CENTRE MULLS HOLDING COMPANY FOR PSU BANKS

The finance ministry is contemplating a holding company structure for public sector banks. This will help the banks raise capital and government can hold on to a majority stake.

The move comes after public sector banks submitted their capital requirement plans for the next eight-10 years, after taking into account the capital requirement under the new Basel-III framework. The government, which is keen on holding a minimum stake of 58 per cent in public sector banks, may find it difficult to infuse large sums of money, as this would affect the country's fiscal position.

Banking industry officials say by forming a holding company, it would be possible to raise funds from the market, and the government holding can be maintained at above 58 per cent.

HOLDING ON Govt stake in some major public sector banks:
State Bank of India	59.40
Corporation Bank	58.52
Dena Bank	58.01
Allahabad Bank	58.00
Andhra Bank	58.00
Oriental Bank	58.00
Punjab National Bank	58.00
Vijaya Bank	57.69
Union Bank of India	57.07
Bank of Baroda	57.03
Source: Capitaline Compiled by BS Research Bureau

According to the proposal, the government share in the banks would be transferred to the holding company, which would hold 100 per cent stake in the bank. Since the funds would be raised by the holding company, which is an investor in the bank, the government would continue to hold on to its control of the bank's management, while inducting external capital into the holding companies. The bank would pay dividend to the holding company, and this would be used for servicing the debt for the funds raised.

In August, the government had sanctioned capital infusion of around Rs 2,000 crore in some public sector banks, to increase its stake to 58 per cent. It had earmarked Rs 6,000 crore for capital infusion in public sector banks, as announced during the Budget this year.

Apart from maintaining 58 per cent stake, the government also wants to ensure public sector banks’ tier-I capital adequacy ratio be at least eight per cent. The regulatory requirement is six per cent, with an overall capital adequacy ratio of nine per cent.

The government’s stake in large banks like Union Bank of India, Bank of Baroda and Punjab National Bank stands at around 58 per cent and additional fund-raising would not be possible without diluting government stake. The government's stake in State Bank of India (SBI), also in need of funds, is 59.4 per cent. SBI had applied for a rights issue to the government, but the proposal is yet to be approved.

Banks are expected to grow at 20-25 per cent over the next few years if economic growth stays around the trend growth rate of eight per cent. Bankers said retained profit would not be sufficient to support the capital requirements required to maintain decent growth.

SOURCE: http://www.business-standard.com/india/news/centre-mulls-holding-company-for-psu-banks/450963/

BANKS SEE HUGE FALL IN REQUESTS FOR DEMAND DRAFTS

The Demand Draft (DD), a popular financial instrument for transfer of funds or payment till recently, is losing its sheen.

Banks are seeing a significant dip in the requests for issue of DDs, thanks to use of electronic mode of transfer and net-banking facilities.

“The issue of DDs in banks is showing a 50 per cent decrease of late. I think, it is going the legendary Indian postcard way in terms of decreasing patronage from customers,'' Mr Anil Girotra, Executive Director, Andhra Bank, told Business Line.

The use of DDs were inevitable till three-four years ago for payment of fees for recruitment tests, academic exams and Government transactions.

“On an average, a bank branch used to issue 300-500 DDs a day earlier. But now we don't find the number of DDs crossing even a hundred in some branches,'' said a senior official of Punjab National Bank. Almost all major recruiters such as Public Service Commissions, banks and some academic institutions have now switched over to online payments making the DDs almost obsolete.

The expanded use of National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) also made DDs less popular.

“Many businessmen are using the electronic mode now as it is faster. There is no blocking of funds. Clearance of DDs may take up to 10 days in some cases,'' Mr K.T. Ajit, a senior executive of State Bank of India, said.

Then, there is also a cost factor. The RBI had advised banks to reduce commission on DDs as early as 2007 though commission/service charges continue to be on the ‘higher' side, according to experts.

As of now, commission for issue of DD up to Rs 10,000 is around Rs 50. For Rs 1 lakh it is upwards of Rs 400.

Banks are not forthcoming to share exact numbers on the dip in overall revenue due to decreased demand for DDs.

SOURCE: http://www.thehindubusinessline.com/industry-and-economy/banking/article2497473.ece

AXIS BANK OFFERS LIFETIME FIXED INTEREST HOME LOAN AT 11.75%

Private sector Axis Bank on Thursday launched a new home loan product, that offers fixed interest rate of 11.75 per cent, to cash in on the busy festival season demand. 

The bank launched 'NISHCHINT' lifetime fixed interest home loan scheme which offers home buyers loans at a fixed rate of 11.75 per cent for the entire duration of the loan that is up to 20 years, Axis Bank said in a statement.

Under the scheme, the bank will offer home loan to eligible buyers up to 85 per cent of loan-to-value for debt up to 20 lakh and 80 per cent loan-to-value for borrowings above Rs 20 lakh, with a pre-payment charge of 2 per cent of the outstanding amount, it said.

