The Centre has elevated as many as nine general managers to the post of executive directors in various public sector banks (PSBs).
The nine general managers who have been appointed as executive directors are
- Ravindra Marathe ( from Bank of Baroda to Bank of India);
- K.V.R. Moorthy (Bank of Baroda);
- Harideesh Kumar ( from Vijaya Bank to Canara Bank);
- Kharat Kishore Piraji (Bank of Baroda to Union Bank);
- N.K.Sahoo (from Canara Bank to Allahabad Bank);
- Ravishankar Pandey (from Union Bank to Syndicate Bank);
- Rishab Lodha ( from Union Bank to Central Bank of India);
- Pawan Kumar Bajaj (from Bank of India to Indian Overseas Bank);
- and Charan Singh (Bank of India).
A panel headed by the Reserve Bank of India Governor Raghuram Rajan had interviewed 35 candidates on December 25 last year in New Delhi.
Interestingly, all the 33 General managers who had appeared for the interviews a year ago, again attended the interview in December also.
More pressure on banks to cut interest rates
Hindu Business Line
After 50 basis points cut in the policy rates, banks are expected to lower their base rate soon. This issue among others was discussed in a review meeting between the Finance Ministry and Bank Chiefs. The meeting was chaired by the Finance Minister Arun Jaitley and attended by the Minister of State for Finance Jayant Sinha among others.
“With regard to cut in base rate by banks let’s wait and see how that plays out. We have a very competitive financial services industry and we will see once certain banks starts to take action we will see how it unfolds,” Sinha told reporters after the meeting. The RBI cut policy rates twice by 25 basis points each first in January and the latest one on a day after budget.
However, only two public sector banks, United Bank of India and Union Bank of India cut the base rate in January while only State Bank of Travancore has lowered the base rate now.
Banks have indicated that they will take a call next month. Sinha also said that during the meeting the Government tried to understand where the banks stood on this and the banks pointed out what they have already done. “As far as retail loans are concerned they have already brought down rates a fair bit,” he said.
The meeting reviewed performance of all the 27 public sector banks for quarter ending December 27 besides budget announcements. “Obviously we discussed capital raising plans, what we have agreed to do is that we will get into those in more detail with each individual bank. You must understand that there are 27 public sector banks at this meeting...each banks situation is different, Each bank for instance has different shareholding from the government, has different sort of valuation multiples, price to book etc,” he said.
Both, the Finance Ministry and Banks discussed the NPA (non performing assets or bad debts) issue plus the situation in stalled projects. “There are a variety of measures that we are planning to undertake as far as stalled projects are concerned. And also we are thinking about the ways in which resolution of the NPA situation can be done more speedily,” he said.
Talking about consolidation, he said that the Government’s approach, after ‘Gyan Sangam’ ( a meeting between the PM and Banks in Pune in January), has been to find whether consolidation or good or any of its alternative. “So that's really what banks are working on now as to figure out for each of them individually what are in fact best strategies for them,” he said.
Man poses as bank official, cheats store owner of Rs 25K-Times of India
CHENNAI: Police have launched a search for a conman who posed as a bank official and swindled Rs 25,000 from the owner of a provision store in Velachery on Tuesday.Police said the conman on Tuesday afternoon made a telephone call to the provision store owner, Selvarajan, a resident of Ram Nagar in Velachery, who required change for his transactions. Claiming to be an official at a bank in the neighbourhood, he asked Selvarajan to send one of his employees to the bank. He promised to provide Rs 24,000 in change for a commission of Rs 1,000.
"The cheat claimed that he was going out to meet one of his customers and told Selvarajan to instruct his employee to meet him just outside the bank," a police officer said.
Selvarajan sent one of his workers, Murugan, to the bank with Rs 25,000 in notes of large denomination and asked him to collect coins worth Rs 24,000 in exchange. In a police complaint Selvarajan lodged later, he said the conman was waiting for Murugan near the bank. He intercepted Murugan, took the cash from him and gave him two gunny bags in which he said was Rs 24,000 in coins.
"The shop owner realised that the conman had cheated him only when Murugan returned and he opened the gunny bags," the officer said. "He found stones and sand in the bags instead of coins."
Selvarajan called up the bank and inquired about the person who offered to give him change but bank officials denied that anyone matching his description worked in that branch.
The Velachery police registered a case on Selvarajan's complaint and have launched a search for the conman. They gathered security camera footage from the bank in an attempt to identity the culprit. Investigators also questioned Murugan about the sequence of events and got a detailed description of the cheat.
"The conman is likely to have studied Selvarajan's practice of exchanging cash for coins at the bank," the officer said. "He called the shop owner on his land line and cheated him without them even meeting."
Ensure high standard in outsourced services: RBI to banks -Economic Times
MUMBAI: The RBI today asked banks to ensure high standard of care while outsourcing financial services and directed them to put in place a robust system of internal audit of all such activities.
"Banks have been advised to take steps to ensure that the service provider employs the same high standard of care in performing the services as would be employed by the banks, if the activities were conducted within the banks and not outsourced," the RBI said in a notification.
Reiterating its stance, the central bank said that outsourcing of any activity by the bank does not diminish its obligations and those of its Board and senior management who have the ultimate responsibility for the outsourced activity.
"Banks should not engage in outsourcing that would result in their internal control, business conduct or reputation being compromised or weakened," the RBI further said.
The central bank said instances of non adherence with the guidelines have been observed
with regard to sub-contracting by the primary outsourced vendors and the engagement of sub-contractors by the outsourced service providers without the prior consent of the bank.
