Sri D.S. Lahane, General Secretary, CBOA, Nagpur, Jt. General Secretary, AICBOF, Secretary, AIBOC, Maharashtra State Unit II and Asst. General Secretary, AIBOC retired from the services of Central Bank of India today.
Central Bank Officers' Association, Andhra Pradesh acknowledges his services to the officers movement in Central Bank of India and particularly to Nagpur zone.
We wish him a peaceful retired life.
SRI D.S. LAHANE, GENERAL SECRETARY, CBOA, NAGPUR RETIRES
NOW WITHDRAW RS ONE LAKH AT ATMS; SHOP FOR RS 1.25 LAKH A DAY
Bank customers can soon withdraw up to Rs one lakh in a single day from ATM machines, and can shop for even an higher amount of Rs 1.25 lakh with their debit cards. Also, as much as Rs three lakh can be transferred in a day to another account through ATMs as also over phone.
The enhanced limits for ATM withdrawals, debit card swiping and fund transfers would save the consumers from running to bank branches, that too within banking hours, for such large transactions. Currently, the maximum the customers of most of the banks can withdraw through ATMs is Rs 50,000 in a day.
While HDFC Bank is allowing these enhanced banking limits to its customers with effect from June 1, other banks might soon follow the suit.
The ATM withdrawal limit for HDFC Bank Imperia Gold Debit Cards now stands increased to Rs 1 lakh, and that for shopping to Rs 1.25 lakh, from Rs 50,000 per day. Besides, the ATM card and shopping limit for Easy Shop Regular International/ Maestro/ NRO Debit Cards would stand increased to Rs 25,000 and Rs 40,000 respectively, from Rs 15,000 and 25,000 respectively.
The bank is currently in the process of informing its customers about these enhanced debit card limits. Given the competitive nature of the banking business, other banks would have to soon follow HDFC Bank in increasing their own card limits for ATM withdrawals, shopping and fund transfers, a senior official at a rival bank said.
Also the holders of Kid's Advantage Debit Cards can withdraw and shop for Rs 2,500 in a single day, higher from Rs 1,500 and Rs 1,000 currently.
Further, for Women debit Card holders will get to withdraw Rs 25,000 from ATMs from Rs 20,000. Also customers can shop for up to Rs 40,000 crore with debit cards, from the present Rs 30,000.
"The above revised limit are not applicable to the card holders whose current limit are different from the ones stated above and will continue to enjoy their requested/offered limits as sanctioned before," HDFC said.
PMO REJECTS FINMIN PROPOSAL ON BANK CHIEF APPOINTMENTS
The Prime Minister’s Office (PMO) has turned down a finance ministry proposal to allow bankers with less than two years of residual service to be appointed as public sector bank chiefs.
The move will affect several candidates in race for top posts of banks. Sources close to the development said PMO was against dilution of appointment norms, which have been in place for several years and have coincided with the re-emergence of public sector banks as strong players in the banking space.
The sources said a term of less than two years did not give individuals time to implement their decisions properly.
Following the feedback from South Block, the finance ministry has prepared a fresh set of names and sent them to the Appointments Committee of Cabinet (ACC).
PMO’s objections come at a time when some lawmakers have written to Finance Minister Pranab Mukherjee expressing concerns over the proposal to allow executive directors with 18 months of residual service to be considered for appointment as bank chiefs. The members of Parliament said the decision was taken unilaterally by the finance ministry and ACC’s approval was not taken.
They said since 2007, the government had followed ad-hocism in appointment of bank chiefs and not followed a uniform set of rules. For the interviews conducted in February, the government kept changing norms, so much so that some candidates from State Bank of India, who were called for the meeting, were dropped at the last moment.
Interestingly, because of this intervention by PMO, a long tradition of appointment of chairmen of government banks has been broken. Traditionally, appointments at large banks are done through lateral movement, that is, the chairman of a smaller bank takes charge of a big bank. However, for Canara Bank’s top job, the government has decided to promote an existing executive director because present chairmen of smaller banks do not meet the two criterions, that is, two years of residual service and one-year experience as chairman of a smaller bank.
