Syndicate Bank to get Rs 539 cr fund infusion from govt

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

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

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

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

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

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

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

Source: Business Standard

Syndicate Bank Q3 net profit rises 32%

Syndicate Bank's net profit grew 32 per cent during the third quarter of this fiscal on the back of higher net interest income and operating profits.

The bank's net profit for the period stood at Rs 1,004 crore (Rs 759 crore), while net interest income was Rs 1,325 crore (Rs 1,150 crore).

The bank's operating profit grew 30 per cent to Rs 2,556 crore (Rs 2,078 crore).

Other income increased by 17 per cent to Rs 776 crore (Rs 660 crore), mainly due to an increase in fee-based income, said a press release from the bank.

Gross NPAs (non-performing assets) declined to 2.29 per cent (2.32 per cent), and net NPAs to 0.86 per cent (0.95 per cent). The bank's provision-coverage ratio stood at 78.5 per cent.

anju@thehindu.co.in

SBI to get Rs 6,000 cr fresh capital via pref issue before fiscal-end

The government has agreed to infuse up to Rs 6,000 crore fresh capital into State Bank of India through a preferential issue before the fiscal-end, the bank Chairman, Mr Pratip Chaudhuri, said here today.

“We will be having a preferential issue and will be getting capital through it,” Mr Chaudhuri told PTI when asked about the progress on its proposed recapitalisation.

When asked what could be the quantum of infusion, he said: “The size will be Rs 5,000 to Rs 6,000 crore.”

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

SBI’s total capital adequacy ratio stood at 11.4 per cent as of September quarter, of which core Tier-I capital stood at 7.7 per cent, below the 8 per cent-level desired by the government.

Rights issue

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

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

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

Fund infusion

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

“As part of increasing its stake to the mandated 58 per cent, the government has agreed to pump in Rs 775 crore into the bank. The fund infusion will happen before the end of the fiscal,” Bank of Baroda Chairman and Managing Director, Mr Mallya, told PTI last month-end, adding that this would be done by way of a preferential issue.

In March last year, the Government pumped Rs 2,675 crore into BoB, increasing its stake to 57.3 per cent from 53 per cent earlier. With the infusion of Rs 775 crore, government ownership in the bank will touch the mandatory 58 per cent level, Mr Mallya added.

Union Bank also said that it would be recapitalised by the government this fiscal. UBI said it would receive a capital infusion of Rs 280 crore from the government.

Last week, a Finance Ministry official said the government would be pumping Rs 17,000 crore into various state-run banks this fiscal. This makes the additional requirement Rs 11,000 crore, which the official said would be met through a supplementary demand.

The FY’12 Budget had earmarked only Rs 6,000 crore for the recapitalisation of state-run banks in the current fiscal. The other banks that are likely to get a fresh capital infusion are IDBI Bank and Syndicate Bank, among others.

In 2010-11, the government had provided capital support worth Rs 20,157 crore to various public sector banks.

A committee headed by Finance Secretary, Mr R.S. Gujral, is working out a strategy for the capitalisation of public sector banks over a period of next 10 years to meet Basel III requirements, under which the 26 state-run lenders would need Rs 3.6 lakh crore in fresh capital.

Ensure rotation of officials in sensitive posts: CVC to banks

Concerned with instances of alleged irregularities in public sector banks, the Central Vigilance Commission has directed them to ensure timely rotation of officials working in sensitive posts to check corruption and avoid “vested interest“.

The anti-corruption watchdog has also told the Chief Vigilance Officers (CVOs) of the banks to strictly comply with its orders and to furnish an action taken report in this regard every month.

It said that all CVOs were asked to identify the sensitive posts which were prone to corruption and to ensure that “officials posted on sensitive posts are rotated every two/three years to avoid vested interest“.

The CVC noted that its earlier instructions in this regard were not being strictly followed which is a matter of “serious concern“.

“The Commission would once again emphasise that periodical rotation of officials holding sensitive posts/jobs especially at senior levels need to be ensured,” the Commission said in a recent directive to the CVOs of public sector banks.

“As such, officials should not be retained in the same place/position for unduly long periods in the guise of indispensability etc. by the Management of Public Sector Banks,” it said while directing the banks to “specifically mention the action taken report indicating the number of officials rotated/transferred in the Bank in the monthly report of CVOs to the Commission“.

