 The VC fund, which had earlier picked up an 11 per cent in Mannapuram, sold the shares at Rs 740 each. It had bought them for Rs 142 a share, according to MGFL chairman VP Nandakumar. MGFLhas a loan outstanding of Rs 2,550 crore. |
Wednesday, April 28, 2010
Sequoia exits Mannapuram
RBI transfers 90 senior officers
In one of the biggest-ever portfolio re-allocation exercise of senior officers, the Reserve Bank of India (RBI) has changed the work allocation of about 90 chief general managers (CGMs) and general managers (GMs) at one go. |
While only six officers have been promoted from the level of GM to CGM, 34 CGMs have been identified for reallocation of portfolios. In addition, 31 officials have been promoted from the level of deputy general manager to GM, while 60 GMs have been identified for reallocation of departments.
RBI has around 70-80 officers at the level of CGM.
D Subbarao, who took over as RBI governor in September 2008, has been trying to rework the human resource practice of the central bank.
Sources familiar with the development said for the first time a transfer policy for CGMs was put in place which mandated transfer of officials with over 10-year stay in Mumbai. Regional directors, who are also of the rank of CGM and spent four-five years in a regional centre, have also been identified for transfer.
But, there are some officers who have been transferred despite spending lesser time (less than 10 years in Mumbai and five years in a regional centre).
For instance, S Karuppasamy, senior-most CGM working with the department of banking supervision, has been transferred to Kolkata as regional director. RBI sources said the move was a precursor to his elevation as executive director next year. Among others, FR Joseph and B Srinivas, regional directors in Kolkata and Bangalore, respectively, were also transferred.
What has, however, caused some heartburn is the transfer of some CGMs due for retirement in around a year.
While it is the first time that a transfer policy has been put in place for CGMs, some exceptions have been made in case of officers who have been in Mumbai for over 10 years.
RBI sources said the rotation exercise was not that easy, as it took nearly three months to finalise the list. Top RBI officials also differed on the various issues, sources said.
Unlike in the past, the central bank has also decided to provide more time to officers to relocate. Earlier, the orders were applicable with immediate effect, but this time they have been provided more time to move. Also, there are at least five CGMs identified for relocation, but have got a reprieve for a year.
Well-behaved borrowers may pay less for loans
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| Source:BS:Sudeep Jain / Mumbai April 28, 2010, 0:30 IST |
NEW NORMS
LENDING RATES ARE CURRENTLY LINKED TO:
# The prime lending rate
# Credit worthiness, which is determined by family income, other debt commitments and number of dependents
LENDING RATES WILL NOW BE LINKED TO:
# Customer’s record on timeliness of payments
# Performance on other loan commitments
# Record of dishonoured cheques
Banks consider dynamic lending rate system based on credit history.
For bank borrowers, it might soon pay to be well-behaved. Banks are considering the introduction of a behaviour-based dynamic lending system once the base rate mechanism is in place from July.
Once the proposal, at drawing board stage at a number of banks, is implemented, a customer’s record on timeliness of payments, performance on other loan commitments and frequency of cheque bounces would go into calculating a behaviour score.
Banks are already accessing the credit score from credit information companies while determining the worthiness of a prospective borrower. Now the data would be accessed more frequently to keep tabs on customers.
The base rate mechanism has given banks the flexibility to not only charge retail customers according to their risk profile, but also make changes to the risk weight during the term of the loan.
This means customers who are regular with their equated monthly installments (EMIs) can expect to have a few basis points shaved off the interest rate on an existing loan. In contrast, customers who are irregular with their repayments might see their interest charges bumped up.
At present, most banks charge retail customers a fixed rate of interest on loans or a floating rate, which moves in tandem with their prime lending rate (PLR). There is no provision to change the rate charged to a customer on an individual basis during the tenor of the loan.
In case of credit cards, some banks, especially the foreign players, review the interest rate on a quarterly or half-yearly basis, based on the repayment record for the card issued by them. The repayment record for other loans and cards from other banks is not factored in.
The base rate system requires banks to declare a floor rate below which they would be barred from granting loans. To arrive at the final rate charged to customers, banks are permitted to add other weight-risk premium and a tenor premium to the base rate. Bankers said they also have the flexibility to change the risk premium during the tenure of the loan as long as they are transparent about their pricing mechanism.
“The base rate will allow risk-rate pricing for retail customers. You create a behaviour score card for a particular customer and depending on his performance, you either increase or decrease the interest rate you charge him,” said Shyamal Saxena, General Manager, Retail Banking Products at Standard Chartered Bank.
“The base rate system has definitely set the foundation for dynamic pricing of retail loans. This is a fairly common practice abroad where all interest charges are linked to a customer’s behaviour score. It is still unknown in India,” said a senior Axis Bank executive. The executive, however, added that the system would not work if only a handful of banks shift to a dynamic pricing mechanism.
