27 November 2004

AIBOC sets up independent commission on banking issues
Mumbai: The All-India Bank Officers' Confederation (AIBOC) has decided to set up an Independent Commission on Banking & Financial Policies with S.P. Shukla, former Finance Secretary, as the Chairman.

According to AIBOC, the commission will have experts from various fields who will address questions relevant to the banking sector. The questions posed to the committee are:

a) Was the nationalisation of banks in 1969-80 and the subsequent developments in the banking sector till 1991 in furtherance of the declared economic priorities of the country?

b) What were the failures, if any, of the banking system which impinged on the larger economic issues?

c) What will be the impact of the changes taking place in the banking industry now in relation to ownership, liberal branch licensing, free entry to Indian and foreign players, profits and the likely mergers on basic developmental issues?

d) Will mergers and amalgamations of banks serve the larger public interest?

e) Without sacrificing commercial interests what could be an alternative model of banking that can meet the fundamental developmental issues?

The latest move to give preference to foreign banks based in Singapore for acquiring a creeping stake in Indian private banks has caused disquiet amongst the unions and the question being posed by them is whether there are any guarantees that Indian banks would be allowed similar stakes in foreign banks in their own countries?

AIBEA: Debar defaulters from holding public positions
Hyderabad: The All-India Bank Employees Association (AIBEA) has demanded that the Government bring in legislation to debar bank loan defaulters from contesting or holding any public positions in State Assemblies and Parliament.

Apart from demanding the publishing of the list of defaulters, the unions have also called for stern action against them. AIBEA, the world's largest bank employees' union, with a membership of over five lakhs, has also asked the Government to further strengthen the Securitisation Act to provide for attachment of personal properties of the defaulters.

"If these steps are not taken up by the Government, we will once again revive a campaign on these issues and also launch countrywide agitation. The latest list of the bad loans will also be published shortly," association officials have said.

According to the officials, AIBEA is demanding that the Government take over all the 29 private banks in the country without giving scope for their acquisition by foreign banks. He opposed the Government's announcement to allow foreign banks to take over the private banks, which had total deposits of Rs.2.75 lakh crore. The Government's move will enable the foreign banks to easily acquire the Indian private banks with just Rs.2,800 crore of investment, the officials said.

AIBEA has also opposed the Government's move to merge the 27 public sector banks into a few strong and globally competitive entities. Stating that the public sector banks (PSBs) were having over Rs.13 lakh crore of deposits and meeting social commitments, association officials said the public savings should be left available for development and welfare activities of the people. Further, the merger of PSBs would result in the closing down of thousands of bank branches, and lakhs of bank employees would be retrenched.

The association has warned that if the Government and the bankers try to proceed with mergers unilaterally, the bank employees will express their protest through agitations and strikes, besides seeking political support.

Unions oppose merger of BoI and Union Bank
Mumbai: Bank unions have threatened to oppose the proposed merger of Union Bank of India with Bank of India. All India Bank Officers Confederation (AIBOC) officials have said that the union will go on strike immediately if the Government goes ahead with the proposal According to banking circles, the Finance Ministry has sent the merger proposal to the Reserve Bank of India for its view, which is expected to work out a scheme of merger. The unions are against mergers as it will result in loss of employment. In this case, both are large banks and have been running profitably, a union official said.

In general, it is estimated that consolidation of banks may result in surplus staff of nearly 25 to 30 per cent. In rural branches, mergers could result in the closure of 30 to 40 branches.

Besides opposing the merger, the union also has other demands, such as the immediate recruitment of 25,000 officers and discussions on service-related issues of officers.

The Finance Minister, P. Chidambaram, has been reiterating that consolidation alone will give banks in India the muscle, size and scale to become world-class banks. The Indian Banks' Association recently came out with a report on the banking industry, in which it suggested the "corporatisation" of public sector banks to simplify the process of consolidation.

The confederation has set up an independent committee on alternative banking and financial policies, under the chairmanship of a former Finance Secretary, Mr S.P. Shukla.

26 November 2004

Rupee forwards go into discount
Mumbai: Annualised forward premia fell sharply on Thursday following the continued slide of the US currency against the Indian rupee. The rupee breached the Rupee 45 levels but weakened slightly towards the close, at 45.0300/0350 against the US dollar, as against its previous close of 45.0650/0750.

Forwards Market: The premium for the first three months went into discount with the one-month annualised premium ending at - 0.07 per cent (1.09 per cent) and the two month premium closing at - 0.40 per cent (1.14 per cent). The six-month forward premium fell by 70 basis points from previous closing level to finish at 0.40 per cent. The twelve-month ended at 0.45 per cent (0.95 per cent).

G-Secs: The 11-year benchmark 7.38 per cent 2015 paper closed at Rs101.40 at a yield of 7.19 per cent. The 7.55 per cent 2010 paper closed at Rs102.88, lower by over 15 paise than previous closing levels.

