Indian Bank, United Bank on recruitment drive

Indian Bank is recruiting management trainees in the junior management grade scale I/probationary officers to fill up about 452 vacancies across the country.

The bank has specified that candidates with a graduate degree in any discipline and a total weighted standard score of 141 in the common written examination conducted by the Institute of Banking Personnel Selection (IBPS) are eligible to apply. The selection will be based on both the marks secured in the IBPS exam as well as interview/group discussion.

The minimum age requirement is 21 years while the maximum is 30 years. Applications have been invited online and are open from February 17. The last date for registration of online applications is March 3, 2012.

United Bank of India is recruiting 450 probationary officers. The bank has prescribed a graduate degree with 55 per cent marks and a total weighted standard score of 138 in the IBPS exam as eligibility criteria to apply.

The bank says that only those candidates with a sufficiently high score will be called for group discussion/ interview. The total marks for group discussion and interview will be 100 and the pass mark for this will be 40. The minimum and maximum age requirement is 21 years and 30 years, respectively.

Applications are invited from February 24 till March 9.

Panel move will help meet priority sector lending target: United Bank ED

The recommendation to classify bank loans to non-banking financial companies (NBFCs) for on-lending to specified segments as priority-sector lending will help banks achieve their priority-sector targets, said Mr S.L. Bansal, Executive Director, United Bank of India, and Chairman and Managing Director-designate, Oriental Bank of Commerce.

“Till March 2011, bank lending to NBFCs was allowed to be classified as priority sector lending and there was no cap on such lending. However, in April 2011, Reserve Bank of India disallowed banks to take that route (of lending to NBFCs and classifying those as priority sector) in order to encourage direct lending. However, the present recommendation of the committee will help banks meet their priority sector lending targets,” Mr Bansal said.

The raise in the limit under priority sector for advances towards education and home loans will also help fuel growth in these sectors. “Education and housing are two priority areas for the country and raising the limits under these two sectors is a welcome suggestion,” he added.

United bank signs remittance deals with Nepal's Global bank

Kolkata State-run United Bank of India has entered into an agreement with Nepal's Global Bank to launch remittance facility to a large segment of Nepalese population working in India. UBI became the third bank in India to offer Indo-Nepal remittance services.

Under the agreement, a person of Nepalese origin can remit funds in Indian rupee to a beneficiary in Nepal through any of the designated branches of UBI. The remitter will be provided with a unique PIN which will then be communicated by the remitter to the beneficiary in Nepal.

The beneficiary in Nepal can claim the funds within seven days in Nepalese Rupee by producing the PIN along with identity proofs at any of the 31 branches of Global Bank or the 1,741 Claim Outlets of the International Money Express (IME).

Source: EconomicTimes

United Bank of India net spurts 38.5% in Q3

United Bank of India on Tuesday posted an increase of 38.5 per cent in net profit to Rs 226 crore for the third quarter ended December, 2011, compared with Rs163 crore recorded in the same period of last fiscal.

During the quarter, business of the bank stood at Rs 1,41,915 crore, with advances touching Rs 59,100 crore and deposits Rs 82,815 crore.

Net interest margin (NIM) during the quarter stood at 3.38 per cent as compared to 3.21 per cent in the corresponding period of last fiscal, said Mr Bhaskar Sen, Chairman and Managing Director, UBI.

Operating profits of the bank during the quarter under review stood at Rs 483.27 crore registering a rise of 25 per cent as compared to Rs 386.71 crore in the same period of last year.

Capital adequacy of the bank at the end of December 31, 2011 stood at 12.63 per cent, Mr Sen said.

Gross NPA of the bank as on December 2011 stood 3.28 per cent, while net NPA stood at 2.01 per cent.

Star Union Dai-ichi Life to start online sales

Star Union Dai-ichi Life Insurance is not looking at any capital raising for the next 12-18 months despite robust business growth in the recent months. Primarily a bancassurance-based organisation, the company aims to start selling its products online in the next two quarters, a top company official has said.

“We are quite well off… for at least next 12-18 months. We are very efficient with the capital we have. We are not looking at any capital infusion for the next 12-18 months into our balance sheet”, Mr Saurabh Mishra, Chief Marketing & Distribution Officer, Star Union Dai-ichi Life Insurance told Business Line here. The company has paid-up capital of Rs 250 crore. Mr Mishra was in New Delhi for the launch of traditional endowment plan Dhan Suraksha Platinum. He said that the company aims to garner premium income of Rs 300 crore from this product by end March this fiscal.

