BANKS' LOANS & DEPOSITS RISE BY MORE THAN 1L CRORE

Banks have posted a record growth in loans and deposits in the latest fortnight ended December 31 during which both loans and deposits rose by more than 1 lakh crore.

The latest data on loans and deposits released by the central bank show that bank loans comprising loans to individuals and business, or non-food credit, amounted to 3,697,265.07 crore as on December 31, up 119,920.01 crore over the previous fortnight.

Bank deposits on the other hand were up 171,601.71 crore to 4,971,390.23 crore. While demand deposits rose 51812.31 crore, term deposits, which are a resource for lending to banks, rose 119,789.4 crore during the fortnight.

Banks, which have to make public their business and profit figures every quarter, often shore up loans and deposit figures during the last fortnight in any quarter to show good business performance to their investors. However, this time around, the rise is very steep.

For the quarter as a whole, loan growth ended at 325,205.93 crore against 143,711 crore in the same period a year ago while total deposits rose 264,097.19 crore ( 44,533 crore).

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/banks-loans-deposits-rise-by-more-than-1l-crore/articleshow/7271983.cms

BANKS NEED TO LOOK BEYOND INFRASTRUCTURE FINANCING

Rising lending by banks to build roads, ports and power plants is not necessarily in the best interests of lenders since more of it may stress their financials due to volatile cost of raising funds, Reserve Bank of India deputy governor Subir Gokarn said.

The institutional structure of banks forces them to rely more on the current account and savings accounts, which for many banks constitute nearly half their total deposits. Even the fixed deposits tenure is mostly for one or two years. With this cost structure, lending for building ports and roads becomes risky when interest rates begin to rise as it is happening now. Most of these infrastructure projects take more than a decade to be built, keeping banks on tenterhooks.

Banks can lend for tenors of five, seven and 10 years, but infrastructure projects need finance for 12,15 and 20 years. This role would eventually have to be taken up by insurance and pension funds that have the funds but not the wherewithal to appraise risk. Right now, banks are financing infra projects. They are largely riding on a spirit of positivism, not much else.

Public sector participation in financing infrastructure has also come down which is the reason for the widening gap in funding.

The deputy governor also said the noise on infrastructure building is also diverting attention from other pressing needs of the economy such as manufacturing capacity expansion. The lack of capacity expansion is blamed for the surge in prices of manufactured products.

Building new capacity does not necessarily mean new competition, though scales of economies have definite advantages, the RBI deputy governor said. The increasing role of services in India's economic expansion needs to get balanced with rise in the role of manufacturing too, he added. In 2010, more than 57% of the GDP was contributed by the services sector, whereas only about 16% was from the manufacturing side.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/banks-need-to-look-beyond-infrastructure-financing/articleshow/7271973.cms

BANKS MAY GET TO SPREAD 10K CRORE PENSION LIABILITY OVER MANY YEARS

Public-sector banks may be allowed to expense their more than 10,000-crore potential pension liabilities over many years, sparing them from taking a one-time blow on their profits and net worth due to new accounting norms.

The step will come as a breather for banks which are experiencing a quantum increase in liabilities after the government raised the gratuity limit and effected a 17.5% wage revision and pension grant to retired employees.

The relaxation will, however, apply only for the gratuity limit enhancement, with no changes in accounting treatment being considered for wage revision or the pension burden.

Wage revision and the case of pension was a decision which the management of the banks took in consultation with their unions, so the impact of it has to be borne by the banks in their income statement, the official said, adding that an announcement in the matter is expected shortly.

In the last Union Budget, the government amended the Gratuity Act, leading to an employee receiving 10 lakh on retirement instead of a capped 3 lakh. Banks have estimated that the outgo on this would be around 4,000 crore.

Banks had earlier approached RBI as well as the Institute of Chartered Accountants of India (ICAI) to relax the accounting norms to minimise their financial burden due to these liabilities. Concerned that the total pension and gratuity outgo can be as high as 10,000 crore, they sought to relax the accounting norms applicable for this type of a treatment.

