In the recent times group of pubic sector banks has witnessed drop in their low-cost deposits, the drop is a 10-year low While individuals are preferring bulk deposits and more are depositing more money in fixed deposits, which offered higher interests a year ago.
Also, the opening of customer-savvy private sector banks is responsible for bringing down investments in low-cost deposits (savings and current account balances) at public sector banks.
This year public sector banks, savings and current account balances accounted to 31 per cent of their total deposits, which was 34 per cent in 1999 and was at peak of 38 per cent in 2066, as per the study conducted by Indian unit of London-based investment banking group, Noble.
But among the public sector banks there have been some of the exceptional banks like State Bank of India (SBI) and Bank of Baroda (BoB). SBI accounted increase in its savings and current account balances in its total deposit by 41 per cent at the end of September from 38 per cent in 1999. Although, in 2006 bank savings and current account balances was 48 per cent. While BoB, has witnessed increase of 36 per cent from 32 per cent.
According to an anonymous chairman of a large public sector bank, public sector banks took time in taking on competition from private sector banks such as ICICI Bank and HDFC Bank.
Private sector banks have got hold of salary accounts of companies due to marketing skills that they used in dealing with companies, especially with those having large number of employees, he said.
In 2007 there was rise in expensive term deposits and wholesale deposits of public sector banks’ deposit portfolio as liquidity in banks have got scarce amongst an unprecedented high credit growth, due to home and other retail loans.
In 2007, banks mostly laid stress on grabbing every bulk deposit available, in a bid some of the banks offered interest rates as high as 15 per cent in some instances. At that time the fight for bulk deposits between the banks intensified so much that the then chief executive of Indian Banks’ Association (IBA) had to meet the top officials at SBI on behalf of ICICI Bank.
The IBA official gave the message that the banks should stop increasing bidding for bulk deposits, as there was lack of faith on each other no solution could be found for this.
The ICICI bank low-cost deposits share in its total deposits stood at 13 per cent 10 years ago which has increased to 37 per cent.
While the HDFC Bank low-cost deposits showed high percentage. In September, bank low-cost deposits accounted at 50 per cent of total deposits, which is up from 46 per cent in 1999, although it has come down from 61 per cent in 2005.
Since 2004 HDFC Bank’s low-cost deposits share was above 50 per cent. However none of the banks have been able to achieve 50 per cent and more share of low-cost deposits in total deposits.
Monday, December 28, 2009
Monday, December 7, 2009
Banks continue to invest in mutual funds, ignore RBI directions
The Reserve Bank of India (RBI) has told banks not to invest in mutual funds, mainly because the credit off take has still not improved, but they continue to give funds to asset management companies.
As per the latest RBI report, by fortnight ended November 20 the investments done by banks in MF schemes has increased from Rs 4,173 crore to Rs 1,64,656 crore. Banks invest very high amounts in the beginning of quarter and then withdraw funds at quarter end so that they do not require providing additional capital. And again they invest back the funds after the quarter ends.
Last month RB governor D Subbarao, in his monetary policy review had pointed out that bank investment in mutual funds have increased and their boards should put some limits on such investment.
Banks have invested funds with liquid mutual funds basically not only from their own surplus funds as lending was low, but have borrowed money from the collateralized borrowing and lending obligation (CBLO) at cheaper rates and later invested funds in mutual and also in RBI’s reverse repo scheme and earned a higher return. To stop such arbitraging, the central bank imposed a CRR of 5% for CBLO borrowings, which means the banks will have to keep aside more funds as cash so that they can invest with the central bank, in order to reducing their invested surplus.
According to bankers, banks are investing in MF due to poor credit off take. M Narendra, executive director, Bank of India, told after the RBI guidelines, banks have started re-looking at their strategies thereafter have revised their internal targets for mutual funds investments and sub-targets for various schemes. Thus, there can be measured increase in investments.
On the other hand some of the banks having ultra-floats (huge temporary surpluses) might have invested in liquid funds, he said. Anil Girotra, executive director, Andhra Bank said, “Many projects are still waiting to be executed because of which disbursals are delayed, though there may be sanctions, because of which banks could have surplus funds. Only those banks who have had temporary surpluses have deployed funds in liquid MF schemes rather than deploying in the overnight call money market.”
As per the latest RBI report, by fortnight ended November 20 the investments done by banks in MF schemes has increased from Rs 4,173 crore to Rs 1,64,656 crore. Banks invest very high amounts in the beginning of quarter and then withdraw funds at quarter end so that they do not require providing additional capital. And again they invest back the funds after the quarter ends.
Last month RB governor D Subbarao, in his monetary policy review had pointed out that bank investment in mutual funds have increased and their boards should put some limits on such investment.
Banks have invested funds with liquid mutual funds basically not only from their own surplus funds as lending was low, but have borrowed money from the collateralized borrowing and lending obligation (CBLO) at cheaper rates and later invested funds in mutual and also in RBI’s reverse repo scheme and earned a higher return. To stop such arbitraging, the central bank imposed a CRR of 5% for CBLO borrowings, which means the banks will have to keep aside more funds as cash so that they can invest with the central bank, in order to reducing their invested surplus.
According to bankers, banks are investing in MF due to poor credit off take. M Narendra, executive director, Bank of India, told after the RBI guidelines, banks have started re-looking at their strategies thereafter have revised their internal targets for mutual funds investments and sub-targets for various schemes. Thus, there can be measured increase in investments.
On the other hand some of the banks having ultra-floats (huge temporary surpluses) might have invested in liquid funds, he said. Anil Girotra, executive director, Andhra Bank said, “Many projects are still waiting to be executed because of which disbursals are delayed, though there may be sanctions, because of which banks could have surplus funds. Only those banks who have had temporary surpluses have deployed funds in liquid MF schemes rather than deploying in the overnight call money market.”
Monday, November 23, 2009
Tata Motors raised Rs 264 crore through revised fixed deposit scheme
Tata Motors, India’s biggest automobile company this year in August had launched revised fixed deposit scheme and company has raised Rs 264 crore through this scheme. Company has the permission to raise Rs 1,300 crore from the revised scheme
The rate at which the market has retorted to the revised fixed deposit scheme has narrowed considerably, especially in comparison to its previous deposit scheme, when the company had collected Rs 2,700 crore in nine months.
Previously the amount was raised on higher payment of interest rates, which the company has now revised to downwards by 325 basis points to 8.75 per cent for a period of three years.
From the earlier FD scheme the Tata Motors was able to raise an average of Rs 300 crore per month, when deposit schemes of other companies were struggling. According company annual report the FD scheme was launched to cater the funding requirement of the company.
In November last year when company launched the scheme it offered 11 per cent interest rate for a period of three years on a minimum amount of Rs 20,000. In August the company revised interest rate to 8.75 per cent keeping in order to similar cut in FD’s offered by banks.
According to Tata Motors spokesperson, “Tata Motors had introduced a fixed deposit scheme, under which we could raise about Rs 2,700 crore. We did raise that amount. On the date of the annual general meeting (AGM) this year (August 25, 2009), we renewed our FD scheme. The company is now authorised to raise about Rs 4,000 crore. Since August 25, Tata Motors has raised about Rs 264 crore.”
According to market experts the Tata Motors launched first FD scheme at the time when liquidity in the market was very low and people preferred to save their income than spending it. As the company offered higher interest rate than most fixed deposit scheme of banks and, also carried the brand name Tata, it got a favorable response from the market.
Moreover the revised rate offered by Tata Motors is still higher than most banks, including ICICI bank, HDFC bank and State Bank of India, which are offering 6-7 per cent interest for the comparable terms.
As per the norms, Tata Motors can float its current FD scheme till the next AGM or till it meets the Rs 4,000 crore target.
Recently the company has cleared the $3 billion debt it had taken to buy the two UK-based brands of Jaguar and Land Rover, thus it has the option of not to stock on the FD scheme a lot. It aims to use the funds for day-to-day operations, including catering of the working capital requirement.
The rate at which the market has retorted to the revised fixed deposit scheme has narrowed considerably, especially in comparison to its previous deposit scheme, when the company had collected Rs 2,700 crore in nine months.
Previously the amount was raised on higher payment of interest rates, which the company has now revised to downwards by 325 basis points to 8.75 per cent for a period of three years.
From the earlier FD scheme the Tata Motors was able to raise an average of Rs 300 crore per month, when deposit schemes of other companies were struggling. According company annual report the FD scheme was launched to cater the funding requirement of the company.
In November last year when company launched the scheme it offered 11 per cent interest rate for a period of three years on a minimum amount of Rs 20,000. In August the company revised interest rate to 8.75 per cent keeping in order to similar cut in FD’s offered by banks.
According to Tata Motors spokesperson, “Tata Motors had introduced a fixed deposit scheme, under which we could raise about Rs 2,700 crore. We did raise that amount. On the date of the annual general meeting (AGM) this year (August 25, 2009), we renewed our FD scheme. The company is now authorised to raise about Rs 4,000 crore. Since August 25, Tata Motors has raised about Rs 264 crore.”
According to market experts the Tata Motors launched first FD scheme at the time when liquidity in the market was very low and people preferred to save their income than spending it. As the company offered higher interest rate than most fixed deposit scheme of banks and, also carried the brand name Tata, it got a favorable response from the market.
Moreover the revised rate offered by Tata Motors is still higher than most banks, including ICICI bank, HDFC bank and State Bank of India, which are offering 6-7 per cent interest for the comparable terms.
As per the norms, Tata Motors can float its current FD scheme till the next AGM or till it meets the Rs 4,000 crore target.
Recently the company has cleared the $3 billion debt it had taken to buy the two UK-based brands of Jaguar and Land Rover, thus it has the option of not to stock on the FD scheme a lot. It aims to use the funds for day-to-day operations, including catering of the working capital requirement.
Friday, November 13, 2009
IDBI Bank, Central Bank announces cut in deposit rates by 0.25-0.5 per cent
Central Bank of India and IDBI Bank- two state-owned banks have slashed deposit rates by 0.25-0.5 per cent in various maturities in order to bring down the cost of funds.
Before country’s largest lender State Bank of India has reduced its deposit rates by a similar margin.
IDBI Bank revised rates will be effective from November 16 while the Central Bank has to yet announce the rate reduction officially.
After revision on one year to less than two years maturity deposits IDBI Bank offers a rate of 6.5 per cent as against 6.75 per cent, informed IDBI Bank sources.
On tenure 2 years to less than 1,100 days deposits, bank will offer rate of 7 per cent (7.25 per cent) while that of 1,100 days maturity deposits will now attract a rate of 7.25 per cent (7.5 per cent) earlier.
Moreover on 1,100-days to 5 years, 5-years to 7-years and 7-years to 10-years deposits bank will offer 7 per cent (7.25 per cent), 7.5 per cent (7.75 per cent) and 7.75 per cent (8 per cent) earlier, the bank said.
The bank said senior citizens will get 0.5 per cent above the card rate.
Before country’s largest lender State Bank of India has reduced its deposit rates by a similar margin.
IDBI Bank revised rates will be effective from November 16 while the Central Bank has to yet announce the rate reduction officially.
After revision on one year to less than two years maturity deposits IDBI Bank offers a rate of 6.5 per cent as against 6.75 per cent, informed IDBI Bank sources.
