Festive Cheer:some banks to cut home, auto rates

Banks are getting into a festive mood. A few public sector banks have decided to reduce home and automobile loans till Dec 31.
State Bank of India(SBI), the country's largest lender, has decided to extend its fixed-cum-floating rate home loan scheme for 3 months. The hugely popular scheme, launched in Feb.2009 was scheduled to expire on September 30. Under the scheme, for the first year, home loans carry an 8% interest rate, which rises to 9% in second & third years. Mangalore- based Corporation Bank has gone up. It has bettered SBI's offering, at least for thr first year, by charging 7.75% on home loans. Corporation Bank, charging 8.25% for home loans less than Rs30 lakh, has now launched a fixed-cum-floating home loan product which charges 7.75% interest for the 1st year and 8.25% for the next 2 years.The Mangalore-based bank has also reduced auto loan rates. Another lender, Bank of Baroda is also planning to give 'better rates" on home and auto loan products.(BS 29092010)

RBI allows 'for profit' Cos to act as bank business correspondents

In a bid to give a fillip to financial inclusion, the Reserve Bank of India on Tuesday allowed banks to engage the services of ' for profit' companies as business correspondents (BCs). This move will enable banks to engage the services of companies ( registered under the Indian Companies Act, 1956) with wide distribution network to offer limited range of banking services at low cost at places where setting up a brick and mortar branch may not be viable.
When the BCs model of banking outreach was introduced in Jan. 2006, only entities such as non-government organisations or micro finance institutions set up under Societies/Trust Acts, Societies registered under Mutually Aided Cooperative Societies Acts or the Cooperative Societies Acts of States, Section 25 (not-for-profit) companies and post officies were eligible to act as BCs.
The list of persons who can be engaged as BCs was later expanded to include individuals like retired Bank employees, retired teachers, retired Government employees and ex-servicemen, individual owners of kirana, medical, fair price shops,individual public call office operaters, agents of small savings schemes of Government of India, insurance companies, individuals who own petrol pumps, etc.
BCs are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM. They are permitted to perform a variety of activities including collection of small value deposit, disbursal of small value credit, recovery of principal, collection of interest, sale of micro insurance, mutual fund products, pension products, other third party products and receipt and delivery of small value remittances/other payment instruments. Corporate as BC would be more suitable for rendering banking services in accordance with the bank's internal policies and standards than individuals and other small entities.(BL 29092010)

SBI may raise rates to grab bonus money

In an effort to grab a share of the hefty Diwali bonus to employees in government and corporate sector, country's largest lender State Bank of India may raise the interest rate on term deposit rates in next few days.
"Bank may revise hike interest rate on term deposits only during festive season to get funds from people who will get bonus money. This is also will time build liquidity to manage rise in credit uptake from the third quarter" senior SBI official said. The asset liability committee would take a decision this week, official said but did not elaborate further. At present, bank has adequate liquidity to manage any immediate rise in demand for resources.The Statutory Liquidity Ratio( SLR) is about three-four per cent over minimum level 25 per cent of deposits prescribed by Reserve Bank of India, he added.(BS 29092010)

Corporation Bank starts branchless banking in W. Bengal

Mr. Pranab Mukherjee, Finance Minister, inaugurated five branchless banking units (Grameen Vikas Kendras), a biometric ATM of Corporation Bank and its 1170th branch at Sagardighi in Murshidabad district of West Bengal on Monday,the bank said in a press release .
Mr. Mukherjee said that the Government, in consultation with the Reserve Bank of India, has decided to provide appropriate banking facilities to habitations having population in excess of 2000 by March 2012.The benefits of welfare programmes such as those provided by the Mahatma Gandhi National Rural Employment Guarantee Act or payment of wages in lieu of work, pension etc. will be routed through the banks directly to the beneficiaries, so that there will be no pilferage through middlemen. Banking services will be provided to everyone within their reach through branch, mobile, internet, business correspondents, he said.( BL 28092010)