Union Bank’s S Raman is scheduled to take charge of Canara Bank when the present chief, A C Mahajan, retires in July. For six large banks, Punjab National, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and Central Bank of India, the system of lateral movement has been followed.
The sources said the finance ministry sought consent from eight candidates for appointment in as many number of banks where top positions would be vacant till February next year.
Apart from Canara Bank, the government has sought consent from candidates for appointment as chiefs of Corporation Bank, Andhra Bank, Indian Overseas Bank, Uco Bank, Oriental Bank of Commerce, Bank of Maharashtra and Vijaya Bank. Except for Vijaya Bank, where the post will be vacant in February, the top posts in seven other banks will be vacated in 2010.
The government has also sought consent from 11 general managers for the position of executive directors in nine banks.
PUNJAB & SIND BANK LIKELY TO GET IAS HEAD
Unable to find a senior Sikh banker to replace G S Vedi at Punjab & Sind Bank, the finance ministry has begun the search for an IAS officer to be appointed as the Delhi-headquartered bank’s chairman & managing director. Vedi is due to retire at June-end and, unlike other public sector banks where the top job is falling vacant this year, no candidate has been shortlisted for the bank’s top job.
Traditionally, the bank has had a Sikh as chairman and managing director and, in the absence of a banker, the job has gone to an administrative service officer. R P Singh, who is at present secretary in the department of industrial policy and promotion, was Vedi’s predecessor. Singh was, however, appointed as the government wanted an outsider to run the bank that had run up a pile of bad debt and was unable to modernise.
In the absence of a Sikh executive director with at least two years of service left, the government was toying with the idea of appointing a non-Sikh banker. But, the move was opposed by the community, prompting the government to settle for a candidate from the bureaucratic community.
Punjab & Sind Bank, the only unlisted public sector bank in the country, has received the Reserve Bank of India’s approval for an initial public offer. The bank’s management has indicated it intended to hit the capital market in June-July for raising around Rs 500 crore. Post-IPO, the government holding will come down to 82 per cent.
AIBOC CIRCULAR NO. 77 DATED 26TH MAY 2010
AIBOC issued its circular No. 77 on date of effect of revision of Gratuity Ceiling. We are reproducing the same here for our readres.
CIRCULAR NO:77 26th MAY, 2010
TO ALL AFFILIATES/MEMBERS:
REVISION OF GRATUITY CEILING - DATE OF EFFECT IS 24TH MAY 2010
We have just now received a copy of the Gazette Notification issued by the Labour Ministry, Government of India for the purpose of notifying the date of effect of the revision in the Gratuity Ceiling payable under the Payment of Gratuity (Amendment) Act 2010. The date of effect has been made as 24th May 2010, much to our surprise and astonishment.
Our members are aware that the Confederation had led a delegation to the Minister of State for Labour and appealed to him to make the date of effect same as in the case of the Central Government employees i.e., 01.01.2006. When we were given to understand that there are certain vested interests from the industry lobby who were inimical to raising the ceiling to Rs.10/- lacs in the Gratuity Act and were attempting to scuttle the amendment; we submitted an exhaustive Memorandum to the Government to ensure that there is no discrimination as regards the date of effect between the Central Government employees and the Banks. There were positive responses from the Labour Ministry and our subsequent interaction with them at various stages also provided sufficient comfort and confidence to us.
We are disappointed with the current notification since it results in frustration to all those who retired between 1.1.2006 to 23rd May 2010. We have been receiving anxious queries as to the impact of this notification. The import of the notification is that it is prospective and all those who retire/resign on or after 24th May 2010 shall be eligible for the benefit of the revised ceiling. For those who had retired earlier, we will pursue the matter after due consultation with other organizations as to the manner in which the issue needs to be taken up with the Government. We are also examining the possibility of legal remedy in the matter in view of a large number of representations we have been receiving in the matter.