It is to be noted that the bank offers home loan up to Rs 25 lakh under floating rate at 10.75 per cent.

So customers opting for the 'NISHCHINT' plan will have to shell out a premium of one per cent over the floating rate of interest.

At the moment, the base rate of the bank stands at 10 per cent.

Customers today are facing uncertainty about EMIs on their home loans, due to interest rate increases in the market, Axis Bank ED (retail banking) R K Bammi said.

"At Axis Bank, we want to offer the customer certainty about the EMI they need to pay for the entire life of the loan. 'NISHCHINT' offers that option to the customer at a very attractive rate," he said.

Since rates are almost at their peak, banks have no problem in offering loans at fixed rate, analysts said.

Earlier this month, mortgage firm HDFC, LIC Housing Finance launched teaser product following ICICI Bank.

ICICI Bank was the first to introduce a fixed home loan scheme last month, after SBI discontinued with it in April.

Clarifying whether such products are teaser or not, the RBI said loans that are fixed in the initial years and become floating later would be considered as teaser loans, and banks must make provisions as mandated by the regulator.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/axis-bank-offers-lifetime-fixed-interest-home-loan-at-11-75/articleshow/10172301.cms

AADHAAR LETTER VALID DOCUMENT TO OPEN ALL ACCOUNTS

A letter issued by the Unique Identification Authority of India (UIDAI) containing details of name, address and the Aadhaar number will be considered as an officially valid document for opening bank accounts without the limitations applicable to ‘Small' accounts. Earlier, the RBI had stipulated that the Aadhaar letter would be treated as complete Know Your Customer document for opening only small accounts.

SOURCE: http://www.thehindubusinessline.com/industry-and-economy/banking/article2494274.ece

BAD LOANS TO HIT BANKS' Q2 NOS

A fully-automated system of bad loan calculation may reflect a spike in non-performing assets (NPAs) of banks and weigh on profitability in the second quarter, industry experts said. The finance ministry has asked all state-run banks to fully computerise calculation of stressed loans by September 2011.

Until now, lenders calculated bad loans manually. This may result in higher bad loans and force the lenders, already pressured by poor credit demand and rising yields on treasury portfolio, to set aside a greater portion of profits as provisions. Banking analysts said, in the second quarter, banks will either show higher slippages when an account moves from standard category to sub-standard category or report reversal of interest income due to automation.

Banks, such as the State Bank of India and Bank of Baroda, have already incorporated this system for all their accounts as on June 2011. Other banks, including Bank of India and Union Bank, have adopted it only for those accounts where the customer has borrowed above Rs 5 lakh, while Central Bank of India had not started this process by the end of the first quarter. "All efforts are being made by the bank to move towards a fully-automated system of arriving at NPA numbers on automated basis.

We have set up a full-fledged team for the same," said Central Bank of India executive director RV Iyer. Among others, Canara Bank has shifted accounts of more than Rs 2 lakh and Punjab National Bank has shifted accounts above Rs 10 lakh to the automated system.

"By the end of second quarter, we will be calculating bad loans on a fully-automated basis without any human intervention. To negate the impact of possible increase in NPAs, we are focusing aggressively on recovery of bad loans, especially smaller ones, by holding recovery camps which have yielded good results," said Punjab National Bank chairman and managing director KR Kamath.

In the first quarter, several lenders had to reverse interest income on adopting automated system of loan calculation. This means that in the past, banks had booked income which they had not actually received and the same was reversed.

For instance, Canara Bank reversed Rs 210 crore of interest income, while Bank of India reversed Rs 175 crore in the quarter ended June 2011. Both banks had computerised only a part of their accounts in the first quarter and thus the pain would be felt in the second quarter as well when all accounts are computerised.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/bad-loans-to-hit-banks-q2-nos/articleshow/10149017.cms

BANKS SMELL PROFIT BY BORROWING FROM RESERVE BANK OF INDIA'S REPO WINDOW

Banks are seeing an arbitraging opportunity by borrowing from the Reserve Bank of India and investing in higher yielding short-term instruments like one-month certificate of deposits and one-month commercial papers. In the current market, one month certificate of deposits are now traded at 9.20% while one month commercial papers are being traded at 9.50%.

On the other hands, banks can borrow from RBI's repo window at 8.25% on an overnight basis against government securities. The traded volumes in the CD market also jumped to Rs 12,434 crore on September 23 from Rs 6,480 crore on September 13. In the last few days, banks on an average have borrowed Rs 67,000 crore from the Reserve Bank of India's repo window.

This is despite the fact that the banking system is flush with incremental deposits worth Rs 3,14,000 crore (6%) so far this year, compared with a fresh loan disbursal of Rs 1,32,000 crore (3.4%). "Banks which hold surplus SLR of 2-3% can avail funds from the repo facility(8.25%) and utilise the funds for short-term investment in commercial paper or certificate of deposits and earn a clean spread of above 1%," said Roy Paul, DGM, Federal Bank.