Central Bank plans Rs2500 crore rights issue this fiscal

Public Sector Central Bank of India said on Monday that it will come out with a rights issue to raise around Rs 2500 crore in this financial year. The funds will be issued for normal operations said the bank's CMD, Mr.S.Sridhar while attending a conference on " Finance and Investment" organised by CII. He further said that the bank is assessing the market and is taking all the necessary steps. The bank is yet to approach the SEBI. It will be filing its Red Herring Prospectus shortly. The bank has already appointed the merchant bankers for the rights issue.(BL 28092010)

Corporation Bank to expand branchless banking network

Corporation Bank, which uses the branchless banking model for financial inclusion, plans to bring more people under its branchless banking network. Mr. Ramnath Pradeep,CMD,said that the bank has around six lakh no-frills accounts, with an average balance of Rs 475 a customer. The Bank plans to increase the number of no-frills accounts to nine lakh,by the end of the fiscal year, under its financial inclusion plan. He said that opening of no-frills accounts is a stepping stone to enable customers to avail other banking products. The Corporation Bank has 1385 branchless banking units in Karnataka,AndhraPradesh, Goa, TamilNadu, Kerala, Gujarat, Maharashtra, Haryana & Punjab.(BL 24092010)

Toyota, UCO Bank seal car loan deal

Toyota Kirloskar Motor (TKM) Ltd. said on Thursday that it has signed an agreement with UCO Bank earlier this month to extend finance to its prospective customers. The Bank will be one of the preferred financiers for the entire range of vehicles sold by Toyota. The CMD, UCO Bank said that the tie-up will enable the Bank to increase its car loan portfolio substantially.The ED, UCO Bank said that inorder to increase the competitiveness of the Bank's Car Loan Scheme, the product has been modified and interest rate is lowered to make it more attractive in the market place.(BL 24092010)

Syndicate Bank, Vijaya Bank sign MOU for financial literacy

Syndicate Bank and Vijaya Bank have executed a memorandum of understanding (MOU) to form a trust exclusively to establish and run financial literacy and credit counselling centres across various lead districts in Karnataka.These will later be extended to other States in the country. The trust, Jnana Jyothi Financial Literacy and Credit Counselling Trust (JJFLCCT), formed jointly by both the banks according to the Reserve Bank of India guidelines, will oversee the establishing and management of these centres in 10 lead districts in Karnataka, to begin with. Mr.D.T.Pai,former CMD,Syndicate Bank will be the Chairman and Managing Trustee of the trust, and will be assisted by two other trustees. The setting up of these centres in rural, semi-urban,urban and even in metropolitan areas according to the RBI's model scheme is aimed at financial literacy and counselling for farming communities and those engaged in allied activities. In urban areas, the focus will be on activities such as individual debt counselling. The centres will educate the farming community on various banking habits and in agriculture and allied activities.(BL 24092010)

Public sector banks set up financial inclusion drive

Public Sector Banks are planning to go the extra mile with their financial inclusion efforts. While the Government has asked them to provide basic banking services to all unbanked villages with a population of over 2000 by March 2012, the Banks are gearing up to cover even villages with population of between 1000 to 2000. This was indicated by top public sector banks at a meeting held to review the progress made by banks in achieving the financial inclusion plan for 2010-2012 at the Indian Banks' Association on Thursday. Over 73,000 unbanked villages in the country have been allotted to different commercial banks for coverage through the bank's financial inclusion plans. (BL 24092010)

RBI asks banks to beef up deposits

Worried over bank's reluctance to increase deposit rates despite its signal, the Reserve Bank of India(RBI) has prodded banks to beef up efforts to mobilise deposits. At a recent meeting with the country's top bankers, RBI officials , led by Dy.Governor Subir Gokarn, expressed concern over the tardy growth of term deposits. Deposit growth has been just 14.44% for the year to August 27, far below RBI's projection of 18%. This is mainly due to unattractive rates. With inflation close to double digits, the real returns are negative. Though RBI raised repo and reverse repo rates by 25 and 50 basis points (bps), respectively, on September 16, most banks are yet to take its cue. A day after, the country's largest lender, SBI, said it was not likely to raise rates before 3-6 months. According to bankers, the regulator wants that availability of money should not be a constraint to corporate India's growth. Banks,on the other hand, do not see an immediate need to raise rates as demand for loans has not picked up significantly. Banks credit growth till now has been in line with RBI's projection of 20% for 2010-11.Rather than raising term deposit rates, which are more stable, banks are rushing to raise short-term funds. (BS 23092010)

