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Wednesday, May 11, 2011

SBI to introduce green-channel banking at more branches

BERHAMPUR: State Bank of India (SBI) will introduce "green-channel banking" at more of its branches to promote paperless work and to facilitate faster transactions for customers, SBI sources said.

All major transactions, including withdrawals, deposits and remittances up to Rs 40,000, will be made through green-channel banking, which was introduced at 26 out of 680 branches of the bank in the first phase, the bank's General Manager (Network-II), Devendra Prasad, said today.

Although there was no specific number of branches to be covered in the state with these facilities in the second phase, several more branches -- including some at Berhampur, in Ganjam district -- are expected to introduce green channel counters.

"Since there is no paperwork in this initiative, it is called green-channel banking," said Prasad, who was here to address customers and inspect some of the branches.

The customers need not fill up any pay-in slip or cheque for depositing or withdrawing money from their account.

Instead they could access the services of ATMs. "In this way, there will be no requirement of paperwork and the process of money transaction will be fast," he said.

Around 28 per cent of the bank's total transactions, mostly deposits, are made through alternative channels, including mobiles, the internet, ATMs and green-channel banking, in 2010-11.

He said the bank would add more branches in the state during the current year. In the last financial year, it had opened 11 branches in the state.


Source: EconomicTimes
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ICICI Bank, Lanka's Sampath Bank launch fund transfer service

MUMBAI: India's largest private lender ICICI Bank has tied up with Colombo-based Sampath Bank PLC to launch an online cross-border money transfer facility between the two countries.

Money2SriLanka (M2SL) is a web-based online platform which facilitates the sending of remittances from various geographies to beneficiaries in Sri Lanka in a convenient and economical manner, ICICI Bank said.

"We remain committed to extend expertise in the cross border payments business and the online tracking service for money transfers is the first step towards creating a remittance platform for Sri Lanka," an ICICI spokesperson said in a statement here.

The remittance received through M2SL is available for account holders of ICICI Bank Sri Lanka and Sampath Bank instantly on the day of receipt of funds and the remittances received on behalf of account holders of other banks in the island nation.

It will be then disbursed via Sri Lanka Interbank Payment System (SLIPS) with the same day value, subject to cut off timings for processing of the payments.

The service will be soon piloted in Canada and the UK and will shortly be rolled out in Australia, the US, South East Asia and the Euro Zone in the second phase.

Source: EconomicTimes
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Indian Bank plans to raise $1 bn in FY12: Source

MUMBAI: State-run Indian Bank plans to raise up to $1 billion in fiscal 2012 that ends in March and is in talks with arrangers for the first tranche, which it expects in three to four months, a senior bank executive told Reuters.

"We are looking overseas as funds are available at favourable rates. We are examining various possibilities. The exact quantum will depend upon the market appetite," said the executive, who did not wish to be identified.

The bank has already received government approval to sell 61.4 million shares in a follow-on public offer. The lender did not disclose the issue size but several local media reports have pegged it at 13 billion rupees ($290.5 million) to 15 billion rupees.


Source: EconomicTimes
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SBI lifts prime lending rate 75 basis points to 14%; demand for homes, cars to fall

MUMBAI: The country's largest bank, State Bank of India , on Tuesday raised deposit and lending rates steeper than rivals, which may push up cost of funds across industry as well as for borrowers. The bank's profitability, which is already under pressure due to rising interest rates in the last few months, may get eroded further as it will pay more for funds. The bank raised its benchmark prime lending rate 75 basis points to 14%, and the base rate below which it will not lend to anyone by the same amount to 9.25%.

Deposit rates on shorter tenors were raised as much as 225 basis points. A basis point is 0.01 percentage point. A 14-day deposit at SBI will return 6.25%, against 4% earlier, while one-year returns remain at 8.25%. New rates are effective May 12. "The raise is quite steep and is a blow to consumers," said Harsh Roongta, chief executive at consumer finance portal apnaloan .com. "The demand for homes, cars and consumer durables will all fall." SBI joins ICICI Bank and the rest in raising rates after the Reserve Bank of India increased policy rates by 50 basis points to 7.25% on May 3.

