Banks cut down loan tenures

Banks are reducing loan tenures on doubt over interest rate outlook. Uncertainty on interest rates and competition among banks are compelling lenders to provide for the short term and introduce interest rate reset clauses that is likely to start to start in coming three months.

Companies are trying to get a loan sanctioned from larger players such as State Bank of India, and using it to negotiate a better deal from another bank, especially smaller public sector and private banks. As a result, the larger players have started opting for short-term loans.

"The ticket size is small because there is little demand for the loans for capital expenditure. So, there is little choice but to give short-term loans or put in other clauses," said a senior executive with a public sector bank.

Banks typically reset interest rates after a year, but are now exercising the option as early as three months, though in some cases the review of the rate takes place after six or nine months, the executive director of a mid-sized public sector bank said.

Banks agree to disburse 7,000 cr. crop loans

Bankers have decided to give out crops loans at an average of Rs.1, 000 crore a day till the month-end since several parts of the state are receiving rainfall and sowing is picking up, in order to achieve 100% target of Rs.14,100 crore for kharif 2009. However, around 50% of crop loans to the tune of Rs.7, 019 crore were disbursed up to August 15 while the banks have agreed to disburse a similar amount in the next seven days.

Moreover, Dr. R. S. Reddy, CMD Andhra Bank and President SLBC stated that bankers shared his concern and confirmed that the target could be achieved and that the disbursal would be monitored on a daily basis with various bank heads. However, there has been good rain for the past 10 days and warned that any inadequacy in coming to the assistance of the farmer would create a threat to his survival moreover, it was found that crop loans only to an extent of 16% of the kharif target were disbursed while sowing and lending were going hand-in-hand, the credit flow reflected bad rainfall situation then.

ICICI loan rates at par with SBI''s : ICICI Bank MD

ICICI Bank stated that the effective rate offered by the public and private bank was the same as the SBI and claimed it was much faster in serving customers. However, on asked about SBI''s aggressive strategy of pricing home loans low, ICICI Bank said the current economic scenario does not warrant aggression whereas earlier this month, SBI launched a new home loan scheme offering loans at 8% for 1-5 years, depending on the amount, with zero processing fees, as against an average of about 10% charged by others.

Moreover, on whether SBI has a better sales pitch on this front, it said that on quarter on quarter you should look at the actual disbursement and if you compare private sector disbursement to the public sector bank, you would get the picture. Additionally, ICICI said that it would not like to talk about any particular bank and that home loan would be a major focus area for the organization.

Swiss law and even OECD''s Model Tax Convention do not allow fishing expeditions that is the haphazard trawling through bank accounts in the hope of f

The Planning Commission has given its nod for a proposed loan of $5-bn from World Bank for India''s urban sector. For this, the bank is working on preparing a detailed concept note that indicates what should be the main components of the loan, a source said.

However, it is not clear which cities will benefit from the bank''s loan. but it''s believed that many of the 63 Mission cities under the Jawaharlal Nehru Urban Renewal Mission (JNNURM) will get a share of it. The government has also decided to add 28 more cities to the list. The source said that the loan could be disbursed in 12-18 months, said the official.

Once the World Bank comes out with a detailed note, the government will give inputs on how best the loan could be utilized, the source said. He also added that the cities, to whom the loan would be grant may be asked to follow a set of reform measures as it is done in case of cities taking grants from JNNURM funds.

HSBC MF Revises Exit Load Structure For Debt Schemes

HSBC Mutual Fund revises the exit load structure for Debt Schemes i.e. HSBC MIP, HSBC Income Fund-Investment Plan as well as HSBC Income Fund-Short Term Plan, HSBC Floating Rate Fund-Long Term Plan, HSBC Flexi Debt Fund. The change will be effective from 20 August 2009. The revised exit load structure (including HSBC SIP/HSBC STP):

HSBC MIP - Regular & Savings Plan:

Accordingly, an exit load of 1% will be charged if units are redeemed / switched out within 1 year from date of investment .

HSBC Income Fund - Investment Plan (Regular & Institutional Option):

The exit load of 0.5% will be charged, if redeemed / switched out within 6 months from the date of investment.

Baroda Pioneer MF Revises Exit Load Structure

Baroda Pioneer Mutual Fund has revised the exit load structure for Baroda Pioneer Growth Fund as well as Baroda Pioneer Diversified Fund, Baroda Pioneer Global Fund, Baroda Pioneer Balance Fund, Baroda Pioneer MIP Fund, Baroda Pioneer Income fund, Baroda Pioneer Gilt Fund effective from August 18, 2009.

