Banking Tides - 003

“Talent wins games, but teamwork and intelligence wins
championships.”

1. 
   
   RBI to Monitor Banks’ Global Books
   The Reserve Bank of India will send its officials for a thorough inspection of the increasing overseas operations of Indian banks, as they do for the local business, to ensure that events outside the nation do not rock the domestic businesses. State Bank of India, ICICI Bank and Bank of Baroda are among the prominent banks that will face RBI scrutiny as they have as high as a fifth of their total assets beyond Indian shores. In case of overseas operations, till recently RBI relied on the inspection reports that respective Indian bank officials conducted on their foreign branches. RBI also pointed out that it is reciprocating the exercise conducted by some overseas regulator authorities such as the Hong Kong Monetary Authority and UK’s Financial Services Authority; those officials regularly visit Indian offices of their domestic banks to review their performance. (Pg-6/BL-24.03.2012)


2. 
   
   Subdued growth ahead for gold loan companies
   The business of non-banking finance companies pre-dominantly lending against gold jewellery could see subdued growth following the regulator’s directives. These companies have seen rapid growth in the last few years. Further, the robust 9-10 per cent margins that these companies enjoyed could come down by up to 100 basis points. RBI, directed them to not give loans exceeding 60 per cent of the value of the gold jewellery. Hitherto, these companies used to give up to 80 per cent of the value of gold as loan. Credit rating agency ICRA has estimated that a relatively small proportion of the lending happens at loan-to-value (loan as a percentage of the value of the asset) of 60 per cent or lower, and therefore, the disbursements volumes of gold loan companies are bound to shrink. Lower LTVs could lower the lending yields of single-line gold loan companies, thereby impacting their return on equity, as per an analysis by the agency. (Pg-6/BL-23.03.2012)


3. 
   
   BoB launches ultra small branches (USB)
   Bank of Baroda launched 1001 ultra small branches to provide banking services to the people of un-banked villages under the financial inclusion initiative. BoB plans to open 1,700 USBs in various villages across the country. (Pg-6/BL-23.03.2012)


4. 
   
   Banks may run out of cover to shield trading losses
   Banks are on the brink of exhausting the held-to-maturity (HTM) cap, which protects them from mark-to-market losses, and may approach the regulator for some relaxation, in order to support the government’s high borrowing programme. According to norms, banks can keep government securities up to 25 per cent of net demand and time liabilities in the HTM category. Senior officials from some mid-sized government banks indicate they have already exhausted 24 per cent. As a result, banks may request the Reserve Bank of India (RBI) to allow them to increase the HTM cap. (Pg-6/BS-23.03.2012)


5. 
   
   Third ED appointment in large banks delayed
   The appointment of a third executive director(ED) in public sector banks, scheduled on April 1, has been delayed due to bureaucratic hurdle. The government was expected to appoint additional EDs in six large public sector banks – Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and Central Bank of India – to begin with. Appointments for other banks were to follow. Smaller institutions such as Bank of Maharashtra and Dena Bank, who have one executive directory, were to get a second. (Pg-6/BS-23.03.2012)


6. 
   
   Axis Bank rolling out ‘new look’ branches
   Bank are increasingly revamping their branches to attract and retain customers. Axis Bank, is changing the layout and look of its branches. All new branches of Axis Bank opened after October sport the same look. By end-March there will about 150 ‘new look’ branches. All new branches are divided into three separate zones – the self-service zone, the retail area or the privilege lounge and the transaction area. The self-service lobby houses ATMs, cheque drop boxes, note accepting machines and Internet banking kiosks. The idea behind shifting the priority lounge or retail area to the centre of the branch is to showcase the bank’s premium offerings. The third area is the transaction area which has the tellers and customers who walk in only for transactions. (Pg-8/BL-22.03.2012)

"You would achieve more, if you don't mind who gets the
credit."

Banking Tides - 002

“Doing more things faster is no substitute for doing the right things.”

