AIBOC CIRCULAR NO. 104 DATED 24.07.2010

AIBOC issued its circular No. 104 on the venues for the Silver Jubilee Celebrations Valedictory Function to be held at Delhi on 22^nd and 23^rd October 2010. We are reproducing the same here for our readers.

CIRCULAR NO. 104                                   DATE:24.07.2010

TO ALL AFFILIATES /MEMBERS

AIBOC-SILVER JUBILEE CELEBRATIONS VALEDICTORY FUNCTION AT DELHI

Please refer to our Circular No. 96, dated 12.06.2010

Following are the venues for National Seminar and Valedictory Function of the Silver Jubilee Celebrations

NATIONAL SEMINAR ON 22^ND OCTOBER, 2010 AT 5.30 PM

SRI SATHYA SAI INTERNATIONAL CENTER,

PRAGATI VIHAR, LODHI ROAD, NEW DELHI 110 003

(Opp. Sai Baba Temple)

SILVER JUBILEE FUNCTION ON 23^RD OCTOBER, 2010 AT 5.00PM

SWARAN JYANTI AUDITORIUM

LADY HARDING HOSPITAL, CONNAUGHT PLACE, NEW DELHI -110 001

(Opp. Shivaji Stadium)

We shall advise the venue of our Special Executive Committee Meeting to be held on 23.10.2010 at Delhi,later.

With greetings

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

NEW BANKS MAY HAVE TO REACH OUT TO RURAL INDIA

Would-be banks seeking a licence may be asked to form alliances with regional rural banks (RRBs) to help them begin operations on a wider footprint, as also to hasten financial inclusion.

Reserve Bank of India (RBI) is likely to set a condition that new banks open a certain minimum number of branches in unbanked areas, according to an official. The central bank is scheduled to finalise draft guidelines for new bank licences this month and some bankers expect these to be announced with the quarterly monetary policy review on Tuesday.

RBI plans to consider granting licences to private sector players and non-bank finance companies to promote new banks. It may selectively permit some large business houses with diversified sources of income and a stable track record.

The central bank may not be enthused to let in securities’ firms because of the volatility in their earnings and market capitalisation. The confidence of depositors could get shaken if income and profits of these firms get eroded, as was witnessed during the global economic downturn in 2008 and early-2009.

An internal committee of RBI is working on the guidelines. The minimum required capital may be set at Rs 500 crore initially, with a provision that it be raised to Rs 1,000 crore by the third year. There is a growing capital requirement if the economy has to grow faster than the 8.5 per cent it aims for the year to March 2011. Foreigners may be permitted to invest up to 20 per cent, the sources said.

“Banks in India will need about $25 billion over the next five years to meet credit, financial inclusion and Basel-2 requirements,’’ said Ashvin Parekh, partner and national leader, global financial services, Ernst & Young.

Source: http://www.business-standard.com/india/news/new-banks-may-have-to-reach-out-to-rural-india/402494/

PAY PARITY BETWEEN RRB AND PSU BANK EMPLOYEES

 Government asked regional rural banks (RRBs) to introduce revised pay structure for their employees on par with PSU banks from November 1, 2007, which will cost them Rs 791 crore on arrears payment and plunge more of them into losses.

The additional cost on payment of arrears will bring down the total profits of the RRBs from Rs 2,374 crores during 2009-10.

This is likely to lead to more RRBs going into losses against only three loss making RRBs at present. Yet the Government is committed towards fulfilling its obligation of giving equal pay scales corresponding to those of nationalized banks to the RRB employees," Mr. Pranab Mjukherjee, Finance Minister said.

Currently, the country has 82 RRBs with over 68,000 employees.

The Finance Minister also asked 49 RRBs regional Rural Banks (RRBs), which have more than five per cent of non-performing assets, to bring down their bad debts below below 5 per cent by this year itself.

Stressing on their role towards financial inclusion, he called upon RRBs to speed up their activities to expand their branches on platform of Core Banking Solutions.

Mukherjee asked them to use new technology including mobile banking vans, tele-banking to provide banking services to entire population of the country, especially in the rural areas.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Pay-parity-between-RRB-and-PSU-bank-employees/articleshow/6216267.cms

NPAS OF BANKS TO RISE THIS FISCAL: FINMIN

Financial Services Secretary, Ministry of Finance said gross bad debts of commercial banks are likely to rise this fiscal from over 2.5 per cent in 2009-10 due to slippage in loans restructured due to the impact of global economic slowdown.

