New Delhi: The National Democratic Alliance (NDA) government on Monday scrapped the selection of six chiefs of public sector banks, recommended under the United Progressive Alliance (UPA) regime, following a high-level panel finding irregularities in the process followed. The probe into selections for banks such as Bank of Baroda and Canara Bank followed the arrest of tainted Syndicate Bank Chairman and Managing Director (CMD) S K Jain for alleged graft. Earlier, the government had constituted a committee comprising Raghuram Rajan, governor of the Reserve Bank of India (RBI); expenditure secretary Ratan Watal; and the secretary for school education and literacy in this regard. “After the receipt of the report of the committee, the government decided to cancel the current selection process of CMDs and EDs (executive directors) of public sector banks. As a result, eight CMD posts and 14 posts of EDs will have to be filled up de novo,” said a statement by the finance ministry. During the UPA regime, a panel headed by the RBI governor and including the financial services secretary had shortlisted CMDs for Bank of Baroda, Canara Bank, Indian Overseas Bank, Oriental Bank of Commerce, United Bank and Vijaya Bank. http://www.business-standard.com/article/finance/centre-cancels-selection-of-6-govt-bank-chiefs-by-upa-114102800042_1.html
FINMIN PANEL TO SELECT CHIEFS OF PSU BANKS
New Delhi: All new appointments of public sector banks’ Chairmen will now be based on the recommendations given by a committee set up by the Finance Ministry. A statement issued by the Finance Ministry on Monday said the Government had cancelled the current selection process for appointment of Chairman and Managing Director (CMD) and Executive Directors in public sector banks. “Eight posts of CMDs and 14 posts of EDs would require to be filled-up ‘de novo’,” a statement issued by the Ministry said. http://www.thehindubusinessline.com/todays-paper/finmin-panel-to-select-chiefs-of-psu-banks/article6539454.ece
NO CHANGE IN CENTRE’S STAND, SAYS JAITLEY
New Delhi: Refuting allegations of a ‘u-turn’ by the Centre in revealing some names the black money case, Finance Minister Arun Jaitley said: “We will disclose names of only those against whom we have prosecutable evidence.” He was speaking on Monday after the Government filed an additional affidavit disclosing eight names against whom prosecution has been initiated. Jaitley reiterated that the Government will make public the names of only those account holders against whom charges have been filed in a court. This is in line with the stand taken by the Centre on October 17. The stated position of the Government has been that that every account in any foreign bank cannot be termed ‘illegal’. On October 17, Jaitley had said the Centre would go by the law, as “we are bound by treaties”. Last week, the Centre had asked the court to clarify if the right to privacy is an integral part of right of life, and hence could information received under a tax treaty be disclosed. http://www.thehindubusinessline.com/todays-paper/no-change-in-centres-stand-says-jaitley/article6539394.ece
UCO BANK IDENTIFIES KINGFISHER AIRLINES AS WILFUL DEFAULTER
Kolkata: UCO Bank has joined the growing list of lenders to have identified grounded Kingfisher Airlines as a wilful defaulter for non-payment of dues. However, the bank is yet to formally declare the company a wilful defaulter. “We have identified Kingfisher Airlines and its corporate guarantors as wilful defaulters. We are in the process of sending them a notice,” a senior executive of the bank told Business Standard, requesting anonymity. The state-run bank has lent over Rs 300 crore to Kingfisher Airlines. The airline has borrowed about Rs 6,500 crore from a consortium of 17 banks. According to the Reserve Bank of India (RBI)’s guidelines, a wilful default is an entity that has the capacity to repay its dues but chooses not to do so, or uses the borrowed money for purposes other than those for which a loan was availed of. Typically, banks have an internal committee, which examines cases of wilful defaults. The credit monitoring or recovery departments submit their reports on borrowers deemed to have defaulted willfully to this committee. The panel examines the efforts made by the bank to recover the dues, the repayment capacity of the borrower, end use of the funds before identifying an individual as a wilful defaulter. http://www.business-standard.com/article/companies/uco-bank-identifies-kingfisher-airlines-as-willful-defaulter-114102700480_1.html
SBM NET ZOOMS ON HIGHER INCOME, LOWER PROVISIONS IN SECOND QUARTER
