ICICI Bank spruces up mobile banking services

ICICI Bank has added additional features to its mobile banking services, such as instant funds transfer, prepaid mobile recharge and paying of insurance premia. These are facilitated using the Interbank Mobile Payment (IMPS), said a press release from the bank. Over 16.5 million customers of the bank have been issued their MMIDs (a 7-digit number required to receive money through IMPS).

The service for paying insurance premia is currently available for ICICI Life Insurance customers. Mr Rajiv Sabharwal, Executive Director, ICICI Bank, said that there is a greater need for interoperability to make cheques and even cash redundant in the next three-five years and IMPS will be a convenient instrument for payments and collection even for businesses.

Indian banks eye assets of European counterparts

As European lenders seek to deleverage their books to meet new capital adequacy norms amid the euro zone sovereign debt crisis, Indian banks are eyeing a business opportunity — acquiring quality assets at attractive prices.

Chanda Kochhar, managing director and chief executive officer, ICICI Bank, said, “For the Indian banking sector, it is a business opportunity. Some European banks are actually shedding great quality Indian assets at very attractive prices. We will see many Indian banks coming forward to pick up these loans.” She was speaking at the India Leadership Forum organised by the National Association of Software and Services Companies.

Kochhar said the deleveraging would have a long-term impact on trade finance and the funding of mergers and acquisitions deals, as European banks have been large players in these businesses.

She was confident that the domestic economy and the banking system would remain resilient to external shocks. “I think we are going through a phase in which the mood is worse than the ground reality. What is still strong for us is the domestic consumption, the demography. We have very strong banks and a prudent regulatory environment,” she said.

On interest rates, she said she expected these to decline from the first half of next financial year, as inflation had appeared to ease. However, banks would first assess the liquidity conditions and the demand for loans before scaling down rates. “I think the coming financial year would be better because many things would actually start correcting. Inflation would start slowing. The only question would be when and at what rate,” she said.

“The lending rates will not change because of (a revision) in policy rates alone, but also on the basis of a pick-up in credit and deposits, and the general liquidity. We should watch the total impact of the CRR (cash reserve ratio) cut, the credit growth and the lending rates. I believe in the coming financial year, at least in the first half, lending rates will go down.”

She, however, dismissed concern on the asset quality of Indian banks in the current uncertain macro-economic environment, saying retail advance portfolios of lenders continued to be stable and that there were only a few instances of corporate loans turning bad. “That does not mean the entire corporate sector is facing a challenge. The worries around asset quality are specific around certain companies, and it (the concern) is probably more exaggerated than the real issue,” she said.

Source: Business Standard

Temasek to sell 1.4% in ICICI Bank

Singapore state investor Temasek Holdings is selling 1.38 per cent stake in India’s No. 2 lender, ICICI Bank, according to a term sheet seen by Reuters, in a deal to raise up to Rs 1,472.3 crore.

The share sale comes less than a week after Carlyle Group and Warburg Pincus took advantage of India’s recent market gains to pare stakes in two financial companies, in deals worth Rs 2,138 crore.

The Sensex is up 14 per cent so far this year, mainly led by financial stocks.

Temasek held 39.83 million shares of ICICI Bank, or 3.46 per cent, as of end-December, via its unit Allamanda Investments Pte, according to exchange data. ICICI Bank’s 15.9 million shares are being sold in the range of Rs 924 to Rs 937.75 each, the term sheet showed, a zero to 1.5 per cent discount to on Tuesday’s closing price. The deal would raise Rs 1,490 crore at the top end of the band.

Goldman Sachs is sole bookrunner to the issue, the term sheet showed. ICICI Bank and Temasek spokesmen declined comment. Temasek’s move to reduce its ICICI Bank holding is part of the investor’s rebalancing of financial portfolio and there could be more partial exits in other banks, sources said.

About 36 per cent of Temasek’s portfolio was in financial services in the financial year that ended March 31, which could change in the months ahead under a team that includes investment bankers from UBS and Credit Suisse.

Buyout firms that invested billions of dollars during the Indian market’s boom years before the global financial crisis are widely expected to look for opportunities to cash in their holdings, with more stake sales anticipated in coming months.

