Samachar lehar jan2013

Canara Bank
Samachar Lehar January 2013

Samacher Lehar- January 2013 Issue
Sl. No Topic/Sub-Topic Page No.
1. Our Bank in News 03
2. KHAS BAAT 06
3. Agriculture & Other Priority 13
4. BASE 15
5. Bonds & Money MarkeT 17
6. Credit Growth 17
7. Cards 18
8. DepositS 20
9. Economy 21
10. Financial Inclusion & MFI 22
11. Minsitry of Finance 23
12. Economy 24
13. Forex Inflows 24
14. Housing Worries 25
15. Human Resources 26
16. Infrastructure 28
17. Liquidity 28
18. Mutual Funds & Capital Market 29
19. NPA 30
20. Other Banking News 33
21. Overseas Aspirations 35
22. RBI Directives & Guidelines 35
23. ` Movement 37
24. Technology 38
25. Perspectives on India's Balance of Payments 39
26. Unearned and Unshared Prosperity are Unsustainable 47
Transit Path for Indian Economy: Six Steps for Transforming the Elephant
27. 49
into a Tiger1
28. FAQs on Speed Clearing 57
29. Technology Enabled Transformation in the Financial Sector 59
30. Money Market and Monetary Operations in India 66
31. Mid-Quarter Monetary Policy Review : December 2012 77
32. RBI releases Financial Stability Report : December 2012 79
RBI re-aligns Implementation Date for Basel III Capital Regulations
33. 80
with Financial Year - Shifts from January 1, 2013 to April 1, 2013
34. In-line with Global models, stricter disclosure norms may be adopted : SEBI 81
35. Speedy payment to all including Tribal and Far Flung areas 82
36. Jail term if cheque bounces due to mismatch of signa 83
37. SEBI to put one-time leverage for Domestic hedge funds 83
38. Govt. suggests merger an option for capital infusion 84
39. CCI to look into saving account interest rate 85
40. IMF endorses reversed capital control measures 86
41. Information sharing mechanism to be improvised for better : Sebi 87
42. Govt. to shower more powers on banks for road projects 87
43. More info on borrowers through common window 88
Recruit as per own policy and requirements : FinMin to PSBs
44. 88
45. New Basel-III capital norms likely to trouble banks : RBI 89
46. Alternative mechanism for cheque dishonor cases : FinMin 89
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47. Take new initiatives for faster recovery of the NPAs : FinMin 90
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48. Govt. to use electoral rolls for opening Aadhar accounts 91

Samachar Lehar January 2013 issue- Compiled by RSTC Gurgaon

Canara Bank

Furnish list of RGESS-complaint securities, ETFs &
49. 91
MF schemes on website : Sebi to Exchanges
50. Comments on Bank exposure norms at examination stage : RBI 92
51. Oversight mechanism for brokers to get stricter 92
52. Depository system under review : Sebi 93
53. Recovery of bad loans get easier for banks 94
54. RDA rules out hiking investment limit for insurers 95
55. Govt. should pay interest on CRR : Deputy Governor 96
56. RBI simplifies account opening norms 97
57. RBI Plans for cost-effective Credit to Exporters 97
Non-payment of dues under Derivatives
58. 98
Contract would Qualify as wilful default : Supreme Court
59. RBI likely to tighten capital, provisioning norms for NBFC 99
60. FIIs may get to trade in currency futures 100
61. Govt. advices banks to assess remittance charges 101
62. Land Acquisition Bill & Setting up of NIB, passed by cabinet 101
63. Set up an Ombudsman for insurance-related matters : Bombay HC to IRDA 102
64. FIU to review KYC, reporting of suspicious transactions by custodians 103
65. RBI norms on foreign banks entry soon 103
66. New law after 56 years, aims at improving corporate governance 104
67. LS clears Banking Bill as govt withdraws future trading clause 105
68. RBI to speed up process for issuing new banking licences 106
Banking licenses must be obtained by Co-operative credit societies from
69. 106
RBI
70. Ceiling for FDI in ARCs raised to 74% from 49% 107
71. PSBs can alter the authorised share capital upon their discretion : FinMin 108
72. IRDA and FinMin have different views on online sale of insurance policies 108
73. Stick to core banking activities : FinMin to PSBs 109
74. Kisan Credit Card scheme should be easily accessible by Farmers : FinMin 110
75. New norms to double the CSR contribution by PSUs 111
76. New Bank licence : Final norms likely in January 112
77. Transaction cost for direct cash transfer is likely to be paid by Govt 112
78. Basel III norms to be implemented from April 1, 2013 113
79.
KEY BANKING INDICATORS 114

