Govt moves towards privatisation of IDBI Bank

Union Finance Minister Arun Jaitley said in his Budget speech that the government has started the process of transformation of IDBI Bank and will look at bringing down government's stake in the bank below 51%.

Following an intent in the Budget, the IDBI Bank share shot up by 8% to 60 per share on Bombay Stock Exchange.

Currently, government's stake in the bank is more than 80%.

This is the first official announcement on such a move, even as discussion were on to dilute stake in the bank. IDBI Bank could be test case for the government before it moves to reduce stake in other banks as capital infusion is becoming challenging for the government considering its tight fiscal stance. 

On recapitalisation, Jaitley said government will infuse Rs 25,000 crore in public sector banks, while the government stands to infuse more if need be. The figure is part of the planned recapitalisation that the government announced last year, under its Indradhanush programme. 

Under the plan, the government will infuse Rs 70,000 crore in phases and has already infused Rs 19,950 crore to 13 public sector banks. Hence, there is nothing much new in the racapitalisation front except the government assurance that it stands "solidly behind banks."

Vinod Rai appointed Chairman of Banks Board Bureau

Former CAG Vinod Rai was on Sunday appointed first Chairman of the Banks Board Bureau, which will advise the government on top-level appointments at public sector lenders and ways to address the bad loans problem among other issues.

Besides, ICICI Bank’s former Joint Managing Director H.N. Sinor, Bank of Baroda’s former CMD Anil K Khandelwal and rating agency CRISIL’s former chief Rupa Kudwa have been appointed members.

RBI EXTENDS DEADLINE FOR EXCHANGING PRE 2005 CURRENCY TO JUNE 2016

Reserve Bank on Wednesday extended the deadline for exchanging pre-2005 currency notes of various denominations, including Rs 500 and Rs 1,000, by another six months to June 30, 2016.

The Reserve Bank had, in June 2015, set the last date for public to exchange pre-2005 banknotes notes as December 31, 2015.

"RBI, on a review, decided to extend the date for the public to exchange their pre-2005 banknotes till June 30, 2016," it said in a statement.

However, RBI added that from January 1, 2016, such facility will only be available at identified bank branches and Issue Offices of the Reserve Bank.

RBI to visit banks secretly, track customer dealings

The Reserve Bank of India (RBI) on Tuesday said that it will soon undertake “incognito visits” to bank branches to check culture towards customer complaints in banks.

It will also undertake a review of how banks have implemented Charter of Customer Rights, the central bank said in a statement.

“Customers must have the right to access banking services and to the grievance redressal machinery — to banks' internal mechanism for grievance redressal as well as the Banking Ombudsman Scheme of the Reserve Bank — so that they are not excluded from the banking fold," the release quoting Governor Raghu-ram Rajan said.

Dr Rajan had inaugurated the Annual Confe-rence of Banking Omb-udsmen 2016 held in Thiruvananthapuram on February 15-16, 2016

He said websites, mobile phones, missed calls, physical places, and collection points could be some ways to aggregate customer complaints for redressal. The RBI had put out a Charter of Customer Rights in public domain and asked banks to implement it.

தள்ளாடும் பொதுத்துறை வங்கிகள்

கடந்த வாரத்தின் தலைப்பு செய்தியாக பங்குச் சந்தையின் சரிவு இருக்கலாம். ஆனால் அவ்வளவு பெரிய சரிவை உண்டாக்கியதில் பொதுத்துறை வங்கிகளின் பங்கு மிக முக்கியமானது. கடந்த வாரம் பல பொதுத்துறை வங்கிகளின் டிசம்பர் காலாண்டு முடிவுகள் வெளியானது. இதில் பெரும்பாலான வங்கிகள் கடும் நஷ்டத்தை சந்தித்தன. வாராக்கடன்களுக்காக அதிக தொகையை ஒதுக்கீடு செய்ததன் காரணமாக நஷ்டம் அதிகரித்துக்கொண்டே சென்றது.

இந்த நிலைமையில் கடந்த மூன்று வருடங்களில் பொதுத்துறை வங்கிகள் 1.14 லட்சம் கோடி ரூபாய் அளவுக்கு கடனை தள்ளுபடி செய்திருக்கின்றன. கடந்த 2014-15ம் நிதி ஆண்டில் எஸ்பிஐ அதிகபட்சமாக 21,313 கோடி ரூபாய் தள்ளுபடி செய்திருக்கிறது. இதனைத் தொடர்ந்து பஞ்சாப் நேஷனல் வங்கி, இந்தியன் ஓவர்சீஸ் வங்கி, அலகாபாத் வங்கி உள்ளிட்ட பல பொதுத்துறை வங்கிகள் கடந்த நிதி ஆண்டில் மட்டும் கணிசமான தொகையை தள்ளுபடி செய்திருந்தன.

