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HDFC
Bank goes retail with wholesale banking
Mumbai: HDFC Bank is expecting an exponential growth
in its wholesale banking segment, with the emerging opportunity
in the business of providing short-term and working capital
finance to vendors and distributors of its large corporate
customers.
Called “supply chain financing”, this high-margin
business has huge potential — as large as retail
banking itself — as it provides bank access to a
huge customer base comprising small and medium scale enterprises
with low levels of non-performing assets. This also facilitates
vendors and distributors to get short-term funds at competitive
rates of interest. Within a year and a half of the launch
of this financing avenue, HDFC Bank has signed up over
50 top companies from industries like petrochemicals,
pharmaceuticals, automobiles and other agro-based industries.
The bank has created an asset portfolio of Rs 15 billion
and gained access to as many as 1,300 vendor accounts
and 200 dealer relationship, Samir Bhatia, the bank’s
country head, corporate banking, said. HDFC Bank has the
required technology, efficient delivery capability and
right market positioning to expect an accelerated growth
in the segment, Bhatia said.
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States
debt level may touch Rs 12,00,000 crore by 2007’
Mumbai: The state finances are in a dismal shape.
Fiscal pressure is likely to mount as the debt level is
expected to grow to Rs 12,00,000 crore by 2007, according
to a study conducted by the Crisil. The debt levels of
state governments in 2002 were as high at over 26 per
cent of the gross domestic product (GDP). Together with
their guaranteed off-balance sheet borrowings, the states’
aggregate debt burden was over a third of the GDP. “This
is very unlikely that the scenario will improve,”
said Crisil’s director (infrastructure rating) Anil
Kumar. The pressure on the states’ fiscal position
has come from large and growing revenue and fiscal deficits
in recent years. Rising state revenue deficit levels have
been the largest contributor at about 60 per cent of the
states gross fiscal deficit (GFD), primarily because of
interest charges on funds borrowed to meet revenue expenditure.
“Now, as the debt burden doubles, it would heighten
the states’ debt-servicing obligations and put further
pressure on the already fragile state governments,”
said Kumar.
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IBA
hints at 0.5 per cent cut pn PLR
New Delhi: Indicating a 0.5 per cent cut in Prime
Lending Rate (PLR), the Indian Banks Association (IBA)
on Tuesday said it was dependent on cost of funds and
that another round of voluntary retirement scheme (VRS)
was in the offing. “The rate (PLR) could be cut by
another 0.5 per cent,” IBA chairman Dalbir Singh
said here inaugurating a seminar organised by PHD Chamber
of Commerce and Industry. He, however, said such a reduction
would depend on the makets and cost of funds of banks.
“If the cost of funds permit me, I will do it,”
Singh, also Central Bank of India chairman, said, adding
that it was dependent on individual banks to decide since
they have now been empowered to determine the PLR on their
own. Earlier, the banks had to wait for the Reserve Bank’s
credit policy to announce their PLR, but at present, they
need to weigh the costs before taking a decision. He said
there had been considerable reduction in PLR in the last
six to seven years with an almost 10 per cent cut, to
the present industry average of 11-11.5 per cent with
only a few banks charging over that.
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Aviva
Life Insurance targets 3 per cent market share by Dec
’03
Kolkata: Aviva Life Insurance Co Pvt Ltd aims to
achieve three per cent share in the Indian insurance market
by December 2003, according to Aviva Life managing director
Stuart Purdy. “Aviva Life’s market share as
of June 2003, stands at 1.3 per cent and we have set a
target to increase the figure to three per cent by December
2003,” Purdy said at a press conference here late
on Monday evening. Aviva Life is a joint venture between
Dabur of India and Aviva Plc of the UK. According to him,
Aviva Life earned total premium income of Rs 26 crore
during the six-month period from January 2003 to June
2003. “We hope to end the year with a total premium
income of around Rs 70 crore,” he said. Purdy said
that out of the Rs 70 crore target around 50 per cent
will come from direct sales agents’ business and
the remaining 50 pre cent from bancassurance. “Currently
75 per cent of our premium comes from bancassurance and
the remaining 25 per cent from the direct sales agents’
business. But we are planning to increase the amount of
our direct sales agents business and double it to 2,500
by December 2003,” he added.
