BoI to help rural borrowers earn carbon credits

Bank of India (BoI) today said it has entered into an agreement with a US-based company for helping its rural borrowers implementing green solutions earns carbon credits.

The bank has entered into a memorandum of understanding with New York-based Micro Energy Credit Corporation for the development, purchase and sale of voluntary emission reduction carbon credits, it said in a statement issued here.

The bank will form bunches of borrowers who have availed credit for off-grid solar lighting which, post audit, will earn the individual borrower some money, a senior bank official said.

“The bigger companies can afford hiring consultants. This is to help rural households earn from their efforts. In about 2-3 years, a borrower should at least be able to pay for the new battery through the realisation of proceeds,” its general manager for priority sector lending and rural lending Mr N C Khulbe said.

Only those households which have borrowed from the bank can avail the scheme, he said, adding it already has 3,000 accounts (borrowers) for solar lighting.

He, however, clarified that the bank is looking at the initiative as a corporate social responsibility as it entails empowering borrowers and is not looking at it to earn any fees from the transactions.

BoI to revamp 350 large city branches

Public sector lender Bank of India will revamp up to 350 key branches in metro and large cities to project these as “Branch of the Future” over the next 18 months to scale up the retail business.

Executive director N Sheshadri said its first pilot branch is already operational at Chembur, a Mumbai suburb. The bank will remodel 200 such branches in the next six to eight months.

The focus is on upgrading customer services to retail clients. Attracting the young by providing the latest communication devices at branches for transactions will top the agenda.

These branches will have a spacious customer lobby, self-service kiosks and a separate area for high net worth individuals, with dedicated relationship managers.

About 70 per cent of staff time will be spent in customer engagement. Staff engaged in customer relations will be designated as personal bankers, Sheshadri said.

Given network of 3,815 branches, the share of retail segment in total domestic loan book is small at about 11 per cent. Its retail loan book stood at Rs 18,004 crore at end of December 2001 while its gross domestic advances stood at Rs 1,63,325 crore. The home loans (Rs 8,575 crore), educational loans (2,168 crore) and auto loans (Rs 1, 7181 crore) are key components of retail portfolio.

Besides credit and deposits products bank would also push for financial products like mutual fund and insurance policies through remodelled branch.

It already has life insurance joint venture Star Dai-ichi Union Ltd. It recently signed a pact to pick up 51 per cent stake in Bharti Axa mutual funds. Both are expected to increase fee-based income through cross selling of products.

Source: Business Standard

No overseas borrowing plan as of now: Bank of India

Bank of India will raise foreign currency loan under its medium term note (MTN) programme as soon as the global economic situation improves, a top executive has said.

“We will enter the market for raising foreign currency loan as soon as the situation improves on the global economic front. However, there is no such plan as of now,” a top bank official, who wished not to be named, told PTI here.

The state-run lender, which had a MTN programme of raising around $5 billion in 2005, has raised $1.475 billion till now.

Referring to amount likely to be raised, the official said it was difficult to peg a specific quantity as it would depend on the prevailing economic situation.

“We may look at other currencies also, except dollar, to raise money through MTN programme.”

Earlier, State Bank of India had said the country’s largest lender would revive its international borrowing plans in next three to four months with the improvement of European situation.

SBI Managing Director Hemant Contractor has reportedly said the bank could raise above $500 million through its international borrowing plan.

Recently, another Government lender, Union Bank of India, filed an updated prospectus with the Singapore Stock Exchange for its $2 billion MTN programme, out of which the bank had already raised $565 million.

Last year, several banks deferred their plans of international borrowing due to risk aversion approach of European institutions towards emerging economies.

Higher provisioning tempers Bank of India's net profit

Higher provisioning towards bad loans and investments moderated Bank of India's net profit in the October-December 2011 period. Profits rose by a modest 10 per cent to Rs 716 crore, against Rs 653 crore in the corresponding year-ago period.

