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5 MAR, 2012, 05.54PM IST, PTI IDBI Bank launches India's first online retail G-Sec portalPATNA: IDBI Bank today launched the country's first online G-Sec portal 'Samriddi' to enable retailers to purchase government bonds and securities for high yield.

Pursuant to RBI's desire that government bonds and securities should be made a popular mode of investment for retailers, the bank has taken the lead and launched the Samriddhi G-Sec portal for the purpose, IDBI Executive Director R K Bansal told reporters here.

A retailer can log on to the portal and register with it for online purchase of government bonds and securities for high annualized yield, he said.

Observing that retail investors' participation in government bonds and securities were much lower in India than countries like Japan, Mexico and Argentina, he said IDBI Bank will launch a series of awareness programmes to attract the retail investors.

Bansal said retail investors money was safe in government securities and bonds as there was a sovereign guarantee to the financial instrument and there will be no TDS on sale of such securities and bond upon redemption.

IDBI Bank launches online Retail G-Sec PortalAnnouncement / Corporate Jan 16, 2012, 12:38 IST

DBI Bank Ltd. has launched India's first online retail G-Sec Portal. This Portal provides an opportunity for retail investors to invest in Government securities, as an attractive alternative investment avenue. Government Securities are bonds issued, both by Central and State Government. IDBI Bank organized a function to launch the portal which has been christened "IDBI Samriddhi G-Sec Portal". This Portal will become operational from January 17, 2012.

The function to launch the Portal was attended by a large gathering of HNIs and senior officials from Co-operative Banks. The launch of the Portal was done in the presence of senior officials of RBI.

RBI during various policy pronouncements has been emphasizing the need for banks to take necessary steps for providing the infrastructure for retail investors to make investments in Government bonds. Shri Melwyn Rego, Executive Director, IDBI Bank Ltd., mentioned that, "IDBI Bank has been a pioneer in introducing a number of new financial products and services. The launch of the IDBI Samriddhi G-Sec Portal is one more such pioneering initiative. Retail investors having access to the internet and a Demat account can now freely buy and sell Government Bonds at the click of a button through IDBI Bank's website, thereby making the entire transaction transparent and a seamless process. This initiative by IDBI Bank is the first

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organized effort to channelize retail savings into Government bonds through a dedicated Portal. Retail investors thus get a rewarding opportunity to participate in the India Growth Story."

Now, FIIs can invest in NCDsBS Reporter / Mumbai Mar 03, 2012, 00:15 IST

The Reserve Bank of India (RBI) has allowed foreign institutional investors (FIIs) to invest in primary issuances of companies’ non-convertible debentures (NCDs), provided these papers are scheduled to be listed on the stock exchanges within 15 days of being issued.

If the papers are not listed within 15 days, the foreign investor concerned would have to sell the securities to a domestic investor, the central bank said. “The terms of offer to FIIs or sub-accounts should contain a clause that the issuer of such debt securities shall immediately redeem or buyback the said securities from the FIIs or sub-accounts of FIIs in such an eventuality (if the debentures are not listed),” RBI said.

5 MAR, 2012, 03.18AM IST, SANGITA MEHTA,ET BUREAU

Finance ministry drops deposit & lending growth from performance target list for PSU banksMUMBAI: CEOs of public sector banks can no longer rake in bonuses by window dressing year-end deposits and loan numbers. For years, banks have been mopping up bulk deposits from large clients in March only to return the money in the first week of April - transactions that prop up total deposit figures for March 31.

Similarly, deals are cut to give out loans to borrowers with an understanding that they would be repaid a month later. Smart customers borrow from one bank and park the money as a deposit with another PSU bank. The circular game helps banks dress up numbers and meet targets.

This practice will now come to an end. The finance ministry has dropped annual deposit and advance growth from the list of performance targets laid down in the annual MoU that all PSU banks have to enter into with the government. From now on, banks will have to focus on the remaining parameters like net interest margin, return on assets, NPAs, fee income, priority sector loans, financial inclusion,etc.

If a bank meets all targets that are set in the beginning of the year, then the chairman and CEOs receive a bonus of 8-lakh each. According to a senior banker, the finance ministry, in a letter to all PSU banks, said, "It has been felt that banks are under pressure to mobilise deposits to meet the statement of intent targets and this may lead banks to secure high cost deposits which may affect the health of banks."

The exclusion of deposits and loans from the list of performance targets will impact the money market as well. AMCs that make a killing by parking bulk money with banks at higher rates will have to look for other investment avenues. Last week, a number of banks raised money in the range of 10.85-11.10%.

P&S Bank agreed to pay 11% for a 700 crore 3-month certificate of deposits. IDBI Bank raised 4,000 crore at 11.10-11.15% and Corporation Bank raised 2,500 crore at 11.10%. Such interest rates for short-term bulk money rose 125 bps since the RBI cut CRR in January.

"Banks have been doing this for decades. It's a customary practice and an open secret. The government has raised the issue when banks are battling liquidity crunch and a rise in sticky loans," said an analyst.

The ministry seems to have taken the issue seriously. The letter adds: "Also, it is felt that banks are compelled to go all out to achieve target on credit.

Sometimes PSU banks may compromise on quality of the loan proposal to achieve target for the advances which may result in higher NPA leading banks to make high provision.

It has been decided to drop the percentage growth in deposit and advances and market share parameter from the SOI."

Some bank treasury heads are happy with the directive. Among other responsibilities, the treasury department has to manage a bank's net interest income, interest rate risk and asset-liability mismatch. In the past, treasurers had objected to top managements' decision to meet targets at the cost of margins.

RBI for more Tier-I capital adequacy than Basel III normsBS Reporter / Mumbai Mar 02, 2012, 00:17 IST

The Reserve Bank of India (RBI) on Thursday indicated it would prescribe higher capital adequacy norms than those proposed under the Basel III framework. This would help sustain the advantage of healthy financial profiles that Indian banks currently enjoy.

At the Risk and Compliance Summit on Thursday, Deepak Singhal, chief general manager, RBI, said, “A requirement of one per cent above the floor set under Basel III would not impact Indian banks. RBI would not like our banks to be seen as laggards.” The central bank, in its draft guidelines issued in December, had proposed that the common equity Tier-I capital should be at least 5.5 per cent of risk weighted assets (RWAs). Basel III norms prescribe minimum common equity of 4.5 per cent.

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RBI has proposed Tier-I capital of at least seven per cent and said the total capital be kept at least nine per cent. It has also proposed a capital conservation buffer in the form of common equity of 2.5 per cent of RWAs.

According to RBI, Indian banks would not have a problem in adjusting to the new capital rules, both in terms of the quantum as well as the quality. Quick estimates suggest the capital adequacy of Indian banks under Basel III norms would be 11.7 per cent, compared with the required capital to risk (weighed) asset ratio of 10.5 per cent under the Basel III norms.

Singhal said many developed and emerging countries had stringent norms to maintain a higher capital base. In Sweden, banks have to maintain a capital adequacy ratio (CAR) of at least 15 per cent, while in Argentina, banks can pay dividend only when the CAR is 18 per cent or more.

Rating agency ICRA said public sector banks’ median capital adequacy levels declined from 13.4 per cent on March 31, 2011, to 12.1 per cent on December 31. Tier-I capital of these banks fell from 8.7 per cent to 8.3 per cent in the same period. The capital adequacy ratios of all large private banks remain comfortable. Their median capital adequacy stood at 16.3 per cent, while the Tier-I capital was 11.2 per cent in December.

Cloud computing: Clearer skies ahead?One of the most radical IT solutions - cloud computing is growing at a fast pace in India. However, doubts and challenges should be immediately addressedPrerna Raturi / January 25, 2012, 0:59 IST

Most times, you won’t even know it’s there. But then, that is the beauty of cloud computing – you just concentrate on your core competency and stop worrying about the operating system, the traffic your IT system or website faces or about resources lying waste. This is especially true for a place and market such as India, where the IT literacy is low, but growing. How companies will manage to leverage the numbers to their advantage is the question. Not just that, start-ups and smaller companies also stand to gain through cloud computing since it helps them do away with a significant amount of investments on IT infrastructure and resources.

The IT industry itself is slated to grow to $225 billion by 2020. Industry figures predictthat digital information in India will grow from 40,000 petabytes to 2.3 million petabytes by the end of the decade, which is actually more than double the worldwide rate! A McKinsey estimate states that data will grow no less than 44 times between 2009 and 2020!To accommodate data of this magnitude, experts advise companies to look beyond servers and in-house storage systems. At the same time, there need to be enough resources to accommodate the surge in data. Mavericks, on the other hand, throw the question back, saying there is no predicting how and when the data surge happens and holding back resources for additional data is only locking up capital that could have been used elsewhere. A study by Nasscom and Deloitte speculates the Indian cloud computing market to teach $16 billion by 2020. In 2010, a report by consulting firm Zinnov Management Consulting estimated that the cloud computing market will touch $4.5 billion by 2015.

The report pegs the current cloud computing market at more than $110 million. Of this, $66 million is the SaaS (software as a service), while the other $44 million is made of PaaS (platform as a service) and IaaS (infrastructure as a service). The report predicts that by 2015, the Indian cloud computing market will reach $1 billion, with SaaS making for $650 million. Experts point out that apps such as CRM and ERP are greatly popular, as are Google apps. The Zinnov report also outlines the sectors where the IT service will be used extensively – banking and financial sectors, government, manufacturing and telecom. Cloud computing takes on a more important role in today’s times when the world has gone through a gloomy phase of recession. Most companies have wizened up and better understand the growing importance of rationalising their costs and keeping the capital flowing.

While universities such as Manipal use cloud computing for online admission and announcements of results, sports channels such as ESPN used it to stream the T20 World Cup to millions over their laptops or mobile phones. Stock broking companies such as India Infoline use it to share data with their clients, while several prominent advertising agencies use the cloud technology for online campaigns. After being wounded sore by crashing due to a surge in traffic, websites are looking at moving to the cloud space. There are companies that are completely on cloud computing when it comes to communicating with their offices all over the world.

But it’s no cakewalk either, as there are a number of challenges standing in the way for the concept to reach its optimal expectation. For instance, the Indian government and sceptics in the sector are still wary of the trend and cite security issues and various transactional and service level issues as major concerns. Insufficient development of apps as well as lack of enough study on the returns on investment in cloud computing are coming in the way of sceptics turning believers. To include these sceptics into the circle, stakeholders need to not only have open-ended discussions about drivers and challenges in the sector, but also look at how problems can be ironed out for a platform that seem to a perfect solution for the burgeoning data, apps and services times we live in.

Forex reserves rise $1.6 bnBS Reporter / Mar 03, 2012, 00:17 IST

India's foreign exchange reserves rose $1.6 billion to $295.04 billion in the week ended February 24, owing to the flow of foreign funds into the capital market and fluctuation in the values of international currencies.

According to Reserve Bank of India data, foreign currency assets increased $1.56 billion to $ 261.10 billion, while the value of gold reserves remained unchanged.

The value of statutory drawing rights rose $25.3 million to $4.48 billion.

LIC, BoB & Citi to partner ICICI in setting up IDF: KochharPublished on Mon, Mar 05, 2012 at 18:19 | Source : CNBC-TV18

Updated at Mon, Mar 05, 2012 at 19:20

Managing director and chief executive of ICICI Bank , Chanda Kochhar today said that their infrastructure debt fund (IDF) will be set up in partnership with Bank of Baroda , LIC and Citigroup."The equity would be contributed by the ICICI Group to the extent of 31%, Bank of Baroda 30%, Citigroup 29% and LIC 10%," she said, adding that their plan is to "make the fund equal to about USD 2 billion in size."

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Kochhar says this fund will invest in PPP projects, roads, railways, ports, airports and other infrastructure sectors. "This fund to my knowledge is definitely the first fund of this kind in India, and probably one of the first of its kind in the world as well," she added.ICICI Bank got an in principle from the RBI to set up the country's first infra debt fund as a non-banking finance company (NBFC) late February.Watch the accompanying video for more details..

Centre: Plans afoot for HAL disinvestmentBS Reporter / Bangalore Mar 03, 2012, 00:13 IST

The government on Friday indicated the process of divesting its stake in Hindustan Aeronautics Limited (HAL) was underway.

Minister of state for defence, M M Pallam Raju, said, “The will of the government for the disinvestment is there. It is going through the procedures.” The government had been planning to divest 10 per cent stake in the defence public sector undertaking.

Raju also said the Indian Air Force (IAF) was dissatisfied with HAL for not sticking to the delivery schedule.

He added sometimes, the company was not able to meet the expectations of the IAF because it was handling “so many programmes”. Hence, the multiplicity of programmes was to be blamed, not a lack of competence or facilities, he said.

“It (HAL) may not be able to complete the production on time,” he said. “The delay has not been entirely to the satisfaction of the Air Force.

“It’s more a question of project management. The need of the hour is greater project management.”

Sometimes, “small decisions”, which could be taken by HAL, were referred to the ministry, he added.

RBI says OMOs not ruled outLiberalisation of foreign investment possible if current account situation improvesBS Reporter / Mumbai Mar 03, 2012, 00:16 IST

The Reserve Bank of India (RBI) on Friday said it was watching the liquidity situation closely, and would act when required.

RBI deputy governor H R Khan said as far as infusing liquidity was concerned, all options for the central bank were open. Asked whether RBI would conduct more open market operations (OMOs), he said, “OMOs are not ruled out.” Banks have been borrowing more than Rs 1.7 lakh crore since Monday.

RBI on Friday infused close to Rs 11,000 crore through a government bond purchase under OMO auctions. Markets are expecting additional RBI support, either through a cut in the cash reserve ratio (CRR) or more OMOs, as liquidity is expected to worsen as the deadline to make advance tax payments draws close. Market participants also expect temporary relief of up to 100 basis points in the statutory liquidity ratio (SLR) requirement. Currently, SLR is 24 per cent of net demand and time liabilities.

Khan refused to comment on a CRR cut. “RBI is watching the situation closely....Steps will be taken when needed.

“Further liberalisation (of foreign investment by companies) can perhaps wait till the current account situation improves,” he said, adding that foreign fund inflows were not commensurate with outflows.

The current account gap this financial year is projected to widen to 3.6 per cent of gross domestic product, compared with 2.7 per cent a year earlier, according to estimates released by the Prime Minister’s Economic Advisory Council. On outward foreign direct investments, Khan said guarantees had risen, and this posed a risk for companies and banks. He added that the guarantees may be invoked in the event of a downturn abroad.

CD rates cross 11% in a first since 2008 repo drawing at new highRecent Sebi norms barring mutual funds from investing in CDs add to liquidity concernsParnika Sokhi / Mumbai Mar 02, 2012, 00:48 IST

The lack of interest from investors and the year-end rush by banks have driven the rates on certificates of deposits (CDs) maturing in three months above 11 per cent, a level last seen in 2008.

According to market participants, lenders, including IDBI Bank, UCO Bank and Central Bank of India, have raised funds for three months through CDs at rates ranging between 11.1 per cent and 11.15 per cent. The rates stood at around 100 basis points lower in the corresponding period of the last financial year.

CDs are short-term debt instruments issued by banks to raise funds for up to one year, and mutual funds are major investors in these instruments. However, traders said norms introduced recently by markets regulator Securities and Exchange Board of India (Sebi) were preventing mutual funds from participating. This is evident from the fact that the volumes are low, despite banks willing to pay high rates.

“Banks are finding it difficult to lock deals even for Rs 200 crore. The volume in the market is small,” said T S Srinivasan, general manager (treasury), Indian Overseas Bank. He added if situation did not improve, the rates would rise further.

A month earlier, Sebi had decided to reduce the threshold for mark-to-market requirement on debt and money market securities of mutual funds from 91 days to 60 days. Hence, securities with maturity periods of more than 60 days would have to be valued at market prices.

Nirav Dalal, managing director (debt capital markets), YES Bank, said, “The demand for CDs is muted, as mark-to-market ramifications due to the recent Sebi guidelines are keeping mutual funds from investing in the money market. This is over and above the inherent systemic liquidity deficit of about Rs 1.5-1.6 lakh crore.”

Banks that have surplus liquidity and invest in CDs issued by other banks are not doing so, as this is the last month of the current financial year. Rather than deploying funds in the money market, these are seeking higher credit growth.

Today, banks borrowed a record Rs 1.91 lakh crore from the Reserve Bank of India (RBI) under the Liquidity Adjustment Facility. The liquidity deficit has been beyond the central bank’s comfort zone of Rs 60,000 crore, despite a cut of 50 basis points in the cash reserve ratio in January.

Tomorrow, RBI is slated to buy government bonds and infuse up to Rs 12,000 crore into the banking system. However, traders said this would not help boost liquidity, in spite of the fact that there is no government debt sale auction scheduled for tomorrow. So far this financial year, the central bank has infused close to Rs 1 lakh crore through open market operations.

“Liquidity is expected to improve if government spending increases,” said N S Venkatesh, head (treasury), IDBI Bank. He added typically, the government tends to spend unused allocated amounts towards the end of the financial year.

Banks are bracing up for withdrawal pressure from companies, as the advance tax payment deadline of March 15 approaches.

Markets expect the central bank to address systemic liquidity concerns by announcing another cut in the cash reserve ratio before the mid-quarter review of monetary policy, scheduled on March 15.

RBI deputy Gokarn says still room for CRR cutPublished on Mon, Mar 05, 2012 at 13:12 | Source : CNBC-TV18

Updated at Mon, Mar 05, 2012 at 19:20

There is still room for the Reserve Bank of India (RBI) to cut the cash reserve ratio (CRR) for banks, RBI Deputy Governor Subir Gokarn said in an interview on CNBC-TV18."When the space opened up for CRR cut, we used it," he said. "That space still exists, and so if we think it is appropriate we will use it."