The RBI's objective of raising rates for the past one year to keep prices under check may at last be yielding results with banks passing on the higher costs to customers. SBI's rate increase is also partly catching up with rivals as it was stubborn in not raising the rates under previous chairman OP Bhatt. "Last couple of times SBI had not increased rates, so they are now aligning with other banks," said MD Mallya, chairman of Bank of Baroda as well as the Indian Banks' Association "If the difference is too much, we will also have to increase the rate. It could go up by 25-50 basis points."

Furthermore, SBI may be aiming to boost growth and adjust its mismatch between loans and deposits, hence, offering more on the shorter tenor deposits.

"We offer 7% on 91-180 day tenure deposits. They are just falling in line with the market. It is also possible that they are looking to shore up their liquidity at the shorter end,'' said MV Nair, chairman, Union Bank of India .


Source: EconomicTimes
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BoI, IoB plan to raise $850 mn through overseas bonds

Owing to robust demand from Indian corporates, public sector lenders Bank of India (BoI) and Indian Overseas Bank (IoB) plan to raise about $850 million from the international market through bonds in the next few months.

BoI Chairman and Managing Director Alok Misra said the bank was expanding its overseas balance sheet and there was a demand for funds. The bank has an option to raise funds under medium-term notes (MTN). It would raise up to $500 million. Another official said the timing of the issue would depend on the market environment, including the pricing trend (yield on paper and fluctuation in benchmark rates).

As on March 31, BoI’s international business comprised deposits of $10.25 billion and advances of $11.39 billion. For 2010-11, its net profit from international operations stood at $110 million.

Royal Bank of Scotland (RBS), in its Asia-Pacific credit strategy report, said overseas funding needs of Indian companies had been driving the issuing of US dollars by Indian banks. Many Indian banks reported good growth in overseas loans, as India Inc turns more aggressive in expansion and acquisitions.

Compared to domestic lending, overseas lending generates lower margins for Indian banks. However, they need to follow their corporate borrowers overseas and provide them funds, as part of their integrated service. The new supply from the Indian financial sector could reach $7-8 billion in 2011, against $6.6 billion in 2010, RBS said.

Meanwhile, IOB chairman and managing director M Narendra said, “We would definitely look at MTN for raising more funds. The interest rates are better compared to the domestic market. We may tap $350 million through the MTN route in the next three to six months”.

The bank plans to use the funds to expand its overseas business to increase its share in the overall business to 15 per cent by the end of the current financial year, against 10 per cent last year.

Last Month, the Chennai-based lender had raised $500 million by issuing senior unsecured bonds. This was done under its $1-billion MTN programme through its Hong Kong branch.

Source: Business Standard
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Tuesday, May 10, 2011

Govt to tweak norms for appointing I-bankers for PSU issues

NEW DELHI: The government is in the process of redrafting the proposal document format for appointment of merchant bankers to avoid the conflict of interest between the public and private share sale issues.

"There was an issue in SAIL... That part (appointment of merchant bankers) of the document was drafted way back in 2001, we are trying to update that," Disinvestment Secretary Sumit Bose told reporters here.

To avoid the conflict of interest of investment bankers (I-bankers) handing public issue of both state-run and private companies at the same time, the disinvestment department would tweak the format of Request for Proposal ( RFP )) for appointing the lead managers to the issue.

The follow-on public offer (FPO) of SAIL was delayed last year after the four BRLMs managing the issue accepted the job of managing the public share sale of private firm Tata Steel.

"We are taking into account what the legal opinion is to make sure that everyone knows where they stand, the BRLMs should understand what we are looking for," Bose said.

SBI Caps, Kotak Mahindra, Deutsche Bank and HSBC were hired as the book running lead managers (BRLMs) for SAIL's FPO in September, 2010, much before Tata Steel reached an agreement with these banks to manage its over Rs 3,000 crore FPO.

Steel Authority of India Ltd's (SAIL) Rs 8,000-crore FPO was initially slated to hit to market in February, but was later delayed. Bose said the steel Navratna's further public offering is most likely to come out in June.


Source: EconomicTimes
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HDFC Q4 net up 23% at Rs 1142 cr

Mumbai: Housing finance lender HDFC Ltd said its net profit rose by 23.2 per cent to Rs 1,141.9 crore for the quarter ended March, 2011.

