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Banking Newsletter - July 30 to August 03, 2012

India Infoline News Service | Mumbai |

As expected the RBI maintained its credit reserve ratio (CRR) from the previous announcements at 8%, thus interest rates on residential property loans from banks will also continue to remain at the current level.

Top Stories     


RBI maintains status quo on key rates… Cuts SLR to 23%


The Reserve Bank of India (RBI) on Tuesday at its First Quarter Review of Monetary Policy Statement 2012-13 maintained status quo on its key lending rates, keeping them unchanged, as it chooses to rein in inflation over growth.


However, the apex bank has cut Statutory Lending Ratio (SLR) to 23% from 24% earlier. The RBI has reduced the SLR of scheduled commercial banks to 23% from 24% of their net demand and time liabilities (NDTL) with effect from the fortnight beginning August 11, 2012, the bank said…Read more


Experts’ Views on RBI Policy Review   


Outlook for real estate sector remains cautious: Sanjay Dutt


“As expected the RBI maintained its credit reserve ratio (CRR) from the previous announcements at 8%, thus interest rates on residential property loans from banks will also continue to remain at the current level. For the housing sector, this may not be a very positive news as end-users who have been postponing their purchase decision on account of still high inflation and high interest rates cannot expect any relief in the near future…Read more


Reduction in SLR may provide structural support to systemic liquidity


“While the status quo in the key interest rates was expected, the 1% slash in the SLR did come as a surprise. It is evident that inflation concerns of RBI have increased in the past few weeks due to inadequate rain fall, devaluing rupee and late resurgence in crude oil prices, highlights Lakshmi Iyer, Head of Fixed Income and Products, Kotak Mutual Fund… Read more


SLR cut will pain markets in the short run


According to Chaitanya Pande, Head Fixed Income , ICICI Prudential AMC, uncertainty on the monsoons and the lack of any pass-through on petro products, RBI’s hands were more or less tied in pushing out the rate cutting cycle by a quarter… Read more


Peerless MF: Bullish on consumption & investments


Banking is a proxy to our growth story and would form a part of our core portfolio. Going by the global slowdown, we are cautious on commodities and energy space, says Kaushik Dani, Fund Manager-Equity, Peerless Funds Management Co Ltd… Read more


SLR cut could put more pressure on govt


The RBI policy guidance conditions further monetary easing on adequate steps by the government to address the supply side constraints, adds Navneet Munot, Chief Investment Officer, SBI MF… Read more


Higher liquidity will result in lower short-term rates


Alok Singh, CIO-Fixed Income, BOI AXA Investment Managers elaborates “The RBI surprised the market once again by lowering the SLR requirement from 24% to 23%, while keeping the repo, reverse repo and CRR ratio unchanged at 8%, 7% and 4.75% respectively”… Read more


Investors are better off investing in funds focused on short-end of g-sec curve


Santosh Kamath, CIO-fixed income, Franklin Templeton Investments, points out “Given the moderation in economic growth and inability to rein in subsidies so far, there remain concerns about the government's ability to meet fiscal deficit and subsidy targets. We expect the long-end of the g-sec curve to remain volatile and believe investors are better off investing in funds focused on short-end of the curve, corporate bonds and accrual strategy”… Read more


We expect average inflation to be around 7.5%: Quantum MF


The ball is back in the government's court. They need to undertake fiscal measures to be able to provide the space for the RBI to provide some more monetary measures through rate cuts and easing liquidity. The RBI frontloaded in April by cutting 50 bps in April… Read more


RBI wants to ensure enough liquidity


George Alexander, managing director, Muthoot Finance, said, “RBI should analyse the risk reward tradeoff as time seems right to cut rates further, which will provide the much needed impetus to the economy and accelerate growth.”… Read more


M3M India comments on RBI Credit Policy Review


We expected some rate cuts from the first quarter review by RBI, however RBI kept the key rates unchanged. The central bank, instead, has reduced the SLR by 1%, bringing it to 23%. Had RBI coupled the reduction in SLR by a cut in any of the key rates, it would have impacted the liquidity significantly on ground level and would have highly impacted the sentiments in the market… Read more 


Harsh Pati Singhania quote on RBI's Credit Policy


“It is disappointing that RBI has chosen not to cut policy rates. Reduction in the SLR does not make any difference in the present scenario as credit growth has not picked up due to higher rates of interest. In fact by following this path RBI is not taking any constructive steps to either control inflation or stimulate economic growth… Read more


RBI policy maintains remains skewed: Indranil Pan


Indranil Pan, Chief Economist, Kotak Mahindra Bank, said, “As we anticipated, there has been no change in the headline policy rates, such as the repo, reverse repo and CRR rates. The policy maintains its hawkish overtone and remains skewed towards containing inflation at all costs.”… Read more 


