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Banking News.....
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Smile Banking News..... - September 26th, 2007

hey boyz n gilrz
there r lots of new things going on in banking sector
soo stay updated

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Re: Banking News..... - September 26th, 2007

Should you ride this banking rally?

Source : Moneycontrol.com

Banking stocks have been in the limelight since August 28 on news of the merger of State Bank of Saurashtra with State Bank of India. Since the last three trading sessions the BSE Bankex is up 1.51% as compared to the Sensex, which has been up only 1.36%.



The Reserve Bank tightening of external commercial borrowings also augurs well for the sector, as the new norms will definitely divert corporate credit from international to domestic market, thus boosting the banks' profitability.



However, the markets ignored the regulator discomfort with banks setting up intermediary holding company. This move would make it difficult for ICICI Bank and SBI to attract foreign investors in their proposed holding companies, which will own their insurance and asset management companies. In the last one-week, both ICICI Bank and SBI are up 7.65% and 13.71% on the BSE respectively.



So, is it time for investors to add banking to their portfolio?
Gautam Shah, Technical Analyst, JM Financial Services, expects midcap and smallcap banking stocks to outperform. "Banking has been our favorite for a very long time. Every time there has been a correction, we have been looking at opportunities in the banking space to play the recovery. We’ve done the same in the last couple of weeks and barring an ICICI Bank, which has really been an underperformer in the recent banking rally, most frontline stocks have participated. From current levels, you will see the midcap and smallcap banking do well, which was the case 3-4 weeks back. Banking is a sector which one has to aggressively trade into and any decline should be used as a buying opportunity to add largecap and smallcap stocks," he added.
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Re: Banking News..... - September 26th, 2007

Banking to continue outperforming: Religare Sec

Source : Moneycontrol.com

Kunj Bansal, CIO of Religare Securities has a view that the market turmoil is mainly governed by international factors not domestic factors. He adds that banking as a sector has been outperformers and will continue to be outperformers, not only over a medium to long term, but also in short term.

Excerpts from the exclusive interview with Kunj Bansal:

Q: Where does the value lie now?



A: It is very difficult to specifically pinpoint where the value lies but I think the impact that we have been seeing in the market for about last fortnight is mainly governed by the international factors. There is absolutely not a single domestic factor which is affecting the market, in fact the latest ramblings in Delhi about the government’s stability and all, is finding it difficult to create a market share for itself in the market movement upward or downward. So that’s where things are and if one is looking for value, one has to still wait for some more time.



Q: Banks have reacted quite positively to what the Fed has done both on the US as well as over here. Is that a sector that you see much value and the leadership coming from that sector going ahead?



A: Banking as a sector has been outperformers and it will continue to be an outperformers, not only over a medium to long term, but also in short term like in today’s recovery we continue to see recovery happening on and off. Banking will be one sector, which will continue to see recovery. Ofcourse along side it will be falling if we see gap down opening like last week, then we will see the banking shares falling also in equal proportion.



Q: The fact that we will be looking at rallies off and on, what are you factoring in terms of an investment strategy over the next three months? How much time you think this problem would take to play out completely?



A: At the outset, it would be anybody’s guess to pinpoint the number of days or months to tell that this problem seems to be settling. But I think the one boost or the dose of injection given by Fed by reducing its discount rate is not enough. We could still see some more things, especially if we see more skeletons falling out of cupboards of some other institutions. One has to wait to be really sure before taking fresh positions in the market or before committing any more money. If one wants to start taking a call, not in today’s market but any corrections like those of last week are an opportunity to start looking at buying into the market.



Q: Apart from banks what else would you buy?



A: I think Telecomm is the another sector which looks very good to us and is beta with the market or maybe higher than market. So that’s another sector, which looks very good to us.



Q: What is fair value on the Sensex or the Nifty right now, which are the one you track more closely?



A: Fair value is more of a perception issue so I don’t think I can comment on that but as I said we see market taking some more time to stabilize in the short term.



Q: How much do you see earnings growth sustaining over the next 3 quarters of FY08 and in light of what’s happened you mentioned the US, how much bottom could this market see before it actually goes up?



A: In terms of earnings growth, I don’t think anything has changed in India because of these issues except the fact that last week we saw the news coming out that some BPOs might get affected because their clients have got into the subprime trouble. But other wise we see the earnings continuing to grow in the range of around 20% and I don’t think there is any issues there.
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Re: Banking News..... - September 29th, 2007

ICICI Bk gives Rs 15L to suicide victim's family

Ten days after being blamed for the suicide of 38-year old Prakash Sarvankar, ICICI Bank has given his family an ex-gratia payment of more than Rs 15 lakhs, reports CNBC-TV18.

