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Banking Newsletter - 06 May to 09 May, 2013

India Infoline News Service | Mumbai |

The Reserve Bank of India (RBI) will soon come out with its clarifications on issuing licences for more private sector banks, Minister of State for Finance Namo Narain Meena said in a written reply to the Rajya Sabha on Tuesday.

Top Stories 

Fitch cautions on banks’ asset quality, funding risk

The Reserve Bank of India’s recent rate cuts are unlikely to ease asset-quality pressures to any great extent or help Indian banks correct their funding imbalances, Fitch Ratings says. The banks’ latest results show a continued decline in overall asset quality as the economic downturn persists.

The infrastructure sector is likely to be the biggest risk for Indian banks in the year ending March 2014 (FY14), putting pressure on asset quality and exacerbating structural funding mismatches. The pace of infrastructure restructuring is likely to accelerate, as the start dates of projects under construction are delayed over the next 18 months.

Infrastructure (including power and telecom) accounted for around 23% of corporate debt restructurings at end-March 2013, up from 20.5% a year ago… Read more

Is it fair to levy addl tax to bail Saradha victims, asks RBI

The Reserve Bank of India (RBI) questioned the fairness of the West Bengal Government’s proposal to levy additional tax on cigarettes to compensate the victims of Saradha chit fund scam.

RBI Governor D Subbarao said, “If people go back to Kolkata-based Saradha Group scheme, the Chief Minister said 'I will levy additional taxes on cigarettes and some other things to compensate the people who have lost money' ... Is it fair?”

The Governor was delivering a lecture to economics students to mark the Platinum Jubilee celebrations of Jammu & Kashmir Bank on Wednesday… Read more

RBI to introduce plastic notes on trial basis soon

Reserve Bank Governor D Subbarao said that the central bank will soon introduce on trial basis plastic currency notes as they have longer shelf-life.

The RBI Governor was delivering a lecture to economics students to mark the Platinum Jubilee celebrations of Jammu & Kashmir Bank on Wednesday.

He pointed out that plastic note is environment friendly because it has longer shelf-life than the paper notes… Read more

RBI panel recommends Indian Bill Payment System

The Reserve Bank of India (RBI) committee on Tuesday recommended ‘India Bill Payment System’ (IBPS), a GIRO-based electronic bill payment system for payment of dues of essential services, insurance premium, utility payments, taxes, university fees, examination fees and school fees.

The committee released the report set up to study the feasibility of implementation of GIRO based payment systems in India. The committee has highlighted the need for developing an electronic bill payment system based on a GIRO model for payment of dues of essential services, insurance premia, utility payments, taxes, university fees, examination fees, school fees, etc… Read more

In Focus

See lower securitisation rates post RBI’s May 2012 norms

India Ratings & Research (Ind-Ra) says that the credit quality of underlying loans in securitisations has improved, and there has been greater alignment of incentives between investors and originators in the last one year. This is because of increased retention of issuances by the originators post the issue of the revised securitisation guidelines in May 2012. However, rates on such issuances have dropped because of the paucity of priority-sector-lending (PSL) eligible assets… Read more 

Results this week

HDFC FY13 cons net profit at Rs66bn

Mortgage lender HDFC (Housing Development Finance Corporation) said that its standalone net profit was Rs. 48.48 billion for the financial year ended 31 March 2013 compared to Rs. 41.22 billion for FY11-12… Read more  

DHFL’s FY13 net profit zooms over 40% to Rs4.52bn

DHFL, India’s leading housing finance company, announced its annual results for FY 2012-13. Net profit for FY2012-13 rose to Rs. 4.52 billion from Rs. 3.24 billion in the corresponding previous year, registering a growth of 39.58%... Read more

Corporation Bank Q4 PAT at Rs3.56bn

Corporation Bank Q4 FY13 net profit stood at Rs. 3.56bn against Rs. 3.51bn YoY. Its Q4 NII stood at Rs9.30bn. The bank's Q4NPA's stood at 1.72%... Read more

Allahabad Bank Q4 net profit at Rs1.26bn

Allahabad Bank has posted a net profit of Rs. 1.26 bn for the quarter ended March 31, 2013 compared to Rs. 4 billion for the quarter ended March 31, 2012… Read more

PNB Q4 FY13 net profit dips 20% to Rs11.3bn

Public sector lender Punjab National Bank (PNB) on Thursday reported a 20.6% fall in net profit for the quarter ended March 31, 2013. The bank registered a profit of Rs. 11.3 billion for the January-March period in FY12-13 against Rs. 14.2 billion in the corresponding period in FY11-12… Read more

Special Stories

Govt plans to introduce new investor class

The government is planning to introduce a new category for investors called foreign portfolio investors (FPI) that do not come under the foreign direct investment (FDI) route, according to a media report.