The company had a net profit of Rs 926.3 crore in the January-March quarter of the previous fiscal, HDFC Ltd said in a filing to the Bombay Stock Exchange (BSE).

Total income rose to Rs 3,784.8 crore in the quarter ended March 31, from Rs 2,899.3 core in the corresponding period a year ago, registering an increase of 30.5 per cent.

The board proposed a dividend of 450 per cent or Rs 9 per share on the face value of Rs 2 each for the financial year 2010-11.

For the year ended March 31, 2011, the company reported a 25 per cent rise in its net profit at Rs 3,534.9 crore, compared to Rs 2,826.4 crore in the previous fiscal.

During the year, total income improved to Rs 12,878 crore from Rs 11,360.8 core in the previous fiscal.

On consolidated basis, the net profit of the bank increased by 40 per cent in 2010-11 to Rs 4,528.4 crore, against Rs 3,240.9 crore in the previous financial year.

Source: Financial Express
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Union Bank of India to open branches in Sydney, Belgium

Kozhikode: The Union Bank of India has got clearance from the Reserve Bank of India for opening new branches in Sydney and Belgium.

The bank at present has one established branch in Hong Kong and representative offices in Sydney, Shanghai, London, Beijing and Abu Dhabi, UBI Chairman and Managing Director M V Nair said.

It is also opening a subsidiary in the United Kingdom and has already got the permission to open representative office in Canada, he added.

Nair was speaking at the inauguration of the Bank's 200th branch in Kerala at Vatakara in the district on Tuesday.

The bank had opened 211 branches across the country during the year 2010-11, and has crossed the milestone figure of 3,000 in a branch network, a UBI release said.

The bank, which has a total business to the tune of Rs 11,000 crore in the state, plans to open 400 additional branches this year including 30 in Kerala, he said.

Transactions through alternate delivery channels has proved to be a huge success for the bank with more than 50 percent of its transactions routed through them, he said.

The bank has more than 2,600 ATMs and plans to increase it to 5,000 ATMs this year, he added.


Source: Financial Express
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IOB plans to raise overseas biz contribution to 15% in FY12

 Chennai-based Indian Overseas Bank (IOB) today said it plans to raise the overseas business contribution from 10% to 15% in the current fiscal and open new branches in Dubai and China.

"We are planning to open new branches in Dubai and China. We have already sought permission from the Reserve Bank of India (RBI) in this regard," bank's Chairman and Managing M Narendra said here today on the sidelines of ICC organised banking summit.

IOB currently has six overseas branches – one each in Seoul, Bangkok, Singapore, Colombo and two in Hong Kong. It also has representative offices in China and Vietnam.
The bank also plans to expand its operations to African countries, Australia and New Zealand in the future.

IOB along with two other nationalised banks - Bank of Baroda and Andhra Bank – plans to set up a new bank in Malaysia.

"The new bank is expected to come up in another three months time," Narendra said.

To boost overseas lending, the bank is planning another medium term note (MTN) issue of around $350 million, he said.

The bank had earlier made a MTN issue of $500 million.

However, IOB remained equally focused on domestic business expecting to see a 30% growth during the current fiscal and aims to add 400 new branches this year across the country.

Source: Business Standard
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SKS Micro to focus on gold loans, mobile phone financing

Expecting pressure on company financials in the near term, SKS Microfinance today said it will start focusing on non-core activities like gold loans and mobile phone financing in places other than Andhra Pradesh, Executive Chairman of the company Vikram Akula said today.

The company suffered a net loss of Rs 69.77 crore in Q4 (FY11) largely due to the situation in Andhra Pradesh where its loan collection has plunged .

It expects the pressure on financials would continue over the next couple of quarters.
SKS has outstanding loans of Rs 1,285 crore in Andhra Pradesh alone and it is not able to extend fresh loans.

According to AP Micro Finance Institutions (Regulation of Money Lending) Act- 2011, every loan application has to be approved by the State Government officials.

SKS filed 73,163 loan applications after the new rules were introduced last October of which only 1648 applications were approved by the Government as eligible for loan.

