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FINANCIAL SECTOR WEEKLY NEWS UPDATES Issue # 11

BY VASANT PONKSHE, SECRETARY, AIBOA

FINANCIAL SECTOR WEEKLY NEWS UPDATES

16th

to 31st

April 2012 Voting rights cap in private banks at 26% now NEW DELHI: The Union Cabinet has allowed private banks to raise voting rights to 26% as recommended by a parliamentary standing committee. However, for buying equity stake of above 5%, approval of the central bank will be mandatory. It has been decided that cap on voting rights of shareholders in private sector banks, which is currently at 10%, would be raised to 26%, confirmed a finance ministry official. The amendments are part of changes approved by the Cabinet in the proposed Banking Laws (Amendment) Bill which was introduced in the Lok Sabha in March 2011. "The cabinet has cleared banking laws (Amendment Bill 2011). It also approved increase of voting rights from 10% to 26% for private-sector banks," Information and Broadcasting Minister Ambika Soni told reporters after a cabinet meeting. At present, the voting right is restricted to 10%, irrespective of the share holding pattern in the banks. The standing committee in December last year, had suggested raising the limit in a phased manner while stating that it was crucial for the Reserve Bank of India (RBI) to ensure strict and efficient regulatory compliance's to prevent any misuse of the provision of increasing the limit. Both bankers and sectoral experts have argued that there was a need to raise the voting rights in order to maintain a balance between economic control and corporate democracy.

Government study fixes poverty line at Rs 66 for cities and Rs 35 for villages NEW DELHI: Here is a new set of official statistics that can escalate the politically contentious debate on what constitutes the poverty line. If average monthly consumption expenditure is taken as the benchmark of what an individual needs to survive, the poverty line would be Rs 66.10 for urban areas and Rs 35.10 for rural regions, while about 65% of the population will be below this cut-off. The figures, based on the 66th round of the National Sample Survey for 2009-10, provide a more realistic marker for estimating both the poverty line and the population below it than the Planning Commission's calculation of Rs 28.65 per capita per day for cities and 22.42 for rural areas. The rural and urban all-India averages for monthly expenditure are Rs 1,054 and Rs 1,984 per person, respectively, and if these are projected on the expenditure-population curve, the population below this works out to 64.47% (rural) and 66.70% (urban). Official sources said the exercise was carried out as part of a study and is based on NSSO data largely available in the public domain. While the government is revising its parameters, the monthly averages might be a useful means of estimating where to draw the poverty line. With almost all states showing more than 60% of populations below the monthly expenditure averages, the oft-repeated claim that 70% of India lives on less than $2 a day has a ring of truth in it.

RBI not to interfere in bank service charges HYDERABAD: The Reserve Bank of India (RBI) will not stop banks from collecting charges

for various services or insist on a minimum balance, as it is the choice of the customer where to open account, Deputy Governor K.C. Chakrabarty said here Thursday. "This is business. We can't interfere. We are not here to control business. We can only bring more competition," Chakrabarty told reporters on the sidelines of a national seminar on financial inclusion. The central bank is only asking banks to bring transparency in what they are charging and that it can ask them to drop charges if they are found unreasonable, he added. The RBI deputy governor said customers who have money will go to those banks which insist on minimum balance of Rs.25,000 or which charge two to three times for value added services. "We are only saying pricing should not be discriminatory or exploitative and the banks should provide minimum services. The customers should know minimum terms and conditions." Earlier in his address, Chakrabarty said banks were also charging for services which they were not providing, collecting pre-payment penalty and not reducing the interest rate for existing customers. He termed this as illegal, unethical and immoral. He said having a bank account is a fundamental right of an individual and no bank can refuse opening an account. The RBI recently asked banks to devise a basic bank account with minimum bouquet of products and services. The banks have been asked not to charge for maintaining minimum balance.

IDBI Bank aims to be among top five in the country

COIMBATORE: State-owned IDBI Bank has set its eye to be among the country's top five banks in terms of business in the next couple of years, a top bank official today said. The bank, with a business of Rs 3.91 lakh Cr. in the just concluded financial year and remaining at 7th slot at present, has made a net profit of Rs 2,000 Cr. which would increase to Rs 3,000 Cr. once the bank reached the fifth slot in two to three years, K C Jani, Executive Director, IDBI Bank, told reporters here. He said the 8-year-old IDBI Bank has to and would achieve 20 to 22 per cent to be among the five top banks as against the 18-20 per cent growth rate being achieved by other banks. Jani was here to inaugurate the first edition of Moneytree-Finexpo, organised by local chapter of Indian Chamber of Commerce and Industry, with IDBI Bank as principal sponsor. With 1,000 branches across the country, IDBI Bank has plans to add 150 more branches during this fiscal, particularly in Taluks and bigger villages, he said, adding that the lender also plans to open more branches in the villages, where the population was below one lakh.

Exim Bank to launch $500 million fund to support export by MSME MUMBAI: The Export-Import Bank of India (Exim Bank) is planning to set up a new fund of USD 500 million (Rs 2,500 Cr.), which will provide MSMEs with long- term foreign currency loans, a top official said today. 'Technology and Innovation Enhancement and Infrastructure Development Fund' will support exports by Micro, Small and Medium Enterprises (MSMEs), he said. "We will set up this fund with an initial amount of USD 500 million over the next five years to support MSMEs in getting foreign currency loans, which will help them in exports," Exim Bank Chairman and Managing Director T C A Ranganathan told reporters here. He said the main purpose of this fund is to reach out to a large number of MSMEs to build capacities in the area of skill development, design and packaging, among others. The Government-owned financial institution will also soon launch a new programme to finance export-oriented creative industries, Ranganathan said.

Government had no outstanding loans from RBI in April 20 week

MUMBAI: The Indian government had no outstanding loans from the central bank as on April 20, the Reserve Bank of India said in its weekly statistical supplement. State governments borrowed 15.79 billion rupees ($300.76 million) from the central bank in the week ended April 20, it said. Government had 48.04 billion rupees of outstanding loans

from the central bank in the week ended April 13, while state governments had outstanding loans of 11.78 billion rupees in the same period.

HDFC Bank set to open rural one-man branches

HDFC Bank, the second largest private sector lender in the country, is set to open one-man branches in rural centers. The move will help the bank meet priority sector commitments and aid its financial inclusion drive. “We have already started it on a pilot basis in some villages. These branches will be operated by a single person. They will be open for a few hours in a day or for a few days in a week, depending on the local requirements,” a senior executive said on Monday. The branches would initially provide the basic banking services, such as cash deposits and withdrawals, fund transfers and loans to locals. ICICI Bank, the largest private sector bank in India, is adopting a similar model to expand its reach in rural centres. According to bankers, this strategy will also help reduce dependence on Business Correspondents (BC). A BC is someone who works closely with an institute to promote, expand and advance the growth of the institute. Bankers feel outsourcing of banking services increases the scope of operational and reputational risks for banks. By having own branches, lenders can control and monitor their operations relatively better. “We started using the BC route about six years before. While those partnerships continue, we are focusing more on direct lending through our own bank branches,” the official said. In 2011-12, while HDFC met its overall priority sector target, it did not in some sub-sectors. The bank has 2,544 branches and 8,913 automated teller machines (ATMs) across 1,399 cities. Earlier this month, the Reserve Bank of India (RBI) had asked the state-level bankers’ committees (SLBCs) to prepare schedules for covering all unbanked villages with a population of less than 2,000. SLBCs are to then notionally allot these villages to banks for providing financial services in a time-bound manner. RBI is to issue a detailed guideline soon.

S&P lowers outlook on State Bank of India and ICICI Bank MUMBAI: Standard & Poor's has lowered the outlook on 11 financial institutions, including State Bank of India and ICICI Bank, to negative from stable. It, however, said a rating downgrade is unlikely since the individual finances of the institutions are unlikely to deteriorate sharply. The revision follows a similar move in terms of the sovereign as financial institutions from India cannot be viewed above the sovereign since policy changes have substantial impact on them. "The negative outlooks on the 11 financial institutions reflect the outlook on the sovereign credit rating on India," S&P said in a statement. "We could lower the ratings on these financial institutions if we lower the sovereign rating or if the stand-alone credit profiles of these financial institutions deteriorate sharply. We believe that such deterioration is unlikely in most cases. We could revise the outlook to stable if we take a similar action on the sovereign rating." Indian banking sector's health has been deteriorating in the last few quarters since borrowers are either postponing repayments or defaulting as tight business conditions hamper growth. Policy obstacles have halted many projects. Crisil, the Indian unit of S&P, forecasts that restructured loans may touch 2 lakh Cr. this fiscal, from an estimated 1.5 lakh Cr. in fiscal 2012. Telecom tower group GTL Infrastructure; microfinance company BASIX; Deccan Cargo and Express Logistic, founded by Captain Gopinath; and Bharati Shipyard are among companies whose loans were restructured last year, document from the CDR Cell shows. Other companies like Hotel Leela Ventures, builder HCC and Lavasa, a hill city, await approvals from banks to restructure their loans.

Banks to restructure loan worth Rs 2 trillion by March 2013: Crisil

MUMBAI: Restructured loan portfolio of banks is expected to touch Rs 2 trillion by March 2013, said Crisil the rating company. A sizeable proportion of the restructuring comprises large-ticket corporate exposures; total restructured loans will account for 3.5 per cent of the banking sector's total advances as at March 2013,'' it said GTL Infrastructure, a telecom

tower group; microfinance company BASIX; and Deccan Cargo and Express Logistic, founded by Captain Gopinath, Bharati Shipyard are among companies whose loans have been restructured this year, document from the CDR Cell shows. Other companies like Hotel Leelaventures, HCC and Lavasa await banks approval to be admitted to CDR cell. "The nature of restructuring in 2011-12 and 2012-13 is qualitatively different from that in 2008-09 and 2009-10. The loans restructured in the earlier phase were smaller and represented the small and medium enterprise (SME) accounts. In the current phase, the loans being restructured are large corporate exposures; over two-thirds of the loans restructured till December 2011 had a ticket size of over Rs1000 Cr. reflecting a high level of concentration,'' said RaMr.aj Pai, president, Crisil Ratings. Bank's gross NPAs are set to increase to 3.2% of advances by March 2013, from 2.9% as at December 2011. The large quantum of restructuring reflects the prevailing stress on corporate India's credit quality because of lower profitability, weak demand, and tight liquidity. 'Nearly 30% of the restructuring is expected in the power sector. The other sectors to be impacted include aviation, construction and engineering, steel, textiles, and telecom infrastructure,'' the rating company said.

