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BUSINESS STANDARD (9) 21/5/2005  PAYMENT SYSTEM BILL ON CARDS The Reserve Bank of India today said it is working with the Centre to draft a comprehensive legislation on payment system.
The Payment System Bill will give th apex bank powers to form regulations for the payment industry, R B Barman, Executive Director, RBI said on the sidelines of a seminar on payment systems in banks.  
BUSINESS STANDARD (9) 21/5/2005  IBA PLANS FIRM FOR CENTRALISED CLEARING SYSTEM
Indian Banks' Association in association with member banks, will form a company that will act as an umbrela organisation for operating all retail payments and settlement system in India. The umbrella organisation will own and operate the clearing system in India. A slew of banks including ICICI Bank, Citibank, Standard Chartered Bank and 12 public sector entities are likely to pick up stake of this company. 
BUSINESS STANDARD (1) 20/5/2005  BANKS TOLD TO FURNISH DATA ON DERIVATIES
Concerned over banks' unhedged positions in the market, the Reserve Bank of India has sought data from banks on their derivatices exposure.
The Central bank has sought data from the fixed income market on banks' domestic as well as foreign exchange positions in segments like currency rupee options, interest rate swaps and the like. Normally, commercial banks on their own report to the RBI their positions at regular intervals.  
THE FINANCIAL EXPRESS (PAGE 12) 18/5/2005  IBA DIFFERS WITH RBI ON DO-NOT-CALL REGISTRY
The Indian Banks' Association has informed the Reserve Bank of India that it would not maintain a ""do-not-call" registry for the banking industry, as suggested by an RBI Group.
The Group has recommended that the IBA should set up a website for the same and act as a mediator with the card issuing banks. The group was set up to address the issue on unsolicited calls for marketing banks' credit or debit cards.  
BUSINESS LINE [pg 1] 13/5/2005  Bank mergers : Approval from two-third board members must
RBI has stipulated that merger of banks should have the consent of 2/3 majority of the members of their boards and not just those present at the board meeting alone. 
BUSINESS STANDARD [pg1] 13/5/2005  SSI Cap to be raised to Rs.5 cr.
The government introduced the Small & Medium Enterprises Development Bill 2005 seeking to enhance the investment cap for small-scale units from Rs. 1 cr. to Rs.5 cr. It seeks to extend progressive credit facilities to SMEs in line with the guildelines laid out by the RBI 
BUSINESS LINE [pg 6] 13/5/2005  Risk-averse, most banks reach IFR Limit
Most banks have reached the investment fluctuation reserve[IFR] limit ahead of the deadline prescribed by the RBI i.e., April 2006.According to RBI guidelines, banks are expected to have built-up reserve of 5% of the investment portfolio within the prescribed deadline. 
BUSINESS STANDARD [pg15] 13/5/2005  RBI may allow rupee to pump iron
India's central bank may allow the rupee to gain gradually in the next few weeks in a bid to stave off rising inflation. 
FINANCIAL EXPRESS [pg 14] 10/5/2005  RBI to meet foreign bank chiefs on card gievances
The RBI is slated to meet chief executive officers of foreign banks next week to discuss customer grievances on credit cards. 
BUSINESS STANDARD [pg 15] 10/5/2005  Foreign Banks await detailed guidelines to merge PDs
Primary dealers [PDs] promoted by foreign banks are learnt to be reviewing their business in India. The RBI had announced in its monetary policy that permitted structures of PD business will be expanded to include banks which fulfil a minimum criteria. 
ECONOMIC TIMES [pg 14] 10/5/2005  Banking Reforms Bills to be tabled in Parliament
The government will soon introduce three bills in parliament that intend to give a big push to banking reforms and increase FDI in private banks. While 2 bills pertain to amendments in the Banking Regulation Act 1949 and the RBI Act 1934, the thrird one is Credit Information Cos.[regulation]Bill of '04. 
BUSINESS STANDARD (Page 11) 9/5/2005  RBI TO ASSESS BASEL -II EFFECT IN 2005-06
The Reserve Bank of India will assess the impact of Basel-II capital adequacy on banks in the current year (2005-06) itself. It will conduct parrallel accounting in about 10 banks to get first hand estimation of the extent of impact the banking sector would have to bear.  
THE FINANCIAL EXPRESS (Page 1) 7/5/2005  RBI LOWERS CDR BAR TO RS.10 CR
The Reserve Bank of India has proposed to lower the bar for extending the corporate debt restructuring scheme to corporate entities on whom banks and institutions have an outstanding exposure of Rs 10 crore or more, as against the current norm of Rs. 20 crore and above.  
BUSINESS LINE (PAGE 1) 4/5/2005  BANKS TO FLOAT COMPANY FOR NEW SETTLEMENT SYSTEM
All banking transactions in the four metros- Mumbai, Delhi, Kolkata and Cheanni - will be cleared and settled under the proposed National Settlement System (NSS) by December. The NSS will function under a limtied company owned and operated by banks, the Reserve Bank of India said on Tuesday. This proposed company will act as an umbrella organisation for all retail clearing operations.  
THE FINANCIAL EXPRESS (PAGE 14) 4/5/2005  BANKS LINE UP HIOMETIC ATMS WITH FINGERPRINT TECHNOLOGY
Banks are switching over to biometric ATMs in a big way. Close on the heels of private sector ICICI Bank launching a pilot on biometric ATMs in the tobacco belt in Guntur District of Andhra Pradesh. 
BUSINESS LINE (PAGE 1) 3/5/2005  SAVINGS ACCOUNTS EXEMPT FROM CASH TRANSACTION TAX
The Finance Minister, Mr P Chidambaram, on Monday, announced a softening of the incidence of proposed Fringe Benefit Tax (FBT) on companies, while exempting transactions in savings bank accounts from the Banking Cash Transation Tax (BCTT). 
BUSINESS LINE (Page 6) 3/5/2005  NEW CHAIRMEN OF PNB, OBC ASSUME CHARGE
Mr S C Gupta on Monday took over as Chairman of Punjab National Bank, while Mr K N Prithviraj assumed office as CMD of Oriental Bank of Commerce.  
BUSINESS STANDARD (3) 2/5/2005  IBA SEEKS CASH WITHDRAWAL TAX LIMIT RAISED TO RS. 50,000
The proposed tax on cash withdrawals from banks is taking a new turn with the Indian Banks' Association and Reserve Bank of India moving the finance ministry in his regard.
The IBA, in its presentation to the ministry, has asked for raising the limit to Rs. 50,000 as against the porposed Rs. 10,000/- and remove demand draft and inter-bank transctions from the purview of the dash withdrawal tax.  
BUSINESS STANDARD (1) 2/5/2005  RBI TO CRACK THE WHIP ON INTERMEDIARIES
The Reserve Bank of India is readying to crack down on the unholy relationships among financial intermediaries. Under the microscope of the central bank are rating agencies, auditing firms, investment banks, and commercial banks that are going the whole hog in pushing third party products. The RBI intends to crack down on the confilict of interest arising in the Indian financial services sector. It has set up a working group on this.  
BUSINESS STANDARD (18) 30/4/2005  NHB CHIEF GIVEN CHARGE OF UNITED BANK OF INDIA
Shri P K Gupta, Chairman and Managing Director of National Housing Bank , has been given the additional charge of CMD of United Bank of India from 1st May, 2005 
THE FINANCIAL EXPRESS (Page 5) 30/4/2005  BILL TO AMEND MONEY LAUNDERING ACT TABLED
A bill to amend the Money Laundering Act, 2002 by providing for the appontment of the chairperson and member of the appellate tribunal was introduced by finance minster P Chidambaram in the Lok Sabha on Friday.
In order to ensure effective implementation of the Act and remove certain difficulties, the Bill was brought in to amend the 2002 law.  
BUSINESS LINE (Page 10) 28/4/2005  RBI DIRECTIVE TO FIs ON RISK EXPOSURE
Financial institutions, which do not accept public deposit, having asset size of Rs. 500 crore and abvoe will be subject to limited off-site supervision by the Reserve Bank of India from March 31.  
THE FINANCIAL EXPRESS (Page 14) 27/4/2005  RBI MAY ALLOW SOME UCBs TO FOLLOW 180 DAY NPA NORM
The Reserve Bank of India is likely to present a slightly watered down version of the vision document for Urban co-operative banks in the forthcoming Annual Policy.  
THE FINANCIAL EXPRESS (Page 14) 27/4/2005  FIRST PSB MERGER THIS FISCAL: SINOR
The first consolidation between two state owned banks along regional lines will happen before the end of the fiscal, said H N Sinor, Chief Executive, Indian Banks' Association.  
THE FINANCIAL EXPRESS (Page 14) 27/4/2005  BANKERS AWAIT RBI GUIDELINES ON RISK MANAGEMENT COURSE
Banks have less than a year to go before they embrace the Basel-II norms. Thus, bankers expect their regulartor, the Reserve Bank of India, to spell out the next step on how to manage credit risks. It may also spell out guidelines for setting up overseas offfices. It is gathered that RBI has been working on the same to make the process easier. 
THE FINANCIAL EXPRESS (Page 1) 27/4/2005  CHARGE OF THE CREDIT CARD BRIGADE
The RBI's working group on plastic money favours allowing banks cand ciredit card companies decide their service charge rates depending on their size and spread of business. The average rate right how is 2.25%.
The cental bank is unhder pressure to ensure fair practices and uniformity. We have decided not to fix any rates on behalf of banks and card companies. We would, however, ensure there is reasonable degree of uniformity, apart from fair practices, a member of the working group said. Plastic companies are also expected RBI to specify a code of conduct in its forthcoming credit policy.  
BUSINESS STANDARD (1) 26/4/2005  CUSTOMER SERVICES BODY MULLED
The Reserve Bank of India is considering a proposal to set up a banking codes and services board in the country to supervise customer services.
This is in line with the recommendations of the Tarapore Committee. A redressal mechanism for customer compalints already exists, but this does not have judicial status. The board, sources said, would have the action against banks, if required.  
BUSINESS STANDARD (9) 25/4/2005  BANKS MAY GET MORE LEEWAY ON DERIVATIVES
The Reserve Bank of India is likely to announce a roadmap for banks to participate in the derivatives segment in the equity, commodities and fixed income (bonds) markets for better risk management.
According to sources, recommendations of several internal committees set up by the RBI may figure in the annual credit policy to be announced this week. 
BUSINESS STANDARD (2) 16/4/2005  BANKS GET NOD TO SET UP INSURANCE ARM
After a gap of four years, the Reserve Bank of India is likely to permit public sector banks to set up insurance subsidiaries, provided the new ventures are widely held.  
BUSINESS STANDARD (8) 16/4/2005  RBI REDUCES UCB EXPOSURE LIMIT
The Reserve Bank of India today revised the exposure limit of urban co-operative banks to a single borrower and a group borrowers at 15 % and 40% respectively from the current 20% and 50 % respectively.  
BUSINESS LINE (PAGE 1) 15/4/2005  MORE PSU BANK OFFICERS MAY BE OFF CVC PURVIEW
Public Sector Banks can hope for more freedom in the days to come with the Ministry of Finance strongly backing the industry's demand for taking out more layers of senior officers out of the purview of Central Vigilance Commission (CVC)  
BUSINESS STANDARD (1) 15/4/2005  BANKS' MUTUAL FUNDS PITCH UNDER SCANNER
Private Sector and Foreign Banks, which have been aggressively pushing depositors to invest in mutual fund products, have come under the scanner of the regulator. The Reserve Bank of India has sent out notices to banks, seeking information on their activity as regards their cross-selling thrid party mutual funds and churning the protfolio of their depositors.  
FINANCIAL EXPRESS [pg 12] 13/4/2005  RBI issues draft norms on bank transactions of NPAs
RBI, on Tuesday, said that a bank can purchase/sell non-performing assets from/to other banks only on 'without recourse basis'and the transaction should be concluded only on cash basis. 
BUSINESS STANDARD [pg 4] 13/4/2005  Keep NPAs for 15 months :RBI
RBI draft guidelines for purchase or sale of bad loans issued suggested that banks purchasing NPAs should keep them on their books for at least 15 months. 
FINANCIAL EXPRESS [pg8] 13/4/2005  Banks ready Rs.181 cr credit line for silk farmers in Kerala
Bankers in Kerala are readying a dedicated Rs.181cr. credit line for silk farmers. 
BUSINESS STANDARD [pg II] 13/4/2005  RBI likely to set up separate monetary management unit
RBI is planning to set up a separate monetary management cell by carving out monetary policy activities from other depts.such as internal debt management and monetary policy dept. 
FINANCIAL EXPRESS [pg14] 12/4/2005  RBI sets cap for donations by UCBs at 1% of previous profit
The RBI on Monday said that normal donations made during a year by a UCB should inaggregate berestricted to a maximum of 1% of the published profits of the bank for the previous year.This ceiling on donations/contributions for public/charitable purposes has been imposed by RBI as it has come across instances of large donations being made by UCBs which adversely affects the interest of depositors. 
