Indian Overseas Bank opens 11 new branches

Indian Overseas Bank has opened 11 new branches in Madurai region.

According to Mr K.M. Thirunavukkarasu, Chief Regional Manager, as part of celebration of Platinum Jubilee of the bank, seven new branches have been opened at Ellis Nagar in the city, Paravai in the outskirts of the city, Peraiyur, Silaiman, Perungudi, Usilampatti and Solavandan; four new branches opened in VIrudhunagar district at Narayanapuram, Malli, Sevalpatti and Mamsapuram. An ATM has also been opened at Karumattur, beyond M.K. University, he added.

He further said that Platinum Jubilee celebrations were held at the regional office, and four wall clocks were donated to Meenakhi Amman Temple and one wall clock to Tirupparankundram Temple.

IOB net down 53% on loan restructuring

Indian Overseas Bank has reported a 53 per cent decline in net profit for the quarter ended December 31 at Rs 108.27 crore, from Rs 231.66 crore for the comparable previous year quarter. Mr M. Narendra, Chairman and Managing Director of the bank, attributed the drop primarily to restructuring of loans amounting to Rs 3,600 crore (particularly on two major accounts in the telecom tower and power sectors) and the resultant reversal of interest to the tune of Rs 75 crore during the quarter.

However, he said, the bank's focus is currently on improving recovery during the current quarter, which will result in improved performance for the whole of the current financial year. “Overall, for the current financial year we hope to recover Rs 1,500 crore,” he said.

Gross NPA

Mr Narendra pointed out that the bank has brought down its gross NPA (non-performing assets) to 3 per cent as on December 31 from 3.26 per cent a year ago, and the net NPA is at 1.23 per cent for the period under consideration (down from 1.51 per cent). Total deposits grew to Rs 1,67,006 crore from Rs 1,25,062 crore last year. Advances too have gone up from Rs 1,00,129 crore to Rs 1,32,549 crore. Operating profit for the nine-month period grew 34.41 per cent to Rs 2,532 crore from Rs 1,884 crore in the corresponding previous year period.

Gross NPA at the end of the nine-month period is at Rs 3,972 crore, and net NPA is at Rs 1,600 crore. Recovery during the period was at Rs 843 crore. Mr Narendra said, with more sharpened focus on recovery, the bank hopes to keep its gross NPA for the whole of the current financial year below the Rs 4,000-crore mark.

The bank also expects an equity infusion of Rs 1,450 crore from the Government “very soon”, which will take the bank's Tier I capital adequacy ratio to 8 per cent, he said.

Mr Narendra also mentioned that the bank has opened 354 branches during the calendar year 2011, taking the total number of branches to 2,400, and it targets to add another 300 branches during the current year. The total number of ATMs too have gone up to 1,344.

rravikumar@thehindu.co.in

Allahabad Bank, Indian Overseas Bank & Sompo Japan Insurance to infuse Rs 200 cr in Universal Sompo

KOLKATA: Allahabad Bank, Indian Overseas Bank and Sompo Japan Insurance will invest Rs 200 crore in their joint venture Universal Sompo General Insurance Co for the first time in four years to sustain business after underwriting losses eroded more than 100 crore of the insurer's capital. Underwriting loss means the insurer settled more in claims than its premium collection by selling risk policies.

"We need fresh capital to maintain our solvency margin as well as to expand business," Universal Sompo's executive chairman ON Singh told ET over telephone.

The firm plans to grow business by nearly 50% next fiscal and aims to collect 600 crore as premium. It expects to close the current fiscal with a 425-crore collection. "Our shareholders have agreed to inject 200 crore together as the need for risk capital has increased. They are expected to take this proposal to their respective boards soon," Singh said. Karnataka Bank and Dabur are also shareholders in the insurer.

The capital infusion is expected to be done by March. The partners will invest according to the size of their holdings and none will pay a premium. Initially, overseas partner Sompo, a multinational insurance firm, joined the venture by paying a share premium for its 26% stake. A senior Allahabad Bank executive confirmed the bank had received a proposal for fresh investment. The bank is the single-largest stakeholder with 30% equity in the JV, while Indian Overseas Bank has a 19% stake. Karnataka Bank holds 15% while the non-bank partner Dabur Investments has a 10% interest.