However, bankers say they would not be able to change to a dynamic pricing process mechanism overnight and it might take months before it is introduced.
“The consumer banking business in India has seen significant volumes only in the past five-six years and is still not mature. Customers would have to be convinced that such a mechanism is in their best interest,” said a senior executive of a public sector bank.
Besides, executives at private sector banks said the public sector players did not do data mining to the extent that is possible. The public sector players account for around 73 per cent of the banking business in the country.
“From a risk-evaluation point of view, a lot needs to be done in India. It will take time for sophisticated credit-scoring models to develop,” said Standard Chartered Bank’s Saxena.
A Mumbai-based financial planner said a move to dynamic pricing would require a change in the contractual agreement that customers sign before availing of a loan.
“Banks will have to clearly explain how they will change the interest rate. It will not be easy to convince customers to sign off on a dynamic pricing clause,” he added.
Some bankers are also skeptical about such a move. “Technically it is possible. Banks will have to make sure that they are transparent about how they are charging customers. It also remains to be seen how the Banking Codes and Standards Board will view such a move,” said a senior executive from public sector lender.
Make phone banking more secure or face penalty: RBI to banks
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| Press Trust of India / New Delhi April 25, 2010, 15:07 IST |
Taking forward its efforts to tackle identity frauds in non-branch banking transactions, the Reserve Bank has asked all the banks operating in the country to put in place by next year a system where credit and debit card customers would need to provide an additional password for IVR (interactive voice response) transactions.
IVR transactions are done over phone, wherein customers dial bank's customer care number and are prompted by a recorded voice to dial designated digits for different kinds of transactions such as balance enquiry, bill payment etc.
The customers would now need to key-in an additional password on their phone, besides the currently prevalent details like card number, date of birth, card issue or expiry date and in some cases a telephonic password.
As RBI has also noted, there has been a stupendous rise in recent past in the banking transactions through channels other than the traditional branch banking. Such non- traditional routes include Internet, mobile and phone banking.
However, these new-age banking transaction routes are considered to be relatively more prone to identity frauds and the credit or debit cards could be misused by those other than their bonafide owners.
To tackle this menace, RBI last year asked the banks to put in place April 2009 onwards "a system of providing for additional authentication/validation based on information not visible on the cards" for transactions where card was actually not presented.
While this directive covered online transactions, it did not apply to IVR transactions and RBI had said at that time that "separate instructions will follow" for the same.
In both online and IVR transactions, a card is not actually presented for conducting the transactions, unlike the transactions at ATMs or merchant establishment where a credit or debit card needs to be swapped for credit or debit to take place from the customer's account.
However, RBI has now decided to "extend this requirement of additional authentication/validation to all CNP (card not present) transactions including IVR transactions."
This additional security codes would need to be different than those visible on the cards, such as the card number, CVV (card verification value, which is printed on the back of the card), date of birth and date of issue and expiry.
As these are visible on a card, a non-bonafide customer, having seen the card at places LIKE merchant establishments, can use them to transact in the account over phone.
Besides, the banks would also need to put in place a system of 'Online Alerts' to the cardholder for all 'card not present' transactions of the value of Rs 5,000 and above.
RBI has asked the banks to implement these additional security measures for all CNP transactions by January 1, 2011.
"Banks are advised to strictly adhere to the instructions and time discipline indicated in this circular. Non-adherence to the directions shall attract penalties...," RBI said in a circular to the chiefs of all banks operating in the country.
These include Scheduled Commercial Banks, Regional Rural Banks, Urban Co-operative Banks, State Co-operative Banks and District Central Co-operative Banks.
StanChart is top taxpaying foreign bank in India
Press Trust of India / New Delhi April 26, 2010, 18:16 IST
UK-based Standard Chartered Bank has pipped Citi Bank and HSBC Bank to become the top taxpayer among foreign banks operating in India during fiscal 2009-10.
With advance tax payment of Rs 1,405 crore, up 14.2 per cent from previous fiscal, StanChart stood as the 16th highest taxpayer in India among all corporates, banking and otherwise, according to advance tax figures made available to PTI.
Standard Chartered Bank was followed by HSBC Bank, which paid an advance tax of Rs 835 crore for FY'10 and American lender Citi Bank that paid Rs 800 crore during the year.
While StanChart saw a rise of 14 per cent in its tax payment, Citi Bank and HSBC Bank saw fall of 53 per cent and 39 per cent (from Rs 1,710 crore and Rs 1,375 crore in the year-ago period), respectively, in tax payment.
Among all bankers in the country, foreign as well as local, StanChart stands behind only three big names -- State Bank of India, Punjab National Bank and ICICI Bank.