Allow customers to transfer accounts within bank: RBI to banks

MUMBAI: Bank customers who change jobs or locations will find it easier to shift their bank account to the new location now. The Reserve Bank of India (RBI) has made it mandatory for banks to allow transfer of accounts from one branch to another without insisting on opening a fresh account or making the customer undergo the full know your customer process again. Earlier, since the account holder's information was maintained with local branches, banks used to insist that customers go through the account opening procedure all over again when they shifted to a different location. "It has been brought to our notice that some banks are insisting on opening of fresh accounts by customers when customers approach them for transferring their accounts from one branch of the bank to another branch of the same bank. Such insistence on opening of fresh account or making the customer undergo full KYC process again causes inconvenience to them resulting in poor customer service," RBI said in a circular to all banks. The circular added that given that most bank branches are now on core banking solution, records of a particular customer can be accessed by any branch of the bank. An official with a new generation private bank, however, said, "We provide 'at par' cheque books to our account holders, which means that the cheques will be treated as local cheques no matter which part of the country they are deposited in. So, it really does not matter if the home branch is in a different city." With all banks having put in place a core banking solution ( CBS) through which all account holder information is maintained in a centralized database accessible across branches, ATMs and internet, the home branch concept has lost relevance. But some private banks charge high fees for services accessed outside the home branch. For instance, most new generation private banks charge a fee for cash withdrawal at branches other than the home branch. Also, some lenders insist that changes in account services or document submission has to be done at the home branch. In its monetary policy on April 17, RBI had asked banks to have a central customer ID to facilitate portability of accounts and ensure that all customer information is centralized. Some banks are seeing this as a precursor to having a central identity which will help customers transfer accounts across banks without having to repeat the KYC procedure. "Banks are advised that KYC once done by one branch of the bank should be valid for transfer of the account within the bank as long as full KYC has been done for the concerned account. In order to comply with KYC requirements of correct address of the person, fresh address proof may be obtained from him/her upon such transfer by the transferee branch," RBI said.

SIC finally terms J&K Bank a public authority

SRINAGAR: After two years refusing information under the RTI act, full bench of the state information (SIC) on Tuesday announced the J&K Bank to be a public authority. The bank was given a month long period to train its staff and make its designated officials responsible for implementing the RTI act. "Our law department is examining the judgment and we will respond at the earliest," Chairman and CEO of the J&K Bank Mushtaq Ahmad told The ET. He refused to elaborate. The judgment came on basis of a number of petitions pending disposal before the SIC. Invariably in all the cases, the bank's law department had refused information citing its exclusion from the list of public authority institutions. The case took more than a year to be decided. CIS website has put the Tuesday judgment separate under 'landmark judgments' that chief information commissioner G R Sufi delivered with two information commissioners Dr. Sudesh Kumar and Nazir Ahmad. The entire debate in the petition was about the genesis of the bank and how it is as good a public authority as other appendages of the government are. The bank had taken resource to a plea that since it was neither set up by parliament or the state assembly, it stays out of the RTI purview. The bank was set up by the last despot of the state Maharaja Hari Singh on June 19, 1939. But the debates in the SIC suggested the bank came into being on basis of the recommendations that Maharaja's administration made. After the formal proclamation, the then government issued a notification as well which eventually marks the beginning of a public authority. Post-partition, the bank was registered under companies act in 1956 also. Right now it is the only listed company of teh state that has 53% of its shareholding with the state government.

SBI targets 25 pc deposit growth in 2012-13

HYDERABAD: The country's largest lender State Bank of India today said it is targetting a growth of 25 per cent in deposits and 22 per cent in advances in the current fiscal. A Krishna Kumar, Managing Director and Group Executive (National Banking), SBI, said mid corporate and retail sectors, which did not fare well in the last fiscal, are expected to contribute to the growth in advances. "The preliminary figures (of SBI) indicated that as on March 12, we have roughly grown about 18 per cent in deposits and 15-16 per cent in credit. In the current year 2012-13, we are targetting a growth of 25 per cent in deposits and 20 to 22 per cent growth in credit," Krishna Kumar told reporters. "We have more than 14,000 branches right now and we expect to open may be another 1,000 branches in the current year. A mixture of opening new branches and schemes for depositors and advances oriented schemes and the fact that the economy would look to be on the upswing help achieve this target," he added. He was speaking to reporters after the inauguration of the second SMECCC -- a centralised credit processing centre for SME accounts -- in the city. Replying to a query, he said the SME sector in the country is under stress due to economic factors but is expected to perform better in the current fiscal. "There was lot of sluggish growth in the mid corporate sector and also in the retail banking side. A little more focus on the mid corporate and retail segment will see this (22 per cent growth in advances) through," he said. On interest rates, he said reduction in the interest rates will not affect the bank's Net Interest Margin (NIM) as there will be adjustments on deposits side as well.

PSU banks invite bids for ATM units

Public sector banks have called for bids to install 5,259 cash dispensers (ATM) in Bihar and Jharkhand by March 31, 2014. This is 30 per cent more than the estimated 4,039 ATMs announced in the first week of March. And if the 50 per cent additional requirement is factored in, the final ATM units figure would be 7,889. Going by the original estimate, this is 95 per cent higher. Though Bank of Baroda has called for the bids on an outsourced basis, it had made it clear that the requirement is for all PSU and co-operative banks. The main banks in the consortium are Bank of Baroda, IDBI Bank, Corporation Bank, SBI and Allahabad Bank. Banks can place orders under the tender up to March 31, 2015. The banks may also increase the requirement of cash dispensers by 50 per cent. It is also obligatory for bidders to take over operation and maintenance services of bank owned ATMs that are in

operation for less than seven years. Vendors will have to take over the ATM, peripherals, networking and other equipment in ATM room owned by the banks which support functioning of the ATM. The selected vendor will receive a seven-year contract from the procurers.

Bank lending to commercial realty rises by 9% in February

BANGALORE: Banks' lending to the commercial real estate sector grew 9% in February 2012 compared to February 2011, as risk-averse fund houses continued to seek a higher rate of return and invest in smaller deals. According to the Reserve Bank of India (RBI) data, banks sanctioned about 1.2 lakh Cr. in loans to the sector in February 2012 against 1.1 lakh Cr. in February 2011. The year-on-year growth in January was 12.1%. Banks normally charge an interest rate of 13-16% compared to 20% or higher sought by fund houses, making bank lending attractive for builders seeking funds for project completion and to meet working capital requirement. On the other hand, private equity exposure to the sector fell more than 50% y-o-y in February. According to research firm Venture Intelligence, PE funds invested $327 million across nine real estate deals in February this year, compared to $714 million across six transactions in February 2011. PE exposure to the sector in the January-March quarter, too, was lower than that in the previous quarter. "There is paucity of funds as sales volumes were impacted for most builders. Builders are not in a position to invest money into the project as cash receivables are at the end of the tunnel with sales slowing down," a senior State Bank of India official said, adding, "Equity funds are also not ready to risk their money."

Axis Bank reworks share swap ratio for Enam deal

MUMBAI: After the much-awaited green signal from the apex bank to its much-delayed takeover of Enam Securities, Axis Bank today reassessed the valuation and said Enam shareholders will now get only five shares of the bank for every single share of the brokerage firm. As per the revised scheme, Enam shareholders will receive five Axis Bank shares for one Enam share held, translating into about 2.93 per cent shareholding in Axis bank, managing director and chief executive of Axis Bank Shikha Sharma told reporters here late this evening. She said the prevailing market conditions and commercial considerations have prompted this revision. Earlier, the swap ratio was 5.7 shares of the bank for one Enam share and the brokerage firm would have got 3.3 per cent stake in the bank. "The regulator (RBI) gave approval for the transaction on March 31. The relook at the valuation was not driven by regulatory guidance. The approval would not come in before June 2012. The market valuation since then has changed, hence the change in the valuation,'' Sharma added.

Up home loan cap to Rs 10 lakh for priority sector: RBI to RRBs

MUMBAI: The Reserve Bank of India today asked allRegional Rural Banks (RRBs) to double the limit for home loans to Rs 10 lakh from Rs 5 lakh for consideration under priority sector lending schemes. "It has been decided to increase the limit from Rs 5 lakh to Rs 10 lakh for the bank loans extended to non-governmental agencies, approved by NHB for their refinance, for on-lending for the purpose of construction or reconstruction of individual dwelling units...and rehabilitation of slum dwellers," the RBI said in a notification. Loans of such nature fall under indirect finance to housing sector as the final disbursement is done through National Housing Bank (NHB) approved non-governmental agencies. In August 2007, the central bank, kept the ceiling of loan component of Rs 5 lakh per dwelling unit for the priority sector lending and since then, the RRBs have been considering the home loan limit up to Rs 5 lakh under for the weaker sections of society under priority sector lending scheme. In view of the shortage of housing for low income groups in major cities and towns, Finance Minister in his budget for 2012-13 also proposed to enhance the limit of indirect finance under priority sector from Rs 5 lakh to Rs 10 lakh.