"It's an investment for us. We will discuss this proposal at the board but we are waiting for the insurance regulator to announce the new capital raising guidelines for general insurers," the Allahabad Bank executive said.

Universal Sompo received its licence in November 2007 and started journey with a Rs 235-crore net worth, which has now shrunk to Rs 125 crore because of underwriting losses of close to Rs 110 crore.

According to data released by Insurance Regulatory & Development Authority, general insurance companies collectively saw a 68% jump in underwriting losses in 2010-11 at Rs 9,969 crore, compared with Rs 5,944 crore in the preceding fiscal.

The insurer sells risk products for health and critical illness, personal accident and disability, home and motor, besides group products like employee benefit and project insurance.

Source: EconomicTimes

IOB revises interest rates

Public sector lender Indian Overseas Bank (IOB) has revised interest rates on its Non-Resident External (NRE) deposits upward to 9.25 per cent with effect from January 2.

Interest rates for NRE deposits have been revised to 9.25 per cent from the existing 3.82 per cent on deposits of one year to less than two years’ tenure, Chennai-based Indian Overseas Bank said in a statement.

For deposits with a maturity period of two years and above, but less than three years, the interest rate has also been hiked to 9.25 per cent from the existing 3.51 per cent.

For deposits of three years and above, but less than five years, the interest rate has been increased to 9.25 per cent from 3.64 per cent, the statement added.

IOB gets new ED

Mr A. D. M. Chavali, 57, has joined the Indian Overseas Bank as its Executive Director. He assumed office on Wednesday. Prior to his appointment, he was working as General Manager in Bank of Baroda, in charge of Treasury & Resource Management. During his 34 years of service in Bank of Baroda, he has served in various parts of India in various capacities, heading the corporate finance branch in Mumbai, as regional head of Kolkata and Deputy General Manager in Risk Management, says a press release from IOB.

Meanwhile, IOB has also announced that it has signed a MoU with Mahindra & Mahindra under which the bank would be a “preferred financier' for the Indian automotive major. The MoU will enable M&M customers to avail themselves of vehicle finance services from any of the over 2,000 branches of IOB.

The MOU was signed by Shri M.S. Raghavan, General Manager, Shri K. Subrahmanyam, General Manager of Indian Overseas Bank and Mr Arun Malhotra, Senior Vice-President, Sales & Customer Care, Mahindra & Mahindra Ltd.

mramesh@thehindu.co.in

Banks extend festive offers

The festive season may be over, but festive offers on loans are open for the next couple of months. Public sector banks offering housing and auto loans at discounted rates under their festival campaigns that began in September, have decided to extend the discounts beyond December 31, as the demand for loans remains muted.

While recent data from the Reserve Bank of India (RBI) shows credit demand has been poor despite these offers, bankers hope the demand would pick up in the last quarter of the financial year. Credit growth during the April-December period was 8.2 per cent, against RBI’s projection of 18 per cent credit growth in 2011-12.

“We have decided to extend the festive offers till February 28 to encourage retail customers to go for housing and car loans,” said M Narendra, chairman and managing director, Indian Overseas Bank. The bank is offering 0.50 per cent concession on lending rates and 50 per cent concession on processing charges.

IDBI Bank had waived processing charges and fees almost a year ago to strengthen its grip on retail assets. The bank has been offering a 100-basis point discount on vehicle loans and a 50-basis point one on home loans since October 1. It may continue this offer for one or two more months. “The demand was not as high as expected. Since the interest rates are not likely to rise further, we have decided to continue with the current rates,” said R K Bansal, executive director, IDBI Bank.

In November, the outstanding amount in home loans rose 7.6 per cent, compared with 8.8 per cent a year ago, while vehicle loans grew 9.5 per cent, compared with 15.5 per cent in the year-ago period, according to RBI data.

Bankers said there was hope of credit pick-up in the fourth quarter. “We have decided to extend the concession by one month, since there was more demand towards the end of the offer period,” said N Seshadri, executive director, Bank of India. The bank offers 50 per cent concession on processing charges.