Source: Business Standard

Dhanlaxmi MD and CEO Amitabh quits

In a surprise move, the managing director and chief executive of Thissur-based private sector lender Dhanlaxmi Bank, Amitabh Chaturvedi, who has been credited for turning around the bank since he took over in 2008, has put in his papers, according to a bank official.

"It is true that our MD Amitabh Chaturvedi has resigned today. The board meeting is underway now to consider his resignation," the bank spokesperson said.

She also scotched rumours that he was removed by the board. "There is no substance to this. He has resigned on his own and a formal announcement will be made after the board meeting."

The resignation comes following major unrest from a section of the bank's officers' union in the past few months which had alleged about financial irregularities at the bank.

The section of the union having allegiance to the All-India Bank Officers Confederation had recently accused the bank of 'window-dressing' its books and showing inflated profits. The bank had dismissed the allegations as baseless.

The regulator RBI had also not found anything wrong with the books of the bank.

The RBI had even allowed Chaturvedi a two-year extension before the union alleged irregularities.

Chaturvedi, who earlier worked with ICICI Bank and Reliance Capital, took charge of the nearly a century-old bank in 2008.

The bank, which is yet to announce its results for the December quarter, had reported a net profit of Rs 4.35 crore from Rs 1.62 crore in the September quarter, an increase of a whopping rose 168 percent.

Source: Financial Express

ATM card delivery fraud: ICICI Bank fined

ICICI bank has been directed by a consumer forum to pay Rs 20,000 as compensation to one of its consumers whose ATM card was delivered to a wrong hand, who withdrew money from the account fraudulently.

The ATM card landed at a wrong address and was used for withdrawing over Rs 48,000 from the savings account of a person, who was waiting for the same to be delivered at his address.

A District Consumer Disputes Redressal Forum (Central) gave its ruling in the favour of account holder Datta Ram, saying that the act of the private bank caused "mental agony and harassment" to him for its failure to return the money to his account in spite of information that it was not withdrawn by him using the ATM card.

The consumer forum also held that non-delivery of ATM card and withdrawal of money from the account of the customer by somebody else amounts to "deficiency of service" by the bank.

"The demand of Rs 48,900 from the complainant and then the act of the bank to withdraw that amount from his saving account amounts to deficiency in service," B B Chaudhary, President of the Central Delhi consumer forum, said in the order.

"On account of the act of the bank, the complainant had to send legal notice and suffered harassment, pain and mental agony," the panel said while also awarding him Rs 5,000 towards litigation charges.

The complainant had said that on November 15, 2008 he received SMS alert that Rs 48,900 was withdrawn from his savings account through his ATM card and he had immediately informed the bank that he never received the card and thus he could not have done the transaction.

The bank denied that it caused any deficiency in service and contended that the ATM card and PIN were duly delivered to the complainant and that only he or someone to whom he allowed access to the ATM card withdrew the money and the bank cannot be held liable.

The forum brushed aside the bank's argument that it had delivered the ATM card and the PIN number to Datta Ram, saying that the delivery sheet of the courier firm used by the bank shows that the card and the PIN number were not delivered to Datta or any member of his family.

"The bank has failed to place or file affidavit of any authorised officer of the courier service or the delivery man to confirm that card was delivered to the complainant or any of his family members.

"In the circumstances, we hold that the bank has failed to establish that ATM card or its PIN was delivered to the complainant or any of his family members," the panel added.

The complainant had contended that the delivery sheet bore the name of a Datu Ram, but without his complete address and that the mobile number on the delivery sheet belonged to a third person and not the complainant.

Source: Financial Express

ATM card delivery fraud: ICICI Bank fined

ICICI bank has been directed by a consumer forum to pay Rs 20,000 as compensation to one of its consumers whose ATM card was delivered to a wrong hand, who withdrew money from the account fraudulently.

The ATM card landed at a wrong address and was used for withdrawing over Rs 48,000 from the savings account of a person, who was waiting for the same to be delivered at his address.

A District Consumer Disputes Redressal Forum (Central) gave its ruling in the favour of account holder Datta Ram, saying that the act of the private bank caused "mental agony and harassment" to him for its failure to return the money to his account in spite of information that it was not withdrawn by him using the ATM card.

The consumer forum also held that non-delivery of ATM card and withdrawal of money from the account of the customer by somebody else amounts to "deficiency of service" by the bank.

