Latest Property News on 'Banking and Finance'

RBI to increase rates to curtail inflation

To check inflation India’s central bank, the Reserve Bank of India (RBI), will announce a 0.25 percent increase in the Cash Reserve Ratio (CRR), effective from September 1. “If the liquidity in the system is on the higher side it leads to inflationary pressures,” said A Thangavelu, General Manager, Eastern Exchange, on deputation from Canara Bank, India. “There is a strong possibility of RBI hiking the various interest rates like the CRR, repo and reverse repo to curtail the inflationary trend.” Indeed, if the excess liquidity is not addressed, it will create inflation pressures and could be used for speculative purposes.

As part of the measures to mop up excess funds, the Reserve Bank of India had hiked the Cash Reserve Ratio (CRR) by 50 basis points to 7.5 per cent in November last year. This had taken out approximately Rs160, 000 million from the system, while the liquidity overhang is to the extent of about Rs300, 000 million. This was the second hike last year. The CRR was increased in July by 50 basis points to seven percent. The CRR is the proportion of deposits banks have to park with the RBI for statutory requirement. Banks do not earn any interest on cash reserves. Explaining the reasons for high inflation in India, Vishal Chauhan, Unit Head, NRI Banking, and Commercialbank, pointed out three main issues – the demand pull, the cost push and the overall bank rates. Read More »

UFBU calls for two day strike

A meeting of the United federation of Bank Unions (UFBU) held in AIBEA Office in Chennai on Thursday decided to give a call for 2 (Two) Days’ All India Strike in all the banks all over the country on 24th & 25th September, 2008.

The strike has been called in the context of the Government’s attempts to hurry up with the Banking Reforms, like Privatisation of Banks, Merger of Public Sector Banks and to allow more foreign capital in Banks with full voting rights and the delay in resolution of our pending demands. N.K.Gaur, General Secretary, Punjab Bank Employees Federation said that Bank employees will oppose Banking Reforms viz. Privatisation of Indian Banks, Merger of Public Sector Banks and more FDI in Banks with full voting rights. He said that they will stress on the speedy implementation of the MoU dated. 25.2.2008 between IBA and UFBU on Pension Option, Wage Revision, Compassionate Appointments and other issues. Gaur said that the 2 Days’ Strike will be preceded by preparatory programmes like, Demonstrations, Deputations, Badge Wearing, Processions, Mass Rallies, etc. in the month of September, 2008. The 2 Days’ Strike will be followed up by further intensified agitational programmes including a call for Indefinite Strike in November/ December, 2008.

Banks observe strike in Punjab

Bank Employees & Officer observed complete strike today in Punjab. The strike was held on the call of All India Bank Employees Association & All India Bank Officers Association. A Procession was also brought out throughout the main bazaars of the city. Employees held a rally before State Bank of Patiala, Head Office, The Mall, Patiala. The rally was addressed by Com.N.K.Gaur General Secretary, Punjab Bank Employees Federation, Com.Vinod Sharma Gen.Secretary. A.I B.O.A (Pb.State) committee, Com.Yog Raj Gupta President A.I O.B.E.F, Com. Sushil Gautam General Secretary, State Bank of Patiala Emp. Union (Pb. State).

The in support of demands of Sponsoring committee of trade unions against the decisions of the Central Govt. to rush through the agenda of Economic Reforms, specially Financial Sector Reforms the banking sector employees are opposed to the reduction of Govt. Equity in Public Sector Banks to 51% and demands that recommendation of Hooda Committee and Raghurajan Committee to reduce Govt. holding in public Sector Banks below 51% be rejected. They are opposed to the merger of public Sector Banks because they will neither become strong and nor they will be global in size. Rather the purpose for which Banks were Nationalized the very purpose will be defeated, they are opposed to unrestricted entry of FDI in banks and removal of Cap on Voting Rights which is 10% at present and the Bill for amendment was already been introduced in the parliament the speakers said the present policies of Public Sector Banks are Pro Corporate and are against interests of common man. They are opposed to the decisions of the govt. to Merge State Bank of Saurashtra in State Bank of India to be followed by merger of other Associate Banks. The meeting of United Forum is being held tomorrow in Chennai on 21st August, 2008 to chalk out further programmes including Strike actions.

Cost-conscious banks raise fees for paid services

Banks are raising the charges of fee-based products, including the use of ATM & credit card facility, locker services, demand draft (DD), cheque issue and internet banking facilities, in a bid to keep the bottomline growing. High borrowing costs, coupled with fears of a slowdown, are now beginning to get bankers worried about profitability and growth.

The largest private sector lender ICICI Bank and public sector lender Bank of India (BoI) have already raised the rates for many of these products while others are expected to follow soon. Fees for some of these products have been increased by up to 50%, while many free services will no longer continue to be free any longer. Read More »

SBI Director downplays employee backlash

Some employees at the State Bank of India and State Bank of Saurashtra went on strike on Monday, and bank unions have called a broader strike for Wednesday to protest the merger of SBI and State Bank of Saurashtra. The finance ministry approved a plan on August 14 for SBI to acquire associate State Bank of Saurashtra.

