:::::SRI S.B. RODE, OUR BELOVED PRESIDENT, AICBOF AND OFFICER DIRECTOR ON THE BOARD OF CENTRAL BANK OF INDIA HAS BEEN COOPTED AS GENERAL SECRETARY, AICBOF IN E.C. MTG. HELD AT MUMBAI ON 24.02.2014:::::MR. S.C. GUPTA, GEN. SECRETARY OF OUR AHMEDABAD UNIT HAS BEEN COOPTED AS PRESIDENT, AICBOF::::::WE CONGRATULATE THEM AND WISH THAT THE OFFICERS' MOVEMENT IN CENTRAL BANK OF INDIA WILL BE TAKEN TO NEW HEIGHTS:::::LONG LIVE CBOA:::::LONG LIVE AICBOF::::::LONG LIVE AIBOC:::::

CHEQUE PAYMENTS TO GET COSTLIER FROM TOMORROW


Making payments through cheques may become a costlier affair from tomorrow, as RBI has allowed banks to levy higher service charges for their clearing, especially of high-value and outstation cheques.

As per a RBI circular coming into effect from April 1, 2011, banks would be free to fix service charges on speed clearing of cheques of value above Rs 1 lakh.

At present, RBI does not allow banks to charge more than Rs 150 per cheque for speed clearing of cheques worth over Rs 1 lakh, while there are no charges for value up to Rs 1 lakh.

However, speed clearing of cheques with value up to Rs 1 lakh would continue to remain exempt of any service charges.

Speed clearing refers to processing of outstation cheques electronically and without movement of cheques from the presentation centre (city where the cheque is presented) to drawee centre (city where the cheque is payable).

For normal local clearing also, drawee bank can charge up to Rs 1.50 per cheque from tomorrow, as against Re 1 at present. For local clearing through cheque truncation system, which works electronically by processing the scanned image of the cheque, drawee bank can levy a service charge of Re 1 from tomorrow, up from 50 paise at present.

Besides, RBI has also given a free hand to the banks to decide on the service charge on outstation cheques of over Rs one lakh, as against a maximum limit of Rs 150 per cheque allowed currently.

However, RBI has decided to lower the service charge for outstation cheques up to Rs 5,000, by allowing a levy of Rs 25, as against Rs 50 currently.

The outstation cheques between Rs 5,000 and Rs 10,000 would continue to attract a fee of Rs 50, while those between Rs 10,000 and Rs 1 lakh would also continue to be levied a charge of Rs 100.

While fixing service charges not mandated herein, banks have been told to get approval from their boards for service charge structure.

"Charges fixed should be reasonable and computed on a cost-plus-basis and not as an arbitrary percentage of the value of the instrument. The service charges-structure should not be open ended and should clearly specify the maximum charges that would be levied on customers including charges if any, payable to other banks," RBI has told the banks.

The service charges by banks should be inclusive of all charges (postal, courier, handling, etc.) other than service tax, RBI said.


SBI OPENS 25,000TH ATM AND 9,000TH SEMI-URBAN BRANCH


The State Bank opened its 25,000th ATM and the 9,000th semi-urban branch, and said it will add 10,000 ATMs annually for the next three years.

The outgoing Chairman Om Prakash Bhatt said SBI had plans to deploy 10,000 ATMs every year over the next three years.

He inaugurated both these facilities at the SBI board room here through video conferencing, which was attended by the entire board of the bank, including RBI Deputy Governor Shyamala Gopinath. 

While the 25,000th ATM is located at south Mumbai's Girgaon, the 9,000th rural, semi-urban (Rusu) branch is at Sundargarh in Orissa's Bhubaneswar Circle.

Speaking at the occasion, Gopinath said though ATM was the most innovative product in the banking space, there was a need for an optimal ratio of technology and physical branches as rural customers still preferred physical branches.

Of the 13,500 plus branches, as much as 67 per cent are located in rural and semi-urban areas, Bhatt said, adding the State Bank Group has 25,000 ATMs, out of which SBI alone has 20,087. 

In the last two years alone, the SBI Group has put up as many as 13,596 ATMs. SBI's ATM network processes over 7.5 million transactions a day, disbursing nearly Rs 1,500 crore in cash. The State Bank has issued over 90 million debit cards and enjoys a market share of over 38 percent. 

From June 2006 to March 2011, more than 3,400 branches were opened by SBI alone, Bhatt said.