இதற்கிடையே செப்டம்பர் 2015 நிலவரப்படி பொதுத்துறை வங்கிகளின் மொத்த வாராக்கடன் ரூ. 3,00,743 கோடி என்ற நிலையை தொட்டது. கடந்த மார்ச் மாதத்தில் ரூ. 2.67 லட்சம் கோடி ரூபாய் என்ற நிலையில் இருந்து ஆறு மாதங்களில் வாராக்கடன் கணிசமாக அதிகரித்துள்ளது.

வாராக்கடன் நிலைமை குறித்து அதிருப்தி தெரிவித்த ரிசர்வ் வங்கி, 2017-ம் ஆண்டு மார்ச் மாதத்துக்குள் தங்களது நிதி நிலை அறிக்கையில் உள்ள சுமைகளை நீக்குவதற்கு அவகாசம் கொடுத்திருந்தது. இந்த பிரச்சினையை பேண்டேஜ் போட்டு மறைக்க முடியாது. அறுவை சிகிச்சை செய்ய வேண்டும் என்று கூறினார் ரிசர்வ் வங்கியின் கவர்னர் ரகுராம் ராஜன். இது மட்டுமல்லாமல், துணை கவர்னர் எஸ்.எஸ்.முந்த்ராவும் காலக்கெடுவை நீட்டிக்க முடியாது என்று தெரிவித்தார்.

இதனைத் தொடர்ந்தே பொதுத்துறை வங்கிகள் வாராக்கடனுக்காக அதிக தொகையை ஒதுக்க ஆரம்பித்தன. இதனால் பல வங்கிகள் நஷ்டத்தை சந்தித்தன.

source: Hindu Tamil

Stress and the City: Britain's bank workers buckle under pressure

Dwindling job security, heavier workloads, regulatory upheaval and the poor public image of the banking sector are taking a toll on the mental health of Britain's bank workers.

Eight years after the global financial crisis, stress in the industry has pushed up demand for insurance to protect revenues against the cost of paying staff too sick to work, insurance data show.

"The problem has gone into a new stratosphere since the financial crisis ... Those who still have a job are vilified," said Jagdev Kenth, director of risk and regulatory strategy in the financial institutions group at Willis Towers Watson.

"Most haven't had anything to do with the scandals. They're working longer hours, doing two to three jobs, under greater pressure. Something has to give."

Once havens for prestigious, highly-paid and lifelong careers, banks have undergone rapid cultural and structural change at the behest of regulators tasked with reining them in.

Tougher capital rules, hefty misconduct fines, and the closure of riskier business lines have forced banks to slash staff.

Ten of Europe's largest lenders have axed 130,000 jobs since June, Reuters data shows.

Banks will be restored to health by March 2017, says Raghuram Rajan

Reserve Bank of India Governor Raghuram Rajan on Thursday said central bank and government efforts to clean up banks' balance sheets would be successful, and warned analysts against "scare-mongering" about the level of stressed assets in the sector.

India's banks are struggling under $100 billion of stressed loans, choking the financial system at a time when the economy needs fresh investment to galvanise growth.

The RBI would strive to have "clean and fully provisioned bank balance sheets by March 2017," Rajan said, adding that the government's planned capital infusion in state-run banks would be sufficient.

State-run banks like SBI, Bank of Baroda, Central Bank of India, apprise PM Narendra Modi of rising bad loans

Last week, Prime Minister Narendra Modi met senior finance ministry officials and got aware of rising bad loans at state-run banks.

Some of these banks have announced that they could not get desired third-quarter results because they were pushed by RBI to set aside money so that bad loans can be covered and their books can be cleaned up. 

"The prime minister was apprised of the situation. It is not that grave as it is made out to be," a senior government official told ET. "We are hopeful that as the bankruptcy law gets passed, financial institutions will have more teeth to rein in defaulters." 

Capital requirements of state-run banks and the impact of bad loans on their profitability were also the topics of discussion in the meeting. 

"The government is committed to adequately capitalise PSBs (public sector banks)," he said. "It is expected that the last quarter of this fiscal will also see some more rise in bad loans because of Reserve Bank of India's asset quality review (AQR)."