Accordingly the exit load charge will be 1%, for any application amount if redeemed on or before 12 months.

HDFC plans to mop up $820 mn via bonds

Housing Development Finance Corp (HDFC) plans to mobilize Rs 40 billion through two- and three-year bonds along with issuing 10.95 million warrants convertible into shares within three years where the dilution on conversion of all warrants would be 3.5% and the proceeds would be used to strengthen its long-term resources. However, it is said that Rs 20 billion in two-year bonds will be sold with a coupon of 7.15% whereas another Rs 20 billion in three-year paper yielding 7.85%. Moreover, Citigroup, Goldman Sachs, Axis Bank, HSBS, JM Financial, Kotak Mahindra Capital Co and Nomura are the arrangers.

Death claims payout rises 21% in Q1

Indian life insurance industry paid 20.74 per cent high death benefit to its policy-holders at Rs 1,717-crore during the first quarter of the current fiscal, according to the Life Insurance Council.

During April-June 2009 quarter, the Indian life insurance industry paid Rs 1,717-crore as death claims to its policy-holders compared to Rs 1,422-crore during the same period last year," Life Insurance Council said in its recently released data.

The private sector life insurance companies have paid 57.35 per cent higher death claims during the first quarter at Rs 321-crore as against Rs 204-crore during the same quarter last year.

"The economic downturn has in no way impacted the Indian life insurance industry, with respect to the payment of death benefit. In fact, it is significant to note that the death benefit on the contrary, has increased," Life Insurance Council Secretary General S B Mathur said.

PNB to issue 200,000 global credit cards by March 2010

Punjab National Bank (PNB) is planning to issue 200,000 global credit cards by March 2010. The bank aims to widen its credit card base across value as well as high end customers,

"We are targeting to issue two lakh global credit cards to our customers by end of the current fiscal," PNB Chief General Manager (Credit Card Venture) Ranjan Dhawan said.

Very soon the bank would also initiate its new cards- Corporate and Platinum credit cards. "Corporate Cards will be meant for senior executives of companies who often travel for business purposes. In this category, there will be two cards such as Individual liability and corporate liability," he informed.

Another second Platinum card will come with enhanced benefits for high-end customers (income having between Rs 7 to 10 lakh per annum). "This card will meet the requirements of customers like premium gold membership, lounge expenses etc," he said.

HDFC slashed rates by 50 bps for Rs 30-50L slab

Housing Development Finance Corporation (HDFC) has slashed the interest rates by 50 basis points to 9 % for the Rs 30 lakh - Rs 50 lakh slab as against 9.5% earlier. The development comes within a week of SBI cutting rates by 50-75 bps for high-value loans and offering loans up to Rs 5 lakh at 8% fixed rate for five years.

Earlier, HDFC had three slabs of providing loans for home buyers. For loans upto Rs 15 lakh, it charged 8.75% per annum while it charged 9% for loans in the range of Rs 15 lakh to Rs 30 lakh and 9.5% for loans more than Rs 30 lakh. However, now HDFC has introduced a new slab of loans at 9% for Rs 15 lakh and Rs 50 lakh. After this rejig, only loans of over Rs 50 lakh, it charge an interest rate of 9.5%. Earlier even home buyers taking loan of above Rs 30 lakh were paying an interest rate of 9.5%.

Now, HDFC offers loans between Rs 30 lakh-Rs 50 lakh at 9%, as per the revised rates. The rates will be applicable only to new customers as the mortgage lender has not revised its prime lending rate.

PNB reduces home, car loan rates by 50 bps

Punjab National Bank slashed home and car loan rates by 50 basis points where the bank has launched ''PNB Festival Season Bonanza Offer 2009'' that offers attractive rates to people during the festival season. However, PNB''s campaign is said to come a week after SBI''s three-month-long home loan campaign, offering loans at 8%.

However, it is said that under the offer, housing loans up to Rs 30 lakh will be available at discounted rate of interest of 8.50% under fixed interest rate option across all repayment tenors, besides full waiver of processing fee and documentation charges whereas margin also stands reduced to 15% for housing loans up to Rs 20 lakh.

As for car loans, a rebate of 0.5% is offered to potential borrowers under fixed option and is said to be valid from tomorrow till October 31 while att present, the fixed rate of interest offered by bank is 9%.

RBI permits Co-op banks to lend housing loan to individuals

In order to provide enhanced housing loan to an individual borrower the Reserve Bank of India (RBI) has given permission to the State and Central Co-operative Banks where they can now give an individual borrower housing loan up to Rs.20 lakhs but for a bank having a net worth of Rs.100 crore and above, the housing loan limit per borrower will be Rs.30 lakhs.