Bankers say no to RBI on savings rate deregulation

Bankers are putting up stiff resistance to Reserve Bank of India's (RBI's)move to deregulate the interest rate on savings bank accounts-the last bastion of administered rates. Banks benefit from low-cost savings deposits.The Central Bank wants to free the savings deposit rate to smoothen monetary policy transmission, which it feels is hampered by the current fixed-rate regime.
At 3.50% a year, interest on savings bank accounts is the only remaining regulated rate in the banking system- and a highly contentious one, given its impact on the common man. However, banks fear that making this low-cost product market-driven will only create instability. As a result, banks have told RBI that the time is not ripe for such a move. The Central Bank had called a meeting of top bankers where their views on this sensitive issue had been sought.
"The Savings Bank interest rate acts as an anchor for other rates. One of the fallouts of deregulation would be that when there is a squeeze on liquidity, the rates could rise to the level of fixed deposit-rates",said the chief of a bank, who attended the meeting.
The country's top bankers, including MD & CEO of ICICI Bank, MD,SBI,MD,HDFC Bank, Regional CEO for India & South Asia of Standard Chartered Bank will meet with RBI Dy.Governor,Subir Gokarn on Tuesday.(BS 23092010)

India Inc. looks beyond banks for funding

India Inc's dependence on banks for funding appears to be showing a modicum of decline. With the Reserve Bank of India blocking the sub-benchmark prime lending rate route for raising cheap resources from banks from July 1, Corporates have found an effective non-bank alternative by resorting to commercial papers and non-convertible debentures. Ever since banks shifted to the base rate linked lending regime, outstanding credit in the banking system has come down. According to RBI data, since the begining of the second quarter and upto September 10, outstanding credit in the banking system has shrunk by Rs 19,463 crore. However, in the corresponding period last year, bank credit was up by Rs 26,632 crore."Top-rated Corporates have aggressively tapped the debt capital market for mopping up low-cost funds since the begining of this quarter. Besides, they are also dipping into robust internal accruals to finance their inventories",said DMD, CARE Ratings. However, during a liquidity crisis, funding could dry up from debt markets but a bank is unlikely to jeopardise its long-standing relationship with a corporate by choking off funds.(BL 23092010)

Banks turning to chip-based smart cards

In what could be the next big revolution in the banking space, banks in India, which now issue credit and debit cards with magnetic stripes, are trying to move towards clip-based payment cards.
A smart card would not only accentuate greater security, but could also become a multifunctional card. In fact, banks have started pilots already, and "mass roll-out would happen in 2011-2012," said a source in Venture Infotek, a transaction management company recently acquired by French IT services company ATOS ORIGIN. The company has a card bureau in Bangalore with an initial capacity to manufacture 12 million chip cards a year. Banks will look at a smart card as an opportunity to make it a multifunctional card including an ID card, said Ms Shubhalakshmi Panse, Executive Director, Vijaya Bank. Features such a e-purse and loyalty programmes too could be loaded on to this card. Once the smart card gets introduced, it might become both debit and credit cards, she said. In fact, HDFC Bank is already issuing chip-based credit and debit cards alongwith the magnetic stripes. Mr. Parag Rao, Head- Credit Card Marketing, HDFC Bank, said that the magnetic stripe will carry lesser sensitive data and more data will be installed on the chip.(BL 23092010)