ECONOMIC TIMES [pg 16] 12/4/2005  Banks place their bets on T-bills as G-sec yields soar
Action in the treasury bills market is hotting up as the rise in yields on g-secs is compelling banks to look at short term instruments to put money in. Wary of rising yields, banks are unwilling to take a bet on long-tenor bonds. 
BUSINESS STANDARD [pg 2] 12/4/2005  Govt. 'goes slow' on FDI in insurance
The Finance Ministry is going slow on the issue of hiking foreign direct investment in the insurance sector even as efforts are on to draft a Bill on insurance based on the feedback from the Insurance Regulatory Development Authority [IRDA]. 
BUSINESS STANDARD [pg 14] 12/4/2005  RBI OrderDelayed Credit of ECS
RBI has reiterated that banks must pay conpensation in case of delayed credit of ECS funds to beneficiaries/customers.  
THE ECONOMIC TIMES (page 1) 8/4/2005  FOREIGN TRADE POLICY TO GET CRACKING ON PENDING SCHEMES
Foreign Trade Policy amendments, which aim at strengthening the country's export thrust to increase India's share in global exports to $150bn by "09. While the Duty Entitlement Export Promotion Scheme is all set to continue in '05-06, Commerce and Industry Minister Kamal Nath is expected to accounce the implementation of the Target Plus scheme, the formation of an export promotion council for the service sector and liberalise the export promotion capital goods scheme for the farm sector.  
THE ECONOMIC TIMES [pg1] 7/4/2005  FII Cap in PSU banks may be raised to 24% The government is studying a proposal to rais the foreign institutional investment limit in public sector banks to 24% from the current 20%. 
BUSINESS STANDARD [pg 17] 7/4/2005  IDRBT setting up banking, finance e-security monitor
In a step towards securing the Indian Banking and Financial Sector, the Institute for Development & Research in Banking Technology is setting up the Indian Financial Computer Emergency Response Team [Inficert] 
THE FINANCIAL EXPRESS (Page 12) 6/4/2005  RBI ISSUES 2 STAGE GUIDELINE FOR SECURITISATION OF ASSETS
The assets of a bank, after their transfer to the special purpose vehicle (SPV) should stand completely isolated from the originator, even under backruptacy, says the draft guidelines on securitisation of standard assets unveiled by Reserve Bank of India.  
BUSINESS LINE (Page 6) 5/4/2005  BANKING SERVICES PUBLIC UTILITY FOR SIX MORE MONTHS
The services in the banking industry have been declared as a public utility under the Industrial Disputes Act, 1947 for another six months with effect from March 30 2005 in the larger public interest, according to an official release.
The Ministry of Labour, in a notification issued here, said the services in this industry were earlier declared public utility for six months from March 30, 2004 and subsequently extended for another six months.
Consequently, all bank employees would be required to give a six weeks' advance notice of a strike so that conciliatory proceedings can be started.
During the conciliatory proceedings and seven days after thier completion, the employees cannot go on strike, the release said.  
THE FINANCIAL EXPRESS (PAGE 16) 5/4/2005  MAKEOVER FROM BANKING TO FINANCIAL SERVICES SOON
Banks are set to undergo a transition from banking to financial services say the Reserve Bank of India's Deputy Governor V Leeladhar. In an address at National Institute for Bank Managment Mr Leeladhar said, banks are uniquely poised to broaden their product lines into the complete offerings that would go under the rubricfinancial services.  
THE FINANCIAL EXPRESS (Page 1) 4/4/2005  OFFSHORE BANKING UNITS IN A BIND
Offshore banking units (OBUs) floated by banks in special economic zones (SEZ)with much fanfare a couple of years ago are proving to be the proverbial mill sonte around their neck.
Stringent restructions imposed by the Rserve Bank of India on lending have resulted in these units chasing the same set of borrowers. Businesses in SEZs are taking advantage of this situation and playing one bank against the other to hammer down the interest rate on loans.  
THE FINANCIAL EXPRESS (Page 1) 2/4/2005  RBI OKAY MERGER OF IDBI BANK WITH IDBI
Reserve Bank of India on Friday approved the amalgamation of the IDBI Bank Ltd with IDBI Ltd. The merger will come into effect from Saturday.  
THE FINANCIAL EXPRESS (Page 1) 2/4/2005  PAN RULE HURTS CREDIT CARD SALES
The number of new credit cards issued by banks has gone down by almost 25% over the last couple of months. Reason: the Central Board of Direct Taxes (CBDT) has dropped a mombsheel by making it mandatory for prospective cardholders to give their Permanent Account Number/Attach Form 16 with their application forms.  
THE FINANCIAL EXPRESS (Page 20) 2/4/2005  RBI WANTS CORPORATES TO DISCLOSE OFF-BALANCE SHEET TRANSACTIONS
Corporates, like banks, should disclose mark-to-market (MTM) positions of their off-balance sheet transations such as forward contracts, interest rates derivaties said Usha Thorat, Executive Director, Reserve Bank of India.  
THE ECONOMIC TIMES (Page 6) 2/4/2005  CODE OF CONDUCT SOON FOR CREDIT CARD ISSUERS
Unsolicited credit cards, bloated bills, hidden charges, so-called freebies, telemarketing by direct selling agents pushing credit cards that you don't want - all very familiar and unpleasant experiences of many. But perhaps not for long with a "fair practicer code" coming into play soon.  
The Financial Express{page12} 31/3/2005  IBA MULLS HIKE IN TRANSACTION TAX THRESHOLD TO RS.50,000
Indian Banks' Association plans to take up with the Centre the issue of the proposed tax on cash withdrawals and may recommend to hike the threshold limit to Rs. 50,000 from the planned Rs.10,000/-. IBA is exploring options of sending a delegation or making a presentation to the Centre on the administrative hassles and rise intransations cost involved in the proposed tax.  
The Financial Express{page12} 31/3/2005  RBI HIKES WMA FOR STATES BY 9.77% TO RS 8,935 CRORE
The Reserve Bank of India has raised the aggregate normal ways and means advances (WMA) of the state governments by 9.77% or Rs. 795 crore, to Rs. 8,935 crore from the pressent limit of Rs. 8.140 crore. WEMA is an overdraft facility that state governments can avail of from the RBI for a short period. The minimum WMA limit is Rs. 50 crore for any state.  
The Financial Express{page12} 31/3/2005  FORM ADVISORY COMMITTEES TO MONITOR AGRI CREDIT FLOW
The Reserve Bank of India on Wednesday has asked banks to form advisory committees to monitor the flow of credit to agriculture and related activities from the banking system. This is part of the accepted recommendations of the committee set up under the chairmanship of Prof V S Vyas which had prepared a report on raising the flow of credit to the agriculture sector.  
THE FINANCIAL EXPRESS (PAGE 3) 30/3/2005  RBI ALLOWS UCBs TO AMORTISE PROVISIONS TO HTM CATEGORY
The Reserve Bank of India has allowed scheduled Urban Cooperative Bank to amortise the provisioning requirement arising on account of shifting of securities from held for trading (HFT)available for sale (AFS) categoies to the held to maturity (HTM) category over a maximum five years commencing from the current fiscal,with a minimum of 20% of such amount each year.  
BUSINESS STANDARD (1) 29/3/2005  CREDIT POLICY
Reserve Bank of India Governor Y V Reddy will unveil the annual credit policy statement for 2005-06 on April, 28,2005. 
THE FINANCIAL EXPRESS (Page 10) 29/3/2005  RBI NORMS ON CLOSURE OF RURAL BRANCHES OF PSU BANKS SOON
The Reserve Bank of India would formulate a comprehensive guideline on rural branches. There is pressure on it to come up with avilable policy by which public sector banks can shut loss making rural branches.  
BUSINESS STANDARD (14) 29/3/2005  BANKS CAN'T USE IFR TO SET OFF TREASURY LOSSES
The Reserve Bank of India is unlikely to allow commercial banks to use the investment fluctuation reserve for setting off treasury losses while preparing the profit and loss account for 2004-05.  
THE FINANCIAL EXPRESS(PAGE 11) 24/3/2005  COMPREHENSIVE AMENDMENT TO BANKING REGULATION ACT ON CARDS
The Finance Ministry is in the process of bringing in a comprehensive amendment to the Banking Regulation Act. A bill for this purpose is likely to be introduced in Parliament after the recess.  
THE FINANCIAL EXPRESS(PAGE 11) 24/3/2005  SEPARATE REGULATOR FOR CO-OP BANKS ON ANVIL
The finance ministry is considering setting up a separate regulator for the co-operative banks. There could also be some structural re-organisation of these banks with a view to making them financially stable. At present, the co-operative banks come under the aegis of the Reserve Bank of India. A consultative committee comprising senior memebers of Parliament is in favour of having a separte regulator for the co-operative banks.  
THE ECONOMIC TIMES (Page 18) 23/3/2005  RBI TO ASSIST NBFCs' EXIT FROM PUBLIC DEPOSITS
The Reserve Bank of India has said that it would assist NBFCs which voluntarily move out of public deposits, by imparting training, technology support among other things. The RBI Governor Y V Reddy who met the representatives of the NBFC industry to discuss the roadmap for the sector, has indicated this.  
THE FINANCIAL EXPRESS(PAGE 22) 23/3/2005  IBA SEEKS SEPARATE SECURITISATION LAW FOR WIDER APPLICATION The IBA is pushing for a separate legislation for securitisation so that financial assets held not only by banks but also by any person or a non-banking entity can be securitised. A separate law having wider application is being sought as under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) 2002, only banks and financial institutions can securitise their assets.  
BUSINESS STANDARD (1) 22/3/2005  PSU BANK MERGERS PUT ON HOLD
The Government has put on hold all proposals to merge state owned banks. The Prime Minister's Office is believed to be unwilling to give its nod to mergers at this point of time, keeping in mind political ramifications. The Left parties have been opposing bank mergers. The PMO's decision, in effect, deals a blow to consolidation in the banking industry.  
FINANCIAL TIMES 22/3/2005  DERIVATIVES FIXING PLAN
Leading banks in the internatinal credit derivatives market will today launch a regular weekly "fixing" for the first time to give investors an independent benchmark of prices.  
BUSINESS LINE (PAGE 1) 18/3/2005  CHIDAMBARAM PROMISES GOOD NEWS ON CASH WITHDRAWAL TAX
The Finance Minster Mr P Chidambaram, on Thursday hinted at a softening of the Budget proposal to impose 0.1 per cent tax on bank cash withdrawals of Rs. 10,000 and more in a single day.  
BUSINESS LINE (Page 6) 17/3/2005  NBFCs DISCUSS GROWTH ISSUES WITH RBI
Members of the Finance Industry Development Council on Wednesday met the Governor of RBI, Dr Y V Reddy and briefed him about the problems facing the non-banking finance companies.  
THE FINANCIAL EXPRESS(PAGE 11) 17/3/2005  BANKING BILL IN CURRENT SESSION: RAKESH MOHAN
A bill to amend the Banking Regulation Act would be introduced in Parliament soon, economic affairs secretary Rakesh Mohan has said. The Bill, among other things, would empower the Reserve Bank of India to trim mandatory limits on statutory liquidity ratio (SLR) for commercial banks.  
THE ECONOMIC TIMES (page 1) 15/3/2005  FIs, PSU BANKS TAKE A KNOCK ON DERIVATIES
A few financial instituitions and state owned banks have taken a hit on derivaties exposurers with their bets on overseas interest rates going wrong.
These institutions had entered into derivatives called "quantos" a sophisticated financial structure, with a view that the London Inter bank Offering Rate (Libor) an international benchmark rate on dollar deposits, would not move up. They were proved wong, with the six month Libor rising 200 basis points in the past year.  
BUSINESS STANDARD (PAGE 1) 11/3/2005  PM FOR POLITICAL CONSENSUS ON FISCAL REFORMS
Prime Minister Manmohan Singh today sought a "national political consensus" on the issue of bridging the growing fiscal deficit, instead of trying out various unpopular austerity measures.  
BUSINESS STANDARD (page 2) 11/3/2005  RBI SETS UP NEW PAYMENT AND SETTLEMENT BOARD
The Reserve Bank of India today constituted a Board for Regulation and Supervision of Payment and Settlement Systems (BRSPSS) as a committee of its central board.
RBI Governor Y V Reddy is the Chairman of the board and deputy governor V Leeladhar the Vice Chairman. Deputy Governors K J Udeshi and S Gopinath and Central Board Memebers. H P Ranina and N R Narayana Murthy are members of the board.  
FINANCIAL EXPRESS [pg 14] 11/3/2005  Treasury Managers to meet RBI Governor on SLR,CRR Treasury Managers of banks and money market participants are planning to meet the Governor of RBI, Y V Reddy on Friday to seek further clarity on the issue of the removal of upper and lower bounds of SLR and CRR as announced by the FM in budget 2005-06. 
BUSINESS STANDARD (Page 14) 10/3/2005  BANKS MAY SEE CAPITAL PLUNGE POST BASEL-II
Commercial banks are likely to see a drastic reduction in their capital with the implementation of the stringent Basel II norms in 2006.
