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Current Affairs: Banking Industry: May 2012 RBS Wealth Division, a part the Royal Bank of Scotland Group,

, launched wealth planning services in India. The service will offer bespoke solutions to clients to meet their long-term plans for structuring, protection and transmission of wealth. Non-performing assets, or bad loans, of nationalised banks rose to 2.9% of their total lending in December 2011 from 2.3% in March. Gross non-performing assets of these banks stood at Rs 59,397 crore at the end of December 2011. The Central government has hiked interest rate on contributions to General Provident Fund (GPF) and other similar funds to 8.8 per cent for 2012-13. State-run Uco Bank may cut growth in the next five years to use capital frugally but will focus on retail lending to boost margin.It has projected a capital requirement of Rs 14,000 crore till 2018 under the imminent Basel III regime from January next year, assuming an average 18-20% growth, but it will face limited scope to raise fresh equities from the fund-starved government. Thrissur, Kerala-based Dhanlaxmi Bank has extended the last date for subscribing to its Rs 200-crore tier-II bond offering to June 1 from May 21 as the bank is struggling to find investors. The bond issue, which has coupon of 11.9% for 71 months and 11.95% for 84 months, opened on April 27. The Reserve Bank of India has granted a banking licence to Morgan Stanley, which will enhance the financial services firm's ability to lend to corporate clients, whom it advises on takeovers. This may enable Morgan Stanley, the top-ranked mergers and acquisitions advisor last year, to extend its lead over rivals Goldman Sachs and Bank of America Merrill Lynch in advisory and compete in providing services such as wealth management, people familiar with the matter said. Anshu Jain to take over as Deutsche Bank co-CEO on June 1, 2012. Federal Bank has tied up with Bangalore Metro Rail Corporation Limited (BMRCL) for providing merchant banking and card top-up services for 13 stations in Reach 2, likely to be commissioned by the year end. India Post will to soon take to core banking solution and set up 24 ATMS in Assam. The department will install these ATMs by this fiscal year. This project is a part of pilot project which India Post has taken up in six states of country. These include Assam, Uttar Pradesh, Tamil Nadu, Karnataka, Maharastra and Rajasthan. The Competition Commission of India(CCI) has approved the proposal of L&T Finance to take over the mutual fund business of Fidelity in India. Vakrangee Finserve has won the SBI RFP (Request for Proposal) to become the common Banking Correspondent company for all public sector banks operating in Maharashtra. Federal Bank has joined hands with National Bank of Abu Dhabi, the biggest bank in UAE, to launch a real-time international account-to-account money transfer service via mobile phones from anywhere in the world to any bank in India.

The Reserve Bank and 926 branches of public and private banks will accept advance income tax in Mumbai and Navi Mumbai to avoid long queues and inconvenience to the tax assesses, RBI said today. Of the 926 bank branches 862 branches are public bank branches, 35 HDFC bank branches, 10 ICICI bank branches and 19 Axis bank branches. The Reserve Bank has cancelled the licence granted to Chatrapur Co-operative Bank Ltd, Chatrapur, Odisha. he RBI said that the bank had ceased to be solvent and with all efforts to revive it having failed and the depositors being inconvenienced by continued uncertainty, the RBI delivered the order cancelling its licence after the close of business on May 23 Individual investors and associations from the Gulf countries will now be able to invest as Qualified Foreign Investors in the Indian equity market. Norms have been relaxed by the Finance Ministry to attract greater inflows of foreign funds. State Bank of India plans to come out with a medium-term notes (bonds) issue worth about $1 billion before August. After a gap of six to eight months, public sector banks (PSBs) have geared up to establish 60,000 more Automated Teller Machines (ATMs) across the country over the next two years. The state-owned lenders had put their ATM expansion on hold as a centralised outsourcing model was being worked out by a committee appointed by the government. ATM machine manufacturers and payment service providers will be participating in the bidding process, being led by six major PSBs State Bank of India, Punjab National Bank, Union Bank of India, Bank of India, Bank of Baroda and Canara Bank. According to data from National Payments Corporation of India, the number of ATMs in the country of private, public, foreign and cooperative banks, part of the National Financial Switch connecting all ATMs had reached 98,025 by the end of April 2012. The guarantor of a loan is liable to pay it if the debtor fails to clear it, the Supreme Court has ruled while maintaining that financial institutions too cannot act like property dealers in recovering the debts. A bench of justices B S Chauhan and Dipak Misra also said the guarantor cannot insist that the creditor must first exhaust all remedies against the principal debtor before recovering the debts from the surety holders. The Reserve Bank will shortly put in circulation new coins of Rs 5 denomination to commemorate 150th year of Comptroller and Auditor General of India (CAG).The coin will bear the logo of CAG along with year "1860-2010" on the bottom of the logo. FirstRand Bank has recently opened its first retail branch in Mumbai, thereby becoming the first bank from the African continent to open a retail branch in the country. The government on May 22 introduced a bill in the Lok Sabha to empower the Reserve Bank to regulate the micro finance industry and fix interest rates ceiling on loans to be provided by lenders.The Micro Finance Institutions (Development and Regulation) Bill, 2012, which was introduced in the House by Finance Minister Pranab Mukherjee, confers power upon the RBI to fix the maximum interest rates that MFIs can charge and also decide on the fair and reasonable method of loan recovery.

