CBOA-AP CIRCULAR NO. 19 DATED 19.09.2011

CBOA-AP issued its circular No. 19 dated 19.09.2011 reproducing the circular No. 16 issued by AICBOF. We are placing the same here for our readers.

CIRCULAR NO.: GS: 2011: 019                  Date: 19.09.2011

TO ALL OFFICERS                                      PLEASE CIRCULATE

Dear Friends,

We reproduce hereunder the Circular No. CIRCULAR/GS/2011/16 dated 08-09-2011 received from our Federation for your information.

With best regards                                                                      

Yours sincerely

Sd/-

(C.A. MALLIKARJUNA RAO)

GENERAL SECRETARY

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

“GENERAL BODY CONFERENCE OF AICBOF

We are pleased to inform you that the General Body Conference of All India Central Bank Officers’ Federation has been scheduled to be held on 15^th & 16^th October 2011 at Ahmedabad. The arrangements for this mega event are under progress. We shall inform you the details of the Conference in due course.

We reproduce hereunder the communication received from AIBOC for your information.

UFBU DECIDES TO CONTINUE THE STRUGGLE

We reproduce hereunder the text of UFBU Circular No.UFBU/2011/CIRCULAR No.15 dated 13^th August 2011, contents of which are self-explicit.

UFBU meeting was held at Bangalore on 10.8.2011 in the Office of Canara Bank Workers Organisation, which was presided over by Com. Ashwani Rana (NOBW).

The meeting observed a minute’s silence to pay respects to the memory of Com. R.D. Trivedi, a senior leader of AIBEA who passed away on 4.8.2011.

Congratulations to all our members:  The meeting congratulated all our unions and entire rank and file membership for their massive response to the strike call and for making the strike a total success in every nook and corner of the country.

Thanks to Central Trade Unions: The meeting expressed its thankfulness to all the Central Trade Unions for their support to our struggle as well as to the members of Parliament who supported our strike and raised these demands in the Parliament.

The wide press and media coverage not only explained the success of the strike but also helped to reach the people at large as to our demands and viewpoints.

Agitation to continued and intensified:

The meeting noted that even though the IBA and the Government intervened in the matter at the last minute, there was no concrete offer from the IBA to resolve the issues.  Hence, the meeting, after detailed discussions, came to the inescapable conclusion that the agitation and struggle has to be continued, carried forward and intensified.

The following are the broad programmes that will be undertaken in the coming period.

a)    Holding of further campaign meetings, seminars, workshop, etc both amongst the employees as well as of the customers to explain the issues and demands in details.

b)    Meeting the Finance Minister, Secretary/Banking and IBA Chairman in a delegation demanding amicable solutions to the issues raised by UFBU.\

c)    Mass Deputations to CMD/MDs of all Banks asking them to take up the matter with IBA to expedite the resolution of our demands.

d)    State Level Morcha / Rally in all State Capitals in October 2011 and submit memorandum to Chief Ministers / Governor.

e)    Demonstrations, rallies, Badge wearing, Poster Campaign, etc.

f)     Meeting leaders of trade unions, political parties, Members of Parliament, etc. to further seek their support in the ensuring agitations.

g)    State-Level Conventions against outsourcing and building up programmes on this issue.

h)    National Seminar in Delhi on Banking Reforms and its adverse impact.

i)     Mass Rally/Dharna before Parliament in the first week of November 2011.

j)     MORE STRIKE ACTIONS/CONSECUTIVE STRIKES IN NOVEMBER 2011 during winter session of Parliament.

k)    In the meantime, if the Banking Laws (Amendment) Bill, 2011 is hurried up by the Government to be passed in this session of the Parliament, instant strike on the day the Bill is taken up in the Parliament for passage.

Comrades, our issues are very reasonable. Our demands are genuine and justified.  If the IBA and Government do not take serious steps to resolve our demands, there is no other away than to escalate and intensify our agitation.

The detailed programmes, dates of the programmes, etc. will be finalised and released shortly.