Banking analysts expect two-three per cent of their capital adequacy ratios (CAR) to be shaved off under the new norms. The Reserve Bank of India has announced that banks will have to adopt the standardised approach for credit risk and basic indicator approach for operational risk with effect from March 31, 2007. 
BUSINESS STANDARD (PAGE 14) 10/3/2005  RBI TELLS IDBI TO REWORK PRIORITY LENDING STRATEGY
The Industrial Development Bank of India proposal to the Reserve Bank of India seeking priority sector status for its outstanding infrastructure lending portfolio - and thus an exemption from priority sector lending norms - has met with resistance at the apex bank.  
THE FINANCIAL EXPRESS (Page 1) 7/3/2005  MOVE TO DELINK FDI NORMS FROM INSURANCE ACT
The Finance Ministry is looking at a proposal to delink the foreign direct investment limit norms from the Insurance Act when it is amended. This move would empower any future government to increase the FDI limit through an executive order wihtout taking the issue to Parliament.  
BUSINESS LINE (Page 8) 7/3/2005  BANKING ON BASEL -II
With the Reserve Bank of India issuing draft guidelines, the stage is set for banks to migrate to a new risk management regime under the Basel -II norms. The deadline is March 31, 2007 and for one year before that banks are expected to do a paralle run to finetune their systems and procedures. Top bankers say the transition may be relatively smooth, given that they have been sensitised to the needs of a more sophisticasted risk-containment scheme thanks to the Basel-I accord and the various regulatory measures introduced by the RBI in its wake. Most banks will require additional capital, though few have been a ball park figure. While reworking their capital adequacy requirements under the new guidelines, banks will have to outlay more capital under certain heads and less under some other categories. This arises out of the essential difference between Basel I and II approaches.  
BUSINESS LINE (Page 6) 5/3/2005  BANKS DIRECTED TO DISCLOSE DERIVATIVES EXPOSURE
The Reserve Bank of India has asked commercial banks to disclose thier risk exposure in derivaties in their balance sheets from March, 2005.
The disclosure format includes both qualitative and quantitative aspects and has been devised to provide a clear picture of the exposure to risks in derivatives, risk management systems, objectives and policies, the central bank has said in a notification. 
BUSINESS LINE (PAGE 6) 5/3/2005  BANKS NEED RS. 11,900 CRORE MORE CAPITAL TO MEET BASEL NORMS: ICRA
Indian Banks, notably state owned entites, will need Rs. 11,9000 crore more capital for meeting operational risks along, and may raise Rs. 18,000 - 20,000 crore in the medium term when they implement Basel II capital norms from March 31, 2007, ICRA said on Friday.  
BUSINESS LINE (Page 3) 3/3/2005  JALAN SEES STABLE INTEREST RATES
The official interest rates will be stable in the next few months even though federal borrowing is set to rise, as inflation has slowed and foreign capital inflows are strong, the former RBI Governor, Mr Bimal Jalan has said.  
THE ECONOMIC TIMES (page 1) 3/3/2005  FM RULES OUT FRINGE CUT, BUT TRIM'S OKAY
Finance Minister P Chidambaram on Wednesday gave a clear indication of reviewing the Budget proposal to tax cash withdrawals from banks. The Government will also take a relook at various categories of expenses proposed to be covered under fringe benefits offered by employers. However, at the same time he stood by his Budget proposals to being into the tax net perquisites offered to employees, which are of private nature, as also devise anti evasion measures.  
BUSINESS LINE (PAGE 1) 2/3/2005  CHIDAMBARAM PLANS TO REWRITE IT ACT, RAISE FDI IN INSURANCE
The Finance Minister Mr P Chidambaram, is planning to rewirte the income-tax law. Also high on his agenda is an ombibus insurance law that would help the Government to raise the FDI limit in the insurance sector from 26 per cent to 49 per cent.
The proposal to hike FDI in insurance has not been put off. We will have to introduce a Bill. Some other amendments are required to both the Insurance Act 1938 and the IRDA Act 1999. All amendments would come together, he said in an exclusive interview to Business Line, a day after presenting the Union Budget for 2005-06.  
THE ECONOMIC TIMES (page 10) 2/3/2005  V P SHETTY TO BE IDBI'S CMD, KHANDELWAL TO HEAD BANK OF BARODA
The Government today notified VP Shetty as Chairman and Managing Directo of IDBI and A K Khandelwal as CMD Bank of Baroda.  
THE FINANCIAL EXPRESS (Page 9) 2/3/2005  RBI TO PUBLICISE DETAILS OF PENALITY REPORTS ON UCBs
The Reserve Bank of India has decided to place the details of the levy of penalty and actions taken by it on the basis of inspection reports or other adverse findings against urban co-operative banks in the public domain, in order to protect the interests of the members and depositors.  
BUSINESS STANDARD [pg 1] 2/3/2005  Bank tele-marketers could soon be a tring of the past-Not interested in a product?They won't call you for next 3 months
The IBA new guidelines for direct selling agents[DSA]suggest that a customer who shows no interest in a particular offer should not be disturbed for another three months.  
BUSINESS STANDARD (1) 2/3/2005  FM MAY RE-EXAMINE TAX ON SALES PROMOTION, PUBLICITY
Finance Minsiter, P Chidambaram said today he would review whether employers would have to pay tax on sales promotion and publicity under the "fringe benefit" tax.  
BUSINESS LINE [pgs 16,17&18] 1/3/2005  Finance Minister's Speech
The Big Picture : Social Sector thrust, A case for more FDI, Emphasis on infrastructure projects, Budget estimates for 2005-06, Investment focus on agriculture, Banking Sector: Reform Road map. 
BUSINESS LINE [pg 21] 1/3/2005  Bankers welcome nod for preference shares, seek clarity
Banks have welcomed the Union Budget proposal to all them to raise capital through preference shares in the Union Budget 2005-06.According to the budget, banking companies have been allowed to issue preference shares since preference share capital can be treated as regulatory capital under specified circumstances as per the Basel Norms. 
ECONOMIC TIMES [pg 15] 1/3/2005  Weak Private Banks can get foreign muscle Foreign banks going long on India can rejig their operations and private banks, particularly the weaker ones, could change hands. Foreign banks will be allowed to form 100% subsidiaries after chipping in Rs.300 crore, convert branches into subsidiaries and acquire local private banks which have slipped into quagmires. 
ECONOMIC TIMES [pg15] 1/3/2005  Banks can now unlock funds and let them rock Banks will have a new way to raise long term capital and a greater choice to put money where it fetches a better return. Legal reforms are under way which could unlock funds tied up as cash and low yielding governtment bonds. 
FINANCIAL EXPRESS [pg 8] 28/2/2005  Extracts from epoch-making budgest presented over the years that mark defining moments in India's economic history 1947 - Dawn of an era : 1997 - The dream budget 
BUSINESS STANDARD [pg 1] 28/2/2005  In last 10 yrs. sensex rose six times on budget day The bulls have notched up a score of 6-4 over the last 10 budgets. In the past decade, the sensex rose on budget day six times and fell four times. 
THE FINANCIAL EXPRESS (Page 16) 26/2/2005  IBA PLANS PENSION PLAN FOR PSB STAFF
The Indian Banks' Association is working out a new pension scheme for employees of public sector banks of the country.
The IBA Chairman, P S Shenoy informed the United Forum of Bank Unions (UFBU) about the decision at a bipartite meeting held in Mumbai recently.  
BUSINESS LINE [PG 1] 25/2/2005  Scrutiny of self-assessed excise returns likely from April 1 Come April 1 and self assessed excise returns may come under scrutiny of the revenue dept. The coverage of selective audit under the Cenvat credit rules 
BUSINESS LINE (Page 3) 25/2/2005  BUDGET SESSION BEGINS TODAY
The Budget session of Parliament, beginning Friday, will be dominated mainly by economic issues such as Rail Budget and the Union Budget for 2005-06 in the first few days and discussion on the motion of thanks of the President's address.  
THE FINANCIAL EXPRESS (Page 1) 24/2/2005  SEBI TIGHTENS MARGINS IN CASH SEGMENT
Tightening the margining requirement for the cash market at a time when equity markets are booming, the Securities and Exchange Board of India has asked all stock exchanges to collect the Value at Risk margin upfront and Mark to Market margin on the next day before the beginning of trading. These changes in the collection of margins will be effective from May 18, 2005.  
BUSINESS LINE (PAGE 1) 23/2/2005  GOVT CLEARS AUTONOMY PACKAGE FOR PSU BANKS
The tussle in the banking space would now be on an equal footing with the Ministry of Finance today clearing a new autonomy package for public sector banks aimed at creating a level playing field for state owned banks with their private sector banks.
Besides allowing PSU banks the freedom to decide on virtually the entire gamut of human resources issues, the package permits them to undertake acquisitions of companies or business, close or merge unviable branches, open overseas offices, set up subsidiaries, take up a new line of business or exit an existing business - all without the need to seek prior Government approval.  
THE FINANCIAL EXPRESS (Page 1) 18/2/2005  RBI CLIPS PUSHY AGENTS' WING
Direct Sales Agents marketing cards, be they of the credit, debit, smart or gift kind, will henceforth be required to conduct customer due diligence (CDD) by applying the "Know Your Customer" principle on prespective customers. Hitherto, only the bank issuing the plastic card was required to carry out the CDD.
The Reserve Bank of India has now extended this principle to DSAs employed by banks. Given the fact that many credit card holders are not even account holders of the issuing banks, the DSAs have been asked to conduct the CDD by applying the "KYC" norm themselves.  
THE ECONOMIC TIMES (page 1) 16/2/2005  BANKS TO SET ASIDE MORE FUNDS FOR MKT EXPOSURE
Banks here will have to provide an additional risk weight of 2.5% on equity investments to capture market risk, adhering to Basel II's higher capital norms. All Banks will have to adopt the new standardised approach for credit and operational risks with effect from March 31, 2007.  
THE FINANCIAL EXPRESS (Page 14) 16/2/2005  SOME BANKS MAY BE ALLOWED TO SHIFT TO IRB APPROACH IN RISK
The Reserve Bank of India on Tuesday said 'at a minimum' all banks in the country will have to adopte 'standarised approach' for credit risk and basic indicator approach for operational risk with effect from March 31, 2007.  
THE FINANCIAL EXPRESS (Page 1) 15/2/2005 
HOTELS, TOURISM, AGRI & HOUSING TO GET INFRASTRUCTURE TAG
The long drawn demand of providing sectors like agriculture, tourism, housing, hotel and hospitals the infrastructure tag may just turn out to be a reality in the forthcoming Budget 2005-06.  
THE FINANCIAL EXPRESS (Page 1) 15/2/2005  SENSEX BREACHES 6,700 IN PRE-BUDGET RALLY
It's being called the pre Budget effect. Fresh inflows from foreign institutional investors and the expectation of a friendly Budget lifted the benchmark 30 share BSE Sensex to its new all time intra-day high of 6,719.20 on Monday, as investors bought into technology and banking stocks. This is the first time ever that the Sensex has crossed the 6,700 mark.  
BUSINESS LINE (PAGE 1) 14/2/2005  BANKING SET TO BE UNLEASHED
The Budget is expected to focus on the financial sector in big way. Sources close to the developments said the government was expected to outline its plan for raising the foreign direct investment in private banks to 74 per cent and sort out the voting rights issue, announce guidelines for mergers and acquisitions and a package for managerial autonomy for public sector banks.  
THE ECONOMIC TIMES ([AGE 2) 11/2/2005  RBI GUIDED BANK M&As TO GET TAX BREAKS NOW
Amalgamations in the banking sector carried out under a scheme prepared such as the one involving Oriental Bank of Commerce - are all set to be eligible for tax breaks now.
The Central Board of Direct Taxes has agreed to carry out necessary amendments in the Income Tax Act. These changes have been provided for banks, which take over another bank under special conditions - where a moratorium is declared on the operations of a bank and a scheme for merger is sanctioned by the Government.
Changes are also set to be made for extending tax breaks available under Section 72 (A) of the Income Tax Act to a bank taking over a financial institution. This will help the government push through, for instance,the merger of the troubled financial institution IFCI with a bank.  
BUSINESS LINE (Page 6) 11/2/2005  PAYMENT AND SETTLEMENT SYSTEM BOARD VERY SOON
The RBI Deputy Governor, Mr. V Leeladhar, today said that the proposed Board for Payment and Settlement Systems would be set up in the next few weeks.
Telling to reporters at the sidelines of a banking technology seminar organsied by the Indian Banks' Association, here today, Mr Leeladhar said the board would function as an autonomous body.
 