Six-year old Prajakta was witness to her father being harassed by recovery agents of ICICI Bank, when he defaulted on a loan of Rs 50,000, which the bank describes as “small ticket”. Fed up of the insults, on September 17, Prakash Sarvankar hanged himself and blamed recovery agents of the ICICI Bank in his suicide note.



The incident evoked strong reactions from activists, who blamed the bank for using strong arm tactics. Now the bank has announced an ex-gratia payment to Sarvankar's family, which includes a fixed deposit, which will give them about Rs 9,500 a month and insurance of Rs 25 lakh over 20 years.



But Sarvankar's widow is still inconsolable.



“ He is not going to come back,” said Priyanka Sarvankar, Prakash Sarvankar's widow.



Consumer organisations welcome the move, but demand stricter checks and balances on banks.



"Even the senior most official, in this case the CEO of the bank, is responsible for this,” said Vinod Chand, General Secretary, Credit Consumers Association of India.



The payment may be an unusual move for, but police say that it will not affect investigations against the bank.



For now four men are under arrest for abetting Sarvankar's suicide. One of them is the owner of the recovery agency, and another, Kailash Choudhary, is an employee of I-Process. The police are investigating whether senior officials of the bank are responsible as well.



An inquiry has been launched into that alleged incident of harassment. The RBI backed Banking Codes and Standards Board of India has stepped in. According to sources, BCSBI has shot off a letter to ICICI Bank asking if it had done adequate due diligence before appointing the collection agency.



BCSBI also asked ICICI Bank to spell out the action taken against the agency and produce details of tangible evidence, which show that such incidents do not recur.

Sources say the Bank has in its reply, assured due diligence while appointing collection agents. It has also said none of those arrested in this case are employees of ICICI Bank and that it has suspended all business with the accused agency.
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Re: Banking News..... - September 29th, 2007

ICICI Group signs MoU with Manipal Academy

ICICI GROUP signed a Memorandum of Understanding (MoU) with Manipal Academy of Banking and Insurance to expand the horizons of learning by offering specialized banking and insurance skill sets to graduates. The MoU was signed by Mr. K. V. Kamath, Managing Director & CEO, ICICI Bank and Dr. Ramdas M Pai, Chairman, Manipal Education & Medical Group.



The ICICI Manipal Academy will expand the pool of industry ready resources and provide inclusive employment opportunity to capable, young graduates. The training offered by the academy will make a difference to the customers by ushering in first day first hour productivity. As a part of the course ICICI Group recently announced the “Probationary Officer Programme”, a first of its kind, nation wide initiative to attract bright graduates to pursue a career in banking and financial services. The one year residential program is aimed to acculturize the students into ICICI Group ethos and work ethics. Post the training the students will be awarded a Post Graduate Diploma in Banking & Insurance and absorbed in managerial position at ICICI group. The initiative has received an encouraging response from students across the country.



Speaking at the occasion Mr. K. V. Kamath, Managing Director & CEO, ICICI Bank, said, “To fulfill India's global aspiration and sustain the growth trajectory its imperative that industry invests in preparing industry- ready talent. A high proportion of highly capable and able Indians have no means to quality specialized education and are hence excluded from employment with top brands in the country. This initiative of ours with Manipal endeavors to fulfill the dreams of many such young Indians and also to expand the industry ready talent pool to deliver high quality customer experience. “



Speaking at the occasion Dr.Ramdas M Pai Chairman, Manipal Education & Medical Group said, “For all of us at Manipal Education this event is an affirmation of both our values and vision, and the trust that ICICI has chosen to place on us. One of the prime drivers of the Indian economic growth engine is the services sector. I am truly glad that we at Manipal Education are getting this significant opportunity to play a role in accelerating the growth of the banking and insurance industry through its undisputed leader – ICICI Group.”



Sourced From: Brand Comm
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Re: Banking News..... - September 30th, 2007

Banks under fire on misconduct of their recovery agents

Source : Moneycontrol.com

An inquiry has been launched into that alleged incident of harassment. The heat is turning on banks on misconduct of their recovery agents. The RBI backed Banking Codes and Standards Board of India or BCSBI has stepped in after the recent alleged suicide by an ICICI Bank customer Prakash Sarvankar in Mumbai. Sarvankar had alleged in his suicide note he had been driven to take the extreme step after alleged threats and harassment by the bank appointed recovery agents. Police has already made arrests in the matter and is probing the death. According to sources, BCSBI has shot off a letter to ICICI bank asking if it had done adequate due diligence before appointing the collection agency. And whether or not it had entered into a written contract with it that binds it to the "Code of Banks' commitment to customers".



BCSBI has also asked ICICI Bank to spell out the action taken against the agency and produce details of tangible evidence, which show that such incidents do not recur. Sources say the bank has in its reply assured due diligence while appointing Collection agents. It has also said none of those arrested in this case are employees of ICICI Bank and that it has suspended all business with the accused agency.