Indian-origin R Seetharaman, Group CEO of Qatar-based Doha Bank, was conferred with Doctor of Laws honorary degree for his contribution to global banking and finance by the Washington College on May 21. The young and affluent class in India and other emerging countries will help make mobile phones the most acceptable medium for financial transactions, according to a MasterCard survey. According to MasterCard Mobile Payments Readiness Index (MPRI), India has been ranked 21 among 34 countries surveyed, with a score of 31.5. State-run Central Bank of India has said it will be requiring over Rs 14,000 crore of fresh capital to meet the Basel-III guidelines which will kick in from next fiscal. State-owned Bank of Baroda (BoB) has pipped PNB to become the country's second largest public sector lender in terms of annual profit. Mumbai-based BoB's net profit crossed Rs 5,000 crore during 2011-12, a rise of 18 per cent from the previous year. Punjab National Bank's (PNB) net profit rose by 10.2 per cent to Rs 4,884 crore for the fiscal ended March, 2012. The country's largest bank State Bank of India in the first nine months of 2011-12 has posted a net profit of Rs 8,243.64 crore. Its profit in 2010-11 stood Rs 8,264.5 crore . The number of credit card-holders declined by 2 percentage points to 21 per cent in 2011 in the country, despite a major rise in the number of premium card-holders which rose to 29 per cent of the total number. State-run Bank of India (BoI) today said it has acquired 51 per cent stake in Bharti Axa Mutual Fund (MF) for an undisclosed amount.

The Reserve Bank is holding gold reserves of 557.75 tonne valued at USD 27.02 billion, Parliament was informed on May 04. "As on April 20, 2012, the value of gold reserve was USD 27.02 billion, which accounts for 9.2 per cent of foreign exchange reserves of USD 294.6 billion," Minister of State for Finance Namo Narain Meena said in a written reply to the Lok Sabha Finance ministry has instructed government owned banks to issue all transfer orders before June every year "so that the staff is not put to undue inconvenience." In a letter to all PSU banks, finance ministry has said that is done taking into consideration the academic year in schools and colleges and other relevant factors. Moody's Investors Service on Monday, May 15 downgraded the ratings of top three private sector lenders - ICICI Bank, HDFC Bank and Axis Bank and Life Insurance Corp, reflecting the alignment of their fortunes with the government's deteriorating finances. The downgrades will bring the ratings of these financial institutions on a par with the State, whose credit outlook is deteriorating with fiscal deficit forecast at 5.1% of GDP in 2012-13. The Reserve Bank has imposed a fine of Rs 5 lakh on the National Urban Cooperative Bank for violation of its guidelines relating to sanctioning of loans. Indian banks sought to restructure 645.3 billion rupees ($12 billion) in corporate loans in the fiscal year that ended in March, up 156 percent from a year earlier; according to data from the Corporate Debt Restructuring Cell (CDR).CDR is a Reserve Bank of India-approved informal forum of bankers that work with companies and lenders to ease loan terms. Loan restructuring through CDR in the fiscal year that ended March 2012 was the highest since the forum was launched in 2001, according to data obtained from a CDR source. Banks filed 84 CDR cases during the year, compared with 49 a year

earlier, the data showed. Banks filed 18 new corporate debt restructuring cases in April 2012, a record number for any month. Private sector lender Ratnakar Bank is targeting to add around 50 branches this fiscal with a majority of them being outside Maharashtra, a top official said here today. In order to strengthen risk management mechanism, the Reserve Bank today unveiled guidelines for implementation of the new global capital adequacy norms, called Basel III, by March 2018. The guideline envisages banks to maintain a minimum total capital (MTC) of 9 per cent against 8 per cent prescribed by the basel Committee of total risk weighted assets. (RWA). Of this, it said, Common Equity Tier 1 (CET1) capital must be at least 5.5 per cent of RWAs. In addition to the minimum Common Equity Tier 1 capital of 5.5 per cent of RWAs, banks are also required to maintain a capital conservation buffer (CCB) of 2.5 per cent of RWAs in the form of Common Equity Tier 1 capital, it said. The CCB is designed to ensure that banks build up capital buffers during normal times (i.e. outside periods of stress) which can be drawn down as losses are incurred during a stressed period.

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