He also said short-term borrowing by banks from RBI indicates that the system is facing tight liquidity, which many experts say will not allow RBI to tighten money supply in its monetary review on Tuesday.

Earlier, ratings firm Standard and Poor's had expected 25-50 per cent of loans restructured by Indian banks to slip to non-performing assets in the next two years.

According to CARE Rating Agency data, top 12 banks had restructured assets worth Rs 32,530 crore, taking their total restructured assets to nearly Rs 73,000 crore.

Source: http://economictimes.indiatimes.com/news/economy/finance/NPAs-of-banks-to-rise-this-fiscal-Finmin/articleshow/6216172.cms

103 US BANKS COLLAPSE IN UNDER 7 MONTHS

The count of bank failures in the US has crossed the century-mark in 2010 and as many as 17 entities have folded up so far this month.

Mostly small and medium banks are bearing the brunt of the collapse, as they continue to wobble under the prolonged sluggishness in financial conditions. On an average, nearly 15 banks have bit the dust every month so far this year.

According to the Federal Deposit Insurance Corporation (FDIC), which insures deposits at over 8,000 banks, as many as 103 entities have gone out of business so far this year. In 2009, a staggering 140 banks were shut down.

On July 23 alone, authorities seized seven banks which would result in an expense of about USD 431 million for the FDIC.

Source: http://www.financialexpress.com/news/103-us-banks-collapse-in-under-7-months/651453/

RBI SAYS CAN'T RELAX DISTANCE NORM FOR BUSINESS CORRESPONDENTS

Reserve Bank of India has declined to accept a proposal from an Inter-Ministerial Group (IMG) to relax the stipulation that business correspondents (BC) should be within 30 km distance of a branch.

The RBI will also bring out a paper to discuss whether or not to allow profit-making organisations, including mobile service providers, to become business correspondents.

This was revealed at the first meeting of the monitoring group chaired by the Cabinet Secretary to consider the recommendations made by the IMG on usage of mobile phones to deliver financial services.

The IMG had suggested simplified know-your-customer (KYC) requirements and permitting “for profit” corporate entities to function as BCs. The IMG report was accepted by the Committee of Secretaries in April after which the Prime Minister had directed the constitution of a monitoring group to oversee implementation of the project.

In the first meeting of this monitoring group, the RBI said the proposal to allow BCs beyond 30 km distance could not be accepted due to supervisory reasons.

The banking regulator, however, added that it was not suggesting that banks open a full-fledged branch but only insisting minimal administrative presence within 30 km range to monitor BCs. On allowing for-profit entities to functions as BCs, the RBI informed that it was preparing a concept paper for public comment and a final decision will be taken by August.

With regard to relaxing the KYC norms, the RBI informed that it has written to the Department of Revenue to make changes to the list of documents required for opening an account to include the identity card issued by State Governments under NREGA.

On the issue of fixing the transaction charges payable to each stakeholder in the system, it was decided that the RBI committee, which is looking into other issues linked to this project, should fix a cap taking into consideration issues of affordability to users while also enabling the players to recover their costs.

It was also decided to set up another IMG under the Secretary, Rural Development, that would work out the process for crediting Government payments by various departments into the no-frills accounts set up under the project.

Source: http://www.thehindubusinessline.com/2010/07/26/stories/2010072652090100.htm

‘PUBLIC SECTOR BANKS SHOULD FOCUS ON LEADERSHIP SKILLS'

Ms. Renu Challu, Managing Director, State Bank of Hyderabad in an interview given to Businessline has said that Public Sector Banks should focus on leadership skills.

“The expectations of public sector banks are very high. Hence the leadership in banking needs to be a little different. One needs to be self-motivated and should be able to identify the right people for the right tasks,'' says Renu Challu.

“Leadership development is not easy in banks as there are regulatory issues, operational assignments and credit assessments. While foreign and private banks have different verticals, managers in public sector banks do not enjoy this luxury,'' she says.

As PSBs have been on a hiring spree in recent years, inducting about 40,000 officers and clerks every year, a special focus on improving leadership skills is required, feels Challu.