The excess SLR, or statutory liquidity ratio - the portion of deposits that needs to be parked in government bonds, in the system is about 7%. The entire banking sector has invested about 31% of its deposits in bonds against the stipulated 24%.

"As the quarter end approaches, money market instruments such as certificate of deposits factor in the quarter end in a premium because credit demand picks up and banks need to shore up their interest income," said a senior treasury official with a private bank, requesting anonymity. The amount borrowed by banks from RBI's repo window, indicates the liquidity situation in the banking system.

The repo borrowing has risen steadily in the past one week, in spite of robust deposit mobilisation. Banks borrowed Rs 78,565 crore on Tuesday from the central bank. This is partly because it is the beginning of the reporting fortnight. Another reason, traders point out is that banks, with excess holding of government securities, are using funds borrowed from RBI to invest in high-yielding certificate of deposits and commercial papers.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/banks-smell-profit-by-borrowing-from-reserve-bank-of-indias-repo-window/articleshow/10148637.cms

HOME LOAN PRE-PAYMENT: RBI AWAITS BANKS’ VIEWS ON FEE WAIVER

Home loan borrowers looking to pre-pay their floating-rate loans better watch out. Banks could recover charges for such pre-payments, what with the RBI still to issue any directions or guidelines prohibiting levy of such charges.

As part of efforts to improve customer service of banks, the annual conference of banking ombudsmen had earlier this month suggested that banks not recover pre-payment charges on floating rate loans.

“Till now, it is only a recommendation being considered by the RBI. Based on the formal response of the IBA, our regulatory department would then take a considered view and then communicate the guideline or the instructions of the RBI on this to all the banks,” Mr M. Rajeshwar Rao, Chief General Manager of RBI, and the Banking Ombudsman, said here today.

Banks have been asked to examine the proposal, and the comments from the Indian Banks Association (IBA) is expected by this month end, Mr Rao added.

Almost 98 per cent of the loans provided by commercial banks now are on floating rate.

On an issue related to ombudsman duties, Mr Rao said efforts would be taken to bring down the time taken for resolution of complaints. “Our attempt this year will be not to keep complaints open for more than three months,” he said.

PSU BANKS

For July-June 2011, the office of ombudsman at New Delhi received 10,508 complaints, 13 per cent lower than the 12,613 received in the previous year.

The highest number of complaints were received from Delhi, followed by Haryana.

About 41 per cent of the complaints were against public sector banks, 36 per cent against private sector banks and 15 per cent against foreign banks. The maximum complaints were against SBI, followed by ICICI Bank and HDFC Bank, Mr Rao said. Card related complaints accounted for 32 per cent, he added.

SOURCE: http://www.thehindubusinessline.com/industry-and-economy/banking/article2490849.ece

MAXIMUM CUSTOMER COMPLAINTS AGAINST SBI,ICICI: OMBUDSMAN

Maximum customer complaints were received against State Bank of India, ICICI Bank and HDFC Bank during 2010-11, said Banking Ombudsman of New Delhi region.

Of the total 10,508 complaints received in 2010-11, about 4,500 cases were against SBI, ICICI Bank and HDFC Bank, RBI Chief General Manager and Banking Ombudsman (New Delhi) M Rajeshwar Rao said here today.

"The reason for these many complaints against these banks is due to their large number of transactions because of their size," he said.

Pointing out the maximum customer complaints (32 per cent) are card related, Rao said 41 per cent are against the public sector banks in the New Delhi region, which includes Jammu and Kashmir, Haryana (excluding Panchkula, Ambala city and Yamunanagar) and Ghaziabad and Noida in Uttar Pradesh.

As much as 36 per cent of the complaints were against private sector lenders, followed by foreign banks at 15 per cent, he added.

The number of complaints received during 2010-11 have come down by 13 per cent from 12,613 in the previous fiscal.

Most complaints are received from Delhi, followed by Haryana.

Banking Ombudsman Scheme, an alternate disputes resolution mechanism appointed by the RBI, deals with deficiency in the services by the bank and 27 services are part of the scheme.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/maximum-customer-complaints-against-sbiicici-ombudsman/articleshow/10140442.cms

RBI BOARD RECONSTITUTED

The Government of India has reconstituted the Central Board of Directors of the Reserve Bank of India. In a notification issued on Friday, the Government of India has appointed seven new Directors on the Central Board of the Reserve Bank for a period of four years from the date indicated. The new Directors are:

Shri Dipankar Gupta, Sociologist, former Professor, Jawaharlal Nehru University, New Delhi (w.e.f. September 20, 2011).

Shri Najeeb Jung, Vice Chancellor, Jamia Millia Islamia, New Delhi (w.e.f. September 22, 2011).

