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

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

Bad Loans of public sector banks like BoB, BoI & Allahabad Bank shrink on better recoveries

Three of the seven banks that have declared quarterly results have shown better recoveries from sticky loans, following a government nod to lenders to go after wilful defaulters. Bank of BarodaBSE 0.97 %, Allahabad BankBSE 2.08 % and Bank of India saw better recoveries from sticky loans after the government allowed them to publish names of wilful defaulters and auction their collateralised assets. Bank of Baroda's slippages fell to Rs 1,600 crore in the three months to September 30, compared with Rs 1,800 crore in the year-ago quarter. Chairman and managing director SS Mundra said he expects that the worst may be over so far as asset quality is concerned, and that performance would stabilise over the next few years. 

Read more >> Click here

Earnings of five state-run banks better than expected

The first set of earnings from five public sector lenders have beaten the market expectations, especially on the bad assets front, during the September quarter.  Among the public sector banks, so far Bank of Baroda, Bank of India, Union Bank, Allahabad Bank and Syndicate Bank have announced the earnings. The star performer was Bank of India whose net profit soared over 105 per cent to Rs 622 crore in the quarter to September as against Rs 302 crore a year ago. Spurt in profit after tax was on account of higher net interest income and other incomes.  Net interest income improved to Rs 2,527 crore, registering a growth of 15.07 per cent as against Rs 2,196 crore in year-ago period.  The two-fold jump in the net profit led to the bank's shares to rise over 22 per cent to close at Rs 211.95 on October 31 on the NSE. 

Read more >> Click here

Former MD & Chairman of Indian Bank, four others sentenced

A CBI court here today sentenced former Chairman and Managing Director ofIndian Bank M Gopalakrishnan and four others to one year imprisonment for defrauding various branches of the bank to the tune of about Rs 6.5 crore. CBI Principal Sessions Judge S Malathi also ordered Gopalakrishnan, N Ramakrishnan, bank valuer, V Ravikumar of Arul Builders, K Sai Jagannathan of Incom Builders, and Businessman Varadarajulu to pay a fine ranging from Rs 15,000 to 40,000. 

Read more >> Click here

Public sector banks make combo loan offer to lure customers

 Public sector banks are offering attractive combo offers to capture a large share of customers purse. Bank like Union Bank of India, Dena BankBSE 0.62 % and Indian Bank have recently launched combo offer where the banks will offer a lower rate of interest if customers avail two loan products from them. For instance, Union Bank of IndiaBSE -0.56 %has a combo offer where existing home loancustomers are offered two wheeler loan and consumer loan (with a ceiling of Rs 75000 per borrower) at 12.50%. These discounted rates would also be offered to borrowers who are employees of bank's borrower from MSME (medium and small micro enterprise) segment or have a salary account with the bank. However, without the combo offer, the bank would be charged 15% on two wheeler and consumer durable loan.

Read more >> Click here

Public sector banks cut retail loan rates

A number of public sector banks (PSBs) on Wednesday cut their rates for retail loans, following a strong suggestion in this regard from the government. State Bank of India (SBI), Dena Bank and Corporation Bank were among those which announced a reduction in rates on car, two-wheeler and consumer durable loans. 

On Tuesday, Punjab National Bank and Oriental Bank of Commerce had cut their rates. Last week, Finance Minister P Chidambaram said the government would provide additional capital to PSBs, to enable them to offer loans to the retail segment at lower rates, especially for two-wheelers and consumer durables.

Read more >> Click here

PSU banks will score on rates this festival season

Has the recent Reserve Bank of India dictate asking banks to stop the zero per cent EMI schemes and the rising prices of electronic gadgets put a dampener on your Diwali shopping? You may still have a chance of buying that iPhone 5 or the latest LED TV you have been eyeing. With the Finance Ministry providing additional capital to public sector banks to facilitate rate cuts in the two-wheeler and consumer durable segments, some have already started doing so. State Bank of India launched a ‘special festival loan’ for its salary package account holders for purchase of consumer durables and two wheelers. Loans under this scheme start from 12.05%. Similarly, Punjab National Bank cut two-wheeler loan rates to 12.25% and rates on consumer durable loans to 12.75%. Oriental Bank of Commerce has also cut rates for a limited period. Consumer durable loans are small ticket loans with a maximum tenure of three years and typically PSU banks offer it to their salaried customers or existing borrowers.