BUSINESS LINE (Page 6) 11/2/2005  RBI GROUP TO PROBE PRACTICES OF RECOVERY AGENTS
The Reserve Bank of India has set up a working group to look into the alleged "strong arm" business practices of the recovery agents engaged by commercial banks to pursue the defaulters of loans for repayment.
According to the RBI Deputy Governor, Mr V Leedadhar, the Committee would look into details of the activities of agents and submit suggestions including the regulatory framework for the card business of commercial banks.  
THE FINANCIAL EXPRESS (Page 1) 11/2/2005  BANK VOTING RIGHTS BILL LIKELY IN BUDGET SESSION
The government is likely to introduce a bill during the Budget session to align voting rights in the banking sector with the shareholding pattern.
It is also considering introducing another Bill in the session to gradually divest states of the power to regulate cooperatives to bring them solely under the Reserve Bank of India. Currently both RBI and states regulate cooperative banks.  
THE ECONOMIC TIMES (page 1) 9/2/2005  RBI TAKES STOCK, ALLOWS BANKS TO PLACE BIGGER BETS ON THE STREET
The plan to allow banks greater exposure to the capital markets is now on course, with HDFC Bank being the first off the block.
The bank has obtained the approval of the Reserve Bank of India to raise its exposure to the stock markets from 5% of outstanding advances at the end of the previous financial year to close to 10%. This is in line with the government's announcement of '04 to allow banks with a strong risk management system greater exposure to the markets.  
BUSINESS LINE (PAGE 1) 9/2/2005  GOVT STUDYING SBI ACT CHANGE FOR TAKEOVERS, MERGERS
The Government is considering amending the SBI Act and the SBI (Subsidiary Banks) Act to allow the State Bank Group take over public sector banks, other banking companies and regional rural banks.
The amendments under considertion would also facilitate the merger of SBI and its seven subsidiary (associate) banks.  
THE FINANCIAL EXPRESS (Page 1) 8/2/2005  DO NOT MAKE UNSOLICITED CALLS: SC NOTICE TO TELCOS.
The Supreme Court on Monday issued a notice to the Government, Telecom Regulatory Authority of India, Telecom service providers and Private and Foreign Banks on a Public Interest Litigation which sought a law to ban unsolicited calls - promotions for credit cards, loans, new phone connections etc., A similar law in the US had hit headlines a few month ago.  
THE FINANCIAL EXPRESS (Page 10) 5/2/2005  RBI TO PREPARE DOCUMENT ON COOP BANKS' REVIVAL BY MARCH
The Reserve Bank of Idnia is preparing a "Vision Document" aimed at rejuvenating the co-operative banking sector, which is expected to be ready by the end of next month.
This document will serve as a comprehensive roadmap for the functioning of co-operative banks in India and also address the demands of small banks for a set of differential prudential guidelines.  
BUSINESS STANDARD [PG1] 5/2/2005  PSU banks' payout
In a move aimed at shoring up the centre's revenue receipts, the finance ministry has asked alll nationalised banks to pay interim dividend. 
THE ECONOMIC TIMES (page 1) 4/2/2005  BANKS MAY GET TO INVEST 10% OF DEPOSITS IN STOCKS
The Ministry of Finance is considering a move to increase the participation of commercial banks in the equity market. As per the plan prepared by the MOF , in collaboration with the RBI, there could be an increase in the limit of banks' participation in equities from 5% to 10% of incremental deposits.  
BUSINESS LINE (PAGE 1) 4/2/2005  BANKS MAY BE ALLOWED TO TRADE IN COMMODITIES
In what would give a huge boost to commodity futures trading, the Government is all set to allow banks to trade in commodity dervatives.
The Reserve Bank of India, according to sources, has given its nod to amend Sections 6 and 8 of the Banking Regulation Act 1949, which prohibit banks from dealing in commodities.
The proposed amendment to the Act, enabling banks to deal with commodities and their derivatives, is likely to feature in the forthcoming Union Budget.  
THE FINANCIAL EXPRESS (Page 14) 3/2/2005  PSBs' PROFIT DECLINE MORE THAN PRIVATE BANKS' IN Q3
The decline in profits of public sector banks is higher than that of private sector banks during October- December, 2004.
A comparison between 14 private sector banks and 18 public sector banks shows that private sector banks' profit decline is lower compared to the that of PSBs during the third quarter.  
BUSINESS LINE (Page 6) 3/2/2005  BANKS TOLD TO REVIEW RISK AUDIT SYSTEM
Pointing towardss deficiencies in risk-based internal audit in banking entities, RBI has asked banks to expeditiously review their audit system and ensure compliance with guidelines at an early date.  
BUSINESS LINE (Page 6) 3/2/2005  RBI PRESCRIBES NORMS FOR MERGER OF UCBs
The Reserve Bank of India has said that it will consider proposals for merger and amalgamation among urban co-operative banks when the net worth of the acquired bank is positive and the acquirer bank assures to protect entire deposits of all the customers of the acquired bank.  
THE FINANCIAL EXPRESS (Page 12) 2/2/2005  FM AGAINST REGULATOR IN MICRO-CREDIT
The best way for lending institutions to promote micro credit disbursals is to use intermediaries as these are able to identify more effectively with the needs of the borrower, better than banks and financial institutions, said Finance Minister P Chidambaram while giving away award to successful mocro-entrepreneurs,on Monday.  
THE FINANCIAL EXPRESS (Page 18) 2/2/2005  LEGISLATION TO BEING BANKING SECTOR OUT OF CVC AMBIT LIKELY
The Union Government is likely to place a bill in Parliament bringing the banking industry totally out of the ambit of Central Vigilance Commission.
Union Finance Minstry sources told FE that the proposal follows suggestion by the Indian Banks' Association in this regard. In its recent report on "Vision 2010" IBA suggested that the banking sector should be brought totally out of CVC ambit in order to allow the banks to function independently and judiciously.  
THE FINANCIAL EXPRESS (Page 10) 2/2/2005  RBI FURTHER SIMPLIFIES FEMA RULES
The Reserve Bank of India has put in place procedures for compunding of contravention under Foreign Exchange Management Act (FEMA) with a view to provide comfort to the citizens and corporate community by minimising tranctions costs, while taking severe view of willful, malfide and fraudulent transactions.
The Centre in consultation with RBI has amended the foreign exchange rules, whereby the compounding process would be subject to the direction control and supervision of the governor of RBI.  
THE ECONOMIC TIMES (Page 15) 1/2/2005  CSO RAISES FY04 GDP GROWTH FIGURE TO 8.5%
The Central Statistical Organisation (CSO) on Monday revised India's gross domestic product (GDP) growth figures upwards for 03-04 to 8.5%. In its quick estimates of the national accounts, the alteration is from 8.2% in the revised estimates released in June 2004 and 8.1% project in the advance estimates of February '04.
A significant part of the revision could be attributed to the upward correction of agriculture sector growth to 9.6% from 9.1% considered in the revised estimates. Agriculture as an economic activity recorded a 10.6% growth.  
THE FINANCIAL EXPRESS (Page 18) 29/1/2005  PSBs SHOULD NOT MAKE TAKOVER STATEMETNS NOW: HOUSE PANEL
The parliamentary committee on banking wants different public sector banks to restrain from making any statements on thier takeover plans, till the bill allowing amalgamation of such banks gets the Parliament approval.  
BUSINESS LINE (PAGE 1) 29/1/2005  PBS OFFICIALS MAY BE OUT OF DVC, CBI PURVIEW
The public sector banking industry might not be the same very soon with the proposed new autonomy package promising to usher banks into a new world of freedom.
Some of the issues under the Government's consideration are removing bank officials from the purview of the Central Vigilance Commission and Central Bureau of Investigation, freedom to determine compension packages for specailised staff including differential salary package and a go-ahead to the acquisition of private companies.  
THE FINANCIAL EXPRESS (Page 1) 29/1/2005  EQUITY DOORS OPEN FOR PROVIDENT FUNDS
In a big push to the stock markets, the government on Friday allowed pension funds, non-government provident funds to invest upto 5% of their corpus directly inequity and another 10% inequity-linked mutual funds or debt instruments of private companies.  
THE ECONOMIC TIMES (page 1) 28/1/2005  BANKS RAISE THE RATE BAR ON FDs Banks are waging a rate war to attract deposits. Interest returns, well above the rack rates, are being offered to allure corporates and bulk depositors, with the result that the return on short-term deposits is outstripping the interest on three year fixed deposits.
On Thursday, a State Bank of India associate accepted a bulk deposit of Rs. 1,500 crores from one of the biggest provident fund managers for 180 days at a rate of 6.3%. The same bank offered 6.5% on a Rs. 100 crore deposit for 123 days.  
THE FINANCIAL EXPRESS (Page 1) 28/1/2005  GDP TO GROW 6.7%: NCAER
NCAER has projected economic growth of 6.6 to 6.7% this fiscal but said revenue deficit seems a "bit out of control"  
THE FINANCIAL EXPRESS (Page 15) 25/1/2005  RBI TO DELINK GUARANTEE OF STATE BACKED LOANS FOR PRUDENTIAL NORMS
The Reserve Bank of India has decided to delink the requirement of invocation of guarantee for asset classification and provisioning in respect of state government guaranteed exposures (advances and investments) and subject them to the same norms as applicable to exposures not guaranteed by the state governments in the case of state and district central co-operative banks.  
BUSINESS LINE (PAGE 1) 24/1/2005  NEW AUTONOMY PACKAGE FOR PSU BANKS ON CARDS
A fresh autonomy package for public sector banks is in the works, this time around seeking to provide a high degree of freedom to the board of directors on operational matters.
The corporate governance linked package could include greater freedom to the boards on opening of branches, restructuring of operations including closure of loss making businesses and opening of new lines of business.  
THE FINANCIAL EXPRESS(PAGE 5) 24/1/2005  BANKS MUST CLOSELY MONITOR HIGH RISK ACCOUNTS: RBI
Banks should closely monitor the accounts of high networth individuals, non government organisations, politically exposed persons, closely held companies, trusts charities and firms with sleeping partners as they fall in the high risk category, said Reserve Bank of India, Chief General Manager, Prashant Saran.
