RBI to issue Rs 1,000 notes with inset letter ‘R’

The Reserve Bank of India will shortly issue banknotes of Rs 10 denomination with inset letter ‘R’ in the Mahatma Gandhi Series.

“The RBI will shortly issue Rs 1,000 denomination banknotes with inset letter ‘R’ in the Mahatma Gandhi series bearing the signature of D. Subbarao, Governor, RBI, and the year of printing on the reverse of the banknote,” the central bank said in a statement.

The design of these notes to be issued now would be similar in all respects to the banknotes in the Mahatma Gandhi Series 2005 issued earlier.

All the banknotes of Rs 1,000 denomination issued by RBI earlier will continue to be legal tender, it added.

Bank of Baroda inks pact with CARE

Public sector lender Bank of Baroda has signed a memorandum of understanding with rating agency Credit Analysis and Research Ltd (CARE) for the rating of micro, small and medium enterprises (MSMEs) which are either prospective or existing customers of the bank.

“We believe that this MoU is an endorsement of our pursuit to retain and further gain the confidence of the financial services and MSME fraternity. We are committed to support all of Bank of Baroda’s efforts in the MSME sector and assist them through their journey of exponential growth,” CARE MSME head, Mr R. Suryanarayan, said in a statement today.

IOB to raise Rs 2,000 cr via pref allotment

Indian Overseas Bank will raise close to Rs 1,980 crore by making preferential allotment to Government of India and Life Insurance Corporation of India.

IOB’s Committee of Directors for preferential issue of shares, on February 21, fixed Rs 97.82 (including premium of Rs 87.82) as the price for the allotment of equity shares on preferential basis to the GoI and LIC.

While GoI will be allotted up to 17,12,32,876 shares for its capital contribution of up to Rs 1,675 crore, LIC would be allotted up to 3,09,37,467 shares (5 per cent of pre-issue capital) for its capital contribution of up to Rs 302.63 crore.

IOB has said that the number of shares to be allotted to both Government of India and LIC and its various schemes will vary according to the capital contribution from GoI and LIC and its various schemes respectively within the amounts mentioned above.

HDFC Bank not to cut its ATM rollout plans

HDFC Bank does not intend to cut on its automated teller machines (ATM) rollout plan in spite of the Reserve Bank giving an in-principle nod for white label ATMs, which will be operated by non-banking companies, a top official said today.

The bank will not cut its ATM rollout target as a result of the RBI’s draft guidelines allowing non-banking entities to set up ATMs, also called as white-label ATMs, said Mr Rahul Bhagat, HDFC Bank Head (Direct Banking Channels).

Asked about the cost of setting up an ATM, Bhagat said up to 50 per cent of transactions in its existing ATMs are done by non-HDFC Bank account holders, resulting in good fee income, which will take care of the installation cost.

Moreover, he pointed out that when a bank sets up an ATM, it is also about giving the customer a feel of the service that each bank wants to give out on its own.

Meanwhile, HDFC Bank today tied-up with Visa and Monitise—promoted Movida to facilitate mobile—based transactions for its debit and credit card—holders.

Under the service, mobile phone users using any handset and even without Internet connectivity will be able to pay for services like electricity bills and mobile recharges.

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.

Citi faces multi billion-dollar write-down risk: Report

Financial services major Citigroup Inc may face a multi billion-dollar write-down as it begins to unwind its minority investment in the Morgan Stanley Smith Barney brokerage, says a media report.

“Citigroup Inc is facing a potential multi billion-dollar write-down as it begins unwinding its minority investment in the Morgan Stanley Smith Barney brokerage,” the Wall Street Journal reported.

Morgan Stanley has the right this spring to start buying Citigroup out of the joint venture, which was formed in 2009 and is expected to take full ownership in 2014, it added.

Morgan Stanley Smith Barney currently is valued at $20 billion on Citigroup’s books, which is $5 billion more than it is on Morgan Stanley’s, the report said citing Credit Suisse’s analyst Mr Howard Chen.

The difference in the valuation is mainly on account of different accounting standards. The value of Citigroup’s equity stake in the business is roughly $10 billion.

Citigroup may need to take a $2.5-billion write-down on a sale, which could translate into a $1.8-billion after-tax hit, the publication said citing Mr Chen.

