The branch manager and an accountant of a nationalised bank have been kidnapped from Jamui district of Bihar, a police officer said today.
The kidnappers have reportedly demanded a ransom of Rs 20 lakh for the duo's release, he said. "We got information that the two bank officials were kidnapped last night, but their family members are not coming forth to the police. They are not sharing information about the ransom calls with police, perhaps out of fear," said Jhajha Station House Officer (SHO), Neeraj Kumar.
Kumar added that police found Paswan's motorcycle "at a deserted place near Shatighat cremation ground, in the Jhajha police station area". The branch manager, identified as Om Prakash Paswan, and accountant Ranjeet Kumar were posted at Canara Bank's Rajla branch in the district, around 200-km from state capital Patna.
Police said efforts are being made to ascertain whether it was criminals or Maoists who have kidnapped the bank officials. According to intelligence inputs received by them, motorcycle-borne persons kidnapped the duo while they were returning home. Raids are being conducted since last night to trace the duo and nab the kidnappers with Jamui SP Upendra Prasad Singh camping in the area to lead the efforts.
Bank stocks bear the brunt of market ire-FE
Bank Nifty was the biggest sectoral loser on Tuesday as the Reserve Bank of India (RBI) left the key rates unchanged. Analysts say status-quo on key rates combined with deterioration of asset quality reported by banks in Q3 triggered the profit-booking.
“Bank Nifty was outperforming most stocks and indices primarily led by private banks — ICICI Bank, Axis Bank and HDFC Bank. Meanwhile, PSU banks, which account for a significant proportion of Bank Nifty, were underperforming the pack. Bank Nifty had become overbought led by thin breadth, where only three private banks contributed to large part of the gains,” said Sahil Kapoor, AVP, Edelweiss Retail Capital Markets.
On Tuesday, Bank Nifty closed 2.4% lower to 19,382.95 points, while NSE’s Nifty ended 0.5% lower at 8,756.55 points. Among Bank Nifty scrips, PNB was the biggest loser after the bank’s asset quality showed further deterioration in Q3FY15. The bank’s gross NPAs rose 32 basis points q-o-q, while the lender’s net profit improved 2.5% y-o-y to R774.56 crore.
Among other Bank Nifty stocks, Axis Bank (-5.1%), Bank of India (-4.7%) and Canara Bank (-3.9%) were the worst hit.
On Tuesday, the RBI Governor Raghuram Rajan cut the Statutory Liquidity Ratio (SLR) by 50 basis points to 21.5%. Further, to encourage revival of stalled projects, the central bank said that in cases where a new management is taking over, the banks can extend the date of commencement of commercial operations (DCCO) without adversely affecting the asset’s classification.
Analysts believe that these measures would have a positive impact on the banks. “Banks can now switch incremental deposits to credit rather than SLR investment. The former has better blended yield over the latter. Moreover, change in asset classification norms for restructured assets where management of the company, whose asset is getting restructured, is under change, is likely to reduce provisioning requirement. This would help both the private and public sector banks,” said Sujan Hajra, chief economist at Anand Rathi Financial Services.
Last month, RBI surprised markets with a rate cut of 25 basis points (bps). Analysts feel another 25 bps cut in March cannot be ruled out. “At the very minimum, the RBI is likely to wait till the Union Budget and if the fiscal deficit numbers (3.6% of GDP or below for FY16) and planned steps to cut the deficit looks encouraging (cut in revenue rather than capital spending) another 25 bps rate cut in early Mar’15 cannot be ruled out,” Hajra added.
Over the last 7 sessions, Bank Nifty has lost 5.7% as banks’ Q3 numbers have disappointed the Street. ICICI Bank has reported a rise in restructured loans and gross NPAs. The lender saw restructured loans plus gross NPAs in Q3 rise to 6.7% of total advances, as against 6.2% in previous quarter. Bank of Baroda saw its net profit decline 68.1% R334 crore in Q3 due to higher provisioning. Bank Nifty closed at its lifetime high on January 27.
“We expect Bank Nifty to remain underpressure as private banks undergo a phase of correction for next few days,” Kapoor added.
Raghuram Rajan’s RBI keeps repo rate steady at 7.75 pct ahead of Budget; cuts SLR by 50 bps-DNA
Disappointing markets and the industry, RBI Governor Raghuram Rajan today left interest rate unchanged, saying there are no developments to warrant further easing since the unscheduled rate cut about a fortnight ago.
RBI kept the benchmark repurchase rate at 7.75 per cent, but cut the statutory liquidity ratio (SLR) – the amount of funds that lenders must set aside – by 50 basis points to 21.5 per cent of deposits from February 7, a move that will help banks to increase lending.