The State Bank Group now has 18,181 branches. In FY11, SBI opened 1,040 branches, including the merged branches of State Bank of Indore.

UNION BANK CUSTOMERS CAN PAY INCOME TAX THROUGH ATMS


Union Bank of India (UBI) customers can now pay their income tax through the automated teller machines (ATMs) of the bank.

This unique facility was launched at the hands of the Minister of State for Finance, Mr Namo Narain Meena, in the Capital.

The launch of this facility is yet another fulfilment of the brand promise of the Bank to provide choice of channel to customers for undertaking various transactions, Mr M.V. Nair, Chairman and Managing Director of UBI, said.

He said that customers of the bank, after one-time registration at the bank's portal, will be able to make their income-tax payments on ATMs. They will be able to generate their challan on Bank's portal. Registration for income-tax payment will also be extended through the bank's branches, he added.

Among those present on the occasion were the Revenue Secretary, Mr Sunil Mitra; the Financial Services Secretary, Mr Shashikant Sharma; the CBDT Chairman, Mr Sudhir Chandra; and the Controller General of Accounts, Mr Sundaramurti. Union Bank is among the few public sector banks that is offering the facility of payment of income tax through ATMs. The bank has an ATM network of 2,600 ATMs and a card base of 6.5 million. Plans are afoot to have 5,000 ATMs by end March 2012.

R SRIDHARAN TO OFFICIATE AS SBI CMD


Mr R Sridharan will officiate as Chairman of State Bank of India, following the superannuation of Mr O. P. Bhatt.

Mr Sridharan is currently the Managing Director of the bank.

OBC GETS RS 1,739.99 CR FUND INFUSION


Oriental Bank of Commerce (OBC) said it has allotted 4.12 crore shares to the government of India on a preferential basis in return for a Rs 1,739.99 crore fund infusion.

As a result, the government of India’s holding has increased to 58 per cent from 51.09 per cent, OBC said in a statement.

Shareholders of the bank approved a Special Resolution at an Extraordinary General Meeting yesterday for the issue and allotment of 4,12,21,482 equity shares of Rs 10 each to the government at Rs 422.11 a share, it said.

HDFC BANK OPENS 275 BRANCHES THIS FISCAL


In a bid to increase its footprint, HDFC Bank opened 275 branches in the current fiscal taking its total network to 2,000.

The bank had a distribution network of 1,725 branches in 779 cities as of March, 2010 which increased to 1,780 branches by the end of December 2010.

About 220 branches were added to the network in the last few months.

With the opening of new branches, the bank's reach has crossed 1,000 cities. Besides, the bank has overseas presence in Hong Kong and Bahrain.

As per the annual report for 2009-10, the bank opened over 300 new branches during the year. The bank's focus on semi-urban and underbanked markets continued, with 68 per cent of the bank's branches now outside the top nine Indian cities.

The bank, which has over 1.8 crore customers, acquiredCenturion Bank of Punjab leading to the integration of 404 branches in 2008.

For the quarter ended December 2010, the bank reported a 33 per cent growth in its net profit at Rs 1,088 crore compared to the same period a year ago.

Total income of the bank rose to Rs 6,357.8 crore at the end of the December quarter, from Rs 4,933.9 crore in the same period last year.

The bank's net interest income went up by 24.9 per cent to Rs 2,777 crore in the third quarter of the current fiscal.

The bank's net interest margin (NIM) remained static at 4.2 per cent in the third quarter. NIM, which is the difference between interest income of a bank and interest paid, was 4.4 per cent at the end of December 2009.

NEW ED FOR CANARA BANK


Ms Archana Bhargava, General Manager, Punjab National Bank, will take charge as Executive Director of Canara Bank on April 1. In PNB, Ms Bhargava has managed functions such as credit, human resource management, planning and development, financial inclusion, and international banking.

VIJAYA BANK ‘ADEQUATELY CAPITALISED FOR NEXT 2 YEARS'


Vijaya Bank, which recently got additional capital of Rs 368 crore from the Government of India, is adequately capitalised for the next two years, according to Mr. Albert Tauro, Chairman and Managing Director.

