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Industry
New bank licences on the back burner
Companies with ambition of setting up a bank will have to wait longer. The muchhyped
grant of new bank licences has been put on the back burner, as the
government is not keen to go ahead. Sources familiar with the developments said
the government had conveyed its view that the matter be set aside to RBI, the
authority for issuing fresh licences. (Business Standard, August 1)
Banks talking tough on textile sector
Faced with multiplying losses due to falling global demand for apparels, banks have
started taking a tough stand against domestic textile mills, resulting in apprehension
of a working capital crunch in the coming months. According to a report by the
Confederation of Indian Textile Industry, the sector lost around Rs110bn in the past
three-four months due to erosion in stock value. (Business Standard, July 31)
India Inc prefers bank FDs on rising interest rate, business
uncertainty
Uncertainties in the business environment and attractive interest rates from banks
are making Indian Inc mimic the retail investor and park a higher share of cash
surpluses in term deposits. Corporate India invested another Rs344.70bn in fixed
deposits (FDs) with banks in 2010-11 – that is, some 40 per cent over the previous
year's level. (Business Line, July 31)
Pension plans: Irda set to drop 4.5% guaranteed return rule
The insurance regulator is set to drop the 4.5 per cent guaranteed return clause in
the controversial pension product norms. The revised guidelines for pension
products will do away with this guaranteed annual rate of return, linked to the
reverse repo rate prevailing in September 2010, when the guidelines were issued.
Instead, insurers will have to provide only a capital guarantee. (Business Standard,
August 1)
RBI warns banks against internal frauds
RBI has warned banks against internal fraud committed by their own employees.
Addressing an IBA conference on Friday, RBI executive director G Padmanabhan
said: Todays employees are able to easily export sensitive files and information via
email, FTP or by copying data to portable media. Banks have to control where their
sensitive information is, how it’s used, and who obtains it. (Economic Times, July
30)
I-banks continue to hire, despite falling revenues
Revenues are sliding but investment banks (i-banks) are not nervous. They are
doing what they advise their clients to do: believe in India’s growth. Despite a lull in
deal activities in recent months, investment banks have not stopped hiring talent.
Last week Sughosh Moharikar, managing director of investment banking at rival
Credit Suisse Securities (India) Pvt. Ltd, quit to head the investment banking and
mergers and acquisitions practice of an American investment bank. (Mint, August 1)
Sebi to frame regulations for alternative investments
Entities promising hefty returns to gullible investors from 'offbeat' avenues like art,
antiques and real estate may soon come under the scanner of Sebi, which is
framing a new set of rules for 'alternative investments'. These alternative or offbeat
investments are generally offered by wealth or portfolio managers in schemes
focused on real estate, art works, antiques and even coins and stamps. (Economic
Times, July 30)
Banks / Financial Institutions
ICICI Bank acquires 29.3% in GTL
ICICI Bank has acquired a 29.3% stake in the troubled tower company GTL Ltd, the
company informed the Bombay Stock Exchange. However, the bank spokesperson
declined to comment. In June, GTL and GTL Infrastructure appointed SBI Capital
Markets to assess their financial situation and obligations. GIL had opted for
corporate debt restructuring or CDR. (Economic Times, July 30)
YES Bank, Indiabulls Real Estate ink lease rental agreement at a huge
discount
Mumbai's biggest commercial lease rental deal this year has come at a huge
discount compared to a year ago. Private sector bank YES Bank, through a lease
agreement, has recently picked up the top six floors at one of the three buildings at
Indiabulls Real Estate's commercial project Indiabulls Finance Center in Lower
Parel at rental of Rs125 per sq ft a month. (Economic Times, July 30)
Govt notifies acquisition of SBICI by State Bank
The Government on Friday notified the acquisition of State Bank of India
Commercial and International (SBICI) Bank by its parent State Bank of India. The
Government notification sanctioned the acquisition in terms of section 35(2) of the
State Bank of India Act, 1955. The order of acquisition is effective July 29, 2011.
(Business Line, July 30)
Indian Bank Q1 Net up 10.5% at Rs4.07bn
Public sector lender Indian Bank on Friday reported a 10.5 per cent growth on its
net profit to Rs4.07bn for the first quarter ending June 30, 2011. The cityheadquartered
bank had reported a net profit of Rs3.68bn during the corresponding
quarter of previous year, Indian Bank Chairman and Managing Director T Bhasin
told reporters while declaring the financial performance of the bank. (Economic
Times, July 30)
Power Finance Q1 net up 5% YoY
With increasing pressure on spreads due to rising interest rates, Power Finance
Corporation (PFC) has reported a 5 per cent increase in quarterly profit. During the
first quarter of the current fiscal, the net profit of the State-run lender to power
projects increased to Rs6.86bn from Rs6.52bn in the corresponding quarter of last
fiscal year. (Business Line, July 31)
Net interest income, NIM lift IDBI Bank net up 34% YoY
IDBI Bank has reported a 34 per cent spike in net income to Rs3.35bn for the
quarter to June driven by a rise in net interest income and net interest margin,
despite advances growing at a slower pace of 15 per cent quarter-on-quarter.