"The demand of Rs 48,900 from the complainant and then the act of the bank to withdraw that amount from his saving account amounts to deficiency in service," B B Chaudhary, President of the Central Delhi consumer forum, said in the order.

"On account of the act of the bank, the complainant had to send legal notice and suffered harassment, pain and mental agony," the panel said while also awarding him Rs 5,000 towards litigation charges.

The complainant had said that on November 15, 2008 he received SMS alert that Rs 48,900 was withdrawn from his savings account through his ATM card and he had immediately informed the bank that he never received the card and thus he could not have done the transaction.

The bank denied that it caused any deficiency in service and contended that the ATM card and PIN were duly delivered to the complainant and that only he or someone to whom he allowed access to the ATM card withdrew the money and the bank cannot be held liable.

The forum brushed aside the bank's argument that it had delivered the ATM card and the PIN number to Datta Ram, saying that the delivery sheet of the courier firm used by the bank shows that the card and the PIN number were not delivered to Datta or any member of his family.

"The bank has failed to place or file affidavit of any authorised officer of the courier service or the delivery man to confirm that card was delivered to the complainant or any of his family members.

"In the circumstances, we hold that the bank has failed to establish that ATM card or its PIN was delivered to the complainant or any of his family members," the panel added.

The complainant had contended that the delivery sheet bore the name of a Datu Ram, but without his complete address and that the mobile number on the delivery sheet belonged to a third person and not the complainant.

Source: Financial Express

ICICI Bank signs $300 mn loan deal with Japan banks

Japan Bank for International Cooperation (JBIC) and Sumitomo Mitsui Banking Corp (SMBC) completed a $300 million loan deal for ICICI Bank, JBIC said in a statement on Friday.

JBIC is providing $180 million, while SMBC and Bank of Tokyo-Mitsubishi UFJ are funding $120 million. The commercial portion is guaranteed by JBIC, it said.

JBIC and SMBC were the arrangers to the deal.

The funds will be used to support renewable energy and energy efficiency projects in India.

In March 2011, the borrower got 15.3 billion yen loan and a $200 million loan from Japan.

Source: Business Standard

Higher interest income lifts ICICI Bank Q3 net 20%

ICICI Bank reported a 20 per cent increase in its net profit at Rs 1,728 crore in the quarter ended December 31, 2011, on the back of an increase in interest income and lower provisions on account of a decrease in non-performing assets. In the corresponding year-ago period, it had recorded a net profit of Rs 1,437 crore.

The bank's profitability in the reporting quarter was also boosted by dividend income of Rs 150 crore from its subsidiary, ICICI Prudential Life Insurance Company, which posted a net profit for the first time since inception.

Provisions decreased 27 per cent to Rs 341 crore (Rs 465 crore in the October-December 2010 period). Gross NPAs decreased to Rs 9,723 crore (Rs 10,187 crore).

The fall in NPAs was on account of decline in unsecured retail loans, which was down 35 per cent from last year, said Ms Chanda Kochhar, Managing Director and CEO, ICICI Bank.

“Our secured assets continue to grow and the credit quality in this segment is strong. The bank is back on growth path,” she said.

Despite lower provisions, the provision-coverage ratio was 78.9 per cent as on December 31, 2011, compared to 71.8 per cent as on December 31, 2010. Net restructured assets at December 31, 2011, were Rs 3,070 crore.

There could be some additions to restructured assets in the current quarter as well, Ms Kochhar added.

The bank has an exposure of 7 per cent to the power sector and so far, there have been no shocks in the asset quality of the segment, she added.

Growth segments

The segments that saw growth were secured retail (mortgages and auto loans), domestic corporate (working capital and disbursal of earlier loans) and international corporate (foreign currency loans given to Indian corporates).

“Credit growth is slower. Growth momentum was first seen in corporate loans and now it is being seen on the retail side,” Ms Kochhar said.

This financial year the bank is targeting a credit growth of 18 per cent.

Due to the rundown of the unsecured portfolio, the share of retail loans decreased to 33.5 per cent of total assets, from 38 per cent.

“We are offering unsecured loans (credit cards and personal loans) only to our existing customers,” Ms Kochhar said.

Non-interest income growth was subdued due to a loss of Rs 65 crore in treasury income, against a profit of Rs 21 core in the year ago quarter. For the nine-month period ended December, net profit was Rs 4,653 crore (Rs 3,699 crore).