The move is expected to simplify the rules governing overseas portfolio investors in India, the report added… Read more

RBI asks banks to reframe cheque-related charges

The Reserve Bank of India (RBI) on Tuesday has advised banks to reframe their cheque collection policies (CCPs) for better customer service and dissemination of information.
According to RBI, banks are expected to indicate the timeline for realisation of local / outstation cheques in their cheque collection policy and charges for cheque returns to be levied in an upfront manner with due prior notice to the customers… Read more

IMG to control fraudulent ponzi scheme

The Finance Ministry on Monday said that it has set up an inter-ministerial group to suggest ways to tackle fraudulent money pooling activities and protect the interest of investors, according to a media report.

The IMG has been set up through the Department of Financial Services, under the Finance Ministry.

The members of IMG will include representatives from the Finance and Corporate Affairs Ministries, Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI), the report added… Read more

No housing bubble building up: RBI
Reserve Bank of India Governor D Subbarao on Monday said there is no housing bubble building up in the country.

Speaking in teleconference with analysts, Subbarao said that liquidity conditions to be less uncomfortable over the next few months due to declining government cash balances and the reducing gap between deposit and credit rates… Read more

Domestic News

RBI to issue clarifications on bank licences soon: FM

The Reserve Bank of India (RBI) will soon come out with its clarifications on issuing licences for more private sector banks, Minister of State for Finance Namo Narain Meena said in a written reply to the Rajya Sabha on Tuesday.

The central bank has received queries from various entities on different aspects of ‘Guidelines for Licensing of New Banks in the Private Sector’ issued on February 22, 2013, Meena added… Read more

Cobrapost expose: 23 bks, insurance cos in money laundering net

Cobrapost’s expose on money laundering has now spread to encompass 23 banks and insurance companies. If you thought only private players were bending the rules, marquee state-owned names like Life Insurance Corporation of India and State Bank of India along with other PSU entities would come as a shocker.

In all, 23 banks and insurance companies have been exposed, namely, State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Indian Bank, Indian Overseas Bank, IDBI Bank, Oriental Bank of Commerce, Dena Bank, Corporation Bank, Allahabad Bank, Central Bank of India, all public sector banks, and their insurance associates… Read more

15 PSU bank employees suspended post Cobrapost sting

After the online portal Cobrapost alleged instances of money laundering by some state owned banks and LIC (Life Insurance Corporation of India), the Finance Ministry on Tuesday said action has been taken against 15 employees, including suspension, for violation of various regulations.

“So far, 15 officers/employees of various public sector banks have been suspended including one from insurance sector. Beside it, ten officers of PSBs have been divested of their work and six have been asked to proceed on leave,” Finance Ministry said in a release… Read more

Banks flouting KYC norms to be issued showcause notices

Reserve Bank of India (RBI) Deputy Governor KC Chakrabarty on Monday disapproved money laundering charges levelled against various banks, and said that all exposures by online portal Cobrapost were related to know your customer (KYC) norms.

Cobrapost’s expose on money laundering has now spread to encompass 23 banks and insurance companies. Cobrapost alleged that there was violation on PMLA (Prevention of Money laundering Act), KYC (know your customer) and banking norms. Among the banks accused in money laundering included SBI, IDBI, OBC, Dena Bank, IOB, Yes Bank, Dhanalaxmi Bank, PNB, ICICI Bank, Axis Bank, Canara and BoB… Read more

IDBI Bank initiates internal enquiry post CobraPost sting

Bank deposits rise 13% to Rs69 trillion YoY

Bank deposits declined marginally to 0.96% to Rs. 68.38 trillion on 19 April 2013 from Rs. 69.04 trillion on 6 April 2013, the Reserve Bank of India (RBI) data said.
On the other hand, bank deposits increased 13.36% on year-on-year basis. The bank deposits stood at Rs. 69.04 trillion on 5 April 2013 compared with Rs. 60.32 trillion on 6 April 2013… Read more

Inflation-indexed bonds to be issued by June-end

The Reserve Bank of India (RBI) and the Government will set up norms for inflation-indexed bonds in a month, RBI Deputy Governor HR Khan said.

