Indian Banks

The Reserve Bank of India (RBI) has allowed banks and non-banking financial companies (NBFC) to sponsor infrastructure debt funds (IDF), which can be set up as mutual funds and NBFCs.The move follows Finance Minister Pranab Mukherjee’s announcement in the 2011-12 budget of setting up of IDFs in order to accelerate and enhance the flow of long-term debt in infrastructure projects.Infrastructure debt funds which can be set up as NBFCs should have a minimum net-owned fund of Rs 300 crore and a capital adequacy ratio of 15 per cent, the RBI said in a statement.

IDF SET UP AS MF
Banks acting as sponsors of infrastructure debt funds as MFs have been subjected to existing limits, including limits on investments in financial services companies and on capital market exposure. A bank’s capital market exposure has been capped at 40 per cent of its net worth, both through direct and indirect routes.In case of NBFCs, it should have a minimum net owned funds (NOF) of Rs 300 crore to act as a sponsor, and should be able to maintain the same level of NOF even after investing in the fund. Also, the NBFC should maintain a capital adequacy ratio of 15 per cent after investment. The entity should also have good track record for five year and been profitable for the last three years.

IDF SET UP AS NBFC
Banks and NBFCs keen on sponsoring an IDF-NBFC must contribute at least 30 per cent and a maximum of 49 per cent of the total capital of the fund, besides meeting the other requirements prescribed for floating an IDF-MF. “The guidelines will be big boost for the infrastructure sector which needs long term funds. NBFCs taking part in it would be able to diversify their borrowing portfolio. We have other fund like gold fund. Hence we would be keen to launch an infrastructure debt fund,” said G S Sundararajan, managing director of Shriram Capital.

RBI further said an infrastructure debt fund set up as an NBFC should have a minimum net worth of Rs 300 crore and at the least should have a credit rating of ‘A’ or its equivalent by CARE, Fitch, Icra and Crisil. The NBFC’s Tier-II capital should not exceed Tier-I capital, while the minimum capital adequacy ratio should be 15 per cent.

“For the purpose of computing capital adequacy of the IDF, bonds covering PPP and post commercial operation date projects in existence over a year of commercial operation shall be assigned a risk weight of 50 per cent,” said RBI.The fund can have an exposure of up to 50 per cent towards a borrower or a group of borrowers. The limit can be increased by up to 60 per cent if the board of the IDF-NBFC agrees. Limited additional extension beyond 60 per cent can be granted only after RBI approval.

(BS)

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With the rupee showing a freefall and hitting a 28-month low against the dollar, India Inc has yet another headache.

While the obvious gainers are export-led sectors like information technology and the biggest losers are oil marketing companies, most companies are putting up a brave face.However, they expect the splinters of the currency turmoil to hit them at a later stage.Business Standard spoke to a number of finance chiefs. Though most put up a brave front, very few wanted to talk on record, claiming it was premature to draw a conclusion.

R Shankar Raman, chief financial officer (CFO), L&T, said. “This is a time of unprecedented fluctuations. So, it’s wise to mitigate your financial risks, rather than use currency risks as an opportunity. L&T has a billion dollars of foreign currency debt.

So, we try to carefully hedge ourselves, swapping some of it into the rupee or buying forward. But the splinters would catch us. Fortunately, most of our operations are in India. So, our business model allows us to remain relatively insulated.”Most are betting on the fact that this is temporary. “While RBI (Reserve Bank of India) is continuously buying dollars, there is no corresponding supply coming in, from foreign direct investment, external commercial borrowings or foreign institutional inflows. For exporters, the incentive to forward-sell dollars has gone down significantly. But this is not a long-term scenario. The US economy is not that strong to prop up the dollar like this.

As a corporate, I don’t think we would take any steps on our foreign currency exposures at this volatile juncture, as the rupee has already depreciated,” said Prabal Banerjee, CFO, Adani Power.Many companies have foreign currency loans on their books, either as working capital for foreign operations, or acquisition-related debt. But CFOs at most large business groups feel despite a depreciating rupee, keeping the benign interest rates in developed markets like the US in mind, it would be better to hold on to foreign currency debt. “You get 0-2 per cent interest on dollar debt, compared with 12-14 per cent on rupee debt. The rupee has only depreciated 10 per cent. But in this volatile environment, I don’t know for how long the advantage would sustain,” said an executive director of a leading private sector airline.Sectorally, a falling rupee is bad news for importers and oil marketing companies, which import their main raw material, crude oil. For nationalised oil marketing companies, the under-recovery in price-controlled products like diesel, kerosene (public distribution system) and domestic liquefied petroleum gas would go up further. With every fall in the rupee, the under-recovery goes up by Rs 9,500 crore per year on these controlled products.Large metal companies like Tata Steel, Hindalco and Vedanta have foreign currency debt on their books. However, as Sunirmal Talukdar, CFO, Hindalco, points out, “A depreciating rupee is beneficial for us, as the domestic price of aluminum or copper rises. Hindalco has repaid a billion dollars of its foreign currency loans taken for the Novelis acquisition. The only foreign currency exposure we have is about Rs 3,000 crore of buyers’ credit for the import of copper concentrates. But the exports offer a natural hedge for us.

