Vijaya Bank to network 400 branches by next fiscal
Thiruvananthapuram: The public sector Vijaya Bank intends to bring 400 of its branches under core banking solutions network by the end of the next financial year. This will cover nearly 80 per cent of the bank's total business.

Already, 35 branches have been networked and the number will go up to 60 branches by the end of the current financial year, the bank has said.
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Andhra Pradesh for cut on interest on housing scheme loans
Hyderabad: The Andhra Pradesh Government has urged the bankers to further reduce the interest rate by 100 basis points for the loans on mass housing initiatives taken up under `Rajiv Gruhakalpa' programme.

At the State-Level Bankers' Committee meeting, the Chief Minister, Dr Y.S. Rajasekhara Reddy, has asked the bankers to further reduce the interest on the housing loans to seven per cent as against eight per cent recommended by the steering committee, a press release issued by the CM's office said.

The meeting was convened to discuss details on the construction of one-lakh houses under `Rajiv Gruhakalpa' programme in Ranga Reddy district. The Chief Minister has also asked the bankers to consider extending 100 basis points of interest concession to those beneficiaries who pay their loan instalments regularly without defaulting.

Explaining the Government's objective of providing own houses to urban poor, the Chief Minister said the registered beneficiary would get the land free, while the house costing Rs 1 lakh would be provided with all facilities such as roads, power, tap water, toilets and good ventilation.

According to him, 30 per cent of the total cost of the house would be borne in by the Government in the form of infrastructure development. Of the remaining 70 per cent cost, the Government would provide 10 per cent as subsidy and banks would meet the rest 60 per cent as loan at low interest.

The housing programme was meant for those urban poor having a monthly income of Rs3,000 in 26 locations in Ranga Reddy district around the twin cities of Hyderabad and Secunderabad. The housing project would be completed and ready for occupation in 18 months with all the infrastructure facilities, he said.
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RBI report on State finances highlights fiscal slippages
New Delhi: The Reserve Bank of India has drawn attention to the persistence of "weaknesses in State Government finances," stating that "fiscal empowerment holds the key to enduring fiscal correction and to provide adequate resources to finance developmental spending."

In its latest monthly bulletin highlighting `Finances of State Governments- 2004-05', the apex bank minces no words about the dismal state of State finances. The weaknesses of the State finances manifest mainly in the sluggish non-tax revenue, downwardly rigid non-developmental committed expenditures and inadequate allocations for education, health and infrastructure. Left uncorrected, this risks fostering a development deficit of a serious dimension.

Commenting on the trends in State finances, the RBI study said the reduction in fiscal imbalances during the period 2000-01 to 2002-03 turned out to be "transitory," with the revised estimates for 2003-04 revealing a marked deterioration in the key deficit indicators from their respective level in the budget estimates. The gross fiscal deficit of the State Governments was placed at 5.1 per cent of the gross domestic product (GDP) in the revised estimates for 2003-04 as compared with 4.2 per cent in the Budget estimates.

The fiscal imbalance flowed largely from higher revenue and capital expenditures in respect of the power sector that was compounded by a decline in revenue receipts. The widening of the revenue deficit was primarily on account of a shortfall in States' own taxes, mainly in respect of State Excise duties, Centrally sponsored schemes, a substantial spurt in revenue expenditure on power projects and a decline in grants from the Centre.

The Budget estimates for 2004-05 however show a concerted bid by States to carry forward the fiscal reforms process through a renewed twin-track policy on fiscal empowerment and expenditure containment. But the expected improvement in the States' fiscal position during 2004-05 would also be contingent upon the acceleration in their share in Central tax revenue and the revenue mobilisation efforts of the State Governments.

It is also disquieting to note that social sector spending of the States is estimated to decline to 5.4 per cent of GDP this fiscal from 5.9 per cent last year and within this, provisions for education and health are estimated to decline from 2.52 and 0.72 per cent in 2003-04 to 2.37 per cent and 0.67 per cent respectively in 2004-05.

A worrisome development is that besides boosting the level of debt, the outstanding guarantees of State Governments have increased from 4.4 per cent of GDP as of March-end 1996 to 8.1 per cent of GDP as of March-end 2001 and were placed at 7.5 per cent (Rs 1,84,294 crore) of GDP as of March-end 2003.
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HDFC Bank allots additional ADS
Mumbai: HDFC Bank Ltd has informed the Bombay Stock Exchange that the greenshoe option in respect of the issue of American Depository Shares (ADS) has been exercised by the underwriter for allotment of additional 9,96,700 ADS at $39.26 per ADS.

The bank has accordingly allotted 29,90,100 underlying Indian equity shares of the face value of Rs10 each. Each ADS comprises of three underlying equity shares of the bank.

HDFC Bank Ltd has priced its public offering of 66.44 lakh ADS at $39.26 per ADS and expected to raise $253.4 million through the issue.
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SBBJ hopes to grow retail lending
Kolkata: The State Bank of Bikaner & Jaipur (SBBJ) hopes to post 65 per cent growth in retail lending by the end of the current fiscal. In 2003-04, the bank achieved 54 per cent growth in retail loans, the bank said.

SBBJ's capital adequacy ratio, which was 13 per cent last year, has now dropped to 10.66 per cent but was likely to rise to 13.5 per cent shortly with the infusion of fresh funds of about Rs200 crore in the form Tier II capital.

Currently, the bank's authorised and issued capital was Rs50 crore, with the State Bank of India holding 75 per cent and public, the balance 25 per cent.

SBBJ's average cost of deposit was 4.78 per cent and the average yield on advances 8.51 per cent. The operating profit in the current year was likely to grow by 30 per cent over the last year to touch the estimated level of more than Rs800 crore.

Last year, the net profit amounted to Rs301 crore. Till December 2004, the net profit was Rs 136.73 crore and operating profit Rs 540.84 crore.

The gross NPA to total advances ratio now was 3.7 per cent likely to drop to around 3.5 per cent by March.
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