"We have been struck a blow by external forces. Now we are reinventing our company and microfinance. That’s what we are going to focus in this year. Reinvention of microfinance will focus on consolidations of existing customer base, diversifying product offerings and continuing to build consensus to resolve issues in Andhra Pradesh," Akula told reporters here.

As per Reserve Bank norms, revenues from non-core areas of a microfinance company should not cross 15%.

SKS has plans to start a subsidiary once that limit crosses, said Dilli Raj, CFO, SKS microfinance.

"Today our book is Rs 4,111 crore and roughly we can go up to Rs 600 crore (for non-core business).So in FY12 we don’t think we will cross that limit. In FY13, based on the business models we will cross that and look at the step-down subsidiary," Dilli Raj said.

Source: Business Standard
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SBI to raise base rate by 75 bps from May 12

State Bank of India (SBI), the country's largest lender, said on Tuesday it will raise its benchmark lending rate, or base rate, by 75 basis points (bps) to 9.25% per annum, with effect from May 12.

The Reserve Bank of India last week raised the repo and reverse repo rate by a larger-than-expected 50 bps to battle stubbornly high inflation.

ICICI Bank, India's second-largest lender, last week raised its benchmark base rate by 50 bps.

Source: Business Standard
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HSBC bank under US IRS scanner

The US Internal Revenue Service (IRS) has asked HSBC Bank to provide information on incomes of US residents who may be using accounts in India to evade income taxes.

The move has raised several questions. First, why did US authorities single out HSBC? Second, would US IRS also approach banks like State Bank of India and Citibank for information?

Responding to questions by Business Standard on what steps the US IRS was likely to take in its investigation, a spokesperson for the US Embassy press office in India said, “ As a rule, the IRS doesn’t comment on ongoing investigations”.

On April 7, US authorities sought an order from a federal court in San Francisco, authorising the US IRS to request for information from HSBC Bank, USA, on US residents who may be using accounts at HSBC India to evade federal income taxes. The US government had filed a petition with the court to allow the IRS to serve what is called a ‘John Doe’ summons on the bank and had, subsequently, secured the approval. The summons seek to obtain information to help US authorities determine if additional actions are needed.

The IRS uses John Doe summons to obtain information about possible tax frauds by people whose identities are unknown. It has directed HSBC USA to produce records identifying US taxpayers with accounts at HSBC India. The US government believes many of these account holders have kept their accounts hidden from the IRS. When contacted, an HSBC spokesperson said, “HSBC does not condone tax evasion and fully supports US efforts to promote appropriate payment of taxes by US taxpayers.”

US laws require taxpayers to pay federal income taxes on all income earned worldwide and report foreign financial accounts if their total value exceeds $10,000 at any time. A failure to report a foreign account may result in a penalty of up to 50 per cent of the amount in the account at the time of the violation.

The issue assumes significance, since the US IRS 2011 Voluntary Disclosure Program expires on August 31. A failure to disclose incomes by HSBC account holders before that date would result in severe action, apart from the penalty, if information by HSBC proves such people guilty.

On the possibility of support from the Indian government with regard to Indian banks, a finance ministry official said the US may seek such information from India under the Double Taxation Avoidance Agreement. Banks which have a branch, a subsidiary or a representative office in the US, may come under pressure. Information on accounts of US citizens of Indian origin may be directly sought from these banks, the way information was sought from Swiss bank UBS.

For information from Indian banks which are not present in the US, the US would have to approach the foreign taxation division in the Central Board of Direct Taxes under the finance ministry.

Income tax department officials say banks have to deduct TDS (tax deduction at source) on bank accounts of US citizens in India. These account holders can then seek credit (exemption) for that in the US.

Undoubtedly, the whole issue has brought out in the open the fact that banks helping their customers in evading tax in any jurisdiction is not a profitable business any more.

What led IRS to HSBC

The US IRS decided to approach HSBC after securing actionable intelligence and information on the matter. A US Justice Department press release issued on April 7, which sought permission to approach HSBC, said according to documents filed with the government’s petition on January 26, a jury in Newark, New Jersey, indicted Vaibhav Dahake of Somerset. He was charged with conspiracy to defraud the United States by using undeclared accounts in the British Virgin Islands and HSBC India to evade his income taxes.