Nine-month profit up

On a consolidated basis, net profit for the nine months was Rs 5833 crore, up 29 per cent, from Rs 4,545 crore in the year-ago period.

Shares of ICICI Bank closed 5.87 per cent higher, at Rs 902, on the BSE, on Tuesday.

priyan@thehindu.co.in

ICICI Lombard aims at Rs 5,000 cr premium collection

ICICI Lombard expects to cross the Rs 5,000-crore mark in premium collection this fiscal on the back of good growth in health and motor insurance segments, a top executive of the leading private general insurer said.

“We are hopeful of crossing Rs 5,000 crore in gross written premium collection (GWP) in the current fiscal and expect to clock a 20-25 per cent growth in overall business for the next three to four years,” Executive Director of ICICI Lombard, Mr Neelesh Garg said.

The company had a GWP of Rs 4,252 crore during the last financial year.

Mr Garg said the growth in premium collection was mainly on account of sound performance across all segments, especially health and motor insurance.

While health insurance constitutes more than 25 per cent of the total portfolio, motor segment is around 40 per cent of the company’s business.

Mr Garg said it is witnessing over 20 per cent expansion in the health segment and is likely to maintain the momentum.

The company has a loss ratio of less than 100 per cent in group medi-claim policy, which is one of the most loss making segments of the industry.

Mr Garg said, “There is no pressure as the market is too big in India and penetration is very less. So, there is scope for every player in the market place.”

He said the firm was witnessing a “sound growth rate” in the motor insurance segment as well.

Mr Garg added that insurance regulator IRDA’s decision to replace third party motor pool with declined pool system would help in profitability of the industry.

IFCI keen on raising stake in Stock Holding Corp

IFCI is looking to strengthen its holding in Stock Holding Corporation of India Ltd (SHCIL), the country's largest custodian of shares and other securities.

It is open to acquiring more stake in SHCIL if the other shareholders are willing to offload, Mr Atul Rai, Chief Executive Officer and Managing Director of IFCI, said here on Friday.

“SGCIL is a great business. We are looking forward to increase our stake,” he said when asked if he would prefer IFCI having a controlling stake of 51 per cent in SHCIL.

IFCI had recently bought out ICICI Bank's entire stake — 17 per cent — in SHCIL for about Rs 300 crore. That took IFCI's current holding to about 34 per cent.

Speculation is rife that IFCI may look to gobble up the 17 per cent holding that SUUTI — the restructured arm of the erstwhile Unit Trust of India — has in SHCIL.

If that were to happen, then IFCI can raise its stake to 51 per cent, it was pointed out. Mr Rai however declined to comment on whether IFCI was eyeing SUUTI's stake in the custodian.

Meanwhile, IFCI has reported a net profit of Rs 114.05 crore on a total income of Rs 673 crore for the quarter ended December 31, 2011. The company had recorded a net profit of Rs 152.92 crore on a total income of Rs 635.84 crore in the same quarter in the previous year.

Mr Rai attributed the lower bottom-line performance to increased cost of funds. He also said that the company was not looking to raise any capital for the next two years.

It is looking to conserve capital given the difficult market conditions for raising fresh equity resources. The current complexities in the capital structure is also coming in the way of attracting investors.

krsrivats@thehindu.co.in

ICICI Bank repays $750-million bonds, skips costly refinance

MUMBAI: ICICI Bank dug into its internal resources to repay $750 million of bonds that matured on Thursday instead of taking the usual refinance route, said two people familiar with the payout.

The development reflects the high borrowing costs for Indian corporates who have more than $125 billion of overseas debt coming up for repayment this year.

International investors are demanding higher rates as the European sovereign crisis has heightened risk-aversion among EU banks, one of the biggest lenders to Indian companies.

ICICI Bank decided not to pay at least 50% more in coupon than the bonds it raised in 2009 at 5.75% and has opted to wait for rates to ease once the EU crisis abates, the two people said.

"Any fresh bond-raising would be evaluated based on market conditions and new lending opportunities," the bank said in an email response. "ICICI Bank has repaid the bonds using its existing liquidity.

The bank's existing liquidity and incoming repayments from its foreign currency asset portfolio are adequate to meet repayment obligations on bonds and bilateral & syndicated loans."