We note to keep our members advised in the matter in due course.
With greetings,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY
AIBOC CIRCULAR NO. 76 DATED 27TH MAY 2010
AIBOC issued its circular No. 76 on serving strike notice by the United Forum of Bank of Rajasthan Unions. We are reproducing the same here for our readers.
CIRCULAR NO:76 27th MAY, 2010
TO ALL AFFILIATES/MEMBERS:
UNITED FORUM OF BANK OF RAJASTHAN UNIONS SERVE STRIKE NOTICE – LONG DRAWN STRUGGLE PLANNED - MOVE TO OPPOSE MERGER OF THE BANK WITH ICICI - FRATERNAL SUPPORT TO AGITATING EMPLOYEES
In view of the lukewarm response of the Management of Bank of Rajasthan and also the Reserve Bank of India and the Government, the United Forum of Bank of Rajasthan Unions were left with no alternative but to proceed with their plan of action which includes 5 days strike in the month of June 2010 in two phases. The Strike Notice has already been served. The details of the strike actions are as follows:-
4th and 5th June 2010 2 days’ countrywide strike
17th, 18th,and 19th June 2010 3 days’ countrywide strike
The Bank of Rajasthan is nearly 7 decades old and has a large branch net work in the Northern part of the country numbering about 468 branches served by over 4200 employees looking after the interest of about 20 lac customers in the country. The Bank was predominantly present in the State of Rajasthan taking exclusive interest in the economic development of the State. It is interesting to note that the Bank of Rajasthan is not only one of the biggest Private Sector Banks belonging to old generation but also the only Bank from the Northern part committed to the development of the people of the country as per the guidance and directives of the Government of India from time to time.
The move to merge this Bank with ICICI Bank is only to enable the major share holder who was one of the promoter to see that his stakes are sold for a huge profits. It is in this background the developments were taking place behind the curtain and the deal was struck despite the fact that the RBI had noticed certain adverse features and wanted those issues to be resolved through proper administration of the Bank and to ensure against the interference of the stake holders. The employees were putting their heart and soul to recover the past glory of the bank affected due to mismanagement and vested interest groups. The decision to merge the bank with the ICICI Bank has come as a rude shock to all of them and they have rightly chosen to go to streets to demonstrate their agitation and seek justice for their demands.
The issue involved in the strike is not an economical one. It is only one point agenda. The Bank should not be merged with ICICI Bank. If there is a need for merger it should be merged with a Public Sector Bank. This is desire of the entire workforce in the Bank and rightly they have come together under the umbrella of United Forum of Bank of Rajasthan Unions.
We have already conveyed our support to the agitation. All our Affiliates/State Units are requested to extend their solidarity support to the struggle and send a fax to the Central Government, Reserve Bank of India, expressing our resentment over these developments. The fax should be sent immediately. The text is appended:
“
1. Shri.Pranab Kumar Mukherjee,
The Honorable Minister of Finance,
Government of India
New Delhi
2. Shri.D. Subba Rao,
Governor,
Reserve Bank of India,
Mumbai.
Dear Sir,
We strongly protest against the proposed move of the Boards of the Bank of Rajasthan and ICICI Bank for the merger of the Bank of Rajasthan with the ICICI Bank through the secret deal that has taken place between the major stake holder of Bank of Rajasthan whose conduct was under scrutiny of SEBI as well as the Reserve Bank of India and also placed the bank in a difficult situation. The employees of the Bank numbering over 4200 are on continuous agitation and strikes opposing these developments. We therefore request your immediate intervention to avert the agitation escalating further and also engulfing the industry as a whole.
Please treat the matter as urgent.
GENERAL SECRETARY PRESIDENT”
The Copy of the fax should be forwarded to our office.
All our Affiliates and State Units are also requested to extend their full support to the various actions programmes initiated by them. They should also mobilize a large number of our members to participate in the rallies and demonstrations conducted by the United Forum of Bank of Rajasthan Unions.