The RBI cut the CRR, or the proportion of deposits that banks must maintain with the central bank, by 50 basis points to 5.5% on January 24 but kept its key policy rate unchanged.The RBI will next review monetary policy on March 15.The CRR cut in January is estimated to have released 320 billion rupees into the banking system.Below is the edited transcript of the interview. Also watch the accompanying video.Q: We are speaking to you for the first time after that GDP number of 6.1%. Now do you think a 7% GDP number looks a little tall for the current year?A: Well, I think the numbers, looking at even traditional experience, tend to get adjusted, and this 6.1% particularly reflects the very weak showing we had on the IIP in the October-December quarter. There maybe an upward revision to it because that's not something that is terribly important from a policy consideration. That number will come out sometime in the future. But I think when we look at all of the indicators that give us some sense of a dynamic industrial sector, I think the IIP was a little bit on the negative side.The order indicators were not so pessimistic, earnings and so on not looking as bleak as the IIP might have suggested. So the number maybe somewhere around 7%, but I think what we are trying to capture eventually is the underlying dynamic, making as good a judgment on the underlying dynamic as possible, and the number is one reflection of that dynamic.So I think from our policy standpoint, what is of concern is whether the dynamic is consistent with the projection that we made. I think at this point, it appears to be so.Q: I was trying to tie this in with the statement you made a few days ago saying that growth will inevitably get slower. You did seem worried about growth, but considering your analysis of the GDP number and other concomitant data, should we assume that there is no anxiety about the growth level and therefore you may not have to speed up the rate cutting cycle by any means?A: I think the growth is not the sole driver of monetary policy. We clearly have inflation as our most important objective and our actions have to be conditioned by what we see as inflation dynamic. To the extent that slowing growth is helping to bring inflation down, I think that is part of the overall transmission process that we expect to be at work. To the extent that we have seen growth come down, we have seen the inflation number including the core inflation number come down in the last reading, that is sort of in-line with the overall story that we had been working on which is that we expected the sort of growth to bottom out and the inflation number to top out, and that gave us the basis for our guidance which was that the interest rate cycle has peaked.So we haven't seen anything yet to change that part of the story, that is the interest rate cycle has peaked. As we go ahead, of course, there are some risks emerging on the inflation front with the way oil prices are behaving and so on, so I think those will now start to condition our thinking in terms of what next. How do we move from what we now see as the peak to the next step, which as we have indicated in our guidance, is going to be towards an easing but the question is of timing and magnitude and that's I think going to be conditioned by the new risks that are also emerging on the scene.Q: Would the core WPI number that you will get on the 14th of this month be a very decisive factor or do you think that overall the rise in crude prices is going to be more important for the RBI for rate decisions?A: I don't think any one number is ever decisive, I think it's really a matter of trajectory and what we expect that trajectory to be. This time around, we will obviously be waiting for our mid-quarter reviews on the 15th, the budget is on the 16th, and it's going to take some time for the assessment of the budgetary impact in terms of various parameters to sink in. So that's not going to play any role in terms of our decision on the 15th, whatever it may be.I think the important thing here is that from the view point of - two points I mentioned, one is in relation to the CPI versus the WPI. If you look at the CPI numbers over the past one year because we have had that series now in place for one year, we have not had any base for that because the average base for 2010 was taken; it's 100 for all months, but the number was typically higher than the WPI number. So what we are seeing now is that the movement in the two indices clearly is out in the same direction and when we

look at our guidance and the medium-term and long-term bench marks that we have been communicating in our policy, that is with reference to the WPI.If we have to look at the CPI, we have to reframe the communication that in terms of what is a good number for the CPI; if the two numbers are not equal over long periods of time you can't use the same bench mark for both. This is a new promising CPI, it does address some of the issues which were concerned with the older ones, let's wait for it to stabilize a bit in terms of trends and then obviously it will enter a dashboard in somewhat more systematic way. For the moment, the core number that we have been tracking and using as basis for action over the last quarters, I think that remains in place.Q: There is one fear in the market that as was earlier thought, the monetary easing which the RBI will undertake over the course of the next one year will not be as aggressive as people had believed perhaps a few months back, given the way crude prices have moved. Do you agree and you all had also indicated the importance of its contingent on what the budget throws up in terms of fiscal consolidation perhaps, so what is your expectation from the budget?A: We made a pretty clear set of statements in our January policy about the nature of fiscal consolidation that we would like to see in a way that makes the fiscal stance consistent with the monetary stance. Essentially, there are two elements to it - one is that at the aggregate level, we need to see a significant narrowing of the deficit number and the deficit GDP ratio, and at the sectoral level or the composition level, we need to see a shift away from consumption-oriented spending, particularly subsidies, to more investment oriented, capital formation. So these are two broad guidances or the two broad desires that we have expressed and that is a direction I think this is unexceptionable.This is the kind of change that we need to see on the fiscal front to help to sustain growth at low rates of inflation. I think there is no real debate about this. It's a question of doing. It's a question of the difficulty or the challenge of actually implementing this strategy. So that is what we are looking for. I think from all indications that is a direction in which the budget will move, we will wait and watch.As for first part of question, the monetary policy is based on an assessment of multiple trends and what's happening to the inflation rate is of course impacted by oil prices, it is impacted by many other things, what's happening to growth is also a factor.... So we have to wait and see how these variables are playing out in terms of deciding what we do and when we do it.Rupee falls by 20 paise vs dollarPress Trust of India / Mumbai Mar 01, 2012, 19:09 IST

Breaking its two-day gaining string, the rupee today dropped by 20 paise to 49.21/22 against the US currency on dollar demand from importers and fall in equity markets.

Fresh dollar demand from importers, mainly oil refiners, weighed on the rupee as geopolitical concerns in the West Asia continue be a strong factor supporting oil prices.

However, capital inflows and weak dollar overseas cushioned the rupee fall. The FIIs invested $132.91 million yesterday, as per the Sebi data.

"Rupee depreciated today taking cues from weak local equities which closed down also the dollar demand from oil importer weakened the rupee further," Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said.

"Rupee is expected to trade between 48.90 – 49.40 levels tomorrow," he added.

At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed lower at 49.07/08 a dollar from last close of 49.01/02 and immediately touched a high of 49.04.

However, later it touched a low of 49.25 before concluding at 49.21/22, showing a fall of 0.41%.

Widening current account deficit amid concerns over the rising global crude oil prices also put pressure on the rupee.

The BSE barometer Sensex today tumbled by 168.71 points or 0.95%.

The dollar index, a gauge of six major currencies, was down by 0.07% while New York crude oil was trading above $107 a barrel in European market today.

In Sydney market, the dollar drifted lower in the early trade after notching big gains the previous day on testimony from Federal Reserve Chairman Ben Bernanke.

Banks seek clarity in classification of restructured loansPress Trust of India / Mumbai Feb 29, 2012, 20:37 IST

Top bankers today sought more clarity from the Reserve Bank of India (RBI) about classification of bad accounts and demanded that they be given flexibility in dealing with restructured loans.

"Today, there is a lot of mystery about what is a restructured asset. Everything restructured is seen as equivalent to NPA [non-performing asset] ... The restructuring definition should have a timeline," State Bank of India Chairman Pratip Chaudhuri told reporters outside the RBI headquarters after a two-hour-long meeting with the Reserve Bank officials.


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"We wanted that RBI gives clear guidelines so that when the auditors come in there is no confusion and there is no divergence in approach," he added.

The Chairman of the largest lender, which in December reported a near 90% spike in NPA provisions, said the banks pointed out to RBI that after the probation period, if an account performs alright, it should not be branded as restructured for all the time.

Chaudhuri attended a specially-convened meeting with RBI Deputy Governor KC Chakrabarty called to assess the bad asset situation in the banking system.

Chaudhuri further said the classification of a recast account is a "gray area" now and hence banks have requested for a timeline of a year-long regular repayment by the restructured account to turn it as a standard asset.

It can be noted that a re-classification of accounts will help banks conserve capital as a restructured account demands more provisioning as opposed to a standard one.

IFC to take 20% stake in India-focussed fundBS Reporter / Chennai Feb 29, 2012, 11:49 IST

International Finance Corporation (IFC) is proposing an equity investment of $15 million or 20% of the fund’s total committed capital in CapAleph Indian Millennium Fund (CapAleph), which targets to raise $150 million to finance small and medium-sized companies.

The fund will be a Mauritius registered and the Fund Manager – CapAleph Advisors India Private Limited -- will based in Bangalore.

CapAleph Indian Millennium Fund has a target fund size of $150 million and IFC is proposing an equity investment of $15 million or 20% of the Fund’s total committed capital.

The fund will support small and mid-sized companies in incipient to early stages of evolution and growth in emerging industry segments through a ‘buy and build’ strategy.

CapAleph will seek control or significant minority stakes and investments will consist primarily of equity and equity-linked instruments, according to the project document.

The five high potential segments, which the fund will focus, include technology based businesses, infrastructure support services, new healthcare services, education and skill development and emerging consumption trends.

“Target investee companies will be SMEs, which are capital constrained and have very limited access to bank debt or the public markets to finance their growth strategies,” said in the report.

This project involves IFC investment in a private equity fund and has been classified as Category FI. The indicative pipeline includes sectors like chemicals, manufacturing and engineering. These sectors are likely to have environmental and social concerns mainly around occupational health and safety (OHS), labour, air and water pollution, and waste management.

Forex reserves dip $10.5 bn in Sept: RBIPress Trust of India / Mumbai Feb 28, 2012, 20:48 IST

India's foreign exchange reserves declined by as much as $10.5 billion in the one-month ending September, 2011 mainly due to the impact of the central bank's policy to intervene in the currency market to contain volatility.

"The [forex] reserves stood at $304.8 billion as at end-March, 2011. It increased to the peak level of $322.0 billion as at end-August, 2011. Thereafter, it came down to $311.5 billion at the end of September 2011", RBI said in its report on management of foreign exchange reserves.


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The movements in the Foreign Currency Assets (FCA), the report said, "occur mainly on purchases and sales of foreign exchange by the RBI in the foreign exchange market in India, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the central government and the effects of revaluation of assets".

On the net basis, during the six-month period ending September 2011, the foreign exchange reserves went up by $6.7 billion to $311.5 billion.

The decision of the RBI to intervene in the foreign exchange market to arrest the declining value of rupee too led to decline in forex reserves.

The value of the India currency which had declined to over Rs 53 to a dollar, has now stabilised at below Rs 50.

The revaluation refers to the impact of exchange rate movement of international currencies vis-a-vis US dollar on country's foreign exchange reserves.

Although both US dollar and Euro are intervention currencies, the Foreign Currency Assets (FCA) are maintained in several major currencies like US dollar, Euro, Pound Sterling, Japanese Yen but expressed in US dollars.

Reflecting deterioration in the adequacy of forex reserves, the report further said that at the end of September 2011, the import cover provided by the reserves, "declined to 8.5 months from 9.6 months at end-March 2011."

Also, it added, the ratio of short-term debt to the foreign exchange reserves which was 21.3% at end-March 2011 increased to 23.0% at end-September 2011.

The ratio of volatile capital flows (defined to include cumulative portfolio inflows and short-term debt) to the reserves increased from 67.3% as at end-March 2011 to 68.3% as at end-September 2011, it added.

RBI asks banks to appoint nodal officers to boost exportsPress Trust of India / Dehra Dun Feb 28, 2012, 20:21 IST

The Reserve Bank of India (RBI) has asked banks to appoint nodal officers for boosting export credit and promote overseas shipments, a senior official of the central bank said today.

"Under the new policy of RBI, all the banks are required to appoint nodal officers who can facilitate exports and related financial matters," Anup Kumar, Deputy General Manager [Foreign Exchange Department] at a meeting here organised by the sub-committee of the state level bankers committee (SLBC).


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Kumar also stressed upon the need to compile authentic data of exporters in Uttarakhand, which has a tremendous scope for exports.

"Unless there is correct data, we cannot know which sector is facing what kind of problem," he said.

The main purpose of the meeting, Kumar said, was to understand the problems faced by exporters and provide solutions.

"We want to understand the problems of the exporters so that we can come out with the solutions," Kumar said.

Kumar also advised the state government to activate its export promotion council which can facilitate exports for bringing foreign exchange.

He also called for identifying exports clusters in the state which he said would help in boosting exports.

Kumar also assured exporters that he would approach the central office to bring solutions to their problems.

SBI cuts education loan rates by 1%Loans between Rs 4.5-7.5 lakh at 13.5% vs 14.5% earlier, new rates effective todayPress Trust of India / New Delhi Feb 27, 2012, 16:22 IST

The country's largest lender State Bank of India (SBI) today reduced interest rates on education loans by up to 1% point across various segments, a move likely to be followed by other lenders.

In order to extend financial assistance to students pursuing higher education in India and abroad at affordable rate, SBI has reduced the rate of interest for education loans, the bank said in a statement.


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Education loans up to Rs 4 lakh have become cheaper by 0.25%, at 13.5% compared with 13.75% earlier.

Loans between Rs 4 lakh and Rs 7.5 lakh will be available at 13.25% against 14.25%, a sharp reduction of 1%.

Loans beyond Rs 7.5 lakh will cost 0.25% less at 12%.

Under this education loan scheme, loans up to Rs 10 lakh for studies in India and up to Rs 20 lakh for studies abroad are given.

The new rates are effective from today, the bank said.

Besides, under the SBI Scholar Loan Scheme extended to students joining elite institutions such as IIMs, IITs and NITs, the new rate of interest is 200 basis above Base Rate, currently 12%.

The base rate of the bank is 10%.

At present, it said, 111 institutes are covered under this scheme and loans upto Rs 15 lakh are given.

Loans are sanctioned at attractive terms without any security except parent/guardian as co-borrower, it said.

In addition, the bank will offer 0.5% additional concession for girl students.

At the same time, 1% concession for the entire tenure of loan, if full interest is serviced during moratorium period (including course duration), it said.

RBI to buy govt securities worth Rs 12,000 crPress Trust of India / Mumbai Feb 22, 2012, 20:26 IST

The Reserve Bank of India (RBI) today announced that it would purchase government securities worth Rs 12,000 crore through open market operations (OMOs) on Friday to ease the current liquidity crisis.

"Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, RBI has decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 12,000 crore on February 24, 2011, through a multi-security auction...," the apex bank said in a statement.


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The RBI will conduct the auction at its Mumbai office.

The auction will be in four price methods -- government securities (G-Sec) maturing in 2017 with a coupon of 8.07%, G-Secs maturing in 2021 with a coupon rate of 8.79%, G-Secs maturing in 2027 with a 8.28% coupon rate and G-Secs maturing in 2032 with also a 8.28% coupon rate.

"There is an overall aggregate ceiling of Rs 12,000 crore for all the securities in the basket put together. There is no security-wise notified amount," the RBI said.

RBI Deputy Governor Subir Gokarn had earlier said liquidity is likely to be under pressure for some more time amid factors like advance tax payment. He had said there is still scope for OMOs to lighten the pressure on liquidity.

The RBI has said in the past that the liquidity deficit has exceeded its target of 1% of net demand and time liabilities (NDTL).

The apex bank has purchased government securities worth over Rs 92,000 crore from the money markets in ten instalments in the past two months as part of efforts to infuse liquidity into the system.

OMOs are the "first preference" of the RBI while injecting liquidity and there is an opportunity to raise up to Rs 2.74 lakh crore through the window as banks' government bond holdings stand at 29%, 5% over the prescribed SLR cap of 24%.

PNB to sell stake to LIC for Rs 1,590 crPress Trust of India / New Delhi Feb 22, 2012, 20:02 IST

State-owned Punjab National Bank (PNB) today said it proposed to raise Rs 1,590 crore by selling about 15.8 million shares to LIfe Insurance Corporation of India (LIC).

The bank has also approved fund infusion of Rs 1,285 crore through preferential issue of shares to the government.

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The board has approved issuance of up to 15.8 million equity shares of face value of Rs 10 each to LIC, on preferential basis, at a premium of Rs 993.69 determined as on February 17 being the relevant date as per the Sebi regulations, PNB said in a statement.

It will also issue up to 12.8 million shares to the government. The capital infusion would raise government's stake, from 58% at present, in the bank.

Following the all necessary regulatory approvals the bank would be able to raise Rs 2,875 crore by March 31.

The bank will hold an extraordinary general meeting of shareholders on March 20 to take up approval for issuing fresh shares to the LIC and the government.

Last year, PNB got a capital infusion of Rs 184 crore from the government.

In 2010-11, the government provided capital support to the tune of Rs 20,157 crore to public sector banks.

Most of the public sector banks got capital support from the government last fiscal. They included Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.

RBI panel for retaining priority sector target at 40%Press Trust of India / Mumbai Feb 21, 2012, 18:44 IST

A Reserve Bank panel on priority sector lending today recommended retaining the existing 40% ceiling for the segment while creating a sub-head of micro enterprises within the micro and small enterprise (MSE) sector.

Besides, the panel headed by Union Bank of India Chairman and Managing Director MV Nair, also suggested raising education loan ceiling by Rs 5 lakh for students, under priority sector.


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The committee also recommended increasing the priority sector target for foreign banks from existing 32% to 40% of total advances, on par with the domestic banks.

The target for foreign banks would include sub-targets of 15% for exports and 15% for MSE sector, within which 7% may be earmarked for micro enterprises.

"Limit under priority sector for loans for studies in India may be increased to Rs 15 lakh and Rs 25 lakh in case of studies abroad, from existing limit of Rs 10 lakh and Rs 20 lakh, respectively," the panel said in its report submitted to the RBI.

The report said, "target of domestic Scheduled Commercial Banks (SCBs) for lending to priority sector is retained at 40% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE), whichever is higher".

The old classification of distinction between direct and indirect agriculture credit has been done away with by converting the segment into a composite one called agriculture and allied activities.

Syndicate Bank to get Rs 539 cr fund infusion from govtPress Trust of India / New Delhi Feb 20, 2012, 20:34 IST

State-owned Syndicate Bank today said it would raise up to Rs 539 crore through issue of preferential shares to the government of India.

The bank has initiated the process to raise capital by issue of shares on preferential basis to the government of India or LIC, Syndicate Bank said in a statement.

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The bank would complete the formalities by March 31, 2012, it said.

The decision was taken in a meeting of committee of directors formed to decide on the quantum of fund raising via issue of preferential shares on February, 18.

Last fiscal, the bank got capital support of Rs 633 crore from the government.


Most of the public sector banks got capital support from the government last fiscal. These banks included Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.

2 banks cut home loan rates by 0.25%, waive feePress Trust of India / Mumbai Feb 19, 2012, 12:55 IST

To prop up the sagging home loan market, state-run lenders Central Bank of India (CBI) and Bank of Maharashtra (BoM) have announced interest rate cuts by up to 0.25% on select loans and to waive off the processing fee.

Pune-headquartered BoM has decided to give housing loans under Rs 25 lakh for a five-year tenor at the reduced base rate (below which it cannot lend) of 10.60%, it said.


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Similarly, the city-headquartered CBI has cut home loan rates by 0.25%, it said. A home loan of up to 25 years and under Rs 30 lakh will be available at 10.75%.

Both the lenders have also announced waiver of processing charges. While CBI is offering a blanket waiver of processing fees for loans across amounts and tenors till March 31, BoM has waived it only for applications under Rs 25 lakh.

BoM charged up to Rs 12,500 for such loans in the past.

High inflation and the ensuing jacking-up of interest rates by the RBI, coupled with the uncertainties on the economic growth, are believed to have dampened the home loan market.

According to the Reserve Bank's Financial Stability Report released on January 12, the housing credit growth fell to 2.3% from 10.7% a year ago.

The country's largest lender State Bank of India is also contemplating a cut in interest rates in select home loan categories where demand is slow.

Indian Bank introduces account portability facilityPress Trust of India / Feb 19, 2012, 11:06 IST

State-owned Indian Bank has introduced account portability feature which allows its customers to retain the account number even if they change the branch.

The facility would enable the customer to have the freedom of operating his or her account from any of the branches, Indian Bank said in statement.


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"The customers can shift his or her account to any of the desired branch any number of times, without any change in the account number, with just a change in home branch code," it said.

"Customers can approach his home branch or the transferee branch with the request letter for transfer of account," it said.