While SBI with Rs 6,552 crore advance tax payment leads the corporate segment, PNB paid Rs 2,018 crore and ICICI Bank Rs 1,502 crore as advance tax.
Among other major lenders, HDFC Bank, Bank of Baroda and Union Bank of India paid Rs 1,375 crore, Rs 1,277 crore and Rs 767 crore, respectively as advance tax.
Among the foreign bankers, Deutsche Bank comes in at the fourth slot with an advance tax payment of Rs 413 crore. This, too, saw a decline of about 13 per cent over fiscal 2008-09.
Next in line is Bank of America with Rs 298 crore, up 23 per cent compared to last year, followed by Barclay's Bank (Rs 275 cr) and DBS Bank (Rs 220 cr)..
Yes Bank to raise Rs 1,500 cr capital this fiscal
Press Trust of India / Mumbai April 27, 2010, 17:20 IST
Private sector lender Yes Bank plans to raise Rs 1,500 crore of capital this financial year, a top bank official said.
"We are very well capital-endowed as at March 2010 but we do have a headroom to raise around Rs 1,500 crore of hybrid capital in both our Tier-II and Tier-I structure," Yes Bank Managing Director and CEO Rana Kapoor told reporters here today.
"We will be tapping this window definitely this fiscal because in a rising interest rate environment it is better to raise money sooner than later," he said.
As on March 31, the bank's total CRAR stood at 20.61 per cent.
The bank would be tapping the domestic market for this hybrid capital, he said.
Yes bank wants to increase its branches to 250 by June 2011, Kapoor said.
"We want to increase our branches from the present 150 to up to 250 by June 2011. We should incur a capex of around Rs 60-75 crore depending on the fund-mix on metro, rural and urban branches," he said.
Yes Bank is also looking at increasing its head count from 3,030 to 4,500 by end-this fiscal, Kapoor said.
"Presently, we have 3,030 people and our objective is to take the headcount in the first-half of this fiscal to 4,000 people. It is quite likely that we would end the year (FY 11) at a level not exceeding 4,500 people," he said.
By March 2015, the bank would have a staff strength of 12,000, he said
RBI declares 108 entities as vanishing companies in last 3 years
Source:27 Apr 2010, 1639 hrs IST,PTI
NEW DELHI: Reserve Bank had declared 108 Non Banking Financial Companies (NBFCs) as vanishing companies during the last three years, Rajya Sabha was informed today.
"Whenever a company is declared as vanishing the matter is referred to the Economic Offences Wing of the concerned state government," Minister of State for Finance Namo Narain Meena said in a written reply.
The onus is on the state police machinery to investigate the case and take legal action as deemed appropriate, including penal action as per Indian Penal Code or Criminal Procedure Code, he said.
It is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution, he said.
RBI has been empowered to impose penalty on NBFCs for violation of the provisions of the RBI Act 1934.
In order to protect the interest of investors, he said, RBI has strengthened market intelligence system for picking early warning signals about the health of a particular NBFC and take preemptive action.
In another reply, Meena said based on the recommendations of the Vaidyanathan Task Force II, the government had approved the Revival Package for Long Term Cooperative Credit Structures with a total outlay of Rs 3,070 crore.
Govt opens I-T units in S'pore, Mauritius; 8 more on the way
Source:Press Trust of India / New Delhi April 27, 2010, 16:28 IST
The government has set up two income tax overseas units at its missions in Singapore and Mauritius and will create such units in eight more countries to facilitate exchange of information on tax-related issues, Parliament was informed today.
"To facilitate exchange of information, two income tax overseas units within our missions have been created in Singapore and Mauritius and officers have been posted there," finance minister Pranab Mukherjee told the Rajya Sabha in a written reply.
Besides, it has also been decided to create eight more such units at the US, Britain, the Netherlands, Japan, Cyprus, Germany, France and the UAE missions, he added.
He said there is currently no proposal for legislative changes to arrest stashing away money out of the country. "At present, there is no proposal for any legislative changes in the matter," Mukherjee said in the reply to a query whether the government is contemplating to modify and strengthen the existing laws, or to bring in a comprehensive legislation for checking syphoning off black money from the country.
"There is no verifiable information available about the money allegedly parked in the foreign banks," the minister said, adding, however, the Central Board of Direct Taxes has asked its investigation directorates to collect information about Indian nationals suspected to have bank accounts in tax havens, and agents of foreign banks who are soliciting people for opening of foreign bank accounts.
"They have also been asked to collect information as regards foreign visits of Indian nationals to tax havens," the minister said. Efforts are being made to collect evidence during search/survey operations pertaining to opening of foreign bank accounts or other assets abroad, Mukherjee said. Besides, whenever any specific case of suspected unauthorised maintenance of accounts abroad by Indians comes to the notice of department of enforcement, appropriate action is taken.