Bangalore: The State Bank of Mysore reported a 240 per cent rise in net profit in the July-September quarter on higher interest income, lower provisions and better recovery from written-off accounts. The bank reported a net profit of Rs. 102 crore for the quarter against Rs. 30 crore in the corresponding year-ago quarter. Operating profit grew 28 per cent to Rs. 347 crore. Net interest income grew by a tenth, while other income was up 26 per cent. Total income rose to Rs. 1,900 crore from Rs. 1,687 crore in the year-ago period. Sharad Sharma, Managing Director, SBM, attributed the bank’s quarterly performance to better recoveries, lower provisions and growth in net interest income. The bank made a provision of Rs. 162 crore for non-performing assets (NPAs) against Rs. 229 crore in the corresponding previous-year quarter. Its net NPAs declined by Rs. 232 crore to Rs. 1,424 crore. The net NPA ratios stood at 2.94 per cent (3.69 per cent). Also, the gross NPA ratio was down at 5.07 per cent, as against 6.56 per cent in the December quarter last year. The bank saw its retail advances grow 20 per cent, while the credit offtake from corporates was rather muted at one per cent. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/sbm-net-zooms-on-higher-income-lower-provisions-in-second-quarter/article6539386.ece
ONGOING SELECTION PROCESS FOR PUBLIC SECTOR BANK CMDS, EDS SCRAPPED
New Delhi: Public sector banks such as Bank of Baroda, Canara Bank and Oriental Bank of Commerce may have to wait longer to get a Chairman, as the selection process will have to stat afresh. Based on suggestions given by a committee, the Government has cancelled the current selection process. A statement issued by the Finance Ministry on Monday said the Government had cancelled the current selection process for appointment of Chairmen and Managing Directors (CMD) and Executive Directors in public sector banks. “Eight posts of CMDs and 14 posts of EDs would require to be filled-up ‘de novo’,” a statement issued by the Ministry said. Apart from these banks, the post of CMD is vacant in Indian Overseas Bank, Syndicate Bank and United Bank of India. The Government has decided that a fresh process for selection would have to be implemented for filling up the existing vacancies. The Reserve Bank of India Governor or his nominee in the rank of Deputy Governor will be part of the new selection process. “The Government would fill up all these vacancies expeditiously. The Government has also decided to finalise a new process for selection of CMDs/EDs for all future vacancies,” it said. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/ongoing-selection-process-for-public-sector-bank-cmds-eds-scrapped/article6539385.ece
AT AXIS BANK, TN WILL BE A KEY DESTINATION FOR LENDING TO SMALL AND MEDIUM UNITS
Coimbatore: Axis Bank expects Tamil Nadu to be a key destination for SME (small and medium enterprise) lending over the next three years. Aiming to be a partner in progress for SMEs in the region, the bank is now proposing to roll out specially structured products for faster credit delivery, strengthen its network and focus on supply chain finance, said G Edwin, Geography Head – South, SME Banking, Axis Bank. “We’ve grown our SME portfolio in the region to Rs. 5,800 crore. Quicker turnaround for credit, decentralised decision-making, effective relationship management and a wide range of financial products and services are helping the bank emerge as a one-stop shop for all SME solutions,” Edwin told newspersons here. He was in the city to introduce the bank’s new initiative ‘Evolve’, which is seen as a growth driver for SMBs (small and medium businesses). “We think we can be of assistance to SMBs in non-financial areas as well,” he said. On the time taken to process loan applications from MSMEs (micro, small and medium enterprises), he said: “We revert within a maximum period of three days if the papers are in order, indicating the status of the proposal to the applicant. Thereafter, depending on the quantum of the loan sought, the sanction will vary between 10 days and a fortnight.” Not only has the bank acquired a number of new customers, but also increased its SME lending portfolio in the region significantly, Edwin said, and pointed out that a third of the bank’s SME loan exposure is from the South. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/at-axis-bank-tn-will-be-a-key-destination-for-lending-to-small-and-medium-units/article6539379.ece
INDIA’S GDP LIKELY TO GROW BY 5.6% IN FY15: WORLD BANK
New Delhi: India’s gross domestic product (GDP) is likely to expand by 5.6 per cent this financial year as reforms gain momentum. The growth is expected to accelerate as proposed measures such as the goods and services tax (GST) will give a boost to manufacturing, a World Bank report said on Monday. In the following years, GDP growth is likely to rise further to 6.4 per cent and 7 per cent in FY16 and FY17 respectively, it said. “India’s economic growth is expected to rise to 5.6 per cent in FY15, followed by further acceleration to 6.4 per cent and 7 per cent in FY 2016 and FY 2017,” said the World Bank report. India’s growth is likely to accelerate towards its high long-run potential and implementation of GST as well as dismantling of inter-state check posts can significantly improve the global competitiveness of Indian manufacturing firms. “Implementing the GST will transform India into a common market, eliminate inefficient tax cascading, and go a long way in boosting the manufacturing sector. The transformational impact of reform, particularly if enhanced by a systematic dismantling of inter-state check posts, can dramatically boost competitiveness and help offset both domestic and external risks to the outlook,” said Denis Medvedev, Senior Country Economist, World Bank, India. The incumbent government is positive on reforms and this is good, said Onno Ruhl, World Bank Country Director in India. “With economic reforms gaining momentum, long-term prospects for growth remain bright for India. To realise its full potential, India needs to continue making progress on its domestic reforms agenda and encourage investments. http://www.business-standard.com/article/pti-stories/india-s-gdp-likely-to-grow-by-5-6-pc-in-fy15-says-world-bank-114102700820_1.html
