The Reserve Bank today sought to downplay the money-laundering allegations against three private sector banks, saying the country has a “perfect” system to prevent such offences and that not a single such transaction took place in the sting operation.

The country’s three largest private banks – ICICI bank, HDFC Bank and Axis Bank – were last week accused of indulging in money laundering both within and outside with an online portal, Cobrapost, claiming that the sting operation conducted by it had revealed a scam.

“Allegations do not mean flouting norms. There is not a single transaction which has taken place. KYC violations will happen in any system. These are all transactional issues and have nothing to do with money laundering,” Deputy Governor KC Chakrabarty told reporters after a meeting with bankers here.

He was responding to a question on the issue.

The senior most Deputy Governor further said, “there is no scam (that) has happened…as no transaction has taken place.” >> Read More

The Reserve Bank of India has initiated the process of carrying out comprehensive scrutinies covering both, Head Office and branches of three private sector banks, namely, ICICI Bank, HDFC Bank and Axis Bank. Apart from this, the Reserve Bank has also undertaken a thematic study in respect of banks that are active in selling gold coins / wealth management products to examine whether there are systemic issues and to plug deficiencies and legal loop-holes, if any.    >> Read More

There were stray incidents of violence at the start of a two-day strike called by trade unions to protest against high prices and policy changes, including foreign investment in supermarkets, that they said could hurt employment.

India’s latest interest rate cut won’t revive growth. The central bank’s quarter-percentage point reduction in the policy rate, to 7.75 percent, is just as futile as the last one almost a year ago.

GDP will pick up when New Delhi curbs its own profligacy and improves the investment climate. The February budget may be the current government’s last chance to do both.

If companies aren’t investing, it isn’t because monetary policy is too tight. With 10.6 percent consumer-price inflation, the base rate for borrowing in 10-year bonds was already negative in real terms before this last rate adjustment. Rather, the government’s quest to fund itself is crowding out the private sector. Banks are forced to buy up government bonds, meaning two-thirds of what households save in a year is reinvested in public debt.

Bottlenecks choking growth are also in need of attention. A debilitating coal shortage is hurting electricity production. >> Read More

The Reserve Bank should give preference to the non-corporate sector for new bank licences, Prime Minister’s Economic Advisory Council ChairmanC Rangarajan said. 

“It is possible for the Reserve Bank to start with initially non-corporate business and find out whether there are suitable applicants and thereafter proceed to look at the other applicants,” he said in an interview. 

The RBI is in the process of finalising the guidelines for giving new bank licences after Parliament approved Banking Laws (Amendment) Bill last month. 

The central bank, Rangarajan said, “should look at various types of financial institutions that are available currently and decide”. 

“…. many of the strong private sector banks today have been at one time or other in the financial system. They can look at it first and look at the other later on,” he said.  >> Read More

*The growth chart is led by the largest financial institution LIC which has paid 10 per cent more at Rs. 1,297 crore in advance tax payout for the third quarter compared to Rs.1,166 crore in the same period a year ago.

*Similarly, housing lender HDFC said it has paid Rs. 560 crore in advance tax against Rs. 475 crore in the year ago period, a growth of 18 per cent.

*Leading private sector banks like ICICI Bank and HDFC Bank have seen their tax payouts increasing.
While ICICI Bank has paid 35 per cent more at Rs. 675crore up from Rs.500 crore, the second largest private  sector lender HDFC Bank has paid Rs. 1,000 crore in the third quarter of this fiscal as against Rs. 900 crore in the same period last fiscal.

An analysis of the results of 360 top manufacturing and services companies, which have announced their July-September quarterly results, showed that a sharp 42% jump in other income, including gains from foreign exchange, boosted their combined net profit by 36% on a yearly basis. For example, net profit of RIL, the most valued company in the country, jumped nearly 92% due to increase in other income on an annual basis. 

The analysis by Crisil Research also showed that there was clear stress on asset quality of public sector banks (PSBs). With a 47-basis-point (100 basis points = 1 percentage point) rise in gross non-performing assets (NPAs) on a quarterly basis, this number for PSBs now stands at 3.28%. “This could be attributed to continued stress in sectors like infrastructure, construction, aviation and textiles. In contrast, private sector banks have been able to maintain their asset quality, due to a higher exposure to the retail segment as well as stringent credit appraisal and recovery mechanisms for corporate loans. On an annual basis, gross NPAs of PSBs have risen by an alarming 95 basis points. >> Read More

On 11th October ,We had written this :

http://www.anirudhsethireport.com/bank-nifty-below-11297-sharp-panic-major-support-11203-we-love-ktk-bank-watch-blast-firework-in-first-leasing/

The country’s largest private sector bank, ICICI Bank, is learnt to have submitted a formal proposal to the Reserve Bank of India (RBI) to acquire Karnataka Bank, an old and listed private sector bank with a nationwide presence and over 500 branches. In May 2010, ICICI Bank had acquired Bank of Rajasthan, another old bank.

According to sources close to the development, Kotak Bank, one of the new private sector banks, too had evinced interest in the 88-year old Karnataka Bank, but it is not clear if it has approached the banking regulator with a formal proposal. A possible acquisition of the bank has, in fact, been talked about for almost two years now.

RBI did not respond to a detailed questionnaire mailed to it earlier in the day. To an e-mail sent on Friday evening, an ICICI Bank spokesperson replied on Monday: “ICICI Bank does not comment on market speculations.”

A spokesperson for Kotak Mahindra Group said, “We deny the rumour.” As on September 30, 2012, Kotak Mahindra Investments Ltd held 3.37 per cent in the bank. >> Read More

Recently, Fitch Ratings—a credit rating agency—said that Indian banks’ gross non-performing loans (NPL) reached 4.2% for the financial year ending March 2013 from 3.75% in 2011-12. The total stressed assets (including restructured assets) in the system is expected to exceed 10% of total loans by the end of the current fiscal. That is not all. The entire banking industry has restructured 4.68% of loans till March. The top five government banks accounted for 39% and 46% of restructured loans and gross non-performing assets (NPAs), respectively, in FY12. The top five government banks reported a year-on-year increase in gross NPAs of 62%.

The non-performing assets of the banking sector rose sharply to 1.28 per cent in 2011-12 from 0.97 per cent a year ago due to high interest rate and slowdown in the economy.

The NPAs (non-perfomring assets) or bad loans of the public sector banks rose to 1.53 per cent in 2011-12, up from 1.09 per cent in the previous year, said the latest RBI report.

As per the Profile of Banks: 2011-12 released by the RBI, the NPA for India’s largest public sector lender SBI alongwith its associates rose to 1.76 per cent from 1.49 per cent in 2010-11.

SBI’s net NPA rose to 2.22 per cent in the first quarter of the current fiscal from 1.61 per cent a year earlier.

However, private sector banks managed to reduce their NPAs in 2011-12 to 0.46 per cent from 0.56 per cent in 2010-11, it said.

Non-performing assets of old private sector banks increased marginally to 0.58 per cent during the year from 0.53 per cent in the previous fiscal.

Also, foreign sector banks had their NPAs below one per cent at 0.61 per cent, down from 0.67 per cent in 2010-11, RBI said.

RBI, however, has asked the banks to improve their ability to manage stressed assets.

Banks, specifically public sector, have been reporting a higher NPAs in their books because of continued slowdown in the economic activities on the back of rising interest rate regime.