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Canara Bank

OUR BANK IN NEWS
Social action:
In commemoration of the International Day of the Disabled, Social Banking Cell jointly with
Women and Child Development Department, Government of Karnataka organised for a Dance,
Drama and Singing Competition for the children of the challenged section of the society at Bala
Bhavan, Bangalore on 30.11.2012.
International T 20 World Cup for the blind is being played for the first time in India and Social
Banking Cell is one of the cosponsors of the event. In the first match between India and
Australia, India won and the Man of the Match award was given to Sri Prakash of the Indian
team by Sri K Premnath, Manager, Social Banking Cell on behalf of our bank. (Social Banking Cell,
PC&FI Wing, HO)

Workshop:

the current year. As a part of the ongoing Vigilance awareness endeavor launched by the Bank
under the aegis of Vigilance Wing, HO, a two day workshop on 'Preventive Vigilance in Public
Procurement' was inaugurated by our Executive Director, Shri A K Gupta, today at STC,
Bangalore. Chief Vigilance Officer and General Manager Smt. Bhanu Raman welcomed the Chief
Guest and Programme Facilitator Shri R Radhakrishnan, Retd. GM, RBI and Ex CVO & CGM, SBI.
The programme is being graced by GMs, DGMs and other executives/Vigilance Officers of
Southern Circles. The ED, in his inaugural address lauded the efforts of Vigilance Wing and
particularly the CVO in organizing such preventive vigilance and other training programmes. (STC
Bangalore)

Opening of new branches:
In an eventful function organized at Kammasandra in Kolar District, our bank declared open 6
branches in Kolar and Chickballapur Districts. These branches viz. Kammasandra, Pulgurkote, D N
Doddi, Kurudumale, Madanahalli Cross and Y.Hunasenahalli were inagurated by the Hon'ble Shri
K H Muniyappa, Union Minister of State (Independent Charge) for MSME in the august presence
of Sri Sambashivamurthy Swamiji of Sri Kotilingeshwara Temple. Top officials from the Bank,
other dignitaries, VVIPs, well wishers and customers of the Bank attended the programme. With
the opening of these 6 branches, Canara Bank's branch net work in Karnataka touches the mile
stone 700 and for the Bank, the number of branches increases to 3680. Bank also launched
Canara Grameena Vikas Vahini - a mobile vehicle for easy access of the rural people. (CC&PR
Section, CC&BP Wing, HO)

Direct Cash Transfer Scheme:
Executive Director Ms Archna S Bhargava chaired the sub-committee meeting of SLBC at
Trivandrum on 11.12.2012. She requested the bankers to gear up the efforts to ensure the

Oommen Chandy and briefed him about the progress made by the banks under the scheme.
After that she made a visit to Pathnamthitta district and reviewed the progress of the
implementation of the "One Family, One Account" campaign. She also addressed a large
gathering of customers of Canara Bank and South Malabar Grameen Bank. (CC&PR Section,
CC&BP Wing, HO)

Study Visit:
24 International Delegates representing Ministries, Central Banks, Development Banks and
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Government Departments of 13 Countries who are on international training at National Institute
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for MSME, Hyderabad, (Ministry of MSME) visited our Head Office on 14th December 2012 under


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the guidance of Prof. T Ve
initiatives towards MSME Sector and the CSR initiatives of the bank especially related to MSME
Sector were highlighted. Sri K S Chandramouli, GM, MSME Wing, HO and Sri G Rajendran, DGM,
MSME Wing, HO were present on the occasion. (SME Business Unit, MSME Wing, HO)

Stress Management Programme:
A Stress Management Programme for Top Level HO Executives (GMs and DGMs) was organized
at HO Auditorium today. The sessions included yoga, meditation and tips to de-stress oneself at
functional and personal levels. Shri Ravi Eswaran from M/s Sivananda Vedanta Centre,
Trivandrum handled the sessions. The programme will continue tomorrow also. (HR&OD Section,
HR Wing, HO)

