INDIAN BANK PLANS FPO BY NEXT JUNE

SOURCE :4 DEC, 2010, 07.46AM IST,PTI 
 

..We will file the DRHP (draft red herring prospectus) with the market regulator Sebi by April and come out with the issue in end May or June," its Chairman and Managing Director T M Bhasin told reporters on the sidelines of the annual Bancon 2010 here today. 

Under the board resolution, the bank will issue 10 per cent fresh shares in addition to its current equity base of around 430 crore shares, he said, adding going by the current market price of the Indian Bank scrip,Public sector lender Indian Bank plans to come up with a follow-on public offer (FPO) by next June through which it plans to raise up to Rs 1,600-crore, a top official said today. 

"Our board has already approved the proposal (to go for an FPO). the issue size can go up to Rs 1,600 crore. 
The government, which holds 80 per cent equity in the Chennai-headquartered bank, will not subscribe for shares in the FPO, he said, adding the stake can come down by around nine per cent post-FPO. 

"The proceeds from the FPO will be used for augmenting its capital adequacy ratio and lend more to customers," Bhasin said, adding that currently, the total capital adequacy ratio of the the bank is 12.86 per cent which will go up considerably after the FPO. 

Meanwhile, Bhasin said the bank will achieve a credit growth of 29 per cent in the current fiscal and a deposit growth of up to 23 per cent, both of which are above the industry average. The RBI's credit offtake target for the year is around 19-20 percent. 

Unlike its peers, Indian Bank is not experiencing any crunch in liquidity currently and in fact is sitting on reserves of over Rs 2,000 crore, which will be disbursed this month, Bhasin said.

Tata-Radia conversations leakage unfortunate but inevitable: PC

Source :4 DEC, 2010, 04.49AM IST,ET BUREAU 


 Home Minister P Chidambaram on Friday said leaks of taped conversations were unfortunate but inevitable, and that such things tend to happen when there’s a major scam. 

“See, what was recorded was conversation of a person suspected to have violated tax laws. We were recording only one end of the conversation but, as it happens, the other end was also recorded. But I am afraid that when there’s a major scam and a major tax violation and such conversations are recorded, things tend to get leaked. It is unfortunate but some of this is inevitable,” Mr Chidambaram told ET NOW, this paper’s sister channel, at the sidelines of an award function for small and medium enterprises, organised by the broadcaster and Indiamart.com. 

Earlier this week, industrialist Ratan Tata had appealed to the Supreme Court against the leaks of his conversation with lobbyist Niira Radia .


 The petition sought an inquiry into the leaks “which are not remotely connected with the purpose for which the investigating agencies had conducted the tapping”. 

Besides Mr Tata, Ms Radia’s conversations with bureaucrats, journalists and other businessmen that were recorded by the income-tax authorities in connection with their investigations also found their way to the media and into the public domain. 


The government subsequently ordered an investigation into the issue and the Central Board of Direct Taxes (CBDT) is now probing how the tapes got leaked. 

No need to worry 

Replying to a question about concerns about whether scams and government probes would vitiate the business environment in the country, Mr Chidambaram said India Inc need not be worried. 

“It’s sad that there are some bad patches but as Professor Bhagwati said yesterday (Thursday), ‘let’s not exaggerate corruption’ . It is an issue which must be addressed and anyone involved in corruption must be punished. 

But I don’t think you should allow yourself to be drowned in this cacophony that everything is corrupt and everybody is corrupt.”

Sebi may tighten disclosure norms to check manipulation

Source :4 DEC, 2010, 11.16AM IST, SANTOSH NAIR,ET BUREAU 

 Amid several instances of market manipulation , capital market regulator Sebi may tighten disclosure rules to check operators and company promoters cutting bulk trades outside the regulator’s radar, feel fund managers and brokers. 

It is common knowledge in market circles that most promoters control undeclared investment arms through which they buy and sell shares of their companies. This helps them evade creeping acquisition norms and other mandatory disclosures. 

“It appears there is enough evidence with Sebi to show how open offer regulations have been side-stepped by purchasing shares through multiple entities carrying out bulk trades. It’s likely that Sebi may ask bulk trade participants to reveal themselves,” said a Mumbai-based broker. 

