7 june 2003

hdfc bank, parent in home loan pact
mumbai: hdfc bank is all set to grab its share of the booming housing loan market. the bank will start selling the parent - hdfc's home loan product, by july-august this year. the loans sold will be through the joint effort of the two entities in which the private bank will help source the loans through its branches and direct sales force, while the credit assessment and processing will be handled by hdfc, the largest player in the home loan market, said a senior official in hdfc bank. "the asset will be present in the books of both the entities. if the bank sources say 100 loans, 60-70 per cent of it will be securitised into the bank's books, while the loan amount would be disbursed by the parent,'' said the official. the asset will be securitised as a `aaa' class asset into the books of the bank and npas if any will be the responsibility of the parent, hdfc.

no repo rate cut now, says rbi

mumbai: the reserve bank of india has said that no repo rate cut is expected immediately in the wake of the rate cut by the european central bank (ecb). "we do not expect to make a repo rate cut now for quite sometime, until the monsoon and inflation situation becomes clearer,'' said the rbi in a press release on friday. money market participants had been counting on a 25-50 basis points cut in the ready forward repo rate. the government securities prices fell by 15-20 paise as a knee jerk reaction to this statement. the repo rate currently pegged at five per cent is the overnight rate at which the rbi sucks out excessive funds from the government securities market.

uco bank to open 136 more atms

kolkata: uco bank proposes to open 136 atms at the cost of rs 10 lakh each during the current financial year, to bring the total number of atms to 150 by march 2004. v.p. shetty, chairman of uco, said all the atms would be interconnected. earlier on friday, he launched the diamond jubilee atm channel at the local india exchange branch providing for anytime banking access to the interconnected atms of the bank across the country. nine branches - two each in kolkata and delhi and one each in chennai , bangalore secunderabad , pondicherry and rourkela - have been brought under the inter-connected channel. a customer could register his request for retail loans using the bank's diamond or diamond plus atm card, shetty added.

birla sun life eyes rs 500 cr from premium
mumbai: birla sun life insurance has set itself a target of rs 500 crore for new premium collections thus year, up from rs 170 crore last year, according to the cfo and appointed actuary, peter j. akers. the insurer sold 75,000 policies last year. "we will increase our focus this year on corporates for the group life and superannuation plans,'' he said, adding that the insurer would double the number of life advisors to 10,000 this fiscal. "our focus is on unit-linked plans and we are communicating its benefits to potential customers," akers said. birla sun life individual life policies come with a guaranteed minimum return of three per cent over the life of the policy, akers said.

city union bank net up 17 pc
chennai: city union bank ltd has posted a net profit of rs 33.37 crore for the twelve months ended march 31, 2003, against rs 28.44 crore, registering a significant growth of 17.33 per cent over the corresponding period last year. the board has recommended a dividend of rs 4 per share (40 per cent) for 2002-2003 and "the recommendation of the same is subject to the approval of rbi". interest income improved by rs 21.37 crore to rs 233.51 crore from rs 212.14 crore earlier. other income amounted to rs 53.86 crore; interest expenses to rs 167.11 crore (rs 157.55 crore) and operating expenses to rs 39.93 crore (rs 37.55 crore). the bank has earmarked rs 46.95 crore towards other provisions and contingencies and provision for taxes as against rs 36.63 crore.

geojit to take part in mul bidding
kochi: geojit securities ltd will actively participate in the maruti udyog ltd's share bidding through its 12 centres in kerala and 17 centres outside the state. the application for the share bidding will be available in all 55 branches of geojit in kerala, a press release from the company has said. the union government is going to reduce their stake in maruti, the largest car manufacturer in india, by way of book building through nse and bse from july 12-19. through this process, the government expects to reduce its stake in the company from 45.8 per cent to 20.8 per cent. the government is slated to sell 7.22 crore shares with a face value of rs 5 each. the suzuki motor corporation of japan has signed an agreement to take over all the shares at a floor price of rs 115 each, if the minimum subscription cannot be fulfilled, the release added.

pay intermediaries well for better growth: irda chief
hyderabad: the chairman of insurance regulatory and development authority (irda), n. rangachary, has advised the insurers to adequately compensate the intermediaries to ensure the overall development of the industry. reacting to the submissions made by some of the insurance players on the poor quality of services being provided by the intermediaries, the irda chief said the regulator had taken note of complaints on insurance agents who were focussing more on new business as it yielded more commission and neglecting the service to old customers. rangachary was interacting with the chiefs of life insurance and non-life insurance companies and their representatives at the `round table on insurance sector' organised by the institute of chartered accountants of india (icai) here.