On tenure 2 years to less than 1,100 days deposits, bank will offer rate of 7 per cent (7.25 per cent) while that of 1,100 days maturity deposits will now attract a rate of 7.25 per cent (7.5 per cent) earlier.
Moreover on 1,100-days to 5 years, 5-years to 7-years and 7-years to 10-years deposits bank will offer 7 per cent (7.25 per cent), 7.5 per cent (7.75 per cent) and 7.75 per cent (8 per cent) earlier, the bank said.
The bank said senior citizens will get 0.5 per cent above the card rate.
Wednesday, November 11, 2009
Banks focusing on recurring deposits to garner long-term resources
Although top bankers are calling out for the need to increase low cost current and savings account (CASA) deposits, on the other hand they have asked their branches to speed up the process acquire long-term resources under recurring deposit (RD) schemes.
It is not difficult to find out the reason why banks are moving their focus on RDs. Although CASA deposits are low cost, but they are not stable as customers can withdraw funds any time. Whereas in RD scheme customer withdraw amounts ranging from a minimum of Rs 50 to a maximum of Rs 10,000 a month and receive a lump sum on maturity, which provides stability to a bank’s resource base.
Earlier RD scheme went out off the sight of banks because of increasing competition among banks to acquire CASA deposits.
In spite of the fact that term deposit rates apply to RDs and interest is compounded quarterly, bankers claim that long-term resources collected under the RD schemes can somewhat handle asset-liability mismatches and also help in financing infrastructure projects.
Some of the banks such as Corporation Bank, Union Bank of India, Bank of India and Central Bank of India, in the last few months have started refocusing on RDs. At present, the RD portfolios of most of the banks, public, private or foreign, have nothing to write about.
However RDs can be related to systematic investment plans floated by mutual funds, leaving latter’s attendant risks. A salaried depositor can build up savings for child’s education, daughter’s marriage, retirement, etc. by maintaining savings discipline. Some banks even allow inconsistent installments.
For instance, a 60-month RD with a bank at a monthly installment of Rs 1,375 per month will give a depositor Rs 100,890 at maturity (interest rate 7.25 per cent, compounded quarterly). Also, interest earned on the amount is exempted from tax deduction at source.
In April 2009, Corporation bank a Mangalore based lender had launched ‘Lakhpati RD scheme’, it is marketing it in a big way to wipe up long-term resources of 5-10 years duration, informed the Chairman and Managing Director, Mr J.M. Garg.
The bank has been able to manage to collect about Rs 100 crore every month ever since the scheme’s launch. The bank is looking for doubling the monthly collection to Rs 200 crore by signing up two lakh customers for the scheme (as against 90,000 now) by March-end 2010.
On the other hand Bank of India is pushing up its branches to promote the RD scheme. Mr A.A. Badshah, General Manager, pointed out, “We can gauge a customer’s behavior by his savings discipline. If a RD account holder is regular in depositing his/ her installment, say for two-three years, we can then cross-sell our loans. It is unlikely that such a customer will default on loans.”
While Union Bank of India’s Union Monthly Plus RD scheme, which was launched six months back, has been able to collect about Rs 400 crore through 3 lakh accounts. According to Mr S. Govindan, General Manager, “Our RD deposit base at around Rs 500 crore could be termed negligible when compared with our total deposit base of over Rs 1 lakh crore. However, with our new scheme we want to grow our RD base to 10 per cent of the total deposit base over the next few years”.
Central Bank of India is also planning to launch an RD product along with an accident insurance feature later this month.
It is not difficult to find out the reason why banks are moving their focus on RDs. Although CASA deposits are low cost, but they are not stable as customers can withdraw funds any time. Whereas in RD scheme customer withdraw amounts ranging from a minimum of Rs 50 to a maximum of Rs 10,000 a month and receive a lump sum on maturity, which provides stability to a bank’s resource base.
Earlier RD scheme went out off the sight of banks because of increasing competition among banks to acquire CASA deposits.
In spite of the fact that term deposit rates apply to RDs and interest is compounded quarterly, bankers claim that long-term resources collected under the RD schemes can somewhat handle asset-liability mismatches and also help in financing infrastructure projects.
Some of the banks such as Corporation Bank, Union Bank of India, Bank of India and Central Bank of India, in the last few months have started refocusing on RDs. At present, the RD portfolios of most of the banks, public, private or foreign, have nothing to write about.
However RDs can be related to systematic investment plans floated by mutual funds, leaving latter’s attendant risks. A salaried depositor can build up savings for child’s education, daughter’s marriage, retirement, etc. by maintaining savings discipline. Some banks even allow inconsistent installments.
For instance, a 60-month RD with a bank at a monthly installment of Rs 1,375 per month will give a depositor Rs 100,890 at maturity (interest rate 7.25 per cent, compounded quarterly). Also, interest earned on the amount is exempted from tax deduction at source.
In April 2009, Corporation bank a Mangalore based lender had launched ‘Lakhpati RD scheme’, it is marketing it in a big way to wipe up long-term resources of 5-10 years duration, informed the Chairman and Managing Director, Mr J.M. Garg.
The bank has been able to manage to collect about Rs 100 crore every month ever since the scheme’s launch. The bank is looking for doubling the monthly collection to Rs 200 crore by signing up two lakh customers for the scheme (as against 90,000 now) by March-end 2010.
On the other hand Bank of India is pushing up its branches to promote the RD scheme. Mr A.A. Badshah, General Manager, pointed out, “We can gauge a customer’s behavior by his savings discipline. If a RD account holder is regular in depositing his/ her installment, say for two-three years, we can then cross-sell our loans. It is unlikely that such a customer will default on loans.”
While Union Bank of India’s Union Monthly Plus RD scheme, which was launched six months back, has been able to collect about Rs 400 crore through 3 lakh accounts. According to Mr S. Govindan, General Manager, “Our RD deposit base at around Rs 500 crore could be termed negligible when compared with our total deposit base of over Rs 1 lakh crore. However, with our new scheme we want to grow our RD base to 10 per cent of the total deposit base over the next few years”.
Central Bank of India is also planning to launch an RD product along with an accident insurance feature later this month.
Fixed Deposit rates can increase
In the recent credit policy review of the Reserve Bank of India (RBI) there were indications of rising interest rate which is good news for those who prefer to invest in fixed deposits. The central bank has given indications that in the coming days the rates can be tighten up and its impact can be seen in the first quarter of the next year.
In year 2009 various changes could be seen in the interest rate cycles and the rates were under the scrutiny of the central bank throughout the year. However the incentive packages introduced for the revival of financial markets brought down the rates nearly to zero levels in most economies but the in the domestic market the decline of rates was not major. It was only by a couple of percentage points that the domestic deposit rates had reduced during the first half of the current year.
It was government’s aggressive borrowing that was responsible in slowing down the fall and this was visible in the poor performance of income funds. Although it was observed that lack of fall or even the steady rise in long term paper rates have been responsible to bring changes in the performance of income funds.
In the near future there will not be much change in the scenario as RBI has indicated tightening of rates. Thus, those who have invested in income funds in the recent time will continue to face the tough times.
But rise in rates is definitely be a good news for the investors who prefer fixed deposits. In the last few quarters the rates had started falling, at present are not in the revival mode but can reverse in early to middle of 2009. Therefore the investors who like to invest their funds in fixed deposits can wait for few months to make the investments.
On the other hand if you invest funds in floaters it is not bad as they automatically take note of the changing interest rate scenario. As the inflation is also moving upwards, there are chances of the general interest rates to move up.
In case you are taking loan then the upcoming scenario is not going to be comfortable as rising rates will again push up the borrowing costs. The immediate impact could be seen on the products like personal loans and car loans although on the latter one the borrowers can get relief from manufactures side.
The recent change in the auto sector has again revived the hopes for the sector and the increasing competition in the passenger car segment can force OEMs to offer discounts. Such discounts can be in the form of subsidized interest rates as is given during boom times.
But for the two-wheeler segment the scenario is different due to high margin pressure in this segment. Moreover the loan ticket size is small therefore the competition amongst the lenders is restricted to a few players. Therefore, buyers might not get huge discount offers.
Meanwhile the home loan borrowers might have an escape from the pressures of high borrowing costs as the RBI is believed to be looking at supporting sector. There is news that banks will probably increase the share towards the priority sector lending and property loans can be a bigger chunk for the banks. This can help in reversing the ill effects of rising borrowing costs and shall help the customer base in a big way.
In year 2009 various changes could be seen in the interest rate cycles and the rates were under the scrutiny of the central bank throughout the year. However the incentive packages introduced for the revival of financial markets brought down the rates nearly to zero levels in most economies but the in the domestic market the decline of rates was not major. It was only by a couple of percentage points that the domestic deposit rates had reduced during the first half of the current year.
It was government’s aggressive borrowing that was responsible in slowing down the fall and this was visible in the poor performance of income funds. Although it was observed that lack of fall or even the steady rise in long term paper rates have been responsible to bring changes in the performance of income funds.
In the near future there will not be much change in the scenario as RBI has indicated tightening of rates. Thus, those who have invested in income funds in the recent time will continue to face the tough times.
But rise in rates is definitely be a good news for the investors who prefer fixed deposits. In the last few quarters the rates had started falling, at present are not in the revival mode but can reverse in early to middle of 2009. Therefore the investors who like to invest their funds in fixed deposits can wait for few months to make the investments.
On the other hand if you invest funds in floaters it is not bad as they automatically take note of the changing interest rate scenario. As the inflation is also moving upwards, there are chances of the general interest rates to move up.
In case you are taking loan then the upcoming scenario is not going to be comfortable as rising rates will again push up the borrowing costs. The immediate impact could be seen on the products like personal loans and car loans although on the latter one the borrowers can get relief from manufactures side.
The recent change in the auto sector has again revived the hopes for the sector and the increasing competition in the passenger car segment can force OEMs to offer discounts. Such discounts can be in the form of subsidized interest rates as is given during boom times.
But for the two-wheeler segment the scenario is different due to high margin pressure in this segment. Moreover the loan ticket size is small therefore the competition amongst the lenders is restricted to a few players. Therefore, buyers might not get huge discount offers.
Meanwhile the home loan borrowers might have an escape from the pressures of high borrowing costs as the RBI is believed to be looking at supporting sector. There is news that banks will probably increase the share towards the priority sector lending and property loans can be a bigger chunk for the banks. This can help in reversing the ill effects of rising borrowing costs and shall help the customer base in a big way.
Friday, November 6, 2009
Banks witness increase in low-cost deposits
Banks are experiencing increase in flow of funds in low-cost deposits rather than in bulk deposits.
The reason for increase in the share of low –cost Casa deposits is mainly because of revival in stock markets, economic activity and a fall in term-deposit rates.
As per the latest reports from banks, in most of the public sector banks there has been increase of 20 per cent in the low-cost deposits during the current financial year (2009-10). Whereas during the second half of 2008-09, in Casa deposits flow of funds was low to some extent because of high deposit rates, thus for most of the banks the share of these deposits got reduced. The banks started reducing deposit rates which fell to 6.25-7.5 per cent from 8.75-10.5 per cent, therefore individuals started looking for other investment options rather than investing funds in fixed deposits.