Recent investigations show that it’s possible for market operators to buy large blocks of shares well exceeding the open offer trigger limit of 15%. 

“In Sangam India , the Dangi group, along with Ashika Group on November 23, 2010, had provided an exit route to investors such as Swiss Finance Corporation (Mauritius) and India Advantage Fund-I which were approximately holding 23.01% share capital in the said company,” said Thursday’s Sebi report on share trader Sanjay Dangi and entities controlled by him, alleged to be rigging share prices in collusion with the promoters. Sangam officials were not available for comment. 

Broker-members are required to disclose to the stock exchanges all transactions for a client wherever the total quantity bought or sold is more than 0.5% of the equity shares of that company. This is referred to as a bulk deal. A block deal is one which is for a minimum of five lakh shares or a trade worth Rs 5 crore. 

Fund managers and brokers say that one way of curbing malpractices would be for the regulator to relax norms for block deals and ensure that large deals are done through this window. The block deal window on the BSE and NSE — for a minimum of 5 lakh shares or for trades worth Rs 5 crore — is open for only the first half an hour of the trading session. 

The transaction price can’t be more than plus or minus 1% of the previous day’s closing price, if the deals are struck right at the start of the session, or plus or minus 1% of the prevailing market price once trading commences for the day. 

Brokers say that when it comes to large trades in mid-cap stocks, many fund managers prefer to route the trades through the regular window. One reason is that the buyer may want to keep his identity secret. This is not possible, if the trade has been done through the block deal window: identity of both the buyer and seller has to be disclosed. 

Another reason, allege market watchers, is that bypassing the block deal window facilitates front-running — an illegal activity in which a trader takes a position in an equity based on advance information of an impending trade. 

“Bulk deals are always negotiated, with the broker(s) finding a counterparty before entering the order on the trading screen,” says a BSE broker , adding that promoters often use undeclared investment arms to absorb heavy selling in their stock from institutional investors. “But they buy in small chunks so as not to trigger the 0.5% limit for disclosing trades to the bourses,” the broker said. 

Last week, India Advantage Fund and Swiss Finance Corporation together sold around 90 lakh shares of Sangam. Of which, around 63 lakh shares were picked by Sanjay Dangi-controlled Pacific Corporate Services and Ashika Group-backed Withal Commercial. According to Sebi regulations, if entities or persons acting in concert acquire more than 15% in a company, they have to make an open offer for additional 20% of the company’s equity. 

In the case of Sangam India, the Dangi and Ashika groups were acting in concert, as the Sebi investigation showed. 

India Post to replace paper stamps with e-stamps for commercial services

Source :4 DEC, 2010, 04.53AM IST, SOUVIK SANYAL & HARSIMRAN JULKA,ET BUREAU 


 It may not ring a bell for a generation fed on emails and SMSes, but those who grew up sending and receiving letters and greetings will take note: paper stamps will be replaced by an electronic version in another two years. 

Licking and sticking will be a thing of the past with India Post deciding to use e-stamps for all its commercial services, including post cards, inland letters and registered post across the country, 156 years after British East India Company introduced the country’s first stamp featuring Queen Victoria. 

“The electronic form of postal stamps will fully substitute paper stamps in two years,” said an official with the ministry of communications and Information Technology. India Post currently has electronic stamping facility in select urban postal circles. 

The postal department is working with USbased consulting firm Accenture to prepare a detailed modernisation plan that includes shifting to the e-stamp system, which is already in place in several developed countries. 


India Post, employing 5 lakh people in more than 1.5 lakh post offices, is the largest postal service in the world. 

Benefits of e-stamps 

The move will help save printing costs and also help the department tackle the menace of forged paper stamps, which is rampant in several states, the official said, requesting anonymity. “There have been cases of revenue leaks due to postal stamps being forged in some parts of the country,” said the official, without getting into details. 


The department sold stamps worth Rs 606 crore in 2008-09 . It reported a loss of Rs 3,638 crore in 2008-09 after posting a 34% jump in expenditure to Rs 9,500 crore. Revenues grew only 6.6% to Rs 5,862 crore during the period. 

Its accumulated losses stand at Rs 7,640 crore. Some premium segment products such as Speed Post are already using bar coded stamps and several large cities have computerised post offices. But most parts of the country, including rural and semi-urban areas , use paper stamps. 