BCSBI is going beyond the recent case. It has sent a letter to all banks directing them to lay down a written and well-defined recovery procedure to their customers at the time of sanctioning a loan. Banks are already bound by a code that prevents them from using force to recover dues.





CNBC TV18'S economic crime show ‘Uncovered’ had recently exposed rampant abuse of norms for recovery and shown how brazenly muscle power and abuse is being used on customers. At that time, before the recent ICICI bank customer incident, BCSBI chairman KJ Udeshi had assured action against wrongful recovery procedures by banks.




While the law is already in place, and places the onus on the board of a bank to ensure strict compliance, cases of harassment by recovery agents, only seem to be growing. It remains to be seen whether the recent crackdown by BCSBI stems this rise.
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Re: Banking News..... - September 30th, 2007

SBI, UTI MF & LIC to manage Natl Invst Fund

Source : Moneycontrol.com

SBI and UTI Mutual Fund have bagged the lion's share of the pension-fund kitty. They, alongwith LIC, have been named fund managers for the new pension system and the National Investment Fund, reports CNBC-TV18.



Rs 1,400 crore is how much UTI MF and SBI each will manage, as fund managers to the National Investment Fund and the new pension scheme.



LIC, which has also been appointed fund manager for the schemes, will manage assets worth Rs 200 crore.



CNBC-TV18 has learnt that of the Rs 1,000 crore under the National Investment Fund, UTI MF will manage 60%, SBI 30% and LIC 10%.



On the other hand, of the Rs 2,000 crore under the new pension scheme, SBI will manage 55% , UTI MF 40% and LIC 5%.



SBI, UTI MF and LIC were shortlisted as fund managers by PFRDA in July. They will have to set up separate companies to manage the funds.



The allocation of funds has been decided on the basis of the fund management fee that each fund manager will charge. Most of the funds in the new pension scheme will be invested in debt and only 10-15% in equity.
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Re: Banking News..... - October 2nd, 2007

Banks split over rates: SBI against the rest

Source:economic times

MUMBAI: A pressure point is building in the world of Indian banks. The outcome will decide how much you get for deposits or pay for loans in the coming days. The interest rate uncertainty has split the bankers’ club into two: Big Daddy State Bank of India (SBI) versus the rest.

While most banks are inclined to cut interest rate on deposits, SBI, country’s largest bank in terms of assets and branches, is in no mood to do so. Having lost market share to aggressive private and foreign banks in the past few years, SBI now wants to regain lost ground at any cost. It is willing to pay a higher rate to mobilise more deposits and increase market share.

“We have opened the tap; it’s difficult to close it,” said SBI chairman OP Bhatt said at a bankers’ meeting last week at the Reserve Bank of India (RBI). With the biggest player taking such an aggressive stand, other banks are finding it difficult to lower deposit rates.

The biggest private bank and the second biggest player, ICICI Bank, is keeping its cards close to its chest, though its CEO KV Kamath said that RBI should consider a rate cut in the wake of weak IIP numbers. Currently, SBI is offering a maximum of 9-9.5% on bulk deposits and 9.25% on the special retail deposit scheme.
This has forced other banks to offer at least 9% on deposits. MBN Rao, chairman of Canara Bank and chief of Indian Banks’ Association said that banks are unable to lower deposits rates since competition for resources is still quite strong. In a somewhat lighter vein, he also pointed out at the meeting that it is difficult to lower rates, since the Big Daddy is offering 9%.

Responding to this, Mr Bhatt expressed his inability to lower rates on the grounds that SBI has launched various deposit schemes for retail customers and these can’t be closed abruptly. But more significantly, SBI is eyeing a bigger market pie.

SBI has mobilised Rs 50,000 crore fresh deposits since March. This has helped the bank increase its market share from 14.83% by end-March 2007 to 15.54% till mid-August 2007.

However, the pressure to cut rates may intensify, with the country’s biggest mortgage lender HDFC announcing its decision to cut lending rates this week. In fact, HDFC had plans to cut rates earlier in the year, but had to drop the idea after RBI hiked the cash reserve ratio.

The interest rate issue also cropped up in a recent IBA meeting. ICICI Bank CEO K V Kamath, who made a rare appearance, had said that high interest rates may hurt growth and eventually result in defaults among borrowers. At the meeting some bankers said that interest rates on loans can be lowered only if larger banks cut rates which will prompt other banks to follow the suit.
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Re: Banking News..... - October 2nd, 2007

Banks wake up to the art of winning retail customers

Source:economic times

NEW DELHI: Banks are reaching out to you. This is clearly reflecting in their ad spends. Even if service may not be a differentiating factor, non-rational factors are influencing customer decisions, according to admen. Banking sector seems to be finally learning the art of selling to retail customers.

The sector has seen a significant increase in its ad spend, critical in reaching out to customers, over last two years. Aggregate spend for about 80 banks has grown at about 56% CAGR during 2005-2007.

