Corp Bank workshop on forex

Corporation Bank, in association with FEDAI (Foreign Exchange Dealers' Association of India) Mumbai, has organised an orientation workshop on foreign exchange in Mangalore.

A bank release said here that the workshop, from February 6 to 11, is being attended by 33 bankers from 17 banks.

Inaugurating the workshop, Mr H.S. Saini, General Manager of the bank, said that it is very important for bankers to be abreast with the latest guidelines of the Reserve Bank of India and the Foreign Exchange Management Act as today's customers are well informed and expect better services from the bankers.

Mr P.M. Pethe, Officer on Special Duty (Training) from FEDAI, spoke about the scope of the training.

Mr T.V. Dattamurthy, coordinator of the programme from Corporation Bank, welcomed the participants.

Mr A.G. Satyanarayana, Chief Manager from the bank's HRD and Training Division, proposed a vote of thanks.

vinayakaj@thehindu.co.in

New Corporation Bank ED

Mr Amar Lal Daultani, General Manager of Allahabad Bank, has assumed charge as Executive Director of Corporation Bank with effect from February 3.

The bank informed the BSE on Saturday that the Central Government, after consultation with the Reserve Bank of India, has appointed Mr Amar Lal Daultani, General Manager, Allahabad Bank, as Executive Director of the Corporation Bank with effect from the date of his taking over charge of the post till March 31, 2015 (the date of his superannuation), or until further orders, whichever is earlier.

Accordingly, Mr Daultani has assumed office as the Executive Director of the bank on February 3, it informed BSE.

Corp Bank net up 5% in Q3

Higher cost of deposits, and provisions for loans and investment depreciation tempered Corporation Bank's net profit in the October-December 2011.

The public sector bank's net profit nudged up by 5 per cent to Rs 402 crore, against Rs 382 crore in the corresponding year-ago period.

In the reporting period, cost of deposits increased to 7.64 per cent (5.72 per cent in the October-December 2010 period).

While provisions for bad and doubtful debts increased by 22 per cent to Rs 440 crore (Rs 360 crore), that for investment depreciation jumped by 460 per cent to Rs 140 crore (Rs 25 crore).

According to Mr Ajai Kumar, Chairman and Managing Director, the thrust of the bank will be to grow the loan portfolio in the retail, small and medium enterprises, and agriculture segments.

Due to the relatively low current account, savings bank account (CASA) deposit base of 21 per cent (of total deposits), cost of deposits has come under pressure. The bank plans to increase the CASA base to 30 per cent in the next couple of years, said Mr Kumar.

To increase the CASA base and expand loan portfolio, the bank will open branches at the rate of 200 every year. Currently, the bank has 1,431 branches.

“We will step up recoveries, and increase focus on upgradation of assets and credit monitoring,” said Mr Ajai Kumar.

Aviation sector exposure

According to Mr Ashwani Kumar, Executive Director, Corporation Bank, the bank has an exposure aggregating about Rs 1,600 crore to Air India (Rs 1,300 crore) and Kingfisher Airlines (Rs 300 crore). The exposure to these distressed airlines accounts for just 1.73 per cent of the total advances of Rs 92,378 crore as at December-end 2011.

The bank is hopeful that a debt-restructuring mechanism for the national carrier will soon be hammered out so that banks' asset classification is not impaired. It has already downgraded the asset classification of Kingfisher Airlines to the sub-standard category.

Shares of Corporation Bank shares closed 0.05 per cent up at Rs 416.05 on the BSE on Thursday, against the previous close of Rs 415.85.

kram@thehindu.co.in

Corporation Bank keen on boosting lending to small units

Mangalore-based Corporation Bank is planning several initiatives aimed at boosting the growth of the SME (small and medium enterprises) sector.

Of the targeted Rs 35,000 crore credit portfolio for the priority sector during the current fiscal, the bank is looking to lend around Rs 15,500 crore to the SME segment.

Speaking to Business Line here on Wednesday, Mr Ajai Kumar, Chairman and Managing Director, said that the bank is giving focused attention to the growth of SME sector by cashing in on the big opportunity available in the industrial ancillary units in the auto, IT, leather, food processing and textile sectors.