Comrades, the present move is yet another fatal blow to our industry by the New Generation Private Sector banks who are owned by the multinationals. We have been spearheading a strong movement against such moves for the last two decades. This is yet another sinister design of those who have been championing the cause of the globalization and privatization of the financial sector in particular the banking industry to break the backbone of the economic prosperity of this country. Let us therefore be prepared to mount greater pressure on all concerned to prevent these initiatives.
With warm greetings,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY
AIBOC CIRCULAR NO. 75 DATED 26TH MAY 2010
AIBOC issued its circular No. 75 on implementation of 9th Bipartite Settlement. We are reproducing the same here for our readers.
CIRCULAR NO: 75 26th MAY, 2010
TO ALL AFFILIATES/MEMBERS:
IMPLEMENTATION OF 9TH BIPARTITE SETTLEMENT PROCESS ON – IBA ISSUES GUIDELINES TO BANKS - GOVERNMENT’S CLEARANCE IN RESPECT OF OFFICERS AWAITED
We are happy to inform our members that the process of the implementation of the 9th Bipartite is on. The Indian Banks’ Association has since issued detailed communication to all the banks in respect of the Award Staff who signed 9th Bipartite Settlement under the provisions of the Industrial Disputes Act, which does not require further approval of the Government. The Communication in regard to the payment of arrears as well as the recovery towards the contribution to Pension Fund on account of the 2nd Option from those who will be required to exercise the option has since been sent to the Banks with instructions to hold the contribution in a separate account pending receipt of the detailed instructions from the Government including the amendment to the Service Regulations in respect of Officers of the banks.
We are in touch with the Banking Department to ascertain the latest position as regards the communication of in-principle approval pending amendment to the service regulations in respect of the Officers in the banking industry. We understand that the approval is expected at any time. The first phase in respect of the Award Staff for the payment of arrears etc., as per the 9th bipartite settlement having already been initiated, we are confident that the process in respect of the Officers will be expedited.
In the meanwhile, we have been receiving anxious enquiries about implementation of the 9th bipartite settlement as well as the 2nd Option on Pension in respect of Officers. We therefore advise the members to have patience for a few more days and the instructions are awaited at the earliest. We also understand that the bank managements have already initiated necessary steps and the workings have since been kept ready so that no delay takes place once the guidelines are received from the Banking Department for implementation of the 9th bipartite, pending amendment to regulations in respect of officers in the banking industry.
Comrades, the technical requirement of obtaining the approval of the Ministry of Finance including the Finance Minister should not take much time since the Government is conscious of the pressures that are built across the country awaiting the implementation of the 9th bipartite. We have also been in touch with IBA as well as the Government authorities for early action in this regard.
We note to keep all our affiliates/members informed of further details in due course.
With greetings,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY
CBOA, AP CIRCULAR NO. 15 DATED 24.05.2010
CBOA, AP issued its circular No. 15 on Bipartite Settlement and Payment of Gratuity (Amendment) Act 2010. We are reproducing the same here for our readers.
Circular No. GS: 2010: 015 Date: 24.05.2010
TO ALL OFFICERS PLEASE CIRCULATE
Dear Friends,
We reproduce hereunder the Circular No. CIRCULAR/GS/2010/8 dated 21-05-2010 received from our Federation for your information.
With best regards
Yours sincerely
Sd/-
(C.A. MALLIKARJUNA RAO)
GENERAL SECRETARY
...................................................…………….…………………………
We reproduce hereunder circulars received from AIBOC for your information:
“IMPLEMENTATION OF 9TH BIPARTITE SETTLEMENT PROCESS ON – IBA ISSUES GUIDELINES TO BANKS GOVERNMENT’S CLEARANCE IN RESPECT OF OFFICERS’ AWAITED
Friends, we are happy to inform our members that the process of implementation of the 9th Bipartite is on. The Indian Banks’ Association has since issued detail communication to all the banks in respect of the Award Staff who signed 9th Bipartite Settlement under the provisions of the Industrial Dispute Act, 1947, which does not require further approval of the Government. The communication in regard to the payment as well as the recovery towards the contribution to Pension Fund on account of the 2nd Option is as under:
An amount equal to 2.8 times of the “Pay” for the month of November, 2007 be withheld and kept in a suspense account for crediting to the Pension Fund in case the employee opts to join the Pension Scheme complying with the terms of the Settlement dated 27th April, 2010.