We request all the officers to be in readiness to observe instant strike if and when declared by the AIBOC / UFBU.

Yours sincerely,                                                                     

Sd/-

(D.S. BHADAURIA)

GENERAL SECRETARY

AIBOC CIRCULAR NO. 85 DATED 17.09.2011

AIBOC issued its circular no. 85 dated 17.09.2011 on the revised guidelines issued by the Govt. on Festival Advance to Bank Employees/Officers. We are reproducing the same here for our readers.

CIRCULAR NO. 85                          DATE: 17.09.2011

To, All Affiliates /Members

FESTIVAL ADVANCE -  REVISED GOVERNMENT GUIDELINES

We had taken up with the Indian Banks’ Association the matter of improvement in Festival Advance Scheme to Bank officers. We are glad to advise that, Government has revised the Festival Advance Scheme for Bank employees /officers, which have been communicated by IBA, in terms of their Circular HR&IR/76/624C/2011-12-400 dated 09.09.2011. The revised scheme has come into force w.e.f. 09.09.2011. The details are as under;

Officers                           -       One month’s Basic Pay

                                                Max. Rs. 25,000/-

Clerks                               –     One month’s Basic Pay

                                                Min. Rs.8, 000/-

                                                Max. Rs.20, 000/-

Sub –staff                       –      One month’s Basic Pay

                                                Min. Rs.6, 000/-

                                                Max. Rs.15, 000/-

Already in some of the Banks, the limits were revised at the Bank –level. Wherever the existing scheme is better, the same would continue. But in many Banks, the old limits are being implemented. Affiliates are requested to take note of the revised Guidelines and take up the matter with their managements for implementation of the same.

With greetings

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

NHB TO SOON ABOLISH PRE-PAYMENT PENALTY ON HOME LOANS

In a big relief to home loan borrowers from housing finance companies, regulator NHB today said it will soon come out with a directive to abolish penalty on pre-payment of floating loans.

"We will soon issue a circular for doing away with pre-payment charges levied by housing finance companies," NHB Chairman and Managing Director R V Verma said after announcing 2010-11 financial numbers here.

National Housing Bank (NHB) regulates 54 housing finance companies, including mortgage major HDFC, LIC Housing Finance and Dewan Housing Finance.

The housing finance companies should not levy any pre-payment charges on floating loans, he said.

If pre-closure of housing loans by the borrowers out of their own sources, then there should not be any penalty, he said.

In a release issued in October, 2010, the regulator had said, "The issue of levying pre-payment penalty or pre-payment charges by housing finance companies on pre closure of housing loans by the borrowers out of their own sources has been considered by the National Housing Bank and it has been decided that housing finance companies should not charge prepayment levy or penalty in such cases."

Meanwhile, the banking sector regulator Reserve Bank of India (RBI) has also mooted the idea of doing away with the pre-payment charges levied by banks on floating home loan.

At the same time, NHB has tightened norms for housing finance companies (HFCs) with regard to provisioning.

It has raised the provisioning requirement for doubtful assets of up to 100 per cent. At the same time, it directed HFCs, to set aside 0.4 per cent of the total outstanding "standard" loans as a buffer.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/nhb-to-soon-abolish-pre-payment-penalty-on-home-loans/articleshow/10043600.cms

BOM MAY GET RS 800 CR CAPITAL INFUSION THIS FISCAL

Pune-based public sector lender Bank of Maharashtra is hopeful of receiving Rs 800 crore from the government as part of the capital infusion plan in the current fiscal.

"We have approached the government for additional capital infusion of Rs 800 crore. This is under process and we expect to get it before March, 2012," Bank of Maharashtra CMD AS Bhattacharya told PTI here.

Post-capital infusion, the capital adequacy ratio (CAR) of the bank is likely to go up to 14% from the present level of 13.35%, he added.