However on current account balances banks do not give any interest, while on savings accounts banks give 3.5 per cent a year.
The increased flow of funds in Casa has helped some of the banks such as ICICI Bank, the country’s largest private sector bank, to increase their Casa base. During July-September alone, ICICI Bank Casa base had increased by Rs 9,000 crore. The reason for increase in the share of Casa in total deposits was mainly due to decline in the deposit base as the bank avoided high-cost deposit from companies. The bank said in spite of rejecting or retiring bulk deposits, the mix between retail and Casa deposits still stand to 50-50.
The sources said focus to increase Casa, by taking certain measures such as higher minimum balance for savings bank accounts, was not completely responsible, it was due to companies moving towards markets for initial public offers (IPO) and assigning to institutional investors (QIPs), funds were transferred to the banking system for a few days. “This was one factor but not the only factor,” ICICI Bank told analysts.
Moreover the banks which saw fall in the flow of funds from sectors such as real estate and gems & jewellery as a result of financial crisis, are witnessing revival of sorts. In the real sector the funds have started flowing due to launch of new projects, gems & jewellery sector is on the path of recovery, an executive with a private sector bank said.
In the public sector banks such as Bank of India, Punjab National Bank and Bank of Baroda there has been 8-10 per cent growth in Casa till September over March. While Union Bank saw the highest growth in Casa in the first six months at 17.8 per cent with Casa accounting for 71 per cent of the incremental deposits since March.
State Bank of India (SBI) country’s largest lender Casa share in total deposits stood at 40.96 per cent at the end of September, the increase of 126 basis points (bps) over the same period of the previous year.
The increase in Casa funds in public sector banks was possible because the government had asked PSBs to provide growth targets for low-cost deposits in their statement of intent for 2009-10. This is the first time such a step was taken, as in previous years the government used to look for overall deposit growth targets. The increase in Casa was mainly done to ensure that banks can keep their cost of funds low, which help the government to bring down the lending rates.
In the recent months, the Reserve Bank of India (RBI) has also shown its concern on the falling level of Casa as banks over the last few years mainly depended on high-cost bulk deposits the funds coming in from companies, including public sector entities.
Over the years, there has been decline in the public sector banks share of Casa in total deposits, which has reduced from 39.95 per cent at the end of March 2006 to 32.66 per cent at the end of March 2009.
“There was a cut in spending in this year and increase in the propensity to save. This was mainly because interest rate on fixed deposits came down drastically and the depositors did not want to lock in their funds in fixed deposits,” a senior executive of a public sector bank said.
In the last one year banks have reduced deposit rates more than 300bps. For instance SBI is offering 6.25 per cent for one-year deposit; a year ago it was as high as 10.5 per cent.
The extension of branches has also helped banks in increasing the low-cost deposits. For instance during the first six months, SBI and Union Bank of Indian have opened 500 and 160 branches, respectively, have been benefited from the expansion.
According to bankers as the public and private sector banks are expanding their branches the share of Casa is likely to rise further.
The reason for increase in the share of low –cost Casa deposits is mainly because of revival in stock markets, economic activity and a fall in term-deposit rates.
As per the latest reports from banks, in most of the public sector banks there has been increase of 20 per cent in the low-cost deposits during the current financial year (2009-10). Whereas during the second half of 2008-09, in Casa deposits flow of funds was low to some extent because of high deposit rates, thus for most of the banks the share of these deposits got reduced. The banks started reducing deposit rates which fell to 6.25-7.5 per cent from 8.75-10.5 per cent, therefore individuals started looking for other investment options rather than investing funds in fixed deposits.
However on current account balances banks do not give any interest, while on savings accounts banks give 3.5 per cent a year.
The increased flow of funds in Casa has helped some of the banks such as ICICI Bank, the country’s largest private sector bank, to increase their Casa base. During July-September alone, ICICI Bank Casa base had increased by Rs 9,000 crore. The reason for increase in the share of Casa in total deposits was mainly due to decline in the deposit base as the bank avoided high-cost deposit from companies. The bank said in spite of rejecting or retiring bulk deposits, the mix between retail and Casa deposits still stand to 50-50.
The sources said focus to increase Casa, by taking certain measures such as higher minimum balance for savings bank accounts, was not completely responsible, it was due to companies moving towards markets for initial public offers (IPO) and assigning to institutional investors (QIPs), funds were transferred to the banking system for a few days. “This was one factor but not the only factor,” ICICI Bank told analysts.
Moreover the banks which saw fall in the flow of funds from sectors such as real estate and gems & jewellery as a result of financial crisis, are witnessing revival of sorts. In the real sector the funds have started flowing due to launch of new projects, gems & jewellery sector is on the path of recovery, an executive with a private sector bank said.
In the public sector banks such as Bank of India, Punjab National Bank and Bank of Baroda there has been 8-10 per cent growth in Casa till September over March. While Union Bank saw the highest growth in Casa in the first six months at 17.8 per cent with Casa accounting for 71 per cent of the incremental deposits since March.
State Bank of India (SBI) country’s largest lender Casa share in total deposits stood at 40.96 per cent at the end of September, the increase of 126 basis points (bps) over the same period of the previous year.
The increase in Casa funds in public sector banks was possible because the government had asked PSBs to provide growth targets for low-cost deposits in their statement of intent for 2009-10. This is the first time such a step was taken, as in previous years the government used to look for overall deposit growth targets. The increase in Casa was mainly done to ensure that banks can keep their cost of funds low, which help the government to bring down the lending rates.
In the recent months, the Reserve Bank of India (RBI) has also shown its concern on the falling level of Casa as banks over the last few years mainly depended on high-cost bulk deposits the funds coming in from companies, including public sector entities.
Over the years, there has been decline in the public sector banks share of Casa in total deposits, which has reduced from 39.95 per cent at the end of March 2006 to 32.66 per cent at the end of March 2009.
“There was a cut in spending in this year and increase in the propensity to save. This was mainly because interest rate on fixed deposits came down drastically and the depositors did not want to lock in their funds in fixed deposits,” a senior executive of a public sector bank said.
In the last one year banks have reduced deposit rates more than 300bps. For instance SBI is offering 6.25 per cent for one-year deposit; a year ago it was as high as 10.5 per cent.
The extension of branches has also helped banks in increasing the low-cost deposits. For instance during the first six months, SBI and Union Bank of Indian have opened 500 and 160 branches, respectively, have been benefited from the expansion.
According to bankers as the public and private sector banks are expanding their branches the share of Casa is likely to rise further.
Wednesday, October 21, 2009
Banks close deposit rates to where they were five years ago
In the last few months the banks have slashed their deposit rates which have shrink depositors income. Banks have reduced interest rates (especially for deposits of up to one year) by about four percentage points in comparison to a year ago.
At present after the cut the deposit rates of 15 days to one-year period range from 3 per cent to 6.25 per cent per annum. Whereas five-and-a-half years ago, in March 2004, the peak rates for this time duration was about 5.25 per cent.
After that the deposit rates began to rise and gradually over the next few years, the deposit rates reached 8 per cent in March 2008.
Moreover banks started lending aggressively as the economic growth started improving.
For aggressive lending banks needed more resources thus they started increasing deposit rates.
However in the bulk market interest rates in the bulk fixed deposits market (deposits above Rs 1 crore) were equally higher by 0.50-1 percentage point. Thus the deposit rates of one-year tenure increased to 10.25 per cent a little over a year ago with the economy moving fast.
The global meltdown undulate also started effecting India, GDP numbers were reduced, as of loan growth figures. The banks also did not require extra liquidity as they had enough.
The investor’s confidence got shaken due to crisis but bank treasury continued to fill up even when they could not find lend-able opportunities for the money pouring in.
For instance State Bank of India for a few months received deposits at the rate of about Rs 1,000 crore a day which led it to set out the bulk money in the Reserve Bank of India’s reverse repo auctions that earned it 3.25 per cent.
Thus banks have been steadily reducing deposit rates for the past few months and now the rates have been closed to where they were five years ago.
After revision State Bank’s one-year deposit is at 5.75 per cent.
However some of the banks have reduced their rates deeper. Punjab National Bank, Union Bank and Indian Bank offer about 5.50 per cent for deposits of similar tenor while Bank of Baroda, a few months ago, pruned them to 5 per cent. While other bank’s deposit rates stand at 6.25 per cent.
At present after the cut the deposit rates of 15 days to one-year period range from 3 per cent to 6.25 per cent per annum. Whereas five-and-a-half years ago, in March 2004, the peak rates for this time duration was about 5.25 per cent.
After that the deposit rates began to rise and gradually over the next few years, the deposit rates reached 8 per cent in March 2008.
Moreover banks started lending aggressively as the economic growth started improving.
For aggressive lending banks needed more resources thus they started increasing deposit rates.
However in the bulk market interest rates in the bulk fixed deposits market (deposits above Rs 1 crore) were equally higher by 0.50-1 percentage point. Thus the deposit rates of one-year tenure increased to 10.25 per cent a little over a year ago with the economy moving fast.
The global meltdown undulate also started effecting India, GDP numbers were reduced, as of loan growth figures. The banks also did not require extra liquidity as they had enough.
The investor’s confidence got shaken due to crisis but bank treasury continued to fill up even when they could not find lend-able opportunities for the money pouring in.
For instance State Bank of India for a few months received deposits at the rate of about Rs 1,000 crore a day which led it to set out the bulk money in the Reserve Bank of India’s reverse repo auctions that earned it 3.25 per cent.
Thus banks have been steadily reducing deposit rates for the past few months and now the rates have been closed to where they were five years ago.
After revision State Bank’s one-year deposit is at 5.75 per cent.
However some of the banks have reduced their rates deeper. Punjab National Bank, Union Bank and Indian Bank offer about 5.50 per cent for deposits of similar tenor while Bank of Baroda, a few months ago, pruned them to 5 per cent. While other bank’s deposit rates stand at 6.25 per cent.
Banks offering low interest rate on term deposits are safer than NBFCs
Before investing your surplus money in term deposits you must consider the safety front while selecting between the bank and a non-banking finance company (NBFC). The bank might offer lower interest rates while the NBFCs offer higher interest rate but from safety point of view banks are safer for investment.
According to wealth managers along with the interest rate differential, there are other factors to be looked up on such as the credit rating of the instrument, the liquidity position of the company, its balance sheet and its sector of operation before make a final choice.
Rajesh Saluja, chief executive officer of Ask wealth pointed out, “Undoubtedly, NBFCs offer higher interest on deposits as compared to banks, but banks do provide much higher safety as compared to any NBFC. A customer who is opting for an NBFC should keep in mind the credit ratings of the company. Unless the credit rating is ‘AA’ or above, a customer should resist from parking their funds in any NBFC”.
Himanshu Kohli, founder of Client Associate also agree with Saluja’s views. He said, “While, a close look at credit ratings is important, it is beneficial for customers if they park their funds in any NBFC only for a very shorter duration.”
While some of the financial planners recommends diversification of deposits. Mukesh Gupta, director Wealthcare Securities said, “Since parking in NBFCs carries a huge risk, one should not park more than 20 to 25 per cent of one’s surplus funds in NBFCs”.