The Indian Banks' Association has formed a working group to draw up a model code for banks to enable them to comply with customer acceptance policy in matters regarding money laundering.  
THE FINANCIAL EXPRESS (Page 4) 20/1/2005  LEFT BACKS FM's BANK CONSOLIDATION PLAN
The left parties conveyed their concerns over banking sector reforms to Prime Minster Manmohan Singh on Wednesday over a breakfast meeting. The discussions although general in nature, focused mainly on reforms in the banking sector. However, both sides will meet on February 1 when the Left parties will present their budgetary wish list to the government.  
BUSINESS STANDARD (1) 20/1/2005  BANK REFORMS GET LEFT NOD
The Government's reforms initiative received a boost today with the Left parties giving their nod to restructuring the banking sector and the sale of a 5 per cent stake in Bharat Heavy Electricals Ltd through public offcer. 
THE ECONOMIC TIMES (page 6) 19/1/2005  RBI DOES A DRESS REHEARSALL FOR FISCAL RESPONSIBILITY ACT ERA
The Reserve Bank of India Governor Y V Reddy today held meetings with a cross section of money market participants to prepare them for a post-Fiscal Responsibility Act Market.
The FRA, which is aimed at reducing the Government deficit, has huge implications for the bond market where the government is the biggest issuer.  
THE FINANCIAL EXPRESS(PAGE 8) 19/1/2005  12th FINANCE COMMISSION FOR CAP ON INTEREST RATES
Concerned over poor financial health of states, the 12th Finance Commission is understood to have suggested a cap on interest rates on loans given by the Centre to States.
The panel had taken a very liberal view on debit as all states, barring a few like Tamil Nadu, had a difficult fiscal situation, official sources told PTI. 
THE ECONOMIC TIMES (page 6) 18/1/2005  RBI MAY MAKE REPORTING MANDATORY FOR ALL CP DEALS ON NDS
In a move to deepen the market and improve pricing the Reserve Bank of India may make it mandatory for issuers to report all commercial paper deals on the Negotiated Dealing System (NDS) platform. This was indicated by RBI Deputy Governor Shyamala Gopinath at a seminar on "Strengthening the CP Market" on Monday. 
BUSINESS LINE (PAGE 1) 18/1/2005  DOUBTS OVER ANNUAL CREEPING ACQUISITION PROPOSAL
With the Finance Ministry- RBI combine busy drawing the final lines on the FDI roadmap that is to be dovetailed with the ownership guidelines in private banks, here is a sneak preview of what the cartographers might have in store for the investing community.
Accordingly to official sources, the proposal to allow staggered annual creeping acquisition of 10 per cent of the paid-up capital of a private bank by foreign banks is unlikely to go through as there are fears that it might lead to manipulation of shares of the investee bank. 
BUSINESS STANDARD (1) 17/1/2005  PRIVATE BANK NORMS
The Reserve Bank of India is expected to release the second draft guidelines on ownership in private banks early this week. RBI Governor Y V Reddy on Saturday met Finance Minister P Chidambaram in Delhi to give final touches to the guidelines. 
BUSINESS STANDARD (Page 11) 17/1/2005  FM TO SPEED UP PROMOTION PROCESS AT PUBLIC BANKS
The finance ministry is working on a plan to speed up the process of elevation of executive directors (ED) to the post of Chairman & Managing Director in public sector banks. This is for filling a slew of vacancies which will be created at the top in the banking industry over the next few months.
Currently, an ED needs to put in a minimum of one year in order to be considered for the post of Chairmanship. The finance ministry is planning to reduce the minimum period to six months. 
BUSINESS LINE (PAGE 1) 13/1/2005  REDDY MOOTS CAPPING FII INFLOWS
Dr Y V Reddy, Governor, Reserve Bank of India, today called upon the Government to have an option to impose a ceiling on FII inflows or even taking them.
However, he later clarified that the RBI was not in favour of imposing such a ceiling at this stage and that the effectiveness of taxes was arguable.  
The Hindu Business Line(page 6) 11/1/2005  'Customer want more personalised ATM services' BANK customers in India expect more personalised services from ATMs, according to a recent survey conducted by NCR Corp, a global technology company involved in manufacturing and supply of ATMs and related services in India. 
THE ECONOMIC TIMES (page 6) 10/1/2005  RBI plans to speed up fund transfers NEW DELHI As part of efforts to speed up fund transfers, the RBI is working on a system to enable encashment of multi-city cheques in a day or two. Days are not far when a person can transfer funds through the nearby banks ATMs also, a senior RBI official said. The central banks is also hopeful that the Real Time Gross Settlement (RTGS) facility is available in 500 major centres in the country by next fiscal from 215 centres now, RBI chief GMR Gandhi said. 
THE FINANCIAL EXPRESS (Page 1) 10/1/2005  Indian Banks likely to get 'national' status in S'pore Singapore bourse seeks tieups with NSE, BSE The monetary authority of Singapore is considering conferring 'national'status to Indian banks in Singapore under the India-Singapore comprehensive economic co-operation Agreement (CECA). 
The Financial Express (page11) 10/1/2005  RBI works on policies to build bigger forex kitty The Reserve Bank of India(RBI) is working on policies to build a higher level of foreign exchange reserves in the country, which takes into account the anticipated current account deficits and also 'liquidityatrisk', arising from unanticipated capital movements. 
The Indian Express(page8) 9/1/2005  Card harassment The Reserve Bank of India's (RBI) initiative in persuading the Indian Banks' Association(IBA) to evolve a code of conduct for credit card issuing banks is a welcome move. Although RBI has noted the harassment caused by Directo Selling Agents (DSAs) appointed by card issuing banks, the effort will be further enhanced if IBA calls for public comment before evolving conduct rules. 
The Indian Express(page8) 9/1/2005  Card harassment The Reserve Bank of India's (RBI) initiative in persuading the Indian Banks' Association(IBA) to evolve a code of conduct for credit card issuing banks is a welcome move. Although RBI has noted the harassment caused by Directo Selling Agents (DSAs) appointed by card issuing banks, the effort will be further enhanced if IBA calls for public comment before evolving conduct rules. 
BUSINESS STANDARD (8) 8/1/2005  RBI NOT TO FOLLOW US FED., RULES OUT RATE HIKE
The Reserve Bank of India Governor Y V Reddy today virtually ruled out a rate hike following the footsteps of the US Federal Reserve.
"In the past also when there have been changes in the US Interest rate, it was not followed by the Central Bank here," Reddy told reporters on the sidelines of Indian Institute of Banking and Finance's Sir Purshotamdas Thakurdas Lecture delivered by President of US-Based Yale University., Richard C Levin when he was asked whether the Indian central bank would review the rates in the light of the US rate hike.  
BUSINESS STANDARD (Page 14) 7/1/2005  REDDY SAYS MARKET DYNAMICS TO DETERMINE BANK MERGERS
The Reserve Bank of India will consider merger proposals by public sector banks on the strength derived by them from their propsoed consolidation. The strength derived and future prospects will be taken into consideration while vetting merger proposals from public sector banks, RBI governor Y V Reddy said today.  
BUSINESS LINE (PAGE 1) 7/1/2005  ROADMAP FOR FDIHIKE IN PVT BANKS SOON
The Finance Minister, Mr P Chidambaram, has hinted that the roadmap for allowing foreign banks to pick up to 74 per cent stake in Indian Private Sector Banks would be announced within the next few days.  
THE FINANCIAL EXPRESS (Page 12) 6/1/2005  RBI should fix SSI lending target for banks:house panel The Parliamentary Committee on banking feels that the Reserve Bank of India (RBI)should fix targets for individual banks for lending to the small-scale industries (SSI) sector. 
The Financial Express{page12} 5/1/2005  IBA asks banks to provide details to NRIs on quqke relief Indian Banks' Association(IBA)has asked member banks having overseas branches to provide necessary information on website for making donation to the PM's National Relief Fund by NRIs and others. "The overseas branches will give publicity regarding the remittance facility, available to NRIs and others free of charge."IBA said 
FINANCIAL EXPRESS [PG 9] 4/1/2005  FM for "libral" loans to workers in unorganised sector FM on Monday asked bank officials to be "liberal" in extending credit to workers in unorganised sector. 
BUSINESS STANDARD [PG 14] 4/1/2005  RBI to seek certification for its currency management system RBI is preparing itself for an ISO certification for its currency management system and has decided to update the security features of all notes above Rs.100 denomination. 
BUSINESS LINE (Page 6) 4/1/2005  RBI MAY HIKE INVESTMENT FLUCTUATION RESERVE
Public Sector Banks have been quietly sounded about a possible increase in the investment fluctuation reserve from the current level.
Already most of the banks have reached the prescribed IFR threshold of 5 per cent of their respective investments. The deadline for complying with IFR guidelines is April, 2006.  
Business Standard, Page 1 3/1/2005  But RBI wary of portfolio funds Reserve Bank of India(RBI) has expressed reservations about the Finance Ministry's proposal to liberalise the investment limit for foreign institutional investors (FIIs) in certain sectors. 
BUSINESS STANDARD [pg1] 3/1/2005  Banks,FIs may be allowed to borrow abroad RBI has initiated a review of its policy relating to external commercial borrowings[ECBs, amid calls for allowing financial intermediaries to raise debt abroad. 
The Economic Times (Page 5) 3/1/2005  Debt rap:Wilful defaulters can't recast loans with existing lenders Wilful defaulters won't be able to restructure their debt with existing lenders. A fortnight ago, RBI directed the Corporate Debt Restructuring (CDR) group not to entertain any company which is categorised as a 'wilful defaulter' by any lender, irrespective of whether it is a CDR member or not. The CDR is a forum of banks which considers the restructuring proposal and possible cuts lenders would have to take against an exposure 
BUSINESS STANDARD (8) 1/1/2005  GILTS MANAGEMENT KEY TO BANK RESULTS IN THIRD QUARTER
The financial performance of commercial banks for the third quarter of the fiscal year 2004-05 (October-December 2004) is likely to be a mixed bag. 