Govt holding
With the recent infusion, the Government holding in the bank will move up from 53.87 per cent to 57.7 per cent. Though the Government's plan was to move its holding from 58 per cent to 60 per cent, “we are not aware of the composition of the beneficiaries of the Rs 6,000-crore additional capital infusion planned for the next fiscal,” he added. According to him, if the Government plans to take it to 58 per cent, the bank might need about Rs 32 crore, and if it's 60 per cent, then the bank might need about Rs 250 crore.

However, going forward, tier-I capital could be an issue. “That is one thing we should be constantly watching,” said Mr Tauro. As of March this year, the bank's current tier-I capital could be 9.5 per cent. He added that as per Basel III guidelines, if the innovative perpetual debt (IPD) and perpetual non-cumulative preference shares (PNCPS) move out of tier-I capital, “there could be some pressure”. Of the 9.5 per cent tier-I capital, the bank's PNCPS was Rs 1,200 crore. Since Basel III will come into effect in 2017 or 2018, he expected that the bank would not face much of an issue.

SBI OPENS AFFORDABLE HOUSING LOAN CELL


State Bank of India, on Tuesday inaugurated its first 'affordable housing loan' cell in Mumbai, which will provide a platform for its customers to interact with the bank.

The bank has initiated this as a pilot project in association with a few builders operating in the affordable housing segment, a press release issued here said. The first facility has been set up in Nalla Sopara where the bank has its branch, the release said.

"The facility will be set up near localities where affordable housing projects are undertaken. The cell is a distinct delivery structure, which has been designed to offer a simple model for appraisal/sanction methodology suited to the segment," a bank official said. 

The demand for affordable houses has not been met due to various reasons including inadequate supply of houses as well as absence of credible builders in this field, the release said. To begin with, the focus would be on loans in the range of Rs 8-15-lakh.

The bank would also provide ATM facility and Internet kiosks at the sites where such cells would be opened, the release said. Customers would also have the facility of making cash payments after business hours through a customer service point of a banking correspondent at a nearby location, it said.

However, disbursement of loans would be made only through the the bank's branches.

RBI OFFICES TO FUNCTION AS USUAL ON APRIL 1


The Reserve Bank of India said on Tuesday its offices in Mumbai and Navi Mumbai will function normally on April 1.

The government of Maharashtra has declared April 1 as a bank holiday to facilitate annual closing of banks' accounts.

Commercial banks will remain closed for public transactions on that day, the RBI said.

BOB'S MALLYA TO TAKE OVER AS IBA CHAIRMAN FROM APRIL 1


Bank of Baroda (BoB) Chairman and Managing Director MD Mallya will take over as Chairman of the Indian Banks' Association (IBA) from April 1.

He will succeed OP Bhatt, who will be superannuating as Chairman of State Bank of India on March 31.

Punjab National Bank Chairman and Managing Director KR Kamath has been appointed as Deputy Chairman of the IBA in place of Mallya.

The other Deputy Chairpersons of the apex industry body of banks are in the country are HDFC Bank Managing Director Aditya Puri, and Bank of India's Chairman and Managing Director Alok Misra, the release said.

GOVT INFUSES RS 1,172 CR INTO ANDHRA BANK


Andhra Bank said the government has infused Rs 1,172 crore into the bank as part of recapitalisation package.

The capital infusion is aimed at shoring up equity base of the bank to enhance lending to productive sectors of the economy.

The shareholders of the bank had earlier approved issuance of over 7.45 crore shares at a price of Rs 157.28 a share on preferential basis.

The capital infusion would help enhance lending capacity of the state-owned banks to meet the credit requirement of the economy in order to maintain and accelerate the economic growth momentum.

AIBOC CIRCULAR NO. 34 DATED 29.03.2011


AIBOC issued its circular No. 34 dated 29th March 2011 on recovery of tax on 2.8 times of Basic Pay contribution to the Pension Fund. We are reproducing the same here for our readers.


CIRCULAR NO: 34                                                         29th March, 2011

TO ALL AFFILIATES/MEMBERS:

RECOVERY OF TAX ON 2.8 TIMES BASIC PAY - CONTRIBUTION TO THE PENSION FUND

Our Affiliate at Corporation Bank, Bank of India and Indian Overseas  Bank have been successful in securing injunction in Kerala High Court and Madras High Court, Chennai, respectively on deduction of  income tax on 2.8 times of revised basic pay as on 1.11.2007 contributed to Pension Fund as per the conditions of the 2nd  Option of Pension. As per the Court orders, the income tax recovered on the said 2.8 times of revised basic pay  should not be remitted to the Government of India, until the Courts take a final decision in the matter.