Read more >> Click here

Rising provisions, treasury losses to pull down banks' quarterly profits

Weak treasury income, rising asset quality pressures and margin contraction will be the key trends witnessed by the Banking industry for the quarter ended September 30, 2013. Consequently, netprofit growth for leading private banks such as ICICI Bank, HDFC Bank and Axis Bank will see some moderation. Analysts expect leading private banks' (ICICI Bank, HDFC Bank and Axis Bank) net profit to grow by 11.2% (Axis) to 27.4% (HDFC Bank). The slower growth becomes significant given that ICICI Bank and Axis Bank posted net profit growth of 25.3 per cent and 22.1 per cent respectively in the June 2013 quarter. For HDFC Bank, the net profit grew by 30 per cent in the June 2013 quarter. The net profit growth could thus be the lowest over the past three-four quarters for these banks.

Read more >> Click here

Hiring in banking sector likely to go up by 30% this year, says experts

With banks being bullish on branch and portfolio expansion, hiring by both PSU as well as private lenders is likely to go up to 30 per cent this year, according to industry experts. “The hiring scenario in the banking sector is extremely positive this year and is likely to be 80,000 to one lakh jobs, which is 25-30 per cent more than last year,” skill development firm TalentSprint Managing Director and CEO Santanu Paul told PTI here.

The rise in recruitment in the banking sector is mainly on account of both PSU and private lenders becoming bullish on branch and portfolio expansion, besides retirement and attrition factors, he said. The Reserve Bank of India has announced giving licences to new banks to operate by the end of FY 2013-14, PSU Banks adding more than 8,000 branches in current fiscal and private sector banks, rural banks and foreign banks expanding their own branch network are factors that will huge job opportunity in the sector, he said.

Read more >> Click here

Banking stocks Which ones to bank on

Last year, no one wanted to touch them. By May, they were the market’s favourite ‘value’ picks.

In September, they were back to where they started.

That’s been the story of banking stocks in the last few months.

But despite their wild swings, with banks making up 10 per cent of the investment universe, they are hard to ignore.

So, with ‘taper’ fears behind us and the RBI telling us clearly where rates are headed (Up!), we think some banking stocks are now worth a fresh look. They aren’t the cheapest ones in the market.

Read more >> Click here

UCBs with deposits of over Rs 750cr can be a scheduled bank

The Reserve Bank today allowed urban cooperative banks (UCBs) with total deposits of over Rs 750 crore to graduate to scheduled bank category. If UCBs fulfill certain listed criteria, it will eligible for inclusion in the second schedule, RBI said in a notification.  All the public sector banks, private sector banks, foreign banks, regional rural banks are part of the second schedule. 

As per the government's notification, with effect from April 01, 2013, only those primary co-operative banks whose demand and time liabilities are not less than Rs 750 crore would be treated as a 'financial institution' for the purpose of inclusion of UCBs in the Second Schedule of the Reserve Bank of India Act, 1934. 

Read more >> Click here

With CPs pricey, a rush for bank loans; increasing credit demand could push up base rates

Bank loans jumped to a 17-month high in the two weeks to September 6 as borrowers made a rush for them, abandoning the commercial paper (CP) markets. The reason — higher short-term rates have made commercial papers unattractive. Besides, companies are picking up money that's part of loan amounts already approved but not borrowed. 

This sets the tone for banks to raise base rates in the weeks ahead as busy season credit demand after an abundant monsoon is likely to push up demand for loans. Bank loans touched Rs54-lakh crore in the fortnight ended September 6, up 18.2% from the year ago. Much of the loan growth happened after the July 14 liquidity-tightening measures announced by the Reserve Bank of India to shore up the falling rupee.

Read more >> Click here

EMIs for home, car loans set to go up as banks gear up to raise lending and deposit rates

The festive season may not hold much cheer for those planning to buy a home or a car, thanks to Raghuram Rajan's unexpected move to raise the repo rate. Mortgage and auto loan borrowers may have to pay more as banks plan to raise interest rates in response to the monetary policy announcement.

The central bank governor himself was circumspect when asked how he expects banks to react. "I expect bankers to set rates appropriate to the cost of funding," Rajan said. "I hope they will look into their cost of funding and see how that has changed to take (a) decision. My sense is that is what most of them do. I don't want to micromanage their process. Let us see what they come up with."

Read more >> Click here

PSU bank chiefs defy Finance Minister diktat, hike rates

 In a rare display of spunk, some chiefs of public sector banks are standing up to their bosses in the North Block, even differing with them on rate cut, something you wouldn't have heard of in the past.  At least two bankers have, in recent months, raised interest rates despite veiled — and at times, explicit instructions — from New Delhi to not do so. What's even more interesting is that these bank chiefs are close to their retirement. 