The Reserve Bank of India prescribes banks to have a CAR of 12% as part of its prudent risk management measures. Bhattacharya, however, noted that the bank had no plans to raise money through either through equity or bonds in the current financial year

In the meantime, government has said that a committee had been formed to look into the matter of recapitalisation of banks.

At present, 6-7 public sector banks, including nation's largest public sector lender State Bank of India, have approached the government for capital infusion in order to boost their capital adequacy ratio, which will help in further lending to customers.

Also, implementations of Basel-III norms, which will start from 2013, require recapitalisation from the government.

Secretary in the Financial Services Department DK Mittal had earlier said that though this year budget for bank recapitalisation was Rs 6,500 crore so far, there would be a second supplement in December to infuse further capital into selected public sector banks.

Bank of Maharashtra, which has a government holding of close to 79.5%, has a total branch strength of 1,546 across the country. It has registered a 3% increase in net profit to Rs 122 crore in the first quarter of the current fiscal. Its net interest income (NII) rose by 44% to Rs 591.4 crore during this period.

SOURCE: http://www.business-standard.com/india/news/bom-may-get-rs-800-cr-capital-infusion-this-fiscal/147047/on

RBI ALLOWS RESIDENTS TO PAY HOUSING LOANS OF NRI RELATIVES

The Reserve Bank has allowed resident individuals to repay housing loans in rupee on behalf of their close relatives, who are non-resident Indians (NRIs) or People of Indian origin (PIO). “..It has been decided that where an authorised dealer (bank) in India has granted loan to a non-resident Indian..., such loans may also be repaid by resident close relative of the non-resident Indian by crediting the borrower's loan account through the bank account of such relative,” the apex bank said in a notification.

However, this repayment facility is restricted to housing loan only, it noted. In another circular, the central bank allowed resident individuals to pay for medical expenses of their non-resident close relatives, who are on visit to India.

SOURCE: http://www.thehindubusinessline.com/industry-and-economy/banking/article2465295.ece

RATE HIKE TO RAISE CREDIT COST FOR SMES

The National Small Industries Corporation (NSIC), a major lender to small and medium enterprises, has said it will pass on the increase in interest rates to the borrowers.

"... we will pass on the cost to our customers," NSIC Chairman and Managing Director H P Kumar said while agreeing that the rising interest rates were causing hardship to the country's small and medium enterprises (SMEs).

The Reserve Bank of India on Friday, September 16 increased the policy interest rate (repo) by 25 basis points, the 12th hike since March 2010.

The key interest rates have increased by 350 basis points in the last 18 months.

For the SMEs, both availability and the cost of borrowings are the major problems.

"Globally loans are available at 4-5 per cent. In India the SMEs have to pay around 15 per cent," Kumar said.

Asked whether increasing interest rates would affect the bottom line of the NSIC as well, he said: "This won't affect our profitability as we will pass on the cost to our customers."

Kumar said that while interest payments for the corporation would increase to Rs 62 crore in 2011-12 from Rs 41 crore in the previous fiscal, this would mainly be attributed to the rising business volume.

For financing the entrepreneurs, the NSIC has tie-ups with Yes Bank, Axis Bank and Central Bank of India.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/rate-hike-to-raise-credit-cost-for-smes/articleshow/10027334.cms

THE CENTRAL BANK OF INDIA LOSES RS 5.33 LAKH TO AVOID PAYING 9.5 LAKH RETIREMENT BENEFIT TO EMPLOYEE

The Central Bank of India spent Rs 5.33 lakh in a 10-year legal battle to avoid paying Rs 9.5 lakh as retirement benefit to an employee on the grounds that she died two days before they cleared her name for the voluntary retirement scheme (VRS). But both the Bombay High Court and the Supreme Court have ruled that Homai Darayas Postwala - an officer in the investment department - was entitled to the benefits.

Postwala, who served the Central Bank for 30 years, died on June 23, 2001. The bank argued that as it accepted her in the VRS retirement scheme on June 25 - two days after her death - her heirs were not entitled to the benefits of the scheme.