He said that SME credit portfolio of the bank was at around Rs 12,500 crore at the end of December. “We want to reach a figure of Rs 15,500 crore in SME lending this fiscal,” he said.

Mr Ajai Kumar said an SME beneficiary is one who manufactures goods for big companies and will, therefore, require money.

He said Corporation Bank has created and launched several niche SME products to meet the needs and expectations of entrepreneurs. The bank has also adopted cluster-based approach for focused lending to SMEs.

The bank, he said, has signed an agreement with SIDBI for financing SMEs. Added to this, the bank also has opened specialised SME branches.

As a process re-engineering measure, the bank proposes to establish ‘SME processing cells' in all zonal offices in the country, Mr Ajai Kumar said.

Under this, customers can go to any branch and submit their loan proposals, and the cell will process them, he added.

vinayakaj@thehindu.co.in

Corp Bank hikes NRE deposit rates

Corporation Bank has increased the interest rates on Non-Resident External (NRE) term deposits with effect from December 30.

A bank release said here on Saturday that the bank has increased the interest rates offered on NRE term deposits up to 9.50 per cent in a bid to attract foreign currency inflows amid a depreciating rupee.

The bank is now offering 9.50 per cent (3.82 per cent) on NRE deposits with maturity ranging from one year to less than two years, and 9.25 per cent on NRE deposits with maturity ranging from two years to less than five years. Earlier, the bank was offering 3.51 per cent for two years to less than three years and 3.64 per cent for three years to less than 10 years.

The release said that NRE deposits of maturity period of five years and above stand withdrawn.

vinayakj@thehindu.co.in

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

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

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

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

These candidates include S.S. Mundra from Union Bank of India, R V Iyer and Rajiv Dubey from Central Bank of India, Ashwini Kumar of Corporation Bank, Archana Bhargava from Canara Bank, V Kannan from Oriental bank of Commerce, Rajeev Rishi from Indian Bank, Rakesh Sethi from Punjab National Bank A K Datt of Dena Bank and Ms Subhalakshmi Panse of Vijaya Bank.

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

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

Source: EconomicTimes

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

Yields on govt bonds likely to ease this week

Yields on government securities are expected to ease in the coming week and will hover in the range of 8.3 per cent to 8.35 per cent for 10-year benchmark bonds, treasury officials of various banks have said.

“Yields are likely to be in the range of 8.3-8.35 per cent for the 10-year benchmark bonds this week, as liquidity issues are being addressed by the central bank through open market operations (OMOs),” Indian Overseas Bank General Manager (Treasury), Mr T.S. Srinivasan, told PTI.

On Friday, yields on the 10-year benchmark bond closed at 8.36 per cent, one basis point lower in comparison to the previous week.

OMOs, which are conducted by the RBI to infuse liquidity into the system through the buy-back of government securities, have been conducted frequently by the central bank in the last one month to ease pressure on the liquidity front.

The central bank has infused around Rs 33,300 crore into the system through OMOs in the last one month and is likely to infuse more in the future.

Mr Srinivasan further said that government spending would accelerate from January as the Budget nears, making the liquidity situation comfortable.

It is usually seen that departmental spending by various government agencies speeds up from January to expend money allocated in the Budget for the fiscal. Mr Srinivasan said the possibility of the government pledging some of its holdings in private companies to borrow more, as suggested by reports, would support this trend.

“There are reports suggesting that the government may pledge its holding in some of the private companies to borrow around Rs 50,000 crore from the market. If that happens, pressure on yields will further ease,” he said.

Earlier, market participants had anticipated that if government borrowing increases, yield rates will harden due to oversupply.

Another treasury official echoed a similar sentiment about the yields on government bonds.

“It should flatten out as the central bank is infusing liquidity through open market operations. Also, the regulations allowing a higher FII limit and some of the other measures should help in easing of the yields,” Corporation Bank General Manager (Treasury), Mr P. Rajaram Karanth, said, adding that yields on the 10-year G-Secs will be around 8.33 per cent next week.

He also said liquidity that has gone out of the system due to advance tax payouts would be pumped back in, which would ease the liquidity conditions going ahead.

Bank of Baroda selected as best public sector bank in India: Report

Bank of Baroda and Karur Vysya Bank have been selected as the best banks in the public and private sectors, respectively, at the national level for this year by a jury appointed by the State Forum of Bankers Clubs in Kerala.