We have today addressed a communication to the Chairman, IBA, citing the above said Court orders, and requested them to advise  the member Banks  not to recover Income Tax on the said 2.8 times of revised basic pay as  at 01.11.2007 and if already recovered, not to remit the same to the Income Tax Department,  Government of India. Text of the communication is appended.

We will keep you posted of the developments in the matter.

With greetings
Sd/-
(G.D. NADAF)
GENERAL SECRETARY

No./1452/178/11                                           28.03.2011

To,
The Chairman,
The Indian Banks’ Association,
World Trade Centre Complex,
Centre 1, 6th Floor, Cuffe Parade,
MUMBAI – 400 005.

Dear Sir,

RECOVERY OF TAX ON 2.8 TIMES - CONTRIBUTION TO THE PENSION FUND

We invite your attention to our letter No.1452/120/11 dated 17.02.2011.

You may be aware that, our affiliates in Corporation Bank and Bank of India, have obtained an injunction orders from the Hon’ble High Court of Kerala against the deduction of Tax out of 2.8 times of revised Basic Pay as on 01.11.2007, from the CPF Optees, towards 2nd Option cost on Pension. The said tax, if it is already deducted, should not be remitted to the Government of India, until the Court takes final decision. They have made, IBA as one of the respondents.

Similarly, our another affiliate in Indian Overseas Bank is also successful in getting the injunction order to-day against the deduction of Tax at 2.8 times contribution from the judicature of Madras High Court, Chennai.

We, therefore, urge upon you to issue necessary instructions to all Member Banks not to deduct the tax, from the 2.8 times contribution to the Pension Fund, if, deducted already, not to remit the same to the Government, until final verdicts pronounced by the respectful Hon’ble High Courts.

Kindly treat the matter as most urgent.

With greetings,

Yours sincerely,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY

NEWER PERSPECTIVE, APPROACHES TO FINANCIAL INCLUSION NEEDED: PRANAB


The Government is trying to address the concerns over banks' high cost of intermediation and limited penetration when it comes to customer segments and geographies, according to the Finance Minister, Mr Pranab Mukherjee.

These concerns are being addressed in collaboration with the Reserve Bank of India and with the active participation of the banking and non-banking financial entities.

“Newer perspective and approaches towards financial inclusion are the need of the hour. There is a case for the policymakers and other stakeholders to re-strategise the financial policies that are meant to reach the un-reached and the un-banked sections of our country,” Mr Mukherjee said in his speech at the Sir Sorabji Pochkhanawala Memorial Lecture, organised by the Central Bank of India.

Last December, the RBI Governor, Dr D. Subbarao, had underscored the importance of making financial intermediation more efficient to achieve double digit and inclusive growth.

Raising savings
“To achieve our collective aspiration of double digit and inclusive growth, we need to raise the level of national savings and channel those savings into investment. This means banks need to raise the interest rates offered to depositors and reduce the lending rates charged on borrowers — in other words, reduce their intermediation costs or, in technical terminology, reduce the net interest margin,” he said.

Though over the last few decades most of the financial sector policies sought to accelerate the penetration of banking and financial services, Mr Mukherjee said the goal of universal coverage is yet to be achieved.

In pursuit of the objective of universal coverage, the Finance Minister observed that many bank branches were set up, particularly in the rural areas of the country. Regional rural banks came into existence to give saving facilities to the people. Credit assistance was given to agriculture by cooperative banks and meticulous efforts were put in to ensure that institutional finance was accessible to the large section of society.

“The nationalisation of banks in 1969 gave a boost to expansion of banking network in the country. However, the outcomes of these efforts are yet to show the desired results,” the Finance Minister said.

Insurance law
When asked about the possibility of the Insurance Laws (Amendment) Bill, 2008 being passed by the Parliament, Mr Mukherjee said, “We are talking to different political parties because we do not have 272 members from the Congress party. Therefore, we require support of other political parties. I hope that there will be a broad consensus.”

One of the key amendments proposed in the Bill is raising the maximum limit for foreign direct investment in Indian insurance companies from the present 26 per cent to 49 per cent.

GATHERING THE SMALL CHANGE


There was a moment of pure comedy at a recent RBI press conference in Chennai, to announce the withdrawal of 25 paise coins and other coins of smaller denomination. Out of the blue, a TV reporter wanted a 25 paise coin to show it in the visuals accompanying the story.
  