If any employee gives in writing an irrevocable letter stating that he does not intend to join the Pension Scheme in terms of the Settlement, 2.8 times of the November 2007 pay as above need not be withheld.
Once the offer is made to join the Pension Scheme, on expiry of the period of option, the amount withheld in respect of those who exercised the option to join the Pension Scheme should be transferred to the Pension Fund. The arrears withheld in respect of those who did not opt for pension within the stipulated time, be refunded to them.
No portion of arrears be withheld in respect of non-optee employees who retired from 1st November 2007 to 27th April 2010. They will be joining the Pension Scheme by making contribution towards funding gap as retired employees in terms of the Settlement.
We are keeping in touch with the IBA to ascertain the latest position as regards in-principle approval, pending amendment to the service regulations in respect of the Officers in the banking industry. We understand that the approval is expected at any time. The first phase in respect of the Award Staff for the payment of arrears etc., as per the 9th bipartite settlement having been already initiated, we are confident that the process in respect of the Officers will get speeded up now.
In the meanwhile, we have been receiving anxious enquiries on implementation of 2nd Option on Pension. The process of obtaining in-principle approval from Govt. is also in progress. We therefore advise members to have patience for a few days more as the instructions are awaited at the earliest. We also understand that the bank managements have already initiated necessary steps and the calculations have since been kept ready so that no delay takes place once the guidelines are received from the banking department for the implementation of the 9th bipartite.
Friends, the technical requirement of obtaining the approval of the Ministry of Finance including the Finance minister should not take much time since the Government is conscious of the pressures that are built across the country, awaiting implementation of the 9th bipartite.
We note to keep all our affiliates/members informed of further details in due course.”
“THE PAYMENT OF GRATUITY (AMENDMENT) ACT 2010
We are glad that, Ministry of Law and Justice have issued notification in Official Gazette on 18th May 2010, amending the Payment of Gratuity Act with revision in maximum ceiling from Rs. 3.5 lac to Rs. 10/- lacs. Whereas the date of effect of the revised ceiling may be decided by the Central Government through Official Gazette.
We have sent a letter to the Labour Minister for State, reiterating our request for revision of the ceiling from 1st January, 2006. A copy of the communication is reproduced hereunder. We shall keep you advised of further developments, in due course.”
“We are grateful to receive your letter DO No.2/10/MOB/L&E/VIP/2010 dated 13th May, 2010.
We are also thankful to the Ministry of Law and Justice in publishing the amendment to the Payment of Gratuity Act in the Gazette of India, extraordinary of 18th May 2010, enhancing the maximum ceiling on gratuity from Rs. 3.5 lacs to Rs. 10 lacs. As regards date of effect of the said amendment, the Central Government may decide by notification in the Official Gazette.
We therefore, once again request your goodself to arrange for the revision to come into effect in the Banking Industry from 01.01.2006, as in the case of Central Government employees, for which act of kindness we shall ever remain grateful to you and the Government of India.”
The reply from Hon’ble Minister of State for Labour & Employment is reproduced overleaf.
Yours sincerely,
(D.S. BHADAURIA)
GENERAL SECRETARY
CENTRAL BANK PLANS TO SELL UPTO RS 400-CRORE NPAS IN FY11: ED
State-run Central Bank of India plans to sell Rs 300-400 crore of its bad loans in the current financial year in a bid to clean up its balance sheet, a top bank official said.
"We may sell Rs 300-400-crore of bad assets this year," Central Bank of India, Executive Director, Arun Kaul told reporters here today. In the last fiscal, the bank had sold badloans worth around Rs 350-crore, Kaul said.
