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STAKE DILUTION IN GOVT BANKS TO START IN NOVEMBER: SANDHU

fsNew Delhi: The government is likely to start selling its stake in public sector banks (PSBs) in November. It is also expected State Bank of India (SBI), India’s largest lender, will tap the markets this year. Financial Services Secretary G S Sandhu on Thursday said the government would seek a Cabinet nod for stake dilution in PSBs, adding the sale would be in tranches, based on banks’ requirement of funds. “It will be a combination of follow-on public offer (FPO) and, in some cases, it will be through qualified institutional placement. It may start around Diwali, most likely November,” he told reporters after a meeting with the heads of PSBs and other financial institutions. Asked whether large banks such as SBI and Punjab National Bank (PNB) would opt for fund-raising through public offers this financial year, he said this was a possibility, as these entities needed funds this year. He added banks that needed funds the most would tap the market first. The Centre holds 58.60 per cent stake in SBI and 58.87 per cent in PNB. Its shareholding in other PSBs varies between 56.26 per cent and 88.63 per cent. As banks have to meet Basel-III norms by 2018, it is estimated they will need Rs 2.4 lakh crore by then. The finance ministry has said the Rs 11,200-crore Budget allocation for recapitalisation of PSBs will not be enhanced. http://www.business-standard.com/article/finance/stake-dilution-in-govt-banks-to-start-in-nov-sandhu-114073101441_1.html

 

 

RESERVE BANK LIKELY TO FOCUS ON LIQUIDITY MANAGEMENT

 

Mumbai: Due to volatility in overnight rates, the Reserve Bank of India (RBI)’s focus could be on liquidity management in its third bi-monthly monetary policy review, to be detailed on Tuesday. In the previous review, too, RBI had taken steps towards liquidity management. RBI had earlier said it wanted call rates to hug the repo rate (at which it lends to banks), which is at eight per cent. Of late, rates have even hovered near nine per cent. Moses Harding, group chief executive officer (liability and treasury management) & chief economist at Srei Infrastructure Finance, said: “The agenda this time is on the liquidity and cost of liquidity. RBI has administered tight liquidity and elevated short-term rates, which is obviously not growth-supportive. There is need to loosen the tight grip to supplement the government’s growth pick-up measures.” Harding believes RBI has a choice between a cut in policy rates or to raise the amount of refinance from the overnight repo counter from the current 0.25 per cent of net demand and time liabilities (NDTL). In July, RBI has infused about Rs 170,000 crore by way of term repos; even so, overnight rates continue to be volatile. http://www.business-standard.com/article/economy-policy/tuesday-might-see-focus-on-liquidity-mgmt-114073101502_1.html

 

 

RBI: THREE BURNING QUESTIONS

 

We continue to expect RBI Governor Raghuram Rajan to hold rates on August 5. That said, three questions arise. When will the central bank cut rates to support growth? We do not see any material change to the June 3 statement that “…if the economy stays on this course (to eight per cent CPI-based inflation, or retail inflation, in January 2015), further policy tightening will not be warranted…” on Tuesday. We expect the first rate cut in December, if rains normalise. Retail inflation will then likely slip below six per cent in November and settle about seven per cent by March. A full-fledged drought poses a 250-basis point upside risk. True, the Narendra Modi-led government will likely combat agflation with supply side measures rather than RBI tightening a la the NDA regime of 1998-2004. Still, this may push the first cut to early 2015. Second, will the RBI moderate call rate volatility? We expect it to accord flexibility to either itself or banks to address genuinely unanticipated intra-week liquidity needs without forcing the money market to pay an additional 100 basis points at the MSF window. http://www.business-standard.com/article/finance/rbi-three-burning-questions-114080100154_1.html

 

JAITLEY MEETS BANKERS, SAYS FINANCIAL INCLUSION TO GET A PUSH IN ‘LAYERS’

 

New Delhi: Finance minister Arun Jaitley on Thursday said Prime Minister Narendra Modi will launch the government’s campaign for financial inclusion to ensure that 7.5 crore households without access to banking have at least two accounts. Efforts will also be made to introduce mobile banking on all kinds of phones, he said. “The intention is, in a mission mode, to have a formal campaign which will be announced by the Prime Minister. This campaign for inclusion will be at various layers,” Jaitley said, although he did not give a timeline or launch date for such a campaign. The finance minister’s statement came after a meeting with the heads of all PSU banks. Elaborating on the “layers”, Jaitley said in some areas where branches are possible, the regular branches will be built. In places where regular branches won’t be possible, smaller branches manned by one or two people will be built. The layer below that will be kiosks, he said, adding that yet another layer below, will be ATMs and then banking correspondents for the most remote settlements. “The objective is to reach every household possible and have at least two account holders in every house. At present, financial inclusion and the reach of the banking systems extends to about 58-59%,” he said. http://www.financialexpress.com/news/jaitley-meets-bankers-says-financial-inclusion-to-get-a-push-in-layers-/1275483