DBS BANK, BOI LOOK TO SELL RS 994-CR EXPOSURE IN TECPRO
Mumbai: Singapore-based DBS Bank and Bank of India have put their combined R994-crore exposure in Tecpro Systems up for sale to asset reconstruction companies (ARCs), sources told FE. While DBS’ R591-crore exposure was offered to ARCs last month, Bank of India (BoI) has been scouting for a buyer for its R403-crore loan much before that. A BoI executive who did not wish to be named said the deal is likely to be struck soon as the account is being restructured as per the decision of the corporate debt-restructuring (CDR) cell. Last month, a consortium of eight banks led by the State Bank of India (SBI) approved the restructuring of Tecpro’s debt with a package of R4,930 crore. However, ARCs are reluctant to buy the asset since the collateral is inadequate, a senior official at an ARC said. New Delhi-based Tecpro, which began operations as a manufacturer of conveyors and components in 2002, has now diversified as an EPC solutions provider for the solar power sector after it acquired EverSun Energy in 2012. The firm is headed by Ajay Kumar Bishnoi as its chairman and Amul Gabrani as its vice-chairman. http://www.financialexpress.com/news/dbs-bank-boi-look-to-sell-rs-994cr-exposure-in-tecpro/1302501
HEALTH INSURANCE OR A HEADACHE?
Mumbai: Ravi Subramanian, 63, was admitted to a Kolkata-based hospital for detection of pneumonia, since he had shown several symptoms of the lung condition. The hospital had made it clear that they would take two days to conduct almost 20 tests, to confirm if he was indeed suffering from the condition, with costs going up to Rs 35,000. Ravi had a health insurance policy. However, he did not realise that it did not cover pre-hospitalisation expenses. After much ado, his main claim was paid but the pre-hospitalisation costs were shared between the insurer and him. His policy had covered him for critical illnesses but did not mention anything about other costs. Health insurance has become a necessity due to double-digit medical inflation. However, while there are 26 general insurance companies, including five standalone health insurers, apart from life insurers offering products, customer grievances are high. The grouses include delay in payment of claims, rejection of claims and partial payments. Third-party administrators (TPAs), required to assist general insurers in processing health claims, have also been found delaying the process in some cases. Says consumer rights activist Jehangir Gai, “There has been a steady rise in consumer grievances with respect to health insurance claims. http://www.business-standard.com/article/finance/health-insurance-or-headache-114102700787_1.html
IDBI FEDERAL LIFE TO STEP UP FOCUS ON GROUP INSURANCE, ONLINE PRODUCTS
Hyderabad: IDBI Federal Life Insurance Company is entering the group insurance space and also planning to file for an online product soon, according to its Chief Executive Officer and whole-time director, Vighnesh Shahane. “We want to be a multi-channel company and these are areas which are growing in the industry,” Shahane told Business Line. The company, a joint venture between IDBI Bank, Federal Bank and European insurance major Ageas, is also building up a team for promoting its group insurance products. IDBI Federal Life now has an over 11,000-strong agency, besides a direct sales force of 250. On the positive sentiment in the industry , the CEO said: “This is driven by a positive regulatory regime at the moment, the buzz about increase in foreign direct investment limit to 49 per cent and a stable political situation.” The life insurance industry might register single-digit growth in the current financial year, he added. However, Shahane also sees challenges for the industry in the form of trust deficit and sustaining cost-rationalisation ratios. The unit-linked insurance plans (ULIPs), which witnessed a steep fall after the regulator had brought in new norms, including cap on commission for agents in 2010, are also staging a comeback. “We can’t exactly quantify this at the moment but there is greater awareness on ULIPs now than earlier among the customers,” he added. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/idbi-federal-life-to-step-up-focus-on-group-insurance-online-products/article6539378.ece
TRAVEL INSURANCE RATES MAY REMAIN STABLE THIS YEAR AS RUPEE VOLATILITY EASES
