US business body welcomes Indian banking sector reform

 The US business body has welcomed the new RBI rules governing access for foreign banks operating in India, describing the move as a positive step and called for opening up of other areas in particular the insurance sector. The central bank on Wednesday permitted wholly-owned subsidiary (WOS) of foreign banks to acquire domestic private sector banks as well as set up branches anywhere in the country. It also allowed foreign bank subsidiary to list on local stock exchanges. "I am pleased India has begun the process of liberalising access to its banking sector for foreign institutions," Senator Mark Warner, Co-Chair of the Senate India caucus said. "While I have concerns about some of the prerequisites accompanying the reforms, it is a positive first step towards boosting foreign direct investment that will be beneficial for both India and the United States," Warner said.....Read more >> Click here

RBI opens doors to M&As for foreign banks in India

Governor Rajan has provided an option to convert or operate through branches for those present before 2010, but has provided incentives to convert with a prescribed capital of Rs 500 crore."Wholly-owned subsidiaries may be permitted, subject to regulatory approvals and such conditions as may be prescribed, to enter into M&A transactions with any private sector bank in India, subject to the overall foreign investment limit of 74%," said the proposed framework.The principles of reciprocity and single mode of presence will determine the need for a foreign bank to locally incorporate, but many of the parameters are not provided in black and white...Read more >> Click here

New rules for foreign banks will be reforming, challenging : Fitch

RBI’s new guidelines on subsidiarisation of foreign banks are unlikely to alter the banking sector’s competitive landscape by itself, but does signal the prospect of further reforms, Fitch Ratings said. Wholly owned subsidiaries (WOS) of foreign banks will now have considerable freedom to open branches, list on Indian exchanges and participate in domestic M&As.

In theory, these ought to encourage the existing large foreign banks to deepen their business profiles in India, the global ratings agency said in a report. “But regulatory treatment, which is almost equivalent to that for domestic banks, will also create formidable challenges such as meeting priority sector lending (PSL) norms (40 per cent net bank credit) and maintaining at least 25 per cent of all new branches in unbanked centres,’’ it said...Read more >> Click here

Young executives prefer small cities to big cities for work-life balance

BhaveshSoni was born and raised in Mumbai, but abandoned the maximum city and moved to Vadodara in search of a quieter, better life. His 25-km commute to work took him two hours in Mumbai; it's now a 10 minute drive in Vadodra. He paid Rs 10,000 for a domestic help; the cost has halved now. He is set to buy a four-bedroom penthouse for Rs 30 lakh in his new city; something similar would have cost him Rs 4.5 crore in Mumbai. "I can come home for lunch everyday," says Soni, a deputy general manager of Vadodara for Serco Global Services, a BPO firm. "I have a two-year-old kid and need to strike a work-life balance." He and another colleague, a training lead, asked for a transfer when Serco Global Services opened a new centre in Vadodra.....Read more >> Click here

HC stays order in bank employees union case

The Madras High Court here today stayed the order of a single judge restraining two retired employees of a nationalised bank from participating in negotiations with management in employer-employee relations.   The First bench comprising Chief Justice R K Agrawal and Justice M Sathyanrayanan directed interim stay till December 2 on an appeal filed by L Balasubramanyan and S Srinivasan, office bearers of the AllIndia Overseas Bank Employees Union.  Balasubramanyan and Srinivasan moved the court against the October 11 order of the court.  Senior council A L Somayaji who appeared on behalf of the retired exployees submitted that no law prevents retired employees from becoming office bearers and as per the bye-laws they are entitled to continue in their respective posts. ..Read more >> Click here

Central Bank of India opens representative office in Hong Kong

The third largest public sector lender by branches Central Bank of IndiaBSE -4.99 % said it has opened arepresentative office in Hong Kong. The representative office will facilitate the bank to tap the huge business potential in the thriving island city by providing marketing and liaisoning, its chairman and managing director Rajeev Rishi said in a statement.  He said the office will not engage in core banking but will use its local presence to explore business opportunities with the aim of establishing a long-term presence and penetrate the markets...Source >> Economic Times

FinMin brings back lateral transfer of CMDs in govt banks

The finance ministry has shortlisted then names of executive directors who are likely to head public sector banks in 2014-15. Six public sector banks will see its chairmen and managing directors retiring in 2014-15, which are Bank of Baroda, Indian overseas bank, Canara Bank, Oriental Bank of Commerce, Vijaya Bank and United Bank of India. The selection panel comprising Anand Sinha, deputy governor, Reserve Bank of India and Rajiv Takru, secretary, financial services in the ministry of finance, among others, interviewed 19 executive directors last week. Sources indicate, Arun Srivastava, who is an ED in Bank of India has been identified to head Indian Overseas Bank, SK Kalra of Andhra Bank may get the charge of Canara Bank, BB Joshi of Bank of Baroda may head for OBC. Similarly, RK Goel of Central Bank of India may be given the charge of Vijaya Bank and MK Jain of Punjab & Sind bank may get the top job ion Kolkata-based United Bank...Read more >> Click here

Allowing bank mergers would boost local consolidation

The finance ministry and the Reserve Bank of India (RBI) are working on new guidelines that will ease mergers and acquisitions (M&As) among banks, which would pave the way for the creation of stronger entities through consolidation and for foreign banks to strengthen their local presence. "We are in discussions with the RBI. The idea is to make the norms easier and remove the irritants, which lead to delay in such transactions after regulatory approvals have been obtained," a finance ministry official said. RBI governor Raghuram Rajan had, last month in Washington, said that the banking regulator was planning a significant change in the rules to allow foreign banks to have a much bigger presence in India than they currently have and that they may even be allowed to acquire domestic lenders. 

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Issue TDS certificates on time to customers: RBI to banks

The RBI today asked banks to put in place systems to enable timely issuance ofTDS certificates to their customers.  The Reserve Bank in a notification said that it has been brought to its notice that some banks are not providing TDS Certificate in Form 16A to their customers in time, causing inconvenience to customers in filing their income-tax returns.  "The matter has been examined and with a view to protect interest of the depositors and for rendering better customer service, banks are advised to provide to their customers from whose income tax has been deducted at source, TDS Certificate in Form 16A," the RBI said. 

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Foreign banks with complex structures can operate via WOS only: RBI

In a bid to regulate and avoid 2008- type crisis, RBI said foreign banks with complex structures and which do not provide adequate disclosure would have to operate in India only through wholly-owned subsidiaries (WOS).  However, it permitted WOS of overseas banks to acquire private sector banks. The framework for setting up of WOS by foreign banks in India, released by the Reserve Bank tonight, also allowed foreign banks' subsidiaries to list on local stock exchanges. The initial minimum paid-up equity capital or net worth for a WOS would be Rs 500 crore. 

"Banks with complex structures, banks which do not provide adequate disclosure in their home jurisdiction, banks which are not widely held, banks from jurisdictions having legislation giving a preferential claim to depositors of home country in a winding up proceedings, etc, would be mandated entry into India only in the WOS mode," it said. 

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