Shri G. M. Rao, Chairman, GMR Group, Bengaluru (w.e.f. September 23, 2011).

Smt. Ela Bhatt, founder and General Secretary, of SEWA, the Self-Employed Women's Association, Ahmedabad (w.e.f. September 23, 2011).

Smt. Indira Rajaraman, Professor Emeritus, National Institute of Public Finance & Policy, New Delhi (w.e.f. September 23, 2011).

Shri Anil Kakodkar, Former Chairman, Atomic Energy Commission (Also Chairman, Northern Area Local Board) (w.e.f. September 23, 2011).

Shri Kiran Karnik, Former Chairman, NASSCOM, (Also, Chairman, Western Area Local Board) (w.e.f. September 23,  2011).

Apart from these new members, four existing members continue to be on the Reserve Bank Board for the present.

They are:

Shri  K. M. Birla, Chairman, Aditya Birla Group of Companies

Shri Azim Premji, Chairman, WIPRO

Shri H. P.  Ranina, Supreme Court Advocate, and

Shri Lakshmi Chand, IAS (Retd).

Prof. M.M. Sharma, Shri Sanjay Labroo, Shri Suresh Kumar Neotia,  Dr. A. Vaidyanathan, Prof. U. R. Rao and Shri Y.H. Malegam retired as Directors of the Central Board of the Bank.

SOURCE: http://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=25132

FINANCE MINISTRY ASKS BANKS FOR ACCOUNT-WISE EXPOSURE TO KEY SECTORS

The Finance Ministry, it appears, wants to take the pulse of the economy through public sector banks. It has called for granular information from these banks on their exposure to commercial real estate (CRE), textiles and sugar sectors.

This move comes in the backdrop of fears that the global economic crisis could impact emerging market economies, including India, through channels such as trade, commodity and capital flows.

Last month the Ministry had sought information on large project loan sanctions, of Rs 100 crore and above, which did not translate into disbursements for a long time for want of statutory clearances relating to environment, land acquisition/ rehabilitation/ resettlement, and coal/ore linkages.

Normally, the Ministry seeks portfolio-wise information, but this time around it has sought specific account-wise information pertaining to sanctioned fund and non-fund-based limits, outstanding loans, and asset classification in the case of borrowers in the CRE, textiles and sugar sectors, said a senior public sector bank official. “Given that we are beginning to feel the ripple effects of the global economic downturn, the Ministry may be wanting to assess the ground realities in different segments of our economy so that the Government can come up with policy measures to minimise systemic shocks,” said the banker.

Credit growth

Notwithstanding the possibility of an asset price build-up, the year-on-year (July 30, 2010 to July 29, 2011) growth in bank credit to the CRE sector was higher at 17.7 per cent, against 2.4 per cent in the July 31, 2009 to July 30, 2010 period, as per the latest RBI data. Asset quality in the CRE sector could come under pressure due to rising interest rates and increasing stock of unsold inventory even as prices remain elevated. Non-performing assets in the CRE segment grew at 70.3 per cent as at end March 2011, with most of the impairment taking place in PSBs, according to the RBI's financial stability report.

The year-on-year growth in bank credit to the sugar sector was higher at 35.7 per cent (18.5 per cent). Bankers say projections of bumper sugarcane crop in the current crop season could impact sugar prices, leading to possible lower realisation for domestic sugar manufacturers.  

The y-o-y growth in bank credit to the textiles sector was a tad higher at 18.1 per cent (16.4 per cent).

With cotton prices per candy yo-yoing between a high of Rs 60,000 and a low of Rs 30,000, spinning mills have been affected. However, these mills are not able to pass on the higher input costs to downstream customers, say bankers.

 Moreover, banks are facing serious concerns on the asset quality front in the textiles sector due to closure of garment units in Tirupur. This follows the Madras High Court order in January 2011, directing the polluting dyeing and bleaching units in the town to close down.

SOURCE: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2485366.ece

FINANCIAL TRANSACTIONS USING DEBIT CARDS OVERTOOK THOSE USING CREDIT CARDS FOR THE FIRST TIME

Financial transactions using debit cards overtook those using credit cards for the first time in July this year, data released by the Reserve Bank of India has shown, signalling a crucial inflection point in the plastic money business.

The month of July saw the volumes of debit card transactions not just exceed those using credit cards, but achieve a gap of a more than a million. In value terms, however, credit card transactions remain comfortably higher than those using debit cards, largely because credit cards are used for more high value payments.

Bankers say the new trend has been helped by strong growth in debt card issuances as also rising comfort levels among Indians for debit cards. Banks typically issue one or more debit cards with every new account opened with them. Between July 2010 and July 2011, the number of credit cards issued increased by 24% while credit card issuances fell 7%. "Both banks and customers are more comfortable with debit cards as compared to credit cards," said Sohini Rajola, vice president and head of cards at Axis Bank. 