“According to those documents, employees of HSBC Holdings and its affiliates operating in the United States assured Dahake that accounts maintained in India would not be reported to the IRS,” said the US Justice Department. “The government alleges that, according to HSBC’s website, in 2002, HSBC India opened a ‘representative office’ at an HSBC USA office in New York City to enable non-resident Indians (NRIs) living in the United States to open accounts in India,” it said.

The US Justice Department said in 2007, HSBC India allegedly opened a second representative office at an HSBC USA office in Fremont, California, purportedly “to make banking transactions more convenient for the NRI community based in California.” “Although HSBC India closed those offices in June 2010, the government alleges NRI clients may still access their accounts at HSBC India from the United States,” it said.

According to the petition documents, NRI clients told IRS investigators bank representatives in the United States told them they could open accounts at HSBC India. This would help them avoid paying income tax in the US on interest earned on these accounts and that HSBC would not report the income earned on HSBC India accounts to the IRS.


Source: Business Standard
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Rs 25 lakh housing loans come under priority sector lending

Mumbai: Reserve Bank raised housing loan limit to up to Rs 25 lakh against the existing Rs 20 lakh to be eligible for classification as priority sector lending.

Pursuant to the announcement made by Finance Minister in Budget 2011-12, it has been decided to increase the above limit from Rs 20 lakh to Rs 25 lakh, RBI said in a notification.

"On account of increase in prices of residential properties in urban areas, I propose to enhance the existing housing loan limit from Rs 20 lakh to Rs 25 lakh for dwelling units under priority sector lending," Finance Minister Pranab Mukherjee said in the Budget 2011-12.

This change in categorisation is applicable to housing loans sanctioned on or after April 1, 2011, it said.

Source: Financial Express
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ICICI rejigs directors allowances, Kochhar to get Rs 7 lakh pm

Mumbai: Country's largest private sector lender ICICI Bank has revised allowances paid to its executive directors including that of its Managing Director Chanda Kochhar.

The board of the bank has decided to pay Rs 7 lakh per month as allowance to Managing Director and CEO Chanda Kochhar from April 1, 2011, ICICI Bank said in a filing on the Bombay Stock Exchange.

The present cash allowance consisting of leave travel allowance, house rent allowance and medical reimbursement has been clubbed into supplementary allowance, it said.

Besides, Executive Director and Chief Finance Officer N S Kannan and other Executive Director K Ramkumar would get Rs 4.8 lakh per month as supplementary allowance. At the same time, Rajiv Sabharwal another Executive Director would get Rs 4.65 lakh per month.

The existing allowance of these directors is not in public domain as the bank has not published annual report for 2010-11.

However, as per the 2009-10 annual report, Chanda Kochhar was entitled to allowances and perquisites of about Rs 4.49 lakh per month, while N S Kannan and K Ramkumar were paid Rs 2.92 lakh and Rs 3.95 lakh, respectively.

At the time of Kochhar's appointment, the Board had said that she would be appointed as its CEO and MD from May 1, 2009 till March 31, 2014, with a salary in the range of Rs 7-13.5 lakh per month.

During 2009-10, Kochhar's basic salary was Rs 94.5 lakh.

Source: Financial Express
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Ambani in unique gold vs loan offering

New Delhi: Reliance Commercial Finance, an Anil Ambani group company, today forayed into the business of providing loans against gold units -- a first-in-industry offering where gold in paper form can be used as collateral.

The company will provide loans up to Rs 1 crore under this programme, for which it has entered into an exclusive tie-up with another group firm, Reliance Mutual Fund.

Initially, these loans would be available to investors in Reliance MF's Reliance Gold Savings Fund, Reliance Commercial Finance CEO K V Srinivasan said.

The company would be offering loans up to 90 per cent of the value of Reliance Gold Savings Fund units held by the investor.

The minimum loan offered under this initiative would be Rs 1,00,000 and the maximum would be Rs 1 crore. The tenure of the loans will vary from six months to 12 months.

Unlike loans against gold in physical form, the new initiative would not require the lender to go through procedures like assessing the quantity, purity and price of the gold, the company said.

