Content Development Team, Chennai 1 Vol -1, Issue-45

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1 IOB IN JV WITH BOB, ANDHRA BANK TO ENTER MALAYSIA Chennai-based public sector bank Indian Overseas Bank (IOB) will join hands with Bank of Baroda (BoB) and Andhra Bank to start operations in Malayasia. The new joint venture is expected to commence operations by the end of The bank has also got the reserve Bank of India's nod to go ahead with the acquisition of Pune-based Shree Suvarna Sahakari Bank. ( Business Standard Feb 2, 2009) (1532) LVB TO RAISE CAPITAL TO Rs. 3,000 CR Karur-based Lakshmi Vilas Bank is planning to increase its capital to Rs. 3,000 cr by from the current Rs. 500 cr. This would help the bank achieve its target of Rs. 75,000-1,00,000 crore total business by 2015, said bank's managing director VS Reddy. (Business Standard Feb 2, 2009) (1533) 2008 INWARD REMITTANCES MAY HIT $40 B Even as the world comes to grips with the ongoing recession, India is expected to witness record inward remittances for the second year on a trot with early indications suggesting upwards of $40 billion in calendar year This is way ahead of the World Bank's projection of $30 billion for the year. RBI data indicates that India has already received $39.14 billion during the first nine months of ( The Economic Times Feb 2, 2009) (1534) SWISS CENTRAL BANK SEES US UPTURN BY 2009-END The US economy is likely to improve by the end of 2009, the chairman of the Swiss National Bank was quoted as saying in an interview in Sonntags Blick on Sunday. The recovery will come, as always, from the United States. I expect that we see an improvement by the end of the year. In 2010 there should hopefully also be an upturn in Europe and Switzerland. ( The Economic Times Feb 2, 2009) (1535) TRIPLE JUMP: 19 BANKS BREAK INTO TOP 500 As many as 19 Indian banks, the vast majority of them state run, have made it to the list of the world's top 500 financial brands this year, showcasing the resilience of the country's banking system at a time when some of the biggest global names in the business are battling to stay afloat. The latest Top 500 Global Financial Brands 2009, a global ranking of financial brands by value brought out by Brand finance long with The Banker's magazine published from Britain, reveals a tripling of the number of Indian banks in the list last year from six in ( The Economic Times Feb 2, 2009) (1536) SOUTH INDIAN BANK LURES SCHOOL-GOERS WITH 'SIB JUNIOR' South Indian Bank's financial inclusion strategy is targeted at 'catching them young'. And this the bank does by educating students in semi-urban and rural schools about banking habits and offering every student customer aged 12 and above an ATM card. Students are enthused and keen to park their savings with us rather than putting it in a traditional hundi at home, its Managing Director and CEO, Dr. V.A. Joseph, told Business Line. ( The Hindu Feb 3, 2009) (1537) EXPORTS RISE MARGINALLY IN DECEMBER With a weakened Indian rupee, there is a comfort on the foreign trade front since the heavy deceleration in exports noticed during October and November 2008 has moderated as export growth in dollar terms was 1.1 per cent lower at $12.69 billion in December 2008 against $12.82 billion in December Trade deficit, too, has come down to a single digit of $7.5 billion in December 2008 against doubledigit deficits seen every month since July ( The Hindu Feb 3, 2009) (1538) IOB GETS NOD TO ACQUIRE PUNE-BASED CO- OP BANK Chennai-based Indian Overseas Bank (IOB) has received approval from the Reserve Bank of India (RBI) to acquire Pune-based Shree Suvarna Sahakari Bank (SSSB). IOB Chairman and Managing Director S.A Bhatt said that the bank has received RBI's approval to acquire all the assets and liabilities of SSSB. ( Business Standard Feb 3, 2009) (1539) RBI POLICY RATES LAST WEEK ( ) CURRENT RATES THIS WEEK ( ) BANK RATE 6.00% 6.00% EXCHANGE RATES (As On) LAST WEEK ( ) THIS WEEK ( ) REPO RATE 5.50% 5.50% 1U.S $ Rs Rs REVERSE REPO 4.00% 4.00% 1 EURO Rs Rs RBI RESERVE RATIOS 1 POUND Rs Rs CRR 5.00% 5.00% 1 YEN Rs Rs SLR 24.0% 24.0% 1 YUAN Rs Rs INTEREST RATE SPECTRUM ( ) ( ) 10 YEAR GOVT. PAPER 6.10% 5.88% CALL RATE 4.15% 3.90% PLR RANGE (TOP 5 BANKS) % % US $ LIBOR (6 MONTHS) SOURCE: RBI & BUSINESS STANDARD ( & ) Content Development Team, Chennai 1 Vol -1, Issue-45