Home branch having the customer's account certifies the know your customer, or KYC, documents while transferring the account to another branch, it added.

Indian Bank has got the account portability feature in-built in core banking software, for transfer of the deposit accounts from one branch to another branch, it said.

RBI may cut interest rate by 100 bps in 2012: Citi

Press Trust of India / New Delhi Feb 19, 2012, 10:42 IST

nflation is likely to be in the range of 6.5-7.6% during next few months and the moderation is expected to prompt the Reserve Bank to cut policy rates by 100 basis points during 2012, according to global finance major Citigroup.

"Given the strong base effect, we expect headline inflation to continue to print lower in the 6.5-7.6% range in the next few months against the 9% plus levels seen over the last two years," Citi Investment Research & Analysis said in its report 'India Macro Flash'.

"Lower core inflation print, coupled with deceleration in growth supports our view of RBI easing the repo rate by a minimum 100 basis points in 2012," it added.

The report, however, said that the central bank's rate cuts will begin only in April.

"Given that RBI has said that the quantum and timing of rate cuts would be dependent on fiscal consolidation, we expect the repo rate to be cut post the Budget (due on March 16), i.e. RBI's April 17 annual policy review," Citi said.

RBI hiked key policy rates 13 times, totalling 350 basis points, between March 2010 and October 2011 to tame inflation which was near double-digit during most of the last two years.

However, inflation fell to a 26-month low of 6.55% in January and RBI has hinted that it may go in for rate cuts if inflation remains at moderate levels for some time.

India Inc has blamed tight monetary policy for lower investments and industrial slowdown.

Earlier this month, the Advanced Estimates released by the Central Statistical Organisation (CSO) said that growth in 2011-12 will slip to 6.9%, the lowest in three years, on the back of slowdown in manufacturing and agriculture.

The economy had expanded by 8.4% in 2010-11.

"Given tight liquidity conditions, the odds favour continued recourse to Cash Reserve Ratio cuts at the March Policy," Citi said.

In the third quarterly policy review last month, RBI injected Rs 32,000 crore into the system by lowering the CRR by half-a-percentage to 5.5%.

The report, however, cautioned that inflation is likely to remain above RBI's comfort zone of 4-5% in near future.

"... Trends would likely remain higher than the RBI's comfort zone of 4-5% due to the structural factors impacting inflation, suppressed fuel prices... And interplay of commodity prices and currencies," it said

RBI buys bonds worth Rs 9,857 cr under OMOPress Trust of India / Mumbai Feb 18, 2012, 17:48 IST

As part of its programme to infuse liquidity, the Reserve Bank has bought bonds worth Rs 9,857.42 crore through open market operations (OMO) against a target of Rs 10,000 crore.

Four securities were on offer for OMO conducted yesterday and RBI subscribed to all of them, the central bank said in a statement.


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While government securities (G-Sec) maturing in 2017 with a coupon rate of 8.07% garnered Rs 1,525 crore, the 9.15% G-Secs maturing in 2024 garnered Rs over 3,951.35 crore.

Furthermore, 8.28% G-Secs maturing in 2027 mopped up Rs 2,897.55 crore and 8.97% G-Secs maturing in 2030 garnered 1,483.51 crore.

With this, the central bank has infused nearly Rs 92,000 crore into the financial system in ten tranches in the last two months.

OMOs are the "first preference" of the RBI for injecting liquidity and there is an opportunity to raise up to Rs 2.74 lakh crore through the

window.

RBI Deputy Governor Subir Gokarn had earlier this month said that OMOs and cut in cash reserve ratio have not got liquidity deficit down to comfort levels and there can be more buyback of government bonds by the central bank.

Overnight drawings by banks from the RBI's liquidity adjustment facility has been around Rs 1,00,000 crore which is above the RBI's stated comfort level of a deficit of around Rs 60-65,000 crore in the system, he had said.

Vijaya Bank sees fiscal-end NIM at 3%Press Trust of India / Mumbai Feb 17, 2012, 18:36 ISTAds by Google

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Bangalore-based public sector lender Vijaya Bank is likely to close this fiscal with net interest margin (NIM) of 2.85-3% despite the difficult economic environment, a top bank official said.

"We hope to post a net interest margin (NIM) of 2.85-3% in the current financial year," Vijaya Bank Executive Director Subhalakshmi Panse said.

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She said the bank was relying on garnering CASA deposits, and shedding bulk deposits to increase NIM in the current quarter.

Referring to growth in bad assets in the third quarter, Panse said those NPAs were on account of the high interest rate regime which had resulted in slippages in some large accounts.

"Our bank has shifted to system-based recognition of NPAs from last March. So, whatever slippages are being seen these days, are due to the present high interest rate environment," she said, adding that the bank has restructured some of the loan accounts, which has resulted in higher provisioning requirements in the last quarter.

Gross non-performing assets (NPAs) of the public sector lender increased to 2.98% in the quarter ended December, as against 2.54% in the previous quarter.

Referring to the possible movement of NPAs in the next quarters, Panse said although it has plateaued, it is difficult to give a figure.

The bank posted 18.4% drop in net profit at Rs 124 crore in the third quarter ended December, against Rs 152 crore in the year-ago period.

Net interest income of the bank dropped by 11.7% to Rs 474 crore from Rs 537 crore in the same period last year.

Majority external panel members wanted rate cut: RBIReuters / Mumbai Feb 17, 2012, 14:57 ISTAds by Google

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A majority of external members of the Reserve Bank of India's advisory panel on monetary policy had suggested a cut in the repo rate at the January monetary policy review, minutes released by the central bank showed.

Three out of the seven external members of the RBI's technical advisory committee (TAC) had suggested a cut in the repo rate by 25 basis points, while one member had suggested a 50 basis points cut, it said.


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The panel met on January 18 in the run-up to the quarterly policy meet on January 24.

Governor Subbarao cut the cash reserve ratio by 50 basis points, but kept the repo rate steady.

The twelve-member panel is advisory in nature and the final rate decision rests with the governor.

HSBC India CEO Davis to move to Singapore in MarchBS Reporter / Mumbai Feb 16, 2012, 16:40 IST

Stuart Davis, chief executive of Hongkong and Shanghai Banking Corporation (HSBC) in India, is likely to move to Singapore in March, 2012. Sources said the move was a "routine replacement" as Davis will complete three years in India next month.

He is expected to be replaced by Stuart Milne, country manager and president of the bank's operations in Japan, sources said requesting anonymity as the bank is yet to receive regulatory clearance on this appointment.


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HSBC's spokesperson in India was not available for comments

Davis will relocate at a time when HSBC is looking to acquire the retail and commercial banking businesses of Royal Bank of Scotland (RBS) in India. The deal is yet to be cleared by the Reserve Bank of India (RBI).

Naina Lal Kidwai is currently group general manager and country head of HSBC in India.

Earlier this month, another foreign lender, Standard Chartered Bank replaced Neeraj Swaroop, chief executive of the lender's operations in India and South Asia, with Sunil Kaushal. Kaushal was heading the British bank's operations in Taiwan.

Stir up passion for financial inclusion: RBI to bankersPress Trust of India / Chandigarh Feb 15, 2012, 19:47 IST

The Reserve Bank of India (RBI) today asked bankers here to "stir up passion" for providing banking facilities to unbanked villages in Punjab and Haryana within stipulated time frame of March 2012.

The apex bank made this observation while reviewing the FIP's during the State Level Bankers’ Committee (SLBC) meeting for Punjab and Haryana held here.


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Over 450 villages in both states are yet to be covered under Centre's most ambitious Financial Inclusion Plan (FIP).

"Passion and zeal is missing among bank officials... There has to be passion... Let us change our attitude... We are not officers... We have to work as public servants," Jasbir Singh, RBI Regional Director, said while discussing the review of financial inclusion programme.

The RBI says merely opening accounts of villagers in unbanked areas under FIP will not serve any purpose where transactions in holders' accounts is minimal.

"Mere opening of accounts will not serve purpose... transactions should also take place in the accounts," said Singh, acknowledging that number of transactions in accounts were not encouraging at several places.

He added that bank officials need to go to the masses in villages and try to bring them in the banking fold.

The RBI in its field visits conducted at some places in Punjab and Haryana found that bankers were enrolling the beneficiaries while showing them as covered under FIP, though smart cards were not issued to account holders, he said. In some cases where the smart cards are issued, it remained non-operational, he added.

According to RBI, the FIP is treated as complete with the whole operations of identification, enrolment, issuance of smart cards, and its operations by the account holders to be ensured by Business Correspondents.

Banks have been given the target of covering 1,576 unbanked villages in Punjab and 1,838 villages in Haryana, with a population of 2,000 and above, by March 2012.

Out of these, 1,260 and 1,670 villages have been covered in Punjab and Haryana by December 2011, respectively, SLBC report said.

Singh also stressed on creating awareness among villagers about the benefits of banking services so they could start using banking services at large scale.

Coverage of unbanked villages under FIP assumes significance as the Centre intends to extend benefits of banking to each citizen of India for speeding up economic development.

Agri NPAs: SBI says it should do a better job at recoveryPress Trust of India / Mumbai Feb 15, 2012, 19:36 ISTAds by Google

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With agriculture emerging as the most stressed segment for State Bank of India, SBI chief financial officer Diwakar Gupta today said the country's largest lender needs to do a "better job" of collecting dues from the farm sector.

"I think we need to do a better job on collecting from the agriculture sector. May be some of it would come back if we were doing it more effectively," Gupta said at an investor conference, organised here by financial services firm India Infoline here.


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In the quarterly earnings announced on Monday, the bank had said that the gross non-performing assets (NPA) ratio for agriculture stood at 9.45% as against an overall 4.61%. Along with agri-lending, aviation loans to Kingfisher, the bank's provisioning rose 87%.

Agriculture accounts for 12% of the bank's book as of the December quarter.

Gupta said that a lot of the problems in agriculture are structural like lack of right linkages and storage facilities among other things.

However, he also pointed out that there are "moral" issues at play with some borrowers showing reluctance to pay in spite of their ability to pay.

"A lot of anecdotal feedback we get from the ground is that there is a reluctance to pay, apart from inability to pay," he said.

It can be noted that after the massive farm loan waiver in 2003 by the Centre amounting to nearly Rs 60,000 crore, many banks have been reporting that farmers are not reluctant to pay up expecting periodic bailout by the government.

Gupta did concede, however, that from the recoveries perspective agricultural segment, with its small ticket sizes, is difficult for banks.

SBI has nearly 53 lakh accounts and the average size of a loan is Rs 62,000, he said.

"The short-term challenge for banks internally is to ensure that their systems and processes allow for adequate micro-tracking and follow-up on the smaller accounts on unsecured retail, on agriculture, on the small and micro in the SME segment," he said.

RBI launches survey on foreign collaboration in industryPress Trust of India / Mumbai Feb 13, 2012, 19:52 ISTAds by Google

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The Reserve Bank of India (RBI) today announced launch of a survey on the Foreign Collaboration in Indian Industry for 2010-11.

The survey is intended to collect comprehensive information relating to the nature, pattern and operation of the foreign collaboration agreements of companies, the RBI said in a statement.


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It will seek information from Indian firms on both financial collaboration through equity participation and technical collaboration. Corporates which have entered into the Foreign Collaboration Agreement have been asked to furnish the necessary information by March 15.

The RBI has instituted the Foreign Collaboration Survey in 1965 and this will be the ninth round. Information collected through the survey serves as an input for the policy formulation.

The eighth round of survey was conducted in 2010 for the reference period 2007-08 to 2009-10.

Bank of Baroda to expand overseas networkPress Trust of India / Kolkata Feb 11, 2012, 19:02 IST

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Public sector Bank of Baroda (BoB) will expand its overseas network by increasing up its presence in Africa, Middle East and entering New Zealand for the first time, a top company official said.

"We want to increase our presence in the overseas market. We are present in 87 countries, which will go up to 100 by June 2012," BoB's Chairman and Managing Director M D Mallya said.

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The bank would increase its presence in Africa and the Middle East, while it would enter New Zealand for the first time.

Regarding African operations, he told reporters last night that "every subsidiary is doing good business in Africa. A large chunk of our incremental growth will be coming from Africa".

The bank is expecting to clock a business volume of more than Rs 6,50,000 crore by the end of current financial year, he said adding it is looking at a growth of 24 per cent year-on-year.

After the government infuses a capital of Rs 775 crore in the bank, Mallya said the bank expects the capital adequacy ratio to go above 14 percent by end of March.

RBS to wind down some equity units, jobs to goReuters / London Feb 10, 2012, 20:25 ISTAds by Google

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Royal Bank of Scotland (RBS) is to wind down some parts of its equities operations as part of a broader cutback of its investment banking operations, with thousands of jobs already set to go as part of the restructuring.

"Following our announcement on January 12 about the restructuring of our wholesale banking division, steps have been initiated to wind down certain parts of the EMEA Equity Capital Markets [ECM] and cash equities businesses, and certain associated activities globally," RBS said on Friday.

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"This will affect about 200 to 300 employees, mostly in London," added the bank, which is 83% owned by the British government following a state bailout during the 2008 credit crisis.

Last month, RBS said it would cut another 4,450 jobs as part of its retreat from investment banking. The cuts come on top of 2,000 at the investment bank in the second half of 2011 and account for more than a quarter of the unit's staff.

The bank also sold its historic Hoare Govett unit to American bank Jefferies last month and reiterated on Friday that it was in talks with potential buyers for other parts of its equities operations.

These include its Asian cash equities business and associated banking and mergers and acquisitions (M&A) division; the M&A business outside Asia and some businesses based in the Netherlands.

Sources with knowledge of the matter have told Reuters that banks in Asia, Australia and the West Asia could be interested in these RBS assets.

SBI eyes higher profits in FY12, plans expansion abroadPress Trust of India / Bhubaneswar Feb 07, 2012, 19:25 ISTAds by Google


State Bank of India (SBI), the country's largest state-owned lender, today said its profit this fiscal will surpass that of last year, and announced plans to expand operations overseas through subsidiaries including one in Australia.

"With very good net interest income, the bank during the current fiscal should be able to outperform its earlier profit level which ranged from Rs 8,000 crore to Rs 9,000 crore," CBI Chairman Pratip Chaudhuri said.


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During 2010-11, SBI's profit had plunged to Rs 8,265 crore, registering a decline of 9.84% from that of the previous year.

Stating that the interest margin was an impressive 3.8%, Chaudhuri said though SBI's profit during the first quarter of the current fiscal was restricted to Rs 1,550 crore, it rose substantially to Rs 2,850 crore in the second quarter.

Unveiling plans for expansion of overseas operations, Chaudhuri said SBI was set to have a subsidiary in Australia within a year and has proposals for expansion in the US and Britain.

Similarly, concrete steps had been taken for opening two branches in Bangladesh by the bank which had already launched operations in countries like Quatar and Saudi Arabia, he said.

SBI waives service fee on SME loansPress Trust of India / Mumbai Feb 05, 2012, 13:20 ISTAds by Google

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Country's largest lender State Bank of India has decided to waive guarantees and annual service fees on loans given to small and medium businesses, guaranteed under the Credit Guarantee Fund Trust scheme.

To improve credit flow to the SME sector, the government- appointed Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) acts as a guarantor for loans up to Rs 1 crore. CGTMSE charges the above-mentioned twin fees to borrowers.


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"The fees are basically a kind of insurance premium. To help clients, we have now decided to pay up to the Trust from our books," SBI Managing Director (National Banking) A Krishna Kumar told PTI here. The decision was taken two weeks ago.

The Trust, which came into being four years ago, charges a guarantee fee ranging from 1 to 1.5% of the loan amount, while the annual service fee ranges from 0.50-0.75%.

Kumar parried a question on the financial implication of the move on the bank's balance sheet, but said this is a long- term arrangement, not a short-term move to lure customers.

Explaining the rationale, Kumar said the presence of such a commission clause dissuades "good borrowers", who feel it is unnecessary to take the extra burden in loan servicing.

Additionally, paying up the fees from the bank's own books will act as a "psychological deterrent" to the bank's staff, who can become complacent as the Trust stands guarantor to such loans, Kumar said.

If a loan turns bad, CGTMSE pays back 75% for the principal to the lending bank and an additional up to 15% depending on the case, he added.

RBI calls for dedicated SME verticals at banksPress Trust of India / Mumbai Feb 05, 2012, 13:12 ISTAds by Google

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The Reserve Bank has asked banks to set up dedicated verticals to help small and medium businesses to deal with financial matters.

"An SME-promoter knows the product, but he doesn't know finance," RBI Deputy Governor K C Chakrabarty said, speaking at an industry seminar organised by the SME Chamber of India here over the weekend.


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Banks, which have long-term association with such SMEs as lending partners, can further this relationship by providing consultancy on finance, cash-flow management, taxation and other related things for a fee, he said.

"I think this is a product innovation, which needs to be done by banks and it needs to be done across the globe," Chakrabarty, whose responsibilities include customer services, said.

A desk should be available centrally that will help SMEs and can handle multiple SMEs, he said.

SMEs will have to pay for such service, he said. "I am not saying anything is free, you charge them for that."

However, banks should eye volumes in the business and ensure that the costs are low, Chakrabarty added.

He also came down hard on the high interest rates charged by banks in lending to SMEs, asking if they can be compared with rates charged to corporates.

As a matter of proper governance, Chakrabarty said, "I will be happy if banks disclose this in the balance sheet."

ICICI Bank signs $300 mn loan deal with Japan banksReuters / Feb 03, 2012, 16:26 ISTAds by Google

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Japan Bank for International Cooperation (JBIC) and Sumitomo Mitsui Banking Corp (SMBC) completed a $300 million loan deal for ICICI Bank, JBIC said in a statement on Friday.

JBIC is providing $180 million, while SMBC and Bank of Tokyo-Mitsubishi UFJ are funding $120 million. The commercial portion is guaranteed by JBIC, it said.


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JBIC and SMBC were the arrangers to the deal.

The funds will be used to support renewable energy and energy efficiency projects in India.

In March 2011, the borrower got 15.3 billion yen loan and a $200 million loan from Japan.

Banks not sure of meeting priority sector lending targetPress Trust of India / Mumbai Feb 02, 2012, 21:01 ISTAds by Google

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With credit growth not picking up owing to a high interest rate regime, many banks are now apprehensive about meeting their priority sector lending (PSL) target for the current fiscal.

"Meeting the priority sector lending target will be difficult in the current fiscal as the credit growth is subdued," Bank of India chairman and managing director Alok Misra has said.


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He also said the bank is likely to post a 15.5-16% growth in gross advances in this fiscal against the earlier estimation of 18%.

Similarly, Central Bank of India is also apprehensive about meeting the growth target in the PSL category this fiscal.

"It seems little difficult at this point of time. However, we will try to meet the target," says Central Bank of India chairman and managing director MV Tanksale.

PSL is the prescribed limit of loan for banks that should be given to specific sectors like agriculture and small scale units for developmental activities.

Currently, the Reserve Bank prescribes domestic banks to disburse 40% of their net bank credit to the priority sector, which is 32% for the foreign banks.