Reliance Commercial Finance already provides loans against gold in physical form and expects its overall book size to grow manifold in the next few years on gold loans, Srinivasan added.

The company had a loan book size of Rs 10,686 crore, with a customer base of over 1,15,000 customers, as on December 31, 2010.

Source: Financial Express
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Sebi warns India Inc over 'fixing' markets

Mumbai: In the wake of a spurt in allegations of fraudulent behaviour by India Inc, capital market regulator Sebi, gave a stern warning to corporates to be on the "right side" and not indulge in market manipulation and insider trading.

"Some corporates, who ideally should not have fallen into this category or this trap, we are discovering that due to lack of focus this (illegal activity) is happening...I'd like corporates in India to be on the right side of Sebi," its new Chairman, U K Sinha, said during an address to the members of industry body, Assocham, here.

Corporates should definitely access the markets to grow, but should not come to the "adverse" notice of Sebi. "What I mean is in matters like market manipulation, insider trading," he clarified, insisting that Sebi is more interested in fulfilling its mandated job of developing the market rather than playing the role of a vigilant watchdog. Asking for extra caution by corporates in their

internal systems, Sinha said promoters and top management "are not able to safeguard themselves against certain things which might be happening without their knowledge or without their support."

Sinha said discovery of documentary evidence and analysis done by Sebi recently prompted these remarks while speaking before representatives of India Inc, his first such interaction since taking over in February this year.

Sebi is currently in the midst of setting-up a world-class facility having the best of surveillance capabilities, Sinha said, adding that more than half of the work on it is complete and the entire facility will be operational in six months.

"It will be possible for us to find a good trail," he said.

Speaking about the accounting and audit fraternity, he new Sebi chief said the regulator would take action if it finds any "collusion" between the audit firms and corporates and asked the latter to adhere to the highest standards of financial reporting.

"Besides concentrating on your vision and business growth, also devote some time on issues of internal controls within your system and things like financial reporting," Sinha said.

The Sebi chief's comments come close on the heels of a string of allegations of insider trading, market manipulation and misuse of borrowed funds coming to Sebi's notice wherein the corporates concerned have walked out by paying hefty "consent fees", choosing not to challenge the allegations.

Expressing reservations over on corporate governance, the Sebi chief said generally , it is limited to issues like independent directors making it very "cosmetic" in nature.

On the takeover code, Sinha said consultations are currently on at various levels and said he expects the final guidelines to come out in a "couple of months".

Coming out in support of pension money being invested in the equity markets, Sinha said a working group's recommendation of allowing trusts to invest up to 15 per cent is yet to be notified and added that Sebi has taken it up with the Government at the "appropriate level".

Sebi will focus towards deepening the markets going forward, Sinha said, pointing out to certain concerns like low participation of domestic institutions, skewed geographical growth and failure to attract pension funds to the market.

Batting for retail investors, Sinha said current know your customer (KYC) requirements are not harmonious for investors and the contracts they enter into while purchasing shares also need a "major overhaul". A working group has been constituted to remove "bottlenecks and discrepancies", he said.

Source: Financial Express
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ICICI Bank on top 100 global brands list

New York: Software giant Apple has emerged as the world's most valuable brand surpassing search engine major Google, while ICICI Bank is the lone Indian company to feature in the list of top 100 global brands.

With a brand value of USD 14.9 billion, India's largest private sector lender ICICI Bank is ranked at the 53rd position in the league of world's 100 most valuable brands compiled by global brands agency Millward Brown.

This is the second straight appearance for ICICI bank in annual BrandZ study.

Interestingly, the report said that with a rise of 27 per cent in brand value to USD 8.2 billion, India's Infosys was one of the most valuable technology brands in the world and is expected to soon rank among the top 100 most valuable global brands across all sectors.

The iPhone maker's brand is valued at USD 153.3 billion, an 84 per cent increase since last year. Besides, Google's brand is now valued at USD 111.5 billion (rpt) USD 111.5 billion, a 2 per cent fall from 2010.

IBM has bagged the third position with a brand value of USD 100.84 billion followed by McDonalds (USD 81.01 billion) and Microsoft (USD 78.24 billion).

