Bank of Maharashtra cuts base rate to 10.6%

State-owned Bank of Maharashtra (BoM) today slashed the base rate or minimum lending rate by 0.1 percentage point to 10.6 per cent.

The bank has reduced the base rate from 10.7 per cent to 10.6 per cent on a monthly compounding basis, with effect from February 21, BoM said in a filing to the BSE.

With the reduction, all kinds of loans linked to base rate would become cheaper by at least 0.1 percentage points.

The benchmark prime lending rate (BPLR) would continue to remain unchanged at 15 per cent on a monthly compounding basis, it said.

Bank of Maharashtra cuts base rate

In a bid to push credit in the run-up to the close of the financial year, Bank of Maharashtra has decided to pare its base rate by 10 basis points to 10.60 per cent with effect from February 21.

The public sector bank has also said it will offer housing loans up to Rs 30 lakh at the Base Rate for a repayment period of five years under the floating rate option.

Home loans above Rs 30 lakh and less than Rs 75 lakh, and Rs 75 lakh and above will be charged 11.10 per cent (Base Rate + 0.50 per cent) and 11.35 per cent (Base Rate + 0.75 per cent) interest respectively for repayment period of five years under floating rate option.

The bank has waived processing charges, which range from Rs 4,000 to Rs 12,500, for housing loans up to Rs 25 lakh.

Bank of Maharashtra cuts base rate

In a bid to push credit in the run-up to the close of the financial year, Bank of Maharashtra has decided to pare its base rate by 10 basis points to 10.60 per cent with effect from February 21.

The public sector bank has also said it will offer housing loans up to Rs 30 lakh at the Base Rate for a repayment period of five years under the floating rate option.

Home loans above Rs 30 lakh and less than Rs 75 lakh, and Rs 75 lakh and above will be charged 11.10 per cent (Base Rate + 0.50 per cent) and 11.35 per cent (Base Rate + 0.75 per cent) interest respectively for repayment period of five years under floating rate option.

The bank has waived processing charges, which range from Rs 4,000 to Rs 12,500, for housing loans up to Rs 25 lakh.

Bank of Maharashtra to raise capital from LIC, second after Dena Bank

MUMBAI: The Bank of Maharahstra will be the second bank after Dena Bank to raise capital from Life Insurance Corporation (LIC), in a move aimed at boosting their capital. The board of the bank will meet on February 10 to consider issuing shares on preferential basis to government or LIC, according to a statement issued to the stock exchange.

Widening fiscal deficit has prompted government to approach LIC to invest in government owned banks- a move which will help government to trim expenses and yet retain control over banks.

Government had targeted fiscal deficit- difference between income and expenses - at 4.6% of gross domestic product (GDP) for the current fiscal, but many fear it would cross 5% as government failed to raise money by divesting their stake in state run companies.

The board of Syndicate Bank too will meet on February 11 to discuss proposal of issuing shares to government or others, it said in a notice to the exchange. Till December end, LIC's stake in Bank of Maharashtra stands at 6.68% while that in Syndicate Bank is 10.27%.

Dena Bank is among the first bank to announce decision to dilute equity in favour of LIC. The insurance company would be acquiring 5% stake for an investment of around Rs 125 crore and the transaction would be complete by end of this fiscal. LIC's stake in Dena Bank will increase to little over 11% after it issues shares on preferential basis to them. However government's stake would fall to 55% - which is below 58% threshold limit they prefers to hold in state run banks.

The current move of seeking capital support from LIC is mainly aimed at small to medium sized banks. The large banks like State Bank of India, Central Bank of India and Punjab National Bank has received capital directly from government.

Government has committed around Rs 18000 crore capital to PSU banks this fiscal. So far it has allotted Rs 7900 crore to SBI, Rs 1285 crore to PNB and Rs 700 crore for Central Bank of India. Union bank of India and Indian Overseas Bank too has received firm commitment about capital from government although the exact quantum is yet to be decided.

Source: EconomicTimes

Central Bank may recast loans to power utilities

Public sector lender Central Bank of India may go in for restructuring of some of its loans given to power companies in the current quarter.

"We have a total exposure of around Rs 12,000 crore to the power distribution companies (discoms) and some of them are likely to be restructured in the current quarter (January-March)," a top bank official told PTI. Of late, banks have been concerned about their advances to the SEBs (state electricity boards) of Tamil Nadu, Bihar, Rajasthan, UP, Haryana, MP and Punjab, which according to the rating agency Crisil, are the most vulnerable ones.