The move assume significance as the CVC while dealing with a case pertaining to a public sector bank recently noticed that a high ranking official, who was associated with procurements etc, was posted in the department for an unduly long period which is against the spirit of the Commission’s guidelines.

CVC officials said that its directive also stands for central government departments and public sector units.

According to the probity watchdog’s latest monthly report for October 2011, major penalty was recommended against 53 officials of the public sector banks including Syndicate Bank, Canara Bank and Punjab National bank for their alleged involvement in corrupt practices.

Govt to interview 10 EDs for banks CMD post on January 4

MUMBAI: The appointments committee will interview executive directors of ten public sector banks on January 4, 2012 for CMD post in six banks.

The ten candidates called for the interview include S.S. Mundra from Union Bank of India, R V Iyer and Rajiv Dubey from Central Bank of India, Ashwini Kumar of Corporation Bank, Archana Bhargava from Canara Bank, V Kannan from Oriental bank of Commerce, Ravi Chatterjee from Syndicate Bank, Rajeev Rishi from Indian Bank, Ashwani Kumar from Corporation Bank and Rakesh Sethi from Punjab National Bank.

The candidates are being selected to fill vacancies in fiscal year 2012-13 in Bank of Baroda, Bank of India, Canara Bank, Dena Bank, Allahabad Bank and United bank of India.

Meanwhile, the government has yet to issue notification for the post of executive director in bank like Indian Overseas Bank and Andhra Bank, Even as the candidates names have been cleared.

Source: EconomicTimes

Syndicate Bank to open 200 ATMs soon

Syndicate Bank is planning to set up 200 ATMs in various parts of the country, according to its Executive Director, Mr M. Anjaneya Prasad.

Speaking after inaugurating the new premises of existing branch at Pathergatty here on Monday, Mr Prasad said the proposed ATMs would have advanced technology features such as biometric capabilities and touch-screen facilities.

Syndicate Bank now has over 2,550 branches and 1,100 ATMs spread across 574 centres across the country.

Mr Prasad also advised employees to get updated with the latest products and services of the bank so as to give the best customer service.

New accounts

There was a need to mobilise more number of new accounts, he added.

Syndicate Bank posted a net profit Rs 666 crore as against Rs 503 crore in the half-year ended September 30, 2011, marking a 32 per cent growth over the year-ago period.

The total business stood at Rs 2,55,286 crore, according to a release.

nagsridhu@thehindu.co.in

Syndicate Bank shortlists 4 for life insurance venture

Public sector lender Syndicate Bank has shortlisted four firms, three domestic insurance companies — Aviva Life, Reliance Life and Birla Sun Life - and a foreign insurer, Avantha Ergo, for its proposed venture in the life insurance space.

The bank is seeking a 'brand premium' of Rs 300-350 crore and a minority stake in the life insurance company, according to three people familiar with the development. The deal is likely to be finalised in the next couple of months.

According to sources, the bank would prefer buying a stake of around five per cent with an existing domestic life insurance company, instead of partnering a new player to launch a greenfield insurance venture, owing to capital constraints. “Syndicate Bank is likely to go with an existing player. This format would require less capital. It makes more sense to pick up a small stake in an existing company and get up-front fees for allowing distribution of insurance products through its branch network,” said a source, requesting anonymity, since the bank has not yet finalised its insurance partner.

In June, the Manipal-based lender had invited bids from insurance players and shortlisted a dozen insurance companies — nine existing players and three new firms.

A senior Syndicate Bank official confirmed the development. “The process is on. We are evaluating both brownfield and greenfield options. What we want is an efficient partnership. We don't want to use our capital to acquire a majority stake,” he said, adding the bank would follow in the footsteps of its rival Punjab National Bank (PNB), which had recently acquired 30 per cent stake in MetLife. “We are looking to buy a minority stake at a discount. That deal (PNB-MetLife) secured the regulatory approval. Hence, it makes sense to structure our deal in those lines,” the official said.

This transaction would be the third instance of a bank acquiring stake in an existing life insurance company. Axis Bank had bought four per cent stake in Max New York Life, with the deal size estimated at around Rs 75 crore.

