SBI SEEKS PCR DEADLINE EXTENSION TILL SEPTEMBER '11

State Bank of India (SBI), which is struggling to meet the regulatory mandate of 70 per cent provision coverage ratio (PCR) by September, has sought a one-year extension to comply with the norm.

According to sources close to the development, the country’s largest bank has written to the Reserve Bank of India (RBI) seeking an extension of the deadline till September 2011 to meet the new stipulation. They, however, added RBI was yet to take a call on the issue. Recently, the regulator has provided six months extension, till March 31, to ICICI Bank for achieving the PCR norm.

According to State Bank’s internal estimates, it will have to make additional provision of Rs 2,800 crore for non-performing assets to reach a PCR of 70 per cent. At March-end, its PCR was 59.46 per cent, including advances under collection accounts (AUCA). Without AUCA, SBI’s loan-loss coverage is 44.36 per cent, and is seen as a pressure point by analysts tracking the sector.

In September 2009, RBI came out with a regulation mandating that banks maintain PCR at 70 per cent. They were given one year to meet the norm which was seen as creating a buffer during good times to tide over possible problems during times of stress. Later, RBI allowed banks to include technical write-offs while calculating PCR. However, when it gave a one-year extension to ICICI Bank, the bank was not allowed to include technical write-offs.

Though most banks have met the PCR mandate, some like SBI, ICICI and Bank of India are yet to achieve it.

SBI’s request for the extension comes after the bank reported a 32 per cent decline in net profit for the quarter ended March 31, which was the first quarterly fall in three years. The fall in the bottom line is mainly due to an increase in provision for non-performing assets to Rs 2,186.77 crore from Rs 1,296.25 crore and an increase of 41 per cent in operating costs.

The bank has already started to curb expenses, as it wants to cap the growth of operating expenses at 5 per cent in 2010-11, mainly by opening lesser branches and automated teller machines.

Source: http://www.business-standard.com/india/news/sbi-seeks-pcr-deadline-extension-till-september-/11/396170/

WORST IS OVER, SAYS BHATT ON SBI'S NPAS

The country's largest lender State Bank of India (SBI) today said the "worst is over" in terms of its rising bad debts, which had dragged down its net profit by a whopping 32 per cent in the fourth quarter of the past fiscal.

"The worst is over," chairman O P Bhatt told reporters on the sidelines of an RBI event here when asked about the bank's non-performing assets (NPA) levels.

In the January-March quarter of 2009-10, SBI reported a 32 per cent fall in its net profit at Rs 1,867 crore, partly pulled down by higher provisioning for NPAs. Its net profit in the same quarter in the previous fiscal was Rs 2,742 crore.

The bank's provisioning during the quarter was 59.23 per cent of the bad assets against 56.98 per cent in the same period in the previous fiscal.

Source: http://www.business-standard.com/india/news/worst-is-over-says-bhattsbi/s-npas/95773/on

TIRUPATI TEMPLE DEPOSITS 1,075 KILOGRAMS OF GOLD WITH SBI

The Tirupati Temple in Andhra Pradesh has for the first time deposited 1,075 kilograms of gold with the State Bank of India (SBI), which is one of the single largest transaction in gold banking ever taken place in the country.

TTD officials said they were extremely happy about taking the step due to security reasons, and also for wanting to convert idle gold into a source of income. 
The interest rate offered by SBI is one percent for three years, 1.25 percent for four years and 1.5 percent for five years.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Tirupati-temple-deposits-1075-kilograms-of-gold-with-SBI/articleshow/5968737.cms

AIBOC CIRCULAR NO. 74 DATED 25.05.2010

AIBOC issued its circular No. 74 on merger move of Bank of Rajasthan with ICICI Bank. We are reproducing the same here for our readers.

CIRCULAR NO.74                                                                          25.05.2010

To All Affiliates /Members

BANK OF RAJASTHAN (BOR) MOVE TO MERGE WITH ICICI BANK

Please refer our Circular No. 68 dated 19^th May-2010, on the captioned matter.

