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Banking Newsletter - November 26 to November 30, 2012

India Infoline News Service | Mumbai |

Over 67% of the total bank deposits amounting to Rs. 38 trillion do not have cover from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as of September 2011, according to the RBI (Reserve Bank of India) data.

Top Stories     

One number wonder... Dial *99# to access your banking needs

Finance Minister P Chidambaram launched NPCI’s National Unified USSD platform (NUUP) based mobile banking service in the presence of Narendra Singh, CMD of Bank of Maharashtra and Shri A P Hota, MD & CEO of NPCI at Pune during the inaugural session of Bancon 2012 on November 24, 2012.

National Unified USSD Platform (NUUP) offered on a short code *99# is a service which would take banking services to every common man in this country. The service would allow every banking customer to access banking services with a single number across all banks—irrespective of the telecom service provider, mobile handset make or the region… Read more

RBI announces OMOs worth Rs.120bn on Dec 4

Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank of India (RBI) has decided to conduct OMO (open market operations) by purchasing the following government securities for an aggregate amount of Rs.120bn on December 4, 2012 through multi-security auction using the multiple price method.

Open market operation is a cash infusion measure and implies outright purchase of government securities by the RBI from banks and primary dealers. The auction shall be conducted by the RBI in Mumbai. There is an overall aggregate ceiling of Rs.120bn for all the securities in the basket put together. There is no security-wise notified amount… Read more

RBI to simplify KYC norms

The Reserve Bank of India (RBI) will soon introduce guidelines to simplify KYC (know your customer) norms and to make Aadhaar the proof for address and identification. “In the next few days, we will come up with guidelines on simplification of KYC norms and use of Aadhaar both as an address proof and identification proof,” RBI Deputy Governor Harun R Khan said.

Mr Khan was speaking at Payment Systems & Financial Inclusion: Recent Trends, Challenges & Emerging Issues—Bancon 2012 on 25 November in Pune… Read more

New KYC is essential for making fresh investments

67% of bank deposits lack insurance cover

Over 67% of the total bank deposits amounting to Rs. 38 trillion do not have cover from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as of September 2011, according to the RBI (Reserve Bank of India) data.

Bank depositors have insurance cover on deposits up to Rs. 1 lakh. This means that if a bank becomes bankrupt, each account will still recover up to Rs.1 lakh from DICGC.

The insurance cover of Rs. 1 lakh per account was introduced around two decades back. With inflation averaging 6.5% in the last 20 years, a Rs. 1 lakh deposit would equal Rs. 3.3 lakh at current prices.

RBI allows IndusInd Bank to raise FII limit to 49%

The Reserve Bank of India (RBI) on Monday notified that the Induslnd Bank Ltd has passed resolutions at the board of directors’ meeting and a resolution in its Annual General Meeting agreeing for the purchase of its equity shares by Foreign Institutional Investors (FIIs) up-to 49% of their paid-up capital through primary/secondary markets in India.

The RBI further advise that its approval to the Induslnd Bank for raising FII investment limit to 49% is subject to the condition that aggregate foreign investment in the bank should also not exceed the composite sectoral cap of 74% as prescribed by the government from time to time it is also advised that the existing prior approval applications for purchase of shares received through custodian banks of FIIs pending with RBI which could not be processed due to unavailability of limit/headroom, such investors are free to invest within the enhanced ceiling… Read more

IIFL Recommendations

IIFL Institutional Equities recommends ‘Buy’ on Sampath Bank

IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends “Buy” Sampath Bank… Read more

Quote, Unquote

“India (may have) had many changes of government, but the outlook might not be as bad as you might think... I would have hope”

Ratan Tata, chairman, Tata Group, in The Australian  

Special Stories

RBI penalises CKP Co-op Bank in Mumbai

The Reserve Bank of India (RBI) has imposed a penalty of Rs. 5 lakh on CKP Co-operative Bank Ltd, Mumbai for violation of the RBI’s guidelines on opening of on-site ATMs, extending finance to borrowers outside area of operations, exceeding exposure to housing and real estate, single party exposure limit, loans to directors, issuing bank guarantee to an entity not banking with them, non-filing of Suspicious Transaction Report (STR) report to Financial Intelligence Unit-India (FIU-IND), exceeding individual limit of unsecured advances, sanctioning overdraft against third party FDs to one of its directors… Read more

RBI, FM to launch inflation-indexed bonds: Reports

The Reserve Bank of India (RBI) is in talks with the Finance Ministry to launch inflation-indexed bonds in order to reduce physical demand for gold, RBI Deputy Governor HR Khan said.

Mr Khan was speaking at FICCI-organised Asian Financial Cooperation Conference in Pune on November 25, 2012. Both the RBI and the government have been taking steps to reduce gold demand. In FY 2011-12, India imported 969 ton gold, which contributed to record current account deficit of 4.2%... Read more

PM introduces Aadhaar-based direct cash transfers: Reports

Prime Minister Manmohan Singh has announced direct cash payout of subsidies to beneficiaries from 1 January, 2013, according to reports.