"Higher growth in debit transactions was expected as the number of debit cardholders has been rising rapidly." In value terms, credit card transactions outpaced those using debit cards by Rs 360 crore during 2010-11. However, amounts transacted using debit cards is growing at a faster clip than credit cards - 46% against 22% during 2010-11.

Experts say better security in payment gateways and freebies such as cash and reward points bundled with transactions have also helped debit cards become more popular. "A combination of security features and incentives have created a comfort zone for debit card users," said Navtej Singh, who heads the direct payment products at HDFC Bank.

Bankers say the trend being seen in the debit cards sector would gain momentum in the months and years ahead. "In the future, debit card growth is expected to remain very strong and will surpass credit cards," said Rajola at Axis Bank, adding that the credit industry in India remained underdeveloped.

Economists agree. Rajesh Shukla, an economist with NCAER, said, "In the near future, debit cards will do much better than credit cards. Customers and bankers feel more comfortable as it is limited to their bank accounts."

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/financial-transactions-using-debit-cards-overtook-those-using-credit-cards-for-the-first-time/articleshow/10099130.cms

RATE HIKES TO AFFECT BANKS' PROFITS, ASSET QUALITY IN FY 2012: CRISIL

Significant increase in interest rates over the past 18 months will affect the asset quality and profitability of banks in India, according to credit rating agency Crisil.

Banks' gross non-performing assets (NPAs) ratio is expected to increase to nearly 3 per cent by March 31, 2012, from 2.3 per cent a year ago.

The pressure on asset quality is expected to arise primarily because of weakening debt-servicing ability of the corporate sector, especially the small and medium enterprises (SME) segment.

Banks' migration to system-based recognition of NPAs will also result in higher NPAs over the near term, the agency said.

Further, limited ability of banks to pass on further increases in funding costs to borrowers may result in a sharp decline in their return on assets (RoA) to below 1 per cent in 2011-12 for the first time in five years, Crisil said in a report. “The deterioration in asset quality will be driven primarily by slippages in banks' corporate and SME loans portfolios.

“This will be caused by increasing interest rates, high input prices, and an expected moderation in economic growth,” said Mr Pawan Agrawal, Director, Crisil Ratings.

As per the rating agency's assessment, sectors with weak demand-supply scenario, intense competition, and high leverage will be the most affected. Also, sustainability of demand across industries, such as cement, automotive, construction, and textiles, will need to be monitored. The uncertain global environment can add pressure on the export-driven sectors.

“In a scenario of prolonged high interest rates, banks' retail advances segment may also see some delinquencies over the medium term,” said Mr Agarwal.

Gross NPAs, in Crisil's view, will not significantly exceed 3 per cent per cent over the medium term. This is because, despite some challenges, it expects the Indian economy to grow at 7.7-8 per cent in 2011-12. Moreover, over the years, banks have strengthened their credit monitoring and collection mechanisms to mitigate delinquencies.

NIM and ROA

So far, banks have been passing on increases in funding cost to their borrowers and this has enabled them to maintain their net interest margin (NIM) at around 3 per cent. Consequently, they reported a healthy RoA of about 1.1 per cent in 2010-11, despite higher provisions for pension liabilities.

The rating agency said banks will have limited room to pass on any further increases in funding costs to borrowers. This will result in banks' NIM reducing to less than 3 per cent, and RoA dipping to around 0.95 per cent in 2011-12.

“Despite deterioration in banks' asset quality and pressures on profitability, their comfortable capitalisation covers asset-related risks,” said Mr Suman Chowdhury, Head, Crisil Ratings.

Banks' overall capital adequacy ratio was around 14 per cent as on March 31, 2011. Moreover, banks' capital coverage for net NPAs is expected to remain adequate, at nearly nine times, as on March 31, 2012.

SOURCE: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2477306.ece

BANKS' GOLD COIN SALES LOSE SHEEN

The recent surge in gold prices has hit banks, as they are witnessing a discernable dip in the sale of gold coins.

Thanks mainly to the increasing popularity of the yellow metal among both small and big investors, many banks entered into gold coin/bar sales during the last one year. They are now selling coins of lower denomination too — 2 gm, for instance.

“Sale of gold coins earned good revenue for banks till last quarter. But now, there is an over 20 per cent dip in sales of these coins,” a senior officer of Punjab National Bank said.

A significant part of banks' coin sales is driven by retail/individual buyers who are now uneasy about the steep hike in the price and are expecting it to come down, say bankers.

Agreeing that there was a dip in gold coin sales, Mr Anjaneya Prasad, Executive Director, Syndicate Bank, said the general sentiment in the gold market was being reflected in banks' sales as well.

Festival demand

“There could be some revival in the ensuing festival season but it remains to be seen how the market evolves,” he said, adding that Syndicate was going ‘slow' on gold coin sale this year.