The merger move has come as a sudden jolt to the employees and officers of Bank of Rajasthan, giving very little time for their unions to protest and attempt to stall the move. However all the three Unions operating in BOR, have come under one umbrella body i.e.: “United Forum of Bank of Rajasthan Unions” and have taken immediate decision to launch an action programme, opposing the Government’s move to merge BOR with ICICI Bank. The details of the action programme are as under.

Date	Programme
19th May, 2010	Spontaneously, countrywide demonstrations before  all Regional Offices, Corporate Office –Mumbai and Central Office –Jaipur in the evening.
22nd  May, 2010 Memorandum to be served To:	Demonstration at 2.30 pm at all branches, Regional Offices and Central Office –Jaipur and Corporate Office –Mumbai and all branches of the Bank. Hon’ble Prime Minister, GOI, New Delhi Hon’ble Finance Minister, GOI, New Delhi Hon’ble State Finance Minister, GOI, New Delhi Hon’ble Chief Minister , Govt. of Rajasthan, Jaipur All Members of Parliament from the state of Rajasthan by respective units The Governer, Reserve Bank of India, Mumbai The Chairman, SEBI, Mumbai
24th May 2010	Dharna at Central Office, Jaipur
25th May 2010	Wearing Black badges. Massive postering before all branches in the country and collection of signatures from customers opposing merger with ICICI Bank.
28th May 2010	Massive demonstrations before all Regional Offices, Corporate Office- Mumbai and Central Office –Jaipur
3rd June 2010	Dharna before all Regional Offices in the Country, Corporate Office –Mumbai and Central Office –Jaipur followed by demonstrations
4th &5th June 2010	All India Bank strike in The Bank of Rajasthan Ltd. for two days

Second phase of agitation:-

Date	Programme
17th , 18th and 19th of June 2010	All India Bank strike in The Bank of Rajasthan Ltd. for three days.

The move of the Government is totally against our just demand of merging old generation Private Sector Banks with Public Sector Banks which is in the interest of the nation , customers and the general public. The move indicates Government of India’s lack of sensibility to the global economic melt down leading to failure of many giant Banks, causing havoc in the financial sectors of countries across the globe. The unpleasant development should have opened the eyes of the Government to the ground realities of such moves. We hope Reserve Bank of India which has played a very important role in saving the Banking Industry from the onslaught of global economic crisis, will stall the move and initiate steps for merger of the Bank with one of the Public Sector Banks.

In this connection we have already addressed letters to the Hon’ble Finance Minister, Govt, of India and the Governor, Reserve Bank of India wherein we have strongly protested the move. The UFBU is meeting shortly to evolve strategies to thwart the move.

We request all our affiliates to extend whole hearted  fraternal support to all the action programmes lunched by “UFBORU”, including joining their lunch time demonstrations.

With militant greetings

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

BANKS LIKELY TO FIX BASE RATE AT 8.5-9.5%

With less than 40 days to go for the implementation of the new base rate system, banks are still working on fixing the rates and assessing the likely impact on their portfolios. According to the sources, the base rate could be fixed at about 8.5-9.5 per cent by many banks.

In case of large banks with good current account and savings accounts (CASA), it might come down a little say experts.

According to Reserve Bank of India, banks need to switch over to the new loan pricing system from July 1, from the existing Benchmark Prime Lending Rate (BPLR), which is in the range of 11.5-12.5 per cent.

The actual lending rate charged to borrowers would be the base rate plus borrower-specific charges including operating costs, say the draft guidelines on the RBI portal.

Source: http://www.thehindubusinessline.com/2010/05/22/stories/2010052252360600.htm

INDIAN BANKS TO PROVIDE OVER RS 35,00 CRORE TO TELECOM COMPANIES FOR 3G

According to news item published in the Economic Times, banks will provide funds of over Rs.35000 crore to telecom companies for paying the Govt. for 3G Mobile spectrum. Of this, SBI alone is likely to lend close to Rs.20000 crore followed by IDBI Bank (8000 cr.), Bank of Baroda (3000 cr.) and Bank of India (2000 cr.).

Telecom companies, which won licences for bandwidth for 3G mobile services, have to pay up close to Rs 68,000 crore to the Govt.

