Bank staff productivity doubles in five years

Employees of Indian banks have become more productive over the last few years. According to 'A Profile of Banks 2008-09' released by the RBI, the average business and profits per employee for Indian banks more than doubled in the five years from 2004-05 to 2008-09. The improvement was due to business growth outpacing that in manpower. Indian banks registered a total business (advances plus deposits) growth of 135 per cent from 2004-05 to 2008-09, while their employee strength edged up only by 10 per cent. Their branch network grew by 21 per cent. Contrary to the general perception, public sector banks' (PSB) employee productivity grew at a faster rate than that for private sector banks in this period.

Bank charges may be capped

Banks may soon have to cap the charges on basic services such as issuing a draft, remittances or for stop-payment instructions. Faced with a rising number of customer complaints on excessive charges, the Reserve Bank of India (RBI) has asked the Indian Banks' Association (IBA) to come up with guidelines on what the reasonable charges should be.Accordingly, the industry lobby has asked its Committee for Customer Service headed by Standard Chartered Bank CEO Neeraj Swaroop to submit a report to the regulator. In turn, a sub-committee of bankers from State Bank of India, Corporation Bank, Citibank and ICICI Bank, which is headed by Union Bank of India Executive Director S Raman, has been tasked with framing the guidelines.

Govt to support banks' consolidation

The Government does not want to force consolidation among public sector banks, but it will provide the right kind of support, Mr R.Gopalan, Secretary, Financial Services, said here recently. Addressing the bankers conference, he said merger should be at banks own initiative and be based on pure business sense. In mergers, banks should look at synergy, technology economies of scale and operational benefits, he said. In the past government had asked public sector banks to take over weak private banks. These were mainly to bail out banks which were in trouble. Mr Gopalan who took over as Secretary, Financial Services, earlier this month, has ruled out any shotgun marriages in the banking sector.

Rs 30,000 cr loans may turn bad in 2010

Indian banks appear to have saddled themselves with significant liabilities with a report pointing to big accumulation of non-performing assets (NPAs) in 2010. On Monday, global rating agency Fitch warned that NPAs of banks were likely to go up by 1%. The report has made specific reference to restructured loans, saying that credit worth Rs 30,000 crore in this category alone could turn bad by next year when two-thirds of them are expected to mature.
The caution comes in the wake of RBI's advisory to banks to be more prudent in extending credit on teaser rates. During 2008-09 and in the first quarter of 2009-10 , banks on an average restructured 4.4% of their total loans, up from 0.71% in 2007-08 . Restructuring was mostly in the form of rescheduling principal for a period of 12 to 24 months, thereby giving the borrowers time to see off the downturn.

India to see solid economic recovery in 2010: ADB

The Asian Development Bank today said India is poised for a strong recovery this year and urged policymakers to address rising inflation and widening fiscal deficit to insulate itself against future shocks. Noting that India has quickly regained growth momentum, the bank said the country has emerged from the global financial crisis relatively unscathed, mainly on account of stimulus measures, past reforms, robust domestic consumption and banks' limited exposure to the global financial system.

Low rates help banks post robust growth

Low interest rates helped banks report healthy growth in the third quarter of the current financial year. With banks repricing and retiring high-cost debt by taking advantage of abundant liquidity, the rise in net interest income, the difference between interest earnings and outgo, helped them make up for the fall in treasury income. While HDFC Bank's bond portfolio was hit by mark-to-market losses due to rise in yields, others such as Axis Bank and IndusInd were not hit as much. IDBI Bank, still in the process of transforming itself into a commercial bank, has a small portfolio of government securities that have to be marked to market.

Over 50% account holders to be under mobile banking by 2015

With the Reserve Bank of India (RBI) increasing the cap on mobile banking to Rs 50,000 a day, more than 50 per cent of account holders are expected to come under this platform in the next five years, a leading service provider said. "The recent hike in the limit of mobile banking transactions by the Reserve Bank will be a boost for the industry and will bring more than 50 per cent of Indian bank account holders under the ambit of this platform by 2015," mobile payment service provider PayMate Managing Director Ajay Adiseshann told PTI here.

Reserve bank likely to widen scope of deposit insurer

The Reserve Bank of India (RBI) said on Monday that there was no need to increase insurance cover on bank deposits, but suggested that the ambit of Deposit Insurance Credit Guarantee Corporation (DICGC), that provided the cover, should be widened. "DICGC is presently working as a pay-box system. Going forward, we are examining the possibility of transforming it from a pay-box system to a system attending to all aspects of bank resolution," RBI Governor D Subbarao said at a conference in Goa.

India topped project finance deals in 2009

A study ranked India on top in the global project finance market in 2009, ahead of Australia, Spain and the US. The study, by Project Finance International (PFI), a source of global project finance intelligence and a Thomson Reuters publication, said the main market for project finance (PF) in 2009 was the domestic Indian market, which raised $30 billion (Rs 1.38 lakh crore), accounting for 21.5 per cent of the global project finance market. This was up from $19 billion in 2008. Also, for the first time, investment bank SBI Capital Markets, a subsidiary of State Bank of India, topped the global loan chart, ahead of top French, British and US banks.

Govt may allow Islamic banking, eyes $1 tn funds

Aggressively pitching for $1 trillion worth of Sharia-compliant funds from the Gulf countries for investments in its infrastructure development, the UPA government has drafted a report on Islamic banking even as RBI and the finance ministry are jointly working on necessary legislative changes to implement the same. A committee headed by the Cabinet Secretary and comprising secretaries from other ministries, including finance, submitted a report to the government recently on the prospects of Islamic banking in the country and on drawing investments from abroad, Rajya Sabha deputy chairperson K Rahman Khan said recently.

Credit offtake improves to 13.5%

The credit growth of banks stood at 13.5 per cent for the fortnight ended January 15 compared to 22 per cent in the same period a year ago. However, this is higher compared to previous fortnights. For the fortnight ending January 1, credit offtake rose by 13.34 per cent at Rs 29,95,396 crore compared to Rs 26,42,774 crore in the year-ago period, while it was over 10 per cent for the two previous fortnights.

Say good bye to teaser rates

Most of the teaser rate schemes, that offer a fixed-cum-floating rate option to borrowers, are due to end by March 31. With RBI setting the stage for a rate hike in the coming months, these schemes, where the rates are fixed for the initial two-three years, were unlikely to get fresh extensions, bankers said. "These rates will be there till the end of March. After that, we will see," said Union Bank of India Chairman and Managing Director MV Nair.