CII statements on monetary policy review


CII welcomes the cut in SLR to 23% thus improving liquidity in the banking system, but CII is disappointed with the RBI’s decision to maintain the status quo in policy rates and in a way is a missed opportunity to revive growth momentum in the economy… Read more


Paras Gundecha comments on RBI Monetary policy


“The RBI’s decision to keep the rates unchanged is absolutely shocking. The real estate sector is already facing difficult times, and a rate cut would have been a boon and fuelled growth. The real estate sector plays an important role in the economy of the country, but it seems the RBI does not take the real estate sector seriously at all…Read more 


New DIPP norms bring clarity to stressed firms


According to a circular issued by Department of Industrial Policy & Promotion (DIPP), the investments by banks with a major foreign shareholding in stressed companies won’t be considered as overseas investment. The circular ‘Consolidated FDI Policy’ was issued by DIPP on 1st August. The new guidelines bring clarity to companies operating in sectors—such as aviation, telecom and media—with a foreign direct investment (FDI) limit when an economic slowdown is forcing them to seek debt restructuring… Read more


No rate cut in India: Moody's Analytics

The Reserve Bank of India is expected to leave rates unchanged at its Tuesday monetary policy meeting, although the economy could benefit from lower borrowing costs. India is facing stagflation: The economy is slowing while inflation remains high. Interest rates have not moved since a cut in April, and Duvvuri Subbarao, the central bank governor, recently said inflation is still above the bank comfort level, signalling no change this month…  Read more


RBI penalises Ernakulam District Co-op Bank


The Reserve Bank of India (RBI) has imposed a penalty of Rs. 5 lakh on Ernakulam District Co-operative Bank Ltd, Ernakulam (Kerala) for violation of rules. Ernakulam District Co-op Bank had violated the Banking Regulation Act, 1949 applicable to Co-operative Societies by granting unsecured loans to Mithra Agricultural Produce Committee (MAPC)… Read more


Fitch affirms 3 largest Indian private banks


Fitch Ratings has affirmed India's three largest private sector banks: ICICI Bank, HDFC Bank (HBL) and Axis Bank Ltd (ABL). The agency has affirmed the Long-Term (LT) Foreign Currency (FC) Issuer Default Ratings (IDR) of ICICI and ABL at 'BBB-' and HBL and ABL's National LT ratings at 'Fitch AAA(ind)'. The Outlook on the LT FC IDRs is Negative, which mirrors India's sovereign rating Outlook… Read more


Leader Speak


Complete Q&A with Mario Draghi, President, European Central Bank


ECB President Mario Draghi said, “Whatever it takes means two things: It means the list of measures, all the measures that are required, and it means that their size ought to be adequate to reach their objectives.”… Read more




What is a Reverse Repo rate?


Reverse Repo rate is the rate at which the RBI borrows money from commercial banks. Banks are always happy to lend money to the RBI since their money are in safe hands with a good interest…Read more


What is a Repo Rate?


The rate at which the RBI lends money to commercial banks is called repo rate. It is an instrument of monetary policy. Whenever banks have any shortage of funds they can borrow from the RBI… Read more


Overview of various credit cards available in India  


Banking in India entered in a nascent phase post globalization and privatization. Earlier the sources to lend money were less, stringent and more over not regulated. Earlier people used to borrow from a money lender, then came banks and now a person gets credit limit on his credit card which helps him to spend money and pay back at a later date…Read more


Domestic News


SBI revises interest rates on home loans and auto loans


Based on the Reserve Bank of India (RBI) First Quarter Review of Monetary Policy, where the Statutory Liquidity Ratio (SLR) has been reduced from 24% to 23% w.e.f. 11th August 2012, the liquidity is expected to increase in the system. The cut in the SLR will add approximately Rs. 10,000 Crores additional liquidity to SBI… Read more


Yes Bank closes $155 mn & EUR 50 mn by dual currency syndicated loan facility


Yes Bank, India’s fourth largest private sector Bank, has successfully closed USD 155 mn and EUR 50 mn by way of Dual Currency Syndicated Loan Facility. The said facility shall be utilized for general corporate purposes and trade finance… Read more


NSTFDC and SBI sign refinance agreement


The National Scheduled Tribe Finance and Development Corporation (NSTFDC) and State Bank of India (SBI) signed a Refinance Agreement in the presence of  V. Kishore Chandra Deo, Union Minister of Panchayati Raj and Tribal Affairs. The agreement was signed by the Gur Saroop Sood, Chairman-cum-Managing Director of NSTFDC and A. Krishna Kumar, Managing Director and Group Executive (NB) of SBI… Read more 


TCBIL emerges as India's largest managed ATM services provider


Tata Communications Banking InfraSolutions (TCBIL), a wholly-owned subsidiary of Tata Communications, specialising in payment solutions for the banking and financial services sector, has emerged as the largest managed ATM service provider in the country as it signs a milestone contract to deploy and manage nearly 14,000 ATMs for all public sector banks across Tamil Nadu & Puducherry, West Bengal & Andaman & Nicobar and Andhra Pradesh. With this win, TCBIL has become India’s largest managed ATM services provider, with almost 27,000 contracted ATMs nationwide….Read more