Canbank VC invests in Scotts Garments:
Canbank Venture Capital Fund Limited (CVCFL), a subsidiary of Canara Bank, has picked up 6.11
per cent stake in Bangalore-based Scotts Garments Limited for Rs 20 crore. The CVCFL has made
the investment through its Emerging India Growth Fund, a Rs 500 crore fund. (BS dt. 22.12.2012
p.8)

Rural Self Employment Training Institute:

Bank Rural Self employment Training Institute, in the state of Punjab at Tapa Mandi, Barnala
District on 16.12.12. He also inaugurated the first batch of 30 days training on Multi Phone
Servicing. Shri Ashok Kumar Gupta, ED welcomed the dignitaries and the audience. He
highlighted the initiatives of our bank in the arena of Rural Development in general and in the

the chief guest. Directors of our bank Shri Sunil Gupta, Shri Khalid Luqman Bilgrami, Shri G V
Manimaran, were the guests of Honour. Shri S S Bhat, GM, PC&FI Wing HO, Shri R Madhusudan,
GM, CO Chandigarh, senior executives, large number of staff and public participated in the
programme. Sri Mohammad Sadique MLA, Badour, Shri Kumar Rahul, DC Barnala, B K Gupta,
General Manager, Northern Railways graced the function. (CC&PR Section, CC&BP Wing, HO)

Vigilance Study Circle:
A talk on "Ethics & Values" by Prof. (Dr) R Venkata Rao, Vice Chancellor of National Law School of
India University, Bangalore, an eminent scholar and orator was organized by the Vigilance Study
Circle Bangalore on Wednesday, 26th December 2012 at Canara Bank Auditorium, HO, Bangalore.
Sri A K Gupta, ED presided over the function. In his presidential address he requested to re-
dedicate ourselves to uphold the declining ethics & values. Sri M N Krishnamurty, CVO, BEL was
the Chairperson. Ms. Aparna, GM welcomed the Chief Guest. Other Senior Executives were also
present on the occasion. (Vigilance Wing, HO)

Social Action:
On the eve of Christman, Social Banking Cell, HO sponsored a Solar Charger to UPS to M/s Sai
Shankar Loving Lights Trust who provides free shelter, value added education, food, clothing etc
to poor children. At a function on 24.12.2012, the Solar Charger was formally handed over to the
Trust by Smt K Susheela, AGM, PC&FI Wing, HO. (Social Banking Cell, PC&FI Wing, HO)

Canara HSBC Oriental Bank of Commerce Life Insurance has launched a Key Information
Document, a single-page document that summarises the key benefits of a product and provides a
snapshot to customers in simple language and format. It also highlights the importance of
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disclosures by customers. The document is introduced as part of the sales process and will help
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customers understand the most important features and conditions of the finalized insurance


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effort i
Officer, Canara HSBC Oriental Bank of Commerce Life Insurance. (FE dt. 28.12.2012 p.13)

Vigilance Study Circle (Bangalore) Vigilance Wing,
by Prof. Dr R Venkata Rao, Vice Chancellor, National Law School of India University, Bangalore on
26.12.2012 at 03.15 p.m. at HO Auditorium. ED Sri A K Gupta will deliver the presidential
address. All are requested to attend the programme & get benefit of the talk. (Vigilance Wing
SCRT, HO)

State-run banks in a rush to open rural branches:

far-flung corners of the co
transfer cash to beneficiaries of welfare schemes. At this point it seems 51 districts are unlikely to
be covered in the first phase but sensing that the scheme could be expanded to cover the country
by 2014, ahead of the next general election, account-opening exercise has picked up in earnest.

in the process and villagers are told to ope
Prabhakar, C&MD, Andhra Bank . (Mint dt. 24.12.2012 p.7)

Vigilance Study Circle (Bangalore)
Prof. Dr R Venkata Rao, Vice Chancellor, National Law School of India University, Bangalore on
26.12.2012 at 03.15 p.m. at HO Auditorium. All are requested to attend the programme & get
benefit of the talk. (Vigilance Wing SCRT, HO)

Award:
Karavali Samskritika Prathistana (R)., Kasargod (A Kannada Linguistic Minority Cultural & Literary

contribution towards Kannada Language-Culture development. The award shall be conferred on
30.12.2012 during the Kerala State 5th Kannada Sammelana-2012 and Kerala-Karnataka Festival
to be held at Lalita Kala Sadan, Kasargod. (Canara Bank Kannada Sangha)