Banker to wealthy Indians, too

Customers can meet in the Sapphire conference room, keep their valuables in the Topaz locker room and freshen up in the Opal dressing room. This is State Bank of India's(SBI) 'by invitation" 4000 sq.ft. branch called "Kohinoor Banjara", which will cater to Hyderabad's swish set.Minimum opening balance :Rs 1 crore. The country's largest lender is carrying out a curious experiment on the assorted group of people that make up wealthy India. This crorepati branch in the tony Hyderabad neighbourhood of Banjara Hills will offer frills that include personalised relationship managers, a round-the-clock locker facility, doorstep pick-up and drops. However, wealth management, advisory and related services-considered derigueur for private banking-will be provided only at the branch. The Bank has set itself an ambitious target as far as clientele is concerned, from prosperous Hyderabad businessmen to Tollywood film stars. It acquired 25-30 clients within four days of operations,a SBI executive said. Predictably, SBI's crorepati branch has created a buzz within banking circles.(BS 21092010)

Indian Bank to disburse Rs 100 crore through SHGs

Indian Bank plans to sharpen its focus on financing through self-help groups(SHGs) targeting disbursement of Rs 100 crore this fiscal. The Bank has since disbursed Rs 335 crore to about 33000 SHGs across the country, with focus on the Southern States in the last 3 years as advised by Mr.V.Ramagopal, the Executive Director. The Bank, which has a network of 27 special branches handling this category of financing, plans to open 7 more such branches this year. SHG members are utilising the loan amount for various income generating activities such as tailoring, pickle making and small scale textile business. The members also organise exhibition-cum-sale as part of their marketing initiative.(BL 21092010)

Core-Banking software developed for small banks

Perfect Software Solutions Pvt. Ltd., a venture by a group of IT technicians based in Kozhikode, has developed a core-banking software that can be used even by small banking institutions such as cooperative banks at a minimal cost. The software, styled"Score" can be operated on windows and linux platforms, according to Mr. K.C.Biju,Managing Director of Perfect Software Solutions. He said that small co-operative banks could not adopt core-banking software solutions developed by companies outside the state and avilable in the market because of the exorbitant expenses involved. The software developed by the company will make avilable all the details of the customers of every branch of the bank on a single platform. This will enable customers carry out transactions from any of the branches and the details of the transactions would reach their mobile phones through SMS.(BL 20092010)

PM reviews financial inclusion efforts

The Prime Minister,Dr. Manmohan Singh, on Friday reviewed the progress made on the financial inclusion front by the Bankers in the country.
He was briefed on the efforts being taken to reach banking services to the 73,000 rural habitations, having population of over 2,000 people (according to the 2001 census) by March, 2012. The efforts include use of technology- based models,as well as banking intermediaries such as business correspondents. Besides the Reserve Bank of India Governor, Dr.D. Subbaro,the others present on the occasion include,Mr. R.Gopalan, Secretary(Financial Services),Ms.Usha Thorat,RBI Deputy Governor and Dr. K. C. Chakrabarty,RBI Deputy Governor.(BL 18092010)

Deposit, lending rates set to rise, but not before Oct.

Lending and deposit rates are set to rise following the hike in repo and reverse repo rates by 25 basis points and 50 basis points respectively by the Reserve Bank of India.But the hikes may not be effected before October as credit growth is yet to pick-up, say bankers. It is also likely that deposit rates may go up before lending rates as there is a need to improve the sluggish deposit growth. According to the CMD of Union Bank of India, deposit rates will have to go up in order to incentivise savers. "Deposit growth is lower than the RBI's projection. If it continues to be low, it cannot support the credit growth, which will pick up in the busy season. So the priority at this point of time has to be deposit growth",he said. The same view has also been shared by some other bankers.(BL 17092010)

Finance Ministry gets SBI's formal proposal for raising capital

The Finance Ministry has received a formal proposal from State Bank of India for its capital raising plans during 2010-11, a senior official has said. Mr. R.Gopalan, Secretary(Financial Services) told that they had formally received a proposal. The actual instrument has not yet been decided. There will be discussions between the Finance Ministry and SBI. After that only the capital raising route will be finalised. The SBI Chairman,Mr. O.P. Bhatt had earlier said that the Bank was looking to raise capital to the tune of about Rs 20,000 crore through a right issues before the end of the current fiscal.(BL 20092010)