The government has already committed Rs 70,000 crore to be given till FY19 for bank recapitalisation, and the amount can be increased if required, said the official. (Source: ET)

WHAT RBI GOVERNOR SAYS FOR THE LOSS INCURRED BY PSBs

COMPARATIVE CHART ON PSBs

SHRI. THOMAS FRANCO INTERVIEW IN THE HINDU

More banking reforms coming soon, says Arun Jaitley

The government will unveil a series of banking reforms in the coming days but it has no intention to exit from the sector, Finance Minister Arun Jaitley said on Sunday.

"There are a series of banking reforms which I am likely to announce in the days to come... you may find something on that," Jaitley said at a forum here during the government's Make In India Week event here.

"I don't think India has reached a stage where the state can pull out of banking altogether," he said.

Declaring state-run banks to be a necessity because of their major role in financial inclusion, he said the government was already committed to bring down its holding in these to up to 51 percent.

The finance minister's comments come after public sector banks posted poor earnings for the third quarter and an asset quality review by the Reserve Bank of India showed a major rise in bad assets and provisioning.

Regarding the government's commitment not to interfere in the running of banks, Jaitley said: "We have erred in the past on this."

Jaitley also said the government is committed to provide a predictable and stable tax regime, adding that tax demands raised in the past have given the country a "bad reputation".

He said the government has embarked on a path to make India's tax regime globally competitive and the move to bring down the corporate tax gradually to 25 percent is a part of the strategy.

RBI asks banks to partially freeze KYC non-compliant accounts

Customers, who have not complied with KYC requirements despite repeated reminders, may face trouble with RBI today asking banks to partially freeze and subsequently close such accounts.

"As regards non-compliance of KYC ( Know Your Customer) requirements by the customers despite repeated reminders by banks, it has been decided that banks should impose 'partial freezing' on such KYC non-compliant in a phased manner," the Reserve Bank said in a notification.

RBI revises rules on reporting of bad loans

The Reserve Bank of India issued new guidelines on Tuesday on the reporting of bad debt and the working of the Joint Lenders' Forum (JLF).

It said banks will be permitted to report their SMA-2 (Special Mention Accounts) and JLF formations on a weekly basis, at the close of business on every Friday. If a holiday, banks will have to report the details on the next working day.

EDUCATION LOAN SUBSIDY SCHEME

To make education loans cheaper, a scheme was finalised Thursday to provide full interest subsidy on the loans taken by students with annual family income below Rs.4.5 lakh to pursue technical and professional courses.

The format for the scheme was finalised after a meeting between the Human Resource Development (HRD) ministry and the Indian Banks' Association (IBA).

"The scheme provides interest subvention to students for the period of their course. The interest for this period will be paid to the banks by the government," a ministry official said.

The Canara Bank was finalised as the nodal bank for IBA member banks to claim the subsidy amount reimbursement.

The scheme, which was approved by the cabinet last year, provides interest subvention to students with annual family income below Rs.4.5 lakh for the period till there course finishes. It will provide interest subvention from the academic year 2009-10.

"The moratorium period also covers the time taken by the student to get a job, or one year, whichever comes first," the official said.

The scheme will be valid for all loans from scheduled banks for pursuing courses in professional and technical streams from recognised institutes in India.

"All eligible students who wish to avail the benefits should approach the respective bank branch from where they availed of the education loan and complete the necessary formalities, including obtaining the certification in respect of annual family income from the competent authority at the local level," the official said.

The individual student accounts will then be credited with the interest due on the loan for the academic year 2009-10 onwards, the official added.

The scheme is effective for all IBA-approved educational loans.

Source: economictimes

BASE RATE LIKELY TO BE BETWEEN 8-8.5%: BANKERS

Most bankers have indicated that they will keep their base rate between 8 per cent and 8.5 per cent, up to 5 percentage points lower than the existing prime lending rate.

The bankers said this even as they awaited a clarification from the RBI on concessional loans, such as farm credit.

The base rate, to come into effect from July 1, will replace the existing Benchmark Prime Lending Rate (BPLR) — which varies between 11 per cent and 13.5 per cent for public sector banks. Base rate, the lowest rate that the bank can charge from a customer, is intended to bring about more transparency in lending operations of banks.

"It (base rate) could be in between 8-8.5 per cent," Canara Bank Chairman and Managing Director A C Mahajan told.

"We have already indicated that the base rate would be between 7.5 per cent and 8.5 per cent," SBI chairman O P Bhatt said.

Last week, banks had made a representation before the RBI to seek clarifications on the concessional rate.

The RBI is understood to have agreed to issue circulars giving more clarity on concessional loans, the official said.

The government offers 2 per cent loan subsidy on farm loans, something that lenders fear may come to an end after the base rate is implemented. Banks cannot charge more than 7 per cent on agriculture loans.