In case you decide to invest with NBFCs then sector of operations should also taken into consideration. An independent financial planner pointed out, “Parking of surplus funds in NBFCs that lend to the real-estate sector can be termed as a more risky proposition compared to NBFCs providing car finance”.
Although most of the banks are offering a maximum of 7.5 per cent interest on certain maturity, whereas some of the NBFC are offering as high as 12 per cent on deposits of similar maturity.
Regarding how safe it would be to invest funds in NBFCs, LP Agarwal, chief general manager of Punjab National Bank said, “If someone is depositing in the stronger NBFCs such as Sriram Finance and Tata Finance, among others, the risk is comparatively lower. But, in general, depositing in NBFCs is risky and one should keep in mind that who is in the management team and their balance sheet, among other things.”
According to H S Saini, general manager, Corporation Bank, “Banks provide higher flexibility to customers. One can break one’s deposit in case of need. But, NBFCs generally do not allow that. Hence, until the interest rate differentials are very substantial, banks deposits are better bets even with lower interest rates”.
According to wealth managers along with the interest rate differential, there are other factors to be looked up on such as the credit rating of the instrument, the liquidity position of the company, its balance sheet and its sector of operation before make a final choice.
Rajesh Saluja, chief executive officer of Ask wealth pointed out, “Undoubtedly, NBFCs offer higher interest on deposits as compared to banks, but banks do provide much higher safety as compared to any NBFC. A customer who is opting for an NBFC should keep in mind the credit ratings of the company. Unless the credit rating is ‘AA’ or above, a customer should resist from parking their funds in any NBFC”.
Himanshu Kohli, founder of Client Associate also agree with Saluja’s views. He said, “While, a close look at credit ratings is important, it is beneficial for customers if they park their funds in any NBFC only for a very shorter duration.”
While some of the financial planners recommends diversification of deposits. Mukesh Gupta, director Wealthcare Securities said, “Since parking in NBFCs carries a huge risk, one should not park more than 20 to 25 per cent of one’s surplus funds in NBFCs”.
In case you decide to invest with NBFCs then sector of operations should also taken into consideration. An independent financial planner pointed out, “Parking of surplus funds in NBFCs that lend to the real-estate sector can be termed as a more risky proposition compared to NBFCs providing car finance”.
Although most of the banks are offering a maximum of 7.5 per cent interest on certain maturity, whereas some of the NBFC are offering as high as 12 per cent on deposits of similar maturity.
Regarding how safe it would be to invest funds in NBFCs, LP Agarwal, chief general manager of Punjab National Bank said, “If someone is depositing in the stronger NBFCs such as Sriram Finance and Tata Finance, among others, the risk is comparatively lower. But, in general, depositing in NBFCs is risky and one should keep in mind that who is in the management team and their balance sheet, among other things.”
According to H S Saini, general manager, Corporation Bank, “Banks provide higher flexibility to customers. One can break one’s deposit in case of need. But, NBFCs generally do not allow that. Hence, until the interest rate differentials are very substantial, banks deposits are better bets even with lower interest rates”.
SBI raised interest rates on corporate loans after reducing deposit rates
Two days back country’s largest lender the State Bank of India (SBI) reduced its deposit rates aggressively. Now the bank has started increasing interest rates on corporate loans by up to 50 basis points.
This measure is a part of bank’s strategy to make sure its net interest margin (NIM) - improves over the next few months.
Net interest margin (NIM) is the difference between the cost of funds and the interest earned.
By June-end bank NIM has dropped to 2.30 per cent, is trying to attain back the 3 per cent comfort zone. Bank executives informed that the lender is expecting NIM to be at 2.55-2.6 per cent by the end of current financial year.
Last year st the peak of the financial crisis bank had mopped up over Rs 1,000 crore-a-day has reduced deposit rates half-a-dozen times during the current financial year. For retail deposits of up to Rs 1 crore, the peak term deposit rate was reduced by 300 basis points to 7.5 per cent over the last 12 months; however it slashed the prime lending rate by 200 basis points to 11.75 per cent.
It is believed in this period the cost of funds will take time to reflect the changes due to sharp slowdown in credit demand which has affected SBI's interest income.
The impact of cut in lending rates on interest income will be visible immediately, whereas the benefit of reducing deposit rates will be visible gradually. According to bank executives the subdued NIM is the reflection of the decline in the credit –deposit (C-D) ratio.
While in September 2008 the high margin was possible as the C-D ratio was 71-72 per cent. but now because of slowdown in credit offtake and fallout of the global financial crisis the ratio has dropped to 67 per cent. A senior SBI executive stated, "Nothing drastic can be done on the interest income side in the short run".
Thus due to subdued credit off-take it became possible for the bank to rework on rates being offered to large companies and mid-size companies in the second quarter. An executive informed, "We have been able to increase lending rates by up to about 50 basis points, especially for those companies that have come up for repricing". The banks are using reset clause in loan agreements to reset interest rates.
The banks say this measure should help in raising up margins marginally. It is believed as the credit off-take continue to rise in third and fourth quarters, the rate charged on fresh credit can be higher and that must boost margins.
Regarding the deposits the headroom available was limited. Also when the credit demand started picking up, liquidity in the system is expected to come down. Besides, the Reserve Bank of India will also start taking measures as part of its strategy to shift to a tighter monetary policy regime. Moreover SBI and other banks will have to raise their rates to counter competition from other asset classes as even the stock market has started showing signs of improvement.
The SBI executives are of view that even though they have to increase rates for retail depositors, the bank’s measures to offer high rates last year has proved helpful in lowering their dependence on high-cost bulk deposits.
To reduce dependence on bulk deposits, the bank introduced a 1,000-day deposit scheme in October 2008, under which it offered 10.5 per cent interest rate with an aim to garner retail resources. But now the bank has withdrawn this scheme.
This measure is a part of bank’s strategy to make sure its net interest margin (NIM) - improves over the next few months.
Net interest margin (NIM) is the difference between the cost of funds and the interest earned.
By June-end bank NIM has dropped to 2.30 per cent, is trying to attain back the 3 per cent comfort zone. Bank executives informed that the lender is expecting NIM to be at 2.55-2.6 per cent by the end of current financial year.
Last year st the peak of the financial crisis bank had mopped up over Rs 1,000 crore-a-day has reduced deposit rates half-a-dozen times during the current financial year. For retail deposits of up to Rs 1 crore, the peak term deposit rate was reduced by 300 basis points to 7.5 per cent over the last 12 months; however it slashed the prime lending rate by 200 basis points to 11.75 per cent.
It is believed in this period the cost of funds will take time to reflect the changes due to sharp slowdown in credit demand which has affected SBI's interest income.
The impact of cut in lending rates on interest income will be visible immediately, whereas the benefit of reducing deposit rates will be visible gradually. According to bank executives the subdued NIM is the reflection of the decline in the credit –deposit (C-D) ratio.
While in September 2008 the high margin was possible as the C-D ratio was 71-72 per cent. but now because of slowdown in credit offtake and fallout of the global financial crisis the ratio has dropped to 67 per cent. A senior SBI executive stated, "Nothing drastic can be done on the interest income side in the short run".
Thus due to subdued credit off-take it became possible for the bank to rework on rates being offered to large companies and mid-size companies in the second quarter. An executive informed, "We have been able to increase lending rates by up to about 50 basis points, especially for those companies that have come up for repricing". The banks are using reset clause in loan agreements to reset interest rates.
The banks say this measure should help in raising up margins marginally. It is believed as the credit off-take continue to rise in third and fourth quarters, the rate charged on fresh credit can be higher and that must boost margins.
Regarding the deposits the headroom available was limited. Also when the credit demand started picking up, liquidity in the system is expected to come down. Besides, the Reserve Bank of India will also start taking measures as part of its strategy to shift to a tighter monetary policy regime. Moreover SBI and other banks will have to raise their rates to counter competition from other asset classes as even the stock market has started showing signs of improvement.
The SBI executives are of view that even though they have to increase rates for retail depositors, the bank’s measures to offer high rates last year has proved helpful in lowering their dependence on high-cost bulk deposits.
To reduce dependence on bulk deposits, the bank introduced a 1,000-day deposit scheme in October 2008, under which it offered 10.5 per cent interest rate with an aim to garner retail resources. But now the bank has withdrawn this scheme.
Thursday, September 10, 2009
SBI reduced rate on 1000-day deposit scheme only
Country’s largest bank, State Bank of India (SBI) has reduced its interest rate on its special 1,000 day fixed deposits with an aim to protect its net interest margin. The bank has reduced rates on 1,000-day deposit scheme by 25 basis points to 7%. With this reduction the SBI deposit rates will be at par with other public sector banks in the industry. The bank has not introduced cut on any other time slab. The revised rates will be effective from September 8.
Since the launch of 1000-day deposit scheme SBI has witnessed maximum collection thus with the cut in the rates in this scheme bank will be able to reduce its interest cost considerably. Earlier SBI was offering 7.25% on its 1000-day scheme which was slightly higher in comparison to the rate being offered by most of its peers in the industry for that period (for 1000 day or between two to three years).
Whereas most of the large banks had reduced their deposit rates few weeks back. Big banks like Union Bank of India, Punjab National Bank and ICICI Bank are offering 7% for two to three years (which is comparable to 1000 day deposits), while Bank of Baroda has reduced rates to 6.5% and HDFC Bank is offering 6% for the same period.
According to bank analyst SBI’s margin- the difference between the cost of funds and yield on advances, have been under pressure due to slowdown in credit growth. For quarter ending June 09, bank net interest margin stood at 2.3%, which is down by 63 basis points over March 09. Earlier SBI officials had given indications that in the second quarter no significant improvement can be expected in the margins.
Recently in an interview with media, O P Bhatt had stated that due to poor demand in credit SBI has been parking over Rs 65,000 crore daily with the Reserve Bank of India’s reverse repo window which gives a return of 3.25%.
Since the launch of 1000-day deposit scheme SBI has witnessed maximum collection thus with the cut in the rates in this scheme bank will be able to reduce its interest cost considerably. Earlier SBI was offering 7.25% on its 1000-day scheme which was slightly higher in comparison to the rate being offered by most of its peers in the industry for that period (for 1000 day or between two to three years).
Whereas most of the large banks had reduced their deposit rates few weeks back. Big banks like Union Bank of India, Punjab National Bank and ICICI Bank are offering 7% for two to three years (which is comparable to 1000 day deposits), while Bank of Baroda has reduced rates to 6.5% and HDFC Bank is offering 6% for the same period.
According to bank analyst SBI’s margin- the difference between the cost of funds and yield on advances, have been under pressure due to slowdown in credit growth. For quarter ending June 09, bank net interest margin stood at 2.3%, which is down by 63 basis points over March 09. Earlier SBI officials had given indications that in the second quarter no significant improvement can be expected in the margins.
Recently in an interview with media, O P Bhatt had stated that due to poor demand in credit SBI has been parking over Rs 65,000 crore daily with the Reserve Bank of India’s reverse repo window which gives a return of 3.25%.
Wednesday, September 2, 2009
Tata Motors to raise funds by re-launching fixed deposit scheme
Tata Motors is again announcing fixed deposit (FD) scheme to raise up to Rs 1,500 crore. The company will be launching the scheme for shareholders and the public. Tata Motors chairman Ratan N Tata at the annual general body meeting of the company in Mumbai informed shareholders, “We will just be announcing the revised FDs scheme.”