Share of hard earned profits of the bank towards provisions for bad debts and write-offs?

 

We all know that banks are earning good profits. Where such profits are going? The following table speaks of the truth :

 

 

 

AS ON 31.3.2003

AS ON 31.3.2004

Total Operating Profits of 27 Public Sector Banks

29,712 crores

39,458 crores

Provisions towards Bad Loans, NPAs, etc. & Contingencies

17,418 crores

22,916 crores

NET PROFITS

12,294 crores

16,542 crores

% of Provisions to Operating Profits

59%

 

58%

 

 

Where the Profit of Banks Going?

IBA says that Banks do not have enough profits to offer us higher wage revision.  But every year huge amounts are being written off towards Bad Loans.

 

 

2002-03

2003-04

Amount provided by 27 Public Sector Banks towards Bad Loans

9,592 crores

14,353 crores

Amount written-off towards Bad Loans

9,039 crores

11,074 crores

 

18,631 crores

25,407 crores

 

If Banks can afford to spend such money for provisions and write-offs, why the IBA cannot agree to our reasonable demands.  Even if the entire demands of the Unions are agreed to by the IBA, it will cost the Banks only around Rs.3000 crores additional.  

 

State owned banks - still the best

 

 

 

 

 

Government-owned banks continue to dominate the top 10 banks list.
 
So you thought that public sector banks were slow, stodgy, inefficient has-beens, out of place in today’s competitive world, right? Wrong.
 
The BS Banking Annual has proved time and again that public sector banks are second to none. This year too, public sectors banks continue to fly high, bagging six of the top 10 slots in the banking survey for 2003-2004. That handsomely beats both private and foreign banks. Private banks account for three slots in the list of top 10. The list also includes a lone foreign bank.
 
The Bangalore-based Vijaya Bank has emerged as the best bank in the 2003-2004 survey. The bank was among the top five in three out of the five criteria used for the survey. It topped in profitability, was third in productivity, fifth in growth, 14th in safety and 20th in efficiency.
 
The really interesting thing, however, was the vast improvement in the bank’s working, as a result of which it vaulted eleven places from its number 12 position in 2002-2003 to the number one slot in 2003-2004.
 

A report card
 
Productivity: Kotak Mahindra Bank tops the productivity charts followed by Allahabad Bank, Vijaya Bank, IDBI Bank and UCO Bank. Kotak Bank's deposit per employee rose from Rs 50 lakh in 2003 to Rs 4 crore in 2004.
 
Safety: Bank of America was the safest bank in 2004 followed by Corporation Bank, J&K Bank, United Bank of India and Karur Vysya Bank. Bank of America had the highest capital adequacy ratio of 22.92%. Besides, it was also a zero NPA bank.
 
Profitability: Vijaya Bank is at the top followed by Andhra Bank, State Bank of Mysore, Allahabad Bank and Catholic Syrian Bank.
 
Growth: Kotak Bank with the highest interest income growth and deposit growth tops the list followed by Allahabad Bank, HSBC, IDBI Bank and Vijaya Bank.
 
Efficency: HDFC Bank is the most efficient bank followed by Bank of Punjab, Standard Chartered Bank, Citibank and IDBI Bank.

 
Nor was the top 10 entirely made up of the well-known market favourites among the public sector banks. In fact, several of them that made it to the elite list are low profile banks that have been quietly doing a great job with a minimum of fuss. Three public sector banks – Vijaya Bank, Allahabad Bank and Oriental Bank of Commerce – were new entrants to the top 10 list, while one State Bank associate, State Bank of Hyderabad, Indian Overseas Bank along with Union Bank of India bowed out.

 

Overall Ranking

Rank

Rank

NAME

P

S

P1

G

E

2003

2004

12

1

Vijaya Bank

3

14

1

5

20

1

2

Andhra Bank

43

16

2

45

27

8

3

Deutsche Bank

12

8

6

11

56

43

4

Allahabad Bank

2

25

4

2

30

2

5

SB of Indore

36

22

7

38

21

10

6

SB of Mysore

16

44

3

24

45

3

7

J&K Bank

21

3

10

36

14

13

8

Oriental Bank of Comm.

15

11

12

19

10

25

9

City Union Bank

10

37

8

12

12

4

10

Catholic Syrian Bank

30

50

5

41

54

19

11

SB of Bikaner & Jaipur

13

20

9

15

36

7

12

Karur Vysya Bank

34

5

21

46

9

11

13

SB of Patiala

17

15

16

13

19

9

14

SB of Hyderabad

23

13

18

21

24

20

15

SB of Travancore

14

33

11

14

32

6

16

Indian Overseas Bank

18

27

14

29

29

38

17

SB of Saurashtra

9

9

22

9

23

14

18

Canara Bank

20

28

15

27

33

48

19

UCO Bank

5

45

13

8

40

30

20

IDBI Bank

4

47

17

4

5

21

21

UTI Bank

52

35

19

17

6

17

22

Corporation Bank

45

2

39

47

16

22

23

Bharat Overseas Bank

33

7

31

43

17

18

24

Bank of India

44

34

20

48

39

-

25

Punjab National Bank

22

19

27

23

28

28

26

Citibank

49

43

26

22

4

15

27

Bank of Maharashtra

19

30

24

26

31

5

28

Union Bank of India

31

32

23

40

22

27

29

Syndicate Bank

11

41

25

16

43

24

30

Kotak Mahindra Bank

1

6

48

1

7

31

31

HDFC Bank

37

26

37

18

1

45

32

Central Bank

7

38

30

7

37

-

33

Standard Chartered Bank

57

42

32

53

3

34

34

Lord Krishna Bank

50

10

40

34

44

32

35

Federal Bank

24

46

29

28

25

26

36

South Indian Bank

35

49

28

32

55

37

37

Bank of Baroda

26

17

38

33

34

16

38

Bank of Rajasthan

25

40

34

30

47

36

39

ABN Amro

42

18

42

20

8

29

40

Karnataka Bank

27

31

36

39

35

42

41

HSBC

53

12

45

3

18

33

42

State Bank of India

38

21

43

37

42

35

43

United Bank of India

48

4

46

50

51

-

44

ICICI Bank

51

51

35

31

11

40

45

Lakshmi Vilas Bank

29

29

41

42

41

23

46

Bank of America

55

1

52

57

15

44

47

Dena Bank

8

55

33

10

50

39

48

Bank of Punjab

54

39

47

44

2

-

49

Tamilnad Mercantile Bank

32

54

44

35

57

-

50

Sangli Bank

39

24

49

54

48

46

51

Dhanlakshmi Bank

46

36

50

52

38

52

52

Indian Bank

6

23

53

6

53

47

53

ING Vysya Bank

47

48

54

55

49

51

54

United Western Bank

40

56

51

49

52

50

55

Bank of Nova Scotia

41

52

55

51

13

53

56

Punjab & Sind Bank

28

53

57

25

46

49

57

Development Credit Bank

56

57

56

56

26

Legend: P - productivity, S - safety;
P1 - profitability; G- growth; E- efficiency

 
Last year’s winner Andhra Bank slipped a place to rank second this year while last year’s runners up State Bank of Indore moved down to the 5th position. State Bank of Mysore moved up four notches to 6th from 10th. Remakable has been the Kolkata-based Allahabad Bank’s leap from 43rd to fourth.
 
