CMD-designate for Oriental Bank

Oriental Bank of Commerce today said that Mr S.L.Bansal has joined the bank as Chairman and Managing Director designate. He will take full charge of his new role with effect from March 1. Mr Bansal will come in the place of Mr Nagesh Pydah, who will retire on February 29.

Higher provisioning drags Oriental Bank Q3 net 13.2%

Oriental Bank of Commerce (OBC) has reported a 13.24 per cent decline in net profits for the quarter ended Deecmber 31, 2011, at Rs 354.22 crore (Rs 408.25 crore). The bottom-line declined despite a 37.61 per cent increase in total income for the quarter under review at Rs 4,491.76 crore (Rs 3,264.17 crore).

The bottom-line performance was hit largely by higher provisioning towards restructured advances and diminution in value of investments in government securities, Mr Nagesh Pydah, Chairman and Managing Director of OBC said after a board meeting here on Monday.

For the third quarter, the bank had to provide as much as Rs 90.30 crore for its investment book (mainly G-secs). The marked-to-market provisioning was negligible in the same period the previous year. The total provision for restructured advances stood at Rs 186 crore (Rs 14 crore). Overall provision (other than tax) stood at Rs 380.86 crore (Rs 191.75 crore)

For the nine months period ended December 30, 2011, OBC has reported a net profit of Rs 876.66 crore, down 25 per cent over the net profit of Rs 1,169.21 crore in same period in previous year. In 2010-11, OBC had reported a net profit of Rs 1502.87 crore.

The volatility in the yields of 10-year Government paper has taken a toll on the financial performance of OBC for the current fiscal. So far, in the nine months ended December 31, 2011, the bank had to provide for Rs 303 crore towards diminution in value of investments. The total treasury loss in fiscal 2010-11 was only about Rs 78 crore, senior officials of the bank pointed out.

The yield of 10-year government paper has moved from 7.99 per cent in end-March 2011 to 8.57 per cent in end-December 2011. However, with yields strengthening to about 8.27 per cent levels, Mr Pydah indicated that the bank could book treasury gains of about Rs 180 crore in the current quarter.

‘Challenging times'

“Today, we are facing challenging times. It's too early to make any forecast on whether we would be able to achieve last year's bottom-line performance. But it is certainly unreasonable to expect it to be like last year,” Mr Pydah said when asked if bottom-line performance for 2011-12 is likely to be lower than last fiscal.

He also noted that there cannot be any more surprises on the NPA front this quarter as the bank had been using system-driven NPA classification for the last four months.

krsrivats@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

PNB appointed lead bank for Pathankot and Fazilka

MUMBAI: The Reserve Bank assigned to state sector lender Punjab National Bank the responsibility of being the lead bank in newly created districts of Pathankot and Fazilka in Punjab.

"It has been decided to assign the lead bank responsibility of the two new districts viz Pathankot and Fazilka to Punjab National Bank," the Reserve Bank of India said in a statement.

The two new districts were created by the Punjab government in July this year.

While Pathankot was carved out of the Gurdaspur district, Fazilka has been carved out from the Ferozepur district.

"The lead bank responsibility of existing Gurdaspur district and Ferozepur district will continue to be with Punjab National Bank and Oriental Bank of Commerce, respectively," the RBI added.

Source: EconomicTimes

SBI, Oriental Bank hike interest rates on select NRE deposits

State Bank of India on Friday hiked its interest rates on certain non-resident (external) rupee (NRE) deposit accounts by 100 basis points.

This follows RBI's recent move to hike the ceiling rates on NRE term deposits for one to three years maturity by 100 basis points. Interest rates on foreign currency non –resident (banks) deposits have been hiked by 25 basis points so as to encourage non-resident Indians to park more of their savings in India.

SBI on Friday increased interest rates on FCNR (B) deposits by 25 basis points in all the six currencies i.e. US dollar, Euro, Pound, Canadian Dollar, Australian dollar and Yen.