The cost of borrowing in dollar-denominated bonds for Indian companies has shot up to more than 600 basis points above the benchmark London Interbank Offered Rate (Libor), from about 350 basis points in the first half of 2011, say investment bankers.

Most Indian companies that borrowed overseas due to lower interest rates are at the receiving end after the rupee slid 16% last year, inflicting losses on many.

Source: EconomicTimes

SBI slashes processing fee for greater home loan pie

MUMBAI: State Bank of India (SBI) has slashed processing fees on home loans by half, a move aimed at garnering a larger pie in the home loan market and giving competition to private banks and housing finance companies.

"The decision is aimed at creating goodwill. With regards to fees charged from retail customers, SBI will charge only to the extent of covering its cost and not earn profit on it," said a senior official from the bank on condition of anonymity.

The bank has reduced processing fee on home loan above Rs 75 lakh to Rs 10,000 from Rs 20,000. For loans in the range of Rs 30 to Rs 75 lakh, the fees has been lowered to Rs 6,500 from Rs 10,000 earlier. The processing fee for loan below Rs 30 lakh continues to be 0.25% of the loan amount.

The reduction in the rates follows a decision taken by the policy committee chaired by SBI chairman Pratip Chaudhuri. The new charges will be effective from January 11. Axis Bank and ICICI Bank charge 0.5% of the loan amount sanctioned as processing fee, while housing finance leader HDFC charges 0.50% of the loan amount with a cap of Rs 10,000.

So, on a loan of Rs 50 lakh currently, SBI's processing fee would be the cheapest among the four banks - it would be stand at Rs 6,500 as against Rs 25,000 (0.5% of Rs 50 lakh) charged by ICICI Bank and Axis Bank, and Rs 10,000 by HDFC. This is yet another aggressive stand taken by SBI to grab the home loan pie.

In November, SBI was the first bank to do away with pre-payment penalty on floating and fixed rate loans. "In an environment where all banks are moving towards zero pre-payment charges, we believe processing fee in the industry would tend to rise over a period of time," said Jairam Sridharan, head - consumer lending and payments at Axis Bank. "Also, the waiver of pre-payment penalty will only encourage customers to prepay more loans, more frequently.

Therefore, it is not sustainable to have a lower processing fee." "At a time when corporate sector is going through a lot of pain, SBI may prefer to decelerate its corporate loan book and expand its retail loan book. And this move may be aimed at that," said Hemindra Hazari, head of research - institutional equities at Nirmal Bang, a broking firm.

Source: EconomicTimes

Axis Bank ranks number one in bond syndication market for 2011

Axis Bank maintained number one position in domestic bond syndication market for the fourth consecutive year, according to data released by Bloomberg. The private bank ranked first in year 2011 cornering 16% of market share in a year where corporates raised Rs 174700 crore through issuance of bonds.

Power Finance, HDFC, Rural Electrification, IDFC and LIC Housing Finance were top debt issuer contributing to 42.4% of total borrowings in the bond market.

Axis Bank arranged Rs 29700 crore while ICICI Bank, the number two arranger, had 13% market share and helped corporates raise Rs 22,700 crore in 2011.

Meanwhile State Bank of India pipped Kotak Mahindra Bank, Citi, A K Capital to emerge 9th in the list from 14th position it held last year. SBI arranged bond of Rs 6300 crore.

Similarly Real Growth Securities and IDFC Capital moved in higher position. While Real Growth was ranked 16th from 24th, IDFC was at 19th from 35th a year ago.

Bloomberg data shows that A K Capital and Barclays Capital lost out to their rivals. A K Capital was ranked 12th in 2011 from 8th position it held last year. Its market share also shrinked 2.8% from 5% a year ago. Similarly, Barclays was pushed to 5th position from 3th position last year. The British bank had market share was 6.9% from 8.5% last year.

Source: EconomicTimes

ICICI Bank to join Facebook bandwagon

The country’s largest private sector lender ICICI Bank will soon join social media platform Facebook, where it plans to allow its customers to access their bank accounts, among other services.

“... ICICI Bank will soon be present on Facebook. The ICICI Bank page (on the social media website) will include a one-of-its kind ‘Your Bank Account’ app through which you can access your bank account information while on Facebook,” the bank’s Executive Director, Mr Rajiv Sabharwal, said.