The awards in the various categories would be presented at a function here on December 17, the State Forum of Bankers Club President L R R Warrier and General Secretary K U Balakrishnan told reporters here.

Minister of State for Consumer Affairs, Food and Public Distribution K V Thomas will present the forum's 'Businessman of the Year' award to NRI businessman B Ravi Pillai, the Managing Director of the Dubai-headquartered RP Group of companies.

Kerala Finance Minister K M Mani will present the best bank award in the public sector category to Bank of Baroda Managing Director and CEO M D Mallaya, while State Excise Minister K Babu will present the best bank award in the private sector of K Venkitaraman, the CEO and Managing Director of Karur Vysya Bank.

Justice V R Krishna Iyer will present the best bank award in the rural development category to V K Saigal, the Chairman of North Malabar Gramin bank, and the best bank award in the new generation banks category to IndusInd Bank Ltd Managing Director and CEO Romesh Sobti.

Corporation Bank and Indian Overseas Bank were adjudged the second and third best banks in the public sector and Lakshmi Vilas and City Union Bank in the private sector, respectively.

Among the new generation private banks, YES Bank and Axis Bank have been selected for the second and third slots.

About 27 parameters, including the banks' deposits, advances and NAP level were taken into consideration while selecting the best banks, Balakrishnan said.

Source: EconomicTimes

IBA Chairman visits Corp Bank

Mr M.D. Mallya, Chairman and Managing Director of Bank of Baroda, and Chairman of Indian Banks' Association (IBA), visited the corporate office of the Corporation Bank on Friday.

A bank release said here on Saturday that Mr Mallya interacted with top executives of the bank, and told them that Information Technology, coupled with human resources management, was the key to the performance of the bank.

He said there are opportunities galore for banks, even in the present condition, to cherry pick business to ensure qualitative growth.

Mr Ajai Kumar, Chairman and Managing Director of Corporation Bank, complimented Mr Mallya for adopting a consistent and sustainable growth model for the Bank of Baroda. Mr Narendra Singh and Mr Ashwani Kumar, Executive Directors of Corporation Bank, were present on the occasion.

vinayakaj@thehindu.co.in

No second round of debt restructuring for Kingfisher by banks

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

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

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

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

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

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

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

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

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

Corp Bank scheme for Kerala Govt employees

Corporation Bank has announced special benefits for the permanent employees of the State Government.

Mr A.M.M.G. Nair, Zonal Manager, Corporation Bank, regional office, Kochi, said Corp Payroll Account is available for routing the salary of permanent employees through which they can withdraw 50 per cent of the amount as overdraft from the second month.

Instant ATM-cum-debit card, Internet banking, SMS banking, free remittance facility, cheque book, multi-city cheques and passbook are also available.

Payment of tax, insurance payment and NEFT can be done free of charge through Internet and ATM.

There is a concession of 1 per cent on interest rates and 50 per cent of processing charges on housing loans and 0.25 per cent concession on interest rates for vehicle loans. Gift cards are also available free of charge.

Corp Bank's Meerut zonal office opens

Mr Ajai Kumar, Chairman and Managing Director of Corporation Bank, inaugurated its new zonal office premises at Meerut on Saturday. The Meerut zone consists of branches in the State of Uttarakhand and some of the districts of Uttar Pradesh.

The Meerut zone has 43 branches in the areas of metro, urban, semi-urban and rural. A bank release said here on Saturday that with a view to making branches more exclusive, the bank had created 12 new zones across the country, taking the total number of zones to 31.

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.

Corporation Bank net up 14% despite rise in NPAs

Corporation Bank's net profit increased 14 per cent to Rs 401 crore in the quarter ended September 30, 2011, from Rs 352 crore in the corresponding quarter last year.

The bank saw a huge rise in non-performing loans on account of moving to the system based recognition of NPA, said Mr Ajai Kumar, Chairman and Managing Director.

Gross NPAs increased to Rs 1,080 crore (Rs 740 crore) and provisions increased to Rs 205 crore (Rs 98 crore).