Additionally, a State/Central Co-operative bank was allowed a maximum housing loan of Rs.5 lakhs per borrower, dependent on the condition that the aggregate housing loans outstanding on any day against individuals, institutions and societies should not exceed 5% its total deposits.

However, RBI also makes it clear that housing loans would not include finance to commercial real estate sector and that the apex bank had already advised State and Central Co-operative banks through a circular in May this year to cease from financing the commercial real estate sector.

Draft of direct tax code unveiled

In order to reduce the tax burden and streamline the over four decade old income tax, the government proposes radical tax reforms through a draft code. The 47-year-old direct tax law in India may soon be history. Unveiling the draft of a new direct tax code on Wednesday the Finance Minister said a bill could be passed in the winter session of parliament if reasonable level of discussion takes place on the code and this will become law in 2011.

As per the proposal, the tax rates on individuals are set to decline to 10 per cent for incomes up to Rs 10 lakh while 20 per cent for up to Rs 25 lakh and 30 per cent for above that. Moreover, the incentives on savings are also set to rise to Rs 3 lakh, even as securities transaction tax (STT) is scrapped, capital gains tax unified to one in the long and short term and wealth tax slashed to 0.25 per cent from one per cent with an increase in limit to Rs 50 crore.

The new draft code also has attempted to simplify the tax processes and increase transparency but also reduce the litigations.

The Corporate Tax could reduce to 25 per cent and now MAT will be charged on gross assets instead of book profits to plug gaps. Besides this, the business losses can be carried forward indefinitely and there shall be no tax deduction on interest payable to banks.

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IDBI Bank lowers interest rates on deposit, auto loans

IDBI Bank has slashed the interest rates on deposits in the range of 25 basis points to 50 basis points across various maturities effective August 12. Along with this, the bank has also announced reduction of one percentage point in lending rates for automobile loans. The bank has not made any changes in rates for deposits up to six months and all changes are for duration beyond six months.

The interest rate for deposit of one year to two year will be 6.75 per cent as against 7.25 per cent currently. The highest rate of 8 per cent is for deposits with tenure of seven to 10 years. Besides this, the bank said it has reviewed its lending rate on auto loans and reduced by one percentage point. The revised fixed rate of interest for a three-year tenor would vary from 10.50 per cent -12 per cent and for five years between 10.75 per cent and 13 per cent.

8 short listed for top banking jobs

As some of the present executive directors have retired or will retire and some others are likely to be promoted as chairpersons and managing directors, the government has recognized at least eight candidates for appointment as executive directors in various state-owned banks. Existing general managers will be promoted as executive directors, except in one case which will be likely in the case of Union Bank of India as the government plans to laterally transfer SC Kalia, executive director, Vijaya Bank. It is said that Kalia will be replaced by Bank of Maharashtra''s General Manager Shubhalakshmi Panse and Union Bank''s executive director TY Prabhu takes charge of Oriental Bank of Commerce (OBC) as chairman and managing director. Similarly, OBC''s present head Alok Mishra is likely be appointed as Bank of India as chairman with is top post falling vacant on May 31 with the retirement of TS Narayanasami.

However, the government is learnt to have finalized to fill vacancies arising out of retirements are Andhra Bank''s V Ramgopal for Indian Bank''s executive directorship, Bank of Baroda''s D Sarkar for Allahabad Bank. Similarly, Indian Bank''s A Subramanian and Allahabad Bank''s KK Agarwal retired in June and July, respectively. NS Srinath of Canara Bank is expected to join Bank of Baroda as its present executive director V Santhanaraman will retire by this month end. Similarly, the executive director of Indian Overseas Bank G Narayanan retiring in October who will be replaced by Bank of India''s Nupur Mitra.

Additionally, all public sector banks with business more than Rs 1 trillion are eligible for two executive directors. Andhra Bank, which has crossed total business of Rs 1 trillion, will get the second executive director. AA Taj of Union Bank of India is likely to take charge as Andhra Bank''s second executive director. Allahabad Bank is likely to get a new chairman and two executive directors. While its chairman KR Kamath is likely to join Punjab National Bank as chairman, one of the executive directors JP Dua may be promoted to replace Kamath. However, Ajai Kumar, general manager of Bank of Baroda, is likely to join UCO Bank. Similarly, SL Bansal of Union Bank is likely to join Dena Bank as executive director once Bhaskar Sen is promoted as the head of another bank.