Financial inclusion should be a bank-led model: RBI

A top official of the Reserve Bank of India (RBI) said banks are in a better position as compared with other entities to lead the financial inclusion goal in India, though mobile companies have been allowed to partner them. “Our experience shows that the goal of financial inclusion is better served through mainstream banking institutions as only they have the ability to offer the suite of products required to bring in the effective or meaningful financial inclusion,” said RBI Deputy Governor K C Chakrabarty in a speech delivered in Washington, DC on Sunday. The speech was released on the central bank’s website on

Tuesday. Under the three-year financial inclusion drive, banks have covered all villages with population more than 2,000 by March 2012 and are working towards reaching out to all villages in a time-bound manner. “The focus is also on the volume of transactions in the new accounts opened as a part of the financial inclusion drive,” said Chakrabarty.

Focus on transactions in no frills accounts: RBI

Banks need to focus on transactions in accounts opened under financial inclusion, according to Dr K.C. Chakrabarty, Deputy Governor of RBI. Speaking on developing a framework for financial inclusion at a national seminar here on Thursday, he said financial inclusion had become fashionable of late. “But this fashion has to become passion,’’ he said. Stating that banks had “great reluctance’’ to open brick and mortar branches in unbanked area, he said a combination of traditional branch model and business correspondent model should be adopted. “The central role in financial inclusion had to be played by banks,’’ he said. “They also need to be careful in collaborating with other agencies like MFIs and NBFCs in financial inclusion because they can only play only supportive role,’’ Dr. Chakrabarty said.

Banks report over 100 home loan frauds in three months

Call it a double whammy for public sector banks. Housing loan frauds have crossed the 100-mark in just three months this year. To top it, the amount under write-off (including compromise) for all categories of loans has increased alarmingly. The Government tabled two sets of data in the Lok Sabha on Friday indicating that banks need to pull up their socks to improve their working. There is apprehension that non-performing assets (NPAs) may increase when banks start announcing their financial results for 2011-12. In a written answer on home loans, the Minister of State for Finance, Mr. Namo Narain Meena, said the Reserve Bank of India had no specific information about home loan scams at any public sector bank. To curb incidents of frauds, the RBI had advised banks to introduce a system of concurrent audit, he said. The Central Bank had also asked banks to review the working of internal inspection and audit machinery by the audit committee of the Board of Directors. Banks were also advised to constitute a special committee of the board exclusively to monitor frauds of Rs 1 Cr. and above. However, a senior bank official said that lack of facility of online inspection of property documents besides other issues help fraudsters. Another senior bank official did not rule out connivance of bank staff and builders. A set of data shows write-offs (including compromise) up from nearly Rs 7,000 Cr. (March 2009) to over Rs 17,000 Cr. at the end of March 2011. Banks resort to write-offs only after exhausting all other possible avenues for recovery or when the asset coverage is not enough, Mr. Meena said. According to RBI guidelines, banks should either make full provision or write off such advances and claim tax benefits. While bankers claim that extra caution in due diligence is taken in all kind of loans, things become difficult when there is too much political pressure to write off or compromise.

State Bank of Mysore to hire 700 officers this fiscal

State Bank of Mysore plans to recruit 700 probationary officers this fiscal. According to Ms Hamsini Menon, Managing Director, State Bank of Mysore, the bank saw 1,000 clerical staff joining duty during the fourth quarter of last fiscal. “The recruitments were mainly to balance the large number of retirements that the bank would see during the 2012-13 fiscal,” she said. About 400-500 SBM employees are due to retire this year. In addition, the bank would recruit 700 probationary officers and 500-600 additional clerical staff this fiscal. State Bank of Mysore is on a branch network expansion mode as well. “We plan to take the number of branches to 1,000 in the next two years,” said Ms Menon. The bank currently has about 740 branches. The branch and manpower expansion would help the bank achieve a business turnover of Rs 1-lakh Cr. by this fiscal-end, she added. The bank's capital adequacy ratio is about 12.55 per cent, and is sufficiently capitalised for the next couple of years, said Ms Menon.

HSBC to cut over 3,000 jobs in UK

HSBC today said it would cut 3,167 jobs as part of previously announced plans to reduce the bank’s global workforce by 30,000 over two years to 2013. The London-headquartered bank added that due to the creation of 950 positions, the net loss for British jobs would total 2,217. “HSBC is today announcing a restructure of its business in the UK which means that 2,217 people will be leaving the UK Bank during the coming months,” Europe’s biggest bank said in a statement. “The reduction of 3,167 roles in the UK follows the group’s announcement last year that by the end of 2013, there would be around 30,000 fewer roles within the bank worldwide.” HSBC is looking to save up to $3.5 billion by next year under its vast cost-cutting programme. The bank added today that the majority of posts being lost in Britain were in areas of senior or middle management, while none of its 1,250 British branches would shut as a result of the move. Founded in Hong Kong and Shanghai in 1865, HSBC recently reported soaring annual net profits as growth in Asia and other emerging markets offset eurozone debt losses and costs linked to the bank’s exit from the United States. Profit after tax jumped 28 per cent to $16.8 billion in 2011 compared with the previous year.

Rural 'ATMs' to service all PSU banks' customers

MUMBAI: Today, when a bank customer in an Indian village withdraws cash, she approaches the bank's business correspondent, who is an agent representing the bank in a remote area. Unlike her counterparts in the city, she can't use automated teller machines, or ATMs, of any bank to withdraw or deposit money. That's about to change. State-owned lenders, under the direction of the finance ministry, are instructing their business correspondents, or BCs, to deal with customers of all banks. Irrespective of the bank a BC is attached to, the agent, armed with hand-held devices that work as mobile ATMs, will accept and give out cash to any villager with an account in any public sector bank. The move, aimed at making banking transactions easier in rural India, could deepen financial inclusion, which has emerged as one of the top priorities of the government and the RBI. At present, each bank appoints a BC who moves around in select villages to enable bank customers carry out basic transactions. In a recent meeting, DK Mittal, secretary, financial services, urged public sector banks to set up a system to enable business correspondents to provide any banking service within a given geographical area instead of acting on behalf of a single bank. "Finance ministry wants inter-portability of BCs to make it easier for villagers on the move to do banking transactions," said a general manager in charge of priority sector who had attended the meeting. As of now, only 74,000 of the 6 lakh villages provide formal banking services by way of branches or business correspondents.

SBH designs recurring-term deposit scheme

In what it claims to be a first-of-its-kind from the Indian banking industry, the State Bank of Hyderabad (SBH) is thinking about launching a new product, which will combine the features of recurring deposit (RD) and term deposit schemes. “The idea is to freeze the interest rate at the time of entry. In the case of a fall in interest rates, it will not impact the customer. So far, nobody (bank) has thought of it (concept),” SBH managing director M. Bhagavantha Rao

told Press. Under the proposed scheme, the period – six, nine and 12 months – will be chosen by the customer. At the end of that period, and depending on the requirement of the customer, it could be turned into a fixed deposit from anywhere between one and 10 years. “We are awaiting regulatory approvals from the Reserve Bank of India (RBI). Also, we have to rework on our core banking system to support this product. We expect the whole process to complete in two to three months from now,” he said. Of its total 1,475 branches, the bank currently has 921 branches in Andhra Pradesh and 525 branches spread across Karnataka and Maharashtra. “We are now trying to branch out into other locations, including coastal Andhra. Overall, we are planning to open 175 branches this year, including 60 to take the total number of branches in that area to 200. Also, the branch network in Andhra Pradesh will reach 1,000 this year,” Rao said. According to him, the bank was planning to hire 2,200 employees during the current financial year. “We would be adding 1,300 probationary officers by June. About 900 clerical staff would join later in the year by December-January,” he added.

Unclaimed money is piling up

In a country where deficits and poverty are rampant, unclaimed money is an irony — but a huge reality. Be it un-banked cheques, deposits with banks, finance companies and post-offices, or investment in tax saving schemes and life insurance policies, the unclaimed sums can be significant. LIC had, for instance, in response to an application filed under the Right to Information Act, stated that as many as 1,80,031 policies were lying unclaimed with the Corporation even after the maturity period. The Corporation, however, did not disclose the amount deposited against these policies by the policyholders. Why does this happen? “It's because the insured fails to keep his near and dear ones informed about his/her investment. Many people have no clue that they are a beneficiary or even that a life insurance policy exists. It does happen and fairly often,” says Mr. P. Mohankumar, the Principal Officer and Managing Director, Link-K Insurance Broker Co (P) Ltd. Citing an instance, he said a friend took a life cover for Rs 50 lakh. He moved to the US, where he passed away. His wife relocated to India after his death. Many months later, when she went through the transactions in his pass book, she noticed that there were payouts towards insurance premium. The policy documents were missing. But somehow she managed to get the claim. “It may not always be easy, especially if the premium against any policy is discontinued continuously for five years. The policy lapses and cannot be revived,” he emphasised.

SBI staff union meet to discuss wage issues

THIRUVANANTHAPURAM: A special convention of the State Bank Staff Union will be held in Kochi on Sunday to discuss the various issues concerning the pay revision in the banking sector. According to a SBSU (Kerala circle) release, union leaders from south Indian states would participate in the meet which would focus on wage reivison due in the banking sector as well as various contemporary issues relating to banking sector. Papers would be presented on topics like "the 10th bilateral agreement--possibilities and challenges", " financial sector and tasks of trade unions" and " contemporary issues in the banking sector", SBSU general secretary A. Jayakumar said. Union Minister for Food and Civil Supplies, K V Thomas, will inaugurate the convention to be presided by SBSU Kerala Circle president M Sreepathi Rao.