The postal department, established in the 19th century as India Post Office by the British East India Company , is one of the oldest government departments in the country. 


The tradition of postage stamps started in 1852 when the British introduced the Scinde Dawk stamps. These stamps, embossed on red wax wafer, were the first in Asian countries.


 By around 1872, the British military started using stamps extensively to send official mails. 

Besides shifting to e-stamps , the postal department has initiated other e-enabled services to survive in a world that is going the digital way, particularly in the communications space. Its e-post service, for instance, allows sending of messages through email to be printed at post offices near to the address.

Indian banks should target global acqusitions: Subbarao

 


Source:4 DEC, 2010, 05.08AM IST,ET BUREAU 




Reserve Bank of India Governor Duvvuri Subbarao has revived the debate on global acquisitions by Indian banks, after a two-year hiatus, suggesting that local lenders would be able to pick up some valuable firms from the global financial wreckage. 

The governor tempered the likely euphoria, saying that banks should be opportunistic in buying in regions with business potential and at attractive valuations , which would come with associated risk. He neither specified the regions nor valuation parameters. 

“Notwithstanding the risks involved ... some of our larger banks (should) be looking out for opportunities for consolidation both organically and inorganically,’’ Subbarao said at an annual bankers’ conference.


 “They should look (at)... regions which hold out a promise of attractive acquisitions. Indian banks should increase their global footprint opportunistically even if they do not get to the top of the league table.’’ 

The need for global expansion of Indian banks is necessitated by the rising aspirations of domestic companies to buy up assets as also rising trade with other emerging markets such as Indonesia and African nations. 

On treatment of foreign banks in India , he left the door wide open, saying the soon-to-be-released discussion paper would address it, but said mandating incorporation of subsidiaries alone is not necessarily the safest net. 

Former Finance Minister P Chidambaram had advocated consolidation among Indian banks and acquisitions overseas, including an audacious bid for the then sinking Citigroup by State Bank of India . 

Domestic banks reluctant 

Many international financial institutions were trading at throwaway valuations during the 2008 credit crisis. But domestic banks have been reluctant either because they do not have the bandwidth to buy, or see better opportunities in the local markets.


 The domestic banking industry is heavily controlled, unlike in the West where loose regulations nearly collapsed the global financial system because of the mortgage crisis in the US. 


Indian banks mostly deal with plain vanilla loan products and stay away from exotic derivatives, the main revenue stream for the Western financial companies. 

New a/c for 1,400cr lying unclaimed with banks

Souece :

NEW DELHI:

4 DEC, 2010, 05.04AM IST,ET BUREAU

 Banks could lose nearly Rs 1,400 crore of cheap funds lying in unclaimed deposits with the government deciding to create a fund to park these moneys and use it for depositor education. 

Funds in deposit accounts that have not been operated for more than 10 years will be credited into a “depositor education and awareness fund”, Finance Minister Pranab Mukherjee informed Parliament in a written reply to a question. 

“The government is contemplating to amend the Banking Regulation Act, 1949 for creating the Depositor Education and Awareness Fund,” finance minister said adding that the fund was conceived in consultation with the Reserve Bank of India. 

The depositors will get their money back if they make a claim later, along with interest at the rate decided by RBI. 

Currently, banks treat unclaimed deposits as regular deposits. The total amount outstanding under these deposits as on December 31, 2009 was Rs 1,360 crore. 

Canara Bank has over Rs 218 crore lying unclaimed while Punjab National Bank and Union Bank of India have over Rs 160 crore and Rs 100 crore in idle accounts. 

The proposed depositor education fund will be run by an authority or committee constituted by RBI. 

Banks will have to credit the funds into the account within three months of a dormant account becomes 10 years old. 

The move will help clear the administrative burden of unclaimed deposits and also prevent their possible misuse. At the end of December 2009, there were more than one crore such accounts with scheduled commercial banks. 

Recently, even the Employees’ Provident Fund Organisation had decided that it will stop paying interest on accounts that had not received any contribution for more than three years. 

The organisation hopes this will encourage subscribers to settle the accounts that are clogging the system.