M D Mallya, chairman and managing director, Bank of Baroda, said the lender would run its festive offer on housing and car loans for one more month. “The response was fairly good, given the current context,” Mallya said, adding the extension would help the bank rope in more borrowers with the help of attractive rates.

Overall credit growth stood at 17 per cent as on December 16, compared with 24 per cent a year ago. High lending rates and high inflation have impacted growth in the retail segment this year. RBI had raised policy rates by 375 basis points in a span of 19 months since March 2010. Banks responded by raising lending rates by around 250 basis points in the same period.

Banks have been able to add Rs 3.24 lakh crore to the outstanding loan base so far this financial year. However, it would be an uphill task to continue the trend, as banks need to disburse around Rs 3.8 lakh crore till the year-end to meet RBI’s projection of 18 per cent.

Source: Business Standard

Indian Overseas Bank may raise $500 mn next year

MUMBAI: State-run Indian Overseas Bank may look at borrowing $500 million in the overseas market next year to meet dollar demand from Indian companies, its chief M. Narendra told Reuters on Wednesday.

"We may, at an appropriate time, look at medium-term notes for $500 million next year, when the market is right," he said over the telephone. "This is to meet credit growth in international market, corporates who want ECBs."

"There are other markets like Chinese, Japanese where we can also raise money. So, all options can be looked at. Not immediately, but next year," he added.

Last month, India's central bank eased overseas borrowing rules for local corporates and directed that funds raised abroad meant for rupee expenditure in India would have to be brought in immediately, in a move to boost inflow of foreign currency.

Source: EconomicTimes

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

IOB plans to restructure SME, corporate loans

CHANDIGARH: State-run Indian Overseas Bank is planning to restructure its SME and Corporate loans by extending the tenure of repayment, Executive Director A K Bansal said today.

"We are getting applications from our customers regarding restructuring of loans. In order to address the issue we have facilitated them by offering longer repayment schedules and we are thinking to further facilitate them," he said.

Bansal said the dollar appreciation has impacted the importers. Also, the corporates who have raised money under FCCB (Foreign Currency Convertible Bond) route are under pressure and they are finding it difficult to repay, he said.

The Bank's NPA has touched Rs 3,898 crore as on September 2011, whereas it was around Rs 3,200 crore as on March 31, 2011.

On NPAs, he said the reasons behind the increase is the real estate sector, which is facing slowdown, delay in projects, bad recovery from agriculture sector.

Bansal was speaking at a seminar by Chandigarh Management Association (CMA) in association with Indian Overseas Bank (IOB) on "MSME In India - Challenges & opportunities."

Source: EconomicTimes

Axis Bank to start Sri Lanka operations

COLOMBO: India's No.3 private lender Axis Bank has been granted a banking licence in Sri Lanka and will start operations at its first branch this week, the island nation's central bank said on Wednesday.

Central Bank Governor Ajith Nivard confirmed Axis Bank is the fifth Indian bank licensed to operate in Sri Lanka.

"They are starting on Friday and they will do all banking business. Initially they will open one branch and then they will have to make an application for anything they will want," Cabraal told Reuters.

The bank posted a net profit growth of 27 percent to 9.4 billion Indian rupees ($191.2 million) in the June quarter.

Axis Bank is the fifth Indian bank to enter Sri Lanka, hoping to catch a piece of the growing economy after the end of a three-decade civil war in 2009. The State Bank of India, Indian Bank , ICICI Bank , and Indian Overseas Bank are already in Sri Lanka.

Earlier this year, Indian Bank opened a branch in Sri Lanka's northern city of Jaffna, in the former war zone, aiming to get a piece of the growing post-war reconstruction lending pie.

Source: EconomicTimes

2 lakh savings accounts opened in Thiruvananthapuram

More than two lakh new savings bank accounts have been opened in Thiruvananthapuram district for crediting wages of workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme.

Indian Overseas Bank, the Lead Bank, is monitoring the performance of banks to ensure that payments do not get delayed.

This was announced during the 2nd District-Level Review Committee on Banking held here on Tuesday.

MORE BRANCHES

Banks were told to open more branches in the rural and semi-urban areas and deliver more credit for the development of the district.