Oriental Bank of Commerce (OBC) also announced on Friday that it has revised upwards the interest rates on NRE deposits on all maturities from one to three years. The interest rates on FCNR(B) deposits have also been revised for all maturities from one to five years in all the six currencies.

krsrivats@thehindu.co.in

Jump in provisioning dents Oriental Bank Q2 net profit

Oriental Bank of Commerce (OBC) has reported a 58 per cent decline in net profit for the quarter ended September 30, 2011 at Rs 167.74 crore (Rs 397.65 crore).

The second quarter bottomline performance was weighed down by 114 per cent jump in provisioning, especially towards bad debts.

For the quarter under review, provisioning (other than taxes) stood at Rs 485.34 crore (Rs 226.31 crore).

“The bank has moved to system-driven NPA provisioning. The second quarter performance was impacted by this. You will see a different picture in the December quarter,” Mr Nagesh Pydah, Chairman and Managing Director of OBC, said here on Monday.

Total income of the bank for the second quarter ended September. 30, 2011 increased by 27 percent to Rs 4,078.78 crore (Rs 3206.04 crore).

For the six months ended September 30, 2011, OBC reported a net profit of Rs 522.44 crore, reflecting a 31 percent decline over net profit of Rs 760.96 crore recorded in same period last year.

Total income increased by 28 percent to Rs 7998.84 crore(Rs 6251.58 crore).

Oriental Bank of Commerce plans to open 79 branches thru restructuring exercise

The branch network re-structuring exercise, which Oriental Bank of Commerce started last year, has given it a scope to open 79 branches across India, according to a top official of the bank.

As part of the exercise, the bank had last year hoped to club a redundant branch with other branches.

“We use those licences to areas where we don't exist. By doing that, we have been able to get some business out of those areas, which we were not able to access through our earlier set-up,” Mr Nagesh Pydah, Chairman and Managing Director, Oriental Bank of Commerce, told Business Line.

One such branch was opened at Malleswaram in Bangalore. In an area where practically most banks have already located their branches, he hoped to “enjoy the last mover advantage”, and create a differentiation through customer service.

On a pan-India basis, the bank is looking at “opening about 79 branches only out of the re-jig process. It's a good opportunity for us. In some places, the results have been remarkable,” he said.

The bank targets a business of Rs 30 crore-35 crore a year from these branches.

“If they are able to record business of Rs 25 crore in the first year, it is good enough for us,” explained Mr Pydah.

This year, Oriental Bank of Commerce has about 96 pending licences, which he said would take the total branch network of the bank to over 1,800 branches. The RBI is very clear that average balance of Rs 1 lakh would be one rate, and above that should be non-discriminatory rates.

The idea is to encourage innovation and competition, and that savings bank deposit should also be a good source of liability management for banks and also reward the savings bank customers adequately.

I don't expect each to be significantly high.

Before savings bank rates touched the current levels, they were at about 6 per cent.

I have a feeling that they may again slowly crawl up to 6 per cent.

An exercise has to be done on the composition of savings bank account. We find that close to 25 per cent of our deposits are in the sub-Rs 1 lakh category and 75 per cent in the over Rs 1 lakh category.

The stickiness of the portfolio is about 65-70 per cent, which is very good.

Today people who are maintaining savings bank account would stand to gain.

For a bank of my size, we expect that additional cost would be about Rs 28 crore annually.

Today, quite a lot of services are offered free to customers.

There will be a system that will regulate the free services.

Earlier, the cost of the free services was capable of being absorbed because of the low interest rate that we were paying.

Now, we have to be selective in offering the services.

RBI frees savings bank interest rate

Mumbai: Ending the era of controlled interest rate regime, the Reserve Bank of India (RBI) today freed savings bank deposit rates, a step which bankers said could fetch better returns for depositors as competition will intensify.

"...banks are free to determine their savings bank deposit interest rate," the Reserve Bank of India (RBI) said, adding the change will come into force with immediate effect.

While freeing interest rates on savings bank accounts, the RBI has said that banks will have to offer a uniform interest rate on deposits of up to Rs 1 lakh.

For savings bank deposits of over Rs 1 lakh, banks would be free to provide differential interest rates.

Till now, banks were mandated to give 4 per cent interest rates on such deposits.

