No clear info with RBI on Re 1's different title: RTI reply

The Reserve Bank of India (RBI) does not have a clear guideline regarding the printing of different titles on the currency note of Re 1 and that of other denominations, reply to an RTI query has revealed.

The Re 1 note bears the title 'Government of India', while other currency notes bear the title 'Guarantee by the Central Government'.

Activist Manoranjan Roy had filed an RTI query with the RBI recently seeking gazette copy or any other legal document with respect to the two different titles printed on Re 1 note and other notes.

In its reply, RBI's Central Public Information Officer Uma Shankar said, "The information sought is not available with us."

Notes of Re 1 bear the signature of Secretary, Ministry of Finance, while currency notes of all denominations carry signature of the Governor of RBI.

Roy said that the discrepancy in the title is ambiguous and, moreover, it seems like the RBI was doing its job "without clear-cut guidelines".

The activist also said the RBI Governor's signature on the currency notes, which are in both Hindi and English, should only be in one language. "These are definitely not part of security features on a currency note but definitely creates unnecessary ambiguity. It is time that the Finance Ministry take a note of it."

Banking governance will see reform: FM Arun Jaitley

Finance minister Arun Jaitley on Tuesday met representatives of banks, financial institutions and social sector groups as part of pre-budget consultative meetings with various stakeholders. He said focus would continue on governance reforms in banking and there was considerable improvement in opening of basic savings bank deposit accounts under the Pradhan Mantri Jan Dhan Yojana.

The finance ministry quoted Jaitley as saying that as part of governance reforms in public sector banks, Bank Board Bureau will replace the appointment board for appointment of whole time directors as well as non-executive chairmen to formulate appropriate growth and development strategies. Jaitley, in his meeting with social sector groups, said inclusive growth is high on the agenda and adequate measures can be expected to ensure social security for children, women and senior citizens.

Banks and FIs sought raising tax exemption limit to Rs 2.5 lakh, bringing down maturity period for taxfree term deposit to one year to promote domestic savings among other exemptions and putting affordable housing in the priority sector. HDFC Bank managing director Aditya Puri said certain tax-specific suggestions were made so as to encourage domestic savings. "Everybody was of consensus that public expenditure is necessary and if that is necessary then a balance will have to be done between fiscal deficit and expenditure, and may be it has to be delayed," he said.

Yes Bank managing director Rana Kapoor said the major point of the interaction was that overall savings in the country needs to be increased through a series of action to ensure domestic savings to create capital formation. "It was also suggested to bring down lock-in period on tax-free fixed deposits to one year from five years so that more depositors come into the system."

Social sector groups asked for doubling of allocation towards the health sector and higher rate of sin tax on tobacco products and alcohol in the budget. They sought allocation under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) be increased by Rs 5,000 crore and spending of 10% of GDP on the education sector. Other suggestions included insurance to farmers as a major initiative to address the distress in the agriculture sector and for achieving higher agriculture growth, and adequate provisioning towards a comprehensive and universal crop insurance scheme.

RBI, banks seek higher tax sops under 80C

The Reserve Bank of India and financial sector bosses on Tuesday made a strong pitch for higher incentives for savings, including raising the tax benefit for investing money in fixed deposits and public provident fund (PPF) to Rs 2.5 lakh from Rs 1.5 lakh currently.

Sources said RBI deputy governor Urjit Patel kicked off the customary pre-budget consultation with finance minister Arun Jaitley with a suggestion to "significantly" increase savings, which was followed by demands to raise the cap by bankers as well as insurance companies.

"We need to increase the savings rate in the economy and take it back to 35% of GDP. For that, enhancing section 80C (of Income Tax Act) to Rs 2.5-3 lakh will be helpful," Yes Bank MD & CEO Rana Kapoor said.

Bankers said the ceiling should be enhanced, especially at a time when real interest rates (net of inflation) had turned positive after several years.

Taking a cue from RBI's Patel, Life Insurance Corporation chairman SK Roy suggested that the government could impose sub-limits within the section 80C exemptions, said a source present in the meeting.

Under the current rules, the government allows deduction of up to Rs 1.5 lakh for investment in various savings instruments such as fixed deposits with a tenure of five years or more, provident fund, PPF and life insurance schemes.

The suggestion came amid recommendations from some private sector bankers that the government should lower the quantum of tax-free bonds that are issued, if not completed do away with them. They argued that the bonds were being bought by high net-worth individuals such as film stars and were not benefiting the common man. The bonds issued by certain institutions compete with bank deposits.

Bankers also demanded tax should be deducted on interest of above Rs 50,000 as against the current Rs 10,000.

In addition, Kapoor said, there were suggestions on making the gold monetization scheme more attractive. A finance ministry statement said bankers also suggested that interest rate on small savings schemes such as PPF should be rationalized and linked to the yield on five-year government securities.

Banks as well as the RBI have been demanding the change to ensure that investors don't park funds in PPF and National Savings Scheme, which offer higher rates, and instead opt for fixed deposits with banks. Bankers say higher deposit rates don't allow them to lower lending rates, something that the government has been seeking.