”Tata Motors, like Tata Steel, also has foreign currency exposure. But analysts don’t see much of an impact for the company, as 60 per cent of revenues for Jaguar Land Rover are dollar-denominated and are converted to pounds. The dollar-pound movement is likely to hit the company more.The biggest gainers are information technology companies. A weak rupee means a positive impact of at least three per cent on revenues from India for the top four Indian information technology firms. Every one per cent change in the rupee-dollar exchange rate has a 40-basis point impact on the margins, and an impact of at least two-3.5 per cent on the net profits of these firms. Rostow Ravanan, CFO, MindTree, believes the real benefit of the depreciating rupee would only be seen if it remains at this level in the third quarter.

(BS)

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Volatility in exchange rate to stay, says Gokarn; RBI intervention only to target excess in this regard. The Reserve Bank of India’s intervention in the foreign exchange market on Friday helped the rupee to rebound after hitting a 28-month low yesterday.The rupee closed the day at 49.43 per dollar, stronger than Thursday’s close of 49.58, when it suffered the biggest single-day loss in 15 years. Intra-day, it went close to breaching the psychological 50-mark, to 49.90 levels, dealers said. However, the RBI is likely to have sold dollars from around 49.60 per dollar, which helped the rupee.Subir Gokarn, RBI’s deputy governor, who is on a visit to the US, said on a television channel that volatility in the currency exchange rate had become “a part of the game” and RBI intervenes to curb excessive volatility.

“Your investment or return calculations have to take that (volatility) into account and you have to decide how you are going to hedge that risk,” he said.RBI had not intervened in the foreign exchange market for nine months in succession, till July. However, it had stepped in to stem the rupee depreciation on three occasions over the past week.Gokarn reiterated RBI’s stance, on intervention only to smoothen excessive volatility in the exchange rate. “We, at this point, do not see any intervention from a rate-targeting viewpoint. That would reflect a change in policy stance, which we are not doing at this point. If we do intervene at all, it will be with a very narrow objective, of smoothening what might be a very volatile market situation; nothing beyond that,” he said.Adding: “There is larger logic and context to our exchange rate policy and we have, over the last few years, allowed the rupee to float within the broader structural boundaries of debt limitations or debt restrictions. That policy remains.”Traders said the rupee would not be able to stay strong. Growing concern on the impact of a possible Greek default on the banking sector would negate any move by India’s central bank to support the rupee.According to Kotak Mahindra Bank’s chief economist, Indranil Pan, the rupee could witness further depreciation. “The sudden weakness has been led by the recent risk aversion globally. The Indian currency could be poised for more near-term depreciation with the absence of any intervention from the RBI,” he said.In the near term, there appears a risk of the rupee breaching the 50-mark, but from a more medium-term perspective, we should see the rupee settle in a range of 46-49, unless there is an absolute meltdown in the global markets, Pan added.

(BS)

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Loans grew faster than deposits during the fortnight ended September 9, indicating an increase in credit demand during the festive season. The growth in loans has been slow so far this financial year, owing to steep rate rises by the Reserve Bank of India (RBI).

According to recent data released by RBI, credit growth during the period was Rs 29,433.37 crore, a growth of 0.7 per cent over the previous fortnight. On a year-on-year basis, loans grew 20.4 per cent till September 9.

On the other hand, deposits saw a growth of only Rs 12,935 crore, a rise of 0.2 per cent over the previous fortnight. On a year-on-year basis, deposits grew 17.5 per cent.

“We expect the growth in advances to sustain in the remaining part of this financial year. For instance, we are focusing on sectors like agriculture and mid-corporates. For the farm sector, bank credit is still the cheapest funding option available at this moment,” said Bank of Maharashtra Chairman & Managing Director, A S Bhattacharya.

RBI had, last week, raised interest rates for the 12th time in 18 months to fight high inflation. It had also signalled more rises may follow, confounding expectations of the tightening cycle coming to an end and putting it at odds with global peers, which are focused on reviving weak demand.

“We have certainly started seeing an increase in demand for credit now, although it is a gradual pick-up,” said a senior official with a large state-run bank, on the condition of anonymity. “We are hopeful it would gather pace, as the festive season progresses.”

Typically, credit growth sees an increase during the festive season starting August and extending till November, since people require more funds to buy new cars, consumer durables and houses.