During the corresponding quarter last fiscal, the city-based lender had reported a
net profit of Rs2.51bn, the bank said in a release today. (Business Line, July 31)
Punjab & Sind Bank, Corp Bank and others hike lending, deposit rates
Several banks including Indian Overseas Bank (IOB), Punjab & Sind Bank and
Corporation Bank have raised lending rate by up to 50 basis points in line with other
lenders. While all loans, including home and auto, will become expensive,
depositors will get better returns on their savings. (Economic Times, July 31)
Other income helps Syndicate Bank post 29% rise in net
Buoyed by a 35 per cent increase in other income, Syndicate Bank posted a 29 per
cent increase in net profits to Rs3.43bn during the first quarter of the 2011-12 fiscal,
as against Rs2.65bn recorded during the corresponding quarter of last year.
(Business Line, July 31)
United Bank net rises 22% on fee income
United Bank of India achieved 22 per cent growth in net profit at Rs1.32bn for the
quarter ended June 30, 2011, against Rs1.08bn during the corresponding period
last fiscal. Mr S.L. Bansal, Executive Director, attributed the rise in profits to an
increase in fee-based income. (Business Line, July 31)
Allahabad Bank, UCO Bank raise lending rates
Allahabad Bank and UCO Bank have both hiked their lending rates by 50 basis
points. The revised rates would come into effect from August 1, according to banks'
press statements. Post revision, the base rate of both banks would stand at 10.75
per cent (10.25 per cent), while benchmark prime lending rate would be 15 per cent
(14.50 per cent). (Business Line, July 31)
Punjab & Sind Bank seeks Rs9.90bn from govt
State-owned Punjab & Sind Bank has sought Rs9.90bn capital infusion from the
government to fund its business growth. "We have requested the government to
infuse additional capital of Rs9.90bn by way of preferential shares," said Punjab &
Sind Bank Executive Director PK Anand. (Business Line, July 31)
Dena Bank clocks 21% rise yoy in Q1 net
Dena Bank reported a 21% YoY rise in net profit to Rs1.68bn for the June quarter,
helped by higher NII and non-interest income. NII rose 23.87% from a year ago to
Rs4.47bn while non-interest income jumped 16% to Rs1.24bn. NIM remained
almost flat at 2.90%. Net non-performing assets (NPAs) stood at Rs4.58bn against
Rs6.51bn a year ago. (Economic Times, July 30)
Sundaram Finance Q1 net increases 28% yoy
Sundaram Finance June quarter net profit rose 28% to Rs0.75bn from Rs0.59bn in
the year-ago period. Income from operations grew 24.5% to Rs3.89bn from
Rs3.12bn. The Chennai-based NBFC had said it expects modest growth in FY12 in
the commercial vehicles and car segments. (Economic Times, July 30)
Canara Bank ties up with Canara HSBC Oriental for micro-insurance
product
Canara Bank has tied up with Canara HSBC Oriental Bank of Commerce Life
Insurance Company for a micro-insurance product. This will be offered on the smart
cards that it provides in its financial inclusion initiative. At a premium of Rs100, the
insurance will offer a cover of Rs22,500. (Business Line, August 1)
IIFCL to raise Rs35bn via tax-free infra bonds
India Infrastructure Finance Company Ltd (IIFCL) will raise Rs35bn through tax-free
infrastructure bonds anytime in the present financial year. “We are writing to the
Government for necessary approvals. Once we receive the approval, it will not take
more than a week to bond market,” Mr S.K. Goel, Chairman and Managing Director
of IIFCL, told newspersons after the inauguration of the company's first regional
office here on Sunday. (Business Line, August 1)
City Union Bank clocks 32% increase in net YoY
City Union Bank reported a 32 per cent growth in net profits at Rs0.59bn for the first
quarter of 2011-12 compared with Rs0.44bn for the same period last year. The bank
intends to hike its base rate by 75 basis points to 10.50 per cent. Addressing a
press conference, Dr N. Kamakodi, Managing Director and CEO, City Union Bank,
said despite pressures on net interest margins the bank would continue to maintain
its NIM at 3.5 per cent during the current financial year. (Business Line, July 30)
Opinion
Think inflation targeting, put rumours to rest: Kaushik Basu
In a recent paper presented at the Indian Statistical Institute, chief economic advisor
to the government Kaushik Basu has deliberated on the complexities of inflation
management. In the paper, 'Understanding inflation and controlling it', he
emphasizes the need for research-based policy decisions and the pitfalls that arise
when policies are taken for granted. (Economic Times, July 30)
How can we save India’s MFI industry?