2 3 MORE STANDALONE FIRMS TO ENTER HEALTH INSURANCE Three more standalone health insurers are likely to join the race for grabbing a chunk of the general insurance pie. Only two standalone insurers Chennaibased Star Health and Allied Insurance and Apollo DKV Insurance are operating in this sector, which is poised to clock Rs. 28,000 crore by According to the Insurance Regulatory and Development Authority's data in , the health insurance segment was estimated to be around Rs. 5,152 crore, with only 2 per cent of the total population being covered. Realising the potential and advantages-the segment has been growing at 37 per cent since 2002-both life and nonlife insurers have already started offering health insurance products. ( Business Standard Feb 3, 2009) (1540) PHARMA EMERGES AS MAJOR RECRUITER With traditional sectors like banking and finance taking a backseat at most B school placements, sectors like pharmaceutical and healthcare have emerged as major recruiters. ( Business Standard Feb 3, 2009) (1541) NBFCs TO GET EASY LOANS FROM PSBs In a move that would increase the flow of credit to small non-banking finance corporations (NBFCs), public sector banks have agreed to give collateral-free loans to NBFCs for financing purchase of commercial vehicles. While doing this, they would not ask for credit rating. ( The Financial Express Feb 3, 2009) (1542) FINO, NCR TO ROLL OUT 30,000 MICRO DEPOSIT MACHINES In an effort to support the country's financial inclusion programme, Financial Information Network & Operations (FINO) and NCR Corporation will jointly set up 1,000 machines that will accept small deposits. Both entities will roll out 30,000 machines named Easy Point 70 Tijori in the next five years with an aim to cover 25 million unbanked people by The micro deposit unit works with the support of smartcard and biometrics technology. The large scale deployment of machines will help banks and micro finance institutions (MFIs) to scale up their services. ( Business Standard Feb 4, 2009) (1543) SC REFUSES TO CAP CREDIT CARD INTEREST The Supreme Court on Tuesday stayed an order of the National Consumer Disputes Redressal Commission restraining banks from charging interest rates in excess of 30% per annum from credit card holders. Banks are now free to charge an annual interest rate of up to 49% from credit card customers for late payment. ( The Economic Times Feb 4, 2009) (1544) APEX BANK HOLDS BACK SILVER IMPORT LICENCE Bullion traders are a worried lot. This comes on the back of the Reserve Bank of India (RBI) not renewing the licence of banks to import silver. At the end of each year, the central bank issues a circular, where in banks are given licence to import gold and silver simultaneously. This year has been a little different. While the licence to import gold was renewed as part of the normal process, silver, however, has run into a bit of a problem. No reason has been cited by the RBI so far for the silver licence not being renewed. ( The Economic Times Feb 4, 2009) (1545) STANCHART, DBS & ANZ LEAD RACE FOR RBS' INDIAN BUSINESS A host of international and regional banks are understood to be eyeing the Asian assets of Royal Bank of Scotland (RBS). With the bank likely to come under intense pressure due to an anticipated loss of $41 billion in 2008, it is expected to sell parts or all of its Asian business or go in for a portfolio sale, such as mortgage or credit cards. India is one of the largest retail markets of the bank in Asia and a host of lenders, including StanChart, DBS and ANZ, are likely to pitch for the Indian business. ( The Economic Times Feb 4, 2009) (1546) 'NARROW' BANKS: AN IDEA WHOSE TIME HAS COME? What's a 'narrow' bank? It's a deposit-taking institution like any other bank. But, the resemblance stops there. The 'narrow' bank deploys its funds only in completely risk-free assets. (By this it is probably meant those free of credit risk). The only asset satisfying this criterion is Government paper. Hence, the brainwave that banks could be segregated into 'narrow' and 'broad' banks. The latter will be allowed to invest in a variety of assets. In other words, 'broad' banks will have far more lending and investment freedom. Depositors in 'narrow' banks will enjoy full deposit protection. Governments will have no qualms about completely insuring 'narrow' banks as their asset portfolios are only in zero risk assets. They will also have full access to central bank funding ( The Hindu Feb 4, 2009) (1547) Content Development Team, Chennai 2 Vol -1, Issue-45