While net interest income (the difference between interest earned and expended) nudged up by 4 per cent to Rs 2,067 crore (Rs 1,986 crore), non-interest income (includes commission, exchange and brokerage, profit from exchange transactions and recovery in written off accounts) rose by 19 per cent to Rs 471 crore (Rs 396 crore).

Quarter-on-quarter, the public sector bank managed to bring down the gross non-performing assets level by Rs 162 crore to Rs 6,386 crore. However, since March-end 2011, the NPAs have surged by Rs 1,574 crore. In the reporting three months period, provision towards NPAs jumped 169 per cent to Rs 333 crore (Rs 124 crore in the October-December 2010 period) and provision for investments rose 80 per cent to Rs 119 crore (Rs 66 crore). Total provisions rose by 38 per cent to Rs 1,016 crore (Rs 736 crore).

According to Mr Alok Misra, Chairman and Managing Director, BoI, the global and domestic economic environment has become challenging and stress is showing in sectors such as steel, textiles, aviation, and power (especially state-owned power distribution companies). Though the year-on-year advances growth was 8.23 per cent as on December-end 2011, the bank is hopeful of achieving a credit growth of 15.5-16 per cent by March-end 2012, he added.

Focus on recoveries

Mr N. Seshadri, Executive Director, BoI, said the bank is aggressively focussing on recoveries from small value loan accounts that have turned bad. This move has paid rich dividends, with the bank realising Rs 186 crore from written-off accounts, against Rs 66 crore in the corresponding period last year.

In the nine-month period ending December 31, 2011 the bank's net profit declined by 13.53 per cent to Rs 1,725 crore (Rs 1,995 crore) as the bank recognised NPAs through the system driven process in the June and September quarter, said Mr Ravi Kumar, General Manager & CFO.

Bank of India's scrip closed up at Rs 352.85 per share on the BSE, up 3.17 per cent, against the previous close of Rs 342.

Bank of India to recruit 1,800 probationary officers

Bank of India is recruiting probationary officers to fill up about 1,800 vacancies across the country.

The bank has specified that candidates with a minimum of 60 per cent in their graduation and a total weighted standard score of 130 in the common written examination conducted by Institute of Banking Personnel Selection (IBPS) are eligible to apply.

The bank has said that only those candidates who rank sufficiently high in the order of merit shall be called for a personal interview in the ratio of 1:3. The interview will be for 100 marks and the minimum required for qualifying the interview is 50 marks. The tentative period of the interview will be between February and March 2012.

A merit list will be prepared based on the marks secured in the common written exam as well as the interview and then the final selection will be made.

The minimum age requirement is 21 years while the maximum is 30 years. Applications have been invited online and are open from January 19. The last date for registration of online applications is January 31.

Andhra Bank CMD B Prabhakar will have to move fast to get noticed

On the face of it there does not appear to be anything out of the ordinary about B Prabhakar, the new chairman and managing director (CMD) of Andhra Bank. He would, in fact, give the impression of being a docile and easy-going person. A perpetual smile on his face may have misguided many to assume that that he has little or no worries.

But only a few who have worked closely with him know that he does not display emotions very easily. Also, practising yoga daily for over 25 years has helped him gain emotional stability and maintain calm. A chartered account by training and a graduate from Mysore University, Prabahakar started his career at Bank of Baroda where he worked extensively in the credit and treasury division.

He was posted twice overseas - Zambia in his younger days and later on at London. Interestingly, having joined as a specialist, he was exempted from rural posting. An ardent music lover, he spent three decades with the bank where he rose to the rank of general manager way back in 2003 to become the youngest GM those days. But luck did not favour him. First, it took him five years to rise to the post of executive director.