S Raman appointed SEBI whole-time member:
The Finance Ministry has appointed Mr S. Raman as Whole-time Member of the Securities and
Exchange Board of India (SEBI). Prior to this appointment, Mr Raman, who had recently
superannuated, was C&MD of Canara Bank. Mr Raman will hold the post of SEBI whole-time
member for a period of five years from the day he assumes charge or up to 65 years of age or
until further orders, whichever is earlier, said a Finance Ministry notification. (BL dt. 29.12.2012
p.9)
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KHAS BAAT…..
Check your cheque:
Beginning January 1, 2013, you will no longer be able to use bank cheques that do not conform to
the Cheque Truncation System (CTS) 2010 standards. The new cheques have additional security
features, making it difficult to counterfeit. "Old cheque leaves will not start bouncing after
January 1, 2013. This is an indicative deadline for banks not to issue old cheques and to ask
customers to replace the old cheques. The RBI has not indicated to banks not to honour old
cheques," said Mr A P Hota, MD and CEO NPCI. (BS dt. 03.12.2012 Supplement p.2)

HSBC Gives up Plan to Buy RBS India Ops:
Hong Kong and Shanghai Banking Corporation (HSBC) on Friday abandoned its purchase of Royal
Bank of Scotlands India business after a two-year ordeal as regulator stood its ground on transfer
of branch licences,two people familiar with the matter said. RBS, the UK bank partly owned by
the British government, will wind up its 31-branch India operations by selling loans. The bank will
continue to operate its global banking and markets business, but it may be the end of road for
about 600 of its staff involved in local business. This decision is also likely to hit HSBCs attempt to
expand in India. HSBC, which aims to cut costs by as much as $3.5 billion this year globally, could
have used the failure to get branches transferred to itself as the right excuse to not pursue the
purchase, said those people who did not want to be identified. (ET dt. 01.12.2012 p.5)

Supervisory college for SBI, ICICI Bank:

largest domestic banks that have a worldwide presence. The objective is to keep these lenders
abreast of the latest worldwide regulatory rules and evaluate their worthiness for global
operations. As part of this process, the Reserve Bank of India (RBI) met State Bank of India (SBI)
officials along with regulators from the UK, the US, Europe and a few other countries on Monday,
said two persons familiar with the development. They declined to be named as RBI is yet to
formally announce this exercise. The members of the college will meet ICICI Bank Ltd
second largest lender by assets, on Tuesday. (Mint dt. 04.12.2012 p.3)

Crackdown on availing multiple loans against same property:
To prevent incidents of fraud by availing multiple loans against the same property, the Central
Registry of Securitization Asset Reconstruction & Security Interest of India (CERSAI) and Credit
Information Bureau (India), abbreviated as Cibil, have decided to create a link between their

encumbrance status of the property offered as collateral. Nearly 300 banks, financial institutions
and housing finance companies have registered themselves with CERSAI and are filling the
details of the mortgages accepted by them, depositing title needs. (FE dt. 04.12.2012 p.3)

which had lowered its outlook on Indian lenders to negative from stable in November 2011, said
on Tuesday that its view for the next 12-
factors to lead to a further deterioration in asset quality, an increase in provisioning costs, and a
(Mint dt. 05.12.2012 p.8)

Concern in LS over ATMs dispensing fake notes:
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Concern was expressed over growing instances of counterfeit notes being dispensed by ATMs,
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with a member demanding that those running these outlets should be held responsible. Raising


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the matter during Zero Hour, RSP member Mr Prashanta K Majumdar said circulation of fake
currency in the country had grown to such an extent that counterfeit notes were conveniently
finding way to banks and re-circulated through ATMs. He alleged that banks could be in collusion
and those running the ATMs could also be involved. "The source needs to be checked. When ATMs
dispense fake notes, those running them should be held responsible," he said demanding
adequate steps by the Finance Ministry to stop the menace. (FE dt. 05.12.2012 p.8)

Advance tax at 926 bank branches:
To avoid long queues in front of central bank counters, arrangements have been made at the
Reserve Bank of India and 926 branches of public and private sector banks in Mumbai and Navi
Mumbai to receive advance tax for the December quarter. (BS dt. 05.12.2012 p.4)

