31 MAR, 2012, LOAN-DEPOSIT RATIO MAY TIE RBI HANDS ON RATES
The Reserve Bank of India is facing yet another challenge in its endeavor to lower benchmark rates, as high loan-to-deposit ratio will make it difficult for lenders to lower borrowing costs even if the RBI takes policy measures to ease the pressure.
Profitability of banks could also be hit due to the scramble for deposits among lenders due to the slowdown in savings. Loan-to-deposit ratio, or credit deposit ratio, of Indian banks touched a new high of 76.65% in early March, indicating resource pressure in the system and forcing many banks to raise interest rates on deposits. Put simply, banks are lending from other resources than deposits.
Given that for every Rs 100 they raise as deposits, they have to park Rs 5.50 (until early January) as cash reserves requirements with the central bank and another Rs 24 that needs to be parked in government bonds, they are left with only Rs 69.50 to lend.
This indicates that at the systemic level, banks could be using their reserves and surplus to lend. Moreover, they have already invested almost 5% extra in government bonds.
Profitability of banks could also be hit due to the scramble for deposits among lenders due to the slowdown in savings. Loan-to-deposit ratio, or credit deposit ratio, of Indian banks touched a new high of 76.65% in early March, indicating resource pressure in the system and forcing many banks to raise interest rates on deposits. Put simply, banks are lending from other resources than deposits.
Given that for every Rs 100 they raise as deposits, they have to park Rs 5.50 (until early January) as cash reserves requirements with the central bank and another Rs 24 that needs to be parked in government bonds, they are left with only Rs 69.50 to lend.
This indicates that at the systemic level, banks could be using their reserves and surplus to lend. Moreover, they have already invested almost 5% extra in government bonds.
Market analysts, however, said while some banks are opting for cheaper sources such as bonds to fund long-term assets like infrastructure loans, for some, it could be a temporary phase as they face liquidity pressures.
APRIL 1 2012, MALAYSIA BANK CIMB TO BUY ROYAL BANK OF SCOTLAND'S INDIA DIVISIONS
Commerce International Merchant Bankers, or CIMB, Malaysia's largest lender, will acquire Royal Bank of Scotland's corporate finance, investment banking and institutional equity broking businesses in India and some of the Asia Pacific markets.
The deal is expected to be signed in Malaysia next week, said people familiar with the transaction. Senior CIMB officials, including Carol Fong, CEO of CIMB Securities, were in India on Friday to meet financial market regulators and stock exchange authorities.
RBS, whose history in India goes back to 1921, and has the third largest concentration of RBS Group employees after the UK and US, will retain its international debt financing, transaction services and risk management in all 11 Asia Pacific countries it operates in.
For the sale of its retail and commercial banking operations in India, RBS is already in discussions with HSBC. CIMB entered into a memorandum of understanding with RBS earlier this month to acquire its cash equities, equity capital markets and corporate finance businesses in Asia Pacific. Lazard is advising RBS on the transaction.
Sources said CIMB has aggressive plans to expand in broking, investment banking and equity capital markets segments in India. The Malaysian group may acquire an institutional brokerage in India to expand its footprint in the country.
APRIL 2 2012, 'BANKS CAN SAVE RS 300 CR ANNUALLY BY SWITCHING OVER TO RUPAY'
A switchover to RuPay Card, the Indian version of Visa or MasterCard, can help domestic banks save as much Rs 300 crore annually in transaction fees, says the National Payments Corporation, which launched the card last week.
"Adoption of the RuPay Card will help banks save Rs 250-300 crore annually as our interchange charge is cheaper by up to 40 per cent than what banks pay to foreign cards like Visa and MarsterCard," according to National Payments Corporation of India (NPCI) Managing Director and Chief Executive Officer A P Hota.
"Adoption of the RuPay Card will help banks save Rs 250-300 crore annually as our interchange charge is cheaper by up to 40 per cent than what banks pay to foreign cards like Visa and MarsterCard," according to National Payments Corporation of India (NPCI) Managing Director and Chief Executive Officer A P Hota.
After years of preparation and soft launch, NPCI commercially launched RuPay Card on March 26, with major banks such as SBI, BoB, UBI, BoI, Corporation Bank and Axis Bank launching their domestic debit cards on the RuPay platform.
This makes the country second after China to have an indigenous electronic payment card.
This makes the country second after China to have an indigenous electronic payment card.
APRIL 3 2012, DBS ENHANCES INDIA UNIT CAPITAL WITH $100 MN INFUSION
DBS Group Holdings, Southeast Asia's biggest bank, has infused about 5.1 billion rupees ($100 million) into its India unit to enhance its capital base and help launch of new services.
DBS' total capital base in India was at more than 33 billion rupees as on end-March after the latest round of fund infusion.