Canara Bank board okays organisational restructuring

Aimed at improving efficiency, public sector Canara Bank’s board has approved organisational restructuring by moving to ‘4-tier system’ that will allow the lender to set up regional offices for a better connect with branches across the country.

“The board of the bank in its meeting held on January 12, 2016 permitted the bank to move to 4-Tier system i.e., Head Office, Circle Offices, Regional Offices and Branches from the existing system of 3-Tier i.e., Head office, Circle Offices and Branches in the next financial year in a phased manner,” Canara Bank said in a BSE filing today.

The bank said this is being done “to enhance the connect between the branches and controlling offices, strengthen the control mechanism and to improve business and profitability by improving the operational efficiency“.

Public sector banks are under pressure to bring down their non-performing assets and improve efficiency.

On Monday, another public sector lender Indian Overseas Bank (IOB) said it will rationalise the number of its regional offices by closing 10 such offices to improve efficiency.

Indian Overseas Bank said currently it has 59 regional offices and seven zonal offices, which provide support and guidance to branches, which are undertaking business activities and are required to monitor the performance of branches.

Royal Sundaram launches 'Lifeline' for Standard Chartered Bank customers

Royal Sundaram General Insurance has launched Lifeline, its flagship health insurance product to Standard Chartered Bank’s India customers through the bancassurance channel. 

Royal Sundaram will leverage its partnership to offer the highly customisable Lifeline suite of health insurance plans complemented with global benchmarks of customer service and exhaustive product knowledge to the corporate and retail customers of the bank.

M.S. Sreedhar, Managing Director, Royal Sundaram General Insurance Co. Limited said, “Lifeline’s suite of health insurance plans has witnessed heartening response from our customers ever since its launch. With the unique offerings and the customisation options, we have successfully established our brand proposition among well established and aspiring customer segments.” 

“We have a long standing relationship with Standard Chartered Bank, spanning almost 15 years largely due to synergies in our vision and commitment. We both believe in providing value to our customers by understanding their needs and risk profile and providing innovative, cost effective, customised solutions to ensure total customer satisfaction. I am sure our portfolio, now strengthened with the addition of Lifeline, will help us together take the partnership to the next level and script yet another winning story”, he added.

Lifeline is the company’s first plan serviced by doctors, offers the widest range of sum insured from Rs 2 lakhs to Rs 1.5 crore. The cover has three sub-plans to choose from–Classic, Elite and Supreme with varying benefits and premiums. The tax-saving plan covers anyone from three-month-old babies to adults of all ages and has family floater benefits too.

To boost smart health practices, the product also covers cost of taking second opinions of as many as 11 critical illnesses.

Rs. 75000 cr disbursed under Mudra scheme till Dec: Mudra Bank CEO

Disbursements to the tune of Rs 75,000 crore has been made under the Pradhan Mantri MUDRA Yojana till December last year; out of a total target of Rs 122,000 crore, Jiji Mammen, CEO, MUDRA Bank, said.

The Micro Units Developments Refinance Agency (MUDRA) scheme that looks at refinancing loans up to Rs 10 lakh was launched in April 2015.

According to Mammen, disbursal has been made to around 1.73 crore beneficiaries; of which, 50 per cent are new units; while the remaining half has been for expansion towards existing ones.

“Against a target of Rs 122,000 crore for this fiscal, we have disbursed Rs 75,000 crore in the first nine months of the year,” he told reporters on the sidelines of the Eastern India Microfinance Summit 2016.

Loans under the scheme have been bracketed in three categories: Shishu loans are up to Rs 50,000; Kishor loans are between Rs 50,001 and Rs 5 lakh; and Tarun loans of Rs 5-10 lakh. Sishu loans are for small businesses, while Kishor and Tarun ones are for larger ones.

Refinance

Till December, the agency has refinanced around Rs 1,500 crore from its corpus of Rs 20,000 crore.

Of this around Rs 800 crore has been for the banks, that include mostly public sector entities like Bank of Maharashtra, Indian Overseas Bank and the State Bank of Travancore, Mammen said. The remaining amount includes microfinance institutions.

To make the MUDRA scheme more attractive, the Centre has also cleared the setting up of a Rs 3,000 crore Credit Guarantee Fund for these loans. This will provide insurance against default on MUDRA loans to a maximum of 50 per cent.

IndusInd Bank reports 30% jump in net profit

Private sector lender IndusInd Bank Ltd on Tuesday said its net profit for the quarter ended 31 December 2015 jumped 30% on strong growth in its core operating income and other income.

Net profit for the quarter stood at Rs581.02 crore compared to Rs447.19 crore—an increase of 29.9%. A poll of 22 Bloomberg analysts had pegged net profit at Rs579.10 crore.

Net interest income, or the core income from lending businesses, rose 36.23% to Rs1,173.42 crore in the October to December quarter compared to Rs861.37 crore in the year-ago period. Other income, which includes earnings from fee-generating businesses, rose 29% to Rs839 crore from Rs649 crore in the year-ago quarter.