There was a mad scramble as officials and other reporters ransacked their purses and pockets to see if they could come up with a 25 paise coin to cater to this whim. Never have so many tried so much for so few! (with apologies to Churchill).

For a few seconds it almost looked as though the public had  dispensed with the 25 paise long ago — and this announcement, like many other RBI/Government announcements, was a post facto recognition of prevailing reality.  But just in time, this elusive dime was found, and peace was restored. 

 All that the officials were willing to say was that the withdrawal of coins was on Government's orders.  Other reporters just speculated that since nothing could now be got for 25 paise or less, it might as well be withdrawn.  Inflation has eroded the value of the coins and it perhaps costs more to manufacture the coin than the value it denotes.  In any case, the RBI is not telling.

There is one piece of information in its Annual Report of 2010 that one may find interesting. According to the Report, there were about 105 billion pieces of coins of all denominations as of March 2010 — worth about Rs 11,020 crore.  About 54 billion pieces, or roughly half of the coins, are called small denomination coins (value of less than Re 1).  These account for Rs 1,455 crore in value or about 13 per cent of the value of coins in circulation.

While the exact break-up of small coin denomination is not available, it is still going to be a tall order for the RBI to pullback a substantial part of these coins into its vaults.  That's because the RBI is getting a limited number of coins (something equivalent to about Rs 3,000 every day) since the process began in the second week of March. 

Would you go to a bank and exchange your small change or would you rather drop them into a temple hundi or give them off to beggars?  Maybe the RBI will have better luck with them?

And, by the way, those who think they can melt these coins and extract value had better be warned. The Lok Sabha passed the Coinage Bill 2009 on Friday, which provides for increasing the maximum punishment for melting or destruction of coins from five years of imprisonment to seven.

FIR AGAINST SBI MANAGER FOR DEPOSITING FAKE CURRENCY


The Reserve Bank of India registered an FIR against a manager of State Bank of India (SBI) for allegedly depositing fake currency.

Anupam Chaudhary, Manager of RBI has registered a case against the manager of SBI located on P D Road in Bajaria area for allegedly depositing four fake notes of 100 denomination in the treasury of RBI.

FINANCE MINISTER’S SPEECH - SIR SORABJI POCHKHANAWALA MEMORIAL LECTURE 2011


Shri S Sridhar, Chairman & Managing Director
Central Bank of India
Members of the Central Bank family,
Ladies and Gentlemen

I am very happy to be here today for the Sir Sorabji Pochkhanawala Memorial Lecture 2011, which is part of the Centenary celebrations of  Central Bank of India.   Let me start by congratulating you all on the important milestone that your Bank has achieved.  It is creditable for any organization, more so for an organization, which was established during the pre-independence period of our country.

I have not had the opportunity of knowing Sir Sorabji Pochkhanawala, but I am aware of his stellar contribution to Indian Banking. He came from a modest background and had the rare vision and belief in India’s destiny. It made him think big and led to the setting up of the Central Bank of India.  He ran the Bank with great distinction exhibiting a pragmatic and an innovative approach.  It is remarkable that this was at a time when the country was still under the colonial rule.  Having a vision and nursing that vision into reality required immense courage in those times.  It speaks of the sagacity of Sir Sorabji.

The seed he planted has grown into a vast tree with over 3650 branches all over the country. I have been told that the Bank has decided to have a branch in every single district of the country, as the Centenary Year of the Bank comes to a close, by the end of 2011.

Following the global financial crisis and one of the deepest economic downturns that the world has witnessed in recent times, we are compelled to rethink some of our principles of economic and financial policy making.  The global developments underscore the importance of understanding and regulating the financial markets and the innovative financial products in the interest of sustaining growth and development.  We have seen how unfettered growth of financial sector can have dangerous implications for the real sector, both in the developed and the developing world.  There is much that we need to know about their functioning, the best practices that underpin the creation of new financial products and the related oversight issues so as to promote financial stability.

Ladies and Gentlemen,
We have been more fortunate in surviving the crisis without major disruptions and have recovered our growth momentum much faster than most others.