Eight years later, the HC ruled that as the bank had failed to provide the family any record or notification of her acceptance (or rejection) under the scheme, "it would have to be held that the application was accepted when she (Postwala) was alive". 

When her husband and son filed an RTI application in June 2011, they learnt that the bank had spent nearly half the amount due to Postwala fighting the case. They have now moved the Bombay High Court to enhance her pension from Rs 4,700 to Rs 6,700 per month after the Supreme Court accepted her rights under VRS.

Postwala had applied for the bank's VRS scheme on February 22, 2001- the day it was announced. The bank did not include her in the first list, but her name appeared on the second list on June 30, 2001. The bank claimed that they had approved her name for the second list on June 25, two days after her death.

While arguing their side of the case in court, Postwala's heirs said the bank had failed to communicate their decision, be it an acceptance or rejection, as is the norm. In fact, the family learned of her acceptance under the scheme only when they enquired with the bank after her death. They were told that she was not eligible for VRS.

The HC in July 2009 directed the bank to pay retirement and other dues under VRS to Postwala's legal heirs in three months. The bank then appealed to the Supreme Court, which upheld the HC order in April 2011.

Postwala's family has now filed a contempt petition in the HC since the pension amount has not been increased retrospective from July 2001. The family has also filed an appeal against the RTI order because the bank refused to provide receipts showing money paid to the lawyers.

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/the-central-bank-of-india-loses-rs-5-33-lakh-to-avoid-paying-9-5-lakh-retirement-benefit-to-employee/articleshow/10026743.cms

LENDING RATES TO RISE, ALBEIT WITH A LAG

Bankers say high interest rates may lower credit growth this financial year.

With the Reserve Bank of India (RBI) raising key policy rates by 25 basis points to 8.25 per cent on Friday, bankers said they would follow suit, though adding the transmission may come with a lag. Bankers also said high interest rates may lower credit growth further this financial year.

State Bank of India (SBI), the country’s largest lender, would increase the base rate, though that may not happen immediately. “Yes, the bank will pass on the interest rate rise to customers. This is what RBI wants banks to do. SBI may not raise the rate immediately,” said SBI Managing Director, A Krishna Kumar. At 10 per cent, SBI’s base rate is the lowest among its peers.

During the first quarter policy review in July, the central bank had raised the repo rate by 50 basis points. Banks had then responded by increasing their base rates.

Slower offtake in credit growth is one reason why banks are in no hurry to raise lending rates. However, with the festive season about to begin, banks hope credit growth gains momentum. “To increase the lending rate, the trigger has to come from the deposit side. Deposit mobilisation has been good so far. As of now, there is no urgent need to raise deposit rates, since credit growth has been muted so far this financial year. However, credit growth is expected to pick up, as we approach the festive season. So, the rise in lending rate may happen with a lag,” said Canara Bank Chairman and Managing Director, S Raman.

Bank of Baroda feels since liquidity conditions are still comfortable, barring this week (owing to advance tax outflows), transmission may take some time. “Right now, the liquidity condition is reasonably good. We would look at the credit growth trends in the second half, when credit offtake picks up due to the festive season. This would decide if we want to increase the base rate. We had raised base rates recently. Thus, the transmission from our end would not be immediate,” said Bank of Baroda Chairman and Managing Director, M D Mallya.

As interest rates continued to rise in the last one and half years, RBI had cut the credit growth target to 18 per cent for the current financial year from 19 per cent projected at the beginning of the financial year. While year-on-year credit growth stood at around 20 per cent, and is expected to increase during the second half of the year, bankers feel the target may be further scaled down. “Credit growth picks up in the second quarter. But this year, the growth may not be as high as that seen last year,” said Bank of India Chief Financial Officer Ravi Kumar.