 

RUPEE TANKS TO 3-MONTH LOW

 

The rupee on Thursday depreciated 49 paise to close at a three-month low of 60.55 against the dollar on capital outflows after the US Fed trimmed its monthly bond buying programme by another $10 billion. Heavy dollar demand and weakness in local equities also pulled the rupee down against the Greenback. The dollar index was quoting up by 0.10 per cent against a basket of six major global currencies. http://www.business-standard.com/article/finance/rupee-tanks-to-3-mnth-low-114080100152_1.html

 

 

EXPECT TURBULENCE WITH PUBLIC SECTOR BANK MERGERS

 

Mumbai: The government-driven exercise to consolidate public sector banks (PSBs) is likely to run into problems. Beside issues with organisation integration, there is strong opposition from employee unions. While mergers take care of accounting, legal and regulatory requirements, the banks face challenges of wages and compensation fitment, culture and systems and info technology platform integration, said experts and senior PSB executives. And, the resistance from bank staff and employees unions and local political interest could pose a formidable challenge. C H Venkatachalam, general secretary, All India Bank Employees’ Association (AIBEA), said there is absolutely no case for consolidation. There is enough space for many banks to do business when half the population is yet come under the ambit of financial services, he said. Adding that the unions will begin agitations against the move to merge some state-run banks with other larger ones. AIBEA will prepare detailed plans in early August, he said. http://www.business-standard.com/article/finance/expect-turbulence-with-public-sector-bank-mergers-114073101842_1.html

 

ANDHRA BANK TO RAISE RS 1,000 CR VIA INFRASTRUCTURE BONDS

 

Mumbai: Andhra Bank will raise Rs 1,000 crore through long-term infrastructure bonds to fund projects with long gestation. Rating agency CRISIL has assigned its ‘AA+/Stable’ rating to the Rs 1,000-crore long-term infrastructure bonds of the bank. It is the first issuance to be rated after the RBI revised regulations on July 15, CRISIL said in a statement. The new rules are positive for banks, as they open up a much-needed, long-term funding avenue — that, too, with minimum regulatory pre-emption. Pawan Agrawal, senior director, CRISIL Ratings, said: “Given the exemption from statutory reserve requirements and priority-sector obligations, these bonds will be cost-effective for the issuing bank.” The benefit would be around 75 basis points compared with longer-maturity deposits. The bonds will also help banks improve their asset-liability profile. RBI’s move to revise the regulations on long-term bonds (with a minimum maturity of seven years) for financing infrastructure projects and for affordable housing — by scheduled commercial banks — followed a similar announcement in the Union Budget on July 10. Apart from statutory liquidity ratio and cash reserve ratio exemptions, advances against these bonds are also exempt from priority-sector lending obligations. http://www.business-standard.com/article/finance/andhra-bank-to-raise-rs-1-000-cr-via-infra-bonds-114073101309_1.html

 

SBI CAPS TO PREPARE REPORT ON RECAPITALISATION, MERGER OF BANKS

 

New Delhi: SBI Caps (the investment banking arm of State Bank of India) has been asked by the Finance Ministry to undertake a study on the merger and recapitalisation of banks. “We have given them (SBI Caps) two assignments. One is on recapitalisation and the other on bank consolidation. I hope within a month or so we will be getting something,” Financial Services Secretary GS Sandhu told newspersons on the sidelines of Finance Minister Arun Jaitley’s meeting with public sector bank chiefs here on Thursday. Sandhu said though the Ministry had received many suggestions in this regard, it is yet to receive a formal proposal. He said work was on for merger of one of five associate banks of SBI with the parent organisation. Sandhu also said that reduction of Government holding in SBI and 19 nationalised banks was more likely to happen in tranches. Although, according to regulation, Government holding in public sector banks should not go below 51 per cent, in practice the effort is not to reduce Government stake below 58 per cent. “We will go to the Cabinet. We will apprise the Cabinet. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/sbi-caps-to-prepare-report-on-recapitalisation-merger-of-banks/article6269810.ece

IDFC WILL BE ABLE TO CARVE A NICHE FOR ITSELF IN BANKING SPACE, SAYS RAJIV LALL

 