Oriental Bank raises Rs 500 crore capital

Oriental Bank of Commerce (OBC) has raised capital of Rs 500 crore to fund business growth and strengthen its capital adequacy.This is the first time in the current fiscal that the Bank has mobilised capital.Of the Rs 500 crore capital raised, the Tier-I capital component stood at Rs 300 crore and the Tier-II capital was Rs 200 crore.For Tier-I capital raising, perpetual debt instruments with annual coupon of 9.05% was issued. For Tier-II capital raising, bonds with annual coupon of 8.68% was issued,a bank official said.(BL 20092010)

Banks press pause button on power loans

The power sector could run into a funding crunch as banks are going slow on lending.Many lenders have hit the sectoral credit exposure limit and concerns have emerged over environmental and coal mining clearances.As a precautionary measure, banks are laying down conditions such as tying up coal linkages.Some are even insisting that the coal supply should be only from within India and not from countries such as Indonesia and Australia, from where a lot of companies are now trying to source coal. But, domestic coal production is beset with its own set of problems like obtaining clearances from the Ministry of Environment,which can take ages or may not come at all. A senior official from a public sector bank said that currently, disbursements are only for power distribution and transmission projects.(BL 20092010)

Banks see gains from inclusion.

No-frills accounts are proving to be a growing business opportunity.SBI's business correspondent outlet in the middle of Mumbai's Dharavi's grime run by ageing LaduLal Jain which started around four months ago has brought a silent revolution for 2000 account holders there. Mr. Jain's outlet remits around Rs 1,00,000 a day.Account holders can send a maximum of Rs 10,000 on which they pay just Rs 25 as commission, he says. It earns 60% of that and the Bank keeps the rest. Jain expects to exhaust the limit of 2500 accounts very shortly and may seek permission to open more accounts. His expense is a modest Rs 20,000 on mobile phones and a printer to confirm transactions, he says. Many of his account holders are migrant workers who are permitted to furnish a limited KYC disclosure, which may even be a village identity card to open an account for deposits, withdrawals and remittances.It is a revolutionary concept said a senior SBI official closely associated with the project.Costs for banks are limited to spending on a few days training and paying the business correspondents, use of hand-held instruments and other related technological investments. SBI which has enrolled 1000 BCs in the past 3 months, plans to increase the number to 50,000 in 2 years. It aims to open up to 7.5 million no-frills accounts and extend its direct and indirect coverage to 1,00,000 villages. The Bank expects to generate Rs 2,000 crore in business by the 3rd year, and is working on various models with varying commission structures.(BS 16092010)

SBI ties up with Oxigen for kiosk banking in Mumbai

State Bank of India has tied up with technology company Oxigen Services to offer kiosk banking in Mumbai and Maharashtra. To begin with , the bank is launching 50 kiosk banking outlets in Mumbai,with the first one being launched in Dharavi on Wednesday. Last month, SBI had launched kiosk banking with Oxigen in Delhi, with 30 outlets. Under the arrangement, Oxigen will provide the technology support , while Sahyog Microfinance Foundation, an Oxigen-sponsored Company which is registered as a banking correspondent(BC) with SBI, will deal with the commercial aspects of the transactions.Mr. Riten Ghose, General Manager,SBI,Mumbai, said the Bank has about four-five national level BCs and many more at the local level. For instance, there are about 500 BCs in Maharashtra. The Bank is also looking to enrol its active self-help groups as BCs.
Customers will have to open a no-frills SBI account through Oxigen Web Retailers. These are retailers who already offer services such as online bill payment and ticketing.The kiosks would be linked to SBI's Core Banking System to offer banking services such as account opening, cash deposit and withdrawals and products such as remittance, mortgages, loans, insurance and mutual funds. The accounts will be opened with minimum Know Your Customer rules and using fingerprints for identification. The limit for daily cash deposit is Rs 10,000. The Bank will pay a fee to the retailer for every account opened and every transaction - withdrawal and deposit.(BL 16092010)