1. 
   
   RBI clamps down on gold loans by NBFCs
   In a blow to non-banking finance companies (NBFCs), the Reserve Bank of India has directed them not to give loans exceeding 60 per cent of the value of the gold jewellery pledged with them. NBFCs primarily engaged in lending against gold jewellery have been asked not to grant any advance against bullion/primary gold and gold coins. Further, they have to disclose in their balance-sheet the percentage of loans against gold jewellery to their total assets. (Pg-3/BL-22.03.2012)


2. 
   
   Bank of India hikes deposit rates in select categories
   Bank of India has raised deposit rates for select maturity periods by 25-50 basis points. The Bank has hiked interest rates on deposits with more than three months maturity. For deposits of up to Rs.15 lakh, with a maturity to 91 days to 179 days, the rate has been hiked to 7 per cent. For those of 270 days to less than one year maturity the revised rate is 8.25 per cent (8 per cent). For deposits of one year to less than two years, two years to less than three years, three years to less than five years and for five years and above, the revised rate is 9.25 per cent. (Pg-8/BL-22.03.2012)


3. 
   
   ICICI Bank launches new credit card for super rich
   ICICI Bank has launched a new card product targeted at the super affluent and Wealth Management clients. ICICI Bank sapphirois the third in the bank’s gemstone collection of credit cards, after ICICI Bank Coral and ICICI Bank Rubyx. Card members will receive two cards – the ICICI Bank Sapphiro Platinum American Express Credit Card and the ICICI Bank Sapphiro Platinum Chip MasterCard Credit Card, linked to a single card account with a single statement and fee. It will provide access to privileges from American Express and MasterCard. It costs Rs.25,000 to join, with an annual fee of Rs.3,500 from the second year onwards. The annual fee is waived if the amount spent on the card crossed Rs. 5 lakh in the previous year. (Pg-8/BL-22.03.2012)


4. 
   
   NBFC-MFIs get one more year to meet provisioning norms
   Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) will get an additional one year to implement asset classification and provisioning norms. RBI said it has taken this decision taking into account the difficulties faced by the MFIs and the representation received from them. They will now have time till April 2013 to meet these norms. (Pg-8/BL-22.03.2012)


5. 
   
   Banks open crèches to get mothers behind desk, quickly
   A crèche facility recently was inaugurated by the United Bank of India at its head office in Kolkata. Day care centre facility an initiative pioneered primarily by IT companies has found takers in banks too. Standard Chartered and HDFC Bank already have such facilities. Increasing attrition rates and rising demand for worklife balance is forcing organizations to look beyond run-of-the-mill HR interventions. (Pg-8/BL-22.03.2012)


6. 
   
   SBT declares interim dividend
   State bank of Travancore(SBT) has declared an interim dividend of Rs.16 per share to its share holders for the year 2011-12. The date of payment of the dividend is April 10, 2012.
   (Pg-7/ET-22.03.2012)


7. 
   
   Net banking : Federal Bank launches real time fund transfer facility :
   Federal Bank is extending IMPS (Interbank Mobile Payment Service) to its Internet banking customers from March 20.At present, much of inter-bank funds transfer transactions are through NEFT. (Pg-6/BL-21.03.2012)


8. 
   
   RBS shuts down some Asian units :
   Royal Bank of Scotland is closing its equity capital market and corporate finance units in South Korea and cash equities businesses in Indonesia, Korea and Singapore in the latest move to cut the size of its struggling investment bank. The decision sheds light on the British lender’s recent agreement with CIMB Group Holdings Bhd for the sale of Asian assets ,signaling that Malaysia’s second –biggest bank is eyeing RBS’s Hong Kong, India and Australian businesses to boost its investment banking presence in Asia. (Pg-11/ET-21.03.2012)
   
   
   
   
   
   "Whatever you find hardest to do, do with all your heart.”

Banking Tides - 001

“Success is simple. Do what's right, the right way, at the right time.”