As per recent data released by the RBI, on a year-on-year basis, non-food credit increased 15.4% in December compared with 27.2% in the same period previous year.

The RBI also said total credit disbursement to the agriculture and allied areas grew by only 5.6% to Rs 4.60 lakh crore in December, which was as high as 25.4% in the same period last year, indicating a sluggish growth in priority sector lending.

However, some of the bankers also said though they are hopeful of meeting the target.

"We have a disbursement target of around Rs 35,000 crore to priority sector this fiscal and had already provided Rs 27,000 crore as of now. We are hopeful of achieving the targeted advances," Corporation Bank executive director Ashwani Kumar said.

RBI asks banks to evaluate risk of unhedged forexPress Trust of India / Mumbai Feb 02, 2012, 20:11 ISTAds by Google


To prevent adverse impact of volatile forex market movement on corporates and their lenders, the Reserve Bank of India (RBI) has directed banks to evaluate risks from unhedged foreign currency exposure of companies while extending them credit facilities.

"In view of the importance of prudent management of foreign exchange risk, it has been decided that banks, while extending fund based and non-fund based credit facilities to corporates, should rigorously evaluate the risks arising out of unhedged foreign currency exposure of the corporates and price them in the credit risk premium," the RBI said in a circular today.


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It also directed lenders to fix a limit on unhedged exposure of corporates on the basis of bank's board approved policy.

"Recent events relating to derivative trades have shown that excessive risk taking by corporates could lead to severe distress to them and large potential credit loss to their bankers in the event of sharp adverse movements in currencies," it said.

The circular comes a few months after the apex bank had, in its second quarter review of monetary policy in October 2011, warned against unhedged forex exposure of corporates.

"Unhedged forex exposure of corporates is a source of risk to corporates and a source of credit risk to financing banks. If the unhedged position is large, it can have serious consequences for the solvency of corporates in the event of large depreciation of the home currency and can result in large credit losses to the financing banks," the policy review has said.

According to RBI, the recent volatility in rupee exchange rate has underlined the importance of prudent management of foreign exchange risk.

The rupee depreciated by over 15% against the US dollar between August and December 2011. In mid-December, the rupee had weakened to an all-time low of Rs 53.72/73 to a US dollar.

However, it has since then strengthened and is currently trading at around Rs 49 a dollar.

SBI says it has Rs 4,500 cr exposure in telcosPress Trust of India / New Delhi Feb 02, 2012, 18:42 ISTAds by Google


State Bank of India (SBI), the country's largest lender, today said it has an exposure of Rs 4,500 crore in the telecom companies whose licences have been cancelled by the Supreme Court in connection with 2G scam.

The other lenders including Punjab National Bank, Corporation Bank, Oriental Bank of Commerce too have exposure in these telecom companies.


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"I don't think we will be affected much by the the verdict. We have a fund-based exposure of Rs 1,100 crore in five accounts, while another Rs 3,400 crore are non-fund based, which is based on a guarantee of rollout. Now that the licences are cancelled that guarantee is not fulfilled," SBI Deputy Managing Director Santosh Nair said.

"For the Rs 1,100 crore, all the accounts are from corporate houses with whom we have long term relationships. The corporate house behind the licencee will help us or we also expect them to bid again at the time of the new auctions, which can secure our funds," Nair said.

Meanwhile, another large public sector lender Punjab National Bank (PNB) said its exposure for rollout under 2G is limited to Rs 508 crore. However, the bank had not given any loan for seeking licence.

PNB has total exposure of Rs 10,923 crore towards telecom sector. Of this, the bank's exposure to government sector is Rs 1,016 crore, the bank said in a statement.

It also said Rs 173 crore is fully secured by bank's deposits.

Country's largest private sector lender, ICICI Bank, said it is unaffected from the cancellation of 2G licences.

"ICICI Bank does not have any exposure at risk on account of cancellation of 2G licences," the bank spokesperson said.

However, state-owned Corporation Bank said it has exposure of Rs 146 crore in one of the telcos hit by order.

"We have Rs 146 crore exposure to Videocon Mobile. Though it is a secured funding we are a bit worried as to how it will pan out post the Supreme Court verdict," Corporation Bank Chairman and Managing Director Ajay Kumar said.

"We have to review the account in the light of this development though this has been a standard asset so far," Kumar said.

Even Oriental Bank of Commerce (OBC) said the bank had disbursed loans to telecos whose licences have been cancelled.

Loans have been given to all leading players. However, there are some concerns on the loans given, a senior official of OBC said.

According to Indian Overseas Bank Chairman and Managing Director M Narendra, the bank do not have exposure in these telecom companies.

"We have got exposure of 1.21% of total loans in telecom sector including telecom infrastructure," Narendra said, adding, the bank has sanctioned Rs 2,200 crore to telecom sector.

Andhra Bank Q3 net down 8.5% at Rs 303 crPress Trust of India / Hyderabad Feb 02, 2012, 18:36 ISTAds by Google

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Public-sector lender Andhra Bank witnessed a decline of 8.5% in net profit at Rs 303 crore for the third quarter ended December 31, 2011, due to higher provisioning towards non-performing assets (NPAs).

The city-headquartered bank had posted a net profit of Rs 331 crore in the same period of previous fiscal.

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The decline is mainly due to the provisions and contingencies made on account of restructuring of accounts and NPAs, Chairman and Managing Director BA Prabhakar said.

During the quarter, the lender's total income stood at Rs 3,158 crore, up 36% over the year-ago period.

"The provisions have mainly gone up because of the restructured accounts. Major sector for which we have made provisions is telecom... It is for the entire banking industry. Even other banks also made substantial provisioning for telecom tower accounts," Prabhakar said.

The bank has shown Rs 309.43 crore towards the total Provision and Contingencies, of which provision for NPAs is Rs 39.47 crore. Last year, in the same quarter, the provisioning was of Rs 172 crore.

Net NPAs for the quarter were recorded at 1.21% as against 0.47% over the same period last year.

There could be a decline of 15 to 20 basis points in the net interest margin (NIM) by March this year. NIM stood at 3.81% for the quarter and 3.80% for nine months.

"NIM will be under pressure. But we will be able to by and large manage."

On the interest rates of savings account, he said at present there were no plans to increase those interest rates.

"If you increase the interest rates, you will have to increase the lending rates. This is not the time to increase the lending rates for two reasons. One is the credit demand is not very strong. Number two is when the economy is going through so much of stress and slow down, increasing the interest rates will only affect the credit quality. We have to strike a balance and that’s what we are doing," he said.

Deposits at the end of the quarter stood at Rs 98,680 crore, registering growth of 20.2%, while advances recorded a growth of 20.7% at Rs 97,169 crore.

The bank has plans to recruit 2,270 employees, including 820 officers, in the next fiscal.

PNB to get Rs 1,284 cr capital infusion from govtPress Trust of India / New Delhi Jan 30, 2012, 20:28 ISTAds by Google

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Public sector lender Punjab National Bank (PNB) today said the bank has approved a fund infusion to the tune of 1,285 crore through preferential issue of shares to the government.

The board in its meeting today approved issuance of shares of face value of Rs 10 each on preferential basis in favour of government of India, aggregating to Rs 1,285 crore, subject to necessary approvals, the bank said in a filing on the Bombay Stock Exchange (BSE).


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loans

The capital infusion would raise government's stake in the bank. At present, the government of India holds 58% stake in PNB.

The bank will be holding an extraordinary general meeting of shareholders on March 20 to take up approval for the same.

Last year, PNB got a capital infusion of Rs 184 crore from the government.


Most of the public sector banks got capital support from the government last fiscal. These banks included Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.

It is to be noted that Financial Services Secretary DK Mittal had said the state-run banks would be requiring about Rs 3.5 lakh crore by 2021.

Shares of PNB closed at Rs 955.90, down 1.59% at the end of trading session on the BSE.

RBI provides more leeway to banks for rupee vostro accountsPress Trust of India / Mumbai Jan 30, 2012, 20:04 ISTAds by Google


The Reserve Bank of India (RBI) today dispensed with the rule under which banks were required to seek its approval for opening and maintaining vostro accounts by non-resident exchange houses for each new client.

Vostro is an account that one party holds for another.


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"With a view to give more operational leeway to the AD Category-I banks, it has been decided to dispense with the requirement of prior approval of the RBI for opening and maintaining each Rupee Vostro account in India of non-resident Exchange Houses in connection with the Rupee Drawing Arrangements (RDAs) that banks enter into with them," the apex bank said in a circular.

The RBI said that approved dealer banks can now take its permission the first time they enter into such an arrangement with non-resident exchange houses from the Gulf countries, Hong Kong, Singapore and Malaysia.

"Subsequently, they may enter into RDAs, subject to the prescribed guidelines and inform the RBI immediately," the central bank said.

The circular said, "Once the total number of RDAs reaches 20, the AD Category-I bank may cause a detailed external Audit of their internal system to ensure that it is working satisfactorily.

"Based on the satisfactory report, the board of AD Category-I banks may authorise more such arrangements. A copy of the board note together with board resolution in the matter may be filed with the RBI and new arrangements informed to the RBI."

In another circular, the apex bank said that it has also dispensed with the old rule under which fresh licences were issued to banks and financial institutions to act as Full Fledged Money Changers on a selective basis based on criteria.

Such criteria included provisions for facilitating an increase in outreach and preference was given to branches based locational advantage like being located in border areas or tourist centers and so on.

"In view of the recent measures adopted to provide more flexibility to the Authorised Persons in selecting the location for their branches, it has now been decided to remove the criteria relating to increase in outreach and locational advantage while considering the applications for issuance of fresh licenses for Full Fledged Money Changers (FFMC)," the RBI said.

Punjab & Sind Bank Q3 profit slips by 33%Press Trust of India / New Delhi Jan 30, 2012, 19:50 ISTAds by Google


State-owned lender Punjab & Sind Bank (PSB) today reported a 33% dip in net profit at Rs 91.63 crore for the third quarter ended December 31, 2011, due to rise in bad loans.

The lender had posted a net profit of Rs 135.30 crore for the corresponding quarter last fiscal.

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The bank's gross NPAs increased to 1.28% at the end of third quarter from 0.91% in December, 2010. Its net NPAs also went up to 0.88% during the three-month period from 0.44% during the first quarter of 2010-11.

However, the total income of the lender rose to Rs 1,754.44 crore during the October-December period from Rs 1,352.48 crore in the same period a year ago, PSB Chairman DP Singh said.

The interest earned of the bank rose to Rs 1,660.87 crore during the reporting quarter from Rs 1,260.88 crore in the third quarter of the previous fiscal.

Total business of the bank rose by 12.52% to Rs 1,01,855 crore at the end of December, 2011.

Rates to respond to sustained inflation down move: RBIReuters / Chennai Jan 30, 2012, 19:18 ISTAds by Google


The Reserve Bank of India (RBI) will watch for a sustained fall in inflation before it moves ahead with a cut in policy rates, Deputy Governor Subir Gokarn said on Monday.

"Certainly interest rates will respond to sustained movement in inflation downwards and it is on this basis that we have signaled that this cycle has reached its peak," Gokarn said on the sidelines of an event in Chennai.


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With core inflation still stubbornly high, the RBI had as expected left its policy repo rate unchanged at 8.50% for the second consecutive review on January 24.

Inflation has remained high for long due to elevated food prices, infrastructure bottlenecks, and an expansionary fiscal policy that pushed up rural spending power and strained government finances.

However, a sustained fall in food prices since mid-December has given policymakers some respite.

Annual headline inflation, measured by the wholesale price index, slowed to a two-year low of 7.47% in December, thanks to a sharp decline in food inflation. But manufactured product inflation edged up from the previous month.

The 16% drop in the rupee in 2011 has made imports even more expensive.

However, the rupee has gained 7.3% so far in January helped by renewed global appetite and fund flows into local debt.

"Rupee has appreciated by 6 to 7% so some of the inflation impact will obviously get diluted over time," Gokarn said.

The RBI has been intervening in the foreign exchange market to support the rupee, which had slumped to a record low of 54.30 to the dollar in mid-December.

The central bank and the government have also taken other steps to support the currency, including liberalising interest rates for bank deposits held by non-resident Indians as a way to encourage dollar inflows.

Gokarn added that the exchange rate will broadly depend on global liquidity and developments in Europe.

OMOs TO STAY

The central bank is open to more debt buybacks through open market operations to address the strain on liquidity.

"If we need to address liquidity with further OMOs, we are open to that. We are keeping the OMO option open." Gokarn said.

The RBI has bought back about Rs 71,900 crore of government bonds from the secondary market since late November to reduce pressure on yields and ease a cash crunch after the government increased its borrowing plan for 2011-12.

Bank borrowed Rs 1.22 lakh crore from the RBI's repo auction under liquidity adjustment facility on Monday.

RBI had cut CRR, or the share of deposits banks hold with the central bank, by 50 basis points to 5.5% in the latest policy to infuse liquidity. The CRR cut is expected to have released about Rs 32,000 crore into the banking system on Saturday.

Interest rate cut by RBI only in April: Barclays CapitalPress Trust of India / New Delhi Jan 29, 2012, 12:08 ISTAds by Google


The Reserve Bank is unlikely to cut lending rate before April despite moderation in inflation, but may further reduce the Cash Reserve Ratio (CRR) in view of the tight liquidity, global financial major Barclays said.

"We continue to see risks of a 25 basis points repo rate cut at the March mid-quarter policy review, while maintaining our base case that the rate-cutting cycle will start in April," Barclays Capital said in its 'The Emerging Markets Weekly' report.


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It further added: "We maintain our view of a slow but calibrated reduction in policy rates in 2012-13. However, given the ongoing pressures on liquidity, another 50 basis points cut in the CRR in March cannot be ruled out at this stage".

RBI is scheduled to announce its fourth mid-quarterly monetary policy review on March 15 and its annual review for 2012-13 on April 17.

At its third quarterly monetary policy review on January 24, the central bank had injected Rs 32,000 crore into the system by lowering the CRR by half-a-percentage point to 5.5% but kept the short-term lending, or repo rate unchanged.

Headline inflation, which also factors in manufactured items, fell to a two-month low of 7.47% in December. Food inflation has been in the negative zone for four consecutive weeks since mid-December and stood at (-)1.03% for the week ended January 14.

RBI has, however, said inflation remains a concern in view of volatile crude prices in international markets and widening fiscal deficit.

Attributing the decline in food inflation mainly to seasonal factors, the central bank said the impact of good vegetable output will remain limited in the absence of effective measures to address supply-side bottlenecks.

RBI, which has pegged the year-end inflation at 7%, said the revision in domestic-administered prices would add to inflationary pressures.

RBI had hiked interest rates 13 times between March, 2010 and October, 2011 to curb demand and tame inflation. India Inc has blamed the high interest rate regime, which has increased the cost of borrowings, for hindering investments and industrial slowdown in the country.

Economic growth slipped to 6.9% in the second quarter (July-September), the lowest in over two years. The RBI has revised down the growth forecast for the current fiscal to 7%, from the earlier estimate of 7.6%.

Barclays Capital said that pressure from large government borrowing is compounding the problem of capital spending.

"The RBI expects a modest rebound in growth in 2012-13, along with marginally lower inflation, which we again sense is something that can broadly be achieved," it said.

RBI for more secured environment in banking sectorPress Trust of India / Chennai Jan 27, 2012, 20:34 ISTAds by Google


Calling for a more secured environment in the Indian banking system, a senior official of Reserve Bank of India (RBI) today said banks need to have technology enabled processes to earn full faith on the customers.

"I would like to reiterate that a basic principle of information security is to be ahead of the curve and hence there is a need for robust and comprehensive measures. Further, we need to demonstrate effectively that we cannot let our doors open to cyber criminals, fraudsters and terrorists to break the faith of customers in our banking system," RBI Executive Director G Gopalakrishnan told a seminar here.


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"We need to ensure robust technology related controls and processes at all commercial banks to facilitate customer confidence in our banking system," he said.

He said the central bank was very sensitive to the issue and added that "all the stakeholders need to ensure that we [banks] do not lose our guard during our journey ahead. The Working Group's report can be considered to be a key deliverable in this context".

The Working Group is an outcome of a study conducted by Frauds Monitoring Cell of Department of Banking Supervision, RBI.

Earlier, Gopalakrishnan said some of the banks should have a more comprehensive information security polices.

"The implementation is not effective, capacity management plans are not robust, appropriate vendor exit strategies are not in place. The process of designing and development of awareness programmes for customers is not in place," he said.

He said there was a need to see tangible benefits to both customers and banks arising from effective implementation of guidelines by banks.

SBI may return to overseas marketsReuters / Antwerp Jan 27, 2012, 19:03 ISTAds by Google

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State Bank of India, the country's biggest lender, said it could revive international fundraising plans in 3-4 months, in a sign it believed the euro zone crisis might be easing.

The bank, which is involved with about a quarter of all Indian bank loans and deposits, said it would launch the fundraising once it had seen international markets stabilise.


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"We would like to come in as early as maybe in three or four months time," Hemant Contractor, a managing director at the bank, told reporters late on Thursday during a press conference at the bank's office in the Belgian city of Antwerp.

"Because of the slight instability in the capital markets we have deferred our plans, so once there is some stability then we will tap the markets," he said.

In November last year, he said that the bank would hold off on its fundraising plans because of conditions in the international markets, which have been under pressure because of worries over highly indebted European nations.

Contractor said the plans would be finalised after the bank's quarterly results next month.

SBI said last year that it could raise up to $10 billion overseas as it searches for cash to lend to companies on the subcontinent to help fuel their explosive growth.

"There is a demand for funds from our customers, and it's because of that that we are thinking of tapping the markets now," Contractor said.

Even though India saw its slowest growth in national output for over two years in the quarter ended September, that was still an increase of almost 7%.

The bank could raise upwards of $500 million, likely in US dollars, he said.

"Depending on how the markets play out, we will decide on the currency ... but in all likelihood it will be US dollars."

RBI may intervene in forward forex markets: sourceReuters / Jan 27, 2012, 13:30 ISTAds by Google


The Reserve Bank of India (RBI) may intervene in the forward foreign exchange market, in addition to the spot market, to help manage liquidity in the banking system, a central bank source told Reuters on Friday.

"If and when we are doing it (intervention), we may do a combination of spot and forwards so liquidity impact is shifted to a future date," the source said.


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Banks borrowed Rs 1.59 lakh crore from the RBI's repo window on Friday, compared with Rs 1.45 lakh crore on Wednesday, and significantly higher than the RBI's comfort zone of 600 billion rupees, indicating the tightness in liquidity.

No specific inflation rate needed for rate action: RBIReuters / Mumbai Jan 25, 2012, 15:20 ISTAds by Google

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Headline inflation does not need to get to a particular number for the Reserve Bank of India to act on interest rates, Deputy Governor Subir Gokarn said.

RBI Governor Duvvuri Subbarao, speaking on the same conference call, said core inflation of 4% to 4.5% was in the realm of possibility and that the central bank would like the number to reach that level eventually.


