Category Archives: Banking

Banking

Mahindra and Mahindra join hands with Federal Bank

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A preferred financial agreement has been signed by Mahindra and Mahindra with Federal Bank. The tie up will enable M&M as well as Federal Bank to leverage on the inherent strengths of each other’s vast network of more than 250 dealer outlets and 999 branches across the country.

Arun Malhotra the senior vice president, sales and customer care signed the MoU with P C John the executive director of Federal Bank. P C John while talking about the agreement said that it is a part of the bank’s efforts to expand its operations in commercial and financial sector.

The bank will also come up with attractive packages in terms of interest rates and margin norms for purchases of M&M vehicles. Moreover the customers of Federal bank can have the privilege to access to the specialized services.

Malhotra while talking about the aim of the agreement said that it is an attempt to provide the best schemes to the customers. The federal bank offers innovative as well as simple products and services at affordable rates to SME, retail and NRI customers. The bank will be offering highly competitive schemes for car loans and commercial vehicles with up to 90 percent on road funding and facility or repayment in 72 months.

Banking

Corporation Bank plans to open more rural branches

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With an intention to increase the lean farm loan portfolio with a higher rural penetration, the Corporation Bank intends to a higher rural penetration. The increase in the number of rural banks is planned this year but the shortage of man power has put up a challenge.

The state run lender is a perennial offender in meeting the 18 percent agricultural lending norms as it has just 20 percent branches in the rural centres and a very scanty presence in the country’s farm belt if the states of Uttar Pradesh and Punjab.

Ajai Kumar , the chairman and managing director in Kolkata said, “We would like to raise the share of rural branches to 25 per cent (by March 2013) and increase farm lending”. Meanwhile the bank has plans to open as many as 300 branches during this financial year and half of them will be in the rural areas.

At present it has a total of 1,500 branches. Kumar added, “The problem is who will go to run these branches”. He added that the Corporation Bank’s agriculture loan s now 6 percent as against 18 percent norm. This was less than March 2011’s position of 8.72 percent of the adjusted et bank credit of the last year.

Banking

Reserve Bank Of India slaps fine on Karad Urban Cooperative Bank Ltd

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A penalty of Rs. 5 lakh has been imposed by the Reserve Bank Of India (RBI) on Maharashtra based Karad Urban Co-operative Bank for violating guidelines. The penalty has been imposed for shifting of branch without the regulator’s prior approval.

The central bank in a circular said, “The bank had violated RBI instructions…which involved change in municipal ward number 35 to 50, for which no prior permission was obtained from RBI”. The RBI guidelines have mentioned that urban co-operative banks are required to obtain prior permission from it for shifting to a different locality or municipal ward.

The bank has been penalised for shifting the location from Sangli, Maharashtra without the permission of the RBI. A show-cause notice has been issued by the RBI to the bank in response to which the bank submitted a written reply.

The circular added, “After considering facts in the case and the bank’s reply in the matter, the RBI came to the conclusion that the violation was substantiated and warranted imposition of the penalty”. The RBI then came to a conclusion that the violation was substantiated and warranted imposition of the penalty. Initially the facts of the case including the bank’s reply were considered before the fine was slapped.

Banking

State Bank of India says it is not in favor of shutting down Kingfisher Airlines

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India’s biggest and lead lender of Kingfisher Airlines on July 12, 2012 said that it does not intend to shut down the airlines. The cash trapped airline said that it needs to take a few measures to recover the loans given to it.

Krishna Kumar, the managing director of SBI said, “We do not like shutting down of Kingfisher, but we also need to take measures as taken in the last couple of weeks. We have asked Kingfisher to start the process of valuation of non-core assets so that we know how much we could get if they were disposed off”.

The airlines owes a whopping Rs. 7,500 crores and accumulated interests from January to the 17 bank consortium which is led by the SBI.

SBI alone has an exposure of Rs. 1,400 cores. The Consortium on July 5, 2012 had a meeting with the airline management after which the lenders said that they have hired HDFC securities to do a valuation of the properties owned by Kingfisher and come up with a report within 15 days.

Kumar was asked how much the lenders could raise from these properties to which he said, “At the moment I do not know. Once the valuation is done, we will have the correct estimate.” Kingfisher Airlines has constantly been in trouble in terms of finance.

Banking

Dena Bank not to reduce lending rates after SBI

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Indian money lender Dena Bank on July 10, 2012 said that it will not follow the footsteps of the State Bank of India by reducing the lending rates.  The bank also said that its rates were the lowest in the market even before the other banks did the adjustments.

Nupur Mitra, the chairperson and managing director of Dena Bank said that the bank’s lending rates in small and medium enterprises and the other categories were competitive. Its base rate was 10.45% since May, 45 basis points high than SBI’s, where a 100 bps is one percentage point.

The State Bank of India, which is considered as the country’s largest lender cut rates in the month of June by 50-350 bps for the SME as well as agriculture sector. On the other hand the home and retail loan rates were unchanged. Mitra even said that her bank would not hesitate to raise the deposit rates if funds were needed for credit growth amidst the high commodity prices.

Mitra while in Kolkata at an event organized by Bharat Chamber of Commerce said, “Inflation is still around 10%… there is no question of a deposit rate cut now. We may look at raising deposits if the situation demands”. The MD also expressed concerns over farm credit growth due to delay in monsoon.