If banks do not receive any relaxation, profits will dip and reserves will shrink. A lower reserves will mean that banks' capital adequacy ratio that reflects the financial soundness of banks, which includes reserves, equity and senior debt, will fall significantly. RBI mandates that banks maintain a capital adequacy ratio of 9% and most banks currently have a CAR in the region of 11-14%.

Under the current framework - accounting standard-15 (AS-15), banks cannot amortise pension and gratuity liabilities. The international equivalent to this standard, called IAS-19, with which the current standard will converge eventually, however, provides for a 'corridor approach', meaning the regulator can exempt them from the rules.

As per the roadmap on International Financial Reporting Standards (IFRS) as issued by the ministry of corporate affairs, banks will converge with the global set of norms from 2013.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/banks-may-get-to-spread-10k-crore-pension-liability-over-many-years/articleshow/7264018.cms

BATTLING A MONEY CRUNCH, BANKS DEMAND CRR, SLR CUT

Battling a money crunch, banks on 11^th Jan asked the Reserve Bank of India (RBI) to lower the level of cash and government bonds they are required to maintain as reserves. Pruning the reserve ratios, which are a bank's percentages of its net liabilities, will free resources that can be lent to support growth.

CEOs of large commercial banks asked RBI to cut the cash reserve ratio (CRR) - a slice of customer deposits that banks have to set aside as cash, as well as the statutory liquidity ratio - the proportion of government securities that banks have to hold on their books. Currently, the CRR is 6% and SLR 24%.

At the pre-credit policy meeting with RBI deputy governor Subir Gokarn, bank CEOs suggested a 0.5% to 1% cut in CRR and SLR. The credit policy is scheduled on January 25. Speaking to the media, K Ramakrishnan, chief executive of the bankers' lobby of the Indian Banks Association, said, the relaxation has been sought since loan growth has gained momentum.

Most bankers told RBI they hope to meet a credit growth target of 20% this year. A cut in either CRR or SLR, or both, will release liquidity in the banking system, which is facing a shortage of around 80,000 crore - a gap that banks have to meet by borrowing from RBI on a daily basis.

But financial markets fear that RBI may increase rates with food inflation surging. Most research firms have revised their inflation targets upwards and expect RBI to raise rates by 25-50 basis points in the forthcoming policy.

Analysts are worried that an increase in interest rates could impact banks' margins. For most banks, the net interest margin vary from 2.50% to 4%. Some banks even suggested that RBI should pay interest, even if it is a nominal one, on the CRR balance.

At the meeting, banks also urged RBI to allow them restructure loans given to microfinance firms while retaining standard asset status on such loans. According to RBI regulation, any restructured loan to a non-manufacturing entity should be treated as substandard asset on the very day the loan is restructured.

Bankers also said the regulator should allow them to amortise the pension liabilities over the next five years. As things stand, most banks have not fully provided for pension liabilities which add up to 6,000 crore. 

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/battling-a-money-crunch-banks-demand-crr-slr-cut/articleshow/7263831.cms

CENTRAL BANK OF INDIA RECEIVES SKOCH AWARD

In a glittering ceremony organized by SKOCH at   New Delhi, Central Bank of India has been awarded SKOCH Award for its outstanding performance in JEEVIKA Project in Bihar.  The Bank has made major contribution in socio-economic growth of underpriviledged population living below the poverty line in the State through Self Help Group.  The Bank has been instrumental in implementing poverty alleviation programme  through its various programmes e.g. Jeevika Mitra or Community Mobiliser, Jeevika Jyoti, Jeevika Saheli, Community Investment Fund, Health Risk Fund which have been very popular in the State. 

SOURCE: https://www.centralbankofindia.co.in/upload/news/Press_Editors_Press_Release_skoch.pdf 

INDUSIND BANK HIKES DEPOSIT RATES BY UP TO 1.75 PER CENT

IndusInd Bank announced an increase in fixed deposit rates by up to 175 basis, or 1.75 per cent, in line with other banks.