“A sale that valued Citigroup’s stake at $7.5 billion, broadly in line with Morgan Stanley’s assessment according to a report from Mr Chen, could result in a $2.5-billion write-down that would translate into an after-tax earnings hit of $1.8 billion,” it said.

According to the report, Citigroup declined to comment on the issue.

RBI panel for raising priority sector lending target for foreign banks to 40%

Given the inability of many banks to achieve the direct lending target in the agriculture segment, a Reserve Bank of India committee has recommended doing away with the ‘direct and indirect' lending distinction. Instead, it has suggested a composite target for agriculture and allied activities.

However, the committee, headed by Mr M.V. Nair, Chairman and Managing Director, Union Bank of India, kept the priority sector lending target at 40 per cent of adjusted net bank credit (ANBC) unchanged.

The committee has suggested revising the priority sector lending target for foreign banks to 40 per cent from 32 per cent at present. This will bring them on a par with all domestic banks. In revising the target for foreign banks, the principle of reciprocity under the World Trade Organisation regime has been adopted, Mr Nair said.

The RBI released the committee's report on Wednesday and has sought stakeholders' feedback by March 31.

According to the report, the target for lending to agriculture and allied activities will be 18 per cent of ANBC. Currently, this target is broken up into 13.5 per cent direct lending and 4.5 per cent indirect lending.

Agriculture and allied activities will cover the entire value chain from farm gate to food plate.

The distinction between direct and indirect lending was creating confusion with regard to classification and reporting, said Mr Nair. The aim is to ensure that formal credit reaches more sections of society, he said.

“…concepts of ‘Direct' and ‘Indirect' lending to agriculture may be integrated in order to have an all encompassing approach towards agriculture sector,'' the report said.

Within agriculture and allied activities, the committee has recommended a sub target of 9 per cent of ANBC for marginal and small farmers, to be achieved by 2015-16.

Within the micro and small enterprises (MSE) sector, a sub-target of 7 per cent of ANBC for micro enterprises is to be achieved by 2013-14.

Housing, education loans

The quantum of education loans to be counted as priority sector has been increased to Rs 15 lakh for studies in India, from Rs 10 lakh and to Rs 25 lakh for studies abroad, from Rs 20 lakh.

Currently, housing loans up to Rs 25 lakh, per property per family, are included under priority sector.

This has now been revised to consider one property per individual, instead of per family.

UCO Bank to issue 3.13 cr equity shares to LIC on preferential basis

Kolkata-based UCO Bank on Tuesday proposed an issue of 3.13 crore equity shares to Life Insurance Corporation of India on preferential basis. The decision was taken by the board of directors at a meeting in Kolkata this afternoon.

“The issue of 3.13-crore equity shares to LIC on preferential basis will be done at a price as determined in accordance with Securities Exchange Board of India (ICDR) Regulations 2009. It will be subject to approval of the Union Government, Reserve Bank of India and the bank's shareholders,” the bank said in a notification to the BSE on Tuesday.

LIC holds 8.44 per cent of the total number of shares of UCO Bank. It held a total of 5.3 crore shares in the bank as on December 31, 2011, as per data available on the shareholding pattern of the bank from the BSE.

Meanwhile, Allahabad Bank also plans to consider issue of equity shares on preferential basis to LIC at its board meeting on Wednesday.

Life Insurance Corporation holds 8.65 per cent of the total number of stocks of Allahabad Bank as on December 31, 2011.

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.

Fitch downgrades Dhanlaxmi Bank

Rating agency Fitch on Tuesday said it has downgraded the ratings of Dhanlaxmi Bank due to the risks to the operating performance of the Kerala-based private lender and the vulnerability of its capital ratios.

"Fitch Ratings has downgraded Dhanlaxmi Bank and its Rs 17-crore subordinated debt to long-term 'BBB-(ind)' from 'BBB(ind)' and simultaneously put them on Rating Watch Negative (RWN)," the agency said in a release here.

The downgrade comes at a time when the private lender posted a net loss of Rs 36.87 for the third quarter ended December 31.

The rating agency believes there could be potential further losses emerging from the structural weaknesses of an elevated cost base and revenue pressures due to rapid expansion. "Such losses could adversely impact the bank's capitalisation and financial flexibility."

Fitch said the bank has a challenging task of addressing some structural issues.

It noted that the bank's net interest margin is pressurised on the back of large reliance on high-cost wholesale deposits, while non-interest income has also been on a downward trajectory.

