Ficci survey finds PSU banks need consolidation
New Delhi: A survey by the Federation of Indian Chambers of Commerce and Industry (Ficci), has found that the banking sector favours the creation of six or seven large entities like the State Bank of India to enable it to face competition.

According to the survey, "Indian banking system: The current state and the road ahead," as many as 92 per cent of public sector banks lamented the lack of sufficient autonomy to offer attractive incentives to their employees for retaining them and raising their productivity.

In the face of growing competition, consolidation in the banking sector was the most significant measure to achieve global standards, besides strict corporate governance norms and higher FDI limits to create an efficient, seamless banking system, the survey said.

Most of the respondents believed the Indian banking sector was adequately prepared to achieve the BASEL II deadline by March 31, 2007.

More than 84 per cent of the respondents said sound regulatory systems had ensured the Indian banking system a place in the global banking scenario, while 63 per cent and 52.63 per cent attributed the positive perception of India's banking system to robust economic growth and technological advancements, respectively.
Back to News Review index page  

Vijaya Bank to raise Rs700-cr tier-II capital
Hyderabad: To augment its capital adequacy ratio (CAR), the Mangalore-based public sector bank, Vijaya Bank has decided to raise around Rs700 crore under upper, tier-II capital before the year-end, its chairman and managing director, Prakash P. Mallya, said.

Despite mobilising Rs250 crore under lower tier-II capital at a coupon rate of 9.25 per cent recently, the bank is still finding it difficult to maintain its CAR at around 11.5 per cent to meet the requirements under the Basel-II regime from next fiscal, Mallya said.

With the proposed Rs700-crore upper tier-II issue, the bank expects to comfortably have a CAR of over 11.5 per cent even under the Basel-II regime. The bank's current CAR stands at 11.55 per cent, which is likely to fall by 100-200 basis points on account of Basel-II norms.
Back to News Review index page  

Maharashtra makes VAT claim of Rs389 crore
New Delhi: Maharashtra has made a claim of Rs389 crore to the Centre for the shortfall in tax revenues recorded by the State in April-July 2006 on account of implementation of Value Added Tax (VAT).

Last year 2005-06, which was the first year of VAT implementation, Maharashtra had made a total VAT compensation claim of about Rs3,550 crore.

Of this amount, the Centre has so far disbursed about Rs1,400 crore to the State.
Back to News Review index page