Asset quality at the bank remained largely steady although the bank increased provisions during the quarter.

Gross non performing assets (NPAs) at the end of the quarter were at 0.82% of total loans compared to 0.77% in the July-September quarter and 1.05% in the year-ago period.

Net NPAs stood at 0.33% compared to 0.31% in the quarter ended 30 September 2015 and 0.32% in the same period last year.

During the quarter the bank set aside Rs177 crore in the form of provisions compared to Rs158 crore in the previous quarter and Rs98 crore in the year-ago quarter. A number of banks have been setting aside additional provisions as a counter cyclical buffer.

Bank of Maharashtra to raise Rs 1000 cr via tier-II bonds

Public sector Bank of Maharashtra today said it will raise Rs 1,000 crore by issuing Basel-III compliant bonds on a private placement basis.

"Bank of Maharashtra has informed the BSE that the bank is proposing to raise Basel III compliant tier-II bonds amounting to Rs 1,000 crore by way of private/public placement," it said in a regulatory filing.

According to a Fitch Ratings report, Indian banks need USD 140 billion capital to ensure full compliance with the Basel-III norms by 2018-19. The Basel-III norms are aimed at bolstering banks resilience. Basel-III capital regulations are being implemented in India with effect from April 1, 2013 in a phased manner.

IDFC Bank buys 10 per cent stake in ASA International India for ₹ 8.5 crore

Newly launched private sector IDFC Bank has bought a 9.99 per cent stake in ASA International India Microfinance for about Rs 8.5 crore, the first investment by a lender in a microfinance institution.

ASA International India is a division of Dhaka-headquartered ASA, which operates in over 12 countries and plans to disburse $2.5 billion in loans among 6.6 million clients in 2015-16.

"We have taken a 10 per cent equity stake in the microfinance company called ASA that has footprint predominantly in the northeast," Rajiv Lall, managing director of IDFC Bank, told ET.

"ASA will give us access to their customers and that allows us to expand our lending operations. It also gives us the opportunity to open bank accounts for ASA's customers, so it's a win-win partnership. They need capital, we need customers - that's the essence of our transaction."

IDFC Bank will get a board seat in ASAI India and access to unbanked areas through its branches in the east and northeast. Ravi Shankar, head - Bharat Banking at IDFC Bank, will represent the bank on the ASAI India board.

ASAI India has 104 branches covering 22 districts in West Bengal, Assam, Tripura, Bihar and Uttar Pradesh. It had over 1.3 lakh borrowers at the end of December, a total loan portfolio of over Rs 60 crore and 400 employees, including 241 loan officers.

IDFC Bank, which started operations on October 1 with shareholders' funds of Rs 13,300 crore, intends to continue growing inorganically.

"We will continue to look at these kinds of investments. There are some partnerships that do not require an investment, so we will look at that as well," Lall said.

"We are partnering with many MFIs where we haven't invested but from whom we are buying portfolios on a regular basis and whom we are supporting with bank lending." An Indian bank's investment in another financial entity cannot exceed 10 per cent. By keeping its investment in ASAI India at less than 10 per cent, IDFC Bank can fund the MFI's loans, which will qualify as priority sector lending for the bank.

The Reserve Bank of India has mandated that banks must provide at least 40 per cent of their total loans to farmers, small businessmen, students, exporters and small-ticket home loan buyers.

Lall said that would be a tough challenge to meet in the near term. "It's unrealistic. For our size of balance sheet, we need Rs 20,000 crore of PSL, so where is that going to come from?" asked Lall. "I think it's safe to say that we will not be able to achieve that target by just doing organic lending just by ourselves. We will be relying on partners to help generate a lot these assets for us. We will be lending to institutions that are PSL eligible, we will be buying portfolios from institutions that have PSL assets and we will be doing our own lending directly to PSL-eligible customers."

Bandhan Bank, which started operations on August 23, has a strong presence in the eastern and northeastern regions. It has more than 600 branches in 24 states, with 240 of them in West Bengal.

IndusInd Bank ties up with online payment solution firm PayU India

IndusInd Bank has tied up with online payment solution firm, PayU India. This will help provide customers the full suite of consumer banking products online as well as payment innovations. The partnership is aimed at bridging the gap between conventional banking and new online payment systems.

"While the Indian consumers have accepted online payment systems and seamless modes of online payment like mobile wallet, with open arms, the trust they have in the Indian banking system remains unmatched. With this partnership, we are bringing the cutting edge online payments technology and a bouquet of conventional banking services," said Shailaz Nag, COO and Co-founder, PayU India.

"Through this tie-up, the bank's experience will be leveraged to tap and redefine the rapidly growing digital financial space for both retail and business customers," said Sumant Kathpalia, Head, Consumer Banking, IndusInd Bank.

The partners will make announcements about the new products and services in the next 4-6 months. The collaboration will help create co-branded digital consumer banking products that will revolutionise the way digital banking and payments have shaped up and is expected to attract new customers across demographies.