Subbarao to be RBI Governor for 2 more years:The Government has given Dr D. Subbarao, two-year extension as the Governor of the RBI. He will hold office till 2013. “The Prime Minister has approved the extension of the term of Dr Subbarao as Governor of the RBI for a further period of two years with effect from September 5, 2011 up to September 4, 2013,” said a statement from the Prime Minister’s Office.This move is meant to give an impression of stability to the economy, sources told Business Line. Secondly, in the current global economic situation, bringing a new person at the helm would not be seen as a wise step, they said. (BL dt. 10.08.2011 p.1)
Foreign investors can invest in MFs:In a further liberalisation of the portfolio investment route incorporating the industry’s suggestions for a more vibrant debt market for the infrastructure sector, the Centre on Tuesday permitted a new category of qualified foreign investors (QFIs) to invest up to $13 billion in equity and debt schemes of mutual funds (MFs). Announcing this, for which the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) issued separate notifications to set the investment norms as market regulators, a Finance Ministry statement said: “It has been decided that the aggregate investments by qualified foreign investors (QFIs) in equity schemes of the mutual funds under direct and indirect routes shall be subject to a ceiling of $10 billion.’’ (The Hindu dt. 10.08.2011 p. 19)
Signs MoU with PSU insurers:Vijaya Bank has signed an MoU with United Insurance Co. Ltd. Under MoU, it will distribute life insurance and general insurance products of United India Insurance Co Ltd. The bank will also distribute insurance products of LIC, the bank said in a statement. (BS dt. 09.08.2011 p. 5)
Plan FY 12: SBI to raise capital via rights issue:State Bank of India plans no further consolidation of its associate banks with itself during the current fiscal, Chairman Mr Pratip Chaudhuri has said. This comes even as the Finance Minister, Mr Pranab Mukherjee, recently indicated that the Government would not be averse to considering merger proposals involving State Bank of India and its associate banks in 2011-12. The State Bank of India management's "time and bandwidth" during this fiscal would be devoted to raising additional capital of Rs 20,000 crore through a rights issue, besides addressing issues such as asset quality and international expansion, Mr Chaudhuri told reporters after a meeting of the bank's board. (BL dt. 07.08.2011 p. 1)
SBI to open 800 branches this fiscal:State Bank of India plans to open 800 more branches in 2011-12 taking its total network to over 14,000 branches. "We are planning to open 700-800 branches in the current financial year against 650 set up during the last fiscal," the SBI Managing Director and Chief Financial Officer, Mr Diwakar Gupta, told PTI. New branches would be spread across all the 14 circles, he said. At the end March,2011, the total number of branches was 13,542 while the number of ATMs stood 20,084 across the country. Besides, the bank is also looking at expanding its overseas network. The bank would look at increasing its presence in the neighbouring countries in CIS(Common wealth of Independent States)countries. SBI has 156 offices across 32 countries, including US, UK, Singapore, Canada and the Mauritius. The focus of these offices is India related business and the international needs of the bank's foreign customers, in addition to conducting retail operations. Currently, the overseas business contributes about 16% to the bank's total business. The number of foreign offices increased from 142 as on March 31, 2010 to 156 as on March 31, 2011 spread across 32 countries. (BL dt 08.08.2011 p.7)
Banks can now issue prepaid instruments to listed cos:In a bid to widen the scope of prepaid payment instruments, the Reserve Bank of India has permitted banks to issue such instruments to listed corporate entities for onward issuance to their employees. Currently, prepaid instruments are issued by banks to: government organisations for onward issuance to the beneficiaries of government sponsored schemes for loading of funds from such schemes; and financial institutions for loading of one-time/periodical payments by these entities to their customers. Banks also issue such instruments to beneficiaries under money transfer service scheme for loading of cross-border inward remittances received by them. Further, prepaid gift instruments are issued by banks, non-banking finance companies and other persons. (BL dt. 05.08.2011 p. 6)
SIDBI to widen refinance window:Banks’ appetite for refinance from the Small Industries Development Bank of India is expected to increase to about Rs 30,000 crore in the current financial year against Rs 22,900 crore last year, according to a top official of the development financial institution. With deposit rates rising by almost 250 basis points (a basis point is equivalent to 0.01 percentage point) in the last one year or so, banks are finding refinance from SIDBI comparatively cheaper. Lucknow-headquartered SIDBI gives refinance against term loans granted by banks to industrial concerns for setting up industrial projects in the small-scale sector as also for their expansion/modernisation/diversification. (BL dt. 02.08.2011 p. 6)
RBI to issue new Rs 10 notes:The Reserve Bank of India (RBI) announced that it will shortly issue Rs 10 denomination bank notes with inset letter 'B' in both numbering panels in Mahatma Gandhi series 2005 bearing the signature of RBI Governor Dr D Subbaro. Except for the change in the inset letter, the design of these notes to be issued now is similar in all respects to the banknotes in Mahatma Gandhi series 2005 issued earlier. All banknotes in the denomination of Rs 10 issued by the bank in the past will continue to be legal tender, the press release said. (DH dt 02.08.2011 p.15)
New bank licences on the back burner:Companies with ambition of setting up a bank will have to wait longer. The much-hyped grant of new bank licences has been put on the back burner, as the Government is not keen to go ahead. Sources familiar with the developments said the government had conveyed its view that the matter be set aside to Reserve Bank of India, the authority for issuing fresh licences. RBI had framed draft guidelines for new bank licences and submitted these to the Finance Ministry for its views. The ministry is yet to formally get back to RBI. “RBI and the government had reached a consensus on most of the important issues in the draft guidelines, including grant of licences to corporate houses. The government had also agreed to amend the RBI Act to vest more power with the regulator. Things have slackened after that,” said a source. (BS dt. 01.08.2011 p. 1)
Post offices to seek nod to convert into banks:The humble post office is all set to undergo a radical change with a proposal to convert over 1.5 lakh post offices across the nation into full fledged banks on the anvil. Telecom Minister Mr Kapil Sibal wants to reach out to the masses in the rural areas with modern banking facilities through the post offices. “We want to commercialise the department. We will seek a licence from the RBI to convert all our post offices into banks,” Mr Sibal told PTI. The post offices currently offer financial services like savings bank, postal life insurance, pension payments and money transfer services. Its total corpus stood at Rs 5,82,832.90 crore as on March 31, 2011. (DNA dt. 01.08.2011 p. 11)
Punjab & Sind Bank seeks Rs 990 cr from Centre:Punjab & Sind Bank (PSB) has sought capital support of Rs 990 crore from the Central Government to fund business growth, a top official of the bank has said. “It will be pure equity. We have made a request to the Government for capital infusion through preferential allotment route. The capital infusion if done will be made at a premium and near market price,” Mr P. K. Anand, Executive Director, PSB, said. The last time Government infused capital in PSB was in 2005 and the amount pumped in was Rs 500 crore, officials said. Later on, the Government had converted equity capital of Rs 550 crore into preference shares as well as long-term debt. (BL dt. 31.07.2011 p. 18)