"The bank may have to shrink its loan book to conserve capital, which could further compress revenues," the agency said, adding that the asset quality has been stable so far.

"The agency, therefore, remains cautious in view of the moderating economic growth, a still relatively high interest rate environment and low seasoning of a large part of its (the bank) loan portfolio," the release added.

Source: EconomicTimes

RBI wants banks to hold more liquid assets

The Reserve Bank of India said on Tuesday that banks need to maintain additional liquid assets as part of Basel III guidelines, over and above previously mandated levels.

Banks will need to adhere to these norms from the month or quarter ending June 2012, the RBI said in its draft guidelines on "Liquidity Risk Management and Basel III Framework on Liquidity Standards."

Indian banks currently need to meet RBI-set requirements of cash reserve ratio (CRR), and statutory liquidity ratio (SLR).

The CRR, or the share of deposits that banks must set aside in cash with the RBI, is 5.5 percent, and SLR, or the minimum amount of investments that banks need to make mostly in government securities, is 24 percent.

As part of the guidelines, banks are expected to maintain "high-quality" liquid assets, which includes cash and government bonds, which can be converted into cash to meet liquidity needs for a 30-day period under a stress situation.

To qualify as high-quality, the cash reserves and government bond holdings need to be in excess of the mandated levels of CRR as well as SLR, the RBI said.

"Banks are expected to meet this requirement continuously and hold a stock of unencumbered, high-quality liquid assets as a defence against the potential onset of severe liquidity stress," the RBI said.

These holdings will constitute the liquidity coverage ratio, which can help banks tide over potential short-term liquidity disruptions.

The RBI Governor Duvvuri Subbarao has earlier mentioned that existing liquidity ratios, like CRR and SLR, have been a cushion for banks following the Lehman Brothers' collapse in September 2008, and have held in good stead for the banking system as a whole.

Source: EconomicTimes

Mobile banking seeks boost

With Interbank Mobile Payment Service (IMPS) in place, banks are now leveraging their existing corporate clientele to replace day-to-day cash dealings at the ground level with mobile transactions.

So far, 34 banks have registered with National Payments Corporation of India (NPCI) to enable mobile fund transfers between banks for their customers. While most of these banks have launched mobile banking services for their retail customers, some are busy laying the platform for institutional clients as well.

For instance, Citi launched 'Cash-To-Mobile Receivables Solution' and tied up with Coca-Cola India recently. So, instead of handing over the cash to the truck driver delivering goods, the retailer pays the beverage company through his mobile on receiving the order. Coca-Cola India receives credit and the driver gets a simultaneous alert. However, this is on a pilot basis.

Citi said other than in fast moving consumer goods, the mobile payments platform is also being used in the travel, e-commerce, retail and healthcare sectors.

According to experts, another foreign lender, Bank of America Merrill Lynch, is also setting up a mobile platform to facilitate faster collection and cash management for companies.

The biggest challenge in shifting business transactions to the mobile platform is that the client's dealers should also agree. "We are working with some of the companies to train their teams and help upgrade their existing customers to use IMPS," said Sudeep Yadav, MD & Head of Global Transaction Services at Citi.

Rajiv Sabharwal, executive director at ICICI Bank said there was a greater need for interoperability to make cheques and even cash redundant in the next three to five years. IMPS will be a convenient instrument for payments and collections even for businesses, he added. The private sector lender on Monday launched mobile banking services for its retail customers.

Public sector banks are also catching up. Union Bank of India aims to attract its clients from the cash management services to the mobile payment platform. Lalit Sinha, general manager-Alternate Delivery Channels & New Initiative Department at Union Bank of India said the platform will be ready before the end of this financial year.

"While mobile payments will help companies to centralise cash management, it will increase cash flows and generate fee income for banks," said Sinha.

To boost mobile banking in India, the Reserve Bank of India lifted the cap of Rs 50,000 on daily transactions in December. However, the banking regulator empowered banks to set limits based on their own risk perception and with approval of their respective boards.

According to data from NPCI, the volume of inter-bank mobile transactions increased to Rs 5 crore in January from Rs 4.2 crore a month ago. The number of transactions increased to 19,101 from 15,759 in the same period.

In all, banks have issued over 18 million Mobile Money Identifiers (seven digit codes given to customers).