indian overseas bank plans to offer m&a advisory services
chennai: with a view to strengthening its merchant banking activities, indian overseas bank (iob) will offer advisory services for mergers and acquisition (m&a) proposals. to begin with, it will offer these services to its existing customers and then extend it to the market. "mergers and acquisitions (m&a) is one area which is yet to be addressed by the bank. iob has been active in the primary market. we have been acting as bankers and managers to public issues. also, we do underwriting and provide depository services. our idea is to offer the entire range of services under the merchant banking umbrella. so, the bank is planning to extend services to m&a proposals by the end of this year," said iob general manager al chandramouli. m&a proposals require different set of skills and the bank will soon train its staff to facilitate the process. "we will start training four employees in the bank by july-august for the purpose and by the end of this year we will be able to offer the services," he said.

pnb east up zone scouts for panel to speed up recoveries
lucknow: armed with the securitisation act, punjab national bank's (pnb) east up zone, which comprises 301 branches, is turning aggressive on recoveries to bring down the npa level and is on the lookout for a panel of agencies to execute the same. the panel will take physical possession of the assets of defaulters, suggest their just valuation and look after them on pnb's till their final disposal. the agencies chosen will be from national and zonal levels. zone general manager vk nagar said that an aggressive campaign had been launched for effecting these recoveries by building social pressure and already the npa level in the zone had declined to 3.6 per cent. however, some lacunas had remained and problems had erupted during the campaign. he said that pnb is trying to make foolproof efforts and exert pressure on defaulters to return loans but before that it would like to offer them one more chance for one time settlement. agencies will be asked to come out with packages from valuation to realisation and their selection done shortly.

sbi sees total circle profit at rs 5,315 crore
kolkata: state bank of india (sbi) is likely to report a total circle profit of rs 5,315 crore during the financial year ended march 31, 2003. an sbi official said that the five corporate account group (cag) branches, which come under the central office (cag central), are expected to report a total profit of around rs 402 crore. the forex profit is likely to be around rs 887 crore, he said. sbi is yet to calculate the figure of profit from its domestic treasury operations. sources said that it is also yet to finalise the provisions during the fiscal under review. "during the fiscal ended march 31, 2002, sbi made a total provision of rs 3,613 crore and we expect the same figure this year," they said. sbi will announce its financial results for the fiscal ended march 31, 2003, on june 19. sources said that among the 14 circles of sbi, the new delhi circle tops the charts with rs 866 crore, followed by the mumbai circle with rs 796 crore and chandigarh with rs 475 crore.

ing on the prowl again for acquisitions
bangalore: the ing group is looking for bank acquisitions after having consolidated its holding in vysya bank ltd. the managing director and chief executive officer of ing vysya bank ltd, bart hellemans, said: "we will look forward to expanding our presence in india through acquisitions." but he added that any acquisition would be considered only if the "price is right". further, he ruled out acquisitions of any of the public sector banks. or for that matter, even old private sector banks. "we are aware of the problems of turning them around after the vysya bank experience." however, banking sources said that the group has already done due diligence on some of the new private sector banks for the purpose of valuation. acquisition is expected to help ing vysya bank widen the asset book of the bank. at the same time, it would be backed by capital, eliminating the need for large capitalisation.

abn-amro says six banks shortlisted
new delhi: abn amro is looking at various options including acquiring a private bank or setting up a subsidiary to expand its operations in india. "we are looking at all possible options of acquiring majority stake in an indian bank or setting up a subsidiary," jan peter schmittmann, senior executive vice-president, abn amro bank nv, said after the launch of the bank's private banking operations in the capital. schmittmann said the bank would like to have 51 per cent stake and management control if it went for acquisition. "we have shortlisted at least six banks," he said. he also added that abn amro bank would look for banks that have the spread where the dutch foreign bank would like to foray into. technology and other factors would not come in the way, he added. "once we select the right target, it will take couple of weeks to integrate," he said. the bank's presence in india is crucial as "india is the fourth major `home market' for us after us, netherlands and brazil," schmittmann said.