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ROCE
method should be extended to pvt terminals’
Mumbai: The Crisil infrastructure advisory has
recommended that a return on capital employed (ROCE) approach
for estimating the allowable returns be extended for private
terminals to further attract them into the sector. At
present, only major ports are under the purview of this.
The recommendations are part of a study commissioned by
the tariff authority for major ports (TAMP), in a view
of increasing importance of private sector investments
in the sector. Currently, the major ports are allowed
a ROCE to the extent of the government’s lending
rate plus a three per cent contribution each to the two
mandatory reserves maintained by these port trusts. This
works out to 18.5 per cent.
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Dewan
Housing to get Rs 60 cr from IFC
Mumbai: The International Finance Coproration,
the private sector arm of the World Bank Group, has signed
an agreement to provide a loan of Rs 60 crore to Dewan
Housing Finance Corporation Ltd, according to a press
release.
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Forex
dealers can offer rupee options from July 7
Mumbai: Authorised dealers in foreign exchange
will now be able to offer their customers another product
to hedge their currency exposures by way of `Rupee Options'',
effective from July 7. The Reserve Bank of India has stated
in a circular that authorised dealers having a minimum
CRAR of 9 per cent, on a back-to-back basis, and continuous
profitability for at least three years, and has a minimum
net worth of not less than Rs 200 crore, may offer the
product. Apart from this, they must have adequate internal
control, risk monitoring and management systems, including
a mark to market mechanism. Upon fulfilment of the requisite
criteria, authorised dealers will be allowed to run an
option book after obtaining a one-time approval from the
RBI. Initially only plain vanilla European options will
be offered, and customers will be allowed to purchase
call or put options. Customers can also enter into packaged
products involving cost reduction structures provided
the structure does not increase the underlying risk and
does not involve customers receiving premium.
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UCBs
allowed to extend loans to their directors
Mumbai: Urban co-operative banks (UCBs) can now
continue their existing advances to their directors, relatives,
firms and companies in which they are interested, up to
October 1. In April, the apex bank had prevented UCBs
from extending any loans and advances (both secured and
unsecured) these categories with immediate effect. The
UCBs were advised then that the existing advances extended
prior to April 29, 2003 might be allowed to continue up
to the date when they were due and that the advances should
not be renewed or extended further. An RBI circular said,
the extension has been granted in view the representations
received to provide some more time.
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Kisan
cards use picking up
Mumbai: Kisan credit cards seems to be catching
up with over 3 crore currently operational amongst farmers
in the country as on March 31. The target is to touch
5 crore by March 31, 2004, as envisioned by the Prime
Minister on Independence Day, which however looks a bit
difficult. The aim is to fulfil the Prime Minister's announced
plan of covering all `eligible farmers' — landowning
farmers and tenant farmers who are close to 5 crore in
number — under this card by March 31, 2004 in order
to meet their credit needs for cultivation purposes. The
target period may have to be extended considering that
banks are expected to issue only another 75 in the current
year. At present, 70-80 per cent of the total credit given
by the banking system towards crop loans — Rs 17,174
crore for the year 2001-02 — is now through kisan
credit cards, according to Nabard officials. There is
also an effort to make all crop financing through kisan
credit cards by March 31, 2004. Through co-operative banks,
scheduled commercial banks and rural regional banks 3.13
crore kisan credit cards have been issued in the country,
according to the figures available with Nabard, the nodal
agency of this scheme. Out of the 3.13 crore cards given
out, 65 per cent has been issued by co-operative banks,
since they are the traditional lenders towards crop loans,
25 per cent by scheduled commercial banks mainly, public
sector banks and 10 per cent by regional rural banks,
according to the data collected by Nabard.
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Bajaj
Allianz opens office in Kerala
Thiruvanathapuram: Bajaj Allianz General Insurance
Company (BAGIC), a leading private general insurance company,
has opened its full-fledged office here, the first in
Kerala. Announcing this here, Sam Ghosh, chief executive
officer, said Bajaj Allianz would like to bring its products
to "this highly literate State". Thiruvananthapuram,
the capital, offered a huge potential with several information
technology and business process outsourcing companies
having set up offices. According to Ghosh, the company
has already bagged several prestigious clients in the
city. Bajaj Allianz was the first private general insurer
to set up full-fledged offices in the State, which is
known for its predominantly high percentage of middle
class population who needs affordable general insurance
products.
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