EPF interest rate will be raised to 8.6% this year: Kharge

NEW DELHI: Interest rate on employees' provident fund will be increased to 8.6 per cent for the current fiscal, a move which will benefit around five Cr. subscribers. "The rates were brought down due to lower income (on investment in Special Deposit Schemes)...There is no question of minimum or maximum interest rates. We distribute it as per our revenue. Next time, it will be 8.6 per cent," Labour Minister Mallikarjun Kharge said in the Rajya Sabha replying to a debate on working of Labour Ministry. The Employees' Provident Fund Organisation (EPFO) had brought down the rate of interest to 8.25 per cent for 2011-12 from 9.5 per cent provided in 2010-11. The retirement fund body EPFO has parked in excess of Rs 55,000 Cr. in the Special Deposit Schemes (SDS) aimed at providing better returns to non-government provident funds and other such funds. Kharge said the rate of interest on funds depend on the revenues. Since the money belongs to workers, the government does not intend to reap any benefit out of the fund and returns every penny for the welfare of the subscribers. "Even if the interest rate is less, the money is kept in safe custody," Kharge said. The interest rate was lowered last fiscal on the finance ministry's recommendation that with the kind of returns, it was not possible to continue with the 9.5 per cent given in the year-ago period. Stating that his ministry is taking pro-active steps to address issues related to labour, Kharge said, the government has enacted laws to protect workers and provide them additional benefits like assured job, food and medicines. On pending bills, he said, "Sometimes, we are not able to enact good laws because of differences. Without cooperation, no decision can be taken."

RATE CUTS

Indian Bank, IOB cut lending rates by 0.25%

NEW DELHI: Indian Bank and Indian Overseas Bank (IOB) today slashed lending rates by 0.25 per cent, in line with other lenders. The separate announcements come a week after RBI reduced policy rate by 0.5 per cent. The bank decided to reduce its base rate by 0.25 per cent from the existing 10.75 per cent to 10.50 per cent per annum, Indian Bank said in a filing on the BSE. Similarly, IOB has also cut the base rate to 10.50 per cent from 10.75 per cent. Base rate is the benchmark rate below which a bank cannot lend. With the reduction in the base rate all kinds of loans would be cheaper by at least 0.25 per cent. The new rates of both the banks would be effective from May 1.

Allahabad Bank, Uco, UBI cut lending rates

KOLKATA: Three Kolkata-based lenders have reduced their respective base rates following a government order after Reserve Bank of India lowered its short term policy rate by 50 basis points. Allahabad Bank and Uco Bank has announced to cut the base rate by 25 basis to 10.50% while United Bank of India has lowered it by 15 bps to 10.45%.Base rate is the minimum lending rate for banks and one percentage point is equal to 100 bps. The new rates for Allahabad and Uco Bank will come into effect from May 1 while UBI's new rates becomes effective from Monday. Uco Bank has also slashed its housing and car loans by up to 175 bps to boost its retail lending portfolio. It cut housing loan interest rates by 175 bps across all tenures and car loan rates by 125-175 bps. The government wants state-run banks to make retail loans cheaper and compete with private lenders. At a recent meeting with bankers, finance secretary DK Mittal told bank captains to follow this strategy. Uco Bank has cut deposit rates by 25-50 bps across various maturities from Tuesday to reduce cost of funds.

Federal Bank cuts base rate by 0.20% to 10.45%

MUMBAI: The Kerala-based Federal Bank today cut its base rate or the minimum rate of lending by 0.20 percent to 10.45 percent following last week's RBI reduction in the key lendig rate. The bank action, which follows similar announcements from other lenders like ICICI Bank, IDBI Bank and Corporation Bank, among others, will be applicable from May 2, it said in a statement. State Bank of India, the country's largest lender has cut rates on select offerings, but is keeping the base rate intact. The Reserve Bank had surprised all by slashing the repo rate at which it lends to the banks by 0.50 percent to 8 percent at its annual monetary policy announcement on April 17. Reacting to the move, all the bankers had said this will lead to lower rates but some opined that the deposit rates will go down first and the reduced cost of funds will trigger base rates decreasing. Federal Bank reduced term deposit interest rates by up to 0.25 percent depending on maturity, the statement said. The reduced deposit rates will be effective from April 26, it added.

State Bank of India to cut loan rates to SMEs

NEW DELHI: State Bank of India is cutting its loan rates for small and medium enterprises by 1.5 to 2.0 percentage points, Chairman Pratip Chaudhuri said, adding that the move would not squeeze margins at India's largest lender. India's banks, saddled with high-cost long-term deposits, narrow profit margins and the threat from a rising volume of bad debts, are hard-pressed to follow the Reserve Bank of India's 50 basis point cut in lending rates last week.

Union Bank, Corporation Bank cut lending rate

NEW DELHI: A day after country's largest lender SBI trimmed its fixed deposit rates, two more lenders -- Union Bank of India and Corporation Bank -- today slashed benchmark lending rate by 0.15 per cent, making loans cheaper. The bank has revised base rate or minimum lending rate by 15 basis points to 10.50 per cent from 10.65, Union Bank of India said in a filing on the BSE. Base rate is the benchmark rate below which a bank cannot lend. Another state-owned lender Corporation Bank has also reduced the base rate by similar percentage points to 10.50 per cent. The revised rates of both the banks will be effective from May 1. Following the Reserve Bank's decision to cut key interest rate by 0.5 per cent to 8 per cent in its annual credit policy last week, several banks including ICICI Bank, IDBI Bank and Punjab National Bank have reduced both lending and deposit rates. Yesterday, State Bank of India (SBI) along with five more banks announced revision in their interest rates. SBI trimmed interest rates on fixed deposits by up to 1 per cent across various maturities. There was upward revision of 0.25 per cent in case of fixed deposits of 180 days.

SBI rate cut may trigger war in car loan segment

MUMBAI: The country's largest bank, State Bank of India, has slashed auto loan rates and deposit rates while many others including Kotak Mahindra Bank, Bank of Baroda and Deutsche Bank have cut their benchmark base rates. SBI has reduced its auto loan rate by 75 basis points to 11.25%. The move will force other big lenders in the auto finance business like HDFC Bank and Kotak Mahindra Bank to cut rates. SBI's rate cut will enable borrowers save Rs 40 on every lakh. The equated monthly installment on a Rs 1 lakh seven-year loan has come down from Rs 1,765 to Rs 1,725. Till now SBI had pegged its auto loans at its rack rate of 12%. Lenders such as HDFC Bank, Axis Bank and Kotak Mahindra, who had higher rack rates, have been offering better deals through special rates starting around 11.5%."This is a highly interest sensitive market and we will have to review our rates to retain our market share," said an official with a leading private bank. On Monday Kotak Mahindra Bank and Deutsche Bank brought down their base rates by 25bps and

50bps respectively. "We decided to pass on maximum benefit to our customers in keeping with the spirit of supporting economic revival and as signaled in the recent RBI policy," said Gunit Chadha, CEO, Deutsche Bank India. Meanwhile, Bank of Baroda has said that its base rate will come down by 25 basis points with effect from May 1, 2012 while deposit rates are also being reduced by 25 to 50 basis points across maturities. The reduction in lending and deposit rates are a fallout of the Reserve Bank of India's decision to signal cheaper funds by reducing its repo rate by 50 basis points in its monetary policy on April 17. The repo rate is the rate at which RBI extends overnight funding to banks to meet their short-term cash requirements . According to rating agency Moody's , the move will improve credit-worthiness of Indian banks and reduce pressure on bad loans.

SBI, 4 more banks cut interest rates (Deposit rates)

NEW DELHI: Led by SBI, five more banks today cut interest rates on loans and deposits up to one per cent, following reduction in the short-term policy rates by Reserve Bank last week. While banks have tweaked rates differently, the net effect is that depositors lose more than the gains accruing to borrowers resulting in widening of the banks' margins. Country's largest lender State Bank of India (SBI) slashed interest rates up to one per cent on fixed deposits of all but one maturity. With these changes, the peak rate on SBI fixed deposits would come down to 9 per cent per annum, from tomorrow. On the other hand, it has reduced interest rates marginally by about 0.25 per cent, that too only on car loans. SBI Chairman Pratip Chaudhuri said that the bank may not go in for cut in the minimum (base) lending rate. "Our base rate is already one of the lowest in the industry," he told CNBC TV18. Other banks, including Allahabad Bank, United Bank of India and Kotak Mahindra Bank have reduced the base rate by up to 0.25 per cent. SBI's base rate stands at 10 per cent. It is the benchmark rate below which a bank cannot lend. Lakshmi Vilas Bank reduced its FD rates on select maturities by 0.25 per cent. Following the RBI's decision to cut key interest rate by 0.5 per cent to 8 per cent in its annual credit policy ICICI Bank, IDBI Bank and Punjab National Bank have already announced reduction in both lending and deposit rates.

WORKING RESULTS

Dividends, interest income drive ICICI Bank's profit up 31%

ICICI Bank, the largest private sector lender in the country, on Friday said its standalone net profit for the quarter ended March 31 had expanded 31 per cent to Rs 1,902 Cr. from Rs 1,452 Cr. a year earlier. Higher interest income from advances and dividend from its subsidiaries aided the period’s earnings. The standalone net profit grew 26 per cent to Rs 6,465 Cr. during 2011-12 (April-March). On a consolidated basis, net profit for the full year was up 25 per cent at Rs 7,643 Cr. The standalone net interest income, or the difference between interest income and interest expense, was Rs 3,105 Cr. during the January-March quarter, up 24 per cent from a year before. Net interest margin improved 27 basis points (bps) from a year earlier to three per cent during the fourth quarter; it was 2.7 per cent in 2011-12.The bank reportedly aims to improve the margin by 10-15 bps in the current financial year.“We have had healthy growth. We followed a strategy of profitability, growth and risk management during the year. We saw a healthy increase in other income, mainly due to dividend from our subsidiaries. This was the year when our subsidiaries started becoming profitable and contributed handsome dividends for the parent,” Chanda Kochhar, managing director and chief executive, told reporters in her post-earnings comments. The bank’s other income grew 36 per cent from a year before, driven by dividend earnings and increase in treasury income. Operating expenses rose 20 per cent from a year earlier, as the bank opened more branches to support its expansion plans. The cost to income ratio was 41.6 per cent during the three-month period. ICICI Bank closed the January-March quarter

with 2,752 branches and 9,006 ATMs. The bank’s board has recommended a dividend of Rs 16.5 per equity share for 2011-12.