For its online foray, Mr Mishra said the company is initially looking to sell term products and target it at the Internet-savvy age group of 28-38.

Efficiency-led growth

Star Union Dai-ichi Life Insurance, which is a joint venture of Bank of India, Union Bank of India and Dai-ichi Life Insurance, had received IRDA licence for undertaking life insurance business in end-December 2008. The company expects to close the current fiscal with a total premium income of Rs 1,500 crore, Mr Mishra said. Last fiscal, the company had recorded a total premium of Rs 1,200 crore.

About 8,400 branches of Bank of India, Union Bank and some cooperative banks support Star Union Dai-ichi Life's growth.

“Our growth is efficiency-led. This is because our cost of channel, cost of customer acquisition and cost of servicing are more optimum and efficiently placed than others who depend on agency channels, which are capital intensive”, Mr Mishra said.

Mr Mishra said the company would want to remain a multi-distribution channel player even as it was primarily betting on the bancassurance channel for growth

Union Bank expects capital infusion of Rs 280 cr from govt

MUMBAI: State-owned lender Union Bank of India on Monday said it is looking at capital infusion of Rs 250-280 crore from the government by the end of this fiscal.

"We are looking forward to the equity infusion of Rs 250-280 crore by the government, which will increase the stake of the latter to 58 per cent from 57.07 per cent at present," Chairman and Managing Director of the bank M V Nair told reporters on the sidelines of a function here.

Last week, Bank of Baroda too had said it would get Rs 775 crore capital infusion from the government in the March quarter.

Similarly, the nation's largest lender SBI is also expecting some Rs 4,000 crore from the government this fiscal, possibly through a rights issue.

Meanwhile, talking about Union Bank's decision to marginally reduce its benchmark lending rate by 0.1 per cent to 10.65 per cent even before the RBI deciding to ease the rates, Nair said, "We feel the overall interest rate is not expected to go up from now on."

On when does he see the rates easing, he said: "Our internal calculation says it should come down next financial year". Talking about non-performing assets, he said, "We expect the December quarter bad loan ratio below 3.25 per cent...By March, it should fall to below 3 per cent".

On the possibility of bank account portability, he said, the number portability is now available internally in some banks. "If technology supports it will be materialised, but it will take some time. It will give a high level of convenience to the customers," he added.

The bank shares were up over 2 per cent to Rs 173.05 on the BSE, whose main index closed 0.4 per cent higher in a choppy trade.

Source: EconomicTimes

Government to interview executive directors for bank CMD post on January 12

MUMBAI: The appointments committee is slated to interview candidates for the CMD post at government owned banks on January 12. Earlier the interviews were fixed on January 4.

The appointment's committee includes D K Mittal, secretary, department of financial services and deputy governor of Reserve Bank of India Anand Sinha among others.

Ten executive directors of public sector banks will be considered for CMD post at six banks.

These candidates 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, Rajeev Rishi from Indian Bank, Rakesh Sethi from Punjab National Bank A K Datt of Dena Bank and Ms Subhalakshmi Panse of Vijaya 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.

Sources from the industry say that on January 13 the appointments committee will interview 42 general managers for the executive directors post.

Source: EconomicTimes

Rs 36 lakh looted from UBI branch

Armed dacoits looted Rs 36 lakh from the United Bank of India (UBI), Bagnan branch in Howrah district today, police sources said.

Four armed dacoits entered the UBI, Bagnan branch, when the sweeping staff was cleaning the bank. They locked the cleaning staff in a room, the sources said.

When the branch manager entered the bank, the dacoits brandishing revolvers forcibly took away the keys of the vault from him and looted Rs 36 lakh from the bank, they said.

The dacoits fled away with the money in motorcycles, sources said.

United Bank to issue 10-year bonds

United Bank of India will issue 10-year bond at a coupon rate of 9.20 per cent by the end of December this year in order to augment its Tier II capital. The bank has appointed IDFC Ltd as the arranger for its proposed Tier – II bond issue.

The bank plans to raise about Rs 100 crore through these non-convertible bonds. The bond issue will have green shoe options to raise additional Rs 100 crore on private placement basis, said a press statement issued by the bank.