These new rates come into effect from January 8. The interest rate on fixed deposits with a maturity period of 7-14 days has been increased by 25 basis points to 3 per cent. Furthermore, the interest rate on term deposits with a tenor of 15-30 days has been hiked by 100 basis points to 4 per cent.

Another major hike has been effected on term deposits with a tenor of 1-2 years. The interest on these term deposits has been increased by 175 basis points to 9 per cent, while term deposits of 181-269 days' tenor will attract 7.75 per cent interest after the rate was hiked by 150 basis points.

For term deposits with a maturity period of 46-60 days, the bank has revised the interest rate to 5.5 per cent, 125 basis points more than the prevailing rate.

For fixed deposits with a maturity of 2-3 years, the new rate is 8.75 per cent after the IndusInd Bank effected a 125 basis points hike.

For deposits of up to Rs 15 lakh with a tenor of 36-61 months, the rates have been revised upward by 100 basis points to 8.75 per cent.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/indusind-bank-hikes-deposit-rates-by-up-to-175-per-cent/articleshow/7262267.cms

DON'T PUT ONUS OF FINANCIAL INCLUSION ON BANKS ALONE: ADITYA PURI, HDFC BANK

According to Sri Aditya Puri, Managing Director and Chief Executive of HDFC Bank, the government's financial inclusion agenda is desirable but that should not be discriminatory and lead to unmanageable burden on banks with specified lending targets for the poor.

He said, "we cannot have the haves and have-nots. I think financial inclusion is a political, economical and social necessity. That opening a banking account or giving a loan without creating a repayment capability is not the solution, so please do not have this priority sector targets only for banks."

Prime Minister Manmohan Singh's government has been pushing the 'financial inclusion' agenda to ensure that most citizens of the country have access to financial services. It is adopting various measures including mandating certain targets for banks in a nation where more than half don't have access to banks. But some of the efforts were in vain with a recent RBI report pointing out that no-frills accounts have been inoperative since people don't have enough money in the first place to deposit in banks.

The central bank has mandated that at least 40% of the total loans should be given to farmers, small businessmen, minority community and to individuals for purchase of home or to students to pursue education. However, there is no such mandate to government-owned or even private companies.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/dont-put-onus-of-financial-inclusion-on-banks-alone-aditya-puri-hdfc-bank/articleshow/7256782.cms

CBOA, AP CIRCULAR NO. 003 DATED 07.01.2011

CBOA, AP issued its circular No. 3 dated 07.01.2001 on AICBOF Meritorious Children Scholarship. We are placing the same here for our readers.

Circular No. GS: 2010: 003                                                       Date: 07.01.2011

TO ALL OFFICERS                                                                   PLEASE CIRCULATE

Dear Friends,

We reproduce hereunder the Circular No. CIRCULAR/GS/2010/21dated 31-12-2010 received from our Federation for your information.

With best regards                                                                        

Yours sincerely

Sd/-

(C.A. MALLIKARJUNA RAO)

GENERAL SECRETARY

..........................................................................................…………….………………

“WISH YOU AND YOUR FAMILY A HAPPY AND PROSPEROUS NEW YEAR

This is the Centenary Year of our bank. Let us all join together in restoring our bank to position one amongst Public Sector Banks by contributing to the business development.

AICBOF MERITORIOUS CHILDREN SCHOLARSHIP

As you know our organization, as a part of various welfare activities, has introduced many schemes like Meritorious Children Award Scheme, Benevolent Fund Scheme, AICBOF Meritorious Children Scholarship etc.

One of the benefits extended to the Benevolent Fund members is the AICBOF Meritorious Children Scholarship to the children of Benevolent Fund Members who came out meritoriously in HSC exams (12^th Standard). This is an All India Scholarship and in all the three faculties i.e. Science, Commerce and Arts, scholarships are awarded. From the day of its inception, there has been tremendous response to this scheme.

We are giving hereunder the details of children who have been selected for the Meritorious Children Scholarship for the year 2009-10.