Banks and other financial institutions having lending operations sell part of their badloans to ARCs at a discounted rate with a view to clean up their balance sheet.
Asset Reconstruction firm, Arcil today said in the last financial year, it had bought bad assets from banks and other financial institutions for around Rs 600-700 crore through cash and security receipts.
For the fiscal ended March, Central Bank of India reported a 82.83 per cent growth in consolidated net profit at Rs 1,162.55 crore as against a net profit of Rs 635.85 crore in the previous year.
Total income rose to Rs 13,820.61 crore during the year, up 19.75 per cent, from Rs 11,540.97 crore in the corresponding period a year-ago.
BANKS PARK RS 60,000 CR MORE IN MFS
Banks have continued to park surplus funds with mutual funds with incremental investments of close to Rs 60,000 crore since April.
The Reserve Bank of India data shows that bank investment in mutual funds stood at Rs 111,956 crore as on May 7. Banks essentially park funds in liquid mutual fund schemes as the return is a shade better than the return earned by deploying funds in the overnight call money market. Fortnightly trend in data shows that there is a secular rise in such investments over the past three fortnights.
According to Andhra Bank executive director Anil Girotra, this a pure fund management strategy by banks and surplus funds are deployed with mutual fund only until there are visible signs of pick-up in loan demand.
A recent report by Deutsche Bank notes that there could be demand for funds on account of payment of around Rs 67,000 crore as licence fee by telecos towards payment of license fees for 3G spectrum, besides another Rs 15000-20,000 crore toward the upcoming auction of the broadband wireless spectrum. In addition, there is a likely outgo of around Rs 30,0000-35,000 crore because of advance tax payments starting in the middle of June.
In total, assuming that only 75% of the 3G payments are made immediately, we could see over Rs 80,000 crore drained from the banking system.
Banks have in excess of Rs 100,000 crore parked in mutual funds (although it has come down noticeably in the last few months), part of which they are likely to divert towards lending to telecom companies, given higher yields on the latter. Besides treasury officials say government bond issues outstrip redemption in June.
According to a fund manager with a debt fund, any pick-up in loan demand will first result in pullout of surplus funds with RBI under its reverse repo facilities and only then would they pull out funds from mutual funds. “However, there could be some withdrawal pressure towards end June when corporates withdraw funds to make advance tax payments,” he added.
SBI CHIEF: 3G PAYMENTS WON'T PUSH LIQUIDITY INTO DEFICIT
Liquidity is unlikely to move into deficit in India due to outflows to pay for 3G mobile spectrum, the chairman of India's top lender, State Bank of India, said on Wednesday, adding that there is adequate liquidity in the banking system.
O P Bhatt added that he had seen no recent pick-up in credit growth.
TELCOS' 3G BORROWING HITS BANKS' LIQUIDITY
Borrowing by telecom companies, which have to pay licence fees to the government, has led to a shortage of liquidity forcing banks to hunt for large deposits.
Banks say that by next week lenders may have to seek refinance from the Reserve Bank of India. Reliance on refinance will immediately bump up overnight rates by two percentage points from the prevailing 3.75% to 5.75%, which is the rate at which RBI lends to banks.
On Tuesday, banks invested surplus funds of Rs 8,890 crore with RBI under its reverse repo window — a facility whereby banks can lend surplus funds to RBI. This is a massive decline from the situation on two working days earlier on Friday, when banks had parked surplus funds of Rs 47,500 crore under reverse repo.
Some banks have started withdrawing cash from mutual funds while other have raised money by issuing certificate of deposits. Money market dealers expect liquidity to dry up on account of the Rs 68,000 crore that telecom companies are required to pay against their allotment of spectrum for providing third generation (3G) mobile services. Besides the impact of 3G, dealers say liquidity will tighten in the coming weeks due to advance tax payments that is expected to be in the range of Rs 30,000-40,000 crore.