The bank, which started operations in India in 1995, offers corporate and investment banking services, including corporate lending and mergers and acquisitions advisory.
It also offers wealth management services in the personal banking segment.
In March 2010, DBS sold its stake in a financial services joint venture as part of its strategy to focus on corporate clients in India, high net-worth individuals and emerging affluent segments.
In March 2010, DBS sold its stake in a financial services joint venture as part of its strategy to focus on corporate clients in India, high net-worth individuals and emerging affluent segments.
APRIL 4 2012, DHANLAXMI BANK PLANS TO SHUT 30 BRANCHES, APPOINT DEPUTY CEO
The Thrissur-based Dhanlaxmi Bank is planning to shut 30 branches in key metros, including Mumbai and Delhi, and it may elevate a key official to the post of deputy chief executive officer.
The bank's network covers 275 branches and 401 ATMs over 140 centers in 14 states.
The downsizing is a part of the revival plan submitted by PG Jayakumar, MD and CEO, to the bank's board on March 28.
Some of the branches operate in high-cost areas and the bank does not want to keep them open. "The bank is also planning to shut its corporate banking unit,'' said an official with knowledge of the developments.
Muralidaran Rajamani, the bank's chief operating officer, is likely to be made the deputy chief executive officer.
APRIL 5 2012, BANK CREDIT GREW 23% IN JULY-SEPTEMBER: RBI
Credit by banks grew by 23.5 per cent in the quarter to September 2011, up from 19.3 per cent over the same period a year ago, indicating greater economic activity in the country despite higher interest rate regime.
Meanwhile, aggregate deposits during the July-Sept quarter increased by 22.1 per cent against 13.9 per cent from a year ago, RBI data showed
Meanwhile, aggregate deposits during the July-Sept quarter increased by 22.1 per cent against 13.9 per cent from a year ago, RBI data showed
State Bank of India, country's largest public sector lender, along with its associates, showed an increase of 18.2 per cent in credit, up from 16.4 per cent over the same period a year ago, it said.
SBI Group's total deposits more than doubled to 18.2 per cent in the quarter, from 7.8 per cent a year earlier.
As per the data, top hundred centres accounted for 78.5 per cent of the bank credit.
Nineteen nationalised banks taken together accounted for 52.2 per cent of the total deposits, while SBI and its associates contributed 21.8 per cent, it said.
The share of new private sector banks, old private sector banks, foreign banks, and regional rural banksin total deposits remained at 13.7 per cent, 4.8 per cent, 4.6 per cent and 2.9 per cent respectively.
The number of banked centres stood at 35,435 as on September 2011, the RBI data said adding 27,913 were single office centres and 68 centres had 100 or more bank offices, the data said.
SBI Group's total deposits more than doubled to 18.2 per cent in the quarter, from 7.8 per cent a year earlier.
As per the data, top hundred centres accounted for 78.5 per cent of the bank credit.
Nineteen nationalised banks taken together accounted for 52.2 per cent of the total deposits, while SBI and its associates contributed 21.8 per cent, it said.
The share of new private sector banks, old private sector banks, foreign banks, and regional rural banksin total deposits remained at 13.7 per cent, 4.8 per cent, 4.6 per cent and 2.9 per cent respectively.
The number of banked centres stood at 35,435 as on September 2011, the RBI data said adding 27,913 were single office centres and 68 centres had 100 or more bank offices, the data said.
APRIL 6 2012, BAD LOANS SPARK BANK DOWNGRADES
Distressed borrowers are taking a toll on the credit profiles of Indian banks with almost half a dozen lenders being downgraded by rating agencies in recent weeks.
In the past fortnight, rating agency ICRA has downgraded Central Bank of India, Oriental Bank of Commerce and Union Bank of India, citing rising bad loans and the high value of restructured loans.
Some time earlier in 2012, Moody's had lowered its credit opinion on Syndicate Bank, Union Bank and Bank of India, again citing rising bad loans.
In a report after the Budget, Mahrukh Adajania ofStandard Chartered said that all public sector banks have asset quality issues in the form of huge restructuring pipelines, which are more or less in the same proportion.
According to the report, Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank, State Bank of India and Union Bank have restructured loans ranging from 3.5% to 5.9%.
Some time earlier in 2012, Moody's had lowered its credit opinion on Syndicate Bank, Union Bank and Bank of India, again citing rising bad loans.
In a report after the Budget, Mahrukh Adajania ofStandard Chartered said that all public sector banks have asset quality issues in the form of huge restructuring pipelines, which are more or less in the same proportion.
According to the report, Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank, State Bank of India and Union Bank have restructured loans ranging from 3.5% to 5.9%.
No comments:
Post a Comment