Mr Gopinath, a senior functionary of State Bank of India, said that SBI too felt that the decrease in gold sales was reflective of the market trend.

In the last two months, the sale of gold jewellery had come down across the country, Mr A. Palani Kumar, General Manager, Titan Industries Ltd, told Business Line recently.

Some banks might as well gain in a different way. “Those banks which purchased higher quantities of gold before the price hike about two months ago might stand to gain. But this is an exception,” the PNB official said.

Banks, however, were not willing to share the exact numbers by which gold coin sales have fallen and their impact on revenue.

SOURCE: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2477304.ece

BANKS ARE NOW ATTRACTING JOB ASPIRANTS BY THE DROVES

There seem to be far more people in queue for bank jobs than the vacancy position.

Going by what Mr V. P. Iswardas, Chief Executive, Catholic Syrian Bank, and Mr Shyam Srinivasan, Managing Director and Chief Executive of Aluva-headquartered Federal Bank, say, one is bound to think that the lure for bank jobs is back again.

While applicants might yearn for a career in the banking industry, the way in, bankers say, “might not be easy if the applicant fails to make an earnest attempt.”

Mr Iswardas, speaking to Business Line recently, said the bank received 26,000 applications for 300 vacancies (including 230 probationary officers and 70 clerical positions).

Written test

“These applicants are to take the written test on September 25. The examination is being conducted by IBPS (Institute of Banking and Personnel Selection); and would be followed by interview and screening of those who clear the written test. We are expecting the successful ones to join the bank by mid-January 2012,” he said.

Mr Srinivasan said that Federal Bank is looking to hire only at the entry level. It had outsourced the job to IBPS. “Around 45,000 candidates took the test, of which, only 2,000 cleared the written examination and were called for interview. After further filtering, we issued offer letters to 500 successful candidates,” he said.

While stating that hiring has been an ongoing process in banks, Mr Srinivasan said that Federal Bank hired 600 candidates at the entry level during the current year and proposed to add another 400 before the end of the current fiscal. “We will be adding 1,500 personnel between now and March 2013. Our manpower requirement assumes importance considering that around 1,000 are to retire in the next 12-24 months.”

Industry insiders say that getting the right person for the right job is becoming a tough proposition, be it the IT services sector or banking.

SOURCE: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2474212.ece

BANK CREDIT UP 20% FROM LAST YEAR

Bank credit increased to Rs 40,74,295 crore during the fortnight ended September 9, a rise of Rs 29,433 crore from Rs 40,44,861 in the previous fortnight ended August 26, 2011.

Over the same period last year, the increase in credit was to the tune of Rs 6,90,889 crore, or 20 per cent.

As on September 10, 2010, bank credit was Rs 33,83,406 crore. According to bankers, demand for credit is sluggish and the credit off-take is more do to with corporates utilising loans that were sanctioned earlier.

“There has been a clear slowdown in investment demand. There are hardly any new projects coming up due to both rise in interest rates and cost of inputs. Companies such as steel and infrastructure which were earlier large consumers of credit are suffering,” said Mr S. S. Mundra, Executive Director, Union Bank of India.

SOURCE: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2474216.ece

THE BANKING-CORRESPONDENT MODEL HAS ITS WEAKNESSES

An identity is just the first link in the cash-transfer chain. Everyone also need bank accounts that are easily accessed. A host of competing initiatives are trying to get these links up. Each is facing teething troubles. Sixty years after independence, India continues to be appallingly underbanked.

According to the RBI, only 5.5% of 650,000 villages have bank branches. Further, says Skoch, a financial-inclusion consultancy, only 40% Indians have a savings account. Since 2005, the RBI has been prodding banks to open no-frill accounts (NFAs), which don't have a minimum-balance requirement. But they are not viable.

"It costs us Rs 200 to open an account and every transaction at a branch costs Rs 20. So, the average account balance needs to be Rs 2,000-3,000 (to be viable)," says a senior banker at SBI, not wanting to be identified. "It was Rs 133 in June." This is bound to increase as cash transfers gain acceptance and the bank account becomes the centrepiece of a villager's economic life. For example, the average balance in SBI NFAs in 2008 was Rs 22. The journey from Rs 133 to Rs 2,000 is a long one, which Rs 3,00,000 crore of cash transfers can shorten. For now, reluctant to bear the burden of costs, banks are outsourcing. 

OUTSOURCING TO BCS

Instead of setting up branches, banks are outsourcing the NFAs to business correspondent (BC) firms. A BC firm has a team of agents that goes to account holders, and helps them deposit or withdraw cash using biometric cards, over handheld consoles (like FINO, A Little World, Bartronics) or through mobile phones (Eko). Between April 2010 and March 2011, RBI data shows banks expanded their coverage to 43,337 villages. Of these, only 525 villages were through branches; 42,506 were through BCs, and 306 through other modes like ATMs.