One-and-a-half decade ago, state-run Indian Bank came very close to a collapse
when its accumulated losses wiped out its equity and reserves. The Chennai-based
lender had made huge losses as it had to set aside money to provide for its bad
assets. Now, Vijay Mahajan-promoted Bhartiya Samruddhi Finance Ltd (BSFL),
India’s oldest microfinance institution (MFI), is also collapsing under the burden of
bad loans. (Mint, August 1)
Little can be done by RBI to curb inflation
Monetary tightening is having a limited impact on inflation, which is driven by the
supply of money to rural areas through programmes such as the Mahatma Gandhi
National Rural Employment Guarantee Act (MGNREGA), Nirmal Jain, chairman of
India Infoline, said in an interview. The Reserve Bank of India’s (RBI’s) hiking of
interest rates to curb inflation will hurt corporate earnings and the country’s
economic growth, he said. (Mint, August 1)
Governance deficit and RBI action
Last week’s decision of the Reserve Bank of India (RBI) to raise its policy rate by 50
basis points took centre stage as much due to the surprise factor (market analysts
were completely blindsided) as it did with the import (the threat of double-digit
inflation is for real) of the decision. While these reactions are spot on, they ignore
the subtext: it is yet another example of someone stepping forward to breach the
governance deficit, just like the Supreme Court and civil society took the lead in
tackling corruption? (Mint, August 1)
Sebi's pragmatism
The Securities and Exchange Board of India’s (Sebi’s) decision to accept most of
the recommendations of the Takeover Regulations Advisory Committee (TRAC),
almost a year after the report was submitted, has come as a breath of fresh air on
the policy-making front. Several of TRAC’s recommendations amounted to a bold
departure from the existing takeover regulations, with industry and merchant
bankers lobbying strongly against some of them. Sebi, however, took an “all or
nothing” approach. (Business Standard, August 1)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Industry
New bank licences on the back burner
Companies with ambition of setting up a bank will have to wait longer. The muchhyped
grant of new bank licences has been put on the back burner, as the
government is not keen to go ahead. Sources familiar with the developments said
the government had conveyed its view that the matter be set aside to RBI, the
authority for issuing fresh licences. (Business Standard, August 1)
Banks talking tough on textile sector
Faced with multiplying losses due to falling global demand for apparels, banks have
started taking a tough stand against domestic textile mills, resulting in apprehension
of a working capital crunch in the coming months. According to a report by the
Confederation of Indian Textile Industry, the sector lost around Rs110bn in the past
three-four months due to erosion in stock value. (Business Standard, July 31)
India Inc prefers bank FDs on rising interest rate, business
uncertainty
Uncertainties in the business environment and attractive interest rates from banks
are making Indian Inc mimic the retail investor and park a higher share of cash
surpluses in term deposits. Corporate India invested another Rs344.70bn in fixed
deposits (FDs) with banks in 2010-11 – that is, some 40 per cent over the previous
year's level. (Business Line, July 31)
Pension plans: Irda set to drop 4.5% guaranteed return rule
The insurance regulator is set to drop the 4.5 per cent guaranteed return clause in
the controversial pension product norms. The revised guidelines for pension
products will do away with this guaranteed annual rate of return, linked to the
reverse repo rate prevailing in September 2010, when the guidelines were issued.
Instead, insurers will have to provide only a capital guarantee. (Business Standard,
August 1)
RBI warns banks against internal frauds
RBI has warned banks against internal fraud committed by their own employees.
Addressing an IBA conference on Friday, RBI executive director G Padmanabhan
said: Todays employees are able to easily export sensitive files and information via
email, FTP or by copying data to portable media. Banks have to control where their
sensitive information is, how it’s used, and who obtains it. (Economic Times, July
30)
I-banks continue to hire, despite falling revenues
Revenues are sliding but investment banks (i-banks) are not nervous. They are
doing what they advise their clients to do: believe in India’s growth. Despite a lull in
deal activities in recent months, investment banks have not stopped hiring talent.