In the fiscal year 2010-11 the Indian economy is expected to record a GDP growth of 8.6 per cent which takes us back on the high growth path that the economy was traversing on in the years prior to the crisis.  This resilience that India has demonstrated in recent times reflects a maturing of the economic management of the country and the growing competitiveness of our enterprise.  This has happened even as the economy has become more integrated with global markets.  It shows that globalization and economic resilience can go hand in hand.

In the post-crisis period, financial stability and the banking system has become an integral part of policy discussions and macroeconomic objectives in the developed and the developing world.  A sound and resilient banking sector, well-functioning financial markets, robust liquidity management and payment and settlement infrastructure are the prerequisites for financial stability.

The fact that India has not gone through any financial turbulence, as a result of the earlier phase of financial deregulation is a testimony to our consistent view that reforms in global standards have to be adapted to local conditions.  Today, it is well established that our commercial banks are well regulated, vibrant, fast growing and match the global best practices in capital adequacy, risk management and business growth. 

Our Banks are doing a commendable job in meeting vast banking and credit requirements of an economy growing at close to 9 per cent in the last few years. I have said this before, for the economy to sustain a high growth rate, the support of the banking sector is imperative.

The Public Sector banks have played a very important role in economic growth of the country.  They constitute over 72 per cent of the banking sector assets in the country.  While they are expected to improve their outreach and scalability for sustaining high growth of the economy, they are second to none in retail banking practices and profitability.

There are however, several concerns that need to be fully addressed.  The cost of banking intermediaries in India is high and bank penetration is limited to only a few customer segments and geographies.  We are trying to address this in collaboration with the Reserve Bank of India and with the active participation of the banking and non-banking financial entities.

Ladies and Gentlemen,

Financial inclusion is a key determinant of sustainable and inclusive growth, which in turn is essential for building an equitable society.  We have accorded high importance to financial inclusion to cover the entire gamut of financial services pertaining to savings, credit, insurance and transfers.  A major unfinished, in some sense on-going, task in this context is to promote greater financial literacy and investor protection.

Though over the last few decades most of the financial sector policies sought to accelerate the penetration of the banking and financial services, the goal of universal coverage is yet to be achieved.  In the pursuit of this objective many bank branches were set up, particularly in the rural areas of the country. Regional rural banks came into existence to give saving facilities to the people.  Credit assistance was given to agriculture by cooperative banks and meticulous efforts were put in to ensure that institutional finance was accessible to the large section of society.  The nationalization of banks in 1969 have boost to expansion of banking network in the country.   However, as I said, the outcomes of these efforts are yet to show the desired results. Newer perspectives and approaches towards financial inclusion are the need of the hour. There is a case for the policy makers and other stake holders to re-strategize the financial policies that are meant to reach the un-reached and the unbanked sections of our country.

In my last budget speech 2010-11, I had advised Banks to provide banking facilities to habitations having a population of over 2000 by March 2012.   The Banks have identified about 73000 such habitations for providing banking facilities using appropriate technologies.  A multi-media campaign, “Swabhimaan”, has been launched to inform, educate and motivate people to open bank accounts.  During the current financial year, banks will cover 20000 villages.  The remaining will be covered during 2011-12.  The Swabhimaan Campaign will help in providing the basic services such as deposits, withdrawals and remittances using the services of Business Correspondents at the door steps of the targeted people.  This initiative will also enable the Government subsidies and social security benefits to be directly credited to the accounts of the beneficiaries.  I see Swabhimaan as a watershed in the evolution of Indian Banking.

As a part of the reforms in the financial sector in India, we have set up an apex-level Financial Stability and Development Council (FSDC), with a view to strengthen and institutionalize the mechanism for maintaining financial stability.  Without prejudice to the autonomy of market regulators, this Council would undertake macro prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory coordination issues.  It would also focus on financial literacy and financial inclusion.  We have also set up a Financial Sector Legislative Reforms Commission (FSLRC), which will have its first meeting in the coming days to rewrite and clean up the financial sector laws and bring them in line with the requirements of the sector.

We are well aware of the capital constraints faced by the Public Sector Banks.  To address these, we have provided a sum of over Rs.20,000 crore towards recapitalization of public sector banks during the financial year 2010-11.

An additional amount of Rs. 6000 crore is also being provided for the financial year 2011-12.  This will enable the PSBs to meet the credit requirements of the growing economy.

As stakeholders striving for a common goal, we need to reflect upon possible flaws in our system and address them to withstand adversities.
 