Guess who made it to the top 10 list from the private banks? Once again, it wasn’t the high-flying banks that make the headlines. City Union Bank made an entry into the top 10 this year, while Karur Vysya Bank exited. Jammu & Kashmir Bank slipped four notches to the 7th position while Catholic Syrian Bank went down six places to the 10th position.
 
Deutsche Bank, the only foreign bank in the top 10 list, moved up five notches to 3rd from its 8th position last year.
 
The brightest spot in the Indian banking industry in 2003-2004 was the massive cleaning up of banks’ balance sheets by reducing non-performing assets (NPAs). The net NPAs of 82 banks – 27 public, 25 private and 30 foreign banks – studied in the banking annual survery declined 25.8 per cent or by a whopping Rs 8,232 crore to Rs 23,640 crore in 2004.
 
Treasury income played a major role in reducing the net NPAs as banks liberally used treasury profit to clean up their books by making large doses of provisions. The NPAs of public sector banks declined by Rs 6,324 crore to Rs 18,141 crore. Private banks, with less red ink on their books, reduced their NPAs by Rs 1,919 crore to Rs 4,618 crore. Surprisingly, the NPAs of foreign banks rose by Rs 13 crore to Rs 882 crore during 2003-2004.
 
Most banks were able to take advantage of the fat profits from treasury operations, brought about by the lower interest rates, to make higher provisions for bad debts. As a result, four state-owned banks – Oriental Bank of Commerce, State Bank of Indore, State Bank of Patiala and State Bank of Saurashtra – became zero NPA banks by the end of 2003-2004. Four other public sector banks – Andhra Bank, Punjab National Bank, State Bank of Hyderabad and Vijaya Bank – were able to reduce their NPAs to below one per cent.
 
The rush to clean balance sheets by making high provisions for NPAs had its impact on bottomlines. The 82 banks covered in this survey, in percentage terms, had a lower net profit growth of 32.9 per cent (Rs 23,035 crore) in 2003-2004 than the 53 per cent (Rs 17,331 crore) in 2000-2003.
 
Private banks were the hardest hit. In 2003-2004, the net profit of private banks grew by 32 per cent to Rs 4,254 crore versus a rise of 83.9 per cent (Rs 3,220 crore) in 2002-2003. The bottomlines of state-owned banks grew 34.6 per cent (Rs 16,546 crore) in 2004 versus 48 per cent (Rs 12,295 crore) in the previous year. Foreign banks clocked a 23 per cent rise (Rs 2,235 crore) in net profits compared with 38 per cent (Rs 1,816 crore) in 2002-2003.
 
The lower growth in profit can also be attributed to the marginal rise in interest income. Interest income rose marginally by 2.5 per cent to Rs 1,43,437 crore in 2003-2004, compared with 12.5 per cent (Rs 1,39,931 crore) in 2002-2003. It is obvious that the fall in the cost of lending hit the growth in interest income. However, the net interest income of the banking industry rose sharply by 20 per cent. In 2002-2003, the rise in net interest income was 21.3 per cent.
 
Banks indeed made huge treasury profits. However, the bread-and-butter lending business was not entirely neglected. The total advances of 82 banks rose 17.1 per cent to Rs 8,60,741 crore, up from a rise of 15.3 per cent (Rs 7,35,041 crore) in 2002-2003.
 

How we ranked banks
 
Ranking banks is not a subjective exercise. It starts with the Business Standard Research Bureau collecting data on a number of variables from the annual reports of banks. Next, these data are collated under five heads - profitability, safety, productivity, efficiency and growth. Banks are ranked on the basis of these five indicators.
 
However, only banks that have a total asset base of at least Rs 500 crore and five branches are considered for ranking, even though all banks operating in the country are included in the survey. A threshold limit for assets is fixed to eliminate the bias in the growth parameters, resulting from too low a base.
 
This annual survey covers 82 banks. Global Trust Bank has been excluded as the bank was merged with Oriental Bank of Commerce before finalising the annual report for 2003-2004. Three foreign banks – OCBC Bank, State Bank of Mauritius and Toronto Dominion Bank – which were present in last year’s survey are not there as we could not gather their annual reports for 2003-2004. Bank of Muscat is not there as it is merged with Centurion Bank.
 
For the ranking purpose, the study does not include IndusInd Bank. The non-banking finance arm of the Hinduja group – Ashok Leyland Finance – got merged with it and hence the bank’s balance sheet is not strictly comparable with those of its peers.
 
Each indicator is essentially an index built from a set of variables. These need to be standardised if any meaningful comparisons are to be made. The normalisation or standardisation has been done in relation to the relevant aggregates. In general, normalisation has been done in relation to advances, deposits, assets and so on.
 
Having normalised them, the next step is to give an index number to these variables. The standardised variable has been converted into an index number by deflating with the aggregated sector value. In other words, indices of specific indicators have been worked out relative to the banking sector’s average.
 
In arriving at an assessment of which the best bank is, the inherent bias in favour of smaller and private sector banks has to be neutralised. For instance, productivity in the case of public sector banks turns out to be low as their staff strength is huge even after the successful implementation of a voluntary retirement scheme.
 
On the other hand, private and foreign banks have a slender work force and naturally their employees are more productive. To neutralise the bias, the weightage given to productivity is low while arriving at which the best bank is.
 
The parameters to arrive at the most productive bank are profit, income, expenditure, deposit and advance per employee. Expenditure is deducted from the total score; marks are given in an inverse proportion. With profitability gaining precedence over the growth in advances and deposits, the former is given a higher weightage.
 
In the growth parameters, there is a bias in favour of newly set up private banks which post very high growth figures (in percentage terms) because of their small bases. To even out this bias, the growth parameter has also been allocated a low weightage.
 
To assess which bank is the safest, Business Standard looked at the capital risk-weighted adequacy ratio, the stock of non-performing assets and the liquid assets of various banks.
 
The other indicators for arriving at the best of the lot are efficiency and profitability. The parameters to arrive at the most efficient bank are the return on capital employed, the spread on assets, the yield on investments and the spread over establishment expenses.

Who will resist this calculated and false propoganda against bank employees?

Will retired and tired leaders sitting in air conditioned union offices and seem to be determined to occupy the posts till death and not builing any second line for organisation or a data base to countemand such attempts would be able to place true picture ?

A study by FICCI

The nationalised banks in the country have been sheltering more employees that their business volume justify. Looking at the business per employee (BpE) figure for the 19 nationalised banks we observe that:

There is d wide variation in the efficiency level among the banks. Business per employee as at the end of 1998-99 was the highest in Corporation Bank - Rs 185.02 lakh - and the lowest in UCO Bank, just Rs 73 lakh or 150 per cent less than that of Corporation Bank.

Only eight out of the 19 nationalised banks recorded business per employee of Rs 100 lakh or more. Remaining 11 banks and also the State Bank of India have shown business per employee of less than Rs l00 lakh.

Compared to the newly set up private sector banks the efficiency of bank staff in nationalised banks, measured in terms of business per head, is extremely low. In UTI Bank, for instance, BpE in 1998-99 worked out to Rs 10 crore, while the same in the nationalised banks has been averging at less than Rs l00 lakhs only.

BpE in nationalised banks ( including that in SBI is very low comparred to the same in the foreign banks.

An important factor for a low BpE in nationalised banks could be the large number of rural and semi-urban branches where business volume is low. However, this does not explain the wide variation within the nationalised banks (Corporation Bank and UCO Bank).

If we accept Rs 125 lakh as the minimum acceptable business per head - a level which as many as four nationalised banks have achieved in 1998-99 we find that there are a total of 1,77,405 excess employees in 16 nationalised banks (including SBI).

Taking Rs 100 lakh business as a minimum acceptable level (which incidentally was reached by eight out of 19 nationalised banks) there is an estimated 59,388 excess employee in 12 nationalised banks.

The conclusion is clear. Unless the nationalised banking sector gets rid of the excess staff, these will continue to remain inefficient with unduly high operating expense not justified by business volume.

EXCESS STAFF IN NATIONALISED BANKS: AN ESTIMATE

Name of Bank No of Employees No of Extra Employees No of Extra % of Extra % of Extra
  1998-99 Reqd @125 Employees Reqd @125 Employ ees Employ ees Employ ees
               
Allahabad Bank 22500 16200 6300 20250 2250 28.00 10.00
Andhra Bank 14754 9577 5177 11971 2783 35.09 18.86
Bank of Baroda 46264            
Bank of India 52895 40687 12208 50858 2036 23.08 3.85
Bank of Maharashtra 16250 11781 4469 14726 1524 27.50 9.38
Canara Bank 52326 48927 3399     6.50  
Central Bank 48667 30971 17695 38714 9952 36.36 20.45
Corporation Bank 10159            
Dene bank 14474            
Indian Bank 25189 19722 5467 24652 537 21.70 2.13
Indian Overseas Bank 27500 22832 4668     16.98  
Oriental Bank of Commerce 14375            
Punjab & Sindh Bank 12000 10703 1297     10.81  
Punjab National Bank 65263 46770 18493 58463 6800 28.34 10.42
Syndicate Bank 34048 24196 9852 30245 3803 28.94 11.17
UCO Bank 34000 19856 14144 24820 9180 41.60 27.00
Union Bank of India 30769 27801 2969     9.65  
United Bank of India 21429 13995 7433 17494 3934 34.69 18.36
Vijaya Bank 13636 9803 3833 12254 1383 28.11 10.14
State Bank of Inida 239070 179092 59978 223865 15205 25.09 6.36
Total 795566   177383   59388 22.30 7.46

Looking at sheer numbers, SBI needs to lay off the maximum - 15205 in order to achieve a BpE of Rs 100 lakh al1-i 59978 to attain Rs 125 lakh BpE. Accepting Rs 125 lakh BpE as the acceptable level ( which is rather modest compared to the performance of new private sector banks and foreign banks) we observe that:

At least 22.30 per cent of bank employees working for 20 nationalised banks and SBI are redundant. This comes down to 7.46 per cent if we accept Rs 100 lakh BpE as benchmark.

UCO Bank stands aloft in terl11s of excess employees. As many 41.6 per cent of its staff are surplus if we take Rs 125 lakh as benchmark BpE, 27 per cent with Rs -100 lakh BpE.

At least four nationalised banks did record higher than Rs 125 lakh BpE. These are Bank of Baroda, Corporation Bank, Dena Bank and Oriental Bank of Commerce.

Out of the 20 banks listed in this study, as many as eight nationalised banks have shown a BpF. of more than Rs 100 lakh. Apart from the four banks listed above these include Canara Bank, Indian Overseas Bank, Punjab & Sind Bank and Union Bank of India.