A recent Crisil report had said that losses of discoms rose 24 per cent to Rs 27,500 crore between 2006-07 and 2009-10 and may rise to Rs 35,000-40,000 crore in 2010-11, mainly because of the problems the utilities are facing like no rise in tariffs for longer period by states and non-recovery of dues.

On the back of rising concerns relating to distribution companies, many banks have already started restructuring the loan accounts of these firms. Punjab National Bank, which had recast Rs 2,500 crore of loans in the second quarter, has said out of this amount as much as Rs 1,800 crore was from the Tamil Nadu SEB. Similarly, UCO Bank, Bank of Maharashtra along with 11 others had restructured around Rs 7,000 crore of loan extended to Uttar Haryana Bijli Vitran Nigam last month. Bank of Maharashtra has recast about Rs 1,100 crore of debt of the Rajasthan SEB. Industry experts say rising cases of debt recast in the power sector will increase the provisioning requirement of the banks. In case of any standard asset restructuring, the provisioning requirement for commercial banks will increase to 2 per cent from 0.4 per cent, which in turn will adversely impact their profitability.

Source: Business Standard

Bank of Maharashtra restructures around Rs 1,100-cr debt of Rajasthan SEB

MUMBAI: Bank of Maharashtra (BoM) has restructured around Rs 1,100 crore loan, that has been extended to Rajasthan State Electricity Board (RSEB), in the third quarter ended December 31, a top official said on Friday.

"The loan extended to Rajasthan State Electricity Board, which is around Rs 1,100 crore, has been restructured in the third quarter to give more time to the board for making repayment," said the official, who wished not to be named.

The public sector lender had got a good deal as part of the restructuring process, he said.

"We have received a State Government guarantee along with higher rate of interest as part of debt recast deal," he said, adding there will be a moratorium of around six months to one year for RSEB with regard to loan repayment.

As per banking sources, a total loan amount of around Rs 6,000 crore, which has been given to RSEB, has been restructured by various banks.

While there are around six to seven lenders that have exposure to the state board, Central Bank of India is the lead institution among the consortium of lenders.

Recently, around Rs 7,000 crore of loan of Uttar Haryana State Electricity Board was restructured by a UCO Bank-led consortium.

Also, the second largest public sector lender, Punjab National Bank, which had recast Rs 2,500 crore of loans in the second quarter, had said out of this amount as much as Rs 1,800 crore was from the Tamil Nadu SEB.

Referring to debt repayment scenario by SEBs, the BoM official said the situation is set to improve in the near future as tariffs are likely to be revised soon.

Source: EconomicTimes

Bank of Maharashtra net jumps 50% in Q3

Bank of Maharashtra reported a 50 per cent increase in net profit to Rs 135.54 crore in the October-December 2011 period on the back of a healthy growth in net interest income and non-interest income.

The public sector bank had reported a net profit of Rs 90 crore in the corresponding period last year.

In the reporting period, net interest income increased by 24 per cent to Rs 645 crore (Rs 522 crore in the October-December 2010 period) and non-interest income was up by 21 per cent to Rs 150 crore (Rs 123.50 crore).

The Chairman and Managing Director, Mr A. S. Bhattacharya, said incremental growth in advances was flat. The advances as on December-end 2011 stood at Rs 50,751 crore (Rs 50,905 crore as at September-end 2011).

The bank is seeing good pick up in advances to the agriculture, micro, small and medium enterprises and corporates, observed Mr Bhattacharya.

“We have a Rs 10,000-crore loan sanctions pipeline,” he said.

Deposits nudged up from Rs 69,376 crore as at September-end 2011 to Rs 69,926 crore as at December-end 2011.

Higher provisioning

According to Mr M. G. Sanghvi, Executive Director, the bank has made higher provisioning of Rs 290 crore in the current quarter, against Rs 218 crore in the corresponding year-ago period to improve the provisioning-coverage ratio to 87 per cent to 87 per cent from 60 per cent.

The bank is expecting a capital infusion of Rs 860 crore from the Government during this quarter. This infusion will push up the Government's stake in the bank from 79 per cent to about 80 per cent, said the bank's chief.

Shares of BoM closed 1.77 per cent up at Rs 45.90 per share on the BSE, against the previous close of Rs 45.10.

kram@thehindu.co.in

Narendra Singh is new CMD of Bank of Maharashtra

Mr Narendra Singh has been appointed Chairman and Managing Director of Bank of Maharashtra (BoM) with effect from February 1, 2012. He has been Executive Director of Corporation Bank since December 7, 2009.