We need to make our financial sector more competitive by enhancing efficiency and transparency.   While greater competition is welcome, we have to guard against the competitive race to the bottom. I hope this perspective will guide growth of the Central bank and the Indian banking system, in general, in the coming years.

Before I conclude let me thank you for inviting me to address this important function.  I wish you all and the Central bank the very best in your respective endeavour.

Thank you.

AIBOC CIRCULAR NO. 33 DATED 28.03.2011


AIBOC issued its circular No. 33 dated 28.03.2011 on the Banking Laws (Amendment) Bill 2011. We are reproducing the same here for our readers.


CIRCULAR NO.33                                       DATE: 28.03.2011

TO ALL AFFILIATES /MEMBERS:

THE BANKING LAWS (AMENDMENT) BILL 2011 - UNRESTRICTED VOTING RIGHTS FOR SHARE HOLDERS

We have addressed a communication to the Finance Ministry with regard to the captioned subject.  A copy of our communication is annexed.

With greetings,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY

No.1410/176/11                                                              28.03.2011

To,
Sri. Pranab Kumar Mukherjee
Hon’ble Finance Minister,
Government of India,
South Block, Parliament House,
New Delhi.

Respected Sir,

THE BANKING LAWS (AMENDMENT) BILL 2011
UNRESTRICTED VOTING RIGHTS FOR SHARE HOLDERS

s per the news paper reports, the Government has tabled a bill in the Lok Sabha to raise the ceilings on voting rights of share holders of nationalised Banks from the existing 1% to 10% and to remove the cap of 10% in respect of Private Sector Banks. The argument in favour of this is that, the move will make investment in Government owned Banks more attractive. The proposed amendments to the Banking law would increase the access of the nationalised Banks to the capital market to raise funds required for expansion of the Banking business. It is also argued that, it would enable the Public Sector Banks to increase or decrease their authorized capital with approval from the Central Govt. and RBI without the present ceiling of Rs.3000 crores.

The amendment will empower the Public Sector Banks to issue bonus shares and rights issues for accessing the capital market to raise capital required for expansion of business.

We have been reiterating time and again that, the above moves are the covert attempts of the Government to privatize the well run Public Sector Banks and open their doors to the Private investors and Industrial Houses to take control over these goose laying golden eggs.  Hence, we oppose the move of the Government to offer more voting rights for Bank share holders by removing the present ceiling of 1% and raising it to 10%.

We wish to reiterate that the move is fraught with potential danger to the existence of the Public Sector Banks in the country. Therefore, we request you to shelve the move in the interest of the Public Sector Banks, which have played a very important role in the economic development of the country, including implementation of the ambitious programmes of the Govt. such as poverty eradication, employment generation and financial inclusion etc.

We, once again, request to withdraw the proposed Banking Laws (Amendment Bill) 2011, tabled in the Lok Sabha. We have the confidence that our request will be considered positively, keeping the national interest uppermost.

Thanking you,

Yours faithfully,
(G.D. NDAF)
GENERAL SECRETARY

AIBOC CIRCULAR NO. 32 DATED 28.03.2011


AIBOC issued its circular No. 32 dated 28.03.2011 on consolidation of Public Sector Banks. We are reproducing the same here for our readers.

CIRCULAR NO.32                                                   DATE: 28.03.2011

TO ALL AFFILIATES /MEMBERS:

CONSOLIDATION OF PUBLIC SECTOR BANKS

Once again, we have taken up the issue with the Finance Ministry resisting their ill-advised move of consolidation of Public Sector Banks and we have requested to put off their move. A copy of our communication is annexed.

With greetings,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY

No.1454/177/11                                                    Date:28.03.2011

Sri. Pranab Kumar Mukherjee,
Hon’ble Minister for Finance,
Government of India,
New Delhi:

Respected Sir,

CONSOLIDATION OF PUBLIC SECTOR BANKS.

We draw your kind attention to your budget speech and also the news paper reports, wherein it is reported that, the long standing proposal for consolidation of Public Sector Banks is back on the agenda of the Government. It is also reported that, the Finance Ministry is likely to appoint a Committee- comprising the Officials from the Finance Ministry, Reserve Bank of India and some Bankers, to look into the merits of consolidation of the “Public Sector Banks” and recommend a plan of action to identify the Banks to take the process forward.