Rajan also hoped that more banks will pass on the rate cut announced last month to the borrowers. Only a few banks had lowered their rates after the cut.
RBI cuts SLR by 50 basis points to 21.5 pct: Highlights
Announcing the sixth bi-monthly monetary policy review, Rajan said: “Given that there have been no substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it is appropriate for the Reserve Bank of India to await them and maintain the current interest rate stance.”
Stock markets fell sharply soon after the policy was announced, with banking stocks hit the worst.
RBI announced a slew of initiatives to develop markets, including allowing foreign institutional investors to re-invest government bond coupons even when their investment limits are exhausted.
To help exports sector, which of late has been struggling following more headwinds in the global economy, it decided to replace export credit refinance facility with the provision of system level liquidity with effect from February 7.
The Central bank reiterated that it wanted more comfort on inflation front and “high-quality fiscal consolidation” as well as signals from Finance Minister Arun Jaitley’s first full year budget, due at month end.
Rajan said inflation was likely to be around the target level of 6 per cent by January 2016 but flagged monsoon, oil prices and “the unlikely possibility of significant fiscal slippage” as upside risks.
Current account deficit was projected at 1.3 per cent of GDP this fiscal and even lower in the next, primarily on slumping international oil prices.
Rajan, who made inflation-fighting a priority since taking over 17 months ago, had sprung a surprise on January 15 when he cut interest rates by 25 basis points in an unscheduled review.
Later, talking to reporters, Rajan said the central bank will be watching the forthcoming data on inflation and GDP. The first bi-monthly monetary policy for financial year 2015-16 is scheduled on April 7.
He also said that the government has the intent of producing a solid budget. Finance Minister Arun Jaitley will unveil the first full-fledged budget of the new government on February 28.
The monetary policy document said that despite fiscal deficit having touched 99 per cent of the target by November itself, RBI was confident that the government will not miss the budgeted 4.1 per cent target.
On the surprise 25 bps rate cut on January 15, Rajan said the decision was led by falling inflationary expectations and data on weak commodity prices and muted rural wage growth.
“Having committed in public statements to initiate a change in the monetary policy stance as soon as incoming data permitted, the Reserve Bank cut the policy rate on January 15,” he added.
Referring to economic growth, RBI said that though revision in the base year for GDP and calculation methods will mean some revision in GDP growth numbers for 2014-15 as well as in the forecasts, growth expectations should be tempered.
RBI estimates the GDP (under old base year) for current fiscal at 5.5 per cent and 6.5 per cent in 2015-16.
On payments banks and small finance banks as differentiated banks, RBI said it has received 72 applications for small finance banks and 41 applications for payments banks up to the deadline for submission yesterday.
Two External Advisory Committees (EACs) will evaluate the applications received and thereafter make their recommendations to the RBI.
The central bank also increased the eligibility limit for foreign exchange remittances under the Liberalised Remittance Scheme (LRS) to USD 250,000 per person per year from the earlier USD 125,000.
RBI keeps key rate unchanged
(Reuters) The Reserve Bank of India (RBI) on Tuesday held interest rates steady at 7.75 percent after easing monetary policy just three weeks ago, leaving its next move probably until after the government presents its Union Budget at the end of this month.
Instead, the Reserve Bank of India cut the statutory liquidity ratio (SLR) – or the amount of bonds that lenders must set aside – by 50 basis points to 21.5 percent of deposits from Feb. 7, prodding banks to increase lending.
“Banks should use this headroom to increase their lending to productive sectors on competitive terms so as to support investment and growth,” the RBI said in a statement.
The RBI also announced a slew of initiatives to develop markets, including allowing foreign institutional investors to re-invest government bond coupons even when their investment limits are exhausted.
Most economists polled by Reuters had expected the Reserve Bank of India to keep its repo policy rate steady, and reduce rates later so long as the budget, due to be unveiled by Finance Minister Arun Jaitley on Feb. 28, does not disappoint in terms of reducing the fiscal deficit.
The RBI said in its statement that it wanted more comfort that inflation would continue to ease and that it would await action from the government regarding the country’s finances.
“Given that there have been no substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it is appropriate for the Reserve Bank to await them and maintain the current interest stance,” the central bank said.
Comforted by falling world oil prices and inflation slowing, the RBI had surprised investors with 25 basis points cut in the repo rate on Jan. 15, even though investors were expecting the central bank to embark on an easing cycle at some point during the early months of the year.
The RBI clearly saw little point in waiting any longer to reduce borrowing costs in an economy that was struggling to gather momentum.
Markets are pricing in more interest rate cuts over the rest of the year given inflation is expected to remain subdued on the back of a plunge in global crude prices and bigger-than-expected falls in domestic vegetable and fruit prices.
Consumer prices rose 5 per cent in December, well within the RBI target of 6 per cent by January 2016.