Delivering the inaugural address at the meeting, Mr A. Sampath, Member of Parliament, requested them to devise schemes for encouraging the saving habit among students.

The MP also urged bankers to increase the flow of credit to women.

PRIORITY SECTOR

Ms Indira Padmini, Chief Regional Manager, Indian Overseas Bank (IOB) and Convenor, Lead Bank, delivered the introductory address.

Mr P. Thomas, Assistant General Manager, Reserve Bank of India, and Mr K. T. Thrivicraman, District Development Officer, National Bank for Agriculture and Rural Development, reviewed the performance of banks in the district.

Mr V. R. Muralidhar, Lead District Manager, and Mr R. Gireesh Kumar, Senior Manager, Lead Bank, Deputy/Assistant General Managers of various Banks, officers of various Government Departments spoke on the occasion.

Meanwhile, the meeting was told that financial institutions in the district have disbursed Rs 1,006 crore under the three major sectors of priority sector against the target of Rs 5,393 crore in 2011-12, representing achievement of 19 per cent.

Under the agricultural sector, the disbursements amounted to Rs 611 crore against a target of Rs 2,176 crore, recording achievement of 28 per cent.

ABOVE AVERAGE

Under the services sector, the banks disbursed Rs 364 crore (Rs 2,865 crore) while in the non-farm sector, which includes industrial credit, the disbursement is Rs 31 crore.

Among those achieving more than the district average were IOB, Canara Bank, Syndicate Bank, Union Bank of India, Indian Bank, Catholic Syrian Bank, Bank of Baroda and Tamilnadu Mercantile Bank. State Bank of Travancore and South Indian Bank achieved 18 per cent of the target. The Thiruvananthapuram District Co-operative Bank and other cooperative banks together disbursed Rs 3,293.84 crore against a target of Rs 1,288.26 crore (26 per cent).

The performance of the Kerala State Cooperative Agricultural and Rural Development Bank was not ‘up to the mark', the meeting was told.

Bankers have been extending support in the implementation of the National Rural Employment Guarantee Scheme in the district, the meeting was told.

RSETI TRAINING

The Rural Self Employment Training Institute (RSETI) opened here by the IOB with the help of Central and State Governments has been training women for entrepreneurship and skill development free of cost, especially for those taking up self-employment ventures.

During this week, the RSETI will launch mobile phone repairing, autorickshaw and car driving courses for women.

Total bank deposits in the district stood at Rs 32,327 crore and advances at Rs 26,704 crore. The Credit-Deposit ratio for the district is 83 per cent (up from 75 in the preceding quarter).

Banks acquire 60% stake in Trident microfin

Various banks have taken control of Hyderabad-based microfinance firm Trident Microfin by acquiring a majority stake in the firm, leaving promoter and chief executive Kishore Kumar Puli with a stake of only 4.2 per cent.

As many as 20 banks, including ICICI Bank, HDFC Bank, Axis Bank, Indian Overseas Bank, Bank of India and Union Bank of India, have together acquired over 60 per cent stake in the microfinance company by converting a part of its debts into equity shares.

The remaining stake in the company is held by institutional investors Bellwether Microfinance Fund and India Financial Inclusion Fund. Among the five microfinance firms that opted for a debt recast, Trident is the only micro-lender in which banks have acquired equity stake.

The banks converted around Rs 32-crore debts into equity shares, at a price of Rs 10 per share, even though the book value of the company is estimated at around Rs 18.60 per share. The move is part of Trident's plan to restructure Rs 125.5-crore bank debts.

“The banks were not interested in converting the debts into equity shares at a premium. They were willing to convert it only at face value. The primary objective is to revive the company. It does not matter who owns the company, what matters is how we can take Trident back to its old glory,” Puli said.

A representative from Indian Overseas Bank, which, with a stake of 14.13 per cent, accounts for the largest stake among banks, would be appointed as Trident's non-executive chairman and would be present in all board meetings of the company. Puli would continue to be the company's chief executive officer.

Besides converting 25 per cent of existing debts into equity shares, the banks also converted an additional 25 per cent of their loans to Trident into optionally-convertible preference shares.