United Bank's capital adequacy was at 12.95 per cent as on September 30, 2011

United Bank plans Rs 100-cr bond issue

United Bank of India plans to raise about Rs 100 crore through non-convertible bonds to augment its lower Tier-II capital, according to a company notification to the BSE. The bank proposes to issue unsecured, subordinated, redeemable, non-convertible bonds in the form of promissory notes of Rs 10 lakh each, for Rs 100 crore. The issue has been rated AA+ by Care and AA+/Stable by Crisil.

The bond issue will have green-shoe options to raise additional Rs 100 crore on private placement basis. The bank will intimate the coupon rate and the date of opening of the issue in due course.

Government clears creation of new ED slot in public sector banks

KOLKATA: Large state-run lenders like Bank of Baroda and Punjab National Bank will get a third executive director (ED) on their board from next April, while smaller banks like Dena or United Bank will get their second ED.

The government has just cleared the Khandelwal Committee's recommendation to this end, two chief executives at state-run banks said. Banks with more than Rs 3 lakh crore business are considered as large entities.

The government has created the new slot in six large banks and said the third executive directors will be responsible for human resource development and technology.

Bank of India, Canara Bank, Central Bank of India and Union Bank of India are dubbed as large banks and will benefit from this move. This is in step with the director-HR position that exists in public sector undertakings like ONGC, Indian Oil, HPCL or BPCL.

"Creation of the ED position for HRD is an important step in the banking industry as this will help in bringing human resource development under board's direct attention," said AK Khandelwal, who headed the HR reform panel and submitted a series of recommendations in June 2010.

The government has also created a second executive director's position in five small banks having a business of less than Rs 1.5 lakh crore. Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, United Bank of India and Vijaya Bank fall in this category and their second ED will also be responsible for HRD and technology. All these banks have one ED at their top deck at present.

Source: EconomicTimes

No second round of debt restructuring for Kingfisher by banks

Banks have no plans to carry out a second round of debt restructuring of the ailing Kingfisher Airlines which has an outstanding loan of around Rs 6,419 crore, Parliament was informed on Friday.

“State Bank of India, leader of the consortium (of 11 lenders to Kingfisher), has stated that at present, there is no plan,” Minister of State for Finance, Mr Namo Narain Meena, said in a written reply in Lok Sabha.

He was replying to a question on whether lenders are planning to carry out a second round of restructuring of loans to help Kingfisher.

The Minister further said the airline has a total outstanding loan liability of Rs 6,419.60 crore, which include Rs 9,730.37 crore provided to Kingfisher for non fund based activities.

SBI, the minister said, has an exposure of Rs 1,457.78 crore, followed by IDBI Bank (Rs 727.63 crore), Punjab National Bank (Rs 710.33 crore), Bank of India (Rs 575.27 crore) and Bank of Baroda (Rs 537.51).

The other lenders which have provided funds to the airlines include ICICI Bank, Central Bank of India, United Bank of India, UCO Bank, and Corporation Bank.

SBI has already exceeded the exposure limit of Rs 1,436.1 crore in Kingfisher.

Of the total outstanding of Rs 6,419.60 crore, Rs 750.10 crore has been converted into cumulative redeemable preference shares and Rs 553.10 crore as non convertible cumulative redeemable preference shares to be redeemed after 12 years.

Mr Meena further said that Kingfisher is scheduled to start repaying loans to SBI from September 2012. “Servicing of interest is being done with some delay,” he added.

Spurt in ATMs as banks look to shore up fee-based income

The relaxation of norms for using ‘other bank' ATMs by the Reserve Bank of India in 2009 seems to have encouraged banks to set up more ATMs across the country in order to garner fee-based income, acquire new customers as well as to service the existing ones.

There has been a 24 per cent growth in the number of automated teller machines set up by banks to 74,505 ATMs as on March 2011, according to statistics available in the latest ‘Report on Trends and Progress of Banking in India' released by the Reserve Bank.

The central bank had initially completely waived off transaction charges for using ‘other bank' ATMs for a customer. However, later this was restricted to five transactions (financial and non-financial) a month.

The ‘Indian Payment Card Industry Survey 2011', conducted by Atos Worldline suggests that the number of ATMs is likely to increase to over 92,000 in 2011-12.

Banks consider ATMs to be an integral part of their branding, service delivery and expansion strategy. Therefore, most of them are enriching their ATM service offerings and increasing their ATM base.

The spurt in the number of ATMs can also be attributed to banks' attempt to divert customers away from branches to alternative channels to enhance efficiency.