On the basis of Rs 125 lakh BpE an estimated 1,77,383 employees are in excess in 16 nationalised banks . This is 25 per cent of total workforce in these banks.

Applying the Rs 125 lakh BpE standard, as many as 12 banks in the study have 20 per cent or more of its workforce as excess. There are ten banks which have at least a quarter of its workforce as redundant using Rs l25 lakh BpE level as the base.

With Rs 100 lakh BpE, as many as eight banks have 10 per cent or more of its workforce as excess.

Even if we accept Rs 100 lakh BpE standard we observe that 59,388 bank staff are in excess in 12 banks. This as a percentage of total workforce of 20 banks in the list is not much - 7.5 per cent. But if we take this as a percentage of total employees in the 12 banks, this works out to 10.1 per cent.

PROFIT PER EMPLOYEE

The fact that there has been no significant reduction in the operating costs to total assets and the payment to employees has gone up by more than 15 per cent in several banks indicates that no head way has been made in resolving the basic structural imbalance caused by high expenses on employees . The seriousness of the problem of over staffing can be gauged by a comparison of the per employee business of the ndtionalised banks Vis-a-vis the flew private sector banks and the foreign banks.

Judged by profit employee, the precarious condition of three nationalised banks stands out. Two of these - UCO Bank and Indian Bank - have incurred losses in the year ending March 31, 1999. The third - United Bank of India - have earned a measly Rs 7,000 profit per employee. The year before this stood at Rs 4,000 only. Evidently there to be some drastic action to restructure these three banks.

Name of Bank Net Profit Profit per Employee No. of Employees Business per Head
  1998-99 1997-98 1998-99 1997-98 1998-99 1997-98 1998-99 1997-98
  (in crores) (in lakhs)   (in lakhs)
Allhabad Bank 135 129 0.60 0.57 22500 22632 90.00 77.00
Andhra Bank 90 75 0.61 0.50 14754 15000 81.14 67.69
Bank of Baroda 421 461 0.91 1.00 46264 46100 134.75 117.24
Bank of India 201 365 0.38 0.69 52895 52899 96.15 99.14
Bank of Maharashtra 52 56 0.32 0.34 16250 16471 90.62 78.91
Canara Bank 225 203 0.43   52326   116.88  
Central Bank 146 175 0.30   48667   79.55  
Corporation Bank 192 167 1.89   10159   185.02  
Dena Bank 110 105 0.76 0.71 14474 14789 126.00 101.00
Indian Bank -778 -302 nil   25189   97.87  
Indian Overseas Bank 55 113 0.20   27500   103.78  
Oriental Bank of Commerce 230 210 1.60 1.50 14375 14000 169.70 134.80
Punjab & Sindh Bank 60 65 0.50 0.53 12000 12264 111.49 92.76
Syndicate Bank 143 83 0.42   34048   88.83  
UCO Bank -68 -96 (0.20)   34000   73.00  
Union Bank of India 160 250 0.52 0.81 30769 30864 112.94 96.98
United Bank of India 15 10 0.07 0.04 21429 25000 81.46 72.01
Vijaya Bank 30 23 0.22 0.17 13636 13529 89.86 71.68

Even the mighty SBI has not fared well in terms of profit per employee. The bank has seen in 1998-99 a sharp drop profit per employee - from Rs 77,000 in 1997-98 to Rs 43,000 only. Despite an increase in Business per employee SBI has seen the drop because of higher provisioning during the year.

Name of Bank Net Profit Profit per Employee No. of Employees Business per Head
  1998-99 1997-98 1998-99 1997-98 1998-99 1997-98 1998-99 1997-98
  (in crores) (in lakhs)   (in crores)
State Bank of India 1028 1861 0.43 0.77 239070 241688 93.64 75.44

 

Among the selected old private sector banks, Federal Bank did not perform well in terms of profit per employee despite a healthy BpE of Rs 149 lakh. Regarding Bank of Rajasthan the conditions are well known to the Reserve Bank of India. The only curious part is absence of any drastic step till now.

Name of Bank Net Profit Profit per Employee No. of Employees Business per Head
  1998-99 1997-98 1998-99 1997-98 1998-99 1997-98 1998-99 1997-98
  (in crores) (in lakhs)   (in lakhs)
Old Pvt Sector Banks                
                 
The Vysya Bank 31 76 0.50   6200   123.89  
The Federal Bank 3 50 0.04   7500   149.00  
Bank of Madura 30 35 1.17   2564   171.00  
The United Western Bank 37 34 1.08 0.99 3426 3434 139.00 113.00
Bank of Rajasthan -67 -88 -1.54   4351   99.00  

 

Based on the yardsticks used above India's newly established private sector banks have performed well. In fact, both in terms of BpE and profit per employee these banks have done even better than the foreign banks operating in India. Performance of UTI Bank in particular has been extremely well matched only by Bank of America, a foreign bank which has concentrated mainly on big ticket business.

Name of Bank Net Profit Profit per Employee No. of Employees Business per Head
  1998-99 1997-98 1998-99 1997-98 1998-99 1997-98 1998-99 1997-98
New Pvt Sector Banks (in crores) (in lakhs)   (in lakhs)
                 
UTI Bank Ltd 31 17 6.00   517   1000.10  
Times Bank Ltd 27 24 5.00 5.00 540 480 730.00 600.00
ICICI Banking Ltd 63 50 7.11 8.33 886 600 513.91 420.17
Bank of Punjab Ltd 32 32 6.14 6.43 521 498 379.57 290.57

 

Among the foreign banks in the table below, performance of the Standard Chartered Bank has been rather poor. Despite select and comparatively high ticket banking its profit per employee at the end of 1998-99 was a low Rs 14,000.

Name of Bank Net Profit Profit per Employee No. of Employees Business per Head
  1998-99 1997-98 1998-99 1997-98 1998-99 1997-98 1998-99 1997-98
Foreign Banks in India (in crores) (in lakhs)   (in lakhs)
                 
Banque Nationale de Paris 23 18 6.84 5.91 336 305 465.66 394.98
Standard Chartered Bank 4 67 0.14 2.49 2857 2691 311.12 276.63
ANZ Grindlays Bank 176 230 5.33 6.86 3302 3353 370.60 333.08
Bank of America 144 177 20.06 25.04 718 707 991.40 1088.78

STAFF COST & BUSINESS

Yet another parameter which clearly shows the excess manpower cost of India's nationalised banking sector is business generated for every Rs 1000 of staff expenditure. There is a wide variation among the 10 nationalised banks and SBI. Central Bank of India has been at the lowest rung - it could generate a measly Rs 4659 business for every Rs 100 spent on staff. In contrast some other nationalised banks have done much better - Oriental Bank of Commerce and Corporation bank for example. Both the banks had fatched business worth more than Rs 11,000 for every Rs 100 of staff cost.

  Payment to  Employees %increase Total Business
Name of Bank 1998-99 1997-98   1998-99 Business /Rs 100 of staff cost
  (in crores)   (in crores) Rupees
Allahabad Bank 326 273 19.41 20250 6212
Andhra Bank 240 198 21.21 11971 4988
Bank of Baroda 845 739 14.34 62340 7378
Bank of India 924 770 20.00 50858 5504
Bank of Maharashtra 302 266 13.53 14726 4876
Canara Bank 880 691 27.35 61158 6950
Central Bank 831 713 16.55 38714 4659
Corporation Bank 165 129 27.91 18796 11391
Dena bank 276 245 12.65 18237 6608
Indian Bank 427 391 9.21 24652 5773
Indian Overseas Bank 509 408 24.75 28540 5607
Oriental Bank of Commerce 217 185 17.30 24394 11242
Punjab & Sindh Bank 189 181 4.42 13379 7079
Punjab National Bank 1069 871 22.73 58463 5469
Syndicate Bank 589 503 17.10 30245 5135
UCO Bank 484 443 9.26 24820 5128
Union Bank of India 514 436 17.89 34751 6761
United Bank of India 341 309 10.36 17456 5119
Vijaya Bank 220 201 9.45 12254 5570
           
Total 59388 7953 17.54    

 

  Payment to  Employees %increase Total Business
Name of Bank 1998-99 1997-98   1998-99 Business /Rs 100 of staff cost
  (in crores)   (in crores)  
State Bank of India 4147 3558 16.55 223865 5398

Overall, however, the nationalised banking sector seem to have winked at the business factor while indulging on expenses on account of staff. Evidently the indicator mentioned in table below illustrates:

There is no logic for an industry-wide wage settlement when the financial strength and business genrated for every Rs 100 of staff cost are so widely different among the banks. Banks must not pay more than what they can afford.

Banks which could not generated a certain minimum of business ( say Rs 10,000 for every Rs 100 of staff expenditure) must improve their performance on this count before granting any hike in salary and allowances to their staff. To begin with, however, the level may be kept lower, perhaps Rs 7,000. Based on the yardstick staff of four banks will qualify to win a hike in wage.

Name of Bank Payment to  Employees %increase Total Business
  1998-99 1997-98   1998-99 Business /Rs 100 of staff cost
  (in crores)   (in crores)  
Old Pvt Sector Banks          
           
The Vysya Bank 87 73 19.18 7681 8829
The Federal Bank 93 79 17.72 11175 12016
Bank of Madura 48 47 2.13 4385 9135
The United Western Bank 55 42 30.95 4762 5253
Bank of Rajasthan 82 62 32.26 4307 5253

Performance of the new private sector banks are most heartening in this respect. Clearly these banks have accepted a better staff policy than the nationalised banks. Perhaps absence of trade unionism, too, has helped.

Name of Bank Payment to  Employees %increase Total Business
  1998-99 1997-98   1998-99 Business /Rs 100 of staff cost
  (in crores)   (in crores) Rupees
New  Pvt Sector Banks          
           
UTI Bank 12 8 50.00 5167 43060
Times Bank Ltd 15 12 25.00 3942 26280
ICICI Banking Ltd 18 12 50.00 4554 25298
Bank of Punjab Ltd 7 6 16.67 1978 28260

 

Name of Bank Payment to  Employees %increase Total Business
  1998-99 1997-98   1998-99 Business /Rs 100 of staff cost
  (in crores)   (in crores) Rupees
Foreign Banks in India          
           
Banque Nationale de Paris 20 14 42.86 1566 7829
Standard Chartered Bank 90 81 11.11 8889 9877
ANZ Grindlays Bank 157 135 16.30 12237 7795
Bank of America 44 38 15.79 7117 16174


"While the productivity of the workforce has increased, proits have augmented; the management is unwilling to give a better deal to the bankmen"
 
At present, all the banks, particularly the public sector banks, are maintaining a reasonable profitability, and during 1999-2003, the per employee business had risen from Rs 1.25 crore to Rs 2.16 crore and per employee profit to Rs 1.77 lakh from Rs 0.90 lakh.

Beware of Retired and Tired Leaders playing in the hands of the Management