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Subbarao also said the bank's open market operations (OMOs) to buy back government debt have limitations beyond a point.

The RBI will need to assess how liquidity is behaving before taking a view on future OMOs, he added.

He also said the government needs to focus on expenditure compression in lowering the fiscal deficit.

Subbarao and Gokarn were speaking in a conference call with analysts a day after the central bank cut cash reserve requirements for banks but held key interest rates steady

OMOs to be conducted subject to liquidity: GokarnPress Trust of India / Mumbai Jan 24, 2012, 21:33 ISTAds by Google

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Deputy Governor of RBI Subir Gokarn today said he would not rule out conducting open market operations (OMO) subsequent to the central bank's slashing the cash reserve ratio by 0.5 percentage point to 5.5%.

"We don't rule out conducting OMOs in future and it will depend upon the liquidity situation in the system," Gokarn told reporters here after the monetary policy review.


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He also said OMOs are being conducted to ease liquidity deficit in the system and not to support yields.

The central bank had infused Rs 70,000 crore into the system in the last three months after the average daily borrowings under the Liquidity Adjustment Facility (LAF) touched Rs 1.2 lakh crore in the recent past, which is way above the RBI's comfort level of Rs 60,000 crore.

Referring to the rupee, Gokarn said that the central bank was not looking at any level and it would like the currency to float based on demand-supply dynamics.

He also said that it was looking into the possible impact on inflation after the implementation of the proposed Food Security Bill.

"We are now studying the impact of the proposed Food Security Bill on inflation and it's difficult to ascertain its effect on inflation as of now," Gokarn added

RBI to meet bankers to discuss NPA, says no concern for nowPress Trust of India / Mumbai Jan 24, 2012, 20:58 ISTAds by Google

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The Reserve Bank of India (RBI) today said there is no concern about the level of non-performing assets (NPAs) in the banking system and it would soon meet 10 large banks to take stock of the situation.

"Whatever [NPA] figure is being reported, we don't find anything to worry. We have done a stress test in the Financial Stability Report and we don't have anything to worry about," Deputy Governor of RBI KC Chakrabarty said.


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He added, however, that the central bank would soon meet 10 large banks to ascertain the situation.

"Just now, we have no concern. But, we are concerned about how the message is going from the media and analysts [to the public]. So, we will discuss with the banks about the NPA issue," Chakrabarty said.

Referring to sector specific stress points, he said the central bank is not uncomfortable about lending to any particular sector.

"We don't have, as of now, any sector specific concerns. If you analyse, the gross NPA which is 2.66% now was 2.8% in 2007," he said, adding that the NPA numbers reported in sectors like telecom and power distribution companies (Discom) are minimal compared to total portfolio.

"In case of power, the reported NPA is Rs 768 crore out of Rs 2,60,000 crore [of portfolio]. So, we don't have any concerns. Even the restructured standard asset is not substantial. That [NPA] has happened not only because of credit squeeze, but due to various other factors related to project implementation," he said.

The central bank also clarified that it would not intervene in banks' decision to stop lending to power discoms.

"Whether banks [will] continue to lend, or stop lending to discoms and on what basis, it is between state government, banks and discoms. We will not intervene in this matter," RBI Governor D Subbarao said. He quoted instances of letters received from state governments asking for intervention to restart lines of credit discontinued by banks.

A recent Crisil report said losses of Discoms (power distribution companies) rose 24 per cent to Rs 27,500 crore between 2006-07 and 2009-10, which could rise to about Rs 35,000 crore in 2010-11 as power tariffs were not revised by state governments along with various other issues.

Subbarao also said that he is not comfortable with the idea of converting public carrier Air India's debt into SLR (Statutory Liquidity Ratio) bonds.

Banks are struggling to recover Rs 19,000 crore from the ailing national carrier and one of the three proposals floated to restructure includes converting the outstanding debt into government bonds which could be transfered to the banks' SLR portfolio.

Feature: RBI policy action pushes up rate-sensitivesPeaking of interest rates turns focus on banks, capital goods, real estate and consumer durables where demand is closely linked to borrowing ratesSunaina Vasudev / Mumbai Jan 24, 2012, 15:34 ISTAds by Google


Predictably, rate-sensitive indices led the way for a rise in the broader indices as the Reserve Bank of India (RBI) again emphasised a peaking of the interest rate cycle in its review of the Monetary Policy today.

The RBI Governor reinforced the guidance that further policy actions would most likely reverse the cycle by lowering policy rates. The central bank cut Cash Reserve Ratio (CRR) maintained by banks by 50 basis points (bps) to 5.5% of their net demand and time liabilities (NDTL) effective from January 28, 2012 that would release about Rs 32,000 crore into the banking system.


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The move would reduce liquidity pressure which, the Governor stated, has been tight and beyond the RBI’s comfort zone of 1% of NDTL with a net liquidity injection of over Rs 70,000 crore by the RBI through open market purchase of government securities.

The policy stance was influenced by this significant increase in the structural deficit in the system which, according to the RBI, could hurt the credit flow to productive sectors of the economy. This, therefore, necessitated a permanent primary liquidity injection into the system especially ahead of further stresses expected from upcoming advance tax outflows.

Slowing Growth

While keeping the key policy repo and reverse repo rates unchanged at 8.5 and 7.5%, the RBI noted that growth is decelerating and inflation is moderating and therefore the next policy action would most likely cut rates.

The slowing growth reflects the combined impact an uncertain global environment, the net impact of past monetary policy tightening and domestic policy uncertainties. With credit offtake below projected trajectory, the RBI lowered its GDP growth projection for FY12 from 7.6% to 7% and stated that risks to growth have increased.

It noted that although headline WPI inflation is moderating, this largely reflects a sharp softening in prices of seasonal food items. In contrast,

inflation of other key components, particularly protein-based food items and non-food manufactured products continued to be high. The upside risks to inflation were due to global crude oil prices, impact of rupee depreciation and fiscal deficit slippages.

HOW THE INDICES HAVE MOVED

Change (%)

1-day 1-month 6-months

BSE Auto 1.35 7.01 0.03

BSE Bankex 2.71 14.75 -15.29

BSE Consumer Goods 3.43 21.11 -27.93

BSE Realty 0.68 20.60 -21.891-day change is as on Jan 24, 1-mth and 6-mth change is as on Jan 23

The Road Ahead

While this shift in the GDP growth and inflation balance has led to a predictably dovish tone to the monetary policy guidance, the RBI has cautioned that future rate actions depend on policy and administrative actions towards fiscal consolidation.

The projected government borrowing in the second half suggests a fiscal deficit much higher than projected in the Union Budget, which contributes to inflationary pressures while simultaneously crowding out private credit. Therefore, economists don’t expect any real action before the Union Budget announcement slated for March 2012 close to the end of this fiscal.

Arun Singh, Senior Economist, Dun & Bradstreet believes that any policy rate cuts will only come after April 2012 when the inflation scenario becomes clear. The impact of the rate hikes on non-food (manufacturing) inflation will be evident by then and therefore the March inflation print will be significant. A number close to 6 per cent will provide comfort for the RBI to proceed with rate cuts in its April 2012 monetary policy review, he says. While the IIP moderation is a concern, he doesn’t expect it to go into the negative zone but it could be subdued, below 5 per cent levels, for the next four to five months and normalize post rate cuts. Implementation of reforms by the government will be key as sluggishness here has been hurting sentiment, he adds pointing out that the Budget will be key going ahead.

SBI may soften lending rates in select sectorsReuters / Mumbai Jan 24, 2012, 15:12 ISTAds by Google


Indian banks may reduce lending rates for select sectors including those that are seeing higher demand for credit and lower level of defaults, chairman of State Bank of India, the country's top lender, said on Tuesday.

These sectors may see "some softening in cost of funds", Pratip Chaudhuri told reporters, after the central bank cut cash reserve requirements for banks by 50 basis points on Tuesday to ease tight liquidity.

RBI asks govt to free diesel pricesPress Trust of India / Mumbai Jan 24, 2012, 14:50 ISTAds by Google


The Reserve Bank today said the government should deregulate diesel prices in order to contain the trade deficit, which is expected to widen to $160 billion during the current fiscal.

"Particularly, as the food subsidy bill is expected to rise, it will be prudent to fully deregulate diesel prices to contain both aggregate demand and the trade deficit," the RBI said in its third quarterly monetary policy review.


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While petrol prices are market-linked, the government decides the rates of LPG, kerosene and diesel, which usually results in a large budgetary expenditure on subsidies.The central bank further said the current levels of domestic prices of petroleum products do not reflect international prices.

"Petroleum product prices have also not been revised in response to crude oil prices, contributing to both fiscal slippages and suppressed inflation. Revision in domestic administered prices will add to inflationary pressures, although such revisions are necessary to maintain the balance between supply and demand," the RBI said.

According to the financial stability report (or FSR) of the RBI released earlier, the December trade deficit gap for the year would broaden from $155 billion to $160 billion, a significant rise from $104.4 billion in the previous year.

It is estimated that the higher expenditure on petroleum subsidy could drive up the fiscal deficit by around 0.8 percentage points of the GDP for FY12.

The government had fixed the fiscal deficit target for the current fiscal at 4.6%.

"If the increase in government borrowing already announced is an indication, the gross fiscal deficit for FY12 will overshoot the budget estimate substantially," it said, adding that the increase in fiscal deficit could potentially crowd out credit to the private sector.

"Moreover, slippage in the fiscal deficit has been adding to inflationary pressures and it continues to be a risk for inflation," it said.

The RBI injected Rs 32,000 crore into the system by lowering the Cash Reserve Ratio (CRR) by half-a-percentage point today, but kept the short-term lending rate unchanged in view of persisting inflationary concern.

It has also revised the GDP growth projection for FY12 downward to 7%.

High fiscal deficit restraining policy rate cut: RBIPress Trust of India / New Delhi Jan 24, 2012, 14:24 ISTAds by Google

Get 50Lac after 15Years. : Invest करो� L I C में� 3600 p.m जा�ने कनेसा� है ये Plan PolicyBazaar.com/2012_InvestmentsThe Reserve Bank today suggested that the government should endeavour to contain high fiscal deficit, which has been restraining the central bank from lowering interest rates.

"In the absence of credible fiscal consolidation, the Reserve Bank will be constrained from lowering the policy rate in response to decelerating private consumption and investment spending," Reserve Bank Governor D Subbarao said after announcing RBI's third quarter policy review here.


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- Excl: RBI policy action pushes up rate-sensitives



The RBI said that strong signs of fiscal consolidation are necessary to create a space for lowering policy rate without the risk of resurgent inflation.

"The forthcoming Union Budget must exploit the opportunity to begin this process [of fiscal consolidation], in a credible and sustainable way," Subbarao said.

He also made a case for freeing of diesel prices to control the subsidy burden.

"As the food subsidy bill is expected to rise, it will be prudent to fully deregulate diesel prices to contain both aggregate demand and trade deficit," he said.

Even Finance Minister Pranab Mukherjee had last month said that the government's subsidy burden could exceed budgeted target by Rs 1 lakh crore on account of petroleum subsidy.

"The gross fiscal deficit for FY12 will overshoot the budget estimate substantially," he said. The government pegged the fiscal deficit target at 4.6% of the GDP for the current fiscal.

Subbarao said the slippage in fiscal deficit would add to inflationary pressure.

The RBI in its macroeconomic review of the economy released ahead of third quarter review of monetary policy had said that the higher expenditure on petroleum subsidy could drive up the fiscal deficit by around 0.8 percentage points of GDP for FY12.

The government will face additional pressures on account of food subsidies when the proposed Food Security Bill is enacted and implemented, it said, adding, the government needs to control its expenditure on petroleum subsidies.

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CRR cut to increase liquidity, boost growth: FinMinPress Trust of India / New Delhi Jan 24, 2012, 13:59 ISTAds by Google

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The Reserve Bank's decision to cut cash reserve ratio (CRR) by half a percentage point will boost the economic growth by increasing liquidity in the system and reducing cost of fund, the Finance Ministry said today.

"CRR cut ensures that fair amount of money is available, the cost of fund is reduced ... All these things are good to create a growth enhancing impression," Economic Affairs Secretary R Gopalan told reporters here.


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He said the third quarter monetary policy also indicates that the interest rate cycle has peaked and there is a recognition that growth has to be now fostered.

The CRR, the amount of deposits banks are required to keep with RBI in cash, has been reduced to 5.5% from 6% with effect from January 28, releasing Rs 32,000 crore in the system to ease the liquidity problems.

RBI expects the economic growth to be 7% this fiscal, but Gopalan said the third quarter GDP numbers, which are yet to be released, would give an idea about the growth for whole FY12.

"The [GDP] numbers should give us an idea of what the growth for whole year is going to be," he said. The third quarter economic growth figures would be released next month.

The economic growth slowed down to 6.9% in the second quarter of the fiscal from 8.4% in the same period last fiscal.

On the year-end inflation, Gopalan said it is likely to be 7% or even slightly lower than that.

No change in EMIs, banks to have more fundsPress Trust of India / Mumbai Jan 24, 2012, 13:53 ISTAds by Google


There is no immediate respite to home, auto and corporate loan borrowers in terms of their monthly equated instalments (EMIs) but with the RBI reducing the cash reserve ratio (CRR), banks will have more money to lend.

After the Reserve Bank unveiled the third quarterly review of the monetary policy, several bankers said that they may not go in for rate cut immediately.


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However, a few like Oriental Bank of Commerce Executive Director S C Sinha said the CRR cut would "definitely lead to reduction in interest rates."

Chairman of the Prime Minister's Economic Advisory Council and former RBI Governor C Rangarajan said that as the primary injection of Rs 32,000 crore liquidity (through CRR cut to 5.5% from 6%) would have a multiplier effect, the interest rates would soften.

"The improvement in liquidity condition will automatically have effect on the interest rates. It would lead to softening of interest rates," he said.

CRR is the percentage of bank deposit that lenders have to keep with the RBI. The new rate would be effective from January 28.

Since March 2010, the retail and corporate loans have become expensive for the borrowers but the fixed deposit holders had benefited from the 375 basis point hike in the short-term lending rate by the RBI.

Canara Bank Executive Director AK Gupta said banks would now get much-needed liquidity. This will also allay fears of further hike in base rate.

"Probably, interest rates may not come down immediately," he said, adding, the banks will however will have more cash at their disposal.


Industry View: RBI cuts CRR, holds ratesReuters / Mumbai Jan 24, 2012, 11:51 ISTAds by Google


The Reserve Bank of India left interest rates on hold on Tuesday but cut the cash reserve ratio for banks by 50 basis points, a move that eases tight liquidity in the banking system and underscores a policy shift from fighting inflation to reviving growth.

Following are views of industry officials after the RBI statement:

Hm Bharuka, Managing Director, Kansai Nerolac

"There is no need to reduce rates in a hurry and what the Reserve Bank has done is right. There needs to be clear signals from the economy, and it is only right for them to wait. The housing industry, which has been asking for a cut has not reduced prices. The fund flow to the housing sector has to be controlled as that has pushed up inflation to these high levels.

The CRR cut is something we are not sure about as additional liquidity in the system could be more inflationary. We are hopeful that the two pauses have been good and from March the industry is expecting a rate cut to boost growth."

(Kansai Nerolac is a paint maker)

Pramod Chaudhari, Chairman, Praj Industries


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"The decision will definitely act as a stimulus for growth; with inflation partly under control, growth is definitely a priority. The actual impact will take some time. (With capital) available for circulation, may be, planning for 2012/13 could be on a robust footing now."

(Praj Industries is a renewable energy technology company)

N Shridhar, Group Director, DB Realty

"The cuts would bring down interest rates, and as interest rates would get slightlty moderated I would assume that corporates would kick-start their capex plans. This is a step in the right direction, hopefully to stimulate growth. There was a lot of pressure on corporate

earnings, given that money was tight and interest rates moving up."

(DB Realty is a real estate developer)

Experts views on RBI policyReuters / Mumbai Jan 24, 2012, 11:26 ISTAds by Google


The Reserve Bank of India cut cash reserve requirements for banks in a move to ease tight liquidity, signaling a policy shift towards reviving growth after nearly two years of fighting inflation.

With core inflation still sticky, the RBI as expected left its policy repo rate unchanged at 8.50 percent for the second consecutive review after raising rates 13 times between March 2010 and October 2011, which made it one of the most hawkish central banks anywhere.

It cut the cash reserve ratio for banks by 50 basis points.

COMMENTARY:

Sailesh K Jha, Head Of Asia Strategy, Skandinaviska Enskilda Banken, Singapore

"Very dovish statements. My takeaway is this is negative for INR as inflation will re-accelerate by February, growth will surprise high, and fiscal concerns are looming. We expect USD/INR to be close to a bottom.

"I don't see a cut in the CRR to be a precursor to (a) change in the key benchmark rate in the March policy. We are hawkish on the outlook for inflation. There is a possibility of a CRR cut in the coming policy but I don't see a policy rate cut coming yet."

Radhika Rao, Economist, Forecast, Singapore

"Cut in the CRR could be perceived as a precursor to change in the key benchmark rate, with odds for a 25 bps cut in March, earlier than we had anticipated.

"Accompanying comments still see the central bank maintain a cautious tone on inflation, despite signs of softening growth and external headwinds, which highlights the tight bind the authorities are in.

"Nonetheless, policymakers will draw confidence from the food-prices driven slowdown in inflation and lower rates in the coming months. We look for 75 bps cut by end-2012."

Saugata Bhattacharya, Economist, Axis Bank, Mumbai

"The cut in cash reserve ratio is an excellent step that the Reserve Bank of India has taken in reversing its monetary policy stance, but it is not an indication that the next move would be a rate cut. They have very clearly specified that the rate cut would depend on the fiscal environment."

Arun Kejriwal, Strategist, Kris, Mumbai

"I think it's a little bit of a gamble -- if this can provide a thrust to the economy which is slowing down, so be it. We are used to having unpleasant surprises, but this time, it's a pleasant surprise."

Jagannadham Thunuguntla, Strategist And Head Of Research, SMC Global Securities, New Delhi

"The CRR cut is more of an indicator that the repo rate and reverse repo rate cuts are around the corner and I believe that would happen in March. I think growth and inflation are equally important for the central bank now."

Shubhada Rao, Chief Economist, YES Bank, Mumbai

"If the fall in inflation trajectory going forward is in line with expectation, then the cut in CRR should be followed by a 50 basis points cut in the repo rate in March.

"... If monetary policy transmission has to be effective, then a 50 basis point cut is needed to stimulate investment demand."

Sumedh Deorukhkar, Senior Economist, BBVA, Mumbai

"RBI has clearly said growth concerns have come center-stage despite lingering inflationary pressures.

"So we expect the central bank to go for a 25 bps repo rate cut in (its) March review. Deeper rate cuts will be seen only after RBI sees clear signs of easing in the core inflation.

"We expect repo rate cut worth 150 bps by end of December."

