RBI wants banks to focus on smaller loans
Hyderabad: Reserve Bank of India (RBI) governor Y V Reddy has said commercial banks should concentrate on smaller loans and attain business from mass banking. He said looking at small clients also made sense as big corporates had started to look beyond banks for their capital requirements.

Reddy said moving towards masses would be a timely step.

Strong economic growth has enhanced incomes and opportunities, while the technology has provided tools to make the inclusive growth more viable.

Combined with policy initiatives, a new business potential has emerged before banks in the form of mass banking, according to the RBI governor.
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Karnataka Bank in talks for non-life insurance venture
Karur: Karnataka Bank is in talks with a group of financial institutions in India and Japan to form a joint venture for promoting non-life insurance products. Officials said the talks were at an advanced level.

The new joint venture would include Karnataka Bank, the Allahabad Bank, the Indian Overseas Bank and Sompo Japan, an insurance firm, to promote non-life insurance products.
The joint venture would be a separate entity and all general insurance policies would be in the product range.

Karnataka Bank has planned to open new branches in Allahabad, Siliguri and Panipat shortly, while the Karur branch has been classified as a designated foreign exchange dealer, he said.

By March-end, the bank hopes to have established 125 ATMs.
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NBFCs begin reworking models
Mumbai: The Reserve Bank of India's (RBI) draft guidelines prohibiting banks from having an exposure of more than 5 per cent of its net worth to a single NBFC, while aggregate exposure to all NBFCs at 40 per cent will affect the financing model of NBFCs.

Other than funding through banks, NBFCs normally raise finances through commercial paper and debentures, and sometimes, through bonds. NBFCs will now have to either bring in fresh capital or find other alternate sources of funding. This, in return, will increase the cost of funding for NBFCs.

Foreign banks with a branch presence in India who have NBFCs promoted by the parent or group of a foreign bank like Citi and StanChart will now have to submit consolidated prudential returns. Although foreign banks have been adhering to conglomerate reporting for the past seven quarters to the RBI, these banks will now have to adhere to prudential regulations.

What this would mean is that there would now be restrictions in the form of a capital market exposure of 5 per cent of previous years outstanding. Advances would now be applicable even to the NBFCs other than restrictions like maximum of Rs20-lakh funding for loan against shares and others.

According to bankers, foreign entities which have been looking at entering the country through the NBFC model would have to bring in more capital and would need to look at a broader product mix for their foray into the country.
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Deutsche Bank moving jobs to India
Frankfurt: Germany's biggest bank, Deutsche Bank, plans to move thousands of jobs to India, a German magazine has said.
According to the Der Spiegel magazine, Deutsche Bank's Indian subsidiaries DNETS, DBOI and GMC planned to employ more than 4,000 in 2007 to work securities trading or equity research.

The bank also planned to move jobs in its controlling business to India and the Philippines, Spiegel said.

The magazine added that the bank was also massively expanding its retail business in emerging markets and planned to enter the Chinese and Turkish market.
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Chola DBS puts stop on new deposits
Mumbai: Cholamandalam DBS Finance has decided to convert into a non-deposit taking non-banking finance company (NBFC) to ensure that Singapore's DBS Bank, which has a 37.48 per cent stake in it, does not have to reduce its stake to comply with new guidelines set by the Reserve Bank of India (RBI) which barred all banks — domestic as well as foreign banks having operations in India — from holding more than a 10 per cent stake in an NBFC that accepts deposits.

Cholamandalam DBS Finance was earlier Cholamandalam Investment and Finance Company.

Other foreign banks like Citibank, Standard Chartered Bank and Barclays Bank, which have operations in India, also own NBFCs but do not take deposits.

Cholamandalam DBS Finance is one of the country's largest NBFCs with a gross asset base of Rs2,015 crore at the end of March 2006. It offers vehicle finance, corporate finance, capital market finance and also consumer finance, a business it entered into after DBS Bank became its shareholder.
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