Several telcos, such as Tata Teleservices, Idea, Reliance Communication and Aircel, entered the debt market on Thursday and Friday to raise money through the commercial paper route. Tata Tele raised Rs 1,500 crore for one year at 7%, while Idea raised Rs 1,000 crore for one year at 6.75% and RCom raised Rs 4,000 crore for three months at 3%.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/Indian-banks-to-provide-over-Rs-3500-crore-to-telecom-companies-for-3G/articleshow/5960070.cms

BANK LOAN GROWTH STILL IN NEGATIVE TERRITORY

According to RBI data, despite a rise of Rs.13029.60 crore in bank credit, outstanding bank credit is still lower by Rs.12627.00 crores when compared to March 2010. Outstanding bank credit for the fortnight ending 07.05.2010 was Rs.3227771.47 crore.

Bankers say the loan growth is normally dull during this time of the year since corporates are still drawing plans for spending. Banks on the other hand also do not push for loans aggressively as they are busy finalising accounts for the previous fiscal. Bankers expect loan demand to pick up by June.

During the same fortnight, deposits mobilised by commercial banks have risen Rs 24,470.67 crore to touch Rs 4,531,217.28 crore as on May 2007.

Bank investments in government bonds too dipped by Rs 9,219.97 crore during the fortnight. In the absence of lending opportunity, banks are instead parking their resources with various liquid mutual fund schemes, though the central bank had warned them to focus on lending instead. It is estimated that banks’ outstanding investments in various mutual funds schemes are in the region of Rs 100,000 crore.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Bank-loan-growth-still-in-negative-territory/articleshow/5956029.cms

RBI TO EXTEND BANKING SERVICES TO ALL VILLAGES BY 2015

The Reserve Bank of India has set a target of extending banking facilities to all villages in the country by 2015 as part of inclusive growth, the RBI Deputy Governor, Dr K.C. Chakrabarty, said.

As a first step, RBI has advised banks to extend banking services to every village having a population of over 2,000 by 2012. The extension of banking facilities has not taken place in the country in the last 50 years due to absence of technological advancement and other institutional constraints, he said while speaking at after the formal release of India Micro, Small and Medium Enterprise 2010 (MSMER 2010) brought out by Institute of Small Enterprises Development (ISED) here on Friday.

He said majority of the six lakh villages in the country do not have a proper banking system and lack access to credit.

He said the growth in the MSME sector in the country has doubled in the last four years despite the global meltdown.

The total credit extended to the sector by the banks is more than 25 per cent and the contribution of the sector to the GDP is 11 per cent.

RBI, he said, has instructed all banks to extend all help to MSMEs and urged the enterprises not to seek concessional credit. There have been complaints of entrepreneurs are not getting help from banks. He said that all deserving entrepreneurs should get credit.

The many shortcomings in extending support to MSME sector can be rectified collectively. There is no need for giving concessional credit to unviable units, he said adding, that the MSME sector plays a prominent role in keeping up the spirit of entrepreneurship.

The MSMER 2010 report highlights India's unutilised potential relating to MSME, as the sector has substantial potential of capitalising on the global warming agenda.

Source: http://www.thehindubusinessline.com/2010/05/22/stories/2010052252771900.htm

SBI NOT TO HIKE INTEREST RATES: BHATT

According to Mr. O.P. Bhatt, Chairman, SBI, there is no proposal to hike interest rate. He also said that State Bank of Indore would be merged with State Bank of India soon.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/SBI-not-to-hike-interest-rates-Bhatt/articleshow/5962682.cms

BOR UNIONS TO MEET CM, MPS

The United Forum of Bank of Rajasthan Unions has decided to knock on the doors of Union Minister of State for finance, Mr Namo Narain Meena, the Rajasthan Chief Minister, Ashok Gehlot, and Members of Parliament from Rajasthan to make out a case against the proposed merger of their bank with ICICI Bank.

The Forum has also given a strike call on June 4 and June 5 to protest against the merger.

Emphasising that there was no cultural fit whatsoever between the working of BoR and ICICI Bank, Mr Dharmendra Rao, President of the All-India Bank of Rajasthan Employees Federation, said his bank was organised and functioned along the lines of a public sector bank.

Source: http://www.thehindubusinessline.com/2010/05/22/stories/2010052252420600.htm