The BrandZ index calculates brand value on several factors, such as an estimate of the brand's contribution to earnings, valuation of intangible assets, measures of customer perception and an estimate of growth potential.

The brand rankings are dominated by technology companies, with six out of the top 10 places cornered by Apple, Google, IBM, Microsoft, AT&T and China Mobile.

Facebook entered the top-100 list for the first time at Number 35 with a brand value of USD 19.1 billion. Besides, Citi's scored the 47th spot with a brand value of USD 15.67 billion.

Other brands in the list include -- Coca-Cola (6th), Vodafone (12th), Toyota (27th), HSBC (28th), Colgate (55th), Pepsi (63rd), Intel (58th) and Samsung (67th).


Source: Financial Express
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Temasek Holdings will not buy TPG Stake in Shriram Transport Finance

MUMBAI: Singapore state investment fund Temasek Holdings has decided to drop its plans to buy private equity major TPG Capital's stake in India's largest commercial vehicle financing company Shriram Transport Finance , two people familiar with the matter told ET.

"Temasek, after evaluating the company (Shriram Transport), has taken a call not to go ahead with the stake buy," said a person with direct knowledge of the deal. Shriram Transport and TPG were not available for comment.

Temasek's decision comes in the wake of the Reserve Bank of India's move to take away priority sector lending status for nonbanking finance companies. The removal of priority lending status is likely to increase cost of funds for NBFCs and dent net interest margin.

Priority lending enabled NBFCs to get fund from banks at a discount to market rates. NBFCs borrowed more than 50% from banks in 2010-11 compared with just 14% in 2009-10 . In the past one year, the central bank has taken various measures to tighten regulations for NBFCs to bring them at par with regular banks.

TPG, which holds 20% stake valued at Rs 3,000 crore in Shriram Transport, was in talks with Temasek to offload part of its holding . The PE major is also in talks with other sovereign wealth funds, including Government of Singapore Investment Corporation to sell its stake in the NBFC.

TPG wants to exit Shriram Transport and invest in other businesses of Shriram Group . It is planning to invest Rs 450 crore in Shriram Properties. It already owns 49% in Shriram Retail Private Holdings and 28% in Shriram City Union Finance.

Source: EconomicTimes
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Kotak Mahindra raises base rate, BPLR by 50 bps

MUMBAI: Private lender Kotak Mahindra Bank said on Monday it has raised its base rate by 50 basis points to 9.25 percent and benchmark prime lending rate by a similar quantum effective May 10.

All categories of loans, other than exceptions permitted by the Reserve Bank of India (RBI), will henceforth be priced with the reference to the revised base rate, it said in a statement to the stock exchanges.

ICICI Bank , India's second-largest lender, said on Friday it would raise its benchmark base rate by 50 basis points to 9.25 percent per annum with effect from Saturday.

Last week, the RBI raised the repo and reverse repo rate by a larger-than-expected 50 basis points to battle a stubbornly high inflation.

Source: EconomicTimes
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Development Credit Bank ups base rate, BPLR by 0.5 per cent

MUMBAI: Private sector lender Development Credit Bank (DCB) today said it has hiked both its base rate and benchmark prime lending rate (BPLR) by 0.5 per cent.

Its base rate now stands at 9.50 per cent, while the BPLR is at 16.75 per cent, the bank said in a press release issued here.

The new rates came into effect from May 7.

Source: EconomicTimes
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YES Bank hikes interest rates on term deposits

MUMBAI: Private sector lender YES Bank today increased interest rates on term deposits by up to 50 basis points depending on the maturity.

The move, which comes within a week of the Reserve Bank hiking its key short term rates by 50 basis points, is in line with other lenders like Kotak Mahindra Bank and Union Bank of India .

Under the revised rates which are applicable from today, a 7-14 day deposit under Rs 15 lakh will earn an interest of 4 per cent per annum from 3.5 per cent earlier, YES Bank said.

Similarly, 12 months to 15 months 21 days deposit under Rs 15 lakh will earn the depositor a rate of 8.75 per cent per annum, 50 basis points more than the earlier 8.25 per cent.

Rates on the Rs 15 lakh to Rs 1 crore bucket have also been increased by the bank, a release issued here said, adding the deposit rates were hiked last on March 21.