SBH Q4 profit up 6.8% on higher net interest income

State Bank of Hyderabad's net profit rose 6.81 per cent to Rs 481.04 Cr. in the quarter ended March 2012, from Rs 450.35 Cr. in the year-ago period. During the quarter, its net interest income climbed 31.29 per cent to Rs 1052.55 Cr. (Rs 801.69 Cr.).For fiscal 2011-12 as whole, its net profit grew 11.32 per cent to Rs 1,298.27 Cr. (Rs 1,166.24 Cr.). The rise in profit was primarily a result of higher net interest income, which grew by 18.11 per cent to Rs 3,364.49 Cr. (Rs. 2,848.51 Cr.).The bank's total business touched Rs 1, 80,143 Cr. reflecting a growth of 14.7 per cent over the previous fiscal, while advances touched Rs 78,337 Cr. up by 19.7 per cent. Mr. M. Bhagavantha Rao, Managing Director, said the bank will be opening 175 branches in the current fiscal. In the last three years, it opened 444 branches, with two-thirds of them being in rural and semi-urban areas. “We will also be hiring 2,500 personnel, including officers and clerks, during the year,” he told newspersons here on Thursday. The bank feels that its Net Interest Margin, which was at 3.47 per cent last fiscal, would remain under some pressure this fiscal owing to prevailing economic conditions and could drop by some 20 basis points. It is also keen to keep its gross NPA (non-performing assets) below the existing Rs 2,007 Cr. or 2.56 per cent this year. On interest rates, Mr. Rao said there may not be any “steep changes” in rates this fiscal, “but, if anything, the direction will be downward.”

Indiabulls Financial Q4 Net Profit up by 24.3%

Indiabulls Financial Services today reported 24.3 per cent growth in net profit at Rs 303 Cr. for the quarter ended March 31, 2012.The company had reported a net profit of Rs 243.75 Cr. in the corresponding quarter last fiscal. Its revenue for the January-March quarter rose by 45.4 per cent at Rs 1,108.63 Cr. The full year revenue jumped by 52.9 per cent to Rs 3,781.88 Cr. it said in a filing to the BSE. For the full year (2011-12), the non-banking financial company's profit increased by 32.57 per cent to Rs 1,006.37 Cr. Shares of the company closed at Rs 234 apiece on BSE, up 4.39 per cent.

Axis Bank Q4 net up 25% on lower provisioning

Private sector lender Axis Bank on Friday reported a 25 per cent rise in net profit for the quarter ended March on the back of robust growth in net interest income and fee income, and lower provisioning. Net profit rose to Rs 1,277 Cr. from Rs 1,020 Cr. a year earlier. Net interest income grew by 26 per cent to Rs 2,146 Cr. in the fourth quarter, while fee income was up eight per cent to Rs 1,327 Cr. Provisioning was down from Rs 254 Cr. to Rs 139 Cr. The bank clocked annual growth of 19 per cent in advances and 16 per cent in deposits. Shikha Sharma, managing director and chief executive officer of Axis Bank, said the lender would aim to achieve credit growth of above 17 per cent, the projection made by the Reserve Bank of India for 2012-13.Current accounts and savings accounts constituted 42 per cent of the total bank deposits at the end of 2011-12. However, an increase in the cost of funds led to lower net interest margins (NIMs) during the quarter. NIMs fell from 3.65 per cent to 3.59 per cent. Somnath Sengupta, executive director and chief financial officer of Axis Bank, said NIMs were expected to be in the 3.25-3.5 per cent range in the coming quarters. On the asset quality front, the bank reported a net non-performing assets ratio of 0.25 per cent as compared to 0.26 per cent in the corresponding period last year. Gross non-performing assets as a percentage of gross assets also fell from 1.01 per cent to 0.94 per cent in the same period. The total amount of restructured assets grew to Rs 3060 Cr. with Rs 588 Cr. added during the fourth quarter of 2011-12.The bank's capital adequacy ratio stood at 13.66 per cent with tier-I capital at 9.45 per cent at the end of financial year 2011-12. Axis Bank announced a dividend of Rs 16 per share for the financial

year 2011-12. Also, executive directors--V Srinivaasn and Somnath Sengupta were appointed as Whole time directors on the bank's board.

L&T Fin Q4 net jumps 45% on healthy loan growth

Buoyed by healthy loan growth, L&T Finance Holdings posted 45 per cent growth in net profit for the fourth quarter ended March 31, 2012, at Rs 141 Cr. (Rs. 97 Cr.).In the fiscal year ended March 2012, the company's net profit grew 16 per cent to Rs 455 Cr. (Rs 391 Cr.).The Chairman and Managing Director, Mr. M. Deosthalee, said: “Despite challenges of continuous GDP revisions, rising interest rates, liquidity problems, and slowdown in infrastructure spending, it has been a good year for us. ”L&T Finance Holdings offers a diverse range of financial products and services across corporate, retail and infrastructure finance sectors. It also offers mutual products and investment management services. The advances rose as on March 31, 2012, to Rs 25,017 Cr. (Rs 17,895 Cr.).Gross non-performing assets as on March 31, 2012, stood at 1.8 per cent (2.2 per cent. In the microfinance sector, the aggregate loan portfolio outside Andhra Pradesh amounted to Rs 134 Cr. The exposure in AP was Rs 193 Cr. of which, Rs 90 Cr. has been written off.

Barclays Q1profit up on investment bank rebound

Barclays posted a 22 percent rise in first-quarter profit, ahead of market forecasts, as a strong rebound in revenue from its investment banking arm and a drop in bad debt countered increased compensation for insurance mis-selling. The British bank reported an adjusted pretax profit of 2.45 billion pounds ($3.94 billion) in the three months to end-March, up from 2 billion a year ago and above the average forecast of 2 billion pounds from a poll of analysts supplied by the company. Barclays first quarter results are an encouraging start to the year and demonstrate continued progress across our execution priorities, Chief Executive Bob Diamond said in a statement on Thursday. Shares in the bank were up 2.4 percent to 215.8 pence at 0830 GMT. However, Barclays made a statutory pretax loss of 475 million pounds, compared with a 1.655 billion profit the year before, including a 2.6 billion pound accounting loss on the value of its own debt and an extra 300 million pound charge to cover for mis-selling of payment protection insurance (PPI). Losses on bad debts dipped to 778 million pounds in the first quarter, down 16 percent on a year ago.

YES Bank Q4 net up 34%

Led by a robust growth in non-interest income, private sector lender YES Bank on Wednesday reported a 33.6 per cent jump in net profit for the quarter ended March 31, 2012, to Rs 271.8 Cr. Its non-interest income grew 42.6 per cent, to Rs 266.4 Cr. compared with Rs 186.8 Cr. in the same period a year ago. In the same period last year, the lender had reported a net profit of Rs 203.4 Cr. “The bank has achieved sustained profit growth of 34.4 per cent on the back of steady NII growth, and a continued focus on revenue diversity, leading to strong non-interest income growth,” said Rana Kapoor, managing director & chief executive officer, YES Bank. Net interest income grew 28.6 per cent to Rs 448.2 Cr. whereas total income of the bank stood at Rs 714.6 Cr. up 33.5 per cent compared with the corresponding quarter a year ago. The bank maintained its net interest margins at 2.8 per cent while the capital adequacy ratio stood at 17.9 per cent. However, advances grew by 10.5 per cent and deposits were higher by seven per cent during 2011-12. “This year has been tough and hence, we consolidated our balance sheet so that we are well positioned to capitalise on the improvements in the macro-economic environment. In the current financial year, we would be growing our advances by at least 17 per cent, as projected by the Reserve Bank of India in its annual monetary policy,” Kapoor said. The bank’s loan loss coverage ratio was at 341 per cent, and specific provisioning cover was at 79.2 per cent as at March 31. Total restructured advances was at 0.53 per cent of gross advances as at March 31, 2012, and gross NPA came down to 0.22 per cent from 0.23 per

cent a year ago. For the year ended March 31, 2012, YES Bank has posted a growth of 34.25 per cent in net profit of Rs 976 Cr. against Rs 727 Cr. for the year ended March 31, 2011.

LIC Housing Finance Q4 net slides 19%

LIC Housing Finance Ltd (LICHFL) on Wednesday said it had posted a 19 per cent dip in net profit for the fourth quarter ended March 31, at Rs 253 Cr. on higher borrowing costs and provisioning. The city-headquartered life insurance giant LIC’s housing finance subsidiary’s net profit for the corresponding quarter in the last financial year was Rs 314 Cr. “Our net profit went down due to higher cost of borrowing with interest rates being elevated, and a Rs 150-Cr. jump in provisioning due to revised norms announced by National Housing Bank,” LICHFL Chief Executive V K Sharma told reporters here. Additionally, last year the company had a one-time income of Rs 169 Cr. from stake sale in a mutual fund business, he said. The company’s scrip closed down 0.04 per cent at Rs 258 on the BSE, whose 30-share index ended 0.3 per cent down at 17,151 points. Sharma said the net interest margin (NIM) registered an improvement sequentially — from 2.3 per cent in Q3 to 2.4 per cent in Q4 — but was down year-on-year when it stood at 3.08 per cent. He sounded confident of regaining lost ground and touch three per cent as the quantum of loans given under floating rate increases and rates soften. The company’s cost of funds moved to 9.2 per cent in the March quarter from eight per cent of the last financial year and 9.4 per cent in the December quarter. For the entire financial year as well, LICHFL’s net profit was down six per cent to Rs 914 Cr. The company was able to squeeze its net non-performing assets ratio to 0.4 per cent of the total assets compared with 0.5 per cent in the year-ago period.

IDBI Bank Q4 net up 49%

IDBI Bank’s net profit rose 49 per cent at Rs 771 Cr. for the fourth quarter ended March 2012, on better growth in fee-based income and lower provision for bad loans. Its net profit for quarter ended March 2011 was Rs 516 Cr. The public sector lender’s net profit for FY12 rose by 23.15 per cent to Rs 2,032 Cr. from Rs 1,650 Cr. a year ago. The total income rose to Rs 25,489 Cr. from Rs 20,685 Cr. in FY11.