This is how cash transfers are being envisaged. The UIDAI is working on the Aadhaar Payment Bridge-a database that knows which UID number is linked to which bank account. Once a ministry enters a payment and the beneficiary's Aadhaar, the system routes the payment to the designated bank account. At the village level, the BC agent will take the beneficiary's fingerprints on his handheld terminal.

This data travels back to a UIDAI authentication system- called Aadhaar Enabled Payment System-for immediate verification. Once the identity is confirmed, the beneficiary completes the transaction through the agent. UIDAI is currently working on both these systems. Questions pockmark the entire chain. One, not all bank branches and servers, especially of regional rural banks, are linked to the banking system. The RBI has told banks to do this by the end of this month.

THE PROBLEM WITH BCS

Two, most banks have asked their BCs to not just do transactions, but also house their NFAs. "Only 30 banks have enterprise licenses for banking software. The others pay per user," says a manager in UIDAI's financialinclusion team, not wanting to be identified. So, loading NFAs on to their core banking system is a cost without adequate returns

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/the-banking-correspondent-model-has-its-weaknesses/articleshow/10047811.cms

AIBOC CIRCULAR NO. 87 DATED 20.09.2011

AIBOC issued its circular No. 87 dated 19.09.2011 on the 21st Triennial Conference of Indian Overseas Bank Officers’ Association. We are reproducing herewith the same for our readers.

CIRCULAR NO.87                                                      DATE: 20.09.2011

TO ALL AFFILIATES/MEMBERS:

21ST TRIENNIAL CONFERENCE OF INDIAN OVERSEAS BANK OFFICERS’ ASSOCIATION

A grand gala Inaugural Session of the 21st Triennial Conference of Indian Overseas Bank Officers’ Association was held at the  prestigious Chennai Trade Centre , Nandambakkam, on Saturday th 17th September 2011 at 5pm. The beautifully and tastefully decorated hall was jam packed with enthusiastic delegates, observers and invitees. There was a huge crowd outside the hall also to watch the programme on the  video screens. More than 4600 comrades had thronged the venue and  enjoyed the session with rapt  attention. The massive gathering created a festive atmosphere  all around. The guests were welcomed with slogans of “IOBOA Zindabad” ‘AIBOC Zindabad” which rent the air and the skyline of Chennai was filled with the aura of the festivities.

The programme commenced with mellifluent  invocation , followed by lighting the lamp by the dignitaries on the dais. Shri C. Rangarajan, General Manager , who was the Chairman of the Reception Committee extended a hearty welcome to the guests and invitees. The entire programme was webcast    through the  Web Site which enabled the officers and well wishers  spread throughout the world,  who could not make it to the conference venue, to observe the   proceedings live. Thus IOBOA exhibited their tech -savvyness.

Com. J.D.Sharma , President  of the Association  in his presidential address highlighted on the ill  effects  of privatisation , liberalisation and globalisation policy  pursued by the Government of India. The increasing trend in  outsourcing is causing loss of job opportunities and exploitation of the cheap  labour . The compassionate appointment scheme is denied in the banking industry , which  is prevalent  in the other industries including the Public Sector undertakings and it is totally unjust on the part of IBA and the Government to deny it to employees /officers in the Public Sector Banks, said Com.Sharma, amidst loud applause.

Shri M.Narendra, CMD of the Bank was the Chief Guest . He showered abundant appreciation on the Staff and Association for enabling the Bank to improve its ranking from 11th to 7th position. He narrated the slogan of the Bank, ie.  “Touching the Hearts, Spreading the Smile “ and  ‘CASA to VISA’. He appealed to the Officers  to aim at improving the ranking of the Bank to number 5 among the Public Sector Banks, reduction of NPA portfolio substantially  and enlarging the bottom line to Rs.5000/- crores. He said that HR are an important Assets of the Bank.  He also acknowledged the contribution of the staff, in the Bank securing   awards under  Microfinance  and SSI financing . He wished the conference all success.

Com. G.D.Nadaf , General Secretary of AIBOC, delivered the key note address. He said that, globalisation has made the rich   richer and the poor   poorer. The outsourcing policy is not suitable to the banking industry . The Confederation, through its stiff opposition against the Government’s moves has been  successful in stopping privatisation  of the public sector banks and   saving the Public Sector Banks from the worst ever  financial crisis in the wake of global meltdown.  Public Sector Banks are rendering yomen service to the country . The Confederation stands for service to the common man and eradication  of corruption in the society . We stand for probity in public life, declared Com. Nadaf amidst thunderous applause by the audience.