Chennai: Rajiv Lall says two recent developments will help IDFC target clients in two extremes — corporate India and the base of the pyramid — as it transitions to a bank. On the base-of-the-pyramid business, the new Government’s backing for Aadhaar, the unique identification number, will be critical. “What this means is that we can use the infrastructure that has already been built on the Aadhaar backbone to sift and acquire customers much more easily than before, with much less paperwork. That is a very important positive development for our plans for Bharat,” says the Executive Chairman of IDFC. The other development is RBI’s recent circular specifying guidelines for issuing long-term bonds by banks for financing infrastructure projects and affordable housing, and exemption from regulatory requirements such as cash reserve ratio (CRR), statutory reserve ratio (SLR) and priority sector lending (PSL). Infrastructure lending would have become unprofitable as IDFC would have had to account for these requirements once it became a bank. Now, the RBI circular eases that burden. “We can continue to build on our strengths in the infrastructure space. The infrastructure lending business would become important for us to cross-subsidise the build out of the consumer bank and the Bharat bank,” Lall said. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/idfc-will-be-able-to-carve-a-niche-for-itself-in-banking-space-says-rajiv-lall/article6269804.ece

 

SYNDICATE BANK NET UP 7% IN FIRST QUARTER

 

New Delhi: Syndicate Bank on Thursday reported a 7 per cent increase in net profit for the quarter ended June 30 at Rs. 485 crore ( Rs. 452 crore in the year-ago period). The bottomline growth was weighed down by a sharp increase in provision for bad debts to Rs. 538 crore ( Rs. 166 crore). The bank is looking to raise fresh capital of Rs. 1,000-1,300 crore this fiscal through a qualified institutional placement, Sudhir Kumar Jain, Chairman and Managing Director, said. The public sector bank has sought Government approval for the move, which could bring down the Centre’s stake in the bank to 62 per cent from 67.3 per cent. “We are awaiting approval of the Government for the QIP issue,” Jain told BusinessLine after release of first quarter results of the bank. Jain was hopeful that the NPA (non-performing assets) picture would improve by the end of this fiscal as the bank focuses on recoveries. He also said that the bank has decided not to declare any interim dividend for now and would wait to see the nine-month financial performance before taking a call on the same. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/syndicate-bank-net-up-7-in-first-quarter/article6269809.ece

 

 

ICICI BANK NET PROFIT UP 17% AT RS 2,655 CR

 

Mumbai: ICICI Bank, India’s largest private sector lender, reported a 17 per cent growth in its standalone net profit to Rs 2,655 crore in the April-June quarter, compared with Rs 2,274 crore in the year-ago quarter, on the back of both higher core and fee income. The profit numbers were slightly higher than a Bloomberg consensus estimate of Rs 2,592.8 crore. However, the stock closed lower by 1.1 per cent to Rs 1,473 a share on the BSE on Thursday, while overall indices were down 0.74 per cent. Net interest income, the difference between interest earned and expended, was up 18 per cent to Rs 4,492 crore in the June 2014 quarter, compared to Rs 3,820 crore in the year-ago period. Non-interest income, which includes treasury and fee income, commission, etc. was up 15 per cent to Rs 2,850 crore from a year ago. Chanda Kochhar, managing director and CEO of ICICI Bank, said the lender had seen healthy growth from retail advances. “The retail portfolio grew by 26 per cent. Home loans grew 25 per cent and automobile loans at 46 per cent. We believe retail will continue to grow in excess of 20 per cent for the year.” The margins had also improved to 3.40 per cent compared to 3.27 per cent a year ago on the back of the focus on retail. Kochhar said that for the entire year (FY15), margins are expected to be in the range of 3.3-3.4 per cent. http://www.business-standard.com/article/companies/icici-bank-beats-street-reports-q1-pat-at-rs-2-655-cr-114073100853_1.html

 

HDFC BANK LAUNCHES ‘SECURE BANKING’ IN KERALA

 

Thiruvananthapuram: HDFC Bank has launched a ‘secure banking’ programme in Kerala aimed at creatingawareness about safe banking practices amongst customers. The programme will initially be held across 12 branches in the Thiruvananthapuram district and itssurrounding areas. It will eventually be rolled out across all 139 branches in the State, said Dhiraj Relli, Branch Banking Head, HDFC Bank. Damodar Padhi, Vice-President and Global head of Learning and Development for the Tata Consultancy Services, a customer of the bank, launched the initiative here on Thursday. SS Jayasankar, Zonal Head, HDFC Bank, Thiruvananthapuram, was present also at the launch function. The initiative features a series of workshops to educate customers through presentations on key safety measures to keep in mind while undertaking banking transactions. These include using a cheque, transacting at ATMs, using debit or credit cards at POS terminals, merchant outlets and online banking. Theseworkshops are open to all including non-customers, and will be conducted at various branches on a regular basis. In Kerala, in addition to branches, the workshops will also be held at various corporate offices, schools and residential complexes. Other channels such as ATMs, mobile banking, and the bank’s website will also be used to spread the message of secure banking. http://www.thehindubusinessline.com/todays-paper/tp-others/tp-states/hdfc-bank-launches-secure-banking-in-kerala/article6269919.ece