Tata Motors in pact with 14 Banks

Tata Motors has tied up with 14 banks to offer customers in Kerala with loans for purchasing the Tata Nano at attractive rates of interest. More such arrangements are in process.Loans for the Tata Nano will be available at all the branches of SBI, Central Bank of India, HDFC Bank, ICICI Bank, UCO Bank, Bank of Baroda, Tata Finance etc.(BL 16092010)

Allahabad Bank expects 25-26% credit growth

On the back of robust demand for credit, Allahabad Bank expects to post 27% growth in advances during the second quarter(july-september) of fiscal 2010-11.The Bank is hopeful of achieving a credit growth of about 25-26% for the financial year 2010-11, according to its Executive Director, Mr. M.R.Nayak. Mr. Nayak further said that the Bank might raise about Rs 1000 crore during the current fiscal. Although the Bank is quite comfortable with the capital position and might not need to raise funds immediately, however, if credit offtake picks up, then it may consider raising about Rs 1000 crore, he said.(BL 16092010)

Banks urged to launch awareness drive on financial inclusion

Banks should undertake joint publicity campaign in order to create awareness among people about financial inclusion and various products being offered, according to Mr. Rakesh Singh, Additional Secretary(Financial Services), Ministry of Finance.Mr. Singh was addressing a special review meeting to analyse the progress of implementation of financial inclusion plan and the initiatives taken by three Kolkata- based banks on financial inclusion.The banks were United Bank of India,Allahabad Bank and UCO Bank. The meeting took note of the progress in enrolling business correspondents to roll out financial inclusion plan, status of banking service in the villages having population above 2000 and position of training of rural branch managers and BCs among others.(BL 19092010)

ATM transactions cross 10-crore a month mark

ATMs in India appear to be humming with activity, what with the cumulative monthly transaction volumes recorded by the National Payments Corporation of India's (NPCI), National Financial Switch (NFS), to which 61,702 ATMs are linked, crossing the 10-crore mark for the first time in August 2010. The Switch recorded 7.32 crore ATM transactions in July 2010. Between Jan,2010 when 53,906 ATMs of 37 Banks were connected to the NFS, and August 2010, when 61,702 ATMs of 44 Banks were linked to the Switch, monthly transaction volumes on the NFS shot up by 79% to 10.18 crore (5.68 crore in Jan,2010). The spurt in transaction volumes is on 2 counts. For one, bilateral transaction volumes between banks have migrated to the multilateral NFS platform. Two, due to the festival season, said Mr.K.S.Nerurkar, Head-NFS and Business Development,NPCI. NPCI promoted by State Bank of India,Punjab National Bank,Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citi Bank and HSBC, was established in December, 2008. It is the umbrella organisation for all retail payment systems in the country owned and operated by banks.(BL 15092010)

Inform clients about derivatives,RBI tells Banks

The Reserve Bank of India (RBI) has advised Banks to be transparent while marketing derivative products and to educate the customers about the risks involved, according to Mr. K.R.Ananda, Regional Director, RBI, Chennai. He said the RBI will examine the issue of approaching Internet Service Providers (ISPS) to install filters to check spam emails so that gullible investors do not fall for the trap of scamsters tempting them with announcements about winning prizes/lotteries. On the credit flow to the MSME sector, Mr. Ananda said the RBI conducted review meetings every quarter about it and analysed whether the targets were met. RBI has also made it mandatory for Banks to extend loans to MSMEs upto Rs 10 lakh without any collateral.(BL 15092010)

Mobile Bank to cover every village by 2015: RBI

Reserve Bank of India's( RBI's)Deputy Governor, K.C.Chakrabarty said there was a plan to cover all villages through mobile banks by 2015. Every village would be financially included in the next 5 years, he said. A mobile bank is a facility under which an authorised vehicle, with officials of a particular bank, reaches a particular village at a specified time.It provides limited services like deposit or withdrawal to villagers. RBI had prepared a road map to open a bank branch in villages with appropiate space, he said. It has been decided that all the areas having a population of 2000 should get access to banking facility, he added. About circulation of fake currency, Chakrabarty said it was a security issue and police was being trained to deal with this. Allthe banks had been informed about the security features of Rs 500 notes,he said.(BS 14092010)