Thereafter, the appointments committee did not select him for the CMD post at PSU banks in 2009 even as most bankers felt that he was more suitable than other candidates in the list. "Fortunately, all his bosses have recognised his contribution to work which is a satisfying feeling at the end of the day," said a colleague of Prabhakar at Bank of Baroda. He considers himself to be lucky to have worked under RBI's deputy governor KC Chakrabarty in his former avatar as general manager-treasury. He would have learnt from him the art of putting across a point.

In fact, Chakrabarty and Prabhakar joined the bank together and were in the same induction programme, with Chakrabarty one scale senior to him. While having worked under TS Narayanasami former CMD of Bank of India, Prabhakar realised the importance of taking quick decisions - something which will be very useful for him to emerge as a successful bank chief.

Prabhakar was in Zambia between 1989 and 1993 at a time when the Zambian economy was opening up and making structural changes. He returned to be part of the treasury team at a time when the Indian economy too was moving from controlled environment towards liberalisation. His learning in Zambia helped him stay several steps ahead of his peers.

That phase also prepared him to function in a deregulated environment and also boosted confidence level. A few years later he was given charge of the Delhi zone where he dealt with the credit portfolio. The lending business in Delhi was a unique experience as it prepared him to deal with shrewd corporates and businessmen.

From Delhi, he was posted to London for three years to take over from Chakrabarty. Some of his colleagues say that as chief of the bank, Prabhakar, will have to shed his mild approach and become more tough and firm in all walks to business life.

Having worked closely with different kinds of CMDs - some aggressive and some-take-it-easy types - Prabhakar is well aware of the outcome in each case. With little less than two years at Andhra Bank, he will have to move fast to get noticed.

Source: EconomicTimes

Bank of India says Kingfisher loan 'sub-standard'

The troubles of cash-strapped Kingfisher Airlines worsened today with another lender classifying its loan to the Vijay Mallya-promoted company as "sub-standard", a day after State Bank of India termed the airline as defaulter.

City-based, state-run lender Bank of India (BoI) has classified its Rs 575.27 crore loan to the Kingfisher as sub-standard, as the airline has defaulted on repayment.

When contacted, BoI Deputy General Manager (Large Corporates) Bupinder Nayyar, who handles the Kingfisher account, refused to comment. However, a bank official, seeking anonymity, confirmed the development. Bank of India has overall exposure of Rs 4,000 crore to the airline industry.

Kingfisher, which owes Rs 6,419 crore to banks, could not be contacted for response.

A bank classifies an account as sub-standard when it is close to the write-off stage. A loan turns into a non-performing asset when the borrower fails to service it for 90 consecutive days. Since Kingfisher had gone for corporate debt restructuring in November, 2010, it gets some additional days to clear the dues and make the loan a standard asset.

Yesterday, State Bank Chairman Pratip Chaudhuri said the Kingfisher account was a non-performing asset (NPA).

Source: Business Standard

RBI nixes banks' subsidiary plans

Bank of India, South Indian Bank, Lakshmi Vilas Bank’s proposals rejected, to add to the earlier ones of ICICI Bank and Axis Bank.

The Reserve Bank of India (RBI) has rejected several banks’ proposals to launch wholly-owned subsidiaries, as the regulator did not find any merit in floating such arms.

Public sector lender Bank of India, which wanted to float a subsidiary to train human resources and recruit professionals, did not find favour with the regulator. State-run banks have to follow a uniform remuneration package, which is unattractive compared to their private sector counterparts. However, a bank could offer market related pay package for the employees that are hired by its subsidiary.

RBI, however, was not convinced by the idea.

FALLING FLAT
Banks	Subsidiary planned
Bank of India	Human resources
South Indian Bank	Gold loan
Lakshmi Vilas Bank	Housing loan
ICICI Bank	Infrastructure finance
Axis Bank	Infrastructure finance

Similarly, South Indian Bank wanted to open a subsidiary to exclusively offer gold loans. RBI has also nixed that plan, as a bank is allowed to offer gold loan directly through its branches and a subsidiary route is not required for this activity, the regulator felt.