Reform push continues with bank Bill:

sought to ride on the momentum generated by winning the vote on allowing foreign investment
in retail stores, and keep its economic reforms agenda alive. However, Parliament was adjourned
without passing the Banking Laws (Amendment) Bill, 2011, after the opposition protested
against some new provisions added in the Bill that had been studied by the standing committee
on finance. Finance Minister Mr P. Chidambaram said later that a new clause sought to allow
banks to enter into forward trading and that there was nothing wrong in including additional
provisions. (Mint dt. 11.12.2012 p.1)

Laws don't allow interest on CRR, says Chakrabarty:
The Reserve Bank of India (RBI) can pay interest to banks on their cash reserve ratio deposits if the
r the
-five years

told. If the cash reserve ratio is a cost on banks
added. (BS dt. 11.12.2012 p.5)
LIQ
Steps to ease liquidity issue will continue- Gokarn: The Reserve Bank of India will continue to
take steps to address the deficit in the banking system liquidity, Deputy Governor Dr Subir

That is based on the assessment of current liquidity situation. The issue of government balance is
also being taken into account. We are seeing some str
told. (BS dt. 08.12.2012 p.3)

PSU banks detect frauds worth Rs. 5,200 cr in April-Sept:
More than 1,700 fraud cases involving over Rs 5,200 crore were detected in the state-owned
banks during the first six months of this fiscal, government said. Union Bank of India reported
fraud amounting to Rs 656.26 crore, followed by Punjab National Bank (Rs 619.86 crore), Bank of
India (Rs 473.45 crore), State Bank of Hyderabad (Rs 429.31 crore), and State Bank of India (Rs
376.97 crore). In all, 28 banks reported these frauds. In 2011-12, state owned banks had reported
3,392 frauds involving Rs 4,025.3 crore. Mr Meena further said that 12,252 employees of public
sector banks have been probed in fraud cases since 2009-10 till September 30, 2012. (FE dt.
15.12.2012 p.8)

HSBC to pay record $1.9 bn to US penalty:
HSBC holdings Plc plans top acknowledge that for years it ignored possible money laundering,
part of a record $1.9 billion settlement with US authorities that caps th
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into the US market. The UK-based banking company is expected to forfeit nearly $1.3 billion as
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part of a deferred prosecution agreement, the largest-ever US forfeiture for a bank, according to


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people briefed on the agreement between HSBC and multiple US agencies. The deal includes a
civil fine of more than $650 million, according to these people. As part of the agreement, the
bank will admit to violating the Bank Secrecy Act, the Trading with the Enemy Act and other US
laws intended to prohibit money laundering, a government official said. (Mint dt. 12.12.2012
p.24)

Post-reform, bankers eye quicker loan recoveries:
With parliament having passed the Bill to amend the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act), bankers are

recovery procedures due to these amendments. This will help in improving the recoveries in the
long
Earlier banks were allowed to convert debt into equity only if the company were to enter the
corporate debt restructuring cell and approach the banks with the offer. (FE dt.12.12.2012 p.8)

A Supreme Court ruling on Tuesday, to the effect that non-payment of dues against a foreign
exchange derivatives contract by a company will qualify as wilful default, will arm banks with
greater powers to deal with such cases. In 2008, several companies posted losses on derivatives
contracts and dragged banks to court claiming these had been mis-sold to them. Companies had
argued that since a derivatives contract was not a loan, the

hat a wilful default is not just on a loan but also on a derivatives

Govt hopes Banking Bill will be passed this session:
The Government hopes to get the banking Bill passed in the winter session of Parliament.
Meanwhile, this Bill has been listed for passage on Thursday. When asked if there was a
possibility of the Banking Bill being sent back to the House panel, the Finance Minister P.
on of
Standing Committee on Food and Consumer Affairs. I have used Rule 80 (of Parliament
(BL dt. 13.12.2012 p.1)

to negative from stable for three
public sector banks (PSBs), saying their worsening asset quality was exerting pressure on
profitability and capital. These three, Punjab National Bank, Bank of Baroda and Canara Bank,
have witnessed a rise in both gross non-performing assets (NPAs) and the restructured loan

environment, characterised by high inflation and high interest rates. (BS dt. 14.12.2012 p.4)