fis reject spgl's plea for debt rejig

mumbai: financial institutions (fis) and banks led by industrial development bank of india (idbi) have turned down spectrum power generation ltd's (spgl) plea for restructuring and rescheduling its debt of rs 820 crore and cutting the interest rate to 10.5 per cent from 17-19 per cent. however, the idbi-led consortium has asked spgl to follow the supreme court (sc) order of may 8 with regard to issuance of preference shares of rs 200 crore to clear dues of fis and banks by june 30. it has also asked spgl to follow the sc order concerning creation of securities related to a series of project contracts covering engineering procurement and construction of the plant, operation and maintenance contract, power purchase agreement (ppa) and fuel supply agreement with gail india. fi sources told that they had asked the company, through a nominee director, to convene its board meeting by june 16 to discuss the issues and review the implementation of the sc order passed on may 8. "it will not be possible for the fis/banks to accept spgl's request with regard to postponement of issuance of preference share till the process of restructuring and rescheduling of debt and reduction in interest rate is carried out," a source added.

6 june 2003

banks to set their own lending targets for ssis
mumbai: banks will set individual lending targets to small scale industries (ssi) to boost growth in this sector. the target will be fixed keeping in view the outstanding credit to this sector, the previous year's achievement and overall trends in growth of net bank credit. this was decided at a review meeting on ssi credit, held at rbi's mumbai office on june 2. the meeting chaired by deputy governor vepa kamesam, was attended by the secretary and additional development commissioner of the ministry of ssis and top-level officials of major public sector banks, small industries development bank of india and the national bank for agricultural and rural development. at the meeting, it was proposed that banks should double their limits for composite loans. in order to meet the term loan and the working capital requirements of ssis, the bank officials present at the meeting were also agreeable to enhance, on merits, the limit for composite loan from rs 25 lakh to rs 50 lakh on usual terms. further, several banks felt that the procedure for creation of charge on fixed assets of ssi units should be considerably simplified, especially where such assets were already charged to state finance corporations/state industrial development centres.

om kotak mahindra premium collection jumps 400 per cent to rs 40 crore in 2002-03
kolkata: om kotak mahindra life insurance company limited, a joint venture between kotak mahindra and old mutual plc., said on thursday that it has registered more than four times growth in premium collection to rs 40.32 crore in 2002-03 as against rs 7.65 crore in the previous fiscal. it declared a return of 7.50 per cent as against eight per cent last year adjusting to the falling interest rate scenario. md shivaji dam, said 38 per cent of their total business came from gujarat and maharashtra.

idbi bank's new product group account by august

bhubaneswar: idbi bank, whose products are getting a good response from the market, is planning to introduce a slew of new products in the second half of the current fiscal. "the group account is being given finishing touches and will be ready for launch by august, 2003," bank regional head - east (retail banking) gautam gan, said. he said that under the scheme, a group of people would be able to operate through a single account. the marketing division in mumbai is designing several other products, he added. mr gan said that the bank would go in for an expansion programme sometime after september, this year. "we are looking at opening as many as 11 new branches in the eastern region. four of these would be located in orissa. cities like cuttack, sambalpur and berhampur are preferred locations for new branches. besides, a semi-urban branch either at paradip or angul, would be opened as part of the expansion programme," he added.

united bank net rises 256 per cent to rs 305 crore in 2002-03

new delhi: till recently dubbed as weak, kolkata-based united bank has clocked a staggering 256 per cent increase in its net profit during 2002-03. from just rs 19 crore in 2000-01, the post-tax profit went up to rs 119 crore the next year and stood at rs 305 crore at the end of march this year. said bank chairman and managing director madhukar: "the turnaround of a bank whose closure had been strongly recommended has been an all-round surprise, even for me." the revival has also been possible without any recapitalisation, public issue or by raising tier ii capital. he asserted that the bank, constituted when four private banks of west bengal "united" in 1950, made a total profit of rs 80 crore in 52 years. madhukar took charge in mid-2001, when the bank had shown a profit of only rs 19 crore for 2000-01. having managed to reconcile accounts in its 1,300 branches that had not been attended to for years, the bank released rs 1,200 crore of blocked capital. now the bank has effective capital reserves of rs 1,000 crore, from just rs 200 crore in july 2001. accumulated losses that stood at rs 1,600 crore have been nearly halved now.
capital adequacy ratio improved in 2002-03 to 15.17 per cent from 12.02 per cent the previous year. return on assets increased to 1.37 per cent from 0.54 per cent and return on equity to 32.89 per cent against 20.4 per cent, the previous year

sbi life posts 4-fold rise in premium income
mumbai: sbi life insurance company has recorded a jump of 391.6 per cent in premium income at rs 72.75 crore for the financial year ended march 31, as compared to rs 14.8 crore in the corresponding period of the previous year. r. krishnamurthy, managing director, sbi life, ascribed the growth to the large untapped potential for life insurance in the country. the company has settled 8 individual policy claims, which amounted to an outgo of rs 5.5 lakh and settled 200 claims on the group insurance segment, amounting to an outgo of rs 2.4 crore. total sum assured has crossed rs 4,000 crore and over 5 lakh lives have been covered. according to krishnamurthy, the company has cornered a 30 per cent share of the aggregate premium income of rs 35 crore that private players generated.