Partha Sinha, regional strategist, Asia Pacific, Publicis, which handles the Citibank account, told ET, “Traditionally bankers did not engage in brand building. It was perceived as waste of time. Once all products were on the same technological platform, there was very little to differentiate, they became comparable.

It is no longer a function of product efficiency because there is a fair degree of parity amongst products offered by banks. The surge in ad spends in the past five years has been because hard core bankers finally are buying into the concept. This has been the biggest change.”

Growth is even higher at 74% for top ten spenders. However, most of the growth was seen in fiscal year 2006. Further, it is still not broad based, with top ten spenders accounting for 75% of total spends, against a share of 45% in operating profit. Further, their share has gone up from 60% in 2005.

There are only three public sector banks present among the top ten. Further, ad spends for these three banks have risen by only 33% against 56% growth overall. Their share in spends of top ten banks stands at only 15% against 57% share in operating profit.

“For state-owned banks there is an implicit acceptance about their lack of efficiency. It is evident in their body language, and that is precisely reflected in their communication,” a senior advertising executive associated with banks said. Even after the impressive growth, the spend is still small at 0.95%, as a percent of operating profit.

For Citibank, the top spender, it account for 7.8% of operating profit, whereas it is 23.4% for American Express. “The bottomline is relevance. It is clear that relationships with customers are not purely transactional. Customers preferring a particular bank, can have much to do with non-rational, non-transactional processes,” Mr Sinha said.
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Re: Banking News..... - October 2nd, 2007

ICICI catches the PE buzz, to roll out FoF

Source:economic times

BANGALORE/MUMBAI: ICICI Bank is leveraging its size and international clout to grab a big chunk of private equity investments, by launching a fund of funds — the first by any Indian entity. The country’s second-largest bank, which has successfully sold the ICICI Bank story abroad by raising $11 billion through debt and equity during the current fiscal, is seeing an unsatiated appetite for Indian paper.

Although the size is yet to be finalised, the bank is looking at eventually a multi-billion dollar fund to invest in other India-related funds — an area which has been the domain of multinational institutions. FoFs are essentially investor groups that invest in private equity funds in order to provide investors with a lower-risk product through exposure to a large number of investment vehicles across sectors and even geographies. It would also help investors to route investments in some funds, which could be closed to them.

An ICICI Bank official confirmed the move, which is still in its early stages, adding that the fund will be launched by ICICI International Mauritius, a subsidiary of the bank. The Mauritius subsidiary is an investment and fund management company of the group. Both the $2 billion infrastructure fund, which is in the pipeline, and the fund of funds are being launched by the same entity.

The fund of funds will initially target at investing in those private equity funds which have an India focus. Sources said there is a lot of interest among international investors in India-related paper. The bank is currently in talks with a host of potential investors and funds.

Though bank sources said it would be very early stage to comment on the size of the issue, industry officials said the bank is likely to start with an around $500 million fund and expand it to around $2.5 billion. The fund is likely to have a multiple closing. In other words, the subscription will be closed after it hits various subscription milestones and reopen after the initial funds are invested and new avenues become available.

Sources also added that the fund is likely to be launched either by the end of 2007 or by the start of the next calendar year. As far as the bank is concerned, it will earn fees and will also be able to forge better relationships with these investors. The investors in the fund would be a mix of high net-worth individuals, corporates and institutions.

The fund of funds provides an investor with access to a range of fund managers and investment schemes. The FoF is said to be already in the market for raising funds and is also said to be scouting around for investments. If market sources are to be believed, ICICI Bank is likely to kick off the FoF with five-six investments and appears to be in talks for exposure in IDFC’s upcoming $400 million fund and Baring’s next India Fund.

It is also seen eyeing investments in Ashok Wadhwa and Rajiv Aggarwal-floated $100-million Ambit Pragma PE and CDC-sponsored Aureos India Capital, which is currently operating $100 million-plus fund. However, these could not be confirmed with individual fund houses.

ICICI Bank is raising the FoF at a time when Capvent and Thomas Weisel are also reportedly showing up with FOFs estimated at $500 million and $300 million, respectively. ICICI Bank’s FoF will begin with investing in mid-sized India-focused PEs, but could unfurl a play in the global PE fund-raising market later. Sources said ICICI could invest around $20-$30 million in PEs like Aureos and Ambit Pragma, while its exposure in IDFC could be in the $50-$100 million bracket.

According to UK-based Private Equity Intelligence, FoFs accounted for nearly 14% of the commitments made to PEs globally in 2006. The major investors in PEs are public pension funds, banks and financial institutions. Private equity investments touched $135 billion in 2005 and are seen growing at double digits with Asia-Pacific accounting for over 12% of the investments and about 8% of the fund raised globally.
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