RBI rate cut not likely on Dec 18, says Rangarajan:
The Prime Minister's Economic Advisor Dr C Rangarajan said he doesn't expect the RBI to cut
interest rates at its next policy meeting on December 18. Asia's third largest economy is headed
for the weakest full-year growth in a decade, at about 6 percent, far below the near double-digit
pace before the global economic downturn. (FE dt. 15.12.2012 p.8)

RBI extends CTS cheque deadline by 3 months:
Bank customers do not need to discard their non-CTS 2010 standard cheque books in a hurry to
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get their multi-city CTS-2010 standard cheque leafs. They will get another three months time for
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such upgradation. RBI has just extended the deadline for doing the switchover for another three


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months to March 31 next year, following representation from various quarters. (ET dt. 15.12.2012
p.5)

PSBs should learn to say no- Chakrabarty:
RBI Deputy Governor Dr K C Chakrabarty said that the risk assessment capability of public sector
banks (PSBs) is lower than that of private sector banks and asked PSBs to develop the habit of

small borrowers. A
(FE dt. 17.12.2012 p.1)

No-action policy ahead of rate cut:
It is fairly certain that the Reserve Bank of India (RBI) will leave key interest rates unchanged in its
monetary policy review on Tuesday. In fact, in the October policy statement, the central bank
made it clear that rates may be eased only in the fourth quarter of the fiscal, beginning January.
Since the next policy meeting after the 18 December review is in January, RBI is expected to cut

and the government, despite political resistance, is serious about pushing economic reforms
two necessary preconditions for cutting rates. (Mint dt. 17.12.2012 p.1)

RBI keeps rates unchanged; focus shifts to growth:
The RBI on Tuesday kept its key lending rate and CRR unchanged, while signaling clearly that its
foc
monetary policy has to increasingly shift focus and respond to the threats to growth from this
managed with a view to
supporting growth as stated in the SQR (second-quarter review, unveiled in October), thereby

portion of deposits banks need to park with RBI, remains at 4.25%. The repo rate, at which RBI
lends overnight funds to banks, stays at 8%. (e-Mint dt 18.12.2012)

Bank borrowings at 9-mth high:
-month high to nearly
Rs 1.5 lakh crore owing to large withdrawals by companies towards advance tax payments. Banks
borrowed Rs 1,46,300 crore from the repo auction, an amount not seen since March. In March,
repo borrowings had hit an all-time high of around Rs 2 lakh crore owing to large loan disbursals
during year-end and advance tax payments. (FE dt. 18.12.2012 p.8)

Come new year, RBI may shut down counters for exchange of notes, coins:
From New Year, individuals and traders may not be able to get coins and exchange of currency
notes from offices of RBI. The apex bank is all set to shut down its counters or currency chest
offices for distribution of coins/currency notes, according to a decision taken in its monetary
policy statement in 2012-13. There are a few hundred counters offering this public service in the
branches of the RBI across the country. The move would imply that the general public, including
traders, will have access to supply of coins/ exchange notes only through the branches of
commercial banks. (BL dt. 18.12.2012 p.6)

Banking Bill paves way for new banks, foreign investment:
The government cleared the decks for the RBI to initiate the process to issue new banking
licences and widened the window for infusion of capital into the banking sector. Most provisions
in the Bill are to strengthen RBI. In Parliamentary democracy, give and take was required and rest
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of the Bill was important as Reserve Bank of India was awaiting more powers, the Finance
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Minister said.


Canara Bank

The effects of new Banking Bill are:
RBI gets more powers, can supersede bank board
Voting rights of shareholders in banks go up
Banks not allowed to trade in commodity futures
RBI to be banking regulator, CCI to regulate M&As(BS dt. 19.12.2012 p.1)

Exporters unhappy as RBI holds rates:
tance may impact the MSME export sector further, given the weak
demand in the western economies, said the Federation of Indian Export Organisation (FIEO),
while the Apparel Export Promotion Council (AEPC) has expressed its disappointment over the
apex banks mid quarter monetary policy review. FIEO President Mr Rafeeq Ahmed, while
commenting on the status quo on policy rates, said that while inflation (both core and WPI) has
moderated and there was an upsurge in IIP data and core sector industries, RBI has been firm on
(FE dt. 19.12.2012 p.3)