Call Rates: In a range of 4.75-4.80 per cent.

CBLO Market: 180 trades worth Rs5668.15 crore were transacted in the rate range of 2.00-5.25 per cent.

Unions satisfied with new wage pact
Chennai: Officers will get an extra Rs3,000 per month on an average, clerks Rs2,000 and the subordinate staff Rs1,000 extra per month, as per the wage settlement signed between the Indian Banks Association and the bank unions.

Bank unions are happy with the wage settlement signed two days ago. The United Forum of Bank Unions said it was satisfied with the accord, with both parties coming down from their initial negotiating positions. While the IBA had begun by offering 8 per cent the unions in turn had started with 30 per cent two years ago, and then had come down to 20 per cent before settling at 13.5 per cent.

The agreement will be valid from November 2002 till October 2007. The earlier settlements (the 6th and 7th), each valid for a period of 5 years had given pay increases of 10.5 per cent and 12.25 per cent respectively.

SBH launches two schemes
Hyderabad: State Bank of Hyderabad has launched two schemes, namely the Grahak Mitra and Drop Box Migration.
While the Grahak Mitra would help customers to get personal attention to respond to basic enquiries and encourage migration to alternate channels at the branch. The Drop Box Migration will enhance customer satisfaction by providing hassle-free cheque tendering.

The Drop Box would have three separate compartments for outstation, local clearing and payable at the branch cheques and would be accessible round-the-clock, according to a SBH release.

BRR Leafin licence cancelled
Hyderabad: The RBI has announced that it has cancelled the certificate of registration granted to BRR Leafin Private Ltd, having its registered office at Lumbini Towers, Punjagutta here for carrying on the business of a non-banking financial institution.

Following cancellation of the registration certificate, BRR Leafin cannot transact the business of a non-banking financial institution, the RBI has said in a press release.

25 November 2004

Securities decline
Mumbai: The rupee closed at 45.0650/0750 against the dollar on Wednesday after a volatile trade. On Tuesday, the domestic currency had ended at same levels.

Forwards Market: The six-month annualised forward premia closed at 1.10 per cent (1.36 per cent) while the twelve-month annualised premia ended at 0.95 per cent (1.16 per cent).

G-Secs: ended lower with prices falling about 50 paise during the day. Yield on the 7.38 per cent 2015 paper closed lower at 7.18 per cent at Rs101.40. The 7.55 per cent 2010 paper closed about 10 paise lower than previous close at Rs103.15.

T-Bills auction: The cut-off yield was set at 5.28 per cent at the Rs500 crore 91-day Treasury bill auction while it was set at 5.67 per cent at the Rs1,000 crore 364-day Treasury bill auction, as these auctions received good response.

Call Rates: in the inter-bank market softened to 4.60 to 4.90 per cent as liquidity tightness softened.

CBLO Market: 172 trades worth Rs 6,570.20 crore were transacted in the rate range of 4.31-5.25 per cent.

India and Pakistan to establish banking relations
New Delhi: India and Pakistan have decided to establish banking relations and will set up bank branches in each other's country on a reciprocal basis.

Disclosing this, the Foreign Secretary, Shyam Saran, has said that the central bank of the two countries would take the follow-up action to give concrete shape to the decision.

The decision has come during a meeting of the Prime Minister, Dr Manmohan Singh, with his visiting Pakistan counterpart, Shaukat Aziz, here.

PSU insurance staff wage hike at 8.5 per cent
Bangalore: The wage hike in the public sector general insurance companies has been restricted to only 8.5 per cent in line with the recommendations of the consultants for restructuring the insurance sector.

The consultant, A F Ferguson,was appointed in May 2003 for chalking out a viable, future strategy for the insurance companies.

The low wage increase package, it would appear, was aimed at containing costs. The insurers were presently operating way above the statutorily prescribed management ratio of 19.5 per cent.

It would also appear that the unions have rejected the recommendation made by the consultants. The unions argued that it was considerably lower than what was offered to employees of the public sector banks Moreover, they pointed out that after taking into account the current inflation, this increase suggested by the consultant was barely at 2 per cent.

HCL Tech to make preferential offer to Deutsche Bank
New Delhi: HCL Technologies Ltd has said that its board of directors has decided to issue 1.93 crore equity shares to Deutsche Bank. The shares, which have a par value of Rs2 per share, will be issued at Rs361 each.

HCL's proposed issue is as per the terms of the company's joint venture agreement with Deutsche Bank in September 2001, when it acquired a 51 per cent stake in Deutsche Bank's Singapore-based unit DSI Financial Solutions Pte Ltd.