"No roving enquiries can be made by the directorate, though," Mukherjee added.
Besides,the ministry has requested the existing partner countries for renegotiation of the article concerning exchange of information in the tax treaties for specifically, including provisions for obtaining bank-related information. Responses from some of these countries,along with their counter proposals, were also received recently, he said.
Negotiations have already been completed in one case, the minister said, adding the treaty partner-countries, with whom pacts do not have provisions relating to assistance in tax collection, have been approached to include such a provision.
To another query, Mukherjee said there is no proposal to set up any new agency to conduct study on the quantum of black money in the country.
Insurance firms set to defy Sebi
Source:BS:Shilpy Sinha / Mumbai April 27, 2010, 0:21 IST
To approach Irda for new Ulips
Several life insurance companies in the country are
preparing to take on the markets regulator Securities and Exchange
Board of India (Sebi) over unit-linked insurance plans (Ulips).The insurers are working on new insurance-cum-investment schemes and they plan to approach their regulator, the Insurance Regulatory and Development Authority (Irda), for permission to launch these.
This would be in defiance of the Sebi directive issued on April 13, which asked insurance companies to register with it before launching new Ulips.
While companies that Business Standard spoke to were unwilling to come on record on the issue, they confirmed working on new Ulips.
“As of now, the roadmap is insurers will go to Irda. If the insurance regulator does not approve, we will then decide on what to do, whether to register with Sebi before the matter is resolved,” said Life Insurance Council Secretary General S B Mathur. Life Insurance Council is the representative body of all life insurance companies.
Under the current norms, insurance companies are required to give details of any new product they intend to launch to Irda, which then clears the scheme. A plan is deemed to be approved if no questions are raised over it by the regulator within 90 days of filing.
Ulips were being regulated by Irda until April 9, when Sebi barred 14 insurance companies from selling or renewing these products. The Sebi order said any market-related product needs to be cleared by it, since it is the market regulator.
Irda, however, asked the insurers to ignore Sebi’s directive, arguing that only Irda could regulate insurance companies.
The government then stepped in to avoid a showdown between the two regulators. It advised the regulators to seek a legal remedy on the question of jurisdiction.
Later, Sebi withdrew its April 9 order, but asked the insurers to register with it ahead of launching new Ulips. The regulators, however, are undecided on which court they should approach for legal opinion.
With the stock markets showing signs of stability and the investors’ risk appetite growing, demand for Ulips has picked up. Insurance companies want to encash on the improved sentiments, especially in the second half of the financial year, when sale of their products usually goes up.
“The second notice from Sebi is only a clarification and not an order. Our earlier order asking insurance companies to ignore Sebi’s letter takes care of the clarification issued by the market regulator. Finance Minister had restored status quo ante on these policies. This is sufficient to understand that business will be carried as usual,” a senior Irda official said.
Besides, insurers are drawing comfort from a statement given by Minister of State for Finance Namo Narain Meena in Parliament last week.
“The Insurance Regulatory and Development Authority has reported that every life insurance company registered under the IRDA Regulations, 2000, can transact life insurance business, which includes unit-linked business,” the minister had said in a written reply in the Rajya Sabha.
“We have comprehensive plans but want to launch some innovative plans by June. As per our requirement, we will approach the insurance regulator for approval,” said the chief executive officer of a large private sector insurance company, which is among the 14 companies covered by Sebi’s April 9 order.
“It will take three-four months for the matter to be resolved. This is the time when we work on our products. Irda takes around two months to approve a product. If it is innovative with completely new features, it takes more time. We train our workforce, agents and sales team during the first half of the year and try pushing these products during the second half. We are working on policies and will approach our regulator to get it approved,” added a senior executive of another large insurance company.
Though state-run Life Insurance Corporation was outside the ambit of Sebi’s order, a senior executive at the company said the insurer was working on two-three new Ulips.
“Irda will take its time to approve them. We will be launching another set of new products in the coming weeks,” the executive added.
LIC has neither been served any notice nor banned from launching any products.
Sebi Executive Director K N Vaidyanathan had, however, said the remaining nine insurance companies were being investigated.
In recent years, Ulips have accounted for a bulk of new business, generating nearly 90 per cent of the premium income for the private players. In case of LIC, the share of Ulips in new business was around 65 per cent last year.
During 2009-10, insurance companies invested around Rs 75,000 crore in the stock markets and have together emerged as the largest domestic institutional investors.
Bharti says expects to close Zain deal by mid-May
Source:REUTERS:28 Apr 2010, 1524 hrs IST,
NEW DELHI: Bharti Airtel expects to close its $9 billion deal to acquire Kuwaiti telecoms Zain's African assets by mid-May, Manoj Kohli, the Indian firm's chief executive for international unit, told analysts on a conference call.
"The approvals are going on very well," he said.
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