Source: EconomicTimes
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Monday, May 9, 2011

Saraswat Bank FY11 net up 78% at Rs 212 cr

Country's biggest lender from the co-operative space, Saraswat Bank, has posted a 78% growth in net profit at Rs 212.27-crore in FY11 on the back of a lower base but said RBI's rate tightening will result in margins getting dented by up to 80 basis points this fiscal.

"Our profitability will be hit because of the rate hikes by the Reserve Bank...As we are in co-operative sector, we have no immediate plans of passing the hike on to our borrowers," the bank's Chairman Eknath Thakur told reporters here today.

The bank's net interest margins stood at 3.52% and Thakur expects it to come down to 2.80%. Currently, bank's base rate is 10%, he said.

Commenting on the performance in FY11, Thakur said the net profit increase is high because of a lower base in the previous fiscal when the bank took a hit because of the global slowdown and its exposure to the diamond trade.

Saraswat, which has amalgamated seven banks into itself till now, is in advanced talks to takeover a Karnataka-based co-operative in a weak financial state. An MoU will be signed soon and the target bank has 39 branches, Thakur said, choosing not to divulge the name of the bank.

The 93-year-old bank's capital adequacy stood at 12.7% and Thakur said its proposal to expand the capital by issuing shares to borrowers at book value is in advanced stages of being given the go-ahead through a change in statutes.

Such a permission will help it tide over problems relating to capital raising in its growth plan.

"Being a co-operative, we cannot issue shares and list on the markets. We have to think of newer ways," Thakur said, reiterating that turning itself into a private entity is also on the bank's radar which will take care of the capital issue.

However, he did not give any timeframe for the same.

The bank's total business stood at Rs 27,313-crore as on March 31, 2011 and it is targeting Rs 1-lakh-crore in the next 10 years.

Saraswat has also written to the Reserve Bank seeking to start asset reconstruction, microfinance and marketing subsidiaries, Thakur said.

For the asset reconstruction business, it has already sounded some peers in the co-operative space and a state-run lender "informally" with a proposal to team-up as per the regulatory requirement for the business.

On its own asset quality, the gross non-performing assets ratio improved to 3.25% and Thakur attributed the high prevalence of stressed assets to the NPAs coming from the merged banks.

For FY12, the bank is targeting a 25% growth in both advances and deposits as against FY11's 24.45% and 10.75%, respectively, Thakur said, adding, he plans to add over 90 branches during the year.


Source: Business Standard
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Punjab & Sind Bank to raise Rs 600 crore in 2011-12

New Delhi: State-owned Punjab & Sind Bank (PSB) plans to raise Rs 600 crore during the current fiscal from bonds to fund business growth.

"The board has given approval to raise Rs 600 crore from Tier-II bonds in 2011-12," said Punjab & Sind Bank Executive Director P K Anand.

It would be raised in phased manner depending on the requirement, he said. The bank expects to clock 28 per cent increase in advances, while deposits are likely to grow at 30 per cent in the current fiscal, he said.

During 2010-2011, deposits rose by 21.5 per cent to Rs 59,723 crore, while advances jumped 30.8 per cent to Rs 42,833 crore. Thus, the total business of the bank crossed Rs 1,02,555 crore at end of March, 2011.

It is to be noted that the bank, last among the public sector lenders to be listed, raised funds through initial public offering (IPO) an year ago. The bank raised Rs 470.82 crore through IPO, which was subscribed 50.75 times.

For the entire fiscal ended March 31, 2011, the net profit of the bank rose marginally by 3.5 per cent to Rs 526.1 crore from Rs 508.8 crore recorded in the previous fiscal.

Total income improved to Rs 5,369.5 crore from from Rs 4,345.9 crore in 2009-10. The net interest income of the bank rose by 31 per cent to Rs 1,560 crore in 2010-11 against Rs 1,184 crore in the previous fiscal.

The net interest margin (NIM) improved to 2.66 per cent at the end of fourth quarter compared to 2.45 per cent at the end of March, 2010.

Anand said the bank would aim to further improve it to 3 per cent in 2011-12.

Source: Financial Express
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