Indian Banks

Private sector lender Bank of Rajasthan (BoR), which is neck-deep in regulatory troubles, is understood to have identified two merchant bankers to advise it on the proposed Rs 250-crore qualified institutional placement (QIP) issue.

The troubled bank was talking to a host of merchant bankers, including SBI Capital and Enam Securities among others to advise it on the matter and would soon appoint two of them to speed up the fund-raising process through QIP, a top bank official said today. “We are talking to a few of them. We would select two of them as advisors for the issue and a formal appointment will follow soon. This would speed up the fund-raising process,” Bank of Rajasthan (BoR) Executive Director KK Sharma said here today.

A few days after RBI ordered a special audit of the BoR books and Sebi banned 100-odd related entities of the promoter Tayal family from accessing the market, the bank sought the shareholders’ permission to go in for a QIP issue.

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Private sector Axis Bank had initiated talks with investors to spin off its private equity (PE) business as a separate entity, the lender said on Monday. The move was part of the lender’s restructuring plan, said a senior official of the bank. The lender’s PE venture, Axis Private Equity, has a fund size of $150 million.

Shikha Sharma, managing director and chief executive officer of Axis Bank, on the sidelines of the MMA Women Managers’ Convention 2010 held at Chennai on Monday, said, “We have initiated a dialogue with our investors and the process would take a few weeks and this would be part of our restructuring plan.”

She refused to give a time frame for the plan. “We will first get investors’ approval and then decide,” she said.

According to industry experts, the move will help the PE arm to gain investor’s confidence, who prefer independent entities instead of banks or corporate-sponsored funds.

Axis PE’s dominant investment theme is infrastructure enabling/ services companies and the parent has 40 per cent of commitments in the same space, according to market sources.

The PE arm so far has invested Rs 60 crore in Hyderabad-based Vishwa Infrastructures and Services, Rs 126 crore in Delhi-based railway line manufacturer Harish Chandra India, Rs 75 crore in Neesa Leisure, Rs 67 crore Corrtech International and Rs 54 crore in Shalivahana Green Energy.

Commenting on the bank’s plan to set up a subsidiary in the UK, Sharma said the bank had got permission from RBI and was awaiting one from the Ministry of External Affairs, she added.

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According to 2008-09,  69,117 complaints received at 15 banking ombudsman offices throughout the country, 32 per cent or 21,982 complaints were against private banks, which is higher than their market share of 18 per cent.

Foreign banks received 11,700 complaints (17 per cent) from customers with regard to deficiencies in their service, against their market share of 5 per cent.

The banking ombudsman received about one-fifth of the total complaints against the 20 nationalised banks, which comprise 50 per cent of the market. None of the nationalised banks figure in the top five against which the highest number of  complaints were received last year, whereas two leading foreign banks with a significantly lower market share are in the list. Among the individual banks, SBI tops with 18,167 complaints in the year, followed by ICICI Bank (11,453), HDFC Bank (6,584), HSBC (2,838) and Citibank (2,563).

If the total share of government-owned banks is considered, their share in total complaints is 48 per cent, as against their market share of 74 per cent. In contrast, private and foreign banks combined have 49 per cent share in complaints, with 23 per cent market share. The remaining 3 per cent of complaints are against regional, rural and cooperative banks, which have 3 per cent market share.

In the preceding three years (FY’06-08), 29 per cent of the complaints were against the SBI group, while 27 per cent were against other nationalised banks, followed by private (25 per cent) and foreign banks (11 per cent).

The data shows that complaints against all categories of banks have been showing a rise each year, of which over three times is for private banks and four times for foreign banks.

For an effective complaint redressal mechanism and to strengthen customer services in banks, the Reserve Bank of India in July issued a circular for a four-tier institutional arrangement consisting of  a committee of the board, standing committee of executives, a nodal department at the head office and controlling offices, and a committee at the branch level, for customer service.(BS)

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