Highlights: RBI’s Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:
* RBI keeps the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75 per cent;
* RBI keeps the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL);
* RBI reduces the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.0 per cent to 21.5 per cent of their NDTL with effect from the fortnight beginning February 7, 2015;
* RBI replaces the export credit refinance (ECR) facility with the provision of system level liquidity with effect from February 7, 2015;
* RBI continues to provide liquidity under overnight repos of 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and
* RBI continues with daily variable rate term repo and reverse repo auctions to smooth liquidity.
Consequently, the reverse repo rate under the LAF will remain unchanged at 6.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.75 per cent.
My Views on above news are given below:
I praise RBI Governor Mr. Raghuram Rajan that once again he has proved by action that he is not going to change his idea of keeping interest rate intact in the interest of economic health of the country though he has been facing severe and consistent pressure from politicians and corporate lobby to reduce interest rate . He understands well that any more reduction in interest rate will force banks to reduce rate on deposits which will have bad impact on savings rate and investment capacity of Government of India. It is also made clear that banks have enough liquidity in hand and if they want , they can deliver more and more credit to needy persons and companies. Further by reducing SLR , RBI has given additional liquidity in the hands of banks.
He has taken a good step to reintroduce long term deposit to finance long term infrastructure projects. It will help banks in getting rid of asset liability mismatch. Past record of PS banks will prove that they indulged in long term lending by using short term deposits just to please the then UPA government. It is lending to infrastructure made by PS banks under the orders of previous Finance Minister which has added pain to already ailing banks. Further to add fuel to fire, money lent by PS banks to business houses are not coming back in time with speed of demand made by banks. It is therefore neither interest rate nor liquidity is to be blamed for slower credit growth , but it is purely and surely fear of default and lack of enough expertise in branches of public sector banks to assess loan proposals which is responsible for slower credit growth during last few quarters.
It is the record of banks that they always act as per whims of ministers in power instead of sticking to best banking principles for survival. They use to take credit from ministers by achieving targets by hook or by crooks and get elevation in post and get incentives from GOI. PS banks prevail upon all branch heads for achievement of their targets but do not think it wise and necessary to ensure quality lending.
RBI Governor has proved by his action that mere reduction of interest is not going to help in growth of credit portfolio of banks until government makes other parameters conducive for credit growth and until banks develop enough expertise at field level to increase real and genuine credit growth. He has proved by his action that window dressing methods adopted by bankers during last few years to artificially show higher credit growth will not serve any interest in credit growth or in GDP growth and neither it is going to help in containing growth in Non performing assets of PS banks.
GOI will have to activate administrative machineries to give hassle free statutory clearances quickly and without giving much trouble to business men who desire to enter into manufacturing activities and it is the duty of GOI to help banks in recovering money from defaulters by making legal set up more active and effective .I salute Mr. Rajan for his boldness and proactive steps he has been taking for last one year. Banks can achieve advance target under pressure but cannot recover the money from defaulters under existing legal set up even if pressure from the government is increased to any extent.
It is also true that top officials of PS banks neither gave value to credit quality nor they gave required time and importance for recovery of loans from defaulters. Further it is also true that neither RBI nor other agencies like MOF, Audit teams and vigilance team took honest efforts to stop bankers indulging in bad lending and bad human resource management.
But during last few months , banks as well as other agencies have become somewhat serious on recovery and hence they got little success in containing fresh slippages. But real change will be visible only when they stick to quality lending and stop focusing on achievement of target only . Further real change will occur only when GOI get success in making its own machineries active and effective in real sense , not confined to only talks. They have to walk the talk which they do in public domain .
Lastly I have no hesitation in saying that due to faulty management by Chiefs of PS banks, by RBI and by GOI, these banks have suffered huge loss and they have accumulated as much as ten lac crores of bad debts . Now these clever officials are denying respectable wage hike to bank staff who are nowhere at fault in erosion in profitability or in rise in bad debts.
Bank staff on 4-day strike Feb 25-28, indefinite from March 16-BS
Talks between Union & IBA at Mumbai today failed
Bank Employees are threatened to go on a strike for four days from February 25-28, followed by an indefinite strike from March 16th.
C H Venkatachalam, All India Bank Employees Association (AIBEA) said that in today's talks at IBA offered only 0.5 per cent to 13 per cent hike in wage, while Unions are asking for 19.5 per cent. Improvement which is not satisfactory. UFBU decides to revive the strike programme.
The UFBU includes AIBEA, National Confederation of Bank Employees, Bank Employees Federation of India, Indian National Bank Employees Federation, Indian National Bank Officers Congress, National Organisation of Bank Workers, All India Bank Officers Association and National Organisation of Bank Officers.
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