In a New Year message to the bank’s customers, Mr Sabharwal said that the customers would also be able to get updates on exclusive offers through Facebook.

The bank is planning to join Facebook as part of its efforts to continue to provide “superior banking services” in 2012, in line with its ‘Khayaal Aapka’ (Your Care) philosophy, he wrote to the customers.

A number of companies in India and abroad are establishing a presence on social media platforms like Facebook to reach out to their customers and get new businesses.

A survey by workplace solutions provider Regus had said that Indian companies increased their usage of social networks like Facebook, blogs, microblogging site Twitter and other online platforms in 2011 to win new business.

As per the survey, 83 per cent companies in India agreed that their marketing strategies might not succeed without social media activity, while 74 per cent companies globally endorsed this view.

Another study by global consultancy major KPMG last month said that businesses in India and other emerging markets are using social media platforms more than their developed market peers for expanding their customer relationships.

PSU banks consortium begins work on ordering ATMs

A consortium of public sector banks has begun putting out orders for supply of automated teller machines (ATMs)/cash dispensers.

Hitherto, these banks placed orders for purchase of ATMs on an individual basis.

About 40,000 ATMs are expected to be ordered by this consortium, with different banks assuming lead bank responsibility for the process, across different geographies in the country.

The installation, maintenance and management of services of such ATMs and cash dispensers will be done through a totally outsourced model.

In Madhya Pradesh

State Bank of India on Sunday has notified an all-India tender for installation of 3,893 cash dispersers in Madhya Pradesh.

SBI has called for the request for proposal on behalf of a consortium of banks, including itself, United Commercial Bank, Allahabad Bank and United Bank of India.

The rollout of the cash dispensers would be in urban, semi-urban and rural locations according to the requirements of each bank, the notification said.

The requirements are spread over two years - 2012-13 and 2013-14.

SBI alone will need 1,980 ATMs in this area (MP) during the two years.

VENDOR SPECIFICATIONS

The contract will cover provision of services for seven years.

Bidders who wish to participate in the request for proposal process (RFP) should have a minimum annual turnover of Rs 20 crore from ATM operations in India.

In off-site locations (sites away from the branch), vendors can set up ATMs in any site of their choice while sticking to the broad area specifications given by banks.

The specifications include a requirement for a disaster recovery centre and business continuity plans.

USER-FRIENDLY

The minimum availability of an ATM (uptime) for use by customers in a month has been mandated at 97 per cent in urban areas and 95 per cent in semi-urban and rural areas.

Penalties have also been prescribed for those vendors who fail to maintain the mandatory availability of ATMs services.

GAIN FOR BANKS

While banks are tight-lipped about the cost-advantage they have in outsourced ATMs model as against own ATMs, experts agree that reduction in ATM transactions-related costs has been a focus area of banks.

This happened particularly after the regulator forced banks to share their network - enabling customers of any bank to use any other bank's ATM.

Banks bear the fees charged for their customers using other banks' ATMs – and, therefore, are a shade prickly when this happens.

ICICI Bank, for instance, has stated sending a SMS immediately after any its customers uses a non-ICIC bank ATMs.

It promptly SMSes that it has 7,300 of its own ATMs !

It also offers information on the nearest ATM location through the registered mobile of a customer.

As of now, there are about 75,000 ATMS in the country out of which over 26,000 belong to the SBI group.

nagsridhu@thehindu.co.in

ICICI Bank hikes NRE deposit rate to 6.50%

ICICI Bank has increased its one-year NRE term deposit rate from 3.82 per cent to 6.50 per cent. Customers investing over Rs 15 lakh and up to Rs 50 lakh get another 0.50 per cent, the bank said. Those investing over Rs 50 lakh and up to Rs 1 crore get 8.25 per cent.

Other top banks such as SBI and HDFC Bank have increased their NRE term deposit rates of the same tenor to between 9 per cent and 9.25 per cent.

19 banks penalised for flouting derivative norms

The Reserve Bank has imposed penalties on 19 commercial banks, including SBI, HDFC Bank, ICICI Bank and Citibank, for violating norms on derivatives, Parliament was informed on Tuesday.