“NPAs are the biggest challenge for the bank. The number of small NPA accounts has gone up due to the system based recognition of NPAs. Even those cases that were borderline are now shown as NPAs,'' said Mr Kumar

The bank will focus on recovery from NPAs over the next six months and target a gross NPA ratio of less than 1 per cent, he added.

The high cost of deposits also impacted the bank's profitability. The bank plans to improve its share of low-cost current and savings account (CASA) from the current 21.8 per cent. There is no immediate plan to increase the savings bank rate as it will impact profitability, Mr Kumar said.

Going ahead the bank will focus on retail and SME segments. In the current financial year, the bank is targeting deposit growth of 25 per cent, advances growth of 20 per cent, NIM at 3 per cent and CASA at 30 per cent.

Shares of Corporation Bank closed at Rs 426.75, up 2.92 per cent, from Rs 414.65, on the BSE, on Monday

IDBI Bank scouting for partners to float infra debt fund

Mumbai, Oct. 21: Public sector lender IDBI Bank is in talks with various financial institutions, including other state-owned banks, to float an infrastructure debt fund, a top official has said.

“We are in talks with various financial institutions to float an infrastructure debt fund after the recent approval of the Reserve Bank allowing banks to launch such funds,” Executive Director, Mr Melwyn Rego, told PTI here.

He, however, declined to name the institutions, or give information about the corpus of the proposed fund.

However, sources said the bank is in talks with its public sector peers, including Corporation Bank, and pure-play infra finance company, India Infrastructure Finance Company.

On September 24, the RBI allowed banks and non-banking finance companies (NBFCs) to sponsor the IDF, which can be set up as mutual funds and NBFCs.

As per the central bank guidelines, IDFs that can be set up as NBFCs should have a minimum net-owned fund of Rs 300 crore and a capital adequacy ratio of 15 per cent.

During the Twelfth Plan (2012-17), the Government plans to spend around $1 trillion (Rs 50 lakh crore) to fund infrastructure, which is almost double that of the Eleventh Plan infra expenditure.

Banks' total infrastructure lending aggregated Rs 5,52,682 crore by the end of June quarter this fiscal.

IDBI Bank, which draws its lineage from infra funding as a development finance bank, has earlier evinced interest to set up such debt funds and is expected to ramp up its lending to this segment through the specialised fund.

RBI policy: Home, auto loan EMIs to go up

All loans are set to become costlier, with the Reserve Bank today hiking the key interest rate for the 12th time since March, 2010, by 25 basis points to rein in high inflation.

With today's decision, the short-term lending (or repo) rate at which banks borrow from the RBI stands increased to 8.25% and the short-term borrowing (reverse repo) rate at which banks park their funds with the RBI to 7.25%.

Headline inflation rose to 9.8% in the month of August from 9.2% in July this year.

Despite the RBI hiking rates several times since March, headline and food inflation are close to double digits.

"As such, a premature change in the policy stance could harden inflationary expectations, thereby diluting the impact of past policy actions. It is, therefore, imperative to persist with the current anti-inflationary stance," the RBI said in its mid-quarter review of the monetary policy.

Going forward, the RBI's stance will be influenced by signs of downward movement in the inflation trajectory, to which a moderation in demand is expected to contribute, besides the implications of global developments, it said.

"The step is consistent with the RBI monetary stance for the first half of 2011-12 and overall concerns on growth sustainability in the medium term.

"I am hopeful that measures taken would get us back a more comfortable inflation situation earlier rather than later, while having scope for growth to pick up in the second half of the year," Finance Minister Pranab Mukherjee said.

Commenting on the rate hike, Indian Overseas Bank Chairman and Managing Director M Narendra said banks need to pass on the hike to customers as the cost of funds has gone up.

"I believe banks would wait till the month-end before taking a call on an interest rate hike," he said.

"The rate hike is on expected lines and would result in interest rates, both deposit and lending, going up," Oriental Bank of Commerce Executive Director S C Sinha said.

Echoing similar views, Corporation Bank Chairman and Managing Director Ramnath Pradeep said, "Banks will have to raise rates, but when and how will be decided by individual banks, depending on their asset liability conditions."

According to Punjab and Sind Bank Executive Director P K Anand, the impact of the policy rate hike will take effect with a time lag.

The banks, he said, will maintain the current rates at least for the next 15 days and take a call on revising them after ascertaining credit demand.