Public sector banks seem to have taken a lead in the expansion process by installing more number of ATMs. More than 65 per cent of the total 74,505 ATMs belonged to the public sector banks as at end-March 2011, the central bank data said.

Setting up an ATM entails a cost of about Rs 5 lakh. “It is worth making this investment as an ATM brings down the overall transaction cost to a great extent. Moreover, we earn interchange revenue which adds to our fee-based income,” said Mr S. L. Bansal, Executive Director, United Bank of India.

Off-site ATM

The Reserve Bank report, however, suggests that the percentage of off-site ATMs to total ATMs witnessed a marginal decline to 45.3 in 2010-11 from 45.7 in 2009-10.

“From the point of view of banking penetration, off-site ATMs have more relevance than on-site ATMs. Out of the total net increase in ATMs last year, only 44 per cent were off-site ATMs,” the RBI report said.

Explaining the reason for the lower percentage of offsite ATMs, Mr Aspy Engineer, President, Direct Banking, YES Bank, said, “Public sector banks have a huge branch network so their natural choice will be to set up an ATM at their branches first and then to look for offsite ATMs.”

United Bank of India faces crisis at top deck

KOLKATA: A severe human resource gap at the top deck followed by the government's denial in relaxing promotion rules has left state-run United Bank of India in a dire state.

The bank's plan to reach the milestone of Rs 1.5 lakh crore business by March next year faces stiff challenges since it is forced to run the show with just about six general managers who are burdened with three or more departments

The crisis will deepen further in January as half of them will retire by then leaving just about three senior GMs to manage critical verticals like credit, risk management, marketing, priority sector, audit, finance and treasury between them.

""We will face the real challenge when three of our existing GMs retire,"" said UBI executive director SL Bansal.

Banks with more than Rs 1 lakh crore business are entitled for as many as 20 GMs in the top management team. UBI has crossed Rs 1.33 lakh crore business on September 30.

The situation worsens for the bank as none of the 50-odd deputy GMs are eligible for a promotion at present due to a gap in succession planning earlier years.

Chairman and managing Bhaskar Sen said the situation will continue to be difficult for the next three to four quarters.

""We have charted out a transitory phase for three to six months beginning April 2012. The situation will start normalising from September next year,"" he said.

The fact that the government has turned down UBI's request for a six months relaxation for DGMs to qualify for the next level did not help the bank. Normally DGMs become eligible for promotion once they put in minimum three years in this capacity.

The ministry of finance feels that promoting people quickly can be counter-productive. The ministry is in fact going to bring about some changes in public sector banks HR policies. It has proposed a maximum of 10 GMs for up to Rs 1.5 lakh crore business.

Bansal has the bank has started firefighting by empowering DGMs with independent charges and it will go to the board for seeking one year of relaxation in the eligibility rule for DGMs.

If the board gives its clearance, 17 of them will qualify for a promotion by December and another seven by April next year, Bansal said.

""We have started grooming them by giving them independent charges. They will be fully prepared to take higher responsibilities by the time some of reach to the next level,"" the executive director said.

Source: EconomicTimes

Banks start waiving prepayment penalty

Initially reluctant to waive the prepayment penalty on floating rate retail loans, banks have now started to fall in line with the regulator’s advice. The Reserve Bank of India (RBI) had questioned the necessity of levying charges that penalise borrowers repaying their loans before the maturity period.

State Bank of India (SBI), which earlier waived the prepayment penalty for new customers, has now extended the benefit to existing customers. Bank of India, Indian Bank and United Bank of India have also waived the prepayment penalty, and a few other public sector banks may follow suit.

“If the regulator ultimately wants it, we need to fall in line. The prepayment penalty is not an avenue for bankers to make money, but a mechanism to recover costs due to mismatch in assets and liabilities. If RBI feels we have to do away with that, as bankers we will have to find a way to recover the cost,” said K R Kamath, chairman and managing director, Punjab National Bank.

OWE DEAR! Prepayment penalty on home loans
Lender	Penalty (%)
State Bank of India	Nil
ICICI Bank	2-4
Punjab National Bank	2
Bank of Baroda	2
Bank of India	Nil
Axis Bank	Nil
Union Bank of India	2
Standard Chartered Bank	2.5
United Bank of India	Nil
Source: Banks

Bankers said when long-term loans were offered to borrowers, lenders raised long-term deposits to match their assets and liabilities. So, when the loans are pre-paid, banks continue to have long-term deposits on their books, leading to a mismatch.