Source ;ET :NEW DELHI:1 DEC, 2010, 10.48PM IST,PTI 


 Wipro Chairman Azim Premji will transfer company shares worth Rs 8,846 crore to his endowment trust later this month, with a view to fund philanthropic activities taken up by the body. 

Once the share transfer is complete, the promoters' stake in Wipro would come down to 72 per cent from 79.36 per cent at present, according to a company official. 

"Azim Premji will transfer 213 million equity shares (valued at approximately at Rs 8,846 crore at the current market price) of Wipro, held by certain entities controlled by him, to an irrevocable trust," Wipro said in a statement on Wednesday. 

The share transfer would be concluded on December 7.


 Asked if the move was aimed at bringing down the promoter s participating interest to 75 per cent, in line with proposed new norms making it mandatory for the public to hold a minimum 25 per cent stake in listed companies, Azim Premji Foundation CEO Dileep Ranjekar replied in the negative. 

"The trust will fund the philanthropic activities of the Foundation and not (for) any other purpose," Ranjekar said. 

The foundation, which was set up in 2001, works largely for the cause of education in rural India. 

"We believe that good education is crucial to building a just, equitable, humane and sustainable society. We want to contribute significantly towards improvement of education in India and through that, towards building a better society," Premji said. 

Premji, who is also Wipro founder, plans to set up the Azim Premji University , which is expected to start operations next year. The university will offer programmes and conduct research in the field of education and other related areas. 

"All our efforts, including the university that we are setting up, are focused on the underprivileged and disadvantaged sections of our society," Premji said. 

His industry peer and Infosys Chief Mentor N R Narayana Murthy offloaded 800,000 shares in the company earlier this year to set up venture capital firm Catamaran, with a corpus of Rs 174 crore. 

In June this year, HCL Corporation Chief Shiv Nadar sold a 2.5 per cent stake in HCL Technologies to raise over Rs 580 crore for charitable activities. 

Shares of Wipro closed at Rs 414.55 on the Bombay Stock Exchange on Wednesday, down 1.34 per cent from the previous close.

MOIL issue price fixed at Rs 375, listing likely on Dec 15

Source :ET:NEW DELHI:4 DEC, 2010, 07.14AM IST,PTI 


 State-run MOIL's issue price has been fixed at Rs 375 per share at which Rs 1,260 crore will be raised from IPO investors , and the company is likely to get listed on stock exchanges on December 15. 

"Each share of MOIL will be issued at Rs 375 and the company is likely to be listed on December 15," Finance Ministry sources told PTI, making the manganese miner the fifth PSU to divest stake this fiscal. 

The issue price of Rs 375 per share is at the upper end of the price band of Rs 340-375 fixed by the government. 

The public stake sale, which opened for subscription on November 26, was oversubscribed more than 56 times. By the end of the final day of the offer on December 1, it had attracted bids for 189.13 crore shares, though only 3.36 crore equities were up for grabs. 

At the issue price of Rs 375 per share, the IPO would raise about Rs 1,260 crore. 

The Centre is divesting a 10 per cent stake in the company under the IPO, while the state governments of Madhya Pradesh and Maharashtra will offload 5 per cent participating interest each. 

The price band was fixed by an Empowered Group of Ministers chaired by Finance Minister Pranab Mukherjee and attended by Home Minister P Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia. 

The government, which hopes to raise Rs 40,000 crore through PSU disinvestment this fiscal, has already mopped up close to Rs 20,000 crore through divestment in PSUs Satluj Jal Vidyut Nigam, Engineers India, Coal India and Power Grid.

UCO Bank to sell stressed assets

Source : BL :Priya Nair:Remya Nair:Mumbai, Nov. 30.2010

UCO Bank is planning to sell some of its stressed assets as part of its efforts to improve the asset quality.

“We are looking to sell Rs 280 crore of stressed assets. Within the next 10-15 days, we should be able to finalise one deal. We will sell more of these stressed assets so that we can reduce the portfolio,” said Mr Arun Kaul, Chairman and Managing Director of the bank.

The bank will look to sell at least one more tranche in the near future, he said.

“The NPAs are slightly on the higher side. Slippages are very large. For six months, slippages are nearly Rs 1,100 crore. Gross NPAs have gone above 2.3 per cent as on September-end. So we are making a lot of efforts to improve the quality of assets”, said Mr Kaul.