Mr Singh will report to the Head Office of Bank of Maharashtra on Tuesday and start getting acquainted with his new assignment.

Born on September 11, 1953, he started his professional career as an officer with Allahabad Bank in 1980 and became General Manager in 2005 before joining Corporation Bank as Executive Director.

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.

Bank of Maharashtra to be recapitalised this fiscal

Public sector lender Bank of Maharashtra (BoM) today said it expected a capital infusion by the government this fiscal as it had received a letter from the Finance Ministry in this regard.

"We have received a letter from the government stating that our request for fund infusion is under active consideration and we should be ready for the proposed infusion," the Pune-headquartered bank's Chairman and Managing Director AS Bhattacharya said.

However, the quantum of the proposed infusion is not known, he said. The bank has been looking at a capital infusion of around Rs 860 crore by the government.

At present, six to seven public sector banks, including the nation's largest lender, State Bank of India, have approached the government for a capital infusion to shore up their capital adequacy ratio, which will help in further lending to customers.

Last week, Bank of Baroda said it had been assured of Rs 775 crore recapitalisation through preferential share allotment. Yesterday, Union Bank of India had said it would get a capital infusion of Rs 280 crore in the current quarter.

However, there is no final word on a request from the nation's largest lender SBI for the same, though it has been pending for over a year. The bank is expecting a capital infusion of some Rs 4,000 crore this fiscal.

Implementation of Basel-III banking norms, which will be enforced from 2013, requires recapitalisation of the state-run banks by the government.

Earlier, Financial Services Secretary DK Mittal had said though this year's budget for bank recapitalisation was only Rs 6,500 crore, there would be a second supplementary budget after December to infuse capital into select public sector banks.

Referring to capital adequacy ratio, sources in the industry said that post-capital infusion, the combined capital adequacy ratio of BoM stood at 11.88% as of the September quarter. The government holds a 79.24% stake in the bank.

Source: Business Standard

Bank of Maharashtra goes to doorsteps of villagers

Bank of Maharashtra has launched a financial inclusion service as an alternative model to the Business Correspondents format. Under this model, bank staff will visit villages and offer banking services at the homes of the villagers.

The bank has launched six of these Mahabank Gram Seva Kendras (MGSKs) in villages in Raigad, Thane, Ahmednagar, Aurangabad, Pune and Satara districts on a pilot basis, said a press release issued by the bank.

The MGSKs were inaugurated by the RBI Deputy Governor, Dr K.C. Chakrabarty, in Raigad district.

The bank's permanent staff member of the nearest parent branch, equipped with a laptop will go to these villages to render banking services on specified days every month.

Mr A.S. Bhattacharya, Chairman and Managing Director, Bank of Maharashtra, said the bank has covered all the 1,215 villages allotted to it and is in the process of stabilising services through the Business Correspondents and MGSKs.

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 Maharashtra gets new CMD

State-owned Bank of Maharashtra on Friday said the government has appointed Mr Narendra Singh as its new Chairman and Managing Director (CMD).

He will replace the incumbent Mr A S Bhattacharya, who retires on January 31, 2012, Bank of Maharashtra informed the Bombay Stock Exchange.

Mr Singh is now Executive Director of Corporation Bank.

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 Maharashtra not to raise savings bank rate

KOLKATA: Bank of Maharashtra said it is not going to raise savings bank rate immediately as it feels savings deposits are not interest sensitive.

Its chairman and managing director Anup Sankar Bhattacharya told ET: "I don't feel the urge to raise interest rate on savings deposit."

Reserve Bank of India has deregulated the savings bank rate last week which has prompted small private banks like IndusInd Bank, Kotak Mahindra Bank and Yes Bank to raise the rates. Earlier, the rate was fixed at 4%.

IndusInd Bank said it will offer 5.5% rate for balance up to Rs 1 lakh and 6% for over Rs lakh. Kotak Mahindra Bank and Yes Bank raised the rate 200 basis points to 6% for deposits over Rs 1 lakh.

Bhattacharya said the competition for savings deposit mobilisation will largely be limited in urban centres and his bank mobilises a bulk of its deposit from rural and semi-urban centres without much competition.

The Pune-based state-run bank has 1.20 lakh crore savings bank customers of whcih 1.14 lakh core have below Rs 1 lakh deposits.