"We had initially taken shareholders' approval to launch a gold loan subsidiary. The idea was to gold loans through this subsidiary in areas where we don't have a branch," said VA Joseph, managing director and chief executive officer of South Indian Bank.

The Thrissur based lender is a major player in the gold loan market and gold loans account for 20 per cent of its credit portfolio.

Another south India-based lender, Lakshmi Vilas Bank wanted to float an arm to sell home loans, again an activity which a bank is allowed to undertake through its branches. This proposal was also rejected by the regulator on similar grounds.

As a result, Lakshmi Vilas Bank scrapped its plans to set up a housing finance subsidiary. The bank’s housing loan portfolio is currently around 2.5 per cent of its total advances. Its credit portfolio was Rs 8,813 crore as of September 30, 2011.

“RBI is of the view that those businesses, which are possible through bank branches, should be done directly by the bank. There is no need to create a separate non-banking finance subsidiary for those businesses. Hence, for businesses like gold loan, housing finance, etc RBI is not keen to allow banks form a separate subsidiary,” said a top executive of a private sector bank.

Earlier, proposals from ICICI Bank and Axis Bank to float an infrastructure subsidiary also did not find favour with the regulator. In the last couple of years, RBI has given its permission to open subsidiaries to undertake those activities which a bank cannot do directly through its branches. These businesses include securities broking and insurance underwriting.

In addition, the regulator has also approved Bank of Baroda’s application to convert its credit card subsidiary into a joint venture by selling 51 per cent stake to the second largest bank of Spain, Banco Bilbao Vizcaya Argentaria.

Source: Business Standard

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

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

BoI scraps pre-payment fee on fixed & floating home loans

Bank of India on Saturday became the second major bank, after the SBI, to abolish the pre-payment charges on both fixed and floating rate home loans, with immediate effect.

“We have decided to implement the Damodaran committee recommendation on customer service. Accordingly, we have decided to give total liberty to our home loan customers, both on floating rates as well on fixed rates to switch if they choose to do so irrespective of the source of funds, including takeover by another lender,” a BoI official told PTI.

Before this, Bank of India, which has a home loan book of worth Rs 15,000 crore, used to charge 2.5 per cent penalty on the outstanding amount in case of pre-payment.

The country’s largest lender, State Bank of India (SBI), and the largest private sector bank ICICI Bank, had on November 25 abolished pre-payment penalty on home loans.

While the SBI had done away with pre-payment charges for loans on fixed and floating interest rates irrespective of source of funds, ICICI Bank will continue to charge 2 percent on the outstanding amount of fixed-interest loans.

Earlier this week, another state-run lender Central Bank of India too had waived pre-payment charges on its fixed rate home loans.

The Reserve Bank on October 25 had indicated that it was planning to scrap prepayment charges altogether saying in such a product the customer is taking the complete risks.

However, banks are allowed to charge appropriate pre-payment penalties in the case of fixed rate loans.

Within a few days, the National Housing Bank had asked mortgage players to abolish the charges through a circular.

But RBI is yet to issue a circular on this. Normally an RBI directive/advice becomes mandatory only after a circular.

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

Bank of India picks up 51% in Bharti-AXA Investment Managers

With Bank of India entering the asset management business, there has been a re-alignment of ownership in Bharti-AXA Investment Managers.

Bank of India has picked up a 51 per cent stake in the company, buying out Bharti's 25 per cent stake and picking up another 26 per cent from AXA.

With this AXA's shareholding comes down to 49 per cent and Bharti has completely exited the joint venture it entered into in 2008.

It is believed that the re-branding process of the new entity is underway.

Ernst & Young were the advisors to this transaction. The transaction is subject to regulatory approvals, said a press release by the French global insurance group AXA.

PSBs have Rs 2.97 lakh cr loan exposure to power sector

Public sector banks have extended loans worth over Rs 2.97 lakh crore to the power sector at the end of September quarter, with maximum credit doled out by State Bank of India.