Reports stated that the subsidy amount would be transferred to beneficiaries’ bank accounts linked to Aadhaar cards. The scheme is expected to cut down waste and corruption in distribution of subsidised items, PM reported.

PFRDA to popularise NPS in private sector

Considering that New Pension Scheme (NPS) has not been a successful venture in the private sector, the Pension Fund Regulatory Development Authority (PFRDA) has introduced a registration process for pension fund managers (PFMs), increased the fees of PFMs from 0.0009% to a fixed ceiling at 0.25% along with other significant steps to ensure that pension sector in the private sector takes off, chairperson of the PFRDA said at an ASSOCHAM event held in New Delhi on Tuesday.

“NPS which started off as a government pension scheme has not been popular in the private sector as there are certain changes that have to be brought about when extending a compulsory product on a voluntary basis,” PFRDA chief, Yogesh Agarwal said… Read more

Leader Speak

Rebalanced approach needed for Foreign Bank Regulation: Daniel Tarullo

Applicable regulation has changed relatively little in the last decade, despite a significant and rapid transformation of those operations, as foreign banks moved beyond their traditional lending activities to engage in substantial, and often complex, capital market activities… Read more


Banking Ombudsman: Redressal for customer complaints against banks

The main object of the complaint is to get resolved your problem as earliest. So it is most important to make complaint to appropriate person who will resolve your problem effectively… Read more

New Launches

Shamrao Vithal Co-op Bank, Bajaj Allianz Life renew tie-up

Shamrao Vithal Co-operative Bank has renewed its tie up with Bajaj Allianz Life Insurance, one of India’s leading private life insurers, for the second consecutive term, further strengthening the relationship between the two organisations. The arrangement will make available the wide array of Bajaj Allianz Life’s products to over 10 lakh customers spread across seven states & 126 select branches... Read more

American Express, Jet Airways launch co-branded airline credit card 

American Express and Jet Airways launched the New Jet Airways American Express Platinum Credit Card with a powerful proposition that enables card members the quickest way to earn free travel with Jet Airways… Read more  

ICICI Bank website has best user experience for online customers: Research

In the first-ever syndicated user experience research report in India, Kern, a global user experience company, benchmarked the user experience of 32 prominent banks and financial institutions’ websites in India. The research report ‘Acquiring Car Loan Customers Online’ throws shocking insights about the user experience of banking websites in India… Read more

HDFC Bank launches 87 branches in one day

HDFC Bank, the second largest private sector bank, launched 87 rural branches across the states of Punjab and Haryana. Punjab Chief Minister Prakash Singh Badal inaugurated 51 branches in the state. In Haryana, 36 branches were launched by Chief Minister Bhupinder Singh Hooda. These are 3-4 member full-service branches located primarily in the rural areas… Read more

Domestic News

India GDP grew 5.3% in July-Sept quarter       

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the estimates of Gross Domestic Product (GDP) for the second quarter (July-September) Q2 of 2012-13, both at constant (2004-05) and current prices, along with the corresponding quarterly estimates of Expenditure components of the GDP… Read more

SBI to hold discussion with Fin Min on rights issue: Reports

State Bank of India Chairman Pratip Chaudhuri has reportedly said that it will hold discussion with the Finance Ministry next week on the rights issues plan of the bank. The detail the size of the issue has not been informed yet, according to reports.

Last year, it was planning to launch an over Rs. 200 bn issue.

ICICI Bank’s ratings unchanged following tap bond issuance: Moody’s

Moody's Investors Service has today said that the Baa2 rating assigned to ICICI Bank Limited's acting through its Dubai Branch, existing USD 750 million 4.7% 2018 senior unsecured notes issued on 21 August 2012 under the $5 billion medium term note program remains unchanged following the announcement of a tap bond offering. The tap bond offering of $250 million has the same terms as existing senior unsecured notes. The outlook on the ratings remains stable.

Moody’s Investors Service has a standalone bank financial strength rating (BFSR) of D+ for ICICI Bank Limited, mapping to a baseline credit assessment (BCA) of baa3 on the long-term scale… Read more

L&T Finance completes acquisition of Fidelity’s Indian MF business

L&T Finance Limited, a subsidiary of L&T Finance Holdings Ltd, has completed the acquisition of Fidelity’s mutual fund business in India.

This is among one of the largest M&A transactions in the Indian mutual fund industry and provides L&T with the necessary size, scale and momentum to move to the next level. On completion of this transaction, the all new L&T Mutual Fund has over Rs. 128 billion in managed assets and an investor base of close to 9.5 lakh investors from more than 200 cities and towns… Read more

Dena Bank signs MoU with International Tractors

Dena Bank entered into an agreement with International Tractors Ltd (ITL) for providing Channel Financing to the dealers of Sonalika Tractors which is owned ITL.