Source: EconomicTimes

Bank of Maharashtra's Q2 net up by 92%

Mumbai: Bank of Maharashtra today said its net profit for the second quarter ended September 30, 2011 has jumped by 92 per cent at Rs 100.42 crore compared to Rs 52.3 crore in the corresponding quarter last year.

The total income of the bank has risen by 36.44 per cent from Rs 1,425.61 crore to Rs 1,945.15 crore for the second quarter. Its Net Interest Income (NII) reported a 37.65 per cent growth at Rs 1,800.39 crore from Rs 1307.96 crore, while the non-interest and other income has risen by 23 per cent to Rs 144.62 crore, a bank statement said here.

The gross non-performing assets (NPAs) ratio of the bank is dipped by 143 basis points (bps) from 3.58 per cent to 2.15 per cent, while the net NPA ratio decreased by 161 bps from 2.18 per cent to 0.57 per cent on YoY basis, it said.

"During the year, it was a challenge for the banking sector to maintain the asset quality. BoM has done well in recovering the NPAs and in containing the slippages in asset quality to a large extent. The bank hopes to bring down gross NPA level below 2.25 per cent and net NPA below 1.25 per cent," Bank of Maharashtra Chairman and Managing Director A S Bhattacharya told reporters here.

In this environment of rising inflation, tightening monetary policy and the consequent hardening interest rates, the bank has been focusing on enhancing the business quality and operating efficiency to bring about improvement in costs and margins, he said.

The bank continues to give focused attention to cater to the credit needs of MSME sector. The bank has set a target of achieving total business of Rs 1,40,000 crore with mix of deposits Rs 80,000 crore and advances Rs 60,000 crore in FY 12, Bhattacharya said.

The bank has 1,564 branches and expected to add 36 more branches, of which 19 will be in under-banked districts, and 4 in the North-Eastern states.

The bank is also looking at opening branches in the overseas markets, Bhattacharya added.

Source: Financial Express

Festive season sees loans grow faster than deposits

Loans grew faster than deposits during the fortnight ended September 9, indicating an increase in credit demand during the festive season. The growth in loans has been slow so far this financial year, owing to steep rate rises by the Reserve Bank of India (RBI).

According to recent data released by RBI, credit growth during the period was Rs 29,433.37 crore, a growth of 0.7 per cent over the previous fortnight. On a year-on-year basis, loans grew 20.4 per cent till September 9.

On the other hand, deposits saw a growth of only Rs 12,935 crore, a rise of 0.2 per cent over the previous fortnight. On a year-on-year basis, deposits grew 17.5 per cent.

“We expect the growth in advances to sustain in the remaining part of this financial year. For instance, we are focusing on sectors like agriculture and mid-corporates. For the farm sector, bank credit is still the cheapest funding option available at this moment,” said Bank of Maharashtra Chairman & Managing Director, A S Bhattacharya.

RBI had, last week, raised interest rates for the 12th time in 18 months to fight high inflation. It had also signalled more rises may follow, confounding expectations of the tightening cycle coming to an end and putting it at odds with global peers, which are focused on reviving weak demand.

“We have certainly started seeing an increase in demand for credit now, although it is a gradual pick-up,” said a senior official with a large state-run bank, on the condition of anonymity. “We are hopeful it would gather pace, as the festive season progresses.”

Typically, credit growth sees an increase during the festive season starting August and extending till November, since people require more funds to buy new cars, consumer durables and houses.

Amid the series of rate rises, the central bank has also scaled down its credit growth projections for the current financial year from 19 per cent to 18 per cent. Banks have also lowered their credit growth projections.

“There is still a fair amount of consumption demand in the Indian economy and this would drive loan growth on a year-on-year basis. High interest rates may affect demand in rate-sensitive sectors like real estate or large-ticket loans. There may be some impact on the small and medium enterprise segment,” said Pralay Mondal, country head (retail assets & credit cards), HDFC Bank.

Bankers said the borrowing decisions of mid-sized companies were not guided by interest rates alone. “They want funds at the right time and are willing to pay interest on these loans. These factors would ensure we maintain the growth in our advances. In retail, especially in housing loans, there is a slowdown in demand. This is because home buyers are expecting a fall in property prices, and delaying their purchase decisions,” Bhattacharya said.