Exim Bank net up 15.6% in FY12

Export-Import Bank of India reported a 15.6 per cent increase in net profit at Rs 675 Cr. in the year ended March 31, 2012, against Rs 584 Cr. in the corresponding year-ago period. In FY12, the loan portfolio of the development financial institution (DFI) increased by 18 per cent (or by Rs 8,489 Cr.) to Rs 54,530 Cr. Overseas investment assistance was approved to 54 corporates aggregating Rs 4,178 Cr. for part-financing their overseas investments in 23 countries during the year. Last year, the DFI extended overseas investment assistance to 64 corporates aggregating Rs 8,325 Cr. for part-financing their projects in 28 countries. The bank extended lines of credit aggregating $1.499 billion ($2.378 billion in FY11) to support export of projects, goods and services from India. According to Mr. T.C.A. Ranganathan, Chairman and Managing Director, Exim Bank, the bank will maintain a steady 18 per cent growth in its loan portfolio. The thrust will be on financing micro, small and medium enterprises in various clusters across the country. Mr. David Rasquinha, Executive Director, Exim Bank, said this year the bank will be borrowing almost the same quantum of funds as it did last year. It borrowed Rs 27,630 Cr. in FY12 — Rs 14,297 Cr. in rupee debt and foreign currency borrowing equivalent to Rs 13,333 Cr. In FY12, the bank tapped the Japanese retail bond market by issuing ‘Uridashi bonds'. It raised $124 million equivalent.

INTERERSTING TO KNOW

Multitasking has become a way of life - and work - for many of us. Most of us consider it an acquired skill. We check mails while on a conference call. Talk on the cell phone while driving. Doing two or three things at once is almost second-nature now. But multitasking is not the most efficient use of brain power. In fact a series of recent studies using brain imaging has ascertained that multitasking has a cost in terms of efficiency, learning, and neural activity devoted to each task. Dr. Praveen Gupta, head neurologist at Artemis Hospitalsays that multitasking can in fact tax the brain with over stimulation. "Human brain has a finite working memory. Multitasking can interfere with the brain activity leading to lack of efficiency," he says. The best way to improve your cognitive fitness at work is to handle one task at a time. It will also help if you set yourself a defined time band. Mapping the Brain: Just like computers have different circuits, so does the human brain. There are various functional areas in our brain allotted to their defined roles. "When it's unable to handle pressure it can start causing memory loss," says Dr Gupta. Neuroscience tells us that only we can affect how our brain works. At work, or otherwise, you can increase your chances of maintaining your mental edge and functional independence throughout your life. How? By working on cognitive fitness, meaning fitness at all levels - physical, mental and emotional. "Diet plays a vital role in cognitive stimulation," says Dr. Surbhee Soni, clinical psychologist, Fortis Healthcare. According to Dr .Soni, one of the best ways to stay mentally alert at work is to drink lots of water and avoid too much caffeine and nicotine as it affects the neurotransmitters. "Caffeine may provide instant boost but it also leaves the body dehydrated," she says. Or you can take a walk around the office. Eat 5-6 small meals during the day to keep your energy levels up. Dr Gupta advises doing one thing at a time so that you stay focussed. "Even writing down tasks helps as it defines the goals and creates an organised subset in our mind without mixing or interfering one task with another," he says. When making the 'to-do' list assign priorities - it will help you organise tasks in your mind. Set small targets for the day and complete them first before moving on to others - this gives you a sense of satisfaction and completion, says Dr. Soni. The one thing that you need to be careful about is stress. "Stress overloads the brain. A stressed-out brain becomes oblivious to the external environment and loses the power of recall and retention," he says. The only way to beat stress is to train your brain. Here's where you start. Brainy Points Eight ways to boost your brain power while at work 1. Handle the Mundane Stuff You have to file for your arrears or that claim from last year's travel. Don't postpone. Getting the mundane paperwork out of the way clears up your mind 2. Put it in Writing Write down your goals - daily tasks or long-term ones, of course separately. It makes them more meaningful and boosts you to work towards ticking the list off. Adding a why to long-term goals acts as a real motivator 3. Stop Multitasking Multitasking is not the most efficient use of brain power. A series of recent studies confirm that it actually costs in terms of efficiency, learning and neural activity 4. Set a Timeframe Once you have set goals, it's best to assign it to a time band - in hours for short-term goals and months/years for long-term ones. It will help you set your agenda and keep the brain focused on the tasks ahead 5. Level of Physical Activity Daily exercise will of course boost your body as well as your brain. But the key question is how active are you at work. Keep a mindful eye on how many

minutes did you walk at work today - maybe taking a call while walking around or taking the stairs instead of the lift - little things count 6. Keep the Mind Busy At the end of the work day, ask yourself: what new thing I learnt today? What routine task did I approach differently? Did I challenge my mind? Did I do anything just for fun? Reading constantly can also improve your skills 7. Manage Your Stress Levels Stress is the biggest brain killer. Keep a watchful lookout on your stress levels. Identify what stressed you the most at work today, find out why and then assess your reaction. If it persists, follow corrective measures to tackle it. It's important to give your brain some me time - listen to music, read or enroll into a new class - anything that gives the neurons a break, call it a mental sauna 8. Sharpen Your Skills If your organisation allows cross-functional movement, try and challenge yourself. Decide carefully on the new skillset that will be complementary to your existing one Eat Smart No need to pop a pill, here are eight natural brain foods B Vitamins All B vitamins help boost the brain but Inositol, choline and B6 help to sharpen your memory and reduce stress. Take 50-100 mg of B complex supplements everyday Cinnamon It's a memory enhancer and helps prevent your blood sugar level from rising - one of the causes of brain fog that happens when you eat sweets Turmeric Turmeric contains an anti-inflammatory property called curcumin, helps to boost the memory by protecting your brain cells

Rosemary Rosemary is rich in carnosic acid, a chemical that shields your brain from the damaging effects of free radicals. Eat 4-6 gm of rosemary a day Gingko Biloba Gingko biloba is another herb which enhances blood circulation in the brain. This stimulates the brain to work at its best. But it has to be taken under medical supervision Omega 3 Fatty Acids Omega-3 fatty acids - found in fish - are good for the brain because they help to fight depression, slow brain ageing and help your brain to work faster Vitamin C Vitamin C works to protect your brain from free radicals and helps enhance the flow of oxygen to your brain. Take 90 mg daily

RBI THIS WEEK

Guidelines on Credit Default Swaps (CDS) for Corporate Bonds-Permitting All India Financial Institutions

A reference is invited to our circular IDMD.PCD.No.5053/14.03.04/2010-11 dated May 23, 2011 enclosing the Guidelines on Credit Default Swaps for corporate bonds. As indicated in paragraph 2.1.1 of the guidelines, commercial banks, PDs, NBFCs, mutual funds, insurance companies, housing finance companies, provident funds, listed corporates and foreign institutional investors (FIIs) are permitted as users in the CDS market. 2. It has now been decided to permit All India Financial Institutions, namely, Export Import Bank of India (EXIM), National Bank for Agriculture and Rural Development (NABARD), National Housing Bank (NHB) and Small Industries Development Bank of India (SIDBI) to participate in the CDS

market as user to hedge the underlying credit risk in corporate bonds in their portfolio. 3. All other terms and conditions of the circulars IDMD.PCD.No.5053/14.03.04/2010-11 dated May 23, 2011 and IDMD.PCD. 2302/14.03.04/2011-12 dated November 30, 2011 shall remain unchanged.

Priority Sector Lending-Indirect Finance to Housing Sector

Please refer to paragraph 6.4 of our Master Circular RPCD.CO.Plan.BC.10/04.09.01/2011-12 dated July 1, 2011 on lending to priority sector. 2. Pursuant to the announcement made by Union Finance Minister in the Union Budget for the year 2012-13, it has been decided to increase the limit from Rs.5 lakh to Rs.10 lakh for the bank loans extended to non-governmental agencies, approved by NHB for their refinance, for on-lending for the purpose of construction/reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers. 3. The revised limit is applicable to the bank loans sanctioned from the date of this circular.

Monetary Policy Statement 2012-13 -Exposure to Housing, Real Estate and Commercial Real Estate - Primary (Urban) Co-operative Banks

Please refer to our Circular UBD.BPD.(PCB). Cir. No.47/13.05.000/2010-11 dated May 11, 2011, on the above subject, advising UCBs that their exposure to housing, real estate and commercial real estate loans should be limited to 10 percent of their total assets which could be exceeded by an additional 5 percent of total assets for housing loans to individuals up to ` 15 lakh. 2. As announced in the Monetary Policy Statement 2012-13 (para 76 - extract appended), UCBs would, henceforth, be permitted to utilise the additional limit of 5 percent of total assets, referred to in para 1 above, for grant of housing loans to individuals upto ` 25 lakh, which is covered under the priority sector. 3. All other instructions regarding grant of loans by UCBs to Housing, Real Estate and Commercial Real Estate sectors remain unchanged.

Intra-bank Deposit Accounts Portability

It has been brought to our notice that some banks are insisting on opening of fresh accounts by customers when customers approach them for transferring their account from one branch of the bank to another branch of the same bank. Such insistence on opening of fresh account or making the customer undergo full KYC process again causes inconvenience to them resulting in poor customer service. It is not reasonable in view of the fact that most bank branches are now on CBS and KYC records of a particular customer can be accessed by any branch of the bank. 2. Banks are advised that KYC once done by one branch of the bank should be valid for transfer of the account within the bankas long as full KYC has been done for the concerned account. The customer should be allowed to transfer his account from one branch to another branch without restrictions. In order to comply with KYC requirements of correct address of the person, fresh address proof may be obtained from him/her upon such transfer by the transferee branch. It may be noted that instructions regarding periodical updation of KYC data in terms of para 2.4(e) and those on maintenance of records of identity and transaction in terms of para 2.21(iii) of our Master circular DBOD.AML.BC. No.2/14.01.001/ 2009-10 dated July 01, 2011 remain unchanged and banks will be required to carry out the updation at prescribed intervals as also maintain records of transactions and verification of identity as prescribed.