Mumbai: Travellers will not feel the pinch of rising travel insurance premiums this year, thanks to the stability of the rupee, which has ensured that insurers maintain the current rates. The claims for outbound travel insurance are paid out by general insurance companies in foreign currency, while they usually collect the premium in rupees. A senior official of a public sector general insurance company said that since the rupee has stabilised at 60-61 to the dollar over the last six months, general insurers would be able to maintain the current premium rates. Last year, faced with volatile rupee movements, general insurers had asked the Insurance Regulatory and Development Authority to link travel insurance to the exchange rate fluctuation in the currency. According to a recent study by ICICI Lombard, despite an increase in the number of Indians travelling for leisure and business in the international and domestic circuits, purchase of travel insurance, especially for trips to Asian countries and in the domestic sector, remains very low. The survey results showed that while taking leisure trips, Indians purchase insurance more for overseas travel (38 per cent) than domestic travel (4 per cent). http://www.thehindubusinessline.com/todays-paper/tp-money-banking/travel-insurance-rates-may-remain-stable-this-year-as-rupee-volatility-eases/article6539382.ece
KKR INDIA FINANCE TO TAP DEBT MARKET TO RAISE FUNDS
Mumbai: KKR India Financial Services Pvt Ltd, lending arm of global private equity fund KKR, is reworking its fund raising strategy. It plans to raise up to Rs 500 crore through non- convertible debentures to fund the credit business. Rating agency CRISIL has assigned an ‘AA stable’ rating to the offering. KKR India Finance commenced operations in 2009. It focuses on wholesale lending, including promoter financing and mezzanine and acquisition financing. It has comfortable capitalisation, with a net worth of Rs 1,250 crore as on September 30 and no debt. The parent holds 49.8 per cent stake. The company’s capitalisation has been supported by regular capital infusions over the past five years. The most recent was in June, from partner investors in KKR’s fund, as the second tranche of funding estimated at $100 million. The first tranche came in August 2013. The company has a conservative leverage philosophy, with gearing unlikely to exceed 2.5 times over the medium term. Steady accruals to net worth support its capitalisation. The comfortable capitalisation cushions the company against asset quality challenges inherent in the business, said CRISIL. The rating is underpinned by KKR India Finance’s strong linkages with KKR, and the ultimate parent’s management control, plus the shared brand name. http://www.business-standard.com/article/companies/kkr-india-finance-to-tap-debt-market-to-raise-funds-114102700778_1.html
UDAY KOTAK: NOW, WAIT FOR THE NEXT BIG THING
The Indian financial sector has undergone a metamorphic shift over the past four decades. Encapsulating this journey awakens several nostalgic events of my own life – a cricket ball that hit me, an academic year lost, lessons learnt at our family business and a frank chat with my father to make a pivotal choice between a job with a multinational or a leap into entrepreneurship. Soon enough, I was on a path that traversed a 300-square-foot workspace to a head office in the heart of India’s financial hub, the Bandra-Kurla Complex, better known as BKC. Looking back, the transformation of banking from a purely social project to a more sustainable socio-commercial business dramatically unlocked India’s economic potential. However, in the earlier socialist era, profitability and governance were relegated to the immediacy of providing institutional credit, leading to structural inconsistencies. Administered rates and operational inflexibility choked the competitiveness of banks. One such gap sparked what I saw as an opportunity: bill discounting! In the early eighties, banks lent to companies at 17 per cent and paid six per cent to depositors, a surreal 11 per cent spread. http://www.business-standard.com/article/companies/bs-40-now-wait-for-the-next-big-thing-114102701284_1.html
PLAN TO BRING DOWN NET NPAS TO 3% IN NEXT THREE YEARS: IFCI CEO
Ahmedabad: Government-owned lender Industrial Finance Corporation of India (IFCI) Limited on Monday said that it has submitted an action plan to banking regulator Reserve Bank of India (RBI) to gradually reduce its net non performing assets (NPAs). The company plans to bring down its net NPAs to 3 per cent in the next three years. IFCI’s net NPAs grew from 1.92 per cent in FY’ 2012 to 11.39 per cent in FY’ 2014. In value terms, net NPAs stood at Rs 1,700 crore in the last financial year. Malay Mukherjee, Chief Executive Officer (CEO) and Managing Director (MD), IFCI Ltd, said, “We have submitted an action plant to RBI to gradually reduce our NPAs. We hope to bring it down to 3 per cent in the next three years.” Mukherjee added, “Selling of NPAs is in the process. We have transferred some of the NPAs to asset reconstruction companies (ARCs) and close to Rs 200 crore has