“In a bank, the staff at all levels needs to connect with the outside world. This should be practised by those in leadership roles, so that their example can be emulated by their team members,'' she suggests.

Source: http://www.thehindubusinessline.com/manager/2010/07/26/stories/2010072650191100.htm

UBI NET PROFIT UP 53.5%

United Bank of India (UBI) post a 53.50 per cent rise in net profit for the quarter ended June 2010 to Rs 107.86 crore, against Rs 70.28 crore in the same period last year.

Although the bank saw fresh slippages of 248 crore in the last quarter and treasury income fell almost 50 per cent over the corresponding quarter last year, it saw net interest income increase by about 93 per cent to about Rs 508 crore.

The bank’s treasury income fell to Rs 31.75 crore in the quarter under consideration, from Rs 61.20 crore in the first quarter of last year.

According to Mr. Bhaskar Sen, Chiarman and Managing Director, UBI, the increase in profitability was primarily due to restrictions on interest outflow, which was almost flat on a year-on-year basis. In the June 2009 quarter, the interest outflow was Rs 926 crore, which increased to Rs 928 crore in June 2010. The marginal 0.24 per cent rise was on account of the cost of borrowing.

The cost of deposits for the bank came down to 5.40 per cent in the April-June quarter, from 6.47 per cent in the quarter ended June 2009.

The bank’s provision coverage ratio stood at about 68 per cent in the first quarter of the present financial year, and the bank would need another Rs 50 crore to reach the 70 per cent mark mandated by the Reserve Bank of India.

The bank’s net interest margin in the last quarter was 2.98 per cent, against 1.90 per cent in the same period last year.

UBI’s capital to risk (Weighted) assets ratio (CRAR) in the quarter ended June 2010 was 12.99 per cent, against 13.18 per cent in the same period last year.

Source: http://www.business-standard.com/india/news/ubi-net-profit535/402375/

INDIAN BANK POSTS 11% GROWTH IN NET PROFIT

Indian Bank reported an 11 per cent rise in net profit to Rs 368.15 crore for the first quarter ended June 30 as compared to Rs 331.66 crore during the corresponding quarter of the last financial year. The bank posted a 11.07 per cent increase in total income at Rs 2,477.25 crore, as against Rs 2,230.39 crore in the same period last year.

Indian Bank’s revenue from the corporate banking segment went up by 19.67 per cent to Rs 1,041.37 crore, from Rs 870.20 crore in the year-ago period.

Mr. T M Bhasin, chairman and managing director, Indian Bank, said the bank’s current account, savings account (CASA) base rose to Rs 29,750 crore in June 2010 from Rs 22,957 crore during the same period last year. CASA share improved to 33.34 per cent in the first quarter of 2010-11, from 30.39 per cent a year ago.

The bank’s net interest margin (NII) growth would remain healthy at 24 per cent, he added

Source: http://www.business-standard.com/india/news/indian-bank-posts-11-growth-in-net-profit/402374/

BANKS CAN OPEN MOBILE BRANCHES SANS RBI NOD

Reserve Bank of India allowed commercial banks to open mobile branches without its approval in areas with less than 50,000 population, in a major step toward bringing about financial inclusion of the unbanked sections of the society.

It has been decided to further liberalise the branch authorisation policy and grant general permission to domestic scheduled commercial banks (other than RRBs) to operationalise mobile branches in tier 3 to tier 6 centres (with population up to 49,999 as per Census 2001) subject to reporting.

  The mobile branch scheme envisages extension of banking facilities through a well protected van with arrangements for two or three officials of the bank sitting in it with books, safe containing cash etc.

The mobile branch would visit the places proposed to be served by it on specific days. However, it should not visit the villages or centres which are served by co-operative banks and places served by regular branch of commercial banks.

It should be stationed in each location for a reasonable time on specified days and specified hours, so that its services could be utilised properly by customers. The business transacted at the mobile branch shall be recorded in the books of the base branch or data centre.

Further, it has been decided to grant general permission to scheduled commercial banks (other than RRBs) to operate mobile ATMs at places identified by them, without prior permission from the Reserve Bank.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Banks-can-open-mobile-branches-sans-RBI-nod/articleshow/6207011.cms