“I don’t think there is an employee backlash,” said Bhatt, the chairman of State Bank of India. “There are some people who for some reason have gone for a strike. But if you talk to the employees of the bank or associates, I mean, they are very happy this is happening.” He added. Asked whether the strike planned for Wednesday would hinder the merger with State Bank of Saurashtra, Bhatt replied: “I don’t think so.” The bank reported loan growth of 23.4 percent in the year to March 2008, but analysts were expecting a moderation after the central bank last month raised its key lending rate to a seven-year high of 9 percent to rein in double-digit inflation.

Chidambaram requests banks not to hike interest rates

Finance Minister P Chidambaram requested public sector banks not to increase interest rates for home loans up to Rs 30 lakhs. He also asked the banks to lend more to consumers even as the Reserve Bank of India is trying to moderate credit growth to contain inflation. Taking cues from the North Block, most banks have already left interest rates untouched in the above categories. Chidambaram also impressed upon the banks’ chiefs to increase disbursement of auto loans as well as personal loans by keeping interest rates affordable, sources added. Some banks such as the Punjab National Bank, which have raised interest rates for existing borrowers in these categories, have given assurance that they will take another look at these portfolios.

“(Responding to the monetary policy) Public sector banks have increased their benchmark prime lending rates by 75-100 basis points. Banks have said almost unanimously that it will not impact existing home loans up to Rs 30 lakh, auto loans and education loans,” Chidambaram told reporters after meeting the chiefs of public sector banks here. Read More »

Icelandic Bank Encouraging Midland Firms To Woo India

Icelandic investment bank Kaupthing hopes to woo India and take advantage of India’s expanding middle class and increased urbanization and industrialization, which has led to the rise in value of infrastructure assets in the emerging market. It has listed an Indian infrastructure fund on the London Stock Exchange’s AIM market and is hoping the move will boost UK investment in its former colony. The initiative comes as the West Midlands looks to make the most of growing contacts in India.

Kaupthing Singer & Friedlander managing director Trevor Foster said: “This is an opportunity for discerning West Midlands investors to enter one of the fastest growing economies in the world. “We hope it will attract those in the region of Indian origin but also interest business people who can see there are excellent returns to be made by taking a global outlook.” KS&F Midlands chairman Paul Bassi added: “The West Midlands is increasingly seeing great advantages in developing business links with India. With on-going business and political initiatives taking place, the timing is right for this infrastructure fund to take off.” Read More »

Credit Suisse strengthens Indian coverage

Credit Suisse hired three investment bankers from India to strengthen its coverage of investment banking in the country. Sughosh Moharikar and Samita Shah have joined as Managing Directors of its Investment Banking Department, based in Mumbai. In addition, Ashim Ahuja will join as a Director of the investment banking team.

Sughosh Moharikar will be responsible for mergers & acquisitions advisory activities in India. He will play a key role in originating and executing India-related M&A transactions. He will report functionally to Joe Gallagher, Credit Suisse Head of Mergers & Acquisitions in Asia Pacific and locally to V. Anantharaman, Credit Suisse India Head of Investment Banking Department. Mr Moharikar joins Credit Suisse from Kotak Mahindra, where he worked for 14 years and was most recently Executive Director and Head of Mergers & Acquisitions. Read More »

Realty Projects, Home Loans set to get Costlier

The Reserve Bank of India’s decision to revise repo rate and cash reserve ratio is expected to bite the realty industry, which is already burning under a slowdown and price correction.

Loans for housing will get dearer and interest sensitive sectors like real estate will be hit hard, said Mallinath Madineni of Arthaeon Financial Services.

“We expect banking and real estate stocks to under-perform in the near term,” Madineni added. Read More »

PE Fund picks 40% in Amrapali SPV

Private equity fund SUN-Apollo Ventures has invested Rs 300 crore for 35-40% equity in an SPV of Noida-based realty firm Amrapali group.

SUN-Apollo is a joint venture between Delhi-based Khemka family’s SUN group and US-based private equity fund Apollo Real Estate Advisors. Apollo’s development and investment portfolio is spread across US, UK, Russia and other European countries, besides India. SUN Group, which has interests in oil & gas, mining, real estate, infrastructure, food & beverage and technology, has been active in India, Russia and other emerging markets.

“The SPV will develop a 200-acre township in Jaipur and a 15-acre high-end housing project in Noida. Both projects are likely to be completed in two-and-a-half years,” Amrapali group chairman Anil Sharma said. The Jaipur township will have housing, retail, commercial and IT space. Amrapali group, which has developed six urban residential colonies in the national capital region, is at present executing real estate projects worth Rs 8,000 crore in several cities. Read More »