Official figures show that 26 state-run banks have a total exposure of Rs 2,97,762.53 crore to the power sector, which is currently grappling with acute fuel shortages and mounting losses of electricity distribution companies.

Country’s leading public sector lenders State Bank of India (SBI) and Bank of India accounted for nearly Rs 87,000 crore of the total loans given to the power sector till September 30.

SBI’s exposure stood at Rs 47,880.89 crore while that of Bank of India was Rs 39,078 crore.

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

Amid worsening health of power distribution companies and stranding of projects due to fuel shortages, there are rising concerns about possible default on loans extended to the power sector.

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

Going by reports, banks are exercising caution in lending to the power sector.

As per estimates, the aggregate debt of state power utilities stood at Rs 3,10,912 crore in FY’10.

Power sector is expected to see a capacity addition of nearly 1,00,000 MW in the 12th Five Year Plan (2012-17).

A recent report by rating agency Fitch said that losses of power entities in the states of Rajasthan, Tamil Nadu, Madhya Pradesh, Uttar Pradesh and Bihar, alone accounted for over 70 per cent of the overall loss incurred by state power utilities (SPUs) nationwide in fiscal year 2010.

Bank of India likely to relaunch mutual fund biz by December

MUMBAI, NOV 20: Bank of India has decided to advance its proposed re—entry into the mutual fund business by a few months to December.

“We are working on it (MF business)... by December, I suppose we should have something in place,” Bank of India chairman and managing director, Mr Alok Misra, told PTI.

He refused to give more details on the business model saying the bank is working out the details. He also refused to say whether it will be a joint venture or not.

Earlier this year, the bank had said it would launch its MF business by early 2012 and was scouting for a partner.

It was also reportedly in talks with Bharti Axa Investment Managers and Pramerica AMC which were planning to sell their stakes.

BoI was in the MF business in 1990. Of the six schemes launched by the fund, four had been redeemed and two schemes transferred to Tauras Mutual Fund after giving exit option to investors in 2004.

Banks generally enter the MF space as they can leverage on their branches for distribution, which in turn would help cut cost of delivery, thus improving business efficiency.

Currently, there are eight MFs either fully or partly owned by banks along with overseas partners. These include Baroda Pioneer Mutual Fund, Canara Robeco Mutual Fund, ICICI Prudential MF, Principal MF of PNB and SBI Mutual Fund, Axis MF, IDBI Mutual Fund and Union KBC MF of Union Bank.

There are 40 MF players in the country with average asset under management of over Rs 7 trillion.

Allahabad Bank freezes lending loans to power sector on increasing financial stress

MUMBAI: Financial stress to banks caused by the power industry increased with Bank of India set to restructure a quarter of its power loans and Allahabad Bank freezing lending to the sector whipsawed by losses at state distributors and hurdles to new plants.

Loans to Tamil Nadu Electricity Board and Rajasthan Electricity Board will be restructured - the tenor of the loans and interest payable will be changed - to avoid an imminent default and firewall banks from rising bad loans, senior bank officials said.

"We have received requests from one or two state electricity boards and we are looking into it," said Bank of India Executive Director BA Prabhakar. BoI has lent Rs 8,000 crore to various state boards. "We have yet not restructured. No one has defaulted yet."

The country's financial system is under stress because of mounting losses at state distribution companies and thwarted project clearances. Some projects, such as East Coast Energy - in which Goldman Sachs and General Atlantic are stakeholders, are stuck half way because of local protests.

Subsidised tariffs have pushed power distribution companies to the brink of collapse with losses soaring last fiscal by 45% to an estimated Rs 40,000 crore.

Allahabad Bank, which has lent more than Rs 13,600 crore to utilities and distributors, has stopped lending to the sector.

"In the past six months, we have not sanctioned a single fresh loan. Till things are clearer ... we don't want to go into this area," Allahabad Bank CMD JP Dua said.