At that time, HCL had agreed to acquire Deutsche Bank's remaining 49 per cent stake in DSI Financial at the end of three years by issuing its shares to Deutsche Bank.

Following the completion of the preferential issue to Deutsche Bank, which is subject to regulatory approvals, DSI Financial and its software unit DSL Software Ltd will become units of HCL, said a company release.

The shares that HCL agreed to issue Deutsche Bank constitute around 6.1 per cent of its expanded share capital. The issue price is at a slight discount to HCL's closing price of Rs368 on the Bombay Stock Exchange on Wednesday.

Located in Bangalore, DSL has strengthened HCL's presence and expertise in the banking and financial services domain, said a press statement.

RBI Governor says call rates have settled down
Mumbai: The Reserve Bank Governor, Dr Y.V. Reddy, has said that the overnight call rates have 'settled' with the easing of pressures on liquidity in the domestic debt market.

Call rates, which settled at around 4.75 per cent levels today, were ruling at around 6 per cent levels until last week. In early November, overnight rates had touched a high of up to 6.50 per cent.

The Governor said that call rates seemed to have settled within a 'corridor' perhaps with better overall liquidity management and that the liquidity balance was where it should be.

Signature-based debit card from HDFC
Mumbai: HDFC Bank and MasterCard International have together launched a signature-based online debit card. The HDFC Bank MasterCard debit card, has been launched in addition to the PIN-based Maestro debit card, currently being offered in India.

The debit card, which can be used, for all electronic transactions at merchant establishments as well as ATMs will be provided to the customers opening savings and current accounts with the bank. HDFC Bank had a credit card base of around 300,000 at the beginning of this year.

24 November 2004

Rupee and securities weaken
Mumbai: The rupee ended at 45.0650/0750 against the dollar on Tuesday, weaker than its previous closing at 45.0350/0450.

Forwards Market: The six-month forward finished at 1.36 per cent (1.40 per cent), while the twelve-month forward ended at 1.16 per cent (1.15 per cent).

G-Secs: Selling pressure across the board led to a fall of 25 paise to 50 paise in bond prices.

Call Rates: At 4.75 per cent to 5 per cent levels.

CBLO market: 147 trades worth Rs5,717.55 crore were transacted in the rate range of 4-5.50 per cent.

Bank employees salaries to be hiked
Mumbai: The government has agreed to a 13.25 per cent hike in the salaries of bank employees, aggregating a payout of about Rs2,200 crore.

Indian Bank Association and United Forum of Banks Unions (UFBU) today signed a wage settlement accord in this regard.
The move will affect over 10 lakh employees, including officers of the nationalised banks.

The wage settlement would be valid for five years beginning November 2002. The bank unions had threatened to go on a strike during the winter session of Parliament over the wage issue.

Lord Krishna Bank to automate fully
Kochi: The Lord Krishna Bank plans to fully automate all its branches with modern technologies.

The bank, which had its beginnings in Kodungallur in Kerala and which is today spread across 11 States and Union Territories through 111 branches, celebrated its 64 years of existence on Monday.

The bank has played a vital role in the economic scenario of Kerala, having 69 of the 111 branches located in the state.

23 November 2004

Rupee firmer; gilts range-bound
Mumbai: The rupee closed marginally higher at 45.0350/0450 against the dollar as against its previous close of 45.08/10.

Forwards market: The six-month forward closed at 1.40 per cent (1.72 per cent) while the twelve-month at 1.15 per cent (1.41 per cent).

G-Secs: Prices were in a narrow range of 30 paise. The 11-year benchmark 7.38 per cent 2015 paper settled lower at Rs102.22. The yield on the paper closed higher at 7.07 per cent. The 7.55 per cent 2010 paper closed at Rs103.50.

Call Rates: eased off in a range of 5.50-5.75 per cent.

CBLO market: 146 trades aggregating Rs5,843.45 crore were transacted in the rate range of 5.30-5.75 per cent.

Floating Rate Bonds rate set at 5.37 per cent
Mumbai: The Reserve Bank of India set the rate of interest on the Floating Rate Bonds, 2006 (FRB, 2006) at 5.37 per cent per annum applicable for the half-year November 22, 2004 to May 21, 2005.

According to a RBI release, the variable base rate based on the average rate of the implicit yields at cut-off prices of the last six auctions of Government of India 364-day Treasury Bills worked out to be 5.42 per cent. The coupon rate on FRB was decided as per the mark-up of (-)0.05, as per the auction held on November 21, 2001. The coupon rate was accordingly worked out at 5.37 per cent.

Banks hike deposit rates
Mumbai: The Union Bank of India has decided to raise the rates on fixed rate loans by 50 basis points, while floating rates have been hiked by 25 basis points, with immediate effect.

The bank will also hike interest rates on domestic term deposits by around 25 basis points, effective December1, the bank has said.

