Oriental Bank to axe redundant branches

Source:BL:ANJANA CHANDRAMOULY:Bangalore, Feb. 23:  2011

Oriental Bank of Commerce wants to do away with redundant branches in its network which arose due to the merger of Global Trust Bank with the bank. 

This measure would help improve its CASA (current account savings account) ratio, according to a top official of the bank.

“Thanks to the merger of GTB with our bank, there is certain redundancy in the branch network. We want to combine businesses of some branches and under the RBI's relaxed licences policy, use these licences for opening branches in residential areas that are not represented. 

That will help improve our CASA,” Mr Nagesh Pydah, Chairman and Managing Director, Oriental Bank of Commerce, told Business Line.

The bank is already on the job, and “in the next 90 days you will see a substantial difference,” he said, pointing out that about 65-70 branches have been identified across the country in metros and urban towns.

 Redundancy normally comes in a metro branch after it reaches a certain age and hence the growth plateaus, he said. Currently, the bank has 1,608 branches and 1,200 ATMs in the country.

The bank's CASA levels are currently around 25 per cent, and one of the priorities for the new chairman and managing director of this bank is to take it to about 30-32 per cent in a year.

In order to achieve this, the bank has campaigns targeting specific groups including students. “We have also launched a concerted drive for salary accounts,” said Mr Pydah.

Besides, the financial inclusion programme also threw up tremendous opportunities, he pointed out. The bank has been allotted 570 villages for the drive, of which it has to cover 300 by March 2011.

The bank has also drawn up an interim business plan to reach business of Rs 4 lakh crore by March 2013; currently it has Rs 2.2-lakh crore business.

“Except that the liquidity constraint, there is not much of a challenge to achieve this,” he said.

Dhirendra Swarup nominated FPSB India Chairman

Source; PTI:Business Line:MUMBAI, FEB 24:2010

The Financial Planning Standards Board India (FPSB India) today announced the nomination of Dhirendra Swarup as its new Chairman.

Mr Swarup was the Chairman of the Pension Fund Regulatory and Development Authority (PFRDA) till last year.

He has behind him an illustrious career as a civil servant and retired as the Secretary (Expenditure & Budget) in the Union Ministry of Finance, a release said here.

“The Indian financial services industry is due for a major introspection, which is necessary pursuant to recent initiatives by various regulators to bring an element of advice in selling of financial products,” Mr Swarup said.

“FPSB India, backed by the commitment of 50 leading financial brands and the support of all stakeholders, will strive to bring the benefits of informed investment decision-making closer to investors in India,” he said.

The other nominated board members are the Dhanlaxmi Bank Managing Director & CEO, Mr Amitabh Chaturvedi, the ICICI Securities Executive Director, Mr Anup Bagchi, the Hindustan Times Executive Editor, Mr Gautam Chikermane, the Brain Point Investment Centre CEO, Mr Jaideep Kahikar, Partner-Desai Desai Carrimjee & Mulla, Advocates & Solicitors, Mr Kedar Desai, and the Ghalla & Bhansali Securities’ Managing Director, Mr Mukesh Dedhia.

FPSB India was established by 50 leading financial institutions across all sectors and verticals. 

It closely works with all stakeholders — the government, corporates, regulators, industry associations, the media and the general public to achieve its objective of financial planning norms.

SBI set to emerge a giant in 18 months on merging arms

Source:Business Line :K. R. SRIVATS :NEW DELHI, FEB 23: 2011

SBI to consolidate all subsidiary banks with itself in 12-18 months

If the Finance Ministry had its way, the State Bank of India (SBI) would become a mammoth bank in about 18 months.

It has told the Parliamentary Standing Committee on Finance that SBI is looking to consolidate all its subsidiary banks with itself “within a period of 12 to 18 months”.

This consolidation will be “immensely beneficial” to the SBI Group as it would bring in economies of scale, reduce administrative overheads, help re-deploy and channelise trained manpower to business development.

This process would also reduce avoidable competition from different arms of the same SBI group engaged in the same activity in the same segments and geography. “The consolidation is aimed at making the State Bank Group a stronger and more resilient organisation,” the Finance Ministry has said.

Although SBI is the largest bank in India, it ranks only 68th among the world's largest banks. Considering the growing role and importance of India in the world economy, it is desirable that the country's largest bank is sufficiently strong in terms of balance sheet size to cater to the growing requirements especially of Indian-origin multinational companies, according to the Finance Ministry.

Mr R. Gopalan, currently Economic Affairs Secretary, and other senior officials of the Department of Financial Services had represented the Finance Ministry before the Standing Committee on Finance in November last year.

“While SBI has also stepped up its efforts to grow organically, the inorganic growth through mergers would also help the bank in scaling up within an acceptable time frame, to enable it to compete on an equal footing with foreign banks, not only in India but in the international economic arena as well,” the standing committee was informed.

Currently, SBI has five associate banks with controlling interest ranging from 75-100 per cent. These associate banks are State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.

SBI has been active with its consolidation efforts and over the last two years acquired two of its subsidiary banks — State Bank of Saurashtra and State Bank of Indore.

Meanwhile, the Finance Ministry has conveyed to the Standing Committee on Finance headed by Mr Yashwant Sinha that the merger/acquisition of its subsidiary banks by SBI should not be seen as a merger in the conventional sense but is more in the nature of restructuring within the Group as SBI already held 75 per cent or more equity stake in all its subsidiary banks.

“The merger of subsidiary banks with itself is thus more in the nature of restructuring leaving size, market share etc of the Group unchanged but leading to better operational efficiency,” the Finance Ministry has said.

The Finance Ministry has also highlighted that the technology platform of SBI and that of subsidiary banks is the same.

Also, many of the policies of the SBI and its subsidiary banks such as loan policy, investment policy are similar. All the associate banks have products, services and processes broadly similar to that of SBI.