APSFC signs tripartite pact with Govt, SIDBI
Hyderabad: The Andhra Pradesh State Financial Corporation (APSFC) has announced here on Thursday that it has entered into a tripartite memorandum of understanding (MoU) with the Small Industries Development Bank of India (SIDBI) and the State Government, as a part of the restructuring exercise of the Corporation. According to an APSFC press release here, the MoU was signed by the SIDBI chief general manager, G.A. Nayak, the Andhra Pradesh Industries and commerce principal secretary, K.V. Rao, and the APSFC managing director, Ratan P. Watal.

The MoU complements the ongoing internal restructuring measures initiated by the Corporation during the last two years and would provide added impetus to the improved performance of the Corporation, the release said. According to the Corporation, the pact was a result of the relief package announced by the Central Government and SIDBI, the unequivocal financial and other support extended by the AP Government and the determined efforts of the Corporation to bring about a turnaround and become competitive.

The Central Government had earlier (during August this year) unveiled a relief package for restructuring of State Financial Corporations (SFCs) in the country. The package offers 2 per cent per annum interest rate concession on all existing refinance loans and 2 per cent interest rebate for prompt repayment of all future refinance loans availed by SFCs from SIDBI.

According to the APSFC managing director, Watal, the state government has already agreed to allocate Rs 6 crore towards equity of the Corporation for the current fiscal and to consider equity allocations for future years also based on performance review. The Government has also agreed to extend guarantees to the SLR and non-SLR bonds and other borrowings required for funding the loans sanctioned by the APSFC, he said. Watal said the Corporation has agreed to initiate certain internal restructuring measures and show performance improvement in the areas of recovery, cost reduction and containment of non-performing assets in respect of fresh sanctions.

The MoU with SIDBI comes into effect from April 1 this year and would be in operation for a period of five years or till the Corporation was fully restructured/recapitalised, whichever was later, Watal said. Stating that the validity of the MoU might be extended by mutual consultations, he said the performance of the Corporation would be reviewed once a year or at such intervals SIDBI and the State Government might direct as.
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Call to hike non-interest income
Mangalore: Efforts should be made to increase non-interest income as the demand for credit was not picking up and interest rate war was fierce, the chairman and managing director of Karnataka Bank Ltd, Ananthakrishna, has said. Participating in the regional review conference of the bank in Mangalore on Thursday, he said the need of the hour is to safeguard the interest of advances by constant monitoring. Judicious selection of parties and activities will help minimise risk and contribute to bank's profit, he said, and added that the soundness of a bank is judged by its profit and the health of advances. Stating that past and present performance of the bank is a pointer to the future, Ananthakrishna urged the regional heads to play a crucial role.
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Lord Krishna Bank keen to get strategic investors
New Delhi: Lord Krishna Bank is looking at all options, including offering a stake to a foreign partner, to increase its capital base by Rs 35 crore - Rs 50 crore this fiscal. Ashwani K. Puri, promoter-director of the Kochi-based bank, said, "The first choice would be to offer fresh equity to strategic investors. Two or three major foreign banks have evinced interest. We are considering it." The bank plans to offer fresh equity to the foreign banks in return for technology and expertise.

Other options include a rights issue or an initial public offer. Currently, the Puris of Mohan Exports and the Burmans of Dabur India hold about 65 per cent stake in the bank. "We are planning either a Tier-II bonds issue or a rights issue of about Rs 35 crore - Rs 50 crore this fiscal," the bank's managing director, R.M. Nayak, said. The bank's capital adequacy ratio is at about 13 per cent now, but the bank may require fresh capital to sustain its business, which is slated to grow by 100 per cent to about Rs 5,000 crore this fiscal. Puri said the bank aimed at Rs 20,000-crore business by March 2007.

The bank had also applied to the Reserve Bank of India for opening branches in Afghanistan and planned foray into Ghana, Sudan and Mozambique, he said. It planned to open 14 new branches and 20 extension counters across the country by May 2004. The bank also has a tie-up with Visa to offer debit cards. To offer mutual fund products, it has tied up with LIC Mutual Fund, SBI Mutual, Prudential ICICI and some others.
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ICICI Bank gets UK licence, opens arm in London
Mumbai: ICICI Bank Ltd has gained a UK banking licence to set up its first subsidiary overseas, ICICI Bank UK Ltd. With its first branch abroad located at Knightsbridge, London, ICICI Bank UK is currently the only locally incorporated banking subsidiary among Indian banks in the UK, said a press release from the bank.

The bank has also formed a partnership with UK-based Lloyds TSB plc; thereby customers of ICICI Bank can open and access their current and savings accounts through the 2,200 branches of the UK bank. Non-resident Indians and persons of Indian origin customers can also transfer funds to ICICI Bank accounts in India.

ICICI Bank UK will initially be targeting three commercial business areas: commercial banking support for small and medium corporates in the UK, trade finance in support of trade flow between the UK and India, corporate finance and syndication.

As part of its international banking division, the bank inaugurated its overseas offshore branch in Singapore and an OBU in Mumbai in addition to representative offices in Shanghai, Dubai and New York and has received approval for opening a wholly-owned subsidiary in Canada.
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