Industry sources said in both the deals, the insurers had sold their equity at significant discounts. PNB is believed to have got a discount of Rs 750 crore as MetLife, valued at Rs 12-13 per share, sold its stake at Rs 1 a share.

Sources said Syndicate Bank was seeking a brand premium, since under the bancassurance model, banks' branch networks serve as low-cost distribution channels for insurance companies to sell their products.

A committee set up by the Insurance Regulatory Development Authority had, last week, come out with the draft guidelines on the bancassurance model. It had said banks could partner one insurance company per state in each segment — life, non-life and standalone health insurance. Current norms allow banks to tie up with only one insurance company across all states.

Source: Business Standard

Syndicate Bank ties up with ACMIIL

Mumbai, Oct 24:State-run Syndicate Bank today entered into a partnership with the brokerage firm ACMIIL to offer an online trading platform to its customers.

The Manipal-headquartered bank, which has 2.5 crore account holders, will, however, not charge any fees for offering the trading services to them, its Executive Director Mr M Anjaneya Prasad told reporters here.

The bank is carrying out a campaign to open more accounts to strengthen its share of the cheaper Casa (current and savings accounts) deposits and the tie—up will help the initiative, he said.

At present, the bank offers seven services free as part of the campaign and the trading service will become the eighth such service, Mr Prasad said.

The tie-up with Asit C Mehta Investment Intermediates (ACMIIL) will help the bank add 10 lakh new savings accounts to the existing 1 crore, he said.

SBI, Central Bank, Syndicate, Canara extend home loan tenor upto 30 years as rate hikes bite hard

MUMBAI: After goading by the Government and fearing risks to asset quality, a number of state-run banks, led by SBI, Central Bank, Syndicate and Canara, have decided to raise home loan tenors to 25 to 30 years or till the borrower touches 70, well past the working age.

State Bank of India took the lead and has reportedly decided to extend the tenor of home loans by 10 years or up to 30 years, while others are doing this on request.

"We have decided to increase the home loan tenure by up to 10 years to 30 years and up to the age of 70, depending on the customer profile. Our Managing Director (S Krishna Kumar), is likely to announce this tomorrow," a senior SBI official told PTI, requesting anonymity. Kumar, who heads the national banking vertical at SBI, could not be reached for comments.

Fearing more bad loans in the system as interest kept on rising following tight monetary policy being under taken by RBI, the Finance Ministry had recently written to the public sector banks (PSBs) to increase the loan tenor instead of increasing the monthly repayment (EMI) amount.

However, all the banks that PTI contacted for reaction on the issue, said this guideline has been in existence for many years now and they had been implementing it on case to case basis. Over the past 19 months, RBI has increased interest rate by 325 basis points (one basis point is one-hundredth of a percent) to 8.25 per cent to batten down stubbornly high inflation, which stood at 9.72 per cent in September.

Generally, home loans are scheduled for 20 years and in some cases up to 25 years, if the borrower will not be retiring by then at 65. Typically on an average, a 25 bps spike in interest rate can push up EMI for a 20-year loan by Rs 17 per lakh. With regular hikes by RBI, EMIs have been stretched too far.

The RBI has hiked policy rates by 325 basis points since March 2010, following which most banks have raised lending rates by up to 250-300 bps making loans dearer. Central Bank of India Chairman and Managing Director M V Tanksale, too, said his bank is open to requests from the borrowers over increasing loan tenors.

"The important question is the cash flow of the borrower, if it increases, he/she does not require an increase and vice versa. I think this has been a very proactive step on the part of the government to issue such a directive."

When contacted the Mangalore-based Syndicate Bank Chairman and Managing Director B Seth said, "we have always been giving this option to our customers, even before the Ministry's letter. The whole point is to keep our asset quality and we offer such options to customers on request."

Source: EconomicTimes

2 lakh savings accounts opened in Thiruvananthapuram

More than two lakh new savings bank accounts have been opened in Thiruvananthapuram district for crediting wages of workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme.

Indian Overseas Bank, the Lead Bank, is monitoring the performance of banks to ensure that payments do not get delayed.

This was announced during the 2nd District-Level Review Committee on Banking held here on Tuesday.

MORE BRANCHES

Banks were told to open more branches in the rural and semi-urban areas and deliver more credit for the development of the district.