He said the bank is targeting to bring down gross NPAs below 2 per cent this fiscal.

In the second quarter, a large amount of the NPAs have come from the agriculture waiver and debt relief scheme. Over the next two quarters, there is unlikely to be any abnormal slippages, Mr Kaul said.

The bank has created a separate recovery vertical that will focus purely on recovery of bad loans.

“Ordinary branches have so many other functions that have to be done. So this function gets diluted. We have created separate 5-6 stressed asset branches which will focus on recovery of bad loans. These branches will report directly to the head office, thereby ensuring quick decisions are taken,” said Mr Kaul.

These branches will handle large NPA accounts for above Rs 1 crore or so. Besides the separate branches, the bank is also planning to set up recovery camps, lok adalats and engaging recovery agents. The bank has set an internal target of Rs 1,300-1,400 crore for recovery from bad loans.

UCO Bank is also setting up specialised branches for disbursing credit to large corporates to ensure that these do not become bad loans due to bad underwriting.

“NPA creation is partly due to the skill sets available in banks. So we are creating specialised branch known as flagship corporate credit known for large corporate credit”, he said. While for the retail segment, the bank is setting up the central processing units, for more efficient monitoring.

IOB cuts NPAs in Karnataka by Rs 200 cr in first half

— G.R.N. Somashekar 
 
Optimistic of recovery:Mr M Narendra (right), CMD, Indian Overseas Bank, and Mr Ranganath, GM, Bangalore Region, addressing a press conference in Bangalore on Friday.

Source :Business line Bureau:Bangalore, Dec 3.2010

Indian Overseas Bank has brought down its NPAs in Karnataka by about Rs 200 crore during the first half of this fiscal and it currently stands at around Rs 500 crore.

“We expect substantial recovery before March this year,” said Mr M Narendra, Chairman, Indian Overseas Bank.

Tourism projects

Addressing a press conference here, he saidthe bank's exposure to the real estate sector was around Rs 400 crore. “Recovery in this sector has been slow because of the recession and we are confident that we would be able step up the recovery soon,” he said.

Advances to real estate and housing sector in the state areabout Rs 240 crore as of September 30, 2010.

Participation in the State tourism projects, SEZs and infrastructure projects will be the focus for the Chennai-based bank during the year.

Mr Narendra said the bank was ‘interested' in participating in infrastructure projects such as steel, cement and power in the State. “We also want to tap the sugar belt in the state by opening branches in Belgaum and Bagalkot and industrial areas like Jigani and Bidadi,” he said.

Deposits, advances

The banks' total deposits in the State stand at Rs 5830 crore and advances at Rs 3153 crore. Priority sector advance is around Rs 624 crore and agricultural advances about Rs 249 crore. IOB has 83 branches and 41 ATMs in Karnataka.

The bank which has an employee pool of around 26,000 people plans to recruit about 1600 people (1100 clerks and 500 specialist officers) during the current year and about 100 new hires would be in the state, Mr Narendra said.

SBI chief wants overseas HQ for international biz

Source:Business Line :N K Kurup:Priya Nair:Mumbai, Dec. 2:2010

Mr O. P.Bhatt, Chairman, State Bank of India, wants to move the headquarters of the bank's international business outside India and also induct people of international eminence on SBI's board. This is part of the bank's larger strategy to become India's multinational bank.

“Though we have the largest international footprint (among Indian banks), we are not an international bank in many ways,” Mr Bhatt told Business Line.

“We are looking at it not only in terms of our balance-sheet, but for our ability to help in a cross country environment. We want to provide Indian corporates the entire gamut of services for their overseas business — whether it is raising bonds or money, advising and mergers and acquisitions,” he said.

Currently, overseas operations contribute to 12-15 per cent of the bank's profits and the aim is to increase it to 25 per cent over three-four years.

SBI currently, has 150 offices outside India. It is in the process of setting up regional structures or hubs across the world, each of which would be responsible for the administration and other operations of a certain geographical area. 

The overseas branches then would not need to report to the Chief General Manager in charge of international operations in India. 

There would be six-seven such hubs, including in New York, London, Frankfurt, Hong Kong, and Dubai. Dhaka will have a separate country head.