Amid the series of rate rises, the central bank has also scaled down its credit growth projections for the current financial year from 19 per cent to 18 per cent. Banks have also lowered their credit growth projections.

“There is still a fair amount of consumption demand in the Indian economy and this would drive loan growth on a year-on-year basis. High interest rates may affect demand in rate-sensitive sectors like real estate or large-ticket loans. There may be some impact on the small and medium enterprise segment,” said Pralay Mondal, country head (retail assets & credit cards), HDFC Bank.

Bankers said the borrowing decisions of mid-sized companies were not guided by interest rates alone. “They want funds at the right time and are willing to pay interest on these loans. These factors would ensure we maintain the growth in our advances. In retail, especially in housing loans, there is a slowdown in demand. This is because home buyers are expecting a fall in property prices, and delaying their purchase decisions,” Bhattacharya said.

(BS)

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State Bank of India (SBI), the country’s largest lender, on Wednesday said it would offer a discount of 25 basis points (bps) to prospective floating home loan customers during the festive season. The move follows leading home loan players like ICICI Bank and HDFC launching fixed-cum-floating home loans to attract customers during the festive season.

The 25-bps discount on home loan card rates is applicable to all amounts and is valid till December 31, according to the bank’s website. With this concession, the rate of interest on home loans up to Rs 30 lakh is now 10.50 per cent, while for loans between Rs 30 lakh and Rs 70 lakh, the interest rate would be 10.75 per cent. For loans above Rs 75 lakh, the interest rate would now be 11 per cent.

HDFC offers two fixed-floating home loan products: One with fixed interest rates for the first three years, and the other with fixed rates for the first five years. ICICI Bank, too, offers two such products, with fixed rates for one and two years.

SBI also indicated it may raise the base rate in two-three weeks. The floating rates could then rise again. However, the bank may further increase the concession to benefit from the rise in the demand for home loans during the festive season, which is spread over the next two-three months.

Owing to high interest rates, the demand for loans has remained slack this year, and this has prompted lenders to offer discounts on retail loans to attract customers in the festive season.

(BS)

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Applications are invited from Indian nationals for filling up vacancies of Probationary Clerks for Branches under South India Bank’s Mumbai Region. 6 months Probation. Confirmation subject to satisfactory performance.

Application Fee: Rs.250/- for general category and Rs.50/- for SC/ST, to be paid along with application by means of Demand Draft (Crossed Account Payee) favoring SOUTH INDIAN BANK, payable at Mumbai.

How To Apply: Application in the prescribed format (Passport-size photograph pasted thereon) should be accompanied by self-attested copies of all mark lists and certificates to prove the age and qualifications reach to “Deputy General Manager, THE SOUTH INDIAN BANK LTD, REGIONAL OFFICE- MUMBAI, “SIB House” No.266 Linking Road, Bandra (W), MUMBAI-400 050, Maharashtra State, so as to reach on or before 30.09.2011. Please super scribe the envelope containing the application “APPLICATION FOR THE POST OF PRO. CLERKS.”

For Detailed Info: http://www.southindianbank.com/UserFiles/RECRUITMENT%20OF%20CLERKSmumbai%282%29.pdf

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Reserve Bank of India (RBI Bank) invites application from Indian citizens, citizens of Nepal and subjects of Bhutan, Tibetan refugees (who came over to India before 1st January 1962) and persons of Indian origin who have migrated from Myanmar and Sri Lanka, for the post of Officers in Grade ‘B’ (General) (Direct Recruitment - DR).

Application Fee: Rs.100/- payable by Demand Draft favoring Reserve Bank of India and payable at Mumbai only (No fee for SC/ST/PWD candidates).

How To Apply: Candidates are required to apply offline or online.  FF-LINE Application or printout of the ON-LINE Application (hard copy), as the case may be, have to be sent by ordinary post to “The General Manager, Reserve Bank of India Services Board, Post Bag No. 14501, Mumbai Central Post Office, Mumbai-400008″ on or before 6.00 P.M. on October 3,2011. ON-LINE applications can be submitted till 11.59 P.M. on September 26, 2011.

Detailed Info: http://rbi.org.in/scripts/bs_viewcontent.aspx?Id=2411

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Axis Bank prides itself as a young and vibrant organisation and recognises its employees as its greatest assets. Consequently, the employee satisfaction level in the Bank is, possibly, amongst the highest in the industry, and does not stem from the compensation package alone.

Position: Branch Sales Manager – Kolkata

Work Location: Kolkata

 Responsibilities:

Responsible for entire branch budgets for CASA and Third Party Products.

 Requirements:

Candidate must be working as a Sales Manager (CASA) in payrolls of a Bank with minimum relevant experience in the same role for 3 years.

To apply: Click Here

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