IMF THIS WEEK

Transcript of the G24 Press Briefing (Excerpts) Speakers: Mr. Pranab Mukherjee, Finance Minister, India Mr. Kaushik Basu, Chief Economic Adviser, Ministry of Finance, India Mr. Ayman Alkaffas, Alternate Executive Director of the World Bank

Mr. Carlos Perez-Verdia, IMF Executive Director for Mexico Mr. Amar Bhattacharya, G-24 Secretariat

MR. ADRIANO: Good afternoon. I would like to introduce you to the participants of this conference. Minister Pranab Mukherjee from India, Finance Minister of India, Mr. Kaushik Basu, Chief Economic Adviser of the Ministry of Finance of India, Mr. Ayman Alkaffas, Alternate Executive Director of the World Bank, Mr. Carlos Perez-Verdia, Executive Directors for Mexico in the IMF, and Mr. Amar Bhattacharya, G-24 Secretariat. Minister Mukherjee will make some opening remarks and then we will open up for your questions.

MR. MUKHERJEE: Good evening. The G-24 Minster [Spanish interpreter on English channel]--today, and discussed the global economic reform of international financial institutions, and infrastructure financing and sustainable development.

We had frank and fruitful discussions amongst ourselves, including a brief interaction with the Managing Director of the IMF and the President, World Bank. As part of the initiative to enhance the role and effectiveness of the Group, we also had a briefing on the G-20 under the Mexican Presidency. Our communiqué shows that, despite the diversity of the Group, we can find common ground. On the global economy, we remained concerned about the fragility of the economy. Recent policy actions have reduced states from the euro area, but downside risks remain high, including from high and uncertain prices. The subdued global growth has adverse impact on growth in many emerging markets and developing countries.

We believe that immediate and concerted actions are needed to restore confidence and boost growth with a focus on job creation and an effective and affordable social safety nets that protects the poor and vulnerable. We call for the timely and full delivery of the ODA commitments to low-income countries. On management of the capital flows, we have strong reservations on the integrated approach proposed by the IMF staff and insist that policymakers must have the flexibility to adopt policies that they consider appropriate to deal with the capital flows. We also call for actions to mitigate excess volatility in commodity prices, both for food and energy, which is undermining growth.

On the international financial institutions, we stress that the forward-looking commitments on IMF quota and governance reform must be made on a full and timely basis. We welcome ongoing efforts to ensure that the IMF has the necessary resources to play its role but it should remain a quota-based institution. We are concerned that the World Bank lending is projected to decline at this critical juncture because of the constrained financial capacity. We therefore call for new solutions to bolster the financial capacity of the Bank and IFC. We also ask the Bank to improve its responsiveness through more flexible and innovative policies and instruments. We ask the Bank to remain engaged with the middle-income countries and to scale up resources and technical assistance for the development needs of MENA countries in transition. We recognize, for the first time in the history of the Bank, that there was a contest for the selection of the President, and two outstanding candidates from developing countries represented. We congratulated Dr. Jim Kim on his selection and explained our support to him. We believe that to realize our growth potential, a substantial increase in investment in infrastructure is required. We call for the efforts to strengthen the existing architecture of global, regional, and national institutions, and to enhance PPPs and private sector involvement. We also look forward to the review called for by BRICS leaders to explore the feasibility and viability of a new development bank for mobilizing resources for infrastructure and sustainable development projects in emerging markets and developing countries. Thank you.

IMF lowers India's growth forecast to 6.9% on investment slowdown

NEW DELHI: Cautioning that governance concerns have weakened business sentiment in the country, the IMF today lowered India's growth projection to 6.9 per cent for

2012. The International Monetary Fund (IMF) in January pegged Indian economic growth to expand 7 per cent for this year. "In India, the lowered growth outlook in 2012 owes much to a slowdown of investment which partly reflects structural factors," the multilateral agency said. IMF called for renewed efforts to revive the "flagging" structural reform agenda. Apart from some financial reforms and measures to broaden the use of public-private partnerships announced in the 2012-13 budget, the implementation of reforms related to infrastructure is likely to proceed slowly, it noted. IMF's Asia-Pacific Regional Economic Outlook released today also pointed out that domestic factors too have played a role in India's growth slowdown over the second half of 2011. "Concerns about governance and slow project approvals by the government have weakened business sentiment, which in turn has adversely affected investment, along with cyclical factors such as global uncertainty and policy tightening...," IMF said. However, the multilateral agency has retained India's growth estimate at 7.3 per cent for 2013. As per the IMF, the national economy grew by 7.1 per cent last year.

Government to fork out $11 billion for higher IMF quota

NEW DELHI: India's mission to sit at the high table of global finance is going to cost a pretty packet. The government will shell out over $11 billion to buy a bigger quota in the International Monetary Fund, or IMF. This will give India a greater say in the affairs of the multilateral lender. Meanwhile, India continues to battle slowing capital flows and a growing fiscal deficit. Experts say though costly, this is a money well spent. "This money is an investment,'' said Nagesh Kumar, chief economist with UN-Escap. "India is a responsible nation with a growing clout, so it will also have to share some global responsibility." Under the IMF's quota reforms of December 2010, developing countries will see a more than 6% shift in quota in their favour. India's vote share is expected to rise 2.69% from the current 2.34% once the quota reforms are approved. The government says not all of the Rs 56,469-Cr. budget for quota subscription in 2012-13 has to be paid in cash to the IMF. "The net cash outgo will be about Rs 14,000 Cr." a government official said. The government is budgeted to net borrow Rs 4.7 lakh Cr. in the current fiscal to meet excess spending, yielding a fiscal deficit of 5.1% ofGDP. Many analysts believe this target could be breached. Under current IMF rules, up to 25% of the quota amount has to be paid in SDRs, the fund's currency, or in USdollar, euro, yen or pounds sterling. The balance is to be paid in Indian rupees. According to this formula, 25% of the subscription, or Rs 14,000 Cr. will have to be paid to the IMF in hard currency. This will mean nearly $3 billion in foreign exchange outflow at a time capital flows are slowing down. India will pay the balance Rs 42,000 Cr. in local currency bonds.

IMF joins clamour for bail-in for bank debt as EC paper nears LONDON: The International Monetary Fund (IMF) became the latest international body to back the notion of bail-ins for bank debt this week, reigniting the debate on the topic ahead of the presentation of proposals on the subject by the European Commission in the coming weeks. The IMF paper entitled "From bail-out to Bail-in: mandatory debt restructuring of systemic financial institutions" will give further weight to the E C proposals on an EU bank resolution regime scheduled for presentation ahead of the G20 summit in June.. However, market participants have been growing increasingly frustrated by the lack of key details which would enable them to adapt to upcoming changes. "I think we will have bail-ins, but I'm not sure the mechanism will be wholly workable," said Bob Penn, a partner at Allen & Overy. "A huge array of issues still need to be dealt with. For instance, the fact that bail-inable debt will have an embedded equity option has many consequences. Some issues may look marginal, but are in fact important for the bail-in tool to work and for bail-inable debt to be marketable." In his view, a badly constructed bail-in power has the potential to freeze the bank debt market on implementation.

IMF calls on Asia to prepare to tighten policies KUALA LUMPUR: The IMF said Friday Asia should be ready to tighten monetary policies if overheating pressures emerge, while remaining alert to any future shocks from a still volatile

global climate. The International Monetary Fund said in its World Economic Outlook report earlier this month that Asia's growth prospects had dimmed but the region would avoid a hard landing this year thanks to strong domestic demand and monetary flexibility. Regional growth would flatten out at six per cent this year, from 5.9 per cent in 2011, before reviving to 6.5 per cent in 2013, it said, still much ahead of growth rates in the advanced economies. But Anoop Singh, director of the IMF's Asia Pacific department, warned Friday that export-dependent Asia could be hit should there be another slump in advanced economies, as well as by volatile commodity prices, especially high oil prices, and volatile capital flows. "Continued volatility are the risks I see for Asia looking ahead," Singh said when launching IMF's Regional Economic Outlook, a separate report following the World Economic Outlook, in Kuala Lumpur. He added "overheating pressures" could develop in the second half of this year so that policymakers should be ready to adjust their policies to support stable, non-inflationary growth. "In the short term, assuming that market conditions continue to stabilise, as they have in the last few months, there is a concern that overheating pressures could again begin to assert themselves in Asia," he said. He said core inflation in many countries was still "quite high." He added it was also important for Asia, especially China, to further develop domestic demand and attract investment. The IMF's World Economic Outlook report for 2012 said recessions in Europe and turmoil in the Middle East had hit Asia's export markets, forcing downward revisions to regional growth forecasts.

WORLD BANK THIS WEEK

People's Bank of China and World Bank Sign Agency Agreement

Washington DC, The Governor of the People's Bank of China (PBC), China's central bank, Mr. ZHOU Xiaochuan, and the President of the World Bank Group, Mr. Robert B. Zoellick, signed an Agency Agreement in Washington DC today that allows the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) to invest in China's Interbank bond market. This agreement enables the World Bank to participate in the development of China's fixed income market by investing in Chinese fixed income products. It also allows the World Bank to potentially develop and offer Renminbi-denominated products to its borrowers.

BASLE THIS WEEK

New standards for financial market infrastructures issued by CPSS-IOSCO

The Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) have today published three documents that promote global efforts to strengthen financial market infrastructures (FMIs):

a report entitled Principles for financial market infrastructures; 1 a consultation paper on an assessment methodology for these new standards; and a consultation paper on a disclosure framework for the standards.