He also narrated the contributions of the Confederation in securing 2nd option on pension, with 17.5% increase in salary and allowances in the 9th Bipartite. The residual issues of the 9th bipartite such as, regulated working hours, 5 day week, compassionate appointments, staff loans, proper implementation of 2nd option on pension etc., have to be achieved, before commencement of negotiations for the 10th Bipartite. The updation of pension is to be taken up with the Government and IBA with all the force at our command. He emphasized the need for standing united in our struggle against the forces inimical to the officers’ movement. He wished the conference all success and hoped that there would be meaningful and fruitful discussions on all the issues confronted by the officers’ community.  

Com. K.Ananda Kumar the General Secretary, IOBOA, in his address, while sharing the success story of the Association in securing better perquisites, appealed to the officers to rise to the occasion in achieving the set goals of the Bank. He declared that, the officers in the Bank have always shared the corporate vision of the Bank and through their collaborative approach, the officers have contributed immensely for the concerted growth of the Bank. Thus the officers of the Bank have a legitimate share in the prosperity of the Institution. He thanked the management for improving the welfare measures in the Bank.

Com. L.Balasubramnian, President IOBEU, addressing the gathering identified the priority areas for the ensuing 10th Bipartite Settlement such as decent wage hike, congenial working conditions, career progression etc. The need of the hour, he declared emphatically, is unity among the work force at the Industry level, for waging a united struggle to clinch the issues.  He paid rich tributes to the IOBOA and its  matured  leadership in extending  support to the Confederation in all its campaigns.

Smt. Nupur Mitra and Sri. A.K. Bansal, Executive Directors, spoke on the occassion.  Com. S. Srinivasan, General Secretary, AIOBEU spoke and extended his fraternal greetings to the Conference.  On the occasion many awards were distributed and Books on “Rights and Duties,” “Crusader” were released.

The programme concluded with vote of thanks by Com. Vijaya Senan.

Comrades it was one of the best organised and well attended Conferences of the Association which received lot of appreciation by the mammoth gathering.  The programme received wide publicity through print and electronic media.

Com. J.D. Sharma and Com. K. Ananda Kumar have been reelected as President and General Secretary respectively for the triennial period 2011-2014. We congratulate and wish them and their new team of office bearers all  the best  in their future  endeavors.

With greetings

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

AIBOC CIRCULAR NO. 86 DATED 20.09.2011

AIBOC issued its circular No. 86 dated 20.09.2011 on 100% DA neutralization to pensioners. We are reproducing the same here for our readers.

CIRCULAR NO.86                                       DATE: 20.09.2011

TO ALL AFFILIATES/MEMBERS:

100% DA NEUTRALISATION TO PENSIONERS

The Pensioners in the Banking Industry have been getting pension on the basis of the Bipartite settlements right from 01.11.1993. We have been demanding 100% DA neutralization to all the pensioners /family pensioners who retired from service of the bank prior to 01.11.2002. You are aware of the fact that, 100% DA neutralization has been secured to the employees as well as pensioners with effect from 01.11.2002. However Reserve Bank of India has considered 100 % DA neutralization to all its employees retired / deceased prior to 01.11.2002. But, this is implemented wef., 01.02.2005. Our Pension Scheme is akin to the scheme available at RBI.

We have today addressed a letter to IBA highlighting the need to extend 100% DA neutralization to pensioners and family pensioners in the banking industry who retired before 01.11.2002 on par with RBI scheme w.e.f.,  01.05.2005. The letter is annexed to this circular and is self-explicit.

Further developments in the matter will be informed.

With greetings

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No:1003/324/11                                19.09.2011

The Chairman,

Indian Bank’s Association,

Mumbai.

Dear Sir,

100% DA NEUTRALISATION TO PENSIONERS

We refer to Pension settlement between IBA & Unions in Banking Industry dated 29th October, 1993.

The Pension Scheme introduced in the Banking Industry w.e.f. 01.11.1993; was to be broadly based on central Govt./RBI pattern. 

Dearness relief to Pensioners will be granted at such rates as may be determined from time to time to fall in line with the “Dearness Allowance Formula in operation in Reserve Bank of India”, vide its Circular No. HRDD No 10139/21 -01/2007-08 dated 01.04.2008, with instructions for payment of Dearness Relief with cent percent neutralization for the entire pension amount to all its pensioners, retired beore 01.11.2002 with effect from 01.03.2008.

Subsequently, in January 2010, the Reserve Bank of India issued instructions to all its offices to pay Dearness Relief to all its employees retired/deceased before 01.11.2002, with cent percent neutralistion for rise in CPI from the month of February 2005 to February 2008, vide its Circular No. CO HRDD No.6223/21 dated 01.09.2010 and 01.01.2010.

100% D.A neutralization was extended to employees and pensioners in the Banking Industry, w.e.f. 01.11.2002. We therefore, request you to extend 100% D.A neutralization to pensioners and family pensioners who retired before 01.11.2002, at par with RBI Scheme w.e.f 01.05.2005.

Thanking you,

Yours faithfully,

Sd/-                                          

(G. D. NADAF)

GENERAL SECRETARY