3 SYNDICATE BANK TO HIRE 1,000 OPEN MORE BRANCHES Syndicate Bank has said it plans to hire1,000 mainly in the officers' category, and add 150 branches in the current calendar year. At present, the bank has a network of 2,100 branches to cater to its retail lending business. ( The Hindu Feb 4, 2009) (1548) INDIA FOCUSED PEs TO RAISE $24 BILLION IN 2009 Seventy eight private equity players are looking to raise $24 billion in 2009 for investing in India, three times that of last year, when 30 private equity players raised $9.2 billion, a research report says. This also includes real estate funds. ( Business Standard Feb 5, 2009) (1549) BANKS SEEK MORE TIME FOR DEBT RESTRUCTURING All accounts which carried a standard status on the banks' books on September 1, 2008 are eligible to be treated as standard accounts on restructuring accounts provided the restructuring activity began on or before January 31, The package had to be put in place within 120 days from date of taking up the initiating the process. ( Business Standard Feb 5, 2009) (1550) PSU BANKS STEAL THE SHOW IN Q3 At a time when corporate India has seen its net profits shrink by 24 per cent, banks have reproted a per cent net profit growth in the quarter ended December The gorwth was mainly driven by gains from treasury operations on the back of falling yields, write-back of falling yields, write-back of provisions and improved net interest incomes (NIIs). ( Business Standard Feb 5, 2009) (1551) FIVE LAKH JOBS LOST TO RECESSION IN THREE MONTHS: GOVT STUDY According to the latest government study, 500,000 people were rendered jobless between October to December 2008 due to the recession. The findings are part of a first-of-its-kind survey conducted by the Labour Bureau of ministry of Labour and Employment as part of a study on the effect of the economic slowdown on employment in India. ( Business Standard Feb 5, 2009) (1552) KARNATAKA BANK TARGETS 25% RISE IN BUSINESS Mangalore-based Karnataka Bank is planning to close the current financial year with a total business of Rs. 35, 000 crore compared with Rs. 27,858 crore in , an increase of around 25 per cent, said Chairman Ananthakrishna. The bank is also planning to open a representative office in West Asia, the first such office abroad, and ramp up the number of branches to 450 by the end of the current financial year. ( Business Standard Feb 5, 2009) (1553) TRUCK SALES DIP 65% IN JAN Even as car sales have shown signs of revival in January, truck sales plunged 65 per cent to 9,258 units against 26,564 units in the same period last year, as truckers were unable to expand their fleet due to deepening economic slowdown. ( The Hindu Feb 5, 2009) (1554) UCO BANK CAPITAL INFUSION BY FEB-END UCO Bank might get its share of capital infusion under the Government's recapitalisation scheme by the end of February, according to the bank's Chairman and Managing Director, Mr. S.K. Goel. The Government might infuse close to Rs. 600 crore, which will shore up the bank's capital adequacy ratio above 12 per cent, Mr. Goel said. ( The Hindu Feb 5, 2009) (1555) FIIs REGISTRATION UP 25%, SUB-ACCOUNTS TOO RISE Despite equities markets falling, more foreign institutional investors (FIIs) are coming to India. The number of FIIs registered with SEBI has increased 25 per cent in the last one year. ( The Hindu Feb 5, 2009) (1556) RBI UNVEILS MODEL SCHEME FOR CREDIT COUNSELLING CENTRES Credit counselling centres must not act as advice centres or marketing centres for products of banks, and counsellors must not encourage investments only in the promoter bank's products, the Reserve Bank of India has said. ( The Hindu Feb 5, 2009) (1557) LIC TO RENEW POLICIES LAPSED MORE THAN FIVE YEARS AGO Life Insurance Corporation of India will now renew policies that lapsed more than five years ago. The special revival campaign, launched on January 19, is open up to February 28. ( The Hindu Feb 5, 2009) (1558) Content Development Team, Chennai 3 Vol -1, Issue-45

4 'IRDA AGAINST INSURANCE COS PICKING UP STAKE IN INFRASTRUCTURE SPVs' The Insurance Regulatory and Development Authority (IRDA) does not favour insurance firms picking up stake in special purpose vehicles in the infrastructure sector, due to high risk, Mr. J.Hari Narayan, Chairman of IRDA, said at a seminar here. ( The Hindu Feb 5, 2009) (1559) GENERAL INSURANCE PREMIUM RATES MAY RISE FROM APRIL Premium rates for fire, engineering and motor policies may rise in the coming months as non-life insurance companies are anticipating reinsurance commission rates to fall when they come up for renewal in March. ( Business Standard Feb 6, 2009) (1560) US HOUSING MARKET BOTTOM WITHIN SIGHT US housing markets from Florida to California have suffered price drops of 50% or more from their peak, but now, at long last, a bottom is within sight, likely in the fourth quarter nationally, according to a report from Moody's Economy.com ( The Financial Express Feb 6, 2009) (1561) RBI WIDENS SCOPE OF OMBUDSMAN Customers can now lodge complaints related