If Trident fails to repay the remaining debts, or does not comply with the conditions mentioned in the debt-restructuring programme, the preference shares would also be converted into equity shares, giving the banks almost absolute control in the microfinance firm.

The conversion of loans into equity and preference shares did not require the prior approval of the Reserve Bank of India, since these debts were being restructured, Puli said.

According to the terms agreed between the banks and Trident, the microfinance company would repay around Rs 62 crore of debts over the next eight years, including two years of moratorium at an interest of 12 per cent.

The banks, however, would not cut Puli's remuneration, estimated at around Rs 24 lakh per annum, though the corporate debt restructuring (CDR) cell has decided to screen the salaries of top officials of microfinance firms that chose to recast their debts. The clause demanding a personal guarantee from the promoter has also been waived for Trident.

Trident started operations in 2007, and its net worth is Rs 18 crore.

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

SBI likely to hike rates in 15 days

Mumbai: A day after the Reserve Bank raised key policy rates, country's largest lender State Bank of India's Chairman Pratip Chaudhuri today said there will be a hike in its interest rates in the next 15 days.

"In another 15 days we will if the input prices go up, the output has to go up," Chaudhuri said.

When asked about the likely quantum of the rate hike and if it will be at par with RBI's 25 basis point hike, he said, it will be "roughly" the same.

With an eye on taming high inflation, which stood at 9.74 per cent for August, RBI yesterday hiked its short term lending rate by 25 basis points to 8.25 per cent.

Indian Overseas Bank Chairman and Managing Director M Narendra had also said yesterday that banks needed to pass on the hike to customers as their cost of funds has gone up. He had added "banks would wait till the month-end before taking a call on an interest rate hike."

Punjab and Sind Bank Executive Director P K Anand had said the banks would maintain the current rates at least for the next 15 days and take a call on revising them after ascertaining credit demand.

Source: Financial Express

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

RBI raises key rates by 25 bps

Mumbai: All loans are set to become costlier, with the Reserve Bank of India (RBI) today raising key interest rate for the 12th time since March, 2010, by 25 basis points to rein in high inflation.

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

Headline inflation rose to 9.8 per cent in the month of August from 9.2 per cent 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.

Going forward, RBI said the monetary stance will be "influenced by signs of downward movement in the inflation trajectory..."

GDP growth during the first quarter (April-June) of the 2011-12 financial year moderated to an 18-month low of 7.7 per cent from 8.8 per cent in the corresponding period year ago.

The slowdown was also reflected in industrial output growth rate which dipped in July to 3.3 per cent, the lowest in 21 months.

The Reserve Bank said food inflation is near double digits, despite the normal monsoon, underlining the fact that it is driven by structural demand-supply imbalances and cannot be dismissed as a temporary phenomenon.

It further said that hike in petrol prices by Rs 3.14 per litre, with effect from September 16, 2011, will have a direct impact of 7 basis points on WPI inflation, in addition to an indirect impact with a lag.

RBI's decision, though praised by Planning Commission Deputy Chairman Montek Singh Ahluwalia and PMEAC chairman C Rangarajan, evoked sharp reaction from the industry chambers.

Ficci Secretary General Rajiv Kumar said, "This rate hike will only exacerbate the current fears of impending slowdown."

However, PMEAC chief Rangarajan said, "The RBI has taken the correct decision. In the context of rising inflation, RBI had no other option but to raise interest rates."

Expressing similar opinion, Ahluwalia said, "The rate hike is within a range that is not unreasonable" as inflation has continued to remain high.

Source: Financial Express

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

Nupur Mitra to be next CMD of Dena Bank

The government has appointed Nupur Mitra as Chairman and Managing Director (CMD) of Dena Bank.

The notification of the appointment, to be effective November 1, 2011, has been released recently.

At present, Mitra is the Executive Director of the Chennai-based Indian Overseas Bank and will replace incumbent DL Rawal, who superannuates on October 31.

Mitra started her career with Bank of India in 1975 and served the bank in different capacities.

For the first quarter ended June, Dena Bank reported 21% jump in net profit to Rs 168.09 crore against Rs 138.79 crore in the same period a year ago.

Source: Business Standard