FundsIndia.com receives fresh round of growth funding


Wealth India Financial Services Pvt Ltd, (WIFS), the promoter of leading online investment services platform FundsIndia.com, has raised a second round of investment of Rs. 20 crores to support its growth plans. The round was led by Silicon Valley based venture capital firm Foundation Capital with follow-on investments from current investors Inventus Capital Partners. The investment will be used for growing the business both in terms of expanding the customer base and enhancing the online platform with new products and services…Read more


IDBI Bank Q1 net profit up 28%


IDBI Bank Ltd has posted a net profit of Rs. 4273.40 mn for the quarter ended June 30, 2012 as compared to Rs. 3351mn for the quarter ended June 30, 2011.

Total Income has increased from Rs. 60598.30 mn for the quarter ended June 30, 2011 to Rs. 67868.10 mn for the quarter ended June 30, 2012…Read more


IDBI Bank receives 2011 USD STP excellence award from Deutsche Bank


IDBI Bank was awarded 2011 USD STP Excellence Award by Deutsche Bank at a function organized in Mumbai. IDBI Bank received the award for the exceptional quality of payment messages sent from its 39 Trade Finance Centers in India to Deutsche Bank, New York.…Read more


Muthoot Finance Q1 net profit up 29% at Rs. 2.46 bn


Muthoot Finance Ltd., the nation’s largest Gold Loan Company has in the first quarter of the Financial Year 2012-13 registered net profit growth of 29% at Rs.2.46bn, total income grew by 41% at Rs. 12.94bn, Retail Loan Assets under Management decreased by Rs. 13.37bn to Rs. 233.36bn, a decline of 5%... Read more


IOB Q1 net profit at Rs2.33bn


Indian Overseas Bank has posted a net profit of Rs. 2334.359 mn for the quarter ended June 30, 2012 as compared to Rs. 2055.814 mn for the quarter ended June 30, 2011.

Total Income has increased from Rs. 43317.709 mn for the quarter ended June 30, 2011 to Rs. 54028.483 mn for the quarter ended June 30, 2012.


Syndicate Bank Q1 net profit at Rs4.40bn


Syndicate Bank Ltd has posted results for the first quarter ended 30 June, 2012. Its net profit was stood at Rs4.40bn. Its Q1 NII is stood at Rs13.20bn


Corporation Bank Q1 net profit at Rs3.70bn


Corporation Bank Ltd has posted results for the first quarter ended 30th June, 2012. Its net profit was stood at Rs3.70bn. Total Income has increased from Rs. 32447.895 mn for the quarter ended June 30, 2011 to Rs. 39782.350 mn for the quarter ended June 30, 2012.


Allahabad Bank Q1 net profit at Rs5.14bn


Allahabad Bank Ltd has posted results for the first quarter ended 3o June, 2012. Its net profit was stood at Rs5.14bn as compared to Rs4.18bn YoY. Its Q1 Gross NPAs is stood at 1.96%.


New appointments


Akhil Puri joins KKR Capstone in Asia as India Director


Kohlberg Kravis Roberts & Co. L.P has appointed Akhil Puri as director for KKR Capstone. Mr Puri joins KKR Capstone from TPG Capital. Leveraging his extensive operational experience in working with companies throughout Asia, Mr Puri will lead KKR Capstone’s engagements with KKR’s portfolio companies in India… Read more 


Deutsche Bank appoints Ravneet Gill as CEO in India

Deutsche Bank has appointed Ravneet Gill (49) as the chief executive officer of Deutsche Bank, India and a member of its Asia Pacific Executive Committee… Read more


Global News


Yes Bank and Japan’s Shinsei Bank sign business alliance


Yes Bank, India’s fourth largest private sector Bank and Shinsei Bank, Limited, (“Shinsei Bank”) announced that the two banks have signed a comprehensive business alliance to co-operate on information-sharing and business development, syndications, lending, investment banking, trade finance, remittances, treasury operations among other areas… Read more


Fitch expands China presence with new Shanghai office


Fitch Ratings is pleased to announce the opening of an office in Shanghai, the agency's second in China and 51st globally.


The establishment of the new Shanghai office reflects the increasingly important role of ratings within China and its interconnectedness with debt capital markets around the world. Fitch looks forward to having a presence in Shanghai, and to providing investors with independent and prospective credit opinions, research and data…Read more


New Services


Croma and Tata Capital launch Croma Card


Croma, the electronics retail chain by Infiniti Retail Limited has collaborated with Tata Capital to launch an all new credit card--the Tata Croma Card. Available both in Platinum and Titanium variants, the card will be offered exclusively to Croma customers…Read more





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