For instance, State Bank of IndiaBSE -3.44 %chairman Pratip Chaudhuri raised lending rates — a token hike of 10 basis points to 9.80% — on Thursday, a day before Reserve Bank of India governor Raghuram Rajan announced his maiden policy review. Chaudhuri is set to retire at the end of this month. Similarly, BA Prabhakar, former CMD of Andhra Bank, raised rates just a fortnight before he retired in August. 

Read more >> Click here

Decision on Rs 14K Cr fund infusion in PSU banks in 10-15 days

The government today said it will decide about capital infusion in public sector banks in the next 10-15 days as stability is returning to the market. "Very soon now, now that markets are more or less, I see certain amount of confidence in the market and things appear to be stabilising. So anytime now (decision on capital infusion) within the next week, 10 days or fortnight," Financial Services Secretary Rajiv Takru said here.

The government has earmarked Rs 14,000 crore for capital infusion in the public sector banks during the current fiscal. Asked if RBI has more room for rate cut following the status-quo on the stimulus programme of Fed, Takru said, "looking at every event in isolation is not fair. "This (Fed move) would be one of the factors which the RBI will now take into account...So now this (Fed action) will be considered and we will know soon enough."

Read more >> Click here

Banks scurry to expand presence in non-urban areas

With the Reserve Bank of India expected to give banks a free hand to open branches and about a dozen non-banking finance companies (NBFCs) waiting in the wings to set up banking operations, existing banks are going the whole hog to expand their footprint. The fact that most of the new bank licence aspirants are NBFCs with a strong presence in rural and semi-urban centres is likely to drive existing banks to these centres to get the first-mover advantage.

K. V. S. Manian, President – Consumer Banking, Kotak Mahindra Bank said “We had envisaged a growth rate (in number of branches) of 25 to 35 per cent per year ... With imminent entry of new banks we have enhanced this (target) to 30 to 40 per cent per year.” The private sector banks are also rolling out rural branches faster than in the past, he added. “The new rule to free branches of licences is a transparent and friction-free process, and I think this will help banks plan their network expansion better,” said Manian.

Read more >> Click here

Indian banking set to become fifth largest by 2020: KPMG-CII report

Indian banking sector is expected to become fifth largest in the world by the year 2020, KPMG said in a report prepared in association with the Confederation of Indian Industry (CII). "If we look at statistics, India being one of the top 10 economies of the world and with relatively lower domestic credit to GDP percentage provides great opportunity for the banking sector to grow. Indian banking is expected to become fifth largest by the year 2020 and third largest by the year 2025," the KPMG-CII reporton the banking sector said.

It expects bank credit to grow at 17% CAGR (compound annual growth rate) in the medium-term leading to increased credit penetration. The need for having Indian banks among the top global banks is debated recently. The country's largest lender State Bank of India (SBI) is at the 38th position based on the size of assets, while India's largest private sector lender ICICI Bank is at 99th position. These are the only two Indian banks that figure in the list of top 100 banks in the world.

Read more  >> Click here

Banks to generate eight lakh jobs in six years: Assocham

The      country's banking sector will create eight lakh jobs in the next six years,     mainly due to expansion of branches, addition of newbanks and retirement of experienced staff, says an Assocham study.

Twenty-six public sector banks are going to hire 50,000 employees in the current fiscal. Besides, 20 private sector banks, regional rural banks and foreign banks put together will hire more than 50,000 personnel during 2013-14, it said. "This trend is likely to continue in the years to come as business volume and growth will go up along with entry of new private banks in the sector," said Assocham Secretary General D S Rawat. According to estimates, more than 1 lakh vacancies would be created due to superannuation of experienced public sector bank employees over the next six years, the study said. 

Read more >> Click here

Letter from a banker: Thank you governor, but what do we do with our police & politicians?

Dear Mr Governor,

Hearty congratulations on taking charge at the Reserve Bank of India. As a public sector banker, I haven't felt this enthusiastic in more than two decades of service. Not that I did not like the job or that I did not have superiors who did not appreciate my performance, but rarely have I felt anyone from the central bank sympathising with us.

You have demonstrated that you are there with an agenda and launched a banking blitzkrieg. It is very reassuring that you believe in free-market principles and the market has already got a taste of it you're your decisions to liberalise currency markets.

Read more >> Click here