RBI has informed that they had imposed penalties on 19 commercial banks on April 26, 2011, for contravention of various instructions issued by RBI in respect of derivatives such as failure to carryout due diligence in regard to suitability of products and selling derivatives products to users not having risk management policies, Minister of State for Finance, Mr Namo Narain Meena said in a written reply in the Rajya Sabha.

RBI has issued show cause notices to banks. In response to this, banks submitted their written replies, he said.

“On a careful examination of the banks’ written replies and the oral submissions made during the personal hearings, the Reserve Bank of India found that the violations were established and the penalties were thus imposed,” he said.

While a fine of Rs 15 lakh each was slapped on Axis Bank, Barclays, HDFC Bank, ICICI Bank, Kotak Mahindra and Yes Bank, Rs 10 lakh each was imposed on Citibank, BNP Paribas, SBI, Credit Agricole —CIB, Development Credit Bank, ING Vysya Bank, Royal Bank of Scotland and Standard Chartered Bank, he said.

Besides, a fine of Rs 5 lakh each was slapped on Bank of America, DBS Bank, Deutsche Bank, HSBC and J P Morgan Chase Bank, he added.

Mr Meena also said that RBI has informed that the estimated loss of Rs 33,000 crore in the foreign exchange derivative transaction may not be the actual losses but the gross Market to Market (MTM) gains or losses to the customers.

ICICI Bank launches 2-in-1 platinum credit-cards

ICICI Bank has launched a product under which two credit-cards are linked to a single card account with a single statement and single fee.

Card members will receive two cards — ICICI Bank Rubyx American Express Platinum Credit Card and the ICICI Bank Rubyx MasterCard Platinum Chip Credit Card.

The cards provide access to a host of privileges from American Express and MasterCard, said a press release from the bank.

Card members can choose between three reward plans and earn bonus points across merchant categories where they normally spend more.

They have the flexibility to change their reward plan based on their changing needs.

In addition, card members can access privileges across golf, travel, shopping, wellness and entertainment through programmes such as ICICI Bank Credit Cards Experience, American Express SelectsTM and MasterCard MomentsTM, the release said.

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.

ICICI may have to reduce stake in Firstsource Solutions to 10%

MUMBAI: India's biggest private lender ICICI Bank may have to cut its holding in Firstsource Solutions - the global business process outsourcing firm, which it originally promoted a decade ago - to comply with new norms announced by the Reserve Bank of India. The central bank seeks to restrict equity investments by banks in non-financial services.

ICICI Bank, which still controls 18.1% of the company's equity, may have to pare its holding to 10% in line with the guidelines issued by the banking regulator late on Monday.

The new rules say that banks can hold only up to 10% of the capital of the investee company or 10% of its paid-up capital and reserves, which is less.

The bank, while confirming it will have to dilute its stake in the BPO, said the RBI norms do provide a room for holding investments in excess of the limit with regulatory approval. An ICICI Bank spokesperson said there is a three-month window during which the bank can approach the RBI with a proposal on its existing investments. "We will deal with it appropriately in due course," the spokesperson said.

The RBI has capped the equity investment of a bank and its subsidiaries in non-financial services at 20% of the investee company's paid-up share capital. According to the banking regulator, the new norms were aimed at checking indirect influence or misuse and to ensure that banks focus on their core banking activities. The new rules may not impact other banks, the state-owned lenders, who hardly have any investments in non-financial services.

"The RBI guideline covers investments in non-financial companies, which by definition exclude investments in insurance and other subsidiaries of the bank, which are financial companies. Further, the bank's insurance subsidiaries are not expected to require significant capital infusion going forward based on the current regulations and guidelines. The guidelines would not have any material impact on ICICI Bank," the bank's spokesperson said.

The new norms also cap the investment of a bank, entities which are the bank's subsidiaries, associates or JVs or entities directly or indirectly controlled by the bank and mutual funds managed by Asset Management Companies controlled by banks at 20% of the investee company's paid up share capital.

"The Reserve Bank of India norms are aimed at ensuring that banks do not go bust on account of exposure to a single group," said a senior banker. According to this banker, who declined to be identified, the new rules were based on a recommendation of the Board for Financial Supervision (BFS) to check the loophole wherein prior approval of the RBI was not required when it came to investment in non financial services. On the Bombay Stock Exchange, the ICICI Bank scrip ended the day down 0.33% at 705.30.

Source: EconomicTimes