Last week Sughosh Moharikar, managing director of investment banking at rival
Credit Suisse Securities (India) Pvt. Ltd, quit to head the investment banking and
mergers and acquisitions practice of an American investment bank. (Mint, August 1)
Sebi to frame regulations for alternative investments
Entities promising hefty returns to gullible investors from 'offbeat' avenues like art,
antiques and real estate may soon come under the scanner of Sebi, which is
framing a new set of rules for 'alternative investments'. These alternative or offbeat
investments are generally offered by wealth or portfolio managers in schemes
focused on real estate, art works, antiques and even coins and stamps. (Economic
Times, July 30)
Banks / Financial Institutions
ICICI Bank acquires 29.3% in GTL
ICICI Bank has acquired a 29.3% stake in the troubled tower company GTL Ltd, the
company informed the Bombay Stock Exchange. However, the bank spokesperson
declined to comment. In June, GTL and GTL Infrastructure appointed SBI Capital
Markets to assess their financial situation and obligations. GIL had opted for
corporate debt restructuring or CDR. (Economic Times, July 30)
YES Bank, Indiabulls Real Estate ink lease rental agreement at a huge
discount
Mumbai's biggest commercial lease rental deal this year has come at a huge
discount compared to a year ago. Private sector bank YES Bank, through a lease
agreement, has recently picked up the top six floors at one of the three buildings at
Indiabulls Real Estate's commercial project Indiabulls Finance Center in Lower
Parel at rental of Rs125 per sq ft a month. (Economic Times, July 30)
Govt notifies acquisition of SBICI by State Bank
The Government on Friday notified the acquisition of State Bank of India
Commercial and International (SBICI) Bank by its parent State Bank of India. The
Government notification sanctioned the acquisition in terms of section 35(2) of the
State Bank of India Act, 1955. The order of acquisition is effective July 29, 2011.
(Business Line, July 30)
Indian Bank Q1 Net up 10.5% at Rs4.07bn
Public sector lender Indian Bank on Friday reported a 10.5 per cent growth on its
net profit to Rs4.07bn for the first quarter ending June 30, 2011. The cityheadquartered
bank had reported a net profit of Rs3.68bn during the corresponding
quarter of previous year, Indian Bank Chairman and Managing Director T Bhasin
told reporters while declaring the financial performance of the bank. (Economic
Times, July 30)
Power Finance Q1 net up 5% YoY
With increasing pressure on spreads due to rising interest rates, Power Finance
Corporation (PFC) has reported a 5 per cent increase in quarterly profit. During the
first quarter of the current fiscal, the net profit of the State-run lender to power
projects increased to Rs6.86bn from Rs6.52bn in the corresponding quarter of last
fiscal year. (Business Line, July 31)
Net interest income, NIM lift IDBI Bank net up 34% YoY
IDBI Bank has reported a 34 per cent spike in net income to Rs3.35bn for the
quarter to June driven by a rise in net interest income and net interest margin,
despite advances growing at a slower pace of 15 per cent quarter-on-quarter.
During the corresponding quarter last fiscal, the city-based lender had reported a
net profit of Rs2.51bn, the bank said in a release today. (Business Line, July 31)
Punjab & Sind Bank, Corp Bank and others hike lending, deposit rates
Several banks including Indian Overseas Bank (IOB), Punjab & Sind Bank and
Corporation Bank have raised lending rate by up to 50 basis points in line with other
lenders. While all loans, including home and auto, will become expensive,
depositors will get better returns on their savings. (Economic Times, July 31)
Other income helps Syndicate Bank post 29% rise in net
Buoyed by a 35 per cent increase in other income, Syndicate Bank posted a 29 per
cent increase in net profits to Rs3.43bn during the first quarter of the 2011-12 fiscal,
as against Rs2.65bn recorded during the corresponding quarter of last year.