New and more demanding international standards for payment, clearing and settlement systems, including central counterparties, have today been issued by the CPSS and IOSCO in a report titled Principles for financial market infrastructures. Among other things, the standards will provide important support for the G20 strategy to make the financial system more resilient by making central clearing of standardised OTC derivatives mandatory. CPSS and IOSCO members will strive to adopt the new standards by the end of 2012. Financial market infrastructures (FMIs) are expected to observe the standards as soon as possible. The new standards (called "principles") replace the three existing sets of international standards set out in the Core principles for systemically important payment systems (CPSS, 2001); the Recommendations for securities settlement systems (CPSS-IOSCO, 2001); and the Recommendations for central counterparties (CPSS-IOSCO, 2004). CPSS and IOSCO have strengthened and harmonised these three sets of standards by

raising minimum requirements, providing more detailed guidance and broadening the scope of the standards to cover new risk-management areas and new types of FMIs. The new principles are designed to ensure that the infrastructure supporting global financial markets is robust and thus well placed to withstand financial shocks. They apply to all systemically important payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories (collectively "financial market infrastructures"). These FMIs collectively clear, settle and record transactions in financial markets. "FMIs performed well during the financial crisis and we gained a deeper understanding of their true importance. Robust FMIs help markets to continue functioning even in conditions of great uncertainty, making them a fundamental element of financial stability," said Masamichi Kono, Vice Commissioner for International Affairs, Financial Services Agency, Japan and Chairman of IOSCO's Technical Committee. William C Dudley, President, Federal Reserve Bank of New York and a co-chair of the CPSS-IOSCO work on the standards, noted that "Under the new regime of central clearing for standardised OTC derivatives trades, the role of FMIs will become even more important in the future. The principles provide an important safeguard that FMIs will be robust enough to take on this role". Paul Tucker, Deputy Governor, Financial Stability, Bank of England and CPSS Chairman, added that "With these new principles, authorities have a good basis on which to ensure a safe and stable financial infrastructure. It is essential that authorities adopt the principles, and FMIs observe them, as soon as possible".Compared with the old standards, the new principles introduce new or more demanding requirements in many important areas including:

• the financial resources and risk management procedures an FMI uses to cope with the default of participants;

• the mitigation of operational risk;

• the links and other interdependencies between FMIs through which operational and financial risks can spread;

• achieving the segregation and portability of customer positions and collateral; tiered participation; and

• general business risk.

The steering group that carried out the work on behalf of the CPSS and IOSCO was chaired by William C Dudley (see above), Masamichi Kono (see above; since August 2011) and Kathleen Casey (former Commissioner of the Securities and Exchange Commission (SEC), US; until July 2011). The editorial team that drafted the reports was chaired by Daniela Russo (Director General, European Central Bank) and Jeffrey Mooney (Assistant Director, SEC, US). The principles were issued for public consultation in March 2011. The finalised principles being issued now have been revised in light of the comments received during that consultation.

INTERNATIONAL NEWS

New Delhi to host ADB board meet in 2013 Delhi will host the 46th annual meeting of the board of governors of the Asian Development Bank (ADB) in May 2013, Finance Minister Pranab Mukherjee said while releasing the logo of the event in the national capital on Saturday. The logo, designed by the National Institute of Design, Ahmedabad, is based on the tribal motifs of central India, signifying the cycle of life. The annual meeting will provide a valuable opportunity for brain-storming and exchange of ideas among intellectuals and policy makers from across Asia and the world, Mukherjee said. The theme of the meet is 'Development through Empowerment'. It focuses on issues that are critical for sustaining high and inclusive growth in Asia. The two-day event, scheduled for May 2 and May 3, 2013, is expected to receive around 4,000 participants from 67 countries. Economists, investors, bankers, corporate leaders and nobel laureates are

expected to participate in the event. Given the size and scope of the meet, the government has also invited industry bodies - Confederation of Indian Industry (CII), Associated Chambers of Commerce and Industry of India (Assocham) and Federation of Indian Chambers of Commerce and Industry (FICCI) - to be partners in the event. India's association with the ADB dates back to 1966 as one of its founder members. ADB's lending operations in India commenced two decades later in 1986, and India has just completed 25 years of partnership with the institution. This will be the third time that India will be hosting the annual meeting of ADB. The first time the event was held in Delhi in 1990, while the second time it was organised at Hyderabad in 2006. This time, it will be held in Greater Noida. Rabobank sells 3.4% stake in Yes Bank for Rs 453 Cr.

NEW DELHI: The Netherlands-based Rabobank today sold about 3.4 per cent stake in the private sector lender Yes Bank for about Rs 453 Cr. Rabobank sold 1.26 Cr. shares of Yes Bank for Rs 357.03 apiece through an open market transactions. Of this, Bajaj Allianz Life insurance picked up 25.2 lakh shares, while Citigroup Global Markets Mauritius picked up 22 lakh shares at Rs 357 per unit, according to the BSE data. Rabobank owned about 1.67 Cr. shares or 4.73 per cent stake in Yes Bank at the end of March 31, 2012. Shares of Yes Bank closed at Rs 357.10 on the BSE, down 2.54 per cent. In 2010, Rabobank had sold about 11 per cent in Yes Bank and had thus reduced its stake in Yes Bank from around 15.9 per cent to 4.9 per cent, it said. Rabobank has been reducing its stake in Yes Bank as it plans to enter banking space on its own in the country. As per Indian banking regulations, a foreign bank that holds a stake in a domestic bank cannot simultaneously have independent operations.

India, Pakistan to allow each other's banks to set up branches across the border

NEW DELHI: State Bank of India can look forward to crossing the border 47 years after it had to shut its branches in Karachi and Lahore in the wake of the India-Pakistan war. The troubled neighbours are set to allow banks from both sides to open branches in each other's territory amid a renewed attempt at reviving relations. The two central banks - Reserve Bank of India and State Bank of Pakistan - are readying to invite applications from interested commercial banks, following a meeting of their officials earlier this month when they sorted out most prickly issues. These included the high capitalisation requirement for banks in Pakistan, which Indian lenders find steep, an official privy to the talks told ET, adding that a joint announcement can come as early as next month during the meeting of the commerce secretaries. "There were some differences on the financial parameters for eligibility of banks as the Pakistani side had kept capitalisation norms too high. But the requirement has been scaled down now and the norms have been finalised," the official said. The two sides have also reached an agreement on the licensing fees that banks will have to pay, the official added. The modalities will now be circulated to banks, which will then put in applications depending on the feasibility of the proposal. Public sector banks State Bank of India and Bank of India had their branches in Karachi and Lahore till 1965, when India and Pakistan went to war for five weeks and all cross-border banking operations had to be suspended between the neighbours. State Bank of India and Bank of India approached the State Bank of Pakistan in September 2008 seeking permission to start branches again, but got discouraged due to the high capitalisation requirement.

Bank of Japan boosts stimulus again, but fails to impress markets

TOKYO: The Bank of Japan (BoJ) boosted its asset-buying scheme by a further 10 trillion yen ($124 billion) on Friday and pledged to buy longer-term government bonds in a move seen aimed at convincing both impatient politicians and investors of its resolve to pull the

economy out of deflation. The central bank also kept expectations of more stimulus alive as it pledged to "pursue powerful monetary easing" to reach its 1% inflation target, even as it nudged up its growth and price forecasts for the coming years. The policy easing came at the top of an expected 5-10 trillion yen range and initially impressed markets, pushing the yen lower. The central bank's decision to buy more exchange-traded funds (ETFs) and real-estate-linked funds also helped lift Tokyo shares But the yen later crept back up and stocks slipped as some market players saw the Bank of Japan's (BoJ) decision to give itself more time to hit the bond-buying goal as a sign that central bankers themselves had doubts about how much good their action would do for the struggling economy. "The leopard doesn't change its spots. It (the BoJ) doesn't view monetary accommodation as a cure capable of reversing Japan's deflation," said Tim Condon, chief Asia economist at ING in Singapore. "They seem motivated by politics and political pressure in these last couple of moves... so I think they will do the minimum that they feel they are forced to do." BoJ's second easing in just over two months comes at a time when the economy is picking up and was seen mainly as symbolic response to politicians' calls for more efforts in battling deflation that has dogged Japan for over a decade, depressing consumption and business investment. As expected, the central bank also extended the duration of government bonds targeted under its asset-buying scheme to three years from the current two years.

Credit Suisse shareholders reject bank's pay plan, Barclays seen next

LONDON/ZURICH: Almost a third of Credit Suisse shareholders rejected the bank's pay plan on Friday and UK rival Barclays was braced for a similar revolt as investors vented their fury at executive pay deals and called for a bigger slice of profits. Credit Suisse said 31.6 pct of investors who voted opposed the bank's remuneration plan, the latest in a series of rebukes for top banks over pay, but still allowing the non-binding vote to pass. Annual shareholder meetings were stormy at both Credit Suisse and Barclays, with many attendees complaining bosses are getting too big a slice of bank income at their expense. Anger is also rife in the population at large that an industry whose excesses sparked the global economic downturn is still awarding its leaders multi-million dollar pay outs. "People feel that bankers and the banking sector have lost touch with what's real," said Jim Arnott, 56, an executive coach in London who counts bankers among his clients. "The majority of people feel it's just a culture of greed." Credit Suisse chief executive Brady Dougan sought to head off criticism on pay in his address to around 1,700 investors. "I recognize that this can be a very controversial topic ... However, having the right policies and structures in place is particularly important for a global bank, which is dependent on experienced and highly qualified people," he said. But shareholders proved more angered than appeased by a 30-minute lecture on the bank's pay practices by Aziz Syriani, who heads the board's compensation committee. "You should be ashamed of yourselves for taking so much money away from us. We are the owners of this bank, and you are our employees. We should be the ones who decide what you earn," said Rudolf Weber, to applause from other shareholders.

28.04.2012

BY VASANT PONKSHE

SECRETARY

AIBOA

MOBILE 9422319827