Sr.  Name of the Parent           Name of Child  Affiliated          % of Marks       Faculty

No.                                                                   Unit                                                     

1     Mr. S.S. Kataria                  Mast. Pankaj     Chandigarh        89.20       Science

2     Mr. Ajay Kumar Upadhyay   Mast. Avinash    Mumbai             88.40       Science

3    Mr. Bhupendra Kumar Jain   Mast. Chintan    Mumbai             82.33      Commerce

4     Mr. Jaichand B. Lal             Ms. Anisha        Mumbai             77.33      Commerce

We have not received any eligible application under Arts Faculty this year.

We convey our heartiest congratulations to the winners of Scholarships and convey our best wishes to them for attaining greater heights in life. The Scholarship amount and the certificates are being sent to the winners through respective units.”

Yours sincerely,     

Sd/-                                                                 

(D.S. BHADAURIA)                                    

GENERAL SECRETARY

CBOA, AP CIRCULAR NO. 003 DATED 07.01.2011

CBOA, AP issued its circular No. 3 dated 07.01.2001 on AICBOF Meritorious Children Scholarship. We are placing the same here for our readers.

Circular No. GS: 2010: 003                                                   Date: 07.01.2011

TO ALL OFFICERS                                                               PLEASE CIRCULATE

Dear Friends,

We reproduce hereunder the Circular No. CIRCULAR/GS/2010/21dated 31-12-2010 received from our Federation for your information.

With best regards                                                                     

Yours sincerely

Sd/-

(C.A. MALLIKARJUNA RAO)

GENERAL SECRETARY

..........................................................................................…………

“WISH YOU AND YOUR FAMILY A HAPPY AND PROSPEROUS NEW YEAR

This is the Centenary Year of our bank. Let us all join together in restoring our bank to position one amongst Public Sector Banks by contributing to the business development.

AICBOF MERITORIOUS CHILDREN SCHOLARSHIP

As you know our organization, as a part of various welfare activities, has introduced many schemes like Meritorious Children Award Scheme, Benevolent Fund Scheme, AICBOF Meritorious Children Scholarship etc.

One of the benefits extended to the Benevolent Fund members is the AICBOF Meritorious Children Scholarship to the children of Benevolent Fund Members who came out meritoriously in HSC exams (12^th Standard). This is an All India Scholarship and in all the three faculties i.e. Science, Commerce and Arts, scholarships are awarded. From the day of its inception, there has been tremendous response to this scheme.

We are giving hereunder the details of children who have been selected for the Meritorious Children Scholarship for the year 2009-10.

Sr.       Name of the Parent              Name of Child           Affiliated         % of Marks     Faculty

No.                                                                       Unit                                                    

1        Mr. S.S. Kataria                  Mast. Pankaj        Chandigarh     89.20          Science

2        Mr. Ajay Kumar Upadhyay    Mast. Avinash      Mumbai           88.40         Science

3        Mr. Bhupendra Kumar Jain   Mast. Chintan      Mumbai           82.33         Commerce

4        Mr. Jaichand B. Lal              Ms. Anisha          Mumbai           77.33         Commerce

We have not received any eligible application under Arts Faculty this year.

We convey our heartiest congratulations to the winners of Scholarships and convey our best wishes to them for attaining greater heights in life. The Scholarship amount and the certificates are being sent to the winners through respective units.”

Yours sincerely,     

Sd/-                                                                 

(D.S. BHADAURIA)                            

GENERAL SECRETARY                                                                                               

CENTRAL BANK OF INDIA SIGNS DISTRIBUTION AGREEMENT WITH PRINCIPAL Pnb MUTUAL FUND

Central Bank of India signed a distribution agreement with Principal Pnb Asset Management Company Pvt. Ltd.  as a part of the strategy to increase their retail presence. Central Bank of India will distribute Principal Pnb Mutual Fund Schemes through its network of 3600 plus Branches across the country.

SOURCE: https://www.centralbankofindia.co.in/upload/news/Press_Editors_Press_Release_pnb_mutual.pdf