Mr Khan was speaking at the international conference on ‘Housing: An engine for inclusive growth’, organised by Asia-Pacific Union for Housing Finance and National Housing Bank in New Delhi on Thursday… Read more

RBI panel calls for relaxing exporters’ credit rules

The Reserve Bank of India (RBI) on Monday released the report of the technical committee on services / facilities for the exporters.

Among others the Committee has made recommendations relating to i) review of Gold Card Scheme for extension of export credit to exporters, ii) appropriate inclusion of export finance under the priority sector advances for scheduled commercial banks, iii) raising of foreign currency loans on pool basis for extension of export credit to exporters, iv) allowing factoring on non recourse basis… Read more

Liquidity situation will improve in few months: RBI

Reserve Bank Governor Dr D Subbarao on Monday said that the central bank will examine all the options available to it to tackle tight liquidity in the market, including adjusting banks’ cash reserve ratio (CRR) and open market operations (OMOs).

The RBI on Friday reduced the repo rate by 25 basis points from 7.5% to 7.25%... Read more

RBI widens scope for priority sector lending, enhances MSME credit limit

The Reserve Bank of India on Friday announced three changes to the priority sector lending norms and more than doubled the limit for MSME advances to the services sector to Rs. 50 million.

The limit of loans to farmers against pledge / hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months stands increased from Rs. 25 lakh to Rs. 50 lakh both under direct and indirect agriculture, the RBI said in its Monetary Policy Statement for the year 2013-14… Read more

RBI releases paper on fin dvpt, monetary policy transmission

New Initiatives

PFRDA appoints Axis as trustee bank from July 1

Pension Fund Regulatory and Development Authority (PFRDA) has appointed Axis Bank as a new trustee bank in place of Bank of India (current trustee bank) for National Pension System (NPS) from 1 July 2013.

Accordingly, all NPS related funds are to be remitted to the designated accounts of Axis Bank from 1 July 2013. The offices will continue to remit funds to the designated NPS Trust accounts being maintained with Bank of India till 30 June 2013, PFRDA said on 30th April… Read more

Oxigen launches OxiCash Money Transfer

OxiCash on Monday said that it has launched instant money transfer service that enables the unbanked masses of India to transfer money to any bank account and receive money.

People who do not have a bank account would now be able to transfer and receive funds from any bank into the OxiCash Wallet… Read more

SBI ties up with Finolex Plasson to help farmers

SBI has entered into a national level tie-up with Finolex Plasson Industries Pvt Ltd to help farmers increase their acreage under irrigation by minimum use of available water resource… Read more


Commodity trading is an investing strategy wherein goods are traded instead of stocks

Broadly speaking, commodity trading is an activity which involves investing/trading in commodities. It is similar to stock trading but instead of buying and selling shares of companies, a trader buys and sells commodities… Read more

International News

Global eco growth set to expand: S&P

Global economic expansion may gain a firmer footing through 2014 as the recovery in the US strengthens and the Eurozone resumes modest growth, but formidable challenges remain, Standard & Poor's Ratings Services Global Chief Economist Paul Sheard said… Read more

ING posts Q1 CY13 net profit of 800mn euro

Dutch bancassurer ING Group NV on Wednesday reported a surge in the first-quarter profit. Group 1Q13 underlying net profit rose to EUR 800 million from EUR 579 million in 1Q12 and EUR 483 million in 4Q12, ING said in a press release…. Read more

Fannie Mae, KPMG settle lawsuit for $153mn

Ending the litigation process that started in 2004 against US based mortgage finance company Fannie Mae and its then auditor - KPMG, the two companies have agreed to pay $153 million to settle the case.  A lawsuit was filed by Ohio Pension funds and other companies which accused the two companies of giving bogus and misleading financial reports, Ohio Attorney general said on Tuesday… Read more

ING completes sale of Thai invst mgmt unit

ING said that it has completed the sale of its investment management business in Thailand to UOB Asset Management Ltd (UOBAM).

As announced on 20 November 2012, ING has received a total cash consideration of EUR 10 million for the investment management business in Thailand, the company said in a press release on 3rd May.

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