Addressing the reporter after Tata’s AGM with shareholders, Tata Motors chief financial officer C Ramakrishnan said, “Till now we have raised around Rs 2,500 crore through the existing FD scheme. After the new accounting norms that came into effect from April 1, the cap on borrowings through fixed deposits has gone up from Rs 2,700-Rs 2,800 crore to Rs 4,000 crore. So now we can raise additional funds through the deposit scheme.
The revised scheme will open for shareholders and public on Wednesday.”
Currently Tata Motors is giving 8.75 per cent interest on deposits of Rs 20,000 for a period of three years. The company’s aim to launch FD scheme was to raise funds to repay the $2.3 billion bridge loan after the possession of Jaguar and Land Rover in 2008. Later on company reduced the interest rates on cumulative fixed deposits of Rs 20,000 for three years from 12 per cent to 8.75 per cent.
The industry officials informed that Tata Motors is likely to increase the rate of interest up to a competitive level of Mahindra Finance’s ongoing scheme. Mahindra Finance is offering 10 per cent interest on a minimum deposit of Rs 10,000 for a period of three years. However most of the public and private sector banks have recently reduced their deposit rates. India’s top two banks - State Bank of India and ICICI Bank are offering interest rates around 7.25 per cent to 7.5 per cent on fixed deposits with five-year maturity.
An analyst with Mumbai-based brokerage informed Tata Motors is likely to invest the funds being raised through FD scheme, to meet the capital expenditure and technology up-gradation requirements of the company and JLR
Addressing the reporter after Tata’s AGM with shareholders, Tata Motors chief financial officer C Ramakrishnan said, “Till now we have raised around Rs 2,500 crore through the existing FD scheme. After the new accounting norms that came into effect from April 1, the cap on borrowings through fixed deposits has gone up from Rs 2,700-Rs 2,800 crore to Rs 4,000 crore. So now we can raise additional funds through the deposit scheme.
The revised scheme will open for shareholders and public on Wednesday.”
Currently Tata Motors is giving 8.75 per cent interest on deposits of Rs 20,000 for a period of three years. The company’s aim to launch FD scheme was to raise funds to repay the $2.3 billion bridge loan after the possession of Jaguar and Land Rover in 2008. Later on company reduced the interest rates on cumulative fixed deposits of Rs 20,000 for three years from 12 per cent to 8.75 per cent.
The industry officials informed that Tata Motors is likely to increase the rate of interest up to a competitive level of Mahindra Finance’s ongoing scheme. Mahindra Finance is offering 10 per cent interest on a minimum deposit of Rs 10,000 for a period of three years. However most of the public and private sector banks have recently reduced their deposit rates. India’s top two banks - State Bank of India and ICICI Bank are offering interest rates around 7.25 per cent to 7.5 per cent on fixed deposits with five-year maturity.
An analyst with Mumbai-based brokerage informed Tata Motors is likely to invest the funds being raised through FD scheme, to meet the capital expenditure and technology up-gradation requirements of the company and JLR
Thursday, August 13, 2009
IDBI Bank revised interest rates on deposit, auto loans
IDBI Bank announced cut in interest rates on deposits by 25 basis points to 50 basis points (quarter to half a percentage point) across different maturities. The revised rates will come into effect from August 12.
The bank has also reduced 1% point in lending rates for auto loans.
The bank for up to six months did not change rates for deposits and all changes are for duration beyond six months. In most of slabs, the reduction is only 25 basis points, or quarter of a per cent, but in case of a few slabs, the drop is 50 basis points, or half a per cent.
While the interest rate for deposit of one year to two year will be 6.75 per cent against 7.25 per cent at present.
The bank is offering the highest rate of 8% for deposits for the duration of seven to 10 years.
The bank has also revised its lending rate on auto loans and has reduced it down by one percentage point. As per revised fixed rate of interest for a three year tenor will range from 10.50 per cent-12 per cent and for five years between 10.75 per cent and 13 per cent.
The bank has also reduced 1% point in lending rates for auto loans.
The bank for up to six months did not change rates for deposits and all changes are for duration beyond six months. In most of slabs, the reduction is only 25 basis points, or quarter of a per cent, but in case of a few slabs, the drop is 50 basis points, or half a per cent.
While the interest rate for deposit of one year to two year will be 6.75 per cent against 7.25 per cent at present.
The bank is offering the highest rate of 8% for deposits for the duration of seven to 10 years.
The bank has also revised its lending rate on auto loans and has reduced it down by one percentage point. As per revised fixed rate of interest for a three year tenor will range from 10.50 per cent-12 per cent and for five years between 10.75 per cent and 13 per cent.
Bank unions say: ATMs are part of banking network, so can’t operate
The public sector banks are on strike for two days due to which all the banking transactions have come to stop for two days. On Wednesday when a call for strike was made the ATMs were not included in the strike so most of the banks had loaded their ATMs so that public don’t find difficulty in case of cash. But on Thursday first day of the strike the union forcefully got most of the ATMs in the city including off-sites shutdown.
Thus on the second day the few that will be opened might run out of cash. SBI spokesperson informed in Kolkata most of its 260 ATMs remained closed due to the strike. He said, "We had refilled money but could not operate the ATMs due to protest by strikers". An Axis bank official also gave the same reason however ICICI bank spokesperson stated that they had closed the ATMs due to security reasons.
Most of the banks with large ATM networks had loaded most of their ATMs on Wednesday evening but bank union people forced the security guards to shut down the ATMs shutters of majority of onsite and off-site ATMs. Bank unions justifying the shutdown of ATMs Ashok Mukherjee, secretary of SBI Staff Association said, "ATMs are part of banking network. So, they can't operate during a bank strike". He added, "We have no option as IBA and the Centre have refused to listen to our demands."
He pointed out the 29 PSU banks are having a consolidated net profit of Rs 33,000 crore, then also they are not ready to contribute Rs 4,200 crore to the pension fund of bank employees. The United Forum of Bank Unions is demanding 20% hike in salary but IBA is giving a hike of 17.5%.
Therefore today being the second day of strike people will probably find difficulty in getting cash from ATMs.
Thus on the second day the few that will be opened might run out of cash. SBI spokesperson informed in Kolkata most of its 260 ATMs remained closed due to the strike. He said, "We had refilled money but could not operate the ATMs due to protest by strikers". An Axis bank official also gave the same reason however ICICI bank spokesperson stated that they had closed the ATMs due to security reasons.
Most of the banks with large ATM networks had loaded most of their ATMs on Wednesday evening but bank union people forced the security guards to shut down the ATMs shutters of majority of onsite and off-site ATMs. Bank unions justifying the shutdown of ATMs Ashok Mukherjee, secretary of SBI Staff Association said, "ATMs are part of banking network. So, they can't operate during a bank strike". He added, "We have no option as IBA and the Centre have refused to listen to our demands."
He pointed out the 29 PSU banks are having a consolidated net profit of Rs 33,000 crore, then also they are not ready to contribute Rs 4,200 crore to the pension fund of bank employees. The United Forum of Bank Unions is demanding 20% hike in salary but IBA is giving a hike of 17.5%.
Therefore today being the second day of strike people will probably find difficulty in getting cash from ATMs.
Friday, July 31, 2009
Fixed deposit scheme to encourage girl education at primary level
In India government on its level has been making efforts to encourage parents of the girls belonging to lower strata of the society to send them to school. Working on this line BMS in order to encourage girl students complete their primary school will be providing a fixed amount of Rs 1,000 and would double the amount on completion of the education.
Till now the civic body was giving an allowance of Re 1 per girl child for attending the class every day. But now it has suggested a fixed amount scheme. In civic-run schools mostly students are from lower strata of the society or slum areas that often do not complete their primary education resulting in high dropout rate. In a hope that financial incentive will be able to lure parents and children to complete their primary education the civic administration has suggested a fixed amount scheme.
Instead of attendance allowance under the new scheme at the time of enrollment in class I, a fixed deposits of Rs 1,000 will be made in Indian Bank which will get doubled when the girl student completes her primary education till class VII. In the scheduled bank savings account will be created in the name of the student in which the money will be deposited.
This scheme will be started from financial year 2009-2010 and approximately 42,750 girls who enrolled in the first standard for this academic year will be benefited from the scheme. The proposal has been approved by the education committee and an amount of Rs 4.27 crore has been sanctioned. While in the on going scheme the BMC used to give Re 1 to girl students for a day’s attendance and by the end of each academic year a maximum of Rs 210 (for 210 working days) was credited in their account.
Till now the civic body was giving an allowance of Re 1 per girl child for attending the class every day. But now it has suggested a fixed amount scheme. In civic-run schools mostly students are from lower strata of the society or slum areas that often do not complete their primary education resulting in high dropout rate. In a hope that financial incentive will be able to lure parents and children to complete their primary education the civic administration has suggested a fixed amount scheme.
Instead of attendance allowance under the new scheme at the time of enrollment in class I, a fixed deposits of Rs 1,000 will be made in Indian Bank which will get doubled when the girl student completes her primary education till class VII. In the scheduled bank savings account will be created in the name of the student in which the money will be deposited.
This scheme will be started from financial year 2009-2010 and approximately 42,750 girls who enrolled in the first standard for this academic year will be benefited from the scheme. The proposal has been approved by the education committee and an amount of Rs 4.27 crore has been sanctioned. While in the on going scheme the BMC used to give Re 1 to girl students for a day’s attendance and by the end of each academic year a maximum of Rs 210 (for 210 working days) was credited in their account.
Thursday, July 2, 2009
Short-term FD has lower interest rate than savings a/c
Almost all the banks have slashed their fixed deposit rates. After this revision the interest banks are offering on the tenure between a month and 45 days is lower than the 3.5% minimum savings bank rate and some of the banks are not even giving any interest on short-term maturities.
Therefore at this time it is better to keep money in the savings bank account rather than investing in fixed deposits.
For instance amongst the private sector banks HDFC Bank is giving a 2.25% interest on deposits below Rs15 lakh for 15 to 29 days and only a 3% interest on deposits kept for 30 days to 45 days.
While the ICICI Bank is not giving any interest on deposits for 7 days to 14 days and offers only a 3.25% interest for deposits maturing between 15 and 45 days.
Whereas amongst the public sector banks State Bank of India (SBI) is offering only a 3% interest on deposits maturing in 15-45 days.
The savings bank account rate is fixed by the government therefore it can not be changed by the banks whereas it’s not the case with deposit rates.
Anindya Mitra, senior vice-president, retail liabilities, HDFC Bank explained, "We may think that the savings rate has to come down but we can't tinker with it and why should we pay more than 3.5% for short-term money when we can borrow one day funds from the inter-bank call market at 3%". Mitra added that companies, funds and high net worth individuals having huge amount generally invest funds in these tenures.
He stated, "For companies, it's still the better option to keeping huge chunks of money in current accounts at 0%. Some companies which do not even have a bank account open an FD".
