11 November 2004

Hindujas seek RBI nod to raise stake in IndusInd Bank
Kolkata: IndusInd Bank Ltd, one of the new generation private-sector banks in India, has sought the RBI's permission to increase its promoters stake to 40 per cent.

According to Bhaskar Ghose, MD and CEO, IndusInd Bank, the Foreign Investment Promotion Board has already granted its approval for the promoters stake to be raised from present 31.3 per cent to 40 per cent.

The bank has written-off around Rs1,500 crore during last five years and propses to write-off between Rs 100 and Rs150 crore this year to avail tax advantage and aggressively pursue realisation through securitisation and other measures. We will year as well.

IndusInd Bank has a network of 160 outlets, including 69 branches, 11 extension counters and 80 offsite ATMs besides representative offices in London and Dubai and proposes to open offices in the US and some South East Asian countries.

SBI reviewing interest rates: Purwar
New Delhi: In the face of hike in the repo rate, State Bank of India (SBI) is exploring the possibility of raising deposit and lending rates.

This was stated by A K Purwar, Chairman, SBI told reporters during a banking conference.

The revision of interest rates have emerged after the RBI increased repo rate by 0.25 per cent, which was announced at last month's credit policy, as part of its efforts to combat inflation.

Yes Bank's Rs200-crore CD programme gets A1+
New Delhi: Yes Bank Ltd's proposed Rs200 crore (Tranche II) 'certificate of deposit' programme has been assigned the highest safety 'A1+' rating by credit rating agency, ICRA.

The rating factored the profile of the bank's shareholders, its adequate capitalisation, and ICRA's expectation that the shareholders would be able to support the capital requirements of the bank in the medium term, the rating agency said in a release.

10 November 2004

Bank of India increases deposit rates
Mumbai: Public sector bank, Bank of India has hiked interest rates on domestic rupee deposits by 25-50 basis points on certain maturities.

This is the first among public sector banks to have done so. These new rates come into effect from November 10.

The bank has hiked rates in most of shorter tenor deposits by 50 basis points, while in case of longer tenor the hike is to the effect of 25 basis points.

For maturity periods ranging from 7-14 days the interest rates on a minimum deposit of Rs1 lakh is 3.50 per cent. The interest rate for maturity period of 15 days to 45 days is 4.50 per cent; for 46 days to 364 days - 5 per cent; 1 year to less than 2 years - 5.25 per cent; two years to less than 3 years - 5.25 per cent; 3 years to less than 5 years - 5.50 per cent and 5 years and above - 5.75 per cent.

Government considers setting pension funds' floor capital at Rs 50 crore
New Delhi: The interim Pension Fund Regulatory and Development Authority (PFDRA), is considering setting Rs50 crore as the floor limit for pension fund managers, said senior finance ministry officials.

The interim PFRDA in its discussion paper has proposed Rs50 crore as the minimum paid-up capital requirement for PFMs. This would be in between the Rs10-crore minimum capital proposed for mutual funds and Rs100 crore for insurance companies, officials said.

IRDA tries to create level playing field
Hyderabad: For the first time ever the Insurance Regulatory and Development Authority (IRDA) will turn down the sovereign guarantee offer made by the centre to help meet the required solvency margin of the Life Insurance Corporation of India (LIC).

Rao said the rejecting the assurance of the central government was because of the need to create a level playing field in the life insurance segment.

However, IRDA is willing to grant LIC more time to meet the 150 per cent solvency margin, said Rao.

The move may mean that policyholders may have to be content with a lower level of payouts in days ahead.

The solvency margin is calculated by adding up 4 per cent of the reserve (that is the liabilities the insurance company may face) and 0.3 per cent of the amount at risk.

Banks may be exempt from agent norms
Mumbai: The Insurance Regulatory Authority of India (IRDA) may exempt banks from having to adhere to its draft guidelines regarding corporate agents and to place proper checks on the industry.

According to IRDA, insurance companies do not have proper control over corporate agents due to which some of them have issued policies they are not eligible to. The insured are thus getting confused between the insurer and the intermediary, and do not know whom to turn to. Effective disclosure of terms and conditions are also lacking.

IRDA said there will be relaxations with regard to banks as compared to other corporate agents, as banks cannot get elusive. They have huge staff, who are also more responsible.

Limit on foreign banks' local acquisitions to be eased
New Delhi: The government is considering doing away with the proposed 10-per cent-per year limit for acquiring a stake in Indian banks by foreign banks.

Finance minister P Chidambaram's proposal last month that the government was considering a proposal to allow foreign banks to acquire 10 per cent stake in local private banks a year has attracted criticism on the grounds that a pre-determined 10 per cent acquisition limit every year will cause unhealthy speculation in the market.

The government is proposing further flexibility to foreign banks to take over domestic private banks, by relaxing the proposed 10 per cent annual limit on acquiring the shares of the latter.

09 November 2004

HDFC to hike housing loan rates
Mumbai: Signalling the end of good times for consumers a number of institutions led by HDFC are hiking their home loans rates.

Deepak Parekh HDFC's chairman has announced that HDFC (Housing Development Finance Corporation) will hike interest rates on its home loans after Diwali by 50 basis points. Explaining the rationale behind the move, Parekh said that inflation was higher and bond prices had gone up by 200 basis points during the past few months. Besides, interest rates were being hiked worldwide, too.

Other banks and financial institutions are expected to follow suit and are likely to convene their asset liability committee meetings shortly.

According to V Vaidyanathan, senior general manager and head (Retail Products), ICICI Bank, "We are also thinking about reviewing our home loan rates. But we haven't decided to what extent we may want to raise it."

However, State Bank of India, the country's biggest commercial lender, may not raise home loan rates in the immediate future. A K Purwar, chairman, SBI conceding that there was upward pressure on interest rates said, the bank was examining various issues. SBI has, however, decided to increase its short-term deposit rates.

Planning Commission supports consolidation among banks
New Delhi: The Planning Commission has supported the consolidation process in the banking sector and has recommended to prime mininster Manmohan Singh, that having five or six public sector banks (PSBs) is better than the 27 PSBs at present.

Finance minister P Chidambaram had already said that there would be major consolidation in the banking sector in the next few years.

To mark a beginning, Union Bank and Bank of India have already decided to merge.

To make the Indian banking industry globally competitive, the government wants to merge one strong bank with another, instead of merging a weak bank with a strong bank.

IDBI net drops 6 percent in Sept qtr
Mumbai: Industrial Development Bank of India (IDBI) recorded a 6.25 per cent drop in net profit in the July-September 2004 quarter to Rs117 crore from Rs125 crore in the corresponding quarter a year ago.

The decline in net profit was because of a 11.10 per cent fall in income to Rs1,529 crore during the quarter from Rs1,720 crore.

IDBI, which converted itself into a bank under the Companies Act from with effect from October 1, reported a net profit of Rs465 crore for the extended 18-month accounting period ended September 30, 2004, on Rs9,704 crore of income from operations.