 

 

WORLD BANK BEGINS CONSULTATIONS ON SOCIAL SAFEGUARD POLICIES

 

New Delhi: The World Bank held its first internal meeting on its new draft safeguard policies on Wednesday in Washington DC. The Bank’s Committee on Development Effectiveness (CODE) of the Board of Executive Directors has given clearance to start consultations on the first draft and the consultation process is expected to last till December. “The proposed Environmental and Social Framework builds on the decades-old safeguard policies and aims to consolidate them into a more modern, unified framework that is more efficient and effective to apply and implement,” an official statement by the World Bank said on Thursday. A member of an environment organisation said the Bank was easing norms in order to attract more borrowers as it faces increasing competition from other multilateral development banks, which have more lenient rules. Stricter norms for social and environment safeguards by the Bank were introduced in the 1990s, after its funding of the Sardar Sarovar Dam on Narmada river had run into controversy. While the World Bank had been forced to withdraw from the project after inspections found violation of several guidelines on social norms, the Bank’s policies for protecting indigenous people was a direct result of this project. The Bank has repeatedly received flak for failing to protect human and environmental rights across the world. Now, the Bank has again stirred the hornet’s nest with this draft, which has diluted some protection clauses, including those for indigenous communities, strict timeline for reporting resettlement action plans and others. http://www.thehindubusinessline.com/todays-paper/tp-news/world-bank-begins-consultations-on-social-safeguard-policies/article6269860.ece

 

 

MFs JOIN FII-LED STREET PARTY

 

Mumbai: From their participation in the equities market over the past three months, mutual funds (MFs) seem to have joined the stock market party. After dumping stocks worth a net Rs 18,000 crore since September last year, equity fund managers were net buyers in July for a third month in a row. This happened after the Narendra Modi-led National Democratic Alliance (NDA) took office in May after the general election. In a little over two months since then, equity fund managers have net-bought equities worth Rs 7,000 crore. After being net sellers of shares in the previous five financial years, MFs have purchased shares worth nearly Rs 4,300 crore so far this financial year (starting April 1). Higher inflows, coupled with a drop in redemptions, has provided fund managers the capital. A shift in investor preference from debt to equity, due to the sharp rally, has helped. “The sentiment towards the market has turned positive. This has resulted in better inflows for the equity markets. Inflows have been coming from retail investors as well,” says S Naren, chief investment officer (CIO) of ICICI Prudential AMC, the second largest fund house. Fund managers stepped up buying during the end of May. In July, MFs net-bought shares worth Rs 3,600 crore, after pumping about Rs 3,340 crore in the previous month. http://www.business-standard.com/article/markets/mfs-join-the-stock-market-rally-114073101552_1.html

 

SEBI SUSPENDS PANCARD CLUBS’ TIME SHARE SCHEME

 

Mumbai: Pancard Clubs, is in the business of marketing holiday plans, has been directed by SEBI not to collect any fresh money under its existing schemes (holiday plans). SEBI has also directed its directors Sudhir Shankar Moravekar, Shobha Ratnakar Barde, Usha Arun Tari, Manish Kalidas Gandhi, Chandrasen Ganpatrao Bhise and Ramakrishnan not to launch any new schemes and submit the full inventory of assets obtained through the money raised by Pancard Clubs. The regulator has also instructed Pancard Clubs not to divert any funds raised to date and furnish details sought by the regulator within 15 days. The company, earlier had raised ₹3,096 crore from the public. In an interim order on Thursday, SEBI found Pancard Clubs and its directors prima facie guilty of running a collective investment scheme. The company, in its submissions, had said it is in the business of marketing time share products — room nights — of its hotels and other hotels outside its group at a fixed tariff during the contracted tenure of the holiday options. At the end of the tenure, applicants had the option of surrendering their unutilised room night entitlements and obtain estimated market value for the repurchased room nights or provide them any products of the group or gift it to their family or friends. http://www.thehindubusinessline.com/markets/sebi-suspends-pancard-clubs-time-share-scheme/article6268635.ece

 

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