"The deregulation will increase cost of funds for the banks in general. Most of the banks would be taking a call on increasing rate on savings bank deposit in the next few days," Oriental Bank of Commerce Executive Director S C Sinha said.

By freeing the savings bank deposit rates, RBI has demolished the last bastion of the regulated interest rate regime. As part of the economic reforms programme, RBI had earlier given freedom to banks to determine fixed deposit rates, depending on their asset-liability positions.

"There should not be any discrimination from customer to customer on interest rates for similar amount of deposit," RBI said further.

About 20-25 per cent of the total bank deposits are parked in savings bank accounts. The Reserve Bank would be separately issuing operational guidelines on interest rate on savings bank accounts.

Earlier in April, the RBI had floated a discussion paper on 'Deregulation of Savings Bank Deposit Interest Rate'.

The discussion paper had spelt out the pros and cons of deregulating interest rate on the savings bank deposit.

The discussion paper had evoked wide-ranging responses from a cross-section of stakeholders. There were suggestions for and against deregulation.

"On balance, it is felt that the time is appropriate to move forward and complete the process of deregulation ...." RBI said.

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

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

OBC, Allahabad Bank raise fixed deposit rates

Two public sector lenders Oriental Bank of Commerce (OBC) and Allahabad Bank today raised fixed deposits rates by up to 30 basis points (bps) on select maturities.

The move come two day ahead of the mid-quarterly review of the monetary policy.

Term deposit rate for maturities between 1-2 years has been raised from 9.60% to 9.75%, OBC said.

At the same time, another public sector lender Allahabad Bank increased interest rate on term deposits of between 91 and 179 days by 30 basis points to 7.30%.

Interest rates on other maturities would remain unchanged.

The Reserve Bank of India (RBI) is scheduled to announce mid-quarterly review of monetary policy on September 16. It is expected that the central bank will raise key policy rate further to tame inflation.

Banks are of the view that if RBI raises rates, they will pass on to customers.

In July, the RBI raised the short-term lending (repo) rate by 50 basis points to 8% and the short-term borrowing (reverse repo) rate by a same margin to 7% in a bid to tame inflation.

Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9% from the earlier level of 8.5%.

Source: Business Standard

Government to sanction Rs 2,000 cr capital infusion for few banks

NEW DELHI: The government has decided to sanction Rs 2,000 crore to some public sector banks as part of its recapitalisation drive.

"We are in the process of sanctioning Rs 2,000 crore to a few public sector banks, but the the disbursement would take place at later date," official sources told PTI.

The mode of disbursement would be decided later, sources said, adding, the capital infusion would result in raising tier I capital or equity capital of the bank.

Besides, the capital infusion would result in enhancing government's stake in the select banks, sources said.

This is part of the Rs 6,000 crore re-capitalisation amount for the public sector banks announced in the Budget this year.

Finance Minister Pranab Mukherjee in his Budget speech had said, "During the year 2010-11, the government is providing a sum of Rs 20,157 crore for infusion in the Public Sector Banks to maintain Tier I Capital to Risk Weighted Asset Ratio (CRAR) at 8 per cent and increase government equity in some banks to 58 per cent".

"I propose to provide a sum of Rs 6,000 crore for the year 2011-12 to enable Public Sector Banks to maintain a minimum tier I CRAR at 8 per cent," he said.

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

In the first phase of recapitalisation in June last year, the government had approved capital support of Rs 6,211 crore into five banks. The banks, which had got capital from the government included Union Bank of India, Bank of Maharashtra, IDBI Bank, UCO Bank and Central Bank India.

Remaining Rs 13,946 crore was disbursed by March, 2011 through mostly preferential allotment of equity.

All the public sector banks have already submitted to the government their capital requirement.

The bank has requested the government capital infusion of Rs 990 crore to fund its business growth, Punjab & Sind Bank Executive Director P K Anand said.

"We have requested the government to infuse additional capital of Rs 990 crore by way of preferential shares," Anand

had said earlier this month.

Mangalore-based Corporation Bank has also sought Rs 300 crore capital support from the government.

Source: EconomicTimes