Banks tightening norms for education loans

With non-performing assets (NPAs) in the educational loan portfolio rising, banks are putting in place mechanism to check delinquencies and also keep track of students. The Executive Director of Canara Bank, Mr.H.S. Upendra Kamath stressed the need to assess the repayment capacity of the borrower, which comprises two components- of the parent and of the student himself after he gets employed, which depends upon the course he has selected, the employment potential of the course and the track record of the institution as far as placement is concerned.(BL13092010)

Federal Bank ATMs linked to NFS

Federal Bank has announced that its ATM network has been linked to the India Pay National Financial Switch( NFS) managed by National Payments Corporation of India's (NPCI). This is India's largest network of shared ATMs, which connects around 61200 ATMs across 44 banks.This would enable Federal Bank's customers access to all these 61200 ATMs across the country and all the cardholders of the 44 member banks can also access 759 Federal Bank ATMs.(BL 11092010)

Axis Bank's remittance service

Axis Bank has launched a remittance service called Instant Money Transfer, in partnership with Empays Payment Systems. IMT will be avilable to Axis Bank customers in Mumbai,Bangalore, Ahmedabad, and Hyderabad to conduct transactions.The pan-India roll-out is expected to take place in the next 4-6 weeks, said a press release. IMT enables customers of the Bank to make instant cash payments to a receiver anywhere in India at low cost.The receiver need not be an account holder of Axis Bank, or for that matter any Bank. Once the receiver gets the notification of the remittance, he or she can go to the nearest Axis Bank ATM and withdraws the money. Remitters can conduct the remittance using mobile, net banking and ATMs.(BL 11092010)

Axis Bank in urban financial inclusion drive

Axis Bank has tied up with Bangalore- based Janalakshmi Social Services(JSS) to launch its urban financial inclusion initiative in India, the pilot of which will be done in Bangalore. It would be a branchless banking facility, and would follow the business correspondent model. JSS would be the business correspondent, while all accounts will be opened, maintained and serviced by Axis Bank. The Bank has enrolled 5,000 customers through this initiative, Ms Shikha Sharma, Managing Director and CEO, Axis Bank, said.(BS 10092010)

RBI panel to study freeing of savings bank rate

The Reserve Bank of India will soon set up a working group to look into the issue of deregulation of savings bank interest rate, said Ms Usha Thorat, Dy. Governor, RBI. Ms Thorat said ,'The deregulation of savings bank interest rate that is currently set at 3.50% by the RBI is an issue which is on our radar. A working group is being set up to debate the issues and draw conclusions." Totally freeing rates could lead to lowering rates in some areas while leading to increase in other areas. It would need to be ensured that there is no discrimination between different customers of the same bank, she said addressing the FICCI-IBI banking seminar in Mumbai on Wednesday. Another important consideration is whether deregulation of savings rate would draw more people into the fold of the formal banking system. The RBI has been taking measures to safeguard the interest of saving bank customers. From April 1, banks have been calculating the interest on balance in the savings bank account on a daily basis, against the earlier practice of calculating it on the minimum balance between the 10th and the last day of each month.(BL 09092010)

Canara Bank launches retail loan festival

Canara Bank has launched a 5 month long retail loan festival for home loans and vehicle loans from Sept.1 to Jan 31,2011.The Bank has come up with special interest rates for home loans & vehicle loans. According to a press release from the bank, housing loans upto Rs 30 lakh would be available at an interest rate of about 8.50% an annum, and there would be an interest concession of 0.5% an annum for all slabs upto Rs 1 crore.The Bank also announced a waiver of processing charges upto 75%. Home improvement loans would also be offered at home loan interest rates during the offer period. Vehicle loans are offered at 10% an annum, with nominal processing charges.(BL 08092010)

"Allow UK banks to open branches here"