insurance cover for rickshaw pullers in ap
hyderabad: life insurance corporation of india (lic) has announced that the andhra pradesh government has remitted a premium of rs 2 crore to the insurance company for providing insurance coverage for two lakh rickshaw pullers across the state. the chief minister, n. chandrababu naidu, had recently announced free life insurance coverage for the welfare of rickshaw pullers in the state during the telugu desam party conference held at tirupati last month. according to lic, a group insurance for one year through its lic janashree bima yojana scheme would be implemented shortly. the benefits under the scheme include rs 20,000 sum assured for natural

dhanalakshmi bank net up 49 pc

kochi: the net profit of the thrissur-based dhanalakshmi bank has grown by 49 per cent to touch rs 15.02 crore for 2002-2003, up from the rs 10.07 crore recorded last year. the board of directors has recommended a dividend of 15 per cent. total income grew to rs 259.38 crore (rs 239.86 crore), while the total expenditure was rs 195.86 crore (rs 189.27 crore). reduction in the cost of deposits and growth in other income enabled the bank to sustain the growth in profits, an official statement from the bank said. operating profits touched rs 63.52 crore (rs 50.59 crore).

tata cos to merge auto finance biz
mumbai: two tata group companies, tata engineering and locomotive company ltd and tata finance ltd, are working on an `organisational merger' of their auto finance divisions in a bid to increase their market share in this business. as per the proposed plan, the bureau of hire purchase and credit (bhpc) of tata engineering and the asset finance division of tata finance ltd would be merged. the new entity would be christened as tata auto finance (taf), a tata engineering source said. when contacted, a tata engineering official said details of the merger were being worked out but "it will be only an organisational merger and not a legal merger.''

syndicate bank loans for dakshina kannada shgs
mangalore: syndicate bank, which has chalked out its targets for priority sector lending in the current fiscal, has decided to disburse a sum of rs 5 crore to around 900 women's self-help groups in the dakshina kannada district by the end of september.
according to a press release issued here, this is to make credit available to women's groups, the bank's regional manager, m.m. mallya, said. mallya was speaking after inaugurating a one-day workshop on credit to women's self-help groups organised by the mangalore regional office of syndicate bank and the department of women and child welfare at the bank's regional office here.

i-flex solution for brunei bank
bangalore: i-flex solutions, provider of technology solutions to the financial services industry, said on thursday that its flagship product, flexcube, had been selected by brunei's baiduri bank as its new core banking system. "flexcube will provide the technology platform for baiduri bank, thus enabling it to ramp up retail banking operations while consolidating its corporate banking functions. in addition to flexcube, baiduri bank will also implement the revenux crm and profitability analytics solution," said a company press release.

hsbc arm may exit debt broking
mumbai: hsbc securities & capital markets (india) pvt ltd, a wholly-owned subsidiary of hongkong and shanghai banking corporation ltd, is likely to discontinue its debt brokerage business. company officials said that thin margins and low volumes were responsible for the likely closure of this business. the company has intimated several of its clients, banks and primary dealers of this development. said naina lal kidwai, vice-chairman & managing director, hsbc securities & capital markets, onfirming the development, "we may not continue in debt brokerage since it is too small a business compared to the scale of our operations. there are low volumes and marginal profits in this area. therefore you will see no banks in this business and we are also considering an exit."

irda okays web-based training
hyderabad: the insurance regulatory and development authority (irda) has accorded approval to web-based training for insurance agents developed by the hyderabad-based c&k management ltd (ckml). disclosing this in a press release here, ckml said so far the irda approvals were given to the institutes providing offline or traditional classroom-based training. ckml said the classroom model was not sufficient to cover large numbers, especially in a scenario where each new insurance company would need at least 5,000 agents to be trained. the company claimed that its web-based model - www.themanagementor.com - offered a very cost-effective learning solution for the insurance companies.

5 june 2003