Sujan Hajra, Chief Economist, Anand Rathi Securities, Mumbai

"Our sense is that the cut in cash reserve ratio is a reaction to the acute liquidity deficit that is persisting. As far as the inflationary situation is

concerned, it has not materially changed apart from some softening in food prices.

"We think that in the second half of next fiscal year, inflation will start going up again and hence the window for monetary easing is limited. We expect 75 to 100 basis point of rate cut by October, and at least another 50 basis point of CRR cut during the same period."

Anubhuti Sahay, Economist, Standard Chartered Bank, Mumbai

"Their cautious stance is not surprising as imported inflation has emerged as a reason to worry. Going forward we expect inflation to be in the 6.5-7.0 percent range by March and a repo rate cut in Q2 2012."

Ashutosh Datar, Economist, IIFL, Mumbai

"Prima facie it looks like the central bank may go for further reduction in the cash reserve ratio if liquidity stays tight in coming months and so the sense of certainty on a rate cut in March has reduced.

"That said, the RBI may continue with the aggressive pace of bond buy backs through open market operations if liquidity deficit stays above Rs 1 lakh crore despite today's CRR cut."

RBI Policy: CRR cut by 50 bps to 5.5%Injects Rs 32,000 crore liquidity, keeps repo rate unchangedBS Reporter / Mumbai Jan 24, 2012, 11:01 ISTAds by Google


The Reserve Bank of India (RBI) took the half way route today by keeping key policy rates unchanged, but cut the cash reserve ratio (CRR) by 50 basis points to 5.5%. The move will inject primary liquidity of Rs 32,000 crore in the banking system. The CRR cut is effective from the fortnight beginning January 28, 2012.

The central bank kept repo rate unchanged for the second time in as many months as it sees upside risks to inflation from global crude oil prices, lingering impact of rupee depreciation.


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"In reducing the CRR, RBI has attempted to address the structural pressures on liquidity in a way that is not inconsistent with the prevailing monetary stance. In the two previous guidance, it was indicated that the cycle of rate increases had peaked and further actions were likely to reverse the cycle," the RBI said in its third quarter review of annual monetary policy for 2011-12.

"The persistence of tight liquidity conditions could disrupt credit flow and further exacerbate growth risks. In this context, the CRR is the most effective instrument for permanent liquidity injections over a sustained period of time. The reduction can also be viewed as a reinforcement of the guidance that future rate actions will be towards lowering them," it added.

The central bank lowered its credit growth expectation to 16% for 2011-12 from 18% earlier.

RBI also reduced its gross domestic product growth (GDP) forecast for the current financial year to 7% from 7.6% earlier but retained its inflation outlook at 7% by March-end.

"Based on the current inflation trajectory, including consideration of suppressed inflation, it is premature to begin reducing the policy rate. The reduction in the policy rate will be conditioned by signs of sustainable moderation in inflation," the central bank said.

The policy actions are expected to improve liquidity in the system, anchor medium-term inflation expectations and mitigate downside risks to growth.

The next mid-quarter monetary policy review will be on March 15 and the Annual policy on April 17 this year.

RBI may go for rate cut in February: Moody'sPress Trust of India / New Delhi Jan 22, 2012, 11:28 ISTAds by Google


Global ratings agency Moody's has said inflation in India is likely to moderate to around 6.5% by the middle of this year and the Reserve Bank may go for interest rate cuts by February.

"We expect Wholesale Price Index (WPI) inflation to cool a little in the coming months... We expect WPI inflation to ease toward 6.5% by mid-2012," Moody's Analytics said in its report, 'India: Wholesale Price Index'.


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According to the agency, while inflation is on a downward trend, the month-on-month fall in January is not likely to be as steep as was witnessed in December, 2011.

Headline inflation fell to a two-year low of 7.47% in December from 9.11% in November. The moderation was mainly on account of cheaper food items.

Food inflation has been in the negative zone since mid-December on the back of a steep decline in prices of vegetables, particularly potatoes and onions.

"We were honing in on a March rate cut, but this latest inflation cooling may give the RBI sufficient reason to move before then. The Indian economy is slowing sharply and with inflation coming off its peaks, there's no reason for the RBI to continue sitting on their hands," Moody's said in its report.

"Look for an initial rate cut in February," it added.

The central bank had hiked interest rates by 375 basis points between March, 2010, and October, 2011, to deal with persistently high inflation.

However, in its last review in December, the RBI pressed the pause button on its monetary tightening strategy and said that it might go for rate cuts in the future if inflation moderates further.

At the same time, the RBI is confronted with a moderation in economic growth. The government has cut its FY'12 growth projection from 9% to about 7% for the current fiscal.

The central bank is scheduled to conduct its third quarterly review of the monetary policy on January 24. However, experts feel RBI will refrain from cutting rates this time.

The RBI need not wait for the March mid-quarter review for announcing a change in the monetary policy and can go for a rate cut at any time.

"... There are still pipeline pressures that need watching, as indicated by the solid rise in non-food prices," Moody's said.

Inflationary pressure continues in manufactured items, which which have a weight of over 65% in the WPI basket.

Prices of manufactured products went up by 7.41% year-on-year in December, as against 7.70% in the previous month.

Federal Bank Q3 net jumps 41% at Rs 202 crPress Trust of India / Mumbai Jan 23, 2012, 18:39 ISTAds by Google


Private sector Federal Bank today reported a 41% rise in net profit to Rs 201.87 crore for the third quarter ended December 31, 2011.

The bank had posted a net profit of Rs 143.10 crore for the corresponding quarter last fiscal, Federal Bank said in a filing to the Bombay Stock Exchange (BSE).


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- Jyothy Lab Q3 net dips 78% at Rs 29 cr

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- Kotak Mahindra Bank Q3 net rises 47% at Rs 276 cr

- Unichem Labs Q3 net down 4.45% to Rs 24 cr

- United Spirits Q3 net down 62% at Rs 47 cr

Total income of the lender rose to Rs 1,604.76 crore during the October-December quarter from Rs 1,143.57 crore in the same period last year.

During the first nine months of 2011-12, the bank's net net profit rose by 30% to Rs 539.19 crore from Rs 415.36 crore in the same period a year ago.

The bank has reported a total income of Rs 4,451.16 crore in the first three quarters this fiscal, compared to Rs 3,327.63 crore in the same period last financial year.

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Syndicate Bank Q3 net up 32% at Rs 338 crPress Trust of India / Mumbai Jan 20, 2012, 19:27 ISTAds by Google


State-owned Syndicate Bank today reported 32% rise in net profit to Rs 338.12 crore for the third quarter ended December 31.

The bank had posted a net profit of Rs 256.19 crore for the corresponding quarter last fiscal, 2010-11, Syndicate Bank said in a filing to the Bombay Stock Exchange (BSE).

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During the first nine months of 2011-12, the bank's net net profit rose to Rs 1,003.96 crore, from Rs 758.85 crore in the same period a year ago.

The bank has reported a total income of Rs 11,919.90 crore in the first three quarters of this fiscal, compared to Rs 8,949.38 crore in the same period in the last financial year.

Bank of Maharashtra Q3 net zooms 50%Press Trust of India / Mumbai Jan 20, 2012, 19:09 ISTAds by Google


State-owned Bank of Maharashtra (BoM) today reported a 50% increase in net profit to Rs 135.54 crore for the third quarter ended December 31, 2011.

The bank had posted a net profit of Rs 90.25 crore for the corresponding quarter last fiscal, BoM said in a filing to the Bombay Stock Exchange (BSE).

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During the first nine months of 2011-12, the bank registered a 37% rise in net profit to Rs 358 crore from Rs 260.98 crore in the same period a year ago.

The bank reported a total income of Rs 5,783.42 crore in the first three quarters, compared to Rs 4,391.33 crore in the same period last financial year.

RBI buys bonds worth Rs 10,435 cr under OMOPress Trust of India / Mumbai Jan 20, 2012, 19:06 ISTAds by Google


The Reserve Bank of India (RBI) today bought bonds worth Rs 10,435 crore through open market operations (OMO), against a target of Rs 12,000, as part of its strategy to infuse liquidity into the system.

Four securities were on offer for OMO and the RBI subscribed to all of them, the central bank said in a statement.


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While government securities (G-Sec) maturing in 2017 with a coupon rate of 8.07% garnered over Rs 267.94 crore, 7.80% G-Secs maturing in 2021 garnered Rs 4,169.59 crore.

Furthermore, 8.08% G-Secs maturing in 2022 mopped up Rs 2,997.56 crore and 8.28% G-Secs maturing in 2032 garnered Rs 3,000 crore.

With this, the central bank has infused nearly Rs 73,000 crore into the financial system in eight tranches in the last two months.

OMOs are the "first preference" of the RBI for injecting liquidity and there is an opportunity to raise up to Rs 2.74 lakh crore through the window.

RBI Deputy Governor Subir Gokarn had earlier said that liquidity is likely to be under pressure for some more time on account of factors such as advance tax payments.

Overnight drawings by banks from the RBI's liquidity adjustment facility have exceeded Rs 1,20,000 crore and it has said in the past that the deficit has exceeded its target of 1% of net demand and time liabilities (NDTL).

Banks, RBI trying to help power firms: SBIPress Trust of India / New Delhi Jan 19, 2012, 15:33 ISTAds by Google

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Banks are working with the RBI to explore the possibility of extending loan repayment period for those power sector companies which are facing problems in project implementation, a top SBI official said today.

"...Risk in power sector is micro not macro...In some cases they [power companies] have said that implementation of project got delayed due to reasons beyond their control. They want [us] to extend the moratorium.


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"We are working with RBI how that can be done without the banks being required to make any provisioning," SBI Chairman Pratip Chaudhuri said here.

His comments come at a time when the power sector is grappling with acute fuel shortage and mounting losses of electricity distribution companies among others, which in turn is delaying many projects. Such a scenario has also raised concerns of default by power entities.

The SBI has not yet received any "special request" from the power sector for restructuring of loans, he said, adding "they are saying they would be in position to service their debts."

Speaking to reporters after pre-Budget consultation with Finance Minister Pranab Mukherjee, the SBI Chief said the bank has an exposure of around Rs 32,000 crore in the power sector.

"We are giving loans to all big companies...It is not right for us to equate all the companies," he added.

Public sector banks had exposure worth over Rs 2.97 lakh crore to the power sector at the end of second quarter of the current fiscal, with maximum credit doled out by SBI.

Country's leading public sector lender SBI and Bank of India accounted for nearly Rs 87,000 crore of the total loans given to the power sector till September 30, 2011.

Another major lender to the power sector is Punjab National Bank, whose exposure stood at Rs 20,410 crore.

Maharashtra, Gujarat and Rajasthan are among the states that have been high amount of loans in the power sector from public sector banks.

Banks need to invest in digital platform: PwCPress Trust of India / Mumbai Jan 17, 2012, 21:16 ISTAds by Google


Lenders in India are not investing in digital platform for banking even as customers are ready to pay for service which they use, according to a survey by consultancy firm PricewaterhouseCoopers (PwC).

"Banks have generally been slow to openly embrace the digital innovation...They [the customers] are willing to pay for these and yet the majority of banks still only provide basic mobile and Internet banking services," PwC India Associate Director for Financial Services Robin Roy said.


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The commercial banks tend to see digital platforms only as a way to reduce costs and it is time they start to invest in their digital offerings keeping in with the expectations of the customers, he added.

PwC report 'The Digital Tipping Point' released today, said customers are willing to pay for extra services. Eighty-five per cent of those polled in India said they will pay for transaction notifications coming through social networking sites like Twitter and Facebook.

Other areas where users are ready to pay include spending analysis tools, relevant third-party offers and storing documents in a virtual vault, among others.

Stating that the needs of the generation Y are different and that the grouping is very diligent in choosing whom they bank with, the report says, "The quality of a bank's digital offering will become a key determinant for customer stickiness."

HDFC Bank in Harvard Business Review's elite listPress Trust of India / Mumbai Jan 17, 2012, 20:22 ISTAds by Google

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HDFC Bank has been featured by 'Harvard Business Review' in a list of 10 companies globally that have grown their net income by 5% every year for the 10-year period ended 2009, the private lender said today.

The list is based on a survey, 'How the growth outliers do it', which covered 2,347 organisations, all with market capitalisation of $1 billion.


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'Harvard Business Review' is a reputed general management magazine.

"These companies have been recognised for prospering over the long-term and being more stable and innovative than their competitors," the survey report said.

"They [the selected companies] make small bets early and diversify their portfolios, are active acquirers, have processes that support speed and flexibility, build innovations into everyday operations and hold to their talent and keep their senior leadership stable," it said.

Referring to HDFC Bank, the report said the Indian lender had a history of entering into new growth markets through initiatives like the launch of international debit cards, tele-banking, mobile banking and foreign exchange services, among others.

Besides HDFC Bank, the other Indian company to be featured in the list is IT giant Infosys.

The list comprises three companies from the US, two each from India and Spain and one each from Japan, Slovenia and China.

SBI not seeking more funds: chairmanReuters / Mumbai Jan 17, 2012, 18:45 ISTAds by Google

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State Bank of India (SBI), the country's biggest lender, is not looking at raising more funds, its chairman told Reuters a day after the state-run bank received approval for capital infusion of up to $1.6 billion.

"The capital that we are getting right now from the government is good enough. We have been categorically told that it will come by March 31," SBI Chairman Pratip Chaudhuri said.


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SBI received the Finance Ministry's approval for a capital infusion of Rs 6,000-8,000 crore


South Indian Bank Q3 net up 32%, eyes Rs 1,000 cr QIPPress Trust of India / Mumbai Jan 16, 2012, 20:58 ISTAds by Google

Long Term Stock Picks : Free Guide - How To Identify Long Term Multibagger Stock Picks. Equitymaster.com/Free_Stocks_GuideSouth Indian Bank has registered 32% jump in net profit at Rs 280 crore for the third quarter ended December 31 and plans to raise Rs 1,000-crore through qualified institutional placement (QIP).

"We have registered the highest-ever quarterly profit at Rs 279.70 crore and are looking at raising Rs 1,000 crore through QIP issue to fund our expansion plans over the next three-year period," South Indian Bank CEO and Managing Director VA Joseph said.

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"Our capital-raising plan of course depends on the revival of market condition," Joseph said.

The bank's total business increased 27.49% to Rs 58,883 crore in Q3 FY12, over the same period last fiscal. The deposits have gone up by Rs 6,836 crore from Rs 26,998 crore to Rs 33,834 crore. The advances increased by 30.55% at Rs 25,050 crore in Q3 FY12.

The bank's CASA increased from Rs 6,045 crore in Q3 last fiscal to Rs 7,280 crore, up 20.43%.

SIB said it earned Rs 2,754 crore during the 9-month period, as against Rs 1,879 crore in the previous year, a growth of 46.61%.

The capital adequacy ratio of the bank stood at 12.03% (under BASEL II standards) against the regulatory requirement of 9%.

The robust growth in business, coupled with low NPA enabled the bank to attain the present level of performance, Joseph said.

Its gross non-performing asset (NPA) ratio improved from 1.33% to 0.94% sequentially, while the net NPA ratio changed little at 0.24% during the three months period.

The bank is looking at 25% growth in FY12 and plans to increase the number of branches to 700 and ATMs to 625 by fiscal-end.

BoB to open dozen branches overseas in 6 monthsPress Trust of India / Bangalore Jan 16, 2012, 20:17 ISTAds by Google


Bank of Baroda (BoB) plans to expand its international operations by opening more than a dozen branches and representative offices overseas in six months, Chairman and Managing Director MD Mallya said today.

At present, the bank has 87 branches and offices spread across 25 countries and this number is expected to touch 100 by June-July, Mallya told reporters here.

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Overseas operations constitute 24-25% of the bank's total business. "Asset quality of international operations is very strong," he said.

BoB will open branches in Kuala Lampur [Malaysia], Surinam, Uganda, Tanzania and Botswana and couple more branches in New Zealand and the UAE, while its representative office in Australia will be converted into a branch, Mallya said.

He also said the government of India plans to infuse Rs 775 crore into the bank to raise its holding from 57% to 58% by March-end.

Asked if the rising non-performing assets of Indian banks are a matter of concern, Mallya -- who is also Chairman of the Indian Banks' Association -- said "stress and pain points" are anticipated, but the Indian banking system is strong and resilient enough to manage and absorb such bad loans.

He earlier opened the bank's Brigade Road premises, where its retail and SME loan factories, along with corporate financial services and MG Road branches, were moved.

The bank will soon set up a mid-corporate branch in the new premises to help existing and potential entrepreneurs. This branch would finance business entities with an annual sales turnover of Rs 150 crore to Rs 500 crore.

The bank has 71 branches in Karnataka and this number is expected to cross 100 in a year or so, Mallya added.

ING Vysya Bank Q3 net jumps 43% to Rs 119 crBS Reporter / Mumbai Jan 16, 2012, 16:22 ISTAds by Google


ING Vysya Bank reported a 43.3% increase in its net profit at Rs 119 cr for the quarter ended December 31, 2011. It was Rs 83 crore in the year-ago period.

Net interest income of the bank increased 28% to Rs 321 crore from Rs 251 crore in December 2010.

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Gross NPA reduced to 2.01% as compared to 2.66% in December 2010.

Shares of the company marginally up at Rs 313 on the Bombay Stock Exchange.

SBI trims housing loan processing feePress Trust of India / New Delhi Jan 15, 2012, 13:15 ISTAds by Google


Country's largest lender State Bank of India has halved the home loan processing fee, a move which could be followed by other public sector lenders in the coming days.

The bank has slashed processing fee on home loan above Rs 75 lakh to Rs 10,000 from Rs 20,000, while for loans between Rs 30-75 lakh, the fees has been reduced to Rs 6,500 from Rs 10,000 earlier, a senior SBI official said.


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The new fee structure is applicable starting January 11, the official added.

The official, however, added that the processing fee for loans below Rs 30 lakh continues to be 0.25% of the loan amount.

The reason for slashing fee is to promote home loan products of the bank, the official said.

Competitors like ICICI Bank and Axis Bank charge 0.5% of the loan amount for home loans -- both floating and fixed both.

At the same time, Bank of Baroda levies a charge of 0.4% of the loan amount or maximum limit of Rs 50,000, while Bank of India charges Rs 20,000 flat fee for housing loans between Rs 25-75 lakh.

According to another public sector bank official, banks could offer some incentive to promote home loan product above Rs 30 lakh as there has been some moderation in this segment.

It could be in the form of lowering of fee or some concession in rates if interest rates don't come down by the end of the current fiscal, the official added.

In other retail loans, particularly auto loans, some banks are offering concession in rate as well as waiving of processing charges to garner higher share.

Some bankers also feel that the processing fee may go up in the medium term. However, charges are likely to remain stable for the next couple of months.

"Since most of the banks have done away with pre-payment charges, I feel the processing charge in the industry as a whole would tend to go up in the medium term if not in the short run," Axis Bank Head (consumer lending and payments) Jairam Sridharan said.

Last year, housing finance regulator National Housing Bank had directed all housing finance companies to desist from imposing a pre-payment penalty on home loan borrowers. Subsequently, many banks announced abolition of such charges.