Indian Overseas Bank Chairman and Managing Director M Narendra said credit growth target for this financial year had been cut to 19 per cent from the earlier 22 per cent, in line with industry expectations. “Depending on how the credit growth picks up, we will take a call on whether or not to increase the base rate by 25 basis points. If credit growth rises, we would have to garner more deposits, and deposit rates would have to be increased. In this case, we will look at increasing the base rate,” he said.

Asset quality would be another factor that banks would consider, while raising the base rate. This is because growing non-performing assets (NPAs) have been a cause of concern. As chances of defaults rise with an increase in the lending rate, a rise in interest rates might lead to more NPAs.

“RBI wants these costs to be transmitted. But banks will not increase base rates immediately, as they need to take a call on an individual basis. Maintaining asset quality will play a crucial role in decision making,” said Bank of India’s Ravi Kumar.

Rising interest rates exert pressure on micro and small-scale loan portfolios, and restructured loans would be an area of concern, said SBI’s Krishna Kumar.

SOURCE: http://www.business-standard.com/india/news/lending-rates-to-rise-albeita-lag/449471/

PANEL TO LOOK INTO CAPITALISATION OF BANKS

The Union Government has set up a committee to assess the capital requirements of public sector banks to ensure that Tier-I capital is at 8 per cent, government holding is at 58 per cent stake and also prepare them for Basel III capital norms.

“That is sacrosanct,'' said Mr D. K. Mittal, Secretary (Financial Services), Ministry of Finance.

He was speaking to reporters after the meeting with representatives of Western States and bankers here on Saturday.

The Government has allocated Rs 6,500 crore in the 2011-12 Union Budget for capitalisation of six-seven public sector banks and will make additional allocation, if required, in the supplementary Budget in December, said Mr Mittal.

A new Chairman for LIC will be announced in about 10 days, Mr Mittal said. “The process for appointment of a new Chairman for LIC is on. The committee will announce the new Chairman shortly,'' he said.

Mr D. K. Mehrotra was appointed interim chairman of LIC in May, after Mr T S Vijayan was denied an extension when his term came to an end. Mr Mehrotra was appointed for three months or till further orders.

SOURCE: http://www.thehindubusinessline.com/industry-and-economy/banking/article2462629.ece

REPO RATE, REVERSE REPO RATE HIKED: NO IMMEDIATE PLANS BY HDFC, CANARA BANK & CENTRAL BANK OF INDIA TO PASS HIKE TO CONSUMERS

Though the Reserve Bank of India increased its policy lending rate for the 12th time in 18 months in its ongoing fight against inflation, most large lenders do not have immediate plans to toe the lines of the central bank in hiking their lending and deposit rates.

This is the first time in the past one year that top Indian lenders appear to be adopting a different stance and hold rates steady, despite the central bank's continued hawkishness.

Between July 2010 and August 2011, RBI raised repo rate by 250 basis points to 8%. During the same period, the State Bank of India, the country's largest lender, raised its base rate or the minimum lending rate by the same quantum to 10% from 7.50%.

"We do not see a possibility of rate hike based on this policy. But going forward, we cannot rule out another hike in rates. But, that probably will be the last hike," HDFC MD and CEO Keki Mistry told ET.

On Friday, RBI raised its key lending rate, or repo rate, by 25 basis points to 8.25%. The reverse repo rate, which is linked to the repo and 100 bps lower, is up at 7.25%.

"We do not think the banking sector will look at transmission of policy rates immediately. There is ample liquidity in the system, preventing banks from hiking deposit rates, and if we are not raising deposit rates, there is no justification to raise lending rates. Also, whatever little demand exists for loans will get affected if banks raise rates now," said Central Bank of India CMD MV Tanksale.

Canara Bank CMD S Raman said: "The trigger to raise lending rates will depend on accretion of deposits. Since credit growth has not been great, there is no pressure to raise rates. So, the rate hike may not be swift. I think we are almost at the peak."

SOURCE: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/repo-rate-reverse-repo-rate-hiked-no-immediate-plans-by-hdfc-canara-bank-central-bank-of-india-to-pass-hike-to-consumers/articleshow/10014009.cms