The prime-lending rate has been left unchanged at 10.75 per cent.

The Bank of Bahrain and Kuwait BSC, a scheduled commercial bank, have also announced an upward revision in interest rates on deposits of less than Rupees one crore with effect from Monday.

In a press release, the bank said the rate for deposits of 15 days to 30 days was increased to 4.25 per cent from 3.75 per cent, 31 days to 45 days at 4.5 per cent (4 per cent), 46 days to 90 days at 4.5 per cent (4.25 per cent), 91 days to 180 days at 4.75 per cent (4.5 per cent), 181 days and up to one year at 5 per cent (4.75 per cent) and rate on deposits of above one year and up to five years at 5.25 per cent (4.75 per cent).

The South Indian Bank Ltd too has hiked the interest rate on domestic deposits for periods extending beyond 180 days by 50 basis points from November 22.

The bank has revised the rate from 5.25 per cent to 5.75 per cent for deposits with tenure of 180 days to less than one year and from 5.50 per cent to 6.00 per cent for deposits between one and three years. The hike is 25 basis points at 6.25 per cent for deposits beyond 3 years.

Capital Gains bond rates hiked by SIDBI
Mumbai: The Small Industries Development Bank of India (SIDBI) has revised interest rates on its capital gains bonds upwards by 25 and 35 basis points effective November 24.

The rate on investments of less than Rupees one crore will now be 5.25 per cent while investments of Rupees one crore and above will now attract an interest rate of 5.35 per cent.

SIDBI had earlier launched an on tap issue of capital gain bonds under section 54 EC of Income Tax Act, 1961 on private placement basis on July 15.

SBI Home Finance served show-cause notice by NHB
Mumbai: SBI Home Finance Ltd has been served a show-cause notice by National Housing Bank (NHB), New Delhi, which threatens to cancel the registration of the company in the light of the erosion in its net worth and the losses incurred over the past several years.

The notice, dated November 10, asks SBI Home Finance to explain why the certificate of registration issued to the company should not be cancelled under sub-section (6) of Section 29A of National Housing Bank Act, 1987 in light of disclosure in the Company's Annual Report for the year ended March 31, 2004 that its net worth stands totally eroded and the total liability exceeds its total assets.

The Net Owned Fund of the company was Rs230.35 crore (negative) and housing loan portfolio was nil as on March 31, 2004. The company's branches have been closed down and all the employees have been voluntarily separated.

The company has been incurring losses for past several years, mainly on account of high NPAs. The accumulated losses increased from Rs82.35 crore as on March 31, 2001 to Rs248.11 crore as on March 31, 2004.

In a notification to the BSE, SBI Home Finance Ltd said that the company would be responding to the show cause notice appropriately.

SBI staff to strike work on Dec.6 and 7
Thiruvananthapuram: More than two lakh staff and officers working at 9,000-odd branches of State Bank of India (SBI) across the country are gearing up for a two-day strike on December 6 and 7.

The strike, being jointly organised by All India State Bank of India Staff Federation and the Officers Federation, has been called in view of the management's cold response to the token strike on November 5, according to a statement from State Bank Staff Union here on Saturday.

The federations are also planning an indefinite strike from December 27 if the two-day strike fails to elicit a favourable response from the management to their various demands raised the last one year.

Andhra Bank to make second public offer
Hyderabad: The Andhra Bank has informed the stock exchanges that it intends to make a second public offer, subject to regulatory approvals. However, the bank said the size, price and timing of the issue would be communicated separately at the appropriate time.

The market views the primary objective of the issue as raising funds to meet the business expansion plans of the bank and to have a comfortable capital adequacy ratio even after the Basel II norms were enforced.

As at the end of last fiscal, the bank's capital to risk assets ratio (CRAR) stood at 13.71 per cent.

22 November 2004

Weekly Review
Bonds: Firmed up slightly last week as life insurers intervened in the markets which experienced nervous trading.

Forward Premia: Dropped to less than 2 per cent, for up to 12 months, last week.

Forex Reserves: For the last reporting week, forex reserves were $123.53 billion. The accretions came from revaluation of the reserves due to a depreciating dollar and rise in gold prices, and accretions from FIIs.

Besides with at least 20 per cent of the reserves in the form of other currencies, mainly the euro and pound sterling, the appreciation was substantial as the euro has advanced by at least 10 per cent against the dollar since April and now.

AIBOC opposes merger of Public Sector Banks
Hyderabad: The All Indian Bank Officers Confederation (AIBOC) is opposed to mergers of public sector banks.

AIBOC has said that the confederation would not allow the proposed merger of public sector banks and it will go all out to campaign against the move.

The AIBOC has accused the Indian Banks' Association (IBA) of adopting dual standards and for being casual in wage negotiations and warned of strike if no reasonable settlement was reached.