Foreign banks setting up OBUs in SEZs not to get I-T benefits
New Delhi: The government has denied branches of foreign banks operating in India the benefit of tax exemption under Section 80LA of the Income-Tax Act, 1961, and the facility to make investment overseas. This is expected to ‘discourage’ them from setting up overseas banking units (OBUs) in special economic zones (SEZs). A commerce ministry proposal for granting banks this exemption has been shot down by the finance ministry. However, eight applications from Indian banks to establish OBUs have been approved so far with 24 more expected next month. Of those cleared, four are from the State Bank of India and one each from the Central Bank of India, Punjab National Bank, ICICI Bank and Oriental Bank of Commerce. One of the OBUs will be located in the SEZ coming up in Indore (MP).
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IOB net at Rs 416 crore
New Delhi: Indian Overseas Bank (IOB) has clocked a net profit of Rs 416.10 crore in 2002-03, against Rs 230.21 crore earned in the previous fiscal. It would take a decision on the timing and premium for its Rs 100-crore initial public offer (IPO) by the end of July, chairman and managing director SC Gupta said. The bank also proposes to return Rs 50-70 crore to the government so that servicing costs can be reduced, but the plans are at a very preliminary stage, he added. The government at present owns 75 per cent of the bank’s equity at present. Regarding the government’s decision to buy back high-cost securities from banks, he said IOB held Rs 843 worth of G-secs in 19 of the identified 24 categories. In case it were to dispose of them all, it would stand to gain about Rs 225 crore. However, it would finalise its response in about a week.
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Bank of Maharashtra prefers compromise deals on NPAs
Hyderabad: Bank of Maharashtra (BoM), the Rs 28,500-crore public sector bank that is planning to tap the capital market shortly with its initial public offer, is not keen on taking advantage of the Securitisation Act and attach the assets of its defaulters for early recoveries. The bank is of the view that it does not have adequate expertise in managing or disposing of those attached assets to recover its dues from the defaulters. Instead, it prefers to utilise the provisions of the Securitisation Act to bring its defaulters to the negotiations table and execute compromise deals towards early recovery of non-performing assets, the BoM chairman and managing director, Sukmal Chandra Basu, said.
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IRDA seeks more penal powers
New Delhi: The Insurance Regulatory and Development Authority (IRDA) has sought more powers since existing penalties that can be levied on offenders are "paltry". An appellate forum to redress appeals against the authorities is also being considered.
Speaking to newspersons, N. Rangachary, chairman, IRDA, said: "What, perhaps, the Insurance Act of 1938 lacks is sufficient penal machinery to take action against defaulters." Currently, penalties are very low and insignificant, ranging between Rs 100 and Rs 1,000, depending on the nature of the offences.
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IOB plans second public issue in Sept
New Delhi: Indian Overseas Bank (IOB) will be hitting the capital market around September with its second public issue of equity shares, aggregating Rs 100 crore. The issue would result in pruning the Government holding in the bank to 61 per cent from the present 75 per cent. IOB had come out with its initial public offer (IPO) in September 2000. At a press conference here on Friday, the IOB chairman and managing director, S.C. Gupta, said the details of the issue would be finalised by end-June. He said going by the share's current market price, which is hovering around Rs 24, he would expect the premium to be around Rs 10 on a share of Rs 10 face value.
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SIDBI sanctions up 21 pc
Mumbai: Even as long term re-finance has become redundant in a soft interest rate regime, Small Industries Development Bank of India (SIDBI) for the financial year ended March 31, 2003 grew its aggregate sanctions by 20.8 per cent to Rs 10,904 crore from Rs 9,025 crore in the previous year. The refinance institution has declared a dividend of 10 per cent. The growth in disbursements is mainly attributed to the introduction of short-term loans with tenors between 6 and 12 months at 6.75 per cent. However, the long-term refinance for above Rs 2 lakh at 10.25 per cent finds no takers in today's falling interest rate regime.
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RBI fiat on currency handling
Chennai: The Reserve Bank of India on Friday exhorted banks to speed up currency handling automation. At a meeting with the top brass of the South-based public sector banks, RBI's Deputy Governor, Vepa Kamesam, told the banks to quickly install enough of `currency verification and processing systems' and `notes banding, bundling and counting machines'. This is in furtherance of RBI's `clean note policy'. The RBI's Regional Director (South), B. Ghosh, said that since September 2001, when RBI began large scale lifting of soiled notes, in Tamil Nadu and Pondicherry alone 2.3 billion pieces of notes were destroyed.
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Banks told to take over currency chests
Chennai: Banks have been asked to take over the currency chests which are at present managed by the various State Government treasuries, sources in the RBI said on Friday. This, it is understood, is part of the RBI's `clean note policy'.
Sources said that there were 311 currency chests with the banks in the southern region (the four southern States) and 65 more with State Governments' treasuries. Actually, there were 90 currency chests with the State Governments, but recently the State Bank of India took over 25 of them.
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