to Internet banking and non-adherence to the provisions of the fair practices code for banks, with the Banking Ombudsman, the Reserve Bank of India said in a notice issued today. The RBI has widened the scope of the Banking Ombudsman Scheme 2006 to include these two areas. As per the amended scheme, the Ombudsman can award compensation not exceeding Rs. 1 lakh to the complainant in case of complaints arising out of credit card operations, taking into account the loss of the complainant's time, expenses incurred by him, and also harassment and mental anguish suffered. ( The Hindu Feb 6, 2009) (1562) BANKS TO BEEF UP DATA SECURITY MEASURES Among others, Corporation Bank and IDBI Bank are planning to set up 'near-sites' about km away from their primary data centres. This move comes in the wake of the RBI asking banks to ensure enhanced data security. Unlike the primary data centre, the disaster recovery site, which is typically situated in a different geographical location, captures transaction data with a small time lag. In case a data centre blows out, though the disaster recovery site takes over its functioning during the emergency, precious transaction data could be lost in the interregnum. It is to avoid such an exigency that banks are setting up 'near-sites'. ( The Hindu Feb 6, 2009) (1563) PNB LAUNCHES GLOBAL CREDIT CARD The country's second largest public sector lender, Punjab National Bank (PNB), has launched a global credit card, in a move to enrich its product portfolio. To start with, we are launching two varieties of credit cards Global Gold and Global Classic Which will meet the needs of customers and will cater to the requirement of different income group, PNB chairman K C Chakrabarty said. ( The Economic Times Feb 7, 2009) (1564) RBI NORMS FOR BANKS TO RECLAIM CARS FROM LOAN DEFAULTERS SOON The Reserve Bank of India (RBI) will shortly issue new guidelines for banks to take back vehicles from customers defaulting on car-loan EMIs. In the absence of guidelines, banks and other financial institutions claimed that they were facing problems reclaiming their assets even after persistent payment defaults by customers. It had led to several banks reducing lending to customers for car purchases. As a result, the total passenger-car loan market size had reduced 40% in the last two years to Rs. 22,000 crore. ( The Economic Times Feb 7, 2009) (1565) NOMURA STARTS INVESTMENT BANKING, EQUITY SERVICES Japanese bank Nomura Holding has announced that it has launched investment banking and equity sales and trading operations in India. The company also plans to launch fixed income business here when it receives the regulatory approvals. In October, Nomura had taken onboard most of the beleaguered Lehman Brothers' employees, including equities sales and trading, equity research, fixed income liquid market sales and trading, and investment banking teams. Nomura now offers services such as securities broking, securities underwriting and advisory services. ( The Hindu Feb 7, 2009) (1566) OBC RAISES Rs. 500 CRTHRU TIER-II BONDS Oriental Bank of Commerce (OBC) has raised Rs. 500 crore through upper Tier-II bonds. This move is expected to have a positive impact on the capital adequacy of the bank. ( The Hindu Feb 8, 2009) (1567) 9 PSBs ON BOARD NEW CURRENCY FUTURES EXCHANGE Robust trading volumes in currency derivatives has drawn nine public-sector banks led by Bank of India, Federal Bank, MMTC, TCS and Jaypee Capital to jointly float India's fourth currency futures exchange the United Stock Exchange of India Ltd (USEIL). Content Development Team, Chennai 4 Vol -1, Issue-45

5 Other Stake holders With an authorised capital of Rs. 150 crore and paid-up capital of Rs. 120 crore, the new exchange has received in principle approval from the Securities and Exchange Board of India (SEBI) ( The Hindu Feb 8, 2009) (1568) INDIAN BANK MAY SET UP A SUBSIDIARY FOR PORTFOLIO MANAGEMENT Indian Bank, which launched a wealth management service on Saturday, expects to set up a portfolio management subsidiary in a year's time. ( The Hindu Feb 8, 2009) (1569) INDIA SET TO BEAT THE DRAGON IN GROWTH RATE Call it the brighter side of the current downturn. India may pip export-dependent China in the last quarter of FY09 and emerge as the fastest growing nation among all large economies. As China's GDP growth rate dropped to 6.8% during October to December quarter and is expected to go down further, the Indian government has become hyper-active to achieve at least a 6.5% growth in Q4 to register a win over China. ( The Economic Times Feb 8, 2009) (1570) Content Development Team, Chennai 5 Vol -1, Issue-45