SBI, Bank of Baroda, Bank of India, Punjab National Bank are some banks which scrapped pre-payment charges.

Banks can't pay excessive salary to CEOs: RBIPress Trust of India / Mumbai Jan 13, 2012, 21:40 ISTAds by Google


The Reserve Bank of India (RBI) today said CEOs and staff of private and foreign banks cannot draw "excessive" salary, but it did not impose any cap on their remuneration.

Issuing guidelines on compensation of CEOs and staff of private and foreign banks, RBI said all private and foreign lender will have to obtain prior approval from it for renumeration of CEOs and whole time directors as per the Banking Regulation Act, 1949 which prohibits excessive renumeration.


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However, the guideline did not specify what would constitute excessive renumeration.

Banks are required to ensure that the fixed portion of compensation is reasonable, taking into account all relevant factors, including the industry practice, it said.

While designing the compensation arrangements it should be ensured that there is a proper balance between fixed pay and variable pay, it said. Variable pay, however, should not exceed 70% of the fixed pay in a year.

The guidelines would be implemented from 2012-13.

"As hitherto, private sector and foreign banks operating in India would be required to obtain regulatory approval for grant of remuneration to whole time directors or chief executive officers in terms of Section 35B of the Banking Regulation Act, 1949," the RBI said in a notification.

"The approval process will involve an assessment whether the compensation policies and practices are in accordance with the Financial Stability Board [FSB] Principles," it said.

The principles are intended to reduce incentives towards excessive risk taking that may arise from the structure of compensation schemes. The principles call for effective governance of compensation, alignment of compensation with prudent risk taking, effective supervisory oversight and stakeholder engagement, it said.

The principles have been endorsed by the G-20 countries and the Basel Committee on Banking Supervision and are under implementation across jurisdictions, it added

RBI allows foreigners to directly invest in equitiesPress Trust of India / Mumbai Jan 13, 2012, 21:18 ISTAds by Google


The Reserve Bank of India (RBI) today allowed foreign individual investors, pension funds and trusts as Qualified Foreign Investors (QFIs) to directly invest in equities of up to 5% of paid up capital of the listed company.

On January 1, the government had announced that soon QFIs will be allowed to directly invest in the Indian equity market to widen the non-resident investor base in stock markets as well as to expand the set of non-resident portfolio investors.


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A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs do not include FIIs/sub accounts.

"QFIs shall be permitted to invest through Sebi registered Depository Participants (DPs) only in equity shares of listed Indian companies...As well as in equity shares of Indian companies which are offered to public...," the RBI said in guidelines enabling QFIs investments in Indian companies.

They would also be permitted to acquire equity shares by way of rights shares, bonus shares or equity shares.

The RBI said the DP will purchase equity at the instruction of the respective QFIs within five working days failing which the funds would be immediately repatriated back to the QFI’s designated overseas bank account.

However, "only QFIs from jurisdictions which are FATF compliant and with which Sebi has signed MoUs under the IOSCO framework will be eligible to invest in equity shares under this scheme," the RBI added.

Besides, the DPs will ensure KYC (know-your-customer) norms of such investors.

The move comes against the backdrop of significant foreign capital outflows from the domestic equity market in recent times, which has resulted in rupee volatility.

As per the guidelines, the individual and aggregate investment limits for the QFIs would be 5% and 10% respectively of the paid up capital of an Indian company.

These limits would be over and above the FII and NRI investment ceilings prescribed under the Portfolio Investment Scheme for foreign investment in India, the RBI added.

Further, the central bank modified the time period for which funds can be kept in the single rupee pool bank account of the DP under the scheme for investment by QFIs in units of domestic Mutual Funds to five working days.

In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.

Amid severe volatility in the capital market last year, FIIs outflows amounted to over Rs 2,700 crore. The situation had an impact on the rupee, which fell to an all-time low of to Rs 54.30 on December 15.

The fluctuation in the domestic currency has put pressure on policymakers.

Basel-III norms may hit loan growth: S&PReuters / Mumbai Jan 13, 2012, 20:00 ISTAds by Google


The Reserve Bank of India's proposed guidelines for implementing Basel-III norms may "negatively affect" credit growth of a few Indian banks though it will strengthen their capitalisation and credit profiles, Standard and Poor's said.

The RBI's proposals on capitalisation are more stringent than that of the Basel Committee on Banking Supervision, S&P said in a note on Friday.


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"Increased capital requirements could make it harder for Indian banks to grow," the note said.

"But this is unlikely to lead to solvency issues. Delays in raising capital could also limit the credit growth for some banks."

Indian banks should have minimum tier-I capital of 7%, while total capital must be at least 9% of risk-weighted assets under the Basel-III draft guidelines.

Implementation of the minimum capital requirements will begin from January 2013 and should be fully implemented by March 31, 2017.

S&P expects all banks that it rates in India to meet the RBI's requirements within the stipulated timeframe.

However, it does not expect any change in the ratings on these banks as they are in line with the sovereign rating on India, it said.

LIC Home Finance launches Rs 500 cr VC fundPress Trust of India / Mumbai Jan 12, 2012, 20:27 ISTAds by Google

Silver Correction Coming : Silver Could Hit $75 or More, After Correction. Find Out When - New Rpt www.Sovereign-Investor.comLife Insurance Corporation's housing finance arm LIC Housing Finance (LICHFL) today launched a Rs 500-crore venture capital fund to finance realty and micro infrastructure projects.

LICHFL and LIC, have pooled in Rs 50 crore each and another Rs 100 crore have been raised through external investors to launch the fund.


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The fund christened 'LICHFL Urban Development Fund' will be managed by LICHFL's dedicated subsidiary LICHFL Asset Management Company and targets to raise the remaining Rs 300 crore in the next nine months, LIC acting chairman DK Mehrotra said here.

Half of the amount will be invested in mid-income housing projects, while the other half will be dedicated to income yielding micro-infrastructure projects like schools, hospitals, special economic zones, industrial IT parks, the company said.

Stating that LICHFL's pedigree in the sector will be a big asset, Mehrotra did not answer queries on the timing of the launch.

With headwinds like repeated interest rate hikes, lower growth, job uncertainties and policy paralysis, the realty and housing sector is facing stress at present.

LICHFL Chief Executive VK Sharma said the company has invested in other similar realty-focused funds earlier too and the decision to enter the fray by themselves is prompted by handsome returns which have been yielded in the past.

For investors, LICHFL AMC is assuring a return of 12 per cent, he said, adding that it will be targetting institutional investors and high networth individuals to raise the balance amount.

Credit card transaction value up 14.4% in NovPress Trust of India / Mumbai Jan 12, 2012, 19:31 ISTAds by Google


Credit card transactions carried out in November, 2011 were worth Rs 7,920 crore, up 14.4% from that in the same month last year, signifying more transactions through electronic means of payment.

Credit card transactions during the April-November period were worth Rs 62,289 crore, up 28.3% from the comparable period of 2010-11.


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Debit card transactions rose by 16.3% in November to Rs 4,329 crore.

Transactions by debit card during April-November period were up 39.6% to Rs 34,505 crore.

There were over 25.98 crore debit cards in use as of November 30, 2011, up 22.6% from the year-ago period.

The number of credit cards in circulation has, however, declined by 3% to 1.76 crore as of November 30, 2011, according to the Reserve Bank of India data.

Experts said the jump in transaction points to greater use of the electronic payments system as people move away from old formats of payment, especially in major urban centres.

In 2010-11, transactions through credit cards in the country went up by 22.15% to touch Rs 75,515 crore in value terms.

In addition, debit card transactions went up by 46.46% last fiscal to Rs 38,691 crore.

Govt to infuse Rs 6,000 cr in SBI via pref issuePress Trust of India / Mumbai Jan 11, 2012, 15:23 ISTAds by Google

Submit Your Resume : 2-10 years Exp. Salary 3-15 Lakhs. To Apply, Register on Shine.com Now Shine.com/Pharma_JobsThe government has agreed to infuse fresh capital into State Bank of India through a preferential issue and the country's largest lender will get up to Rs 6,000 crore before the fiscal-end, Chairman Pratip Chaudhuri said here today.

"We will be having a preferential issue and will be getting capital through it," Chaudhuri said.


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About the quantum of the infusion, he said, "The size will be Rs 5,000 to Rs 6,000 crore."

He did not give any specific indication about the timing of the issue, though he said it will happen before March 31.

SBI's total capital adequacy ratio stood at 11.4% as of the September quarter, of which core tier-I capital stood at 7.7%, below the 8%-level desired by the government.

It had first announced its intention to raise up to Rs 20,000 crore through a rights issue over a year ago, but the government, which holds a 59.4% stake in the lender, has delayed the proposal as it will have to subscribe to almost two-thirds of the money.

For the past three months, the SBI brass has been realistically pegging the capital infusion size at around Rs 6,000 crore. Last month, Chief Financial Officer Diwakar Gupta said an infusion may happen "any time", while Chaudhuri last week said he has received a letter from the Finance Ministry on recapitalisation.

The recapitalisation will take the bank's Tier-I capital ratio to over 9%, he had said.

A slew of lenders, including Bank of Baroda, Bank of Maharashtra and Union Bank have made similar announcements in the recent past. Bank of Baroda would be getting Rs 775 crore this fiscal, while Bank of Maharashtra is ready for an Rs 860 crore preferential issue.

Rupee ends up on inflows, likely RBI interventionReuters / Mumbai Jan 12, 2012, 17:51 ISTAds by Google

Long Term Stock Picks : Free Guide - How To Identify Long Term Multibagger Stock Picks. Equitymaster.com/Free_Stocks_GuideThe rupee closed higher on Thursday as foreign funds continued to invest in local debt, though weak domestic shares and dollar demand from oil importers put a lid on gains.

The Reserve Bank of India (RBI) probably sold dollars around the Rs 51.74 level in late trading, which further supported the currency, traders said.


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The rupee ended at 51.60/61 to the dollar, up from Wednesday's close of 51.90/91, rising as high as 51.52 after the suspected intervention.

"The rupee's recent gains have been flow-driven, but the outlook is weak because the debt crisis in Europe is far from over," said S. Nagaraja, head of forex dealing at Al Rostamani International Exchange.

"However, sharp volatility is unlikely because the Reserve Bank of India will put a check on sharp moves in either direction," he added.

In an attempt to arrest the sharp slide of the rupee, the RBI intervened in the forex market for a third consecutive month in November in its biggest sale of dollars in more two-and-half years, data released on Thursday showed.

Net inflows into Indian debt so far in January stand at about $2.07 billion, substantially more than the $387.15 million invested in equities, data from the Securities and Exchange Board of India showed.

Traders and economists expected the rupee to weaken in the weeks ahead on worries about India's current account deficit, and as investors remain wary of taking on risky assets.

The currency of a country that runs a sustained trade deficit has to depreciate, V. Balakrishnan, chief financial of Infosys Ltd, said after India's No. 2 software exporter released quarterly results.

"India is seen as an emerging market risk," he said. "To that extent money is not coming in when the environment is very volatile," he said, adding India's political system is paralysed and no reforms are happening. "So if you put all this together, the currency has to depreciate," Balakrishnan said.

The BSE Sensex closed down 0.9% after Infosys cut its full-year revenue forecast.

Strong factory data for November failed to allay concerns about economic growth.

Industrial production recovered in November, rising 5.9% from a year earlier. Traders are now awaiting December headline inflation data due on Monday for clues on what action, if any, the RBI will announce on January 24.

The euro edged up, helped by strong demand at an auction of Spanish bonds but it faces selling if the European Central Bank, which is meeting on Thursday, hints at more interest rate cuts.

One-month offshore non-deliverable forward contracts were quoted at 52.04, indicating some weakness in the short-term in the onshore spot rate.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all around 51.8 on total volume of $4.3 billion.

RBI's Basel-III norms more conservative: Moody'sPress Trust of India / New Delhi Jan 09, 2012, 20:33 ISTAds by Google

HDFC Fixed Deposits : Highest HDFC Deposit Interest Rates Safe & Secure, Invest Now! www.HDFC.com/DepositsRating agency Moody's today said the Reserve Bank of India's (RBI) draft guidelines for adoption of Basel-III norms, which seek to raise the minimum equity capital of banks, are more "conservative" than those proposed globally.

"We interpret these draft guidelines as more conservative than the Bank for International Settlements (BIS) norms and view them as credit positive for the banking sector," Moody's Weekly Credit Outlook said.


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In order to strengthen risk management mechanism, the RBI issued draft guidelines last month.

The RBI has recommended a more stringent minimum common equity Tier-I capital of 5.5% against BIS's 4.5%, it said.

Besides, it said, the central bank has proposed an earlier deadline for the implementation of a 2.5% capital conservation buffer to March, 2017, as compared to BIS's deadline of January, 2019.

The draft guidelines reflect the RBI's policy of ensuring Indian banks have extra stress-absorption capacity if the operating environment worsens, it said.

The proposed guidelines also prompt banks that have used hybrid securities and other innovative debt capital instruments to raise their core equity capital.

In line with BIS norms, it said, the proposed guidelines also focus on quality of capital, with increased emphasis on the loss-absorption capacity of capital rather than its role in supporting business growth.

Under the proposed guidelines, hybrids and other forms of innovative debt capital instruments that banks currently classify as Tier-I capital will no longer qualify as it, owing to their limited loss absorption capacity, it said.

In addition, it said, the proposed guidelines end the practice of making a distinction between upper Tier-II debt capital instruments and subordinated debt in favour of one set of criteria from a capital regime perspective.

Last month, the RBI unveiled draft guideline for adoption of Basel-III norms and set implementation period of minimum capital requirements to begin from January 1, 2013.

However, it said, the capital conservation buffer requirement is proposed to be implemented between March 31, 2014 and March 31, 2017.

It also said that the instruments which no longer qualify as regulatory capital instruments will be phased out during the period beginning from January 1, 2013 to March 31, 2022.

Dhanlaxmi Bank enters silver retailing businessLaunches 'Dhan' silver bars in two denominations of 50 and 100 gramsBS Reporter / Mumbai Jan 09, 2012, 14:01 ISTAds by Google


Dhanlaxmi Bank today entered the silver retailing business with the launch of ‘Dhan’ silver bars. The silver bars will be available in a tamper proof laminated pack in two denominations of 50 and 100 grams at branches across the country.

‘Dhan’ silver bars with a purity of 99.99% will carry Assay certification, signifying highest purity of silver as per international standards.

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Deepak Singh, Head, Insurance, Gold & Silver, Dhanlaxmi Bank, said: “The launch of ‘Dhan’ silver bars has been prompted by the success of the bank’s gold retailing business. With this launch, we foresee further traction and aim to become one of the leading players in the bullion business in the next couple of years.” The launch of silver retailing marks the second phase of the bank’s foray in silver bullion business. In July 2011, the bank rolled out its wholesale initiative with the launch of 30 kg silver bars and silver grains. India is the largest importer of silver in the world. According to estimates of Bombay Bullion Association, imports of silver into India will exceed 4,000 tonnes in 2011. In 2010, India consumed about 2,800 tonnes of silver. “We see a lot of potential in metals as an asset class. With higher disposable income and high inflation, investment in metals such as silver and gold will allow investors to hedge and diversify their savings and investment portfolio,” Singh added. Dhanlaxmi Bank is an 84-year old bank, being incorporated in 1927 at Thrissur, Kerala. In the last three years, it has transformed into a well diversified bank with a pan-India presence from being an SME focused South India based bank. With a network of 275 branches and 404 ATMs covering 140 centers across 14 states, the bank services a broad customer base of over 2 million. The bank provides a suite of banking products and services to its customers across Retail Banking, Wholesale Banking, Microfinance and Agricultural Lending and Small and Medium Enterprises Group. During the last three years, Dhanlaxmi Bank’s total deposits increased from Rs 3,936 crore as on September 30, 2008 to Rs 13,815 crore as on September 30, 2011, advances rose from Rs 2,490 crore as on September 30, 2008 to Rs 10,130 crore as on September 30, 2011. The bank’s total business stood at Rs 23,945 crore, as on September 30, 2011 with total asset base at Rs 16,452 crore. The shares of the bank are listed on the Bombay Stock Exchange Limited, the National Stock Exchange of India Limited and the Cochin Stock Exchange

Banks facing more challenges in current environment: RBIPress Trust of India / Pune Jan 06, 2012, 20:52 ISTAds by Google


Banks worldwide are facing more challenges in the current economic environment and while macro-sustainability is a necessity, it is not sufficient for sustainable economic growth, according to a senior Reserve Bank official.

Speaking here during the inauguration of a national seminar on 'Basel III: Implementation Challenges in Bank' organised by the Bank of Maharashtra, RBI Deputy Governor Anand Sinha said while regulation is important, so is implementation.


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"Banks globally are facing more challenges now and macro-sustainability is a necessity but not sufficient for sustainable economic growth. Therefore, putting regulations in place is only one part and their implementation is equally important for achieving growth and sustainability," Sinha said.

Sinha, who is in charge of regulation of commercial banks, non-banking financial companies and urban cooperative banks in the RBI, also talked about the 2008 global economic crisis and how the Indian banking sector had withstood it.

He also made an elaborate presentation on the genesis of the crisis, its causes, regulatory reforms following the crisis, implementation issues, structural issues and the impact on growth.

The seminar was attended by RBI General Manager Ajay Chowdhary and Bank of Maharashtra Chairman & Managing Director AS Bhattacharya.

The topic of the seminar assumes significance as the RBI earlier this week issued draft guidelines for implementation of Basel-III banking norms in India, which envisage that the equity capital of a bank should not be less than 5.5% of its risk-weighted loans.

It also recommended that Tier-1 capital, comprising pure equity and statutory and capital reserves, must be at least 7% and total capital must be at least 9% of risk-weighted assets (RWAs).

It has also suggested setting up a capital conservation buffer in the form of common equity of 2.5% of RWAs.

It is proposed that the implementation period of minimum capital requirements and deductions from common equity will begin from January 1, 2013, and will be fully implemented by March 31, 2017, it said.

The central bank had invited comments and feedback on the draft guidelines, including the implementation schedule, by February 15, 2012.

RBI Governor D Subbarao had earlier said Indian banks will have to incur additional costs to build capital buffers to comply with Basel-III rules.

RBI buys bonds worth Rs 8,471 cr under OMOPress Trust of India / Mumbai Jan 06, 2012, 20:07 ISTAds by Google

Get 50Lac after 15Years. : Invest करो� L I C में� 3600 p.m जा�ने कनेसा� है ये Plan PolicyBazaar.com/2012_InvestmentsAs part of the strategy to infuse liquidity in the system, the Reserve Bank of India (RBI) today bought bonds worth Rs 8,471.45 crore under open market operations (OMO), as against a target of Rs 12,000 crore.

Four securities were on offer for OMO, of which the RBI subscribed to three, the central bank said in a statement.


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While the government security (G-Sec) maturing 2017, with a coupon rate of 8.07%, garnered over Rs 1,346.08 crore, the 7.80% GS maturing on 2021 garnered Rs 3,300.85 crore.

