PM's council wants govt to cut stake in banks to 51%

The Prime Minister's Economic Advisory Council has recommended phased dilution of government stake in public-sector banks, from 58 per cent to 51 per cent, and introduction of on-tap licensing of new banks. In a note prepared last week, the council, headed by C Rangarajan, said the stake reduction would help raise the additional capital required to implement the Basel III norms, meant to strengthen the banking system. Assuming no discount to market price, the government will be able to raise more than Rs 55,000 crore, the council has estimated, adding the pricing of shares should be attractive enough to bring in non-government shareholders. Making a strong case for abolishing the present system of "stop-go" licensing of new banks, the council has said it should be an ongoing process, in which licences can be given whenever the central bank feels an applicant meets the strict eligibility criteria. Apart from deepening the banking system, this will help reduce the fiscal impact of Basel III as the public-sector banks' share in incremental credit creation can be brought down from the current 70 per cent....Read more >> Click here

Staff retirement: Banks will face severe operational risks

Retirement of the existing pool of employees this decade has intensified the war for talent in the banking industry, according to S. R. Bansal, Chairman and Managing Director of Corporation Bank. Speaking at the inauguration of the Nitte Institute of Banking and Finance at Nitte University in Mangalore, he said more than half of the staff pool in the banking industry - at about 58 per cent - would retire during 2010-2020. 

Stating that the retirement is quite intense at the level of the top executives, he said 82 per cent of top executives in the banking industry will retire during the period. It means a leadership gap at the top management level, and banks are likely to face severe operational risks. He said the retirement of the experienced and committed employees would make way for the inexperienced, young and enthusiastic new ones. Added to this, the entry of new banks will increase the competition further. He suggested that institutes such as Nitte Institute of Banking and Finance focus on identifying the needs of bankers and developing contemporary contents for the banking industry.....Read more >> Click here

Banks still divided on making monthly interest payouts

For people like 62-year-old Padmaja Shastry, a retired professor in Chennai, and 34-year-old Tarunya Singh, a business executive in Pune, the festive season brought cheer from an unexpected quarter: the Reserve Bank of India. With the central bank last month permitting banks to pay interest on savings and term deposits every month instead of every quarter or at longer intervals, customers with such deposits—who also pay interest on loans on a monthly basis—stand to benefit.

“I invariably fall short of money by the end of the second or the third month every quarter. I have a `10-lakh term deposit with SBI (auto-renewed annually), with 9.25 per cent interest. Monthly interest could help me manage my budget better,” says Shastry, who collected interest every quarter so far. For Tarunya, who got a `15-lakh long-term deposit as a gift from her father at her wedding, a monthly interest income will come in handy to pay off her home loan EMI....Read More >> Click here

Public sector banks lagging in risk appraisal skills

Sri G Gopalakrishna...RBI ED

Most banks have identified training gaps in the areas of credit/risk management, agriculture programmes, and foreign exchange, according to Reserve Bank of India Executive Director G. Gopalakrishna. These areas require an equal measure of knowledge of rules, practices and specialised skills for appraisals, on the one hand, and an awareness of markets, on the other, he said while inaugurating the Nitte Institute of Banking and Finance at Nitte University in Mangalore. Banks, he said, require training by external experts and institutions in these areas.

Stating that the training needs cannot be uniform across the banking industry, as each bank has a unique structural make-up of its own with a different set of aspirations, he said: “What applies to a public sector bank may not be applicable for a different skill set present, say, in foreign banks and new generation private sector banks.” Public sector banks have shortage of skills in credit appraisal and risk management, whereas new generation private sector banks and foreign banks have better skills in these areas, he said....Read more >> Click here

New norms for foreign players not to hit Indian banks: Union Bank

Opening up of Indian banking industry for foreign players will not harm local lenders, who have been operating in the country for nearly 100 years, asserts a senior executive of Union Bank. "The presence of more players does not mean we will be weaker. We are ahead of them in terms of local experience and customer relationship," said K Subrahmanyam, executive director of the bank at a press meet here.He was in the city to donate Rs 1 crore to the Chief Minister's relief fund to help the victims of cyclone Phailin and floods in Odisha. The new banking entrants will ensure more competition in the market and ultimately, will provide benefit to the consumers, he explained."The competition will pave way for introduction of more financial products at competitive prices. At the end, it is the consumer who will benefit," said Subrahmanyam....Read more >> Click here

Bank staff miffed over govt’s ‘casual approach’ to wage talks

Bank employees have begun to voice their displeasure over what they call the Government's ‘casual’ approach in settling their wage accord, which is overdue. The 9th wage settlement expired in October 2012. A year has passed but negotiations have hardly taken off, said C.H. Venkatachalam, General Secretary, All India Bank Employees Association (AIBEA). The 10th bipartite talk between bank unions and Indian Banks Association (IBA) to decide on the quantum of wage increase for bank employees is currently on. Each settlement is valid for five years. The current settlement would be valid from November 2012 to October 2017. Read more >> Click here

New bank licences: Sebi scans listed applicants, group firms

As RBI gears up to issue new bank licences, capital markets regulator Sebi has also a job at hand that is of scrutinising all applicants coming under its jurisdiction directly or through group entities. Sebi's scrutiny follows detailed queries shot off by RBI to various regulators in India and abroad as part of its due-diligence of entities seeking to enter banking arena. According to a senior official, Sebi is looking into the capital market track-record of all the group entities of 26 banking aspirants, some of whom are either listed entities or have presence in Sebi-regulated businesses like mutual funds, brokerage and investment banks. The area of prime focus for the Securities and Exchange Board of India (Sebi) is action taken by or underway for violations to various market regulations, he added. The scrutiny is expected to be over this month itself. RBI is granting new bank licences for the first time in about a decade and preliminary screening process is underway for 26 entities that have submitted their applications....Read more >> Click here

Global forex probe ensnares large banks like HSBC, Barclays, Citigroup, JPMorgan and others

At least a dozen large banks from the US and Europe have come under scanner in a global regulatory probe into suspected manipulations in forex markets, with some of them being investigated for possible manoeuvring in over $50-billion a day rupee trade market. Without specifying the jurisdictions of the probes, some of these banks have admitted to being investigated by regulatory authorities for alleged forex marketmanipulations. These include Goldman Sachs, HSBC, UBS,Deutsche Bank, Barclays, RBS, Citigroupand JP Morgan and they have said in their respective regulatory filings that they are cooperating with the relevant authorities in the investigations....Read more >> Click here

ICICI's Chanda Kochhar named most powerful Indian businesswoman

ICICI BankBSE -0.13 % MD and CEO Chanda Kochhar has been named as the most powerful businesswoman in India for the third consecutive year by Fortune Magazine. Shikha Sharma of Axis BankBSE -4.52 % and Aruna Jayanthi of Capgemini India have taken the second and third place in the Fortune list of 50 most powerful businesswomen ranking for 2013. Preetha Reddy, Managing Director of Apollo Hospital Enterprises, and Mallika Srinivasan, CEO of Tractors and Farm Equipment Limited (TAFE), have secured the fourth and fifth positions, respectively. "Whether it's heading the Indian operations of an energy multinational or the world's largest coffee chain, women are getting more visible in India Inc," the magazine said. ..Read more >> Click here