Source: Business Standard

PNB offer for nursing staff in Kerala

Punjab National Bank has introduced a special salary package for nursing staff of private hospitals in Kerala. It will be a zero-charge, zero-balance account which can be operated in any of the bank's branches.

Mr K. V. Rajesh, Deputy General Manager and Circle Head, said in a statement that there is a provision for giving one month's salary advance in the form of overdraft for the account holders. RTGS and NEFT transactions are provided free of cost. The bank will provide free STM/Debit card and internet account also. There is a provision for issuance of add-on debit cards in the same account for the use of family members of the account holders.

The bank will also give free SMS alert and mobile banking facilities. The bank also offers interest concessions on car and housing loans in comparison to the general customers.

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.

Award for Federal Bank

Federal Bank has received Global CSR Award for ‘Best Corporate Social Responsibility Practice Overall.' The award was received by Mr Antu Joseph, Deputy General Manager of the bank, from Dr M. Veerappa Moily, Union Minister of Corporate Affairs. The award is a reflection of the bank's initiatives to treat the society as an integral stakeholder and is a testimony of the various steps taken by the bank in the fields of healthcare, education, and development of agricultural infrastructure.

South Indian Bank plans to raise Rs 1,000-cr capital this fiscal

South Indian Bank is all set to revive its capital raising plan. The Thrissur-headquartered bank had in July-August 2011 proposed to raise Rs 1,000-crore of capital by taking the QIP (Qualified Institutional Placement) route.

The plan was subsequently put on hold as the market conditions were not conducive.

It is now learnt that this proposal is being revived and the bank is planning to complete the process before the end of this fiscal.

At present, FII (foreign institutional investor) and NRI holdings in SIB are more than 48 per cent of the bank's capital, but slightly below the permissible 49 per cent limit.

It is learnt that the bank has appointed JP Morgan, JM Financial, SBI Capital Markets and Enam Securities as merchant bankers to its proposed capital issue.

The bank went for a QIP in 2007, when its business was around Rs 14,000 crore. The issue size then was Rs 326 crore.

Five years later in 2012, it has decided to raise capital to take care of its future requirement.

The issue is expected to improve the bank's capital adequacy ratio from around 14 per cent at present to 17-18 per cent, take care of its branch expansion plans and sustain its growth momentum.

lnr@thehindu.co.in

PNB board to meet on pref allotment to LIC

Punjab National Bank’s board of directors will on February 22 consider issue of equity shares to LIC of India on preferential basis.

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.

Syndicate Bank to get Rs 539 cr fund infusion from govt

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

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

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

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

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

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

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

Source: Business Standard

Power pulls the plug on ATMs

Paul, who hails from Kerala and pursuing his second year in engineering in a college in Coimbatore, was in dire need of cash. He walked up to the ATM outside the college campus only to find the placard ‘Out of Order' placed on the screen of the cash dispensing machine.

Since there were at least four more ATMs (of other banks) within a distance of some 100 yards from the hostel, Paul decided to walk up, but found that none of the ATMs there was functional.

He did not give up. He took his friend's bike and decided to try at an ATM in another location (area) in the city. But no luck there either.

Common man affected

Paul is not alone in this hunt for a functional ATM. Elsewhere in the city a labourer sought the help of this correspondent to draw cash from the ATM.

“I tried to withdraw Rs 200 from the machine closest to my home. The guard there said that the machine was not functioning. Can you help me draw cash please?' he asked, thrusting his card.

But that ATM was also not responding to requests. Why? Frequent power outages of around 8-10 hours that the city has been experiencing for nearly a month now seems to have brought the problem to the fore in unexpected ways.

Hitherto, it was only industrialists who were raising a hue and cry about the acute shortage in power supply, while the common man bore the agony in silence.

Now it is beginning to hurt them more directly.

At least 60 per cent of the ATMs seems to go out of order because of the frequent power cuts.

Though the ATMs are backed by inverters, bankers say that there isn't sufficient time to charge the batteries. “We did not expect such long spells and frequent cuts in power. The inverter battery back-up is for two hours. We are trying to address the issue now,” said one banker.

While another said that ATM maintenance was being outsourced, so he was not in the know of the problem.

Conserving energy

Bankers say they try and conserve energy whenever possible. That includes switching off lights when not required because of the load on the inverter, and so on.

The situation remains bleak for now. Ironically even as ATMs are everywhere, the functional ones are few in this southern industrial hub.

lnr@thehindu.co.in