“Banks have already agreed, but they are not issuing the guideline (to their branches) that you cannot charge prepayment penalty. We are not clear why banks charge the prepayment penalty,” said K C Chakrabarty, deputy governor, RBI.

“RBI has asked for the views of IBA (Indian Banks’ Association) on this. We are working on it...It will happen in the next couple of weeks,” said M D Mallya, chairman and managing director, Bank of Baroda, and chairman, IBA.

“We have waived the prepayment charges on floating rate loans, ahead of the industry. For fixed rate loans, there is still a prepayment charge,” said Pratip Chaudhuri, chairman, SBI. Bank of India has also stopped charging the prepayment penalty on floating rate retail loans, while Indian Bank has waived these charges for both fixed, as well as floating rate advances. “Our view is our interest rates should be so competitive that the customer should always stay with us,” said T M Bhasin, chairman and managing director, Indian Bank.

M Narendra, chairman and managing director, Indian Overseas Bank, said the lender did not levy prepayment charges on small-ticket loans. It would also waive such charges on big-ticket loans if the regulator wishes so. “I don’t think it is a very big issue. In fact, it may benefit public sector banks, since our pricing is competitive, transparent and there are no hidden charges,” said M G Sanghvi, executive director, Bank of Maharashtra.

Source: Business Standard

LIC eyes 5% sales from bancassurance

Life Insurance Corporation of India (LIC) is looking at a huge jump in premium collected through bancassurance, amid increasing competition from private players.

Life Insurance Corporation collected Rs 1,281 crore in premium through bancassurance, which involves using bank branches for selling policies and collecting premia, FY11. This accounted for a little over 0.60% of the total premium collection of Rs 2,03,358 crore.

The corporation sold 7 lakh new policies through this channel during 2010-11.

"Target for the current year is that we want to get 5% of our total premium from bancassurance. And 5% of LIC's premium is huge, you have to realise that," LIC Executive Director (Corporate Communications) Vipin Anand said.

However, he said leveraging the channel was not easy.

"Definitely the scope is much more. Only thing is - for banks which do not own an insurance company, insurance is not very high on priorities. That is the reality, we have to understand that," Anand said.

"If the insurance company is owned by a bank, there is an entirely different kind of a stake...Their mainstay [of distribution] is going to be the bank," he added.

LIC has tie-ups with various banks, including Corporation Bank, United Bank of India, Bank of Maharashtra and UCO Bank.

Anand further said that LIC's 1.337 million agents are its mainstay and it should not be compared with the private sector insurers which count banks as promoters.

Source: Business Standard

No systemic risks from rising NPAs: RBI

Reserve Bank Deputy Governor Anand Sinha today said though bad loans are rising in the system, the central bank does not see it as a systemic risk yet.

Talking to reporters on the sidelines of Ficci-IBA summit here, he said, "We don't see any systemic risks from the current trend of rising non-performing assets. But, there could be some sectoral risks going forward."

The central bank has jacked up its key lending rate by a whopping 425 basis points in the past 15 months to batten down inflation and the banks have passed on the increased cost to borrowers.

"I would not say we are particularly worried about retail loan segment, but yes, the retail segment is the one that is likely to feel the pressure."

Banks have been witnessing rising risks from small and medium scale industries and unsecured portfolios, which primarily consist of personal loans and credit cards business, apart from the home loans front.

Bankers had told RBI Governor D Subbarao last month that there was no systemic risks as of now for banks, even as the interest rate got tightened.

Yesterday, the chief financial officer of SBI, the nation's largest lender, Diwakar Gupta said his bank's Rs 7,000 crore education loan has been witnessing pressure and the level of the stressed assets have reached 4% of this exposure.

The Kolkata-based United Bank Chairman and Managing Director Bhaskar Sen had also said there are rising risks to assets, especially from the SMEs and the retail sector, and that he may look at increasing in the tenor of the loan than increasing the EMIs.

On the impact of the Basel III on the domestic banks, especially on the state-run banks, which control over 70% of the banking assets in the domestic system, Sinha said the government will have to infuse funds into the banks to ensure that they are adequately capitalised.

Meanwhile, Crisil Ratings Director Ramaraj Pai said the 26 public sector banks would need a whopping Rs 8 lakh crore in core capital by 2019, when the Basel III norms will be implemented.

As of FY10, these banks had a core (Tier I) of capital of only Rs 70,000 crore, which is well above the Basel II requirement.

Source: Business Standard