1. 
   
   SBI offers new, lower rates to old home loan borrowers:
   State Bank of India’s old home loan borrowers have a reason to rejoice .The bank has decided to allow these borrowers to switch over to the new floating rates that are lower. Borrowers who have taken loans linked to SBAR (State Bank Advance Rate or the prime lending rate) are paying as much as 2-3 percentage points more than existing floating rates that are linked to the Base Rate. SBI’s Base Rate is currently at 10 percent, while the SBAR is 14.75 percent. Besides, the bank has also reduced the spread it charges over the Base Rate for home loans. There is no restriction on the tenure or the amount of the loan for customers to switch over. The bank is charging a fee of 1 percent of the outstanding amount to switch to the new rate. (Pg-1/BL-21.03.2012)


2. 
   
   Motor insurance premiums set to go up from April 1:
   Motor insurance premiums are set to go up by 15-20 percent from April 1.Industry experts say that a variety of factors will drive the increase in various categories of motor insurance. A major change will be the dismantling of the motor third party pool from March 31, 2012, which was announced by the Insurance Regulatory and Development Authority earlier. A declined Pool will come into force from April 1, 2012. (Pg-6/BL-21.03.2012)


3. 
   
   RBI rejects Dhanlaxmi’s Priority Sector Waiver Request :The Reserve Bank of India (RBI) has turned down Dhanlaxmi Bank’s plea for a one-time waiver of priority sector lending target as tight liquidity forces it to rework its balance sheet, said two people familiar with the development. The banks balance sheet had degrown by about ` 1,500 crore in the past two months. Dhanlaxmi, which is facing management changes, may fall short of `1,400 crore in rural – biased priority sector lending. This figure may come down further to ` 700 crore after some reclassification of loans and last minute disbursements. The central bank has been firm in banks meeting the priority sector target. Recently, it rejected over `5,000 crore worth of loans from top lenders such as ICICI Bank and Axis Bank, citing that loans to commodity traders do not qualify as priority sector lending since it does not benefit farmers directly. (Pg-12/ET-21.03.2012)


4. 
   
   IRDA to decide on letting LIC retain stake in Banks :The Insurance Regulatory and Development Authority will soon decide on whether to allow LIC to retain its holding in public sector banks where it has breached the 10% limit.In the current quarter, LIC has invested over `8000 crore in state-run banks as the government was unable to meet the capital needs of these banks .In over half a dozen banks, LIC has crossed the limit of 10% prescribed by the insurance regulator. “We have asked for information from LIC on their investments in state–run banks. We will examine the data once we get,” said IRDA Chairman J Hari Narayan. LIC has increased stake in Punjab National Bank ,Dena Bank and Central Bank of India .It is looking to hike stake in other banks such as Syndicate Bank ,Indian Overseas Bank and Punjab & Sind Bank.
   (Pg-12/ET-21.03.2012)


5. 
   
   PNB –Metlife deal fails to meet A/c Norms :Metlife India Insurance may not be able to sell stake to Punjab National Bank, as the structure of the deal does not meet the Indian accounting standards, according to IRDA chief. “Under the accounting standards, self-generated assets can’t be valued.Brand is a self-generated asset, hence it cannot be valued,”said J Hari Narayanan, chairman, IRDA. “It (PNB-Metlife deal) will create a bad precedence for the insurance industry”. He said nobody can acquire share in a company without paying some price. The deal is structured in a way that PNB would buy 30% stake in Metlife India insurance for free.
   (Pg-12/ET-21.03.2012)


6. 
   
   SBI shareholders approve Rs 7,900 – cr capital infusion :State Bank of India said its shareholders have approved the Rs 7,900 – crore capital infusion by the Government. At present, the Government holds a 59.4 percent stake in SBI and post allotment, its stake would go up by 2-2.5 percent. (Pg-6/BL-21.03.2012)
   
   
   

   “Take time to be sure, but be sure not to take too much time.”