The 8.13% GS maturing 2022 mopped-up Rs 3,824.51 crore.

The central bank has infused over Rs 41,210 crore in five tranches within the past few weeks. While it bought bonds worth Rs 9,435.48 crore on November 24, it infused Rs 5,782.95 crore on December 1 this year.

On December 8, it bought bonds worth further Rs 9,092.9 crore, followed Rs 8,790 crore on December 22.

On December 29, the apex bank infused a further Rs 8,109.48 crore.

OMOs are the "first preference" of RBI while injecting liquidity and there is an opportunity to raise up to Rs 2.74 lakh crore through the window.

RBI Deputy Governor Subir Gokarn had earlier said that liquidity is likely to be under pressure for some more time on account of such as advance tax payments.

Overnight drawings by banks from RBI's liquidity adjustment facility have exceeded Rs 1,20,000 crore and, it has said in the past that deficit has exceeded its targeted one% of net demand and time liabilities (NDTL).

Banks' deteriorating NPAs a concern: PranabPress Trust of India / Chennai Jan 06, 2012, 19:08 ISTAds by Google


Voicing concerns over "deteriorating assets quality" in the banking sector, Finance Minister Pranab Mukherjee today asked lenders to "tighten the belt" as he outlined the government's intention to bring them at par with global standards.

Banks should "tread cautiously" on risks confronting the sector, the risks arising out of asset quality, market volatility and global downturn, he said at the Special Platinum Jubilee Celebrations of Indian Overseas Bank.


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"There is also the concern over the deteriorating assets quality in the banking sector as a whole, where NPAs [non-performing assets] have grown faster than the credit growth over the past couple of years," he added.

The minister said, "There is need to tighten the belt; not only arrest, but reverse the trend of asset quality deterioration in banks with better professional supervision and management."

In order to bring banks at par with global standards, the government is going forward with a "rigorous regime" of capital adequacy under Basel-III which, he said, will be implemented in phases from January 1, 2013, to 2019.

"The stringent norms of Basel III guidelines have also been factored in for maintaining a minimum capital requirement of 8% in all PSBs [public sector banks] which is over and above the regulatory requirement of 6%," he said.

Mukherjee also assured bankers that in the coming years, the government was committed to keeping all PSBs adequately capitalised to bring them at par with global peers and at the same time cater to the needs of majority of people in the country.

Credit offtake to pick up in current quarter: Andhra BankPress Trust of India / Mumbai Jan 06, 2012, 20:22 ISTAds by Google


State-run Andhra Bank today said it is expecting credit offtake, which has been hovering around 7% so far this fiscal, to pick up in the current quarter as it expects the Reserve Bank of India (RBI) to ease monetary policy sooner than later.

"We expect a pick up in advances in the current quarter as we are expecting the Reserve Bank to soften its tight monetary stance soon. The overall year-on-year credit growth so far has been 21%," B A Prabhakar, who took over as Chairman and Managing director of the Hyderabad-based mid-sized lender on Monday, told PTI on phone today.

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Prabhakar was appointed as the head of Andhra Bank on November 21 last year.

Asked whether his bank's exposure to the power sector, especially to the state-run utilities, has turned bad loans, he answered in the negative. Similar was his response to another query on the textile sector, which has an accumulated debt of over Rs 1 lakh crore.

However, Prabhakar said his bank's exposure has crossed the sectoral cap with nearly 20% of its advances being to state utilities. Last November the bank had said it stopped extending fresh advances to the power sector due to the same reason.

As of the September quarter, its advances to the power sector stood at Rs 17,693 crore, which is over 19% of its Rs 78,454 crore loan-book, the bank's Mumbai Zonal Manager P Nagendranathe Rao had said.

Barring Rajasthan State Electricity Board, no other SEB had approached the lender for a debt restructuring. It has exposure to over half a dozen state-run utilities such as that of Andhra Pradesh, Tamil Nadu, Rajasthan, Maharashtra, Punjab, besides some private utilities, Rao had said.

Many state-run banks had recently asked SEBs to annually revise their tariffs steeply to reduce their mounting losses.

Banks are worried about their advances to the SEBs of Tamil Nadu, Rajasthan, UP, Bihar, Haryana, MP and Punjab, which according to the rating agency Crisil, are the most vulnerable ones.

A recent Crisil report said losses of discoms (distribution companies) rose 24% to Rs 27,500 crore between 2006-07 and 2009-10, which could rise to Rs 35,000-40,000 crore in 2010-11, mainly because of the problems the utilities are facing.

Recently, the second largest public sector lender Punjab National Bank, which had recast Rs 2,500 crore of loans in Q2, had said out of this amount as much as Rs 1,800 crore were from the Tamil Nadu SEB. The bank has an exposure of over Rs 12,000 crore to the sector.

Leading private lenders like ICICI Bank and Axis Bank are also reportedly going slow on the infra sector in general and the power in particular. Going by projections, discoms incurred a staggering loss of Rs 70,000 crore last fiscal.

Apart from poor financial health of SEBs, coal supply issues and environmental hurdles are hurting the power sector.

Against this backdrop, many lenders are treading very cautiously in extending loans to the sector, which is expected to see a capacity addition of nearly 1,00,000 MW in the 12th Plan (2012-17).

Banks may need capital to meet Basel IIIReuters / India Jan 06, 2012, 13:52 ISTAds by Google

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Private-sector banks in India may need to raise a few trillion rupees of capital to meet Basel III norms, Anand Sinha, a deputy governor at the Reserve Bank of India, said on Friday.He was speaking at a seminar in Pune.

Last month, the central bank released draft guidelines on Basel III capital regulations.

PSU banks to get Rs 17K-cr capital infusion in FY12Press Trust of India / New Delhi Jan 05, 2012, 20:21 ISTAds by Google


The Finance Ministry is likely to infuse Rs 17,000 crore into public sector banks in the current fiscal to help them meet their capital requirements and enhance lending operations.

"We are looking to infuse Rs 17,000 crore into banks this fiscal. We are likely to put up bank recapitalisation proposal to the finance minister this weekend," a top official in the ministry said.


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The official said that the ministry would seek additional Rs 12,000 crore through supplementary demands in Parliament, over and above the Budget provision of Rs 6,000 crore, for capital infusion in PSU banks during the current fiscal.

The government has already announced that it is committed to providing adequate capital to public sector banks so as to maintain their Tier-I capital at 8%.

State Bank of India, Bank of Baroda, Union Bank of India, IDBI Bank, and Syndicate Bank, are some of the lenders that would be benefited by the capital infusion initiative of the government.

In 2010-11, the government had provided capital support to the tune of Rs 20,157 crore to public sector banks.

Many public sector banks got capital support from the government during the last fiscal. These banks included Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.

Financial Services Secretary DK Mittal had earlier said that the government would be infusing about Rs 3.5 lakh crore by 2021 into the state-run banks.

A committee headed by Finance Secretary RS Gujral is working out a strategy for capitalisation of public sector banks over a period of next 10 years.

The Finance Ministry has told banks that capital support from the government in future would be linked to their financial and functional efficiency.

RBI raises FCCB limit to $750 mnPress Trust of India / Mumbai Jan 05, 2012, 19:41 ISTAds by Google

Jobs for Freshers. : 1000's of Jobs in Companies. Submit your Resume Free. Now! MonsterIndia.comThe Reserve Bank of India (RBI) today raised the annual limit of Foreign Currency Convertible Bonds (FCCBs) for companies to $750 million under the automatic route, which does not require prior permission from it.

The limit, up from $500 million in a fiscal year, will not only help Indian corporate across all segments access higher quantum of overseas funds but also encourage greater inflow of foreign exchange.


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"...Eligible borrowers under the automatic route can raise FCCBs up to $750 million or equivalent per financial year for permissible end-uses," the Reserve Bank said in a circular.

Corporates in specified service sectors like hotels, hospitals and software, can raise FCCBs up to $200 million subject to the condition that the proceeds would not be used for acquisition of land.

RBI's decision comes a few months after the government decided to relax norms on External Commercial Borrowings (ECBs). In September, the limit of ECBs with tenure of 5 years or more under the automatic route was increased from $500 million to $750 million.

For the services sector, the ECB limit under automatic route was doubled to $200 million and for NGOs from $5 million to $10 million.

This was done following suggestions made by top industry leaders at a meeting with Finance Minister Pranab Mukherjee to boost the economy.

The RBI circular further said, "...It is clarified that the ECB/FCCB availed of for the purpose of refinancing the existing outstanding FCCB will be reckoned as part of the limit of $750 million available under the automatic route as per the extant norms."

It also said henceforth ECBs of up to $20 million or equivalent in a financial year will have a minimum average maturity of three years, while for ECBs of $20-750 million the average maturity would be of five years.

"Accordingly, the requirement of average maturity period, prepayment and call/put options... [for additional amount of $250 million] has been dispensed with," the circular said.

UCO Bank to auction up to Rs 400 cr of NPAsPress Trust of India / Kolkata Jan 05, 2012, 19:12 ISTAds by Google


UCO Bank will hold open auction next week for sale of Rs 300 crore to Rs 400 crore non-performing assets (NPA).

"We will auction for sale of Rs 300 crore to Rs 400 crore of NPAs next week," Chairman and Managing Director of UCO Bank Arun Kaul said.

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"We had one round, we did not get a good response and we did not sell anything," Kaul told reporters on the occasion of the bank's 69th year celebrations.

Kaul said he was confident the sale would come through by March.

About capital infusion, he said we had sought funds from the government. "We are working out that [capital infusion from the government]...We have given some projections to government. Let us see what happens," Kaul said.

The bank's credit growth was 19.16% as of December-end, Kaul said. "I am confident of achieving the 18% stipulation of the apex bank by March-end."

He said the bank has no immediate plans to change the current base rate of 10.7%.

"We have no plans to change the base rate right now unless some monetary policy changes take place," Kaul said.

SBI may get up to Rs 6,000 cr capital infusionPress Trust of India / New Delhi Jan 05, 2012, 18:48 ISTAds by Google


State Bank of India (SBI), the country's largest lender, today said it was likely to get a capital infusion of up to Rs 6,000 crore in the current fiscal from the government that would help the lender increase its operations.

"I have received a letter from the Finance Ministry on recapitalisation. The amount is likely to be between Rs 5,000-6,000 crore this fiscal," SBI Chairman Pratip Chaudhuri said.


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The government has already announced that it is committed to providing adequate capital to public sector banks so as to maintain their tier-I capital at 8%.

The capital infusion into SBI, Chaudhuri said, "will put tier-I capital at 9%".

As of September, 2011, the capital adequacy ratio (CAR) of SBI stood at 11.4%. Of this, tier-I capital stood at 7.7% at the end of first quarter against minimum 8% level desired by the government.

The government of India, which holds 59.4% stake in SBI, has earmarked Rs 6,000 crore for the fiscal for capital infusion in public sector banks to ensure that they meet the regulatory requirements.

In 2010-11, the government had provided capital support to the tune of Rs 20,157 crore to public sector banks.

SBI had submitted proposal some months ago to raise Rs 20,000 crore through a rights issue. The bank requires Rs 20,000 crore to fund its growth plans over the next two fiscals.

Shares of SBI closed at Rs 1,691.70, down 0.20% over previous close on the Bombay Stock Exchange.

Banks to require up to Rs 2.7 lakh cr under Basel III: CrisilPress Trust of India / Mumbai Jan 03, 2012, 21:46 ISTAds by Google


If the Basel III guidelines are implemented as per the proposed deadline set by the Reserve Bank of India (RBI), banks will require up to Rs 2.7 lakh crore in fresh capital, says a research by the leading financial services firm Crisil.

The report notes that the implementation of the new prudential norms will massively strengthen the domestic banks as it would entail capital requirements of banks to be increased significantly, going up to 8% of their loan portfolio.


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"The banks will need to raise equity capital of Rs 1.4 lakh crore till March 2017 to meet their growth requirements, while complying with the guidelines. This requirement can turn out to be higher [by another Rs 1.3 lakh crore] in case the investor appetite is low for non-equity tier-I capital instruments," Crisil Ratings Director Pawan Agrawal said in a report here today.

He further said public sector banks will account for bulk of the requirement and will need regular infusion from the government. As per the report, domestic banks are comfortably placed to migrate to the new guidelines by March 2013.

Last week, the RBI issued the final draft guidelines for a staggered implementation of the Basel III regulations beginning March 2013, through March 2017.

According to the proposed guidelines, the capital adequacy ratio will increase 2.5% to 11.5% by March 2017. Also, for the first time, banks have to maintain a leverage ratio, which will determine the extent of leverage of a bank.

"The RBI norms are stricter than those proposed by the BCBS [Basel Committee on Banking Supervision], with respect to stipulated capital and leverage ratios being higher by one percent and 2%, respectively, and the implementation period being shorter by two years," the report notes.

Referring to profitability, Crisil Ratings Director Ramraj Pai says higher quantum of equity capital and higher cost of non-equity capital can reduce banks' return on equity over the long-term.

The report also notes that the banks are well placed to migrate to the Basel-III requirements by March 2013 and comply with the minimum equity capital requirement of 4.5%, as banks have a common equity capital ratio which is above the prescribed requirements.

RBI to buy Rs 12,000 cr govt securitiesPress Trust of India / Mumbai Jan 03, 2012, 21:51 ISTAds by Google

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The Reserve Bank of India (RBI) today announced it would purchase government securities worth Rs 12,000 crore on Friday through open market operations (OMOs) to boost liquidity in the economy.

"Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, RBI has decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 12,000 crore on January 6, 2012, through a multi-security auction...," the apex bank said in a statement.


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The auction is to be conducted by the bank at its Mumbai office.

The auction will be for government securities (G-Sec) maturing in 2017 with a coupon rate of 8.07%, G-Secs maturing in 2021 with a coupon rate of 7.8%, G-Sec maturing in 2022 with an 8.13% coupon rate and G-Secs maturing in 2027 with an 8.26% coupon rate.

"There is an overall aggregate ceiling of Rs 12,000 crore for all the securities in the basket put together. There is no security-wise notified amount," the RBI said.

RBI Deputy Governor Subir Gokarn had said that liquidity is likely to be under pressure for some more time due to factors like advance tax payment.

OMOs are the "first preference" of the RBI for injecting liquidity into the system and there is an opportunity to raise up to Rs 2.74 lakh crore through the window as banks' government bond holdings stand at 29%, 5% over the prescribed SLR cap of 24%, he said.

Bank of Maharashtra to be recapitalised this fiscalPress Trust of India / Mumbai Jan 03, 2012, 21:07 ISTAds by Google


Public sector lender Bank of Maharashtra (BoM) today said it expected a capital infusion by the government this fiscal as it had received a letter from the Finance Ministry in this regard.

"We have received a letter from the government stating that our request for fund infusion is under active consideration and we should be ready for the proposed infusion," the Pune-headquartered bank's Chairman and Managing Director AS Bhattacharya said.

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However, the quantum of the proposed infusion is not known, he said. The bank has been looking at a capital infusion of around Rs 860 crore by the government.

At present, six to seven public sector banks, including the nation's largest lender, State Bank of India, have approached the government for a capital infusion to shore up their capital adequacy ratio, which will help in further lending to customers.

Last week, Bank of Baroda said it had been assured of Rs 775 crore recapitalisation through preferential share allotment. Yesterday, Union Bank of India had said it would get a capital infusion of Rs 280 crore in the current quarter.

However, there is no final word on a request from the nation's largest lender SBI for the same, though it has been pending for over a year. The bank is expecting a capital infusion of some Rs 4,000 crore this fiscal.

Implementation of Basel-III banking norms, which will be enforced from 2013, requires recapitalisation of the state-run banks by the government.

Earlier, Financial Services Secretary DK Mittal had said though this year's budget for bank recapitalisation was only Rs 6,500 crore, there would be a second supplementary budget after December to infuse capital into select public sector banks.

Referring to capital adequacy ratio, sources in the industry said that post-capital infusion, the combined capital adequacy ratio of BoM stood at 11.88% as of the September quarter. The government holds a 79.24% stake in the bank.

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SBI achieves 100% financial inclusion in AP circlePress Trust of India / Hyderabad Jan 02, 2012, 19:43 ISTAds by Google


State Bank of India (SBI) has achieved 100% coverage of its allotted unbanked villages in Andhra Pradesh under the Financial Inclusion Programme (FIP) of the Reserve Bank of India (RBI).

According to Chief General Manager Rakesh Sharma, out of 6,661 unbanked villages with a population above 2,000 in Andhra Pradesh, SBI was allotted 1,369 villages to be covered under the Financial Inclusion Programme by the RBI and the bank has achieved 100% coverage.

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"We have opened 35 brick-and-mortar branches, appointed 1,157 banking correspondents, introduced 162 banks-on-bikes and 15 banks-on-Wheels, making use of IT in these villages," Sharma told a press conference today.

He said they were able to open as many as 2.1 lakh accounts in the targeted villages with an average balance of Rs 400 to Rs 500 per account.

The RBI has allowed the opening of zero balance-no frill accounts under the FIP to encourage maximum coverage.

SBI now plans to cover villages with a population of less than 2,000 in an integrated manner over the next two to three years, furthering the financial inclusion programme.

"We have a network of 41 urban banking correspondents in Hyderabad. We shall expand the urban banking correspondent network to other cities in Andhra Pradesh to fulfill the objectives of providing banking services to migrant population employed in urban as well metro centres," he added.

Savings bank a/c number portability on anvil: FinMinPress Trust of India / New Delhi Jan 03, 2012, 16:59 ISTAds by Google

1Year FullTime SMU MSc QF : By SMU and CASS Business School Information Session 7 Mar 2012 www.business.smu.edu.sg

The Finance Ministry is working on savings banks account number portability, which will allow a customer to retain his account number while changing his bank.

"We want to do it [savings a/c number portability]. Right now there are some technical problems...We have identified them. We will overcome them soon," Financial Services Secretary DK Mittal said.


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He was speaking after a meeting in the ministry, which among others was attended by Economic Affairs Secretary R Gopalan, Finance Secretary RS Gujral and Chief Economic Adviser Kaushik Basu.

He said banks would have to work on identification code, know your customers (KYC) norms and core banking solution (CBS) for implementing the savings bank account number portability.

The move would help customers change banks, without the need of going through the KYC norms again.

Last year, the government had allowed portability of mobile numbers and health insurance policies.

In October last year, the Reserve Bank had deregulated interest rates on savings account deposits, following which few private sector lenders have hiked rates to as much as 7%.

Mittal further said capital infusion in PSU banks would be completed by the end of this fiscal. "We will complete the process of bank recapitalisation by March 31," he said.

The government has already announced that it is committed to providing adequate capital to public sector banks, so as to maintain their Tier-I capital at 8%.

The government has made Budget provision of Rs 6,000 crore for capital infusion in PSU banks in the current fiscal.

State Bank of India, Bank of Baroda, Union Bank of India, IDBI Bank and Syndicate Bank are some of the lenders which will be benefited by the capital infusion initiative of the government.

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