Source: Business Standard

Vijaya Bank sheds Rs 2,000 cr of bulk deposit in Apr-Aug period

New Delhi: Bangalore-based public sector lender Vijaya Bank said it has retired around Rs 2,000 crore of bulk deposits in the first five months of the current fiscal to protect its net interest margin.

"We have shed around Rs 2,000 crore of bulk deposits in the first five months to protect our margin. This is part of our conscious effort to see that cost is contained," Vijaya Bank Executive Director Subhalakshmi Panse said.

We expect our net interest margin to be above 3 per cent during this fiscal, she added.

Banks are increasingly facing cost pressure due to high deposit rates. As high deposit rates impact net interest margin, many banks are shedding their high cost bulk deposits to protect margin.

Earlier, Bank of Maharashtra had also announced offloading its entire chunk of bulk deposits of Rs 9,000 crore by March, 2012 to control cost of deposits. Usually, banks have to pay higher rate of interest on bulk deposits than retail deposits.

Referring to credit growth, Panse said that the bank was witnessing a credit growth of around 18 per cent as of now.

She, however, said that deposit growth was little subdued during this period.

Vijaya Bank is also hopeful that asset quality will be maintained despite a hardening interest rate regime.

"Though our NPAs had increased in the first quarter of FY12 due to system monitoring of loans, we hope that asset quality will be maintained in the current fiscal," she said.

About possible base rate hike, Panse said that the bank would take a call in the last week of September whether to raise base rate in the aftermath of 25 basis points policy rate hike by the Reserve Bank of India.

Vijaya Bank registered a 58% decline in its net profit to Rs 72 crore for the first quarter ended June 30, 2011 against Rs 173.5 crore reported in the same period last year.

Total income of the bank increased to Rs 1,953 during the April-June quarter, up by 28.5 per cent from Rs 1,520 crore in the same period previous year.

Source: Financial Express

BoM may get Rs 800 cr capital infusion this fiscal

Pune-based public sector lender Bank of Maharashtra is hopeful of receiving Rs 800 crore from the government as part of the capital infusion plan in the current fiscal.

"We have approached the government for additional capital infusion of Rs 800 crore. This is under process and we expect to get it before March, 2012," Bank of Maharashtra CMD AS Bhattacharya told PTI here.

Post-capital infusion, the capital adequacy ratio (CAR) of the bank is likely to go up to 14% from the present level of 13.35%, he added.

The Reserve Bank of India prescribes banks to have a CAR of 12% as part of its prudent risk management measures. Bhattacharya, however, noted that the bank had no plans to raise money through either through equity or bonds in the current financial year.

In the meantime, government has said that a committee had been formed to look into the matter of recapitalisation of banks.

At present, 6-7 public sector banks, including nation's largest public sector lender State Bank of India, have approached the government for capital infusion in order to boost their capital adequacy ratio, which will help in further lending to customers.

Also, implementations of Basel-III norms, which will start from 2013, require recapitalisation from the government.

Secretary in the Financial Services Department DK Mittal had earlier said that though this year budget for bank recapitalisation was Rs 6,500 crore so far, there would be a second supplement in December to infuse further capital into selected public sector banks.

Bank of Maharashtra, which has a government holding of close to 79.5%, has a total branch strength of 1,546 across the country. It has registered a 3% increase in net profit to Rs 122 crore in the first quarter of the current fiscal. Its net interest income (NII) rose by 44% to Rs 591.4 crore during this period.

Source: Business Standard

Dhanlaxmi Bank raises base rate, BPLR

Private lender Dhanlaxmi Bank today hiked base rate, or the minimum lending rate, by 25 basis points to 11%, while loans under the older benchmark prime lending rate will be dearer by 50 bps at 20.75%.

The south India-based bank is the first lender to make the move after RBI raised the key lending rate last week to tame inflation.

"The hike in our base rate and BPLR follows the recent interest rate hike by RBI and reflects the tight monetary conditions," Dhanlaxmi Bank's chief financial officer Bipin Kalra said in a statement.

The country's largest lender State Bank of India and its public sector peers Bank of Maharashtra and Indian Overseas Bank have said that they would pass on the latest hike in rates to borrowers in some time.

In its mid-quarter review of the monetary policy on Friday, the Reserve Bank hiked the short-term lending rate by 25 basis points to 8.25% to tame inflation, which stood at a 9.78% high in August.

The central bank has hiked rates 12 times in the last 18 months and also articulated that it is ready to compromise on growth prospects in the short term to achieve its objective to tame the rate of price rise.

Source: Business Standard