“We would see tightness in the first week of June where we expect the repo rate to be the operative rates as against reverse repo now. Also, we think that the lender-borrower profile will change that will impact money market,” said Mohan Shenoi, group head, treasury, Kotak Mahindra Bank. This will mean that in June, call money rates, or the rates that banks lend to one another, will hover around repo rate — the rate at which banks borrow from RBI — which is 5.75% now. As of now, call money rates hover around the reserve repo rate— rate that RBI borrows from banks — which is 3.75% now.
According to reports from news agencies, last week banks raised Rs 8,775 crore that includes Rs 2,000 crore raised by Allahabad Bank for three months at 5.50%. Among others, Central Bank of India mopped up Rs 1,600 crore at 5.93% for six months, Dena Bank raised Rs 600 crore at 5.58% for about four months and United Bank of India garnered Rs 600 crore. Some money-market participants say that banks have withdrawn almost 20-25% of their investments from mutual funds. The latest data on the funds parked by banks in mutual fund as on May 7 shows an investment of around Rs 1.9 lakh crore.
Money-market sources say that MFs, too, were aggressively selling certificate of deposits which they held in their books in the secondary market to create liquidity.
Due to the tight liquidity conditions interest rates on CDs shot up on Monday. Vijaya Bank raised Rs 250 crore for one year at 6.52%, slightly higher that one year CD raised by State Bank of Hyderabad last week raised one year at 6.25%.
Interestingly, although liquidity is becoming scarce, demand for government securities have not fallen. Dealers say that this is because banks need to hold government securities, which are offered as securities to RBI for borrowing. Yield on the 10-year paper-7.80 maturing in 2020 closed at 7.40%, down from 7.50% earlier last week.
PNB'S BASE RATE LIKELY TO BE BETWEEN 8-8.5%: KAMATH
State-run Punjab National Bank (PNB) expects its base rate to be between 8-8.5 per cent, its Chairman and Managing Director K R Kamath said today.
The Reserve Bank of India (RBI) had introduced base rate for banks instead of the erstwhile benchmark prime lending rate system effective from July 1, 2010.
However, banks are free to decide the methodology to arrive at their respective base rates or to change and fine tune the method of calculating the new rate till December.
The base rate, below which banks cannot lend, will replace the current system of benchmark prime lending rate (PLR) and is expected to improve transparency of lending.
The PLR system has been drawing flak from various quarters as banks used to lend to highly-rated corporates way below their benchmark rate, making the system irrelevant and opaque.
PNB reported a 31.1 per cent jump in its net profit for the quarter ended March 2010. Net profit stood at Rs 1,135 crore during the quarter against Rs 866 crore in the same period last year.
Total income, during the quarter, rose 6.8 per cent to Rs 6,461 crore, against Rs 6,048 crore in the year-ago quarter.
RBI ASKS BANKS TO BE VIGILANT AGAINST MONEY SCHEME DEALS
In an effort to protect people from financial frauds, the Reserve Bank of India (RBI) today advised banks to be vigilant against transactions related to various money schemes, including cheap funding programmes and lotteries.
There has been a spate of fictitious offers of cheap funds in recent times from the fraudsters through letters, e-mails, mobile phones, SMS and so on, the RBI said in a statement today.
It said there have even been communications to targetted people on fake RBI letterheads, purportedly signed by its top executives/senior officials.
"Many residents have been victims of such teasing offers and lost huge money in the process," the central bank said, adding that fraudsters are seeking money from the gullible people, under different heads, such as, processing/transaction fees, tax clearance/conversion charges and clearing fees.
The victims of the fraud have also been persuaded to deposit the amount in accounts with banks in India, and such amounts have been withdrawn immediately.
It is also observed that multiple accounts are being opened in the name of individuals or proprietary concerns, at different bank branches for collecting the transaction charges.
The RBI said that banks are, therefore, "advised to exercise due caution and to be extra vigilant while opening or allowing transactions in such accounts".
It also clarified that any person resident in India collecting and remitting such payments directly or indirectly outside the country would be violating the Foreign Exchange Management Act, 1999 and other rules under Anti Money Laundering (AML) standards.
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