The Indian Government should allow UK banks the freedom to open branches in India, similar to the UK Govt. which allows Indian banks to expand in the UK, said Lord James Sassoon,Commercial Secretary to the Treasury ,UK while speaking at the recently held FICCI-IBA banking seminar at Mumbai. He expressed his desire to see Indian banks establish themselves even more prominently across the UK- and basing international businesses out of the UK. Lord Sassoon further said that London has the advantage of being a financial capital as well as a gateway to other European markets. He cited the example of ICICI Bank which has used its UK subsidiary to open branches in Belgium and Germany and State Bank of India that has decided to make London its European headquarter.(BL 08092010)

HDFC extends dual rate home loan offer

HDFC Ltd. has announced it is offering its dual rate home loan scheme which had ended on August 30 to till the end of September. But the housing finance company has increased the interest rates following the hike in its benchmark retail prime lending rate (RPLR),with effect from September 01. Under the revised scheme, the interest rate on home loans will be available fixed rate at 8.50% upto March 31,2011, 9.50% for the period between April,2011 and March 31,2012 and the applicable floating rate for the balance term.These rates are applicable for all the new home loans, irrespective of the loan amount, said a press release issued by the company.(BL 08092010)

SBT-Kudumbasree drive for financial inclusion

State Bank of Travancore(SBT) is now in the process of tying up with the Kudumbasree poverty eradication project of the Govt. of Kerala to roll out the banking correspondent/ facilitator model in 27 under-banked villages allocated to the Bank in the state. Earlier this year, SBT had formulated and approved a full-fledged financial inclusion plan according to the directives,Managing Director-in-charge said.The plan, inter alia,involves extending banking services to 41 currently under-banked villages with a population of over 2000. Of these, 27 are in Kerala and 14 in Tamil Nadu.(BL 08092010)

SBI to raise Rs 500 crore via retail bonds

State Bank of India plans to tap retail investors via a bond issue . The executive committee of the bank's board accorded approval for raising Tier II capital by way of public issue of lower Tier II bonds for Rs 500 crore with an option to retain 100% oversubscription. Although other banks like IDBI and ICICI regularly tapped retail investors through the 1990s and early 2000 via deep-discount bonds, SBI have not tapped retail investors as deposits were easy to come, say analysts.SBI may make the bond issue in October which could be of 10-15 years tenure.(BL 08092010)

IDBI Bank likely to raise equity capital

IDBI Bank may consider raising equity capital, thereby diluting the Govt's stake, over the next 12-15 months. The Bank will explore the options of going in for a right issue, follow-on public offer , qualified institutional payment or preferential placements for raising funds,according to its Chairman and Managing Director,Mr.R.M.Malla. The Union Govt. currently holds a 65% stake in the bank. The bank will also focus on garnering more CASA( current account and savings account) deposits,which currently stands at close to 15% of the Bank's overall deposits. IDBI Bank has done away with the concept of minimum balance on CASA accounts and has waived off most service charges, other than those pertaining to bounced cheques.(BL 06092010)

Shift to card payments to save on cash printing cost: Study

It cost the Govt. nearly Rs 2800 crore to print currency notes in 2009-10.Cash/ currency notes are the preferred mode of payment for most customers,but with printing cost on the rise, it makes sense for the Govt. to reduce usage of these notes and shift cash transactions to a card-based system of payment. Right now, a mere 5% of retail sales or about 90000 crore worth of transactions in India are done through cards(credit & debit).In other words, card transactions reduced cash transactions in the retail sector by about 5% .Given the cost of printing notes,card usage leads to savings of about Rs 140 crore(i.e,5%of Rs 2800 crore), in currency management, says a study conducted by Prof. Ashis Das, Professor of Maths,IIT Bombay.(BL 06092010)

New Banks must be strong for financial inclusion

New entrants in the banking sector should be strong , well capitalised to promote financial inclusion in a cost-effective way, said a top official at the Reserve Bank of India(RBI),which views increased access to financial services as a driver of sustainable economic growth. RBI initiated its process of increasing banking participants with a discussion paper on issues including capital requirements for aspiring banks, for which it has sought public feedback. The Govt. aims to increase access to banking services across geographics , through the new players, with a stated intention of ensuring every village with a population of over 2000 has access to such services by March 2012.(BS 01092010)