Dena Bank and Indian Overseas Bank are also considering to restructure loans to the power sector. Punjab National Bank restructured Rs 2,500 crore of loans to power companies last quarter.

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

Bank of India doesn't have slippages on power sector loans

MUMBAI: State-run lender Bank of India does not have slippages on power sector loans and has total exposure of about 80 billion rupees to the sector, its executive director said on Tuesday.

Certain state electricity boards have requested the bank to restructure accounts and the bank would take action in due course, B. A. Prabhakar, told reporters.

Source: EconomicTimes

Bank of India plans 'big' retail vertical

Bank of India plans to focus big on its retail vertical, by setting up 20 retail centres across the country. "We are looking at branch hub-and-spokes and retail processing centres closely," Mr N. Seshadri, Executive Director, Bank of India, told.

A pilot for making branches sales centres, and not service units, is already underway, he said.

"We plan to take the entire service part of operations to the back office," said Mr Seshadri. The idea is to ensure that the entire focus at a branch is as a sales unit.

He also added that the bank was focusing on re-balancing their corporate to retail portfolio because of margin shrinkage.

"We want to go up a couple of percentage points in terms of the whole portfolio from corporate to retail over a period of time," said Mr Seshadri. The increasing interest rates have not impacted the bank's retail portfolio so far, "mainly because we have rescheduled repayment schedules of our customers", he said. But if the interest rates are very high for a long period of time, there could be some impact, he added.

The bank is also looking at expanding its footprint overseas by "either acquisitions or branches depending on local regulatory requirements", he said. Countries on the bank's radar include Botswana, Rwanda and Canada. The bank recently started operations in New Zealand, he pointed out.

Bank of India is expecting capital infusion from the Government in the second half of this fiscal, Mr Seshadri said. According to him, the bank has a total capital requirement of Rs 4,000 crore over the next two years.

Capital infusion could either be through a rights issue, follow-on offer or a combination of instruments. Currently, the Government's shareholding in Bank of India is about 66 per cent.

Banks can't have more than 10 general managers for business up to Rs 1.5 lakh crore

KOLKATA: In a move that is going to freeze promotions in public sector banks at senior levels for at least the next one year, the government has proposed to limit the number of senior executives in these banks, according to the size of their business, two bank executives familiar with the development said.

The finance ministry has said that banks should not have more than 10 general managers for business up to Rs 1.50 lakh crore, against the previous rule of 20 GMs for Rs 1 lakh crore.

It has also suggested a 1:3:9 ratio of GM, DGM and AGM in government banks. "This is the first time that the ministry has stepped into such micro manpower management of public sector banks," a bank chairman told ET, requesting anonymity.

This will create a battery of surplus manpower in senior categories and top bankers said that they may have to put a halt in promotions at senior levels. For example, Allahabad Bank will have four surplus GMs, while Punjab National Bank and UCO Bank will have eight and nine excess GMs, respectively. State Bank of India will not have to follow the proposed norm as it is guided by a separate act.

However, existing officials will be allowed to continue till retirement. According to the ministry's proposed rules, Punjab National Bank can have a maximum of 37 GMs till March 2012, while Bank of Baroda and Bank of India can have 35 and 34, respectively.

These banks will be allowed to add one GM each for every Rs 15,000 crore of incremental business. The ministry shot off a letter to all public sector bank chairmen on Wednesday and said that there is "mismatch in the number of posts in senior positions and an immediate feeder channel has taken place which is creating difficulty in proper manpower management." The ministry has directed banks to submit their views on the proposed changes in a week's time.

PSBs have been facing a severe mid-level crisis for the past threefour years, following mass retirement and the move is seen as an effort to rationalise the human resources available in these banks. "A change in regulation for PSB manpower management was long required. The guidelines were last revised in 2007 and the business environment has dramatically changed since then," a general manager in a Kolkatabased bank said.

Source: EconomicTimes