come out of that process.” He said this on the sidelines of a conference organised here. IFCI Limited has received an overwhelming response to the opening of public issue non-convertible debentures (NCDs) to raise up to Rs 2,000 crore, Mukherjee said, adding that it has raised Rs 190 crore in just two days. “The initial response to the opening of public issue NCDs to raise up to Rs 2,000 crore has been overwhelming. We have raised Rs 190 crore within two days and are mainly reaching out to retail investors,” said Mukherjee. The NCDs were opened to public issue on October 20 and would be available for subscription till November 21. It will be offered for three different tenures of five years, seven years and ten years with varying coupon rates ranging from 9.4 per cent to 9.10 per cent. http://www.business-standard.com/article/finance/plan-to-bring-down-net-npas-to-3-in-next-three-years-ifci-ceo-114102700520_1.html
INDIABULLS HOUSING FINANCE Q2 NET PROFIT RISES 21%
Mumbai: India bulls Housing Finance posted a 21 per cent increase in its second quarter consolidated net profit, aided by strong demand for individual home loans. In the July-September quarter, the housing finance company (HFC) posted a net profit of Rs. 448 crore against Rs. 369 crore a year ago. “Retail assets, which constitute over two-thirds of our loan book, grew at 24 per cent over the previous year,” said Ashwini Kumar Hooda, Deputy Managing Director, Indiabulls Housing Finance. Bulk of the demand for new homes and, therefore, home loans is coming from people buying homes in the Rs. 40-50 lakh category, Hooda added. Typically, homes in this price range are available in the outskirts of metros. Chennai, Pune and Bangalore were the three markets which did well in the second quarter compared to cities such as Mumbai and Delhi. Total revenue for the company increased 16 per cent to Rs. 1,706 crore. As on September 30, the Mumbai-based HFC had total outstanding loans of Rs. 45,027 crore ( Rs. 38,140 crore a year ago). The average loan size of the company is Rs. 24 lakh. Hooda said that traction in the retail segment is likely to aid the company’s plan to grow at 20-25 per cent in the third and fourth quarters. Shares of the company were down 2.63 per cent, at Rs. 398.35 apiece, on the BSE on Monday. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/indiabulls-housing-finance-q2-net-profit-rises-21/article6539383.ece
SEBI IMPOSES RS 4.5 LAKH FINE ON RAJLAXMI INDUSTRIES
MUMBAI: Market regulator Sebi today slapped a fine of Rs 4.5 lakh on Rajlaxmi Industries Limited for not making shareholding disclosures within the stipulated timeline. The Securities and Exchange Board of India (Sebi), in its order, imposed the penalty on the company for not complying with the provisions of ‘Takeover Regulations’. According to Sebi, Rajlaxmi Industries “had not made the disclosure to the exchange within the stipulated time for a total of five occasions during the years 2001, 2002, 2004, 2006 and 2007 under Regulation 8(3) of the Takeover Regulations and once in 2001 under Regulation 7(3) of the Takeover Regulations.” Under Sebi norms, Rajlaxmi Industries was required to make yearly disclosure, with respect to change in shareholding of promoters or persons having control over the company, within 30 days from the financial year ending March 31, to the stock exchanges. Also, the company failed to make disclosures to bourses within seven days with respect to the aggregate number of shares held by each who had acquired shares. http://economictimes.indiatimes.com/markets/stocks/news/sebi-imposes-rs-4-5-lakh-fine-on-rajlaxmi-industries/articleshow/44949417.cms?prtpage=1
5 QUESTIONS YOU SHOULD ASK A MUTUAL FUND SELLER
Mumbai: With mutual funds beginning to see increased inflows, retail investors are aggressively coming back into the market. Many need to be careful, as a distributor or bank can easily show last year’s performance and push a product. Since, most schemes would have done well in the past one year due to the sharp uptick in the stock market, it would be a wrong parameter. Also, many might push new fund offers (NFOs), which give them big income. Says Dhirendra Kumar, chief executive officer, Value Research: “The first thing to see is that whether the distributor enquires about your risk profile and whether you want a growth or dividend option. If not, he can sell you anything.” In fact, he goes ahead and says an investor should ask the seller about the downside rather than the upside of the product. For a mid-cap or small-cap scrip, the downside can be as high as 50-60 per cent or even more, whereas for a balanced fund (debt plus equity), it would be 10-20 per cent. “This would give you an idea of the risk being taken,” he adds. There are a few basic questions you should always ask. Read on. One, what is the pedigree of the fund house? If you are being sold an NFO, it is an especially important question. Ask about the fund house’s other schemes and how these have performed over time. http://www.business-standard.com/article/pf/five-questions-to-ask-the-mf-seller-114102700737_1.html