Similarly, in case of rupee loans to exporters, the government does not allow PSU banks from charging more than 2 percentage points below its the BPLR.

Giving indication on the range, the Punjab National Bank said that the base rate would be between 8 and 8.5 per cent.

Banks that have a high Casa (Current Accounts and Savings Account) ratio would be at an advantage because the cost of funds for those banks would be lower.
The Oriental Bank of Commerce said that the base rate was likely to be between 8 and 9 per cent.

Source:http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Base-rate-likely-to-be-between-8-85-Bankers/articleshow/6075659.cms

CENTRAL BANK OF INDIA TO GO FOR RIGHTS ISSUE

Central Bank of India on Friday said that it would come out with a rights issue in the next few months to raise Rs 2,500 crore.

“That (rights issue) we are working out,” Central Bank of India Chairman and Managing Director Mr S Sridhar said after opening a bank branch at the headquarters of the organising committee of the Commonwealth Games 2010 here.

He stated that the bank is planning to raise Rs 2,500 crore from the rights issue, which would be out in the next few months.

Stating that the details are yet to be worked out, he said that they are required to obtain regulatory approval and complete other formalities before holding the issue.

The Central Government holds about 80 per cent stake in the Central Bank of India. Hence, it will make a capital infusion of Rs 2,016 crore by subscribing to the rights issue.

Another Rs 500 crore may be raised from existing retail shareholders and FIIs, who own the remaining 20 per cent stake in the bank.

Last week, the government had announced a capital infusion of Rs 6,211 crore in five public sector banks, including Rs 2,016 crore capital support to Central Bank of India with the objective of raising Tier I capital of over 8 per cent.

The Tier I capital of the bank is about 6.6 per cent, he said, adding that it will cross 8 per cent after the rights issue.

With the infusion, the bank would be able to increase the balance sheet size by about 10-12 times of the amount raised by way of equity.

Earlier this month, the government had infused Rs 250 crore into the bank to shore up the capital.

Mr Sridhar said that though there is an upward bias on interest rate, it would not go up till July. Liquidity, which is tight this month, may ease next month as money would flow back into the system, he added.

Source: http://www.thehindubusinessline.com/businessline

BANKS MAY HIKE DEPOSIT RATES

With the liquidity in the system gradually drying up, banks may jack up deposit rates to mobilise funds.

United Bank of India has already hiked its deposit rates by 25-50 basis points effective Wednesday, while the other Kolkata-based banks are planning to adopt a ‘wait and watch' approach for now.

United Bank of India has increased interest rates on domestic retail term deposits, below Rs 1 crore by 25 basis points to 6.75 per cent per annum from 6.50 per cent a year in the time bucket of one year-to-less than two years.

For the five years and above, the interest rates have been increased to 7.50 per cent from 7.25 per cent at present.

UCO Bank might not go for an immediate hike in interest rates, according to its Chairman and Managing Director, Mr S K Goel.

Source: http://www.thehindubusinessline.com/2010/06/18

FOUR PSUs TO GET FUND INFUSION FROM GOVERNMENT

Four state-run banks—Vijaya Bank, Central Bank of India, UCO Bank and United Bank of India —are likely to get Rs 1,500 crore as part of their recapitalisation package soon, according to official sources here.

The fund infusion will enable these banks to maintain comfortable level of capital to risk-weighted asset ratio for supporting credit requirement of the productive sectors.

Of the total, Vijaya Bank will get Rs 700 crore, UCO Bank Rs 300 crore, Central Bank and United Bank of India Rs 250 crore each, sources said, adding the government has already made a provision for subscription to Tier-I instrument for capitalisation of these bank in the budget.

During the past fiscal, the government had provided Rs 1,200-crore capital support to Central Bank of India, UCO Bank and United Bank of India to meet their capital requirement. UCO Bank and Central Bank of India got Rs 450 crore each while United Bank of India, which recently got listed, received a financial assistance of Rs 300crore.

Financial-Support:
--------------------

The government plans to provide financial support of Rs 15,000 crore to the public sector banks during the current fiscal. The Cabinet has already approved capital infusion plan that will increase the lending capacity of the banks by Rs 1.85 lakh crore. The exact amount, the mode of capitalisation and other terms would be decided in consultation with the banks at the time of infusion.

The Rs 15,000-crore fund infusion for Tier I capital instruments of PSBs would enable them to expand their credit growth by about Rs 1,85,000 crore. This additional availability of credit is likely to benefit employment oriented sectors, especially agriculture, micro and small enterprises and entrepreneurs.

Source:http://www.deccanherald.com/content/68543/four-psu-banks-get-rs.html