On the minimum maturity period if you invest more money the banks give less interest. For instance ICICI Bank, offers only 1.5% interest on deposits from Rs15 lakh to Rs1 crore in the 7-45 days' tenure. While Canara Bank offers 1% for deposits of more than Rs1 crore for seven to 14 days and only 2% for deposits kept for 15 to 30 days.
Regarding offering very low interest rate on minimum tenure bankers say that there is enough liquidity in the system therefore they don't need short-term cash. According to SBI official, "These funds were used to give short-term bridge loans for companies just before their actual loans were being passed. These loans were in demand, particularly when the economic growth was brisk, but now that's not the case".
Therefore at this time it is better to keep money in the savings bank account rather than investing in fixed deposits.
For instance amongst the private sector banks HDFC Bank is giving a 2.25% interest on deposits below Rs15 lakh for 15 to 29 days and only a 3% interest on deposits kept for 30 days to 45 days.
While the ICICI Bank is not giving any interest on deposits for 7 days to 14 days and offers only a 3.25% interest for deposits maturing between 15 and 45 days.
Whereas amongst the public sector banks State Bank of India (SBI) is offering only a 3% interest on deposits maturing in 15-45 days.
The savings bank account rate is fixed by the government therefore it can not be changed by the banks whereas it’s not the case with deposit rates.
Anindya Mitra, senior vice-president, retail liabilities, HDFC Bank explained, "We may think that the savings rate has to come down but we can't tinker with it and why should we pay more than 3.5% for short-term money when we can borrow one day funds from the inter-bank call market at 3%". Mitra added that companies, funds and high net worth individuals having huge amount generally invest funds in these tenures.
He stated, "For companies, it's still the better option to keeping huge chunks of money in current accounts at 0%. Some companies which do not even have a bank account open an FD".
On the minimum maturity period if you invest more money the banks give less interest. For instance ICICI Bank, offers only 1.5% interest on deposits from Rs15 lakh to Rs1 crore in the 7-45 days' tenure. While Canara Bank offers 1% for deposits of more than Rs1 crore for seven to 14 days and only 2% for deposits kept for 15 to 30 days.
Regarding offering very low interest rate on minimum tenure bankers say that there is enough liquidity in the system therefore they don't need short-term cash. According to SBI official, "These funds were used to give short-term bridge loans for companies just before their actual loans were being passed. These loans were in demand, particularly when the economic growth was brisk, but now that's not the case".
Wednesday, July 1, 2009
Govt. in favor of new tax-saving scheme to tap ‘idle money’
The government is thinking over of introducing a new tax-saving scheme to collect 'idle money' kept with households and elsewhere in the system mainly for building funds for infrastructure.
According to sources the tax benefits offered may be on investments up to Rs 5lakh and be involved in somewhat meeting the country's infrastructure funding needs, which have been gauged at as high as $750 billion.
The scheme can provide multiple purposes including giving additional tax benefits to the public, channelizing the huge amount of money lying idle in saving accounts or with households for productive means, and this will also not add to the fiscal deficit, the sources said.
The sources added the government has already made an announcement of borrowing program of over Rs 3,00,000 crore for the current fiscal and if further there is any increase the liquidity will be made available to the drying up private sector and also add to the expansion of fiscal deficit.
Various sectors have been demanding for tax benefits for citizens and also garnering alternative resources for meeting the government's spending needs.
At present, collective tax benefits are being offered on an investment of Rs one lakh in insurance, pension schemes, bonds, mutual funds, children's education and housing loans, etc. An additional benefit of up to Rs 1.5 lakh is given only for housing loan interest payments.
As per Planning Commission approximation, the country would require around $500 billion for the building up of infrastructure during the remaining period of the 11th Plan (2007-12).
According to country top private sector bank ICICI Bank's Chairman K.V. Kamath the capital need for the infrastructure sector will be even higher, at $750 billion, over the next three years.
Meanwhile the policymakers have supported spending most of the money set for infrastructure as quickly as possible in the remaining years of the current five-year plan.
Financial services major Reliance Money's CEO Sudip Bandyopadhyay points out any such initiative will be welcomed from the government in case it launches some sort of infrastructure bonds that can offer tax benefits of up to Rs five lakh in the Union Budget.
According to sources the tax benefits offered may be on investments up to Rs 5lakh and be involved in somewhat meeting the country's infrastructure funding needs, which have been gauged at as high as $750 billion.
The scheme can provide multiple purposes including giving additional tax benefits to the public, channelizing the huge amount of money lying idle in saving accounts or with households for productive means, and this will also not add to the fiscal deficit, the sources said.
The sources added the government has already made an announcement of borrowing program of over Rs 3,00,000 crore for the current fiscal and if further there is any increase the liquidity will be made available to the drying up private sector and also add to the expansion of fiscal deficit.
Various sectors have been demanding for tax benefits for citizens and also garnering alternative resources for meeting the government's spending needs.
At present, collective tax benefits are being offered on an investment of Rs one lakh in insurance, pension schemes, bonds, mutual funds, children's education and housing loans, etc. An additional benefit of up to Rs 1.5 lakh is given only for housing loan interest payments.
As per Planning Commission approximation, the country would require around $500 billion for the building up of infrastructure during the remaining period of the 11th Plan (2007-12).
According to country top private sector bank ICICI Bank's Chairman K.V. Kamath the capital need for the infrastructure sector will be even higher, at $750 billion, over the next three years.
Meanwhile the policymakers have supported spending most of the money set for infrastructure as quickly as possible in the remaining years of the current five-year plan.
Financial services major Reliance Money's CEO Sudip Bandyopadhyay points out any such initiative will be welcomed from the government in case it launches some sort of infrastructure bonds that can offer tax benefits of up to Rs five lakh in the Union Budget.
Monday, June 22, 2009
Rates on small saving schemes to be reduced by 50-75 basis points: Govt
It is very rare you get to see an advertisement of small saving schemes but then also more people invest in these schemes in comparison to bank deposits the reason being the interest given on these schemes and savings plans are tax free. But now these schemes won’t be as attractive as government is planning to reduce the rates on small savings scheme by 50-75 basis points to increase the bank deposits. Earlier in 2003 the rate was reduced by 100 basis points to the current eight percent. Government is thinking of setting up a committee headed by the former governor of RBI which will study the issues and recommend appropriate steps.
Analysts point out that in case the banks slash the deposit rates beyond a certain limit, then investors can get diverted towards small saving scheme. Therefore banks are abstaining from cut in the deposit rates. The industry experts say the reduction in deposit rates might not help in cut down of the lending rates also.
Some of the major small saving schemes are National Saving Certificates, Post Office Savings Account, Public Provident Fund, Kisan Vikas Patra, and Senior Citizen Savings Scheme. These saving schemes are in competition with the bank deposits as they have tax benefits under Section 80 C of the Income Tax Act.
Analysts point out that in case the banks slash the deposit rates beyond a certain limit, then investors can get diverted towards small saving scheme. Therefore banks are abstaining from cut in the deposit rates. The industry experts say the reduction in deposit rates might not help in cut down of the lending rates also.
Some of the major small saving schemes are National Saving Certificates, Post Office Savings Account, Public Provident Fund, Kisan Vikas Patra, and Senior Citizen Savings Scheme. These saving schemes are in competition with the bank deposits as they have tax benefits under Section 80 C of the Income Tax Act.
Wednesday, June 17, 2009
Forum directed ABN AMRO bank to compensate for wrongly billing
The ABN AMRO bank has been directed by the district consumer forum bench comprising president TN Vaidya and member Rajesh Kumar to pay compensation and litigation costs worth Rs 6,000 for wrongly billing a resident, thus causing an undue harassment to the complainant.
The complainant Kanwal Khurana in his complaint alleged that he had opened a current account and got a credit card from ABN AMRO Bank by paying Rs 22,412 for using the credit card vide demand draft dated May 30, 2006. On 16.6.2006 the amount was credited to the account of ABN AMRO Bank.
But in spite of this the bank continued charging late payment charges and interest regularly in his statement. He stated in order to settle the matter in cordially manner he made a complaint to the bank on 28-11-2006 then also bank did not take any corrective measures.
The complainant appealed before the forum that the bank should be proceeded under the
the Consumer Protection Act for causing harassment. Bank did not defend its case in the forum therefore it was proceeded ex parte and the forum after hearing the arguments of the counsel for the complainant and scrutinizing the evidence presented by him, apprehended the bank guilty.
The complainant Kanwal Khurana in his complaint alleged that he had opened a current account and got a credit card from ABN AMRO Bank by paying Rs 22,412 for using the credit card vide demand draft dated May 30, 2006. On 16.6.2006 the amount was credited to the account of ABN AMRO Bank.
But in spite of this the bank continued charging late payment charges and interest regularly in his statement. He stated in order to settle the matter in cordially manner he made a complaint to the bank on 28-11-2006 then also bank did not take any corrective measures.
The complainant appealed before the forum that the bank should be proceeded under the
the Consumer Protection Act for causing harassment. Bank did not defend its case in the forum therefore it was proceeded ex parte and the forum after hearing the arguments of the counsel for the complainant and scrutinizing the evidence presented by him, apprehended the bank guilty.
Tuesday, May 5, 2009
Savings bank deposits are offering more than short term FDs
Almost all the banks have started reducing the interest rates on their deposits therefore the deposits kept for short tenure are earning lesser than the savings bank deposits. The public sector after renewing their deposits rates are offering very low interest rates on short-term deposits than the rates offered on deposits kept in savings bank accounts.
Therefore the customers will be in loss in case they have made short-term FDs than what they are earning by keeping the amount in their savings bank deposits.
According to bankers the trend aim towards the banks’ repulsion towards fresh deposits in a situation where the financial system is flush with liquidity that has no takers.
Some of the public sector banks on the maturities between seven days and 14 days are offering interest rates of as low as 3 per cent, whereas on the savings bank rate there is a uniform rate of 3.5 per cent for all banks.
However the Bank of India and Bank of Baroda are giving 3 per cent for maturities between seven days and 14 days, whereas Punjab National Bank (PNB) is offering as low as 2.5 per cent per annum for deposits of same maturities. On the other hand Union Bank of India is offering 3.5 per cent per annum on deposits, having maturities of 14 days or less, is similar to the savings bank rate.
Moreover on maturities of 30 days, some banks are giving less than 3.5 per cent. While, the PNB on one month is giving a meager 3 per cent interest, while Bank of India is offering its customers a measly 3.25 per cent interest.
However, State Bank of India, the country’s largest commercial bank, is giving 4 per cent even on deposits with maturity tenure from seven days up to 45 days.
The individuals with temporary excess liquidity and who might be requiring the money in the near future invest for short-term and they invest their excess cash in maturities that suit their requirements. In the recent months the banks have done sharp reduction in interest rate for short-term deposits with maturity tenure of up to 30 days. In October 2008, a customer was offered around 5 per cent on maturities of one month or so.
S Raman, executive director, Union Bank of India told Financial Chronicle, “Banks have been offering lower interest rates at the short end because there is ample liquidity in the system. In any case, banks are offering retail customers much more than what we are offering to bulk depositors”.
While on bulk deposits of such short maturities of similar tenure, banks are giving interest rates of around 2 per cent. Amid those offering the lowest rates is PNB with 1.5 per cent for seven-14 days bulk deposits.