(Business Line, July 31)
United Bank net rises 22% on fee income
United Bank of India achieved 22 per cent growth in net profit at Rs1.32bn for the
quarter ended June 30, 2011, against Rs1.08bn during the corresponding period
last fiscal. Mr S.L. Bansal, Executive Director, attributed the rise in profits to an
increase in fee-based income. (Business Line, July 31)
Allahabad Bank, UCO Bank raise lending rates
Allahabad Bank and UCO Bank have both hiked their lending rates by 50 basis
points. The revised rates would come into effect from August 1, according to banks'
press statements. Post revision, the base rate of both banks would stand at 10.75
per cent (10.25 per cent), while benchmark prime lending rate would be 15 per cent
(14.50 per cent). (Business Line, July 31)
Punjab & Sind Bank seeks Rs9.90bn from govt
State-owned Punjab & Sind Bank has sought Rs9.90bn capital infusion from the
government to fund its business growth. "We have requested the government to
infuse additional capital of Rs9.90bn by way of preferential shares," said Punjab &
Sind Bank Executive Director PK Anand. (Business Line, July 31)
Dena Bank clocks 21% rise yoy in Q1 net
Dena Bank reported a 21% YoY rise in net profit to Rs1.68bn for the June quarter,
helped by higher NII and non-interest income. NII rose 23.87% from a year ago to
Rs4.47bn while non-interest income jumped 16% to Rs1.24bn. NIM remained
almost flat at 2.90%. Net non-performing assets (NPAs) stood at Rs4.58bn against
Rs6.51bn a year ago. (Economic Times, July 30)
Sundaram Finance Q1 net increases 28% yoy
Sundaram Finance June quarter net profit rose 28% to Rs0.75bn from Rs0.59bn in
the year-ago period. Income from operations grew 24.5% to Rs3.89bn from
Rs3.12bn. The Chennai-based NBFC had said it expects modest growth in FY12 in
the commercial vehicles and car segments. (Economic Times, July 30)
Canara Bank ties up with Canara HSBC Oriental for micro-insurance
product
Canara Bank has tied up with Canara HSBC Oriental Bank of Commerce Life
Insurance Company for a micro-insurance product. This will be offered on the smart
cards that it provides in its financial inclusion initiative. At a premium of Rs100, the
insurance will offer a cover of Rs22,500. (Business Line, August 1)
IIFCL to raise Rs35bn via tax-free infra bonds
India Infrastructure Finance Company Ltd (IIFCL) will raise Rs35bn through tax-free
infrastructure bonds anytime in the present financial year. “We are writing to the
Government for necessary approvals. Once we receive the approval, it will not take
more than a week to bond market,” Mr S.K. Goel, Chairman and Managing Director
of IIFCL, told newspersons after the inauguration of the company's first regional
office here on Sunday. (Business Line, August 1)
City Union Bank clocks 32% increase in net YoY
City Union Bank reported a 32 per cent growth in net profits at Rs0.59bn for the first
quarter of 2011-12 compared with Rs0.44bn for the same period last year. The bank
intends to hike its base rate by 75 basis points to 10.50 per cent. Addressing a
press conference, Dr N. Kamakodi, Managing Director and CEO, City Union Bank,
said despite pressures on net interest margins the bank would continue to maintain
its NIM at 3.5 per cent during the current financial year. (Business Line, July 30)
Opinion
Think inflation targeting, put rumours to rest: Kaushik Basu
In a recent paper presented at the Indian Statistical Institute, chief economic advisor
to the government Kaushik Basu has deliberated on the complexities of inflation
management. In the paper, 'Understanding inflation and controlling it', he
emphasizes the need for research-based policy decisions and the pitfalls that arise
when policies are taken for granted. (Economic Times, July 30)
How can we save India’s MFI industry?
One-and-a-half decade ago, state-run Indian Bank came very close to a collapse
when its accumulated losses wiped out its equity and reserves. The Chennai-based
lender had made huge losses as it had to set aside money to provide for its bad
assets. Now, Vijay Mahajan-promoted Bhartiya Samruddhi Finance Ltd (BSFL),
India’s oldest microfinance institution (MFI), is also collapsing under the burden of
bad loans. (Mint, August 1)
Little can be done by RBI to curb inflation
Monetary tightening is having a limited impact on inflation, which is driven by the
supply of money to rural areas through programmes such as the Mahatma Gandhi
National Rural Employment Guarantee Act (MGNREGA), Nirmal Jain, chairman of
India Infoline, said in an interview. The Reserve Bank of India’s (RBI’s) hiking of
interest rates to curb inflation will hurt corporate earnings and the country’s
economic growth, he said. (Mint, August 1)
Governance deficit and RBI action
Last week’s decision of the Reserve Bank of India (RBI) to raise its policy rate by 50
basis points took centre stage as much due to the surprise factor (market analysts
were completely blindsided) as it did with the import (the threat of double-digit
inflation is for real) of the decision. While these reactions are spot on, they ignore
the subtext: it is yet another example of someone stepping forward to breach the
governance deficit, just like the Supreme Court and civil society took the lead in
tackling corruption? (Mint, August 1)
Sebi's pragmatism
The Securities and Exchange Board of India’s (Sebi’s) decision to accept most of
the recommendations of the Takeover Regulations Advisory Committee (TRAC),
almost a year after the report was submitted, has come as a breath of fresh air on
the policy-making front. Several of TRAC’s recommendations amounted to a bold
departure from the existing takeover regulations, with industry and merchant
bankers lobbying strongly against some of them. Sebi, however, took an “all or
nothing” approach. (Business Standard, August 1)
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