corporate social responsibility event that coincided with it.

Among projects announced in the State are Metro Rail in Kochi; monorail in Thiruvananthapuram and Kozhikode; a high-speed rail corridor; the Vizhinjam container terminal and the Kannur international airport.

By no chance should short-term funds be advanced to these projects since it could lead to a mismatch of deposit base versus long-term advances committed.

Chaudhury advised banks to examine how and when revenue stream from a project starts kicking in. It is easy to take a decision on projects, for instance Metro or monorail, with an assured revenue stream.

NOT SAME

It would not be the case with projects such as a flyover or a bridge, which propped up the contentious issue of toll as a means of realising costs over a period of time.

Chaudhury said parent SBI was sitting on a cash surplus of Rs 40,000 crore. It is willing to fund projects being executed by reputed contractors known for speed of implementation.

Separately, he reiterated his demand that all loans, including home and vehicle, be brought under a single regulator.

Why should there be a separate regulation for commercial banks and housing finance companies when they lend funds to the same sector, he wondered.

PAT FOR SBT

He complimented SBT for maintaining a good credit-to-deposit ratio of 69 per cent, indicating the extent of credit sanctioned within the home State relative to the deposit base.

This should help remove the misconception that the bank is taking away funds outside for investing in lucrative projects in other States.

Chaudhury said the associate bank had revealed solid financial position with a net profit of Rs 615 crore during 2012-13, backed up with a deposit base of Rs 85,000 crore and advances of Rs 67,000 crore.

Crash of the rupee and how it impacts you

http://articles.economictimes.indiatimes.com/2013-05-27/news/39557333_1_rupee-petrol-and-diesel-dollar

Where you gain

> NRIs remitting money back home are effectively putting more money into their family's wallets as they will get more rupees for every dollar remitted.

> Export oriented companies and those with significant foreign currency revenues will benefit from the rupee decline. This is because they will earn more rupees for every dollar worth of goods sold or assets held.

> Domestic gold prices are likely to receive a boost on account of the declining rupee. Individuals in global funds gain as the performance of these funds in rupee terms gets multiplied to the extent of the fall in the rupee.

Where it hurts

> Companies with foreign currency borrowings or those importing raw materials from abroad take a hit.

> A weaker rupee may dampen FII sentiment as the value of their investments (in dollar terms) erodes.

> Foreign travel and overseas education become more expensive.

> Weakening rupee will raise the cost of petrol and diesel.

State Bank of India suggests RBI as single regulator for all home loans

http://www.indianexpress.com/news/state-bank-of-india-suggests-rbi-as-single-regulator-for-all-home-loans/1117535/

The State Bank of India today suggested that the (RBI) Reserve Bank of India should be the regulator for all home loans provided by banks or housing finance companies.

"I see no justification for having a separate regulator for home loans. Perhaps the regulations of objective would be better served with RBI itself becoming the sole regulator for all loans including home loans," State Bank of India chairman, Pratip Chaudhuri said on the sidelines of the ICC banking summit here.

Banks currently accounted for more than two-thirds of total home loans disbursed in the country. A single regulator having the same rules for all players would help remove the regulatory arbitrage that existed between banks and HFCs, he said.

Currently RBI regulated home loans provided by all commercial banks, while housing finance companies like HDFC Ltd, LIC Housing Finance Co Ltd, also offered home loans which were regulated by the National Housing Bank.

RBI had raised objections to SBI's dual rate policy on housing loan which was tagged as teaser loans introduced some time ago.

"If a bank offers a slightly lower rate in the initial years and higher rate in later years it is called a teaser loan and they are required to make provision but could similar rules not be applied for other players in the home loan market?" Chauduri said.

Meanwhile, SBI has urged upon RBI to reduce the minimum tenure of deposits to three days from seven days for inducing more flexibility of consumers.

"These are not issues that will lead to inflation or bring imbalances in financial stability, but induce flexibility to the depositor," Chaudhuri said.

"Now we have shadow banking offering investors investment for even one day," he said.

The liquidity risk was not very different from a seven-day deposit and three day deposit, but the question was why make banks handicapped," he asked.

Woman bank manager gives chase, helps nab serial conman

http://www.indianexpress.com/news/woman-bank-manager-gives-chase-helps-nab-serial-conman/1118522/0

A SERIAL conman who allegedly duped two branches of Bank of India (BOI) in Navi Mumbai was caught while trying to similarly cheat another branch of the bank Monday. The conman was recognised and chased by the branch manager and bank authorities later handed him over to police. However, although the accused was caught early in the afternoon, police tried to avoid taking a complaint citing jurisdictional issues and only registered a complaint late on Monday evening after the bank approached Navi Mumbai police commissioner A K Sharma.

Bank officials said the accused, identified as Prem Prajapati alias Prem Mhatre alias Prem Shakeel, has been on the bank's radar since he duped its Seawoods branch of over Rs 10 lakh. "Prem had taken a vehicle loan, which we later learned was obtained using forged documents. He would avoid paying the EMIs till we pressurised him and would then pay Rs 10,000-Rs 15,000 just to avoid action by the bank. He had done this at our Seawoods branch as well as our Khandeshwar Colony branch," said Captain S C Singh, chief security officer, BOI.

As there had technically been no defaulting of the loan — an aspect that Prem is believed to have capitalised on — the bank had not filed a complaint. However, it had issued an internal circular, with his photograph, cautioning all branches against him.

On Friday last week, Prem turned up at the Airoli branch and met the manager, Pushpa Subramaniam (50). "Prem applied for a loan of Rs 11.5 lakh and claimed to have all the documents. I told him that I would have to contact his bank and get a certificate, to which he replied that he could get that within five minutes. This made me suspicious and I asked him to return this week. In the meantime, I had an occasion to visit our head office, where I saw the circular with his photograph," said Subramaniam.

On Monday, when Prem returned, Subramaniam had left instructions that he should be told to meet her. When he entered her cabin, she asked him to wait and stepped out, after which she called Captain Singh. In the meantime, Prem grew suspicious and started running. Subramaniam gave chase. Prem managed to leave the bank premises and covered quite some distance before he was caught by Subramaniam and passersby. He was brought back to the bank and the Seawoods branch was informed, who, in turn, informed the NRI Seawoods police station, adds Subramaniam.

"The Seawoods police kept saying that no offence had occurred in their jurisdiction, although we were ready to give a complaint. We had to approach the police commissioner," said a bank official.

Sharma said, "There was an issue and the bank officials had come to me, but I have spoken to officers at NRI police station. They have registered a complaint."

Senior inspector Suresh Vedak, NRI police station, confirmed that an FIR had been registered under IPC section 420 (cheating) and said Prem would be arrested as soon as the initial investigations were completed.

Subramaniam, who has been with BOI for 25 years, stays with her son in Vidyavihar. In 2007, when she was with the Ghatkopar branch of the bank, a bag belonging to an employee had been stolen and she had played an active role in helping police nab the accused, who was eventually arrested the same day. "I felt no fear while chasing Prem. My son later scolded me for taking the risk but I could not just let the man escape," she said.