“Prima facie the interest rate of 3 per cent on maturities of 30 days may seem lower than 3.5 per cent offered on saving accounts. But in actual practice, there might not be much of a difference. While a customer gets interest rate for all 30 days for a 30-day term deposits, he or she gets interest for a shorter period in case of savings bank account. This effectively lowers the interest rates,” informed L P Agarwal, chief general manager, PNB.
Currently banks give interest for only 20 days to the customers on a savings account that too on the least amount kept between 10th day and last day of a particular month.
Soon the calculation method of interest rate on savings deposit is going to change as the RBI has issued new directives for the calculation of interest on savings accounts on a day to day basis throughout the month from April 1, 2010.
Therefore the customers will be in loss in case they have made short-term FDs than what they are earning by keeping the amount in their savings bank deposits.
According to bankers the trend aim towards the banks’ repulsion towards fresh deposits in a situation where the financial system is flush with liquidity that has no takers.
Some of the public sector banks on the maturities between seven days and 14 days are offering interest rates of as low as 3 per cent, whereas on the savings bank rate there is a uniform rate of 3.5 per cent for all banks.
However the Bank of India and Bank of Baroda are giving 3 per cent for maturities between seven days and 14 days, whereas Punjab National Bank (PNB) is offering as low as 2.5 per cent per annum for deposits of same maturities. On the other hand Union Bank of India is offering 3.5 per cent per annum on deposits, having maturities of 14 days or less, is similar to the savings bank rate.
Moreover on maturities of 30 days, some banks are giving less than 3.5 per cent. While, the PNB on one month is giving a meager 3 per cent interest, while Bank of India is offering its customers a measly 3.25 per cent interest.
However, State Bank of India, the country’s largest commercial bank, is giving 4 per cent even on deposits with maturity tenure from seven days up to 45 days.
The individuals with temporary excess liquidity and who might be requiring the money in the near future invest for short-term and they invest their excess cash in maturities that suit their requirements. In the recent months the banks have done sharp reduction in interest rate for short-term deposits with maturity tenure of up to 30 days. In October 2008, a customer was offered around 5 per cent on maturities of one month or so.
S Raman, executive director, Union Bank of India told Financial Chronicle, “Banks have been offering lower interest rates at the short end because there is ample liquidity in the system. In any case, banks are offering retail customers much more than what we are offering to bulk depositors”.
While on bulk deposits of such short maturities of similar tenure, banks are giving interest rates of around 2 per cent. Amid those offering the lowest rates is PNB with 1.5 per cent for seven-14 days bulk deposits.
“Prima facie the interest rate of 3 per cent on maturities of 30 days may seem lower than 3.5 per cent offered on saving accounts. But in actual practice, there might not be much of a difference. While a customer gets interest rate for all 30 days for a 30-day term deposits, he or she gets interest for a shorter period in case of savings bank account. This effectively lowers the interest rates,” informed L P Agarwal, chief general manager, PNB.
Currently banks give interest for only 20 days to the customers on a savings account that too on the least amount kept between 10th day and last day of a particular month.
Soon the calculation method of interest rate on savings deposit is going to change as the RBI has issued new directives for the calculation of interest on savings accounts on a day to day basis throughout the month from April 1, 2010.
Monday, April 6, 2009
Barbie's adult collectible item!
A toy plays a very important role in our childhood as they just help us to imagine how things look like in real life. Every parent wants their child to provide the best sources so that they could face the world with full confidence. Barbie doll collecting has been around for quite a while time and has accomplished many things. She has been everything from a fashion model to an astronaut. It is safe to say that Barbie is so popular that almost every little girl owns at least one. But Barbie is not just for little girls, she is a highly collectible doll. There are Barbies made for play and there are Barbies made for collectors.
People when they enter into teenage just forget the all fun but it should be done. Nowadays Barbie collections are specially designed for the adults also. Barbara Handler is the daughter of Barbie's inventor, Ruth Handler. Ruth Handler had noticed that when her daughter played with her paper dolls, she frequently pretended that the dolls were grown-ups. Most dolls available in the early 1950s were baby dolls so Ruth thought that might represent an opportunity for her husband Elliot's toy company, Mattel.
In this busy world we are lost in search of making life luxurious but nobody knows that this could cost you a much because your family which wants the most of your free time. Mattell wasn't all that interested in the idea, but fortunately Ruth didn't forget about it herself, so when she came across an interesting doll in Germany on a trip there with her children she bought three of them to take home. This doll was the Bild Lili. She was an adult doll based upon a German comic strip character and she had been popular in Germany since her release in 1955.
Are you tired of searching the toys don’t worry now Playdex offers you the great range of toys also buy cheap toys including toys games, Baby Born, Barbie and Disney toys.
Wednesday, March 25, 2009
Bankruptcy
The economic slowdown that started in United States and sent ripples across the globe is taking its toll on all the major macroeconomic indicators of the country. Reports suggest that the US Federal Reserve has reduced the GDP forecast for the FY 2009. It is being anticipated that United States economy would shrink by 1% or slightly more in the current fiscal year. It has affected employment and practically all sectors of the economy.
To cope up with the financial requirements of the prevailing market conditions, more and more individuals and business entities are filing bankruptcy.
Probable scenario in 2009
2009 has hardly seen the first 3 months, when financial experts are indicating that there are probable signs that 2009 will be a year when bankruptcy filings will register a record high. This will probably be the highest in the last 3 decades.
The incidence of corporate bankruptcies have increased manifold. And there are many companies in queue. As of February 20, 2009 33 cases of bankruptcy filings have been recorded. 33 cases include both Chapter 7 as well as Chapter 11. Bankruptcy filings during the same period in FY2008 was 14, the only difference is the companies filing for bankruptcy this year have comparatively more assets.
The pre-petition assets of these 33 companies when combined amounts to USD$65.7 billion. The figure has escalated by more than 7 times as compared to the same period last year. It has also been observed that majority of the companies that have declared themselves bankrupt, had sought protection in past (Chapter 22).
What’s new in bankruptcy?
With the introduction of the new bankruptcy law that took effect on 17th October 2005, filing for bankruptcy has become a tough job. Few changes have been made in the way consumers can file for bankruptcy. Given below is an overview of the same.
-Changes in the waiting period
If you have filed for bankruptcy, you could file for it again at frequent intervals. Under the new law, a considerable period of time should have elapsed before you can file for bankruptcy again.
-Eliminating all your debts
Previously, you could do away with all debts. As per the new law, there are only certain debts that can be eliminated.
-A bankruptcy lawyer for you
Earlier you could file for bankruptcy and take the decision on your own. The new law has made it mandatory that you need to consult a bankruptcy lawyer and if he deems it necessary for you to file for bankruptcy, you can go ahead.
Even though filing for bankruptcy will reduce your chances of getting new credit, it is sometimes the only option that a consumer is left with. Nevertheless, it has helped many recover financially.
To cope up with the financial requirements of the prevailing market conditions, more and more individuals and business entities are filing bankruptcy.
Probable scenario in 2009
2009 has hardly seen the first 3 months, when financial experts are indicating that there are probable signs that 2009 will be a year when bankruptcy filings will register a record high. This will probably be the highest in the last 3 decades.
The incidence of corporate bankruptcies have increased manifold. And there are many companies in queue. As of February 20, 2009 33 cases of bankruptcy filings have been recorded. 33 cases include both Chapter 7 as well as Chapter 11. Bankruptcy filings during the same period in FY2008 was 14, the only difference is the companies filing for bankruptcy this year have comparatively more assets.
The pre-petition assets of these 33 companies when combined amounts to USD$65.7 billion. The figure has escalated by more than 7 times as compared to the same period last year. It has also been observed that majority of the companies that have declared themselves bankrupt, had sought protection in past (Chapter 22).
What’s new in bankruptcy?
With the introduction of the new bankruptcy law that took effect on 17th October 2005, filing for bankruptcy has become a tough job. Few changes have been made in the way consumers can file for bankruptcy. Given below is an overview of the same.
-Changes in the waiting period
If you have filed for bankruptcy, you could file for it again at frequent intervals. Under the new law, a considerable period of time should have elapsed before you can file for bankruptcy again.
-Eliminating all your debts
Previously, you could do away with all debts. As per the new law, there are only certain debts that can be eliminated.
-A bankruptcy lawyer for you
Earlier you could file for bankruptcy and take the decision on your own. The new law has made it mandatory that you need to consult a bankruptcy lawyer and if he deems it necessary for you to file for bankruptcy, you can go ahead.
Even though filing for bankruptcy will reduce your chances of getting new credit, it is sometimes the only option that a consumer is left with. Nevertheless, it has helped many recover financially.
Tuesday, February 10, 2009
Public banks deposit growth rise, private, foreign banks see drop
The public sector banks have shown growth in their credits in comparison to their private and foreign competitors. According to latest data released by the Reserve Bank of India (RBI) in due course the depositors have withdrawn funds from private and foreign banks and are investing their money with public sector banks which has resulted in a significant decline in growth of deposits with private and foreign banks.
By the week ended January 2, 2009 there has been significant drop in deposit growth of private and foreign banks which in turn pulled down the overall growth in deposits on year-on-year (y-o-y) basis, of all scheduled commercial banks to 21.2 per cent from 25.1 per cent in the corresponding period a year ago.
Although for foreign banks the deposit growth went down to 12.1 per cent from 34.1 per cent, the private sector banks saw their deposit growth dipping to 13.4 per cent from 26.9 per cent on y-o-y basis.
On the other hand in the same period, for the public sector banks, deposit growth was projected at 24.2 per cent, the same growth rate as last year.
Standard Chartered Regional CEO Neeraj Swaroop, remarked that the picture got twisted due to the performance of a few banks, which were saw a rapid rise in the last three-four years. He informed, “We have not seen a drop in growth rates. It may be the case with some of the US-based banks that operate in
In recent months big companies such as Infosys moved their deposits from private and foreign banks to public sector banks, largely because the state-owned players were offering higher interest rates. While in December, the public sector players had taken decision to reduce bulk deposit and focus more on current account and saving account balances.
While on lending side, bankers, notified that as overseas funding sources were drying up therefore companies were finding difficulty in accessing money from the equity markets, the demand has shifted to the domestic arena.
Likewise, as per the data public sector banks has seen a sharp increase in lending for the year up to January 2, 2009. However private and foreign banks have seen a drop in credit growth during the period.
| Bank group-wise deposits and credit | ||
| In per cent | Jan 4, 08 | Jan 2, 09 |
| Deposits | ||
| Public sector banks | 24.2 | 24.2 |
| Foreign banks | 34.1 | 12.1 |
| Private sector banks | 26.9 | 13.4 |
| Commercial banks* | 25.1 | 21.2 |
| Credit | ||
| Public sector banks | 19.8 | 28.6 |
| Foreign banks | 30.7 | 16.9 |
| Private sector banks | 24.2 | 11.8 |
| Commercial banks* | 21.4 | 24.0 |
| * Includes regional rural banks (RRBs) | ||
From the records on a y-o-y basis, the public sector banks, credit growth increased to 28.6 per cent in January 2009 from 19.8 per cent in January 2008, whereas, credit growth of private banks dipped 105.1 per cent from 24.2 per cent to 11.8 per cent in January 2009.