Earlier this week, State Bank of India Chairman Pratip Chaudhuri had said if the RBI raised interest rates, banks would have to pass on the increase to customers.

"It has to be financial transmission," Chaudhuri had said.

Source: Business Standard

Bankers see RBI hiking rates by 25 bps

New Delhi: With inflation moving closer to the double-digit mark, bankers expect the Reserve Bank to increase its key policy rates by 25 basis points in the upcoming policy review on Friday.

As long as inflation does not decline to a significant level, the Reserve Bank of India (RBI) would continue its tight monetary stance. The general view is that RBI would go in for another rate hike as inflation is hovering around the double-digit mark, Indian Overseas Bank Chairman and Managing Director M Narendra said.

"I think there would be some rate hike this week and could be some more in October policy if inflationary expectations are not anchored," he said.

RBI, which is scheduled to review interest rate policy again on September 16, faces a dilemma of sorts as the Indian economy is confronted with high inflation and sliding growth.

It raised interest rates 11 times in last 18 months to tame inflation.

Inflation climbed to 13-month high of 9.78 per cent in August suggesting that frequent interest hikes by RBI since March 2010 has proved ineffective to contain price rise.

Inflation, based on the Wholesale Price Index, went up from 9.22 per cent in July. The near double-digit inflation in August is highest since July 2010, when it was 9.98 per cent

Corporation Bank Chairman and Managing Director Ramnath Pradeep said it is expected that the RBI will further hike interest rates.

"If policy rates go up it will put pressure on banks to raise interest rates, both lending and deposit rates," he said.

Echoing similar views, Oriental Bank of Commerce Executive Director S C Sinha said, "The current rate of inflation would put pressure on RBI to further tighten monetary policy.

"There could be a hike of 25 basis points in key rates by RBI," Sinha said, adding, this would result in loans becoming more expensive in coming days.

It may noted RBI in the last policy review in July raised the short-term lending (repo) rate by a surprise 50 basis points to 8 per cent and the short-term borrowing (reverse repo) rate by a same margin to 7 per cent.

Source: Financial Express

Prizm Payment plans Rs 1k-cr capex for ATM/POS network

Sequoia Capital-backed Prizm Payment Services Ltd plans capital expenditure of Rs 1,000 crore over three years to scale up its network for electronic payment modes like Automated Teller Machine (ATM) and Point of Sale (POS) networks.

Loney Antony, managing director, said the growth in ATM network was fast, while the tempo of POS network expansion remains subdued. The capital expenditure, pegged over Rs 300 crore per year, would be funded through a combination of debt, operating leases and vendor financing. Over a period, internal accrual would increase in financing network expansion and the company would look at another round of capital infusion only in the second half of 2012-13, he said.

Venture capital firm Sequoia invested a little over $15 million ( Rs 68 crore) in the company in two rounds in the past three years. The last capital infusion, of $8 mn, was in the second quarter of 2010-11.

At present, it operates 8,500 ATMs. Of which, 3,000 are on pay-per-use contracts, while the rest work on a fixed fee plus transactions-based charge arrangement. The pace of ATM rollout would improve to 450-500 a month in the next six months from 300 each month being rolled out at present. The number of ATMs installed in India is expected to grow to 2 00,000 in the next four years, he said.

Axis Bank and Corporation Bank are its key customers for the ATM and POS networks, respectively. For expanding presence in the POS segment, it had acquired the POS service business of Reliance Money in 2009. It is now managing about 20,000 POS.

Anthony said there had been a sharp rise in the number of debit cards issued in recent years but the use (amount of payments) at POS terminals remains low, compared to credit cards. Most use debit cards at ATMs. According to Reserve Bank of India data, the issue of debit cards jumped to 237.1 million at the end of March 2011, from 127.7 million at end of March 2009. The payments made by using debit cards rose in these two years to Rs 35,705 crore from Rs 18,547 crore. The credit cards' base grew from 259.6 million to 265.1 million in the two years, while payments rose to Rs 75,516 crore from Rs 65,356 crore, RBI added.

 

Source: Business Standard

LIC eyes 5% sales from bancassurance

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

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

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

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

However, he said leveraging the channel was not easy.

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

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

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

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

Source: Business Standard