Dena Bank envisages financing of working capital to dealers of ITL by way of channel financing. The purpose of the channel financing is to help the dealer to get hassle free finance.

SK Sharma, general manager (PS&RRB), Dena Bank and KN Vigg, managing director, International Tractors Ltd, signed the MoU at a function held in Mumbai.

OBC’s subordinated lower Tier II bonds subscribed to Rs. 10.25 bn

With reference to the earlier announcements dated November 15, 2012 and November 20, 2012, Oriental Bank of Commerce, has now informed BSE that Bank’s issue of Subordinated Lower Tier II Bonds of Rs. 1 million each for cash at par aggregating Rs. 10 billion with an option to retain oversubscription of up to Rs. 2 billion, was open from November 21, 2012 to November 27, 2012 and was subscribed to the extent of Rs. 10.25 billion.

RBI sets up technical committee to review presentation of accounts

The Reserve Bank of India (RBI) has constituted a technical committee to review the form of presentation of its balance sheet and profit and loss account. The committee will also review the style and content of the management commentaries on financial statements and notes to the accounts, and make recommendations to effect changes, if necessary, by appropriate legislative/regulatory modifications… Read more

Exim Bank extends $13.095 mn line of credit to Republic of Togo

Export-Import Bank of India (Exim Bank) has concluded an agreement with the Government of the Republic of Togo, making available to the latter, a Line of Credit (LOC) of USD 13.095 million for the purpose of farming and cultivation of rice, maize and sorghum in Togo.

The goods, machinery, equipment and services including consultancy services from India for exports under this agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement… Read more

L&T Finance to sell 4.67% stake in Federal Bank         

L&T Finance Holdings is planning to raise around $65 million by selling its 4.67% stake in Kerala-based Federal Bank, according to media reports.

L&T will sell 79.95 lakh shares at a price range of Rs. 450 and Rs. 469.75 per share, the reports added.

Federal Bank has 952 branches across 24 states in India. Citigroup is the sole bookrunner to the transaction. Other stakeholders in the company include Chrys Capital’s arm Warhol (2.87%), IFC (4.99%), Morgan Stanley (2.8%) and Emirates Financial Services (4.16%) among others.

Govt announces sale of dated securities for Rs. 130 bn

The Government of India have announced the sale (re-issue) of (i) 8.07% Government Stock 2017-JUL’ for a notified amount of Rs. 30 billion (nominal) through price based auction; (ii) 8.33% Government Stock 2026’ for a notified amount of Rs. 70 billion (nominal) through price based auction; and (iii) 8.97% Government Stock 2030’ for a notified amount of Rs. 30 billion (nominal) through price based auction… Read more

ICICI Bank launches $250 mn tap bond issuance

ICICI Bank, acting through its Dubai branch, successfully launched and priced a US$ 250 mn tap of its $ 750.0 million 4.70% 2018 notes originally issued in August 2012.

The securities referred to in this announcement were offered only to non-U.S. persons outside the United States under Regulation S of the Securities Act and will be listed on the Singapore Stock Exchange… Read more

International News

World Bank approves $500 mn to accelerate Tunisia’s economic recovery

The World Bank approved a $500 million loan to Tunisia that continues Bank support for key reforms as the government manages the country’s political transition. The Governance, Opportunity, and Jobs Development Policy Loan also helps pave the way for stronger economic growth and job creation over the medium term… Read more

ADB to provide $700mn to boost Bangladesh’s power supply system 

The Asian Development Bank (ADB) is providing a $700 mn loan to dramatically boost Bangladesh’s power supply system, which will reduce outages and shortages that are crippling the economy and causing severe hardship across the country.

“Supply shortages are putting a severe strain on businesses and undermining people’s quality of life, with poor communities suffering the most,” said Herath Gunatilake, Lead Energy Economist in ADB's South Asia Department. “Providing more electricity more reliably is absolutely critical for Bangladesh’s growth and development.”… Read more

ECB rescheduling Loan-Level data reporting requirements     

On 6 July 2012, European Central Bank (ECB) announced the future timeline for the start of the loan-level data reporting requirements for asset-backed securities as part of the Eurosystem’s collateral framework. In order to ensure that all the necessary amendments will have been made to Guideline ECB/2011/14 at the national level, the Governing Council of the ECB has decided to adjust this timeline… Read more

ADB energy assessment shows wealth of possibilities in Myanmar

An initial assessment of Myanmar’s energy sector by the Asian Development Bank (ADB) shows the country has a wealth of possibilities for power generation, from oil and gas exploration to harnessing the energy of geothermal and other renewables, but lacks the capital needed to develop it… Read more

ADB, China Everbright to help PRC create energy from farm, municipal waste

The Asian Development Bank (ADB) and China Everbright International Ltd have signed a loan agreement for agricultural and municipal waste-to-energy (WTE) projects in the People’s Republic of China (PRC) to reduce the environmental impact of agricultural and municipal waste disposal… Read more





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