While the foreign banks, growth rate is on average partly due to the experience of their global parents.
On a year-on-year basis, the credit growth of foreign banks operating in
But in case of Indian private banks, the drop was steep as many of them, including the likes of ICICI Bank, the largest in the segment, are in an asset shrinking mode. A bank executive stated, “These banks are now consolidating their business to control non-performing assets (NPAs) and improve recoveries.”
Tuesday, January 27, 2009
Cheap car rental services
WOW! Vacations coming and we all start on planning for some lovely trips. Children wants to go Disneyland, wife wants to go Hollywood but I want to go for a long trip in France. If you're thinking of taking a holiday abroad, one of the main points to consider when deciding on a destination is how easy it is to get around the surrounding destination. If you're going to a resort that is not too far from the airport, your best option would be to make use of the local public transport during your stay, although your travel company will usually provide coaches to get you to your hotel upon arrival at the airport.
If you'd rather explore the resort and the surrounding areas by yourself, car hire could be the best option for you. Hiring a car can provide you with a lot more freedom to explore the attractions and historical sites outside of the resort.
Indeed, with many of the more recognizable sights to be found outside of the main resorts, many like to make use of their car rental services and embark on a day of exploration and escape the bustling resorts in order explore more of the local area.
Holiday car hire can also give you the chance of a scenic drive, particularly in coastal and mountainous areas. Whilst the majority of attractions can be found around the resort itself, many tourists are usually eager to explore the smaller tourist attractions, as well as heading to the coast in order to participate in activities such as diving and water sports.
Car rental prices will differ depending on your holiday destination and the size of the vehicle you are looking for. You may also get easily car hire europe. Many companies will have a large selection of vehicles that can be collected from the airport upon arrival at your destination. So whether you're looking to hire a smaller economy car or a people carrier to fit your family and their entire luggage into, the variety of choice available means that you can cater a car hire plan to your holiday plans.
Finally, if you do try this adventure you’ll find that car hire France is not so hard to arrange on the web before you go, or if you are going on spec, you’ll probably pick up a reasonable vehicle at the your airport without booking.
Thursday, January 22, 2009
Fixed deposit documents seized from Satyam’s office to be fake
Officers of the Serious Frauds Investigation Office investigating Satyam’s scam found seized fixed deposit documents and other instruments from Satyam’s offices to be fake.
Officers also took in possession around Rs 3,300 crore of such papers, including fixed deposits of over Rs 2,000 crore.
According to analysts if the information provided by the officers is correct then bankers and auditors can get off the hook.
The investigating officer told that letters from banks such as ICICI, Citi, Bank of Baroda, BNP Paribas and HDFC do not even have stamps.
Most banks reported that they had never issued deposit certificates to Satyam. Earlier, Satyam’s chief financial officer Srinivas Vadlamani had informed CID officials that B. Ramalinga Raju. Vadlamani handled bank deposits and had specifically been told not to look into them.
On the other hand investigators speculated why analysts and auditors were not able to spot any malpractice.
Even banks failed to find out who among them held Satyam’s deposits.
The investigating officials pointed out that they will have to look for others from Satyam’s who have been involved in forging bank letters, if these were to be sure fake.
The officials remarked, “Forgery could not have been done alone or without anyone’s knowledge in the company ... there must have been a team working on this.”
NHB offers up to 9.25% interest rate on FD schemes
National Housing Bank (NHB) an apex housing financial institution has launched three fixed deposit schemes, with a tax-saving scheme. NHB is offering interest rate of up to 9.25 per cent.
In a statement released by NHB it stated, "The funds mobilized would be used by the NHB for its business activities".
Under Sunidhi term-deposit scheme, one of the schemes launched by NHB the investors would get 9.25 per cent interest for 12 months and 9 per cent interest for up to five years.
While under NHB tax saving Suvrigdhi investors will get an interest rate of 8.75 per cent. Under this scheme the deposit will have a lock-in period of five years.
Another scheme launched by NHB is Sumeru zero-coupon bonds, which will be sold at a discount at Rs 4,360 with a face value of Rs 10,000. The holder will get the amount after a maturity period of 10 years.
Tuesday, January 20, 2009
IDBI bank announces cut on term deposit rates
IDBI Bank has announced reduction in the interest rate on retail term deposit by 50-150 bps in the maturity bucket of 46-90 days up to 10 years. The new rates will come into effect from January 1, 2009 and has also realigned its maturity buckets.
Furthermore, the Bank is also introducing a longer maturity term deposit of 1100 days with interest rate for normal depositors @9.5% pa and @10% pa for senior citizens in lieu of the existing 890 days term deposit, effective from January 1, 2009.
Furthermore, the Bank is also introducing a longer maturity term deposit of 1100 days with interest rate for normal depositors @9.5% pa and @10% pa for senior citizens in lieu of the existing 890 days term deposit, effective from January 1, 2009.
Sunday, January 18, 2009
Romantic gifts ideas for Valentine’s Day!
14 February, Valentine's Day-a very special moment for women, men even youngsters are busy in buying romantic gifts for their love ones. On this day we express our wonderful feelings and to propose our loved one. One gift which is very common but also essential to buy is flowers because they can bring two hearts closer.
All across the world people are busy in exchanging romantic gifts like flowers, chocolates, valentine's cards, wines and personalized gifts every 14th day of February. Gifts to your love ones do not have to be that expensive but the most important thing is how you express your feelings to the person who will receive your presents. Telling you the truth, to most women or men, simple presents are the ones they remember the most.
Let your Valentine gifts go beyond the usual chocolates, roses and teddies. The important thing to remember is that most women or men tend to prefer valentine gifts that they might receive at any other time of the year. But, If this is your first Valentine then romantic flowers and chocolates will work out just fine as valentine gifts. In this case, the experienced florists are at your service with a wide variety of Valentine Gifts like gift baskets, flower bouquets, and Roses. Those master florists have more experience when it comes to picking the right romantic gifts for her. Other way of doing this is to exchange ideas with your friend or relatives; they can give you bright ideas in choosing the right romantic valentine gifts.
It is great idea to shop around for gifts like wine baskets, gift baskets, gift certificates, jewelry boxes, personalized mugs, flowers and roses, rings, pins and brooches, necklaces, etc. Savebuckets offers the best flower delivery services all at very reasonable cost. You may also find hot gifts for your love ones.
Friday, January 16, 2009
IDBI bank announces cut on term deposit rates
IDBI Bank has announced reduction in the interest rate on retail term deposit by 50-150 bps in the maturity bucket of 46-90 days up to 10 years. The new rates will come into effect from January 1, 2009 and has also realigned its maturity buckets.
Furthermore, the Bank is also introducing a longer maturity term deposit of 1100 days with interest rate for normal depositors @9.5% pa and @10% pa for senior citizens in lieu of the existing 890 days term deposit, effective from January 1, 2009.
Furthermore, the Bank is also introducing a longer maturity term deposit of 1100 days with interest rate for normal depositors @9.5% pa and @10% pa for senior citizens in lieu of the existing 890 days term deposit, effective from January 1, 2009.
Monday, January 5, 2009
FDs rates are likely to reduce by 100bps
At present peak deposit rates are between 9.5 and 10% but it is expected banks might soon cut fixed deposit rates by 100 basis points in two steps which will bring them to a maximum of 9%.
It is expected that the reduction in deposit rates will help in protecting margins for the banks that have reduced lending rates by around 150 basis points over the past few weeks.
“Banks have to keep a gap between their lending and deposit rates in order to maintain their net interest margin. Lending rates have already been cut. Deposit rates have softened and are expected to come down further in the next few weeks,” Uco Bank executive director V K Dhingra said.
By the end of this month government-owned banks are expected to slash down the deposit rates by 50 basis points and by another 50 basis points by end of January. The rates might vary depending upon the tenure of the deposit. Most banks are offering the highest return on one-year deposits.
State Bank ofIndia
Mr Dhingra added, “The money market condition is also showing signs of easing which in turn is bringing down the requirement of high-cost fund for banks. These conditions indicate possibility of further cut in deposit rates”.
On the other hand all the PSU banks have reduced their lending rates by an average of 150 basis points in the last few weeks on almost all loans to their prime borrowers. Although in some cases, such as for small housing loans, the rate has been reduced has been even sharper at 200-300 points.
In comparison to this the deposit rates have come down by only 50 basis points leaving scope for another 100 basis point reduction in deposit rates. While the rates for saving bank deposits will remain at 3.5%.
It is expected that the reduction in deposit rates will help in protecting margins for the banks that have reduced lending rates by around 150 basis points over the past few weeks.
“Banks have to keep a gap between their lending and deposit rates in order to maintain their net interest margin. Lending rates have already been cut. Deposit rates have softened and are expected to come down further in the next few weeks,” Uco Bank executive director V K Dhingra said.
By the end of this month government-owned banks are expected to slash down the deposit rates by 50 basis points and by another 50 basis points by end of January. The rates might vary depending upon the tenure of the deposit. Most banks are offering the highest return on one-year deposits.
State Bank of
Mr Dhingra added, “The money market condition is also showing signs of easing which in turn is bringing down the requirement of high-cost fund for banks. These conditions indicate possibility of further cut in deposit rates”.
On the other hand all the PSU banks have reduced their lending rates by an average of 150 basis points in the last few weeks on almost all loans to their prime borrowers. Although in some cases, such as for small housing loans, the rate has been reduced has been even sharper at 200-300 points.
In comparison to this the deposit rates have come down by only 50 basis points leaving scope for another 100 basis point reduction in deposit rates. While the rates for saving bank deposits will remain at 3.5%.
Banks expected to cut PLR by 75 basis points by March
According to US-based Merrill Lynch report Indian banks are expected to reduce their Prime Lending Rates by another 75 basis points by March to support growth.
The report stated, "We expect banks to cut their PLR by 75 basis points by March and another 75 basis points in the first half of 2009-10".
Regarding the policy rate cut, in the report it was stated that the Reserve Bank is expected to cut rates by about 50 basis points.
The report also stated the Cash Reserve Ratio, the amount of deposits banks need to keep with the RBI, is likely to be cut down next month while Statutory Liquidity Ratio is likely to be slashed by 100 basis points by March 2009.
At present, PLR of most of the public sector banks is in between 12.5 per cent and 13 per cent.
As per report the banks have also witnessed slowdown in industrial credit demand in the past few weeks.
The report said however, the slower growth, credit off take is expected to slow to 22 per cent in the current fiscal and about 15 per cent in the next fiscal.
The report stated, "We expect banks to cut their PLR by 75 basis points by March and another 75 basis points in the first half of 2009-10".
Regarding the policy rate cut, in the report it was stated that the Reserve Bank is expected to cut rates by about 50 basis points.
The report also stated the Cash Reserve Ratio, the amount of deposits banks need to keep with the RBI, is likely to be cut down next month while Statutory Liquidity Ratio is likely to be slashed by 100 basis points by March 2009.
At present, PLR of most of the public sector banks is in between 12.5 per cent and 13 per cent.
As per report the banks have also witnessed slowdown in industrial credit demand in the past few weeks.
The report said however, the slower growth, credit off take is expected to slow to 22 per cent in the current fiscal and about 15 per cent in the next fiscal.
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