In certain cases, like outsourcing of cash management, banks should ensure that reconciliation of transactions between the bank and the service provider are carried out in a timely manner, the notification said.
The RBI also asked banks to put in place a robust system
In certain cases, like outsourcing of cash management, banks should ensure that reconciliation of transactions between the bank and the service provider are carried out in a timely manner, the notification said.
The RBI also asked banks to put in place a robust system
of internal audit of all outsourced activities which should also be monitored by the Audit Committee of the Board of the bank.
Read more at:http://economictimes.indiatimes.com/articleshow/46532908.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Sick PSU banks can put you in trouble, IMF warns India
Report points out corporate vulnerability indicators remain elevated-Business Standard
A further weakening in balance sheets of banks and companies might pose a risk to the nascent economic recovery, the International Monetary Fund’s (IMF) staff report on India has said.
In the past few years, there has been a sharp deterioration in the asset quality of banks, especially the public-sector ones, which account for three quarters of assets in India’s banking system. Part of this deterioration, the report points out, is because of the banking system’s high exposure to infrastructure projects, many of which continue to face regulatory and legal hurdles.
The report estimates public-sector banks’ (PSBs’) non-performing assets (NPAs) in 2013-14 at 4.7 per cent of total advances. This is higher than the NPAs of the entire banking system which rose to 4.1 per cent in the year. Further, at 7.2 per cent as of March 2014, PSBs’ restructured loans are estimated to be significantly higher than the entire banking system’s 5.9 per cent. This has resulted in a sharp slowdown in credit outflow to industry.
Further, a deterioration in corporate balance sheets has limited the space with industry for fresh investments. The report points out that corporate vulnerability indicators remain elevated, with the share of loss-making companies and those with leverage ratios over two increasing to 22.9 per cent and 31.4 per cent, respectively, over the previous year.
So, to kick-start the investment cycle, the Fund sees improving banks’ asset quality and maintaining financial stability as key. The report recommends strengthening regulation for banks’ credit quality classification; increasing provisioning, particularly for all types of restructured assets; and bolstering capital buffers at PSBs which is critical to ensuring banks are able to support the economic recovery.
But here lies the problem. According to the Fund’s analysis, if the government were to provide the full amount of capital required by banks, it would cost between 1.2 per cent and 1.7 per cent of the country’s estimated gross domestic product in 2018-19. Given its limited fiscal space, however, the government is unlikely to be able to provide the required capital. While many had earlier hoped the Budget for 2015-16 would provide some clarity on this issue, there was no announcement on lowering of government stake in PSBs and allowing these banks to directly raise capital from the markets.
Among other measures the report proposes for improving banks’ debt-recovery mechanism by providing incentives for swiftly dealing with delinquent borrowers and promoters, measures to enhance the corporate bond market in India, and reworking the financial regulatory architecture on the basis of the recommendations of the Financial Sector Legislative Reform Commission (FSLRC). The Budget has announced some measures in line with these recommendations. It has proposed a new bankruptcy law likely to help in debt recovery, and a public debt management agency likely to help create a more vibrant bond market, besides giving indications on introduction of the Indian Financial Code.
In the past few years, there has been a sharp deterioration in the asset quality of banks, especially the public-sector ones, which account for three quarters of assets in India’s banking system. Part of this deterioration, the report points out, is because of the banking system’s high exposure to infrastructure projects, many of which continue to face regulatory and legal hurdles.
The report estimates public-sector banks’ (PSBs’) non-performing assets (NPAs) in 2013-14 at 4.7 per cent of total advances. This is higher than the NPAs of the entire banking system which rose to 4.1 per cent in the year. Further, at 7.2 per cent as of March 2014, PSBs’ restructured loans are estimated to be significantly higher than the entire banking system’s 5.9 per cent. This has resulted in a sharp slowdown in credit outflow to industry.
Further, a deterioration in corporate balance sheets has limited the space with industry for fresh investments. The report points out that corporate vulnerability indicators remain elevated, with the share of loss-making companies and those with leverage ratios over two increasing to 22.9 per cent and 31.4 per cent, respectively, over the previous year.
So, to kick-start the investment cycle, the Fund sees improving banks’ asset quality and maintaining financial stability as key. The report recommends strengthening regulation for banks’ credit quality classification; increasing provisioning, particularly for all types of restructured assets; and bolstering capital buffers at PSBs which is critical to ensuring banks are able to support the economic recovery.
But here lies the problem. According to the Fund’s analysis, if the government were to provide the full amount of capital required by banks, it would cost between 1.2 per cent and 1.7 per cent of the country’s estimated gross domestic product in 2018-19. Given its limited fiscal space, however, the government is unlikely to be able to provide the required capital. While many had earlier hoped the Budget for 2015-16 would provide some clarity on this issue, there was no announcement on lowering of government stake in PSBs and allowing these banks to directly raise capital from the markets.
Among other measures the report proposes for improving banks’ debt-recovery mechanism by providing incentives for swiftly dealing with delinquent borrowers and promoters, measures to enhance the corporate bond market in India, and reworking the financial regulatory architecture on the basis of the recommendations of the Financial Sector Legislative Reform Commission (FSLRC). The Budget has announced some measures in line with these recommendations. It has proposed a new bankruptcy law likely to help in debt recovery, and a public debt management agency likely to help create a more vibrant bond market, besides giving indications on introduction of the Indian Financial Code.
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