We would like to bring to your kind notice the fact that, the consolidation process was kept on hold, as Banks who were expected to come up with inter  merger proposals and probable partners, did not comply with required terms. We had launched a strong resistance against the move on the ground that, the consolidation process which may usher in big Banks will not be in the best interest of the country, as each individual Bank has its own social, cultural background with spread in a particular geographical area. They are catering to the customers of a particular geographical zone,  and with merger this identity will be lost. Besides, the above managerial merger will be difficult to achieve.

With the global economic melt down, leading to collapse of Banking giants in USA, Europe, Japan, like house of cards, shattering the notion that “Big is Beautiful”. Due to stiff opposition to merger move and also the stringent regulatory mechanism of RBI, the Banking Industry in our country, especially the “Public Sector Banks”, were saved from the jaws of the global financial crisis. Our Banks were insulated from one of the worst crisis faced by the Financial Institutions all over the globe.

Keeping the foregoing in view, the Government had kept the move on the back burner and you have made loud announcement that, Public Sector Banks will continue to be under the Government control. Now by reviving   the move to consolidate the Public Sector Banks, there is an attempt to ignore the past upheavals in the financial sector all over the world. The proposed move, will certainly expose the well run Public Sector  Banks  to the hazards, faced by the big banks in the USA, Europe and Japan etc. Hence, we are against the move of the Government embarking upon consolidation of Public Sector Banks.

Sir, it is time to strengthen the Public Sector Banks which have been playing a pivotal role in the economic growth of the country, financial inclusion, poverty alleviation programmes of the Government, employment generation programmes etc. with passion.

We have the confidence that, the move will be put on hold and encourage the Public Sector Banks to be on the growth trajectory, through competition amongst them for full financial inclusion in the Country.

Thanking you,

Yours faithfully
Sd/-
(G.D. NADAF)
GENERAL SECRETARY

BOB CMD SAYS NO NEED TO INCREASE INTEREST RATES


The Chairman and Managing Director, Bank of Baroda, MD Mallya said that he did not forsee any need for the bank to increase its interest rates in the backdrop of RBI hiking key policy rates last week.

He said that most banks had already factored in the possibility of key interest rates being hiked by the central bank and had accordingly adjusted their rates at which they lend and take deposit from customers.

AIBOC CIRCULAR NO. 31 DATED 28.03.2011


AIBOC issued its circular No. 31 dated 28.03.2011 on tenure of the managing directors or executive directors of public sector banks. We are reproducing the same here for our readers.

CIRCULAR NO.31                                       DATE: 28.03.2011

TO ALL AFFILIATES /MEMBERS:

TENURE OF THE MANAGING DIRECTORS OR EXECUTIVE DIRECTORS OF PUBLIC SECTOR BANKS

We have today taken up the issue with the Finance Ministry, Government of India on the issue of appointment of Chairman and Managing Directors or Executive Directors of Public Sector Banks who have been left with less than 3 years of service. We have opposed such appointments, as they may not devote their time and attention for the comprehensive growth of the Banks.  A copy of our communication is annexed.

With greetings,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY

No.1410/175/11                                                                      28.03.2011

To,
Sri. Pranab Kumar Mukherjee
Hon’ble Finance Minister,
Government of India,
South Block, Parliament House,
New Delhi.

Respected Sir,

TENURE OF THE MANAGING DIRECTORS OR EXECUTIVE DIRECTORS OF PUBLIC SECTOR BANKS

We have been observing during the past few years that, the Government of India is appointing persons with less than 3 years of service as Chairman & Managing Directors or Executive Directors of Public Sector Banks. We have noticed appointment of the persons with only a few months remaining service, we wish to make it abundantly clear that, such appointments will not yield the desired results, as the persons appointed to such top posts will not be in a position to devote their time and attention for the comprehensive growth of the Bank. They shall also be just counting their days to retire safely, without any blemish during the fag end of their service. Persons appointed for short stints have not given their best and in many cases, their actions have led to disturbance of the Industrial Relations atmosphere in the Banks, causing adverse impact on the growth of the Banks.

We request you to appoint the top executives who are having minimum service of three years, so that; the Banks will have the continuity of Chairman and Managing Director for the planned and concerted growth of the Institution.

We request you to take note of the above and ensure appointment of Chairman and Managing Director of Public Sector Banks with a minimum tenure of 3 years.

Thanking you,
Yours faithfully,
Sd/-
(G.D. NADAF)
GENERAL SECRETARY