Delivering the inaugural address at the meeting, Mr A. Sampath, Member of Parliament, requested them to devise schemes for encouraging the saving habit among students.

The MP also urged bankers to increase the flow of credit to women.

PRIORITY SECTOR

Ms Indira Padmini, Chief Regional Manager, Indian Overseas Bank (IOB) and Convenor, Lead Bank, delivered the introductory address.

Mr P. Thomas, Assistant General Manager, Reserve Bank of India, and Mr K. T. Thrivicraman, District Development Officer, National Bank for Agriculture and Rural Development, reviewed the performance of banks in the district.

Mr V. R. Muralidhar, Lead District Manager, and Mr R. Gireesh Kumar, Senior Manager, Lead Bank, Deputy/Assistant General Managers of various Banks, officers of various Government Departments spoke on the occasion.

Meanwhile, the meeting was told that financial institutions in the district have disbursed Rs 1,006 crore under the three major sectors of priority sector against the target of Rs 5,393 crore in 2011-12, representing achievement of 19 per cent.

Under the agricultural sector, the disbursements amounted to Rs 611 crore against a target of Rs 2,176 crore, recording achievement of 28 per cent.

ABOVE AVERAGE

Under the services sector, the banks disbursed Rs 364 crore (Rs 2,865 crore) while in the non-farm sector, which includes industrial credit, the disbursement is Rs 31 crore.

Among those achieving more than the district average were IOB, Canara Bank, Syndicate Bank, Union Bank of India, Indian Bank, Catholic Syrian Bank, Bank of Baroda and Tamilnadu Mercantile Bank. State Bank of Travancore and South Indian Bank achieved 18 per cent of the target. The Thiruvananthapuram District Co-operative Bank and other cooperative banks together disbursed Rs 3,293.84 crore against a target of Rs 1,288.26 crore (26 per cent).

The performance of the Kerala State Cooperative Agricultural and Rural Development Bank was not ‘up to the mark', the meeting was told.

Bankers have been extending support in the implementation of the National Rural Employment Guarantee Scheme in the district, the meeting was told.

RSETI TRAINING

The Rural Self Employment Training Institute (RSETI) opened here by the IOB with the help of Central and State Governments has been training women for entrepreneurship and skill development free of cost, especially for those taking up self-employment ventures.

During this week, the RSETI will launch mobile phone repairing, autorickshaw and car driving courses for women.

Total bank deposits in the district stood at Rs 32,327 crore and advances at Rs 26,704 crore. The Credit-Deposit ratio for the district is 83 per cent (up from 75 in the preceding quarter).

Syndicate Bank to partner UAS-Dharwad to help farmers

SyndicateBank plans to partner with the University of Agricultural Sciences-Dharwad to design and develop a rural model to help farmers store and process their farm produce .

According to Mr Basant Seth, Chairman and Managing Director of SyndicateBank, “Once the university comes out with a workable model, we will try to implement it by partnering with other universities in the country.”

“UAS-Dharwad has some novel projects and the bank will take its assistance in implementing it to strengthen the rural economy. At present, there is huge potential for banks like us in the rural areas,” he added.

Rural development officers

The bank, to strengthen its rural presence, has also initiated the process to recruit 750 rural development officers and along with it, posts of agricultural assistants are also expected to be filled.

Mr Seth speaking after inaugurating the two-day 6th national conference of the All-India SyndicateBank Scheduled Caste and Scheduled Caste Employees' Welfare Association, said steps were being initiated to make the functioning of the bank more transparent.

He also added that there were rules and systems in place and that the employees should be aware of them.

Inaugurating the conference, the Karnataka Rural Development and Panchayat Raj Minister, Mr Jagadish Shettar, underlined the importance of providing assistance to the poor and the needy.

About 1,200 delegates from across the country are participating in the conference.

The General Secretary of the association, Mr R.S. Barva, appealed to Mr Seth to look into those cases where association members are being harassed. The national chairman of the association, Mr K. Y. Nagaiah, presided over the function.

Mr D.S. Veeraiah, MLC; Mr G.L. Nagendrappa, chairman of the reception committee of the conference, Mr Sudhir Kini, Deputy General Manager of the bank, and others, were present on the occasion.