Consolidation must involve only large banks-Tanksale:
The consolidation in the banking industry should involve mergers or amalgamations of only large
banks, Mr M. V. T

about his views on consolidation moves in banking industry. Mr Tanksale pointed out that Indian

mergers of large banks and not look at weaker banks getting taken over by larger banks to create
(BL dt. 22.12.2012 p.5)

Banking Bill to expedite new licences :
The passing of the Banking Laws (Amendment) Bill 2011 by Parliament on Tuesday has put new

take a call on giving licences to
Analysts, however, said the passing of the Bill leaves no room for doubt that NBFCs such as L&T
Finance Holdings Ltd, Mahindra and Mahindra Financial Services Ltd, Bajaj FinServ Ltd and
Shriram Transport Ltd would be up for licences. The process of granting new licences is widely
expected to take at least another year if not longer. (Mint dt. 20.12.2012 p.3)

PSUs must start investing-Bankers:
-rich public sector companies to lead the way and kick-
start investments. Speaking at the Business Standard Banking Round Table in Mumbai on
Tuesday, SBI Chairman Mr Pratip Chaudhuri said growth had to come from power, fertiliser, steel
and metals firms - the sectors that
companies are sitting on cash but not investing. They have to go out and invest. That is how
many low-
underlying fact
CEO Ms Chanda Kochhar. (BS dt. 19.12.2012 p.1)

Banking, debt recovery Bills passed in Rajya Sabha:
The Banking Laws (Amendment) Bill, 2011, and the Enforcement of Security Interest and Recovery
of Debts Laws (Amendment) Bill, 2011, got parliamentary approval with the Rajya Sabha passing
both on the last day of the winter session. The Lok Sabha has already passed the Bills. They will
help prepare the ground for the Reserve Bank of India (RBI) to issue new banking licences and
make it easier for banks to recover bad loans. The Bills need presidential approval to become law.
10

formulate guid (Mint dt. 21.12.2012 p.7)
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No cartelization by, state-owned banks:
Fair trade regulator Competition Commission of India (CCI) has found no evidence of cartelization
among public sector banks in deciding their savings interest rates, Parliament was informed. The
issue of common 4% interest rate offered by all public sector banks on savings account deposits

of sufficient in
added. (Mint dt. 21.12.2012 p.21)

YES Bank's fast growth poses operational, credit risks: Moody's:
rational and credit

up from 400 in September 2012. It will take time to fully stabilise a larger business franchise and
start reaping economies of scale benefits

factors in strong financial performance and a high level of loan growth. The agency, however,
warned that high credit growth carries risks, which would become apparent over time during
adverse economic conditions. (BS dt. 24.12.2012 p.10)

HC directs Indian Bank, PNB, UBI to deposit Rs 400 cr to secure BCCI's claim:
The Bombay High Court has asked three public sector banks Punjab National Bank (PNB), Indian
Bank and Union Bank of India (UBI) to collectively deposit around Rs 400 crore in the court to
secure the claim of cricket governing body Board for Control of Cricket in India (BCCI). However,
the PSBs have decided to challenge the order of the single bench court. Punjab National Bank and
Indian Bank have been asked to deposit Rs 150 crore each while Union Bank of India has been
asked to fork out Rs 100 crore. (ET dt. 25.12.2012 p.7)

Govt announces more sops to lift exports, extends interest subsidy:
Worried by dwindling exports and the rising trade account deficit, the Government on
Wednesday announced a number of measures to boost exports. This is the second round of
incentives in less than six months. The sops include extension of 2 per cent interest subsidy for

difficult to meet export targets and want to stop and reverse the fall in exports. Year 2012 has
been particularly difficult and the Government will continue to monitor the situation. We will

and Industry Minister Mr Anand Sharma told. (BL dt.27.12.2012 p.1)

Old generation lender Karur Vysya Bank (KVB) is open to acquiring a bank if an opportunity comes
its way, said a top bank official. Mr K. Venkataraman, MD & CEO, KVB, gave this reply to a specific
question on whether his bank would throw its hat into the ring to acquire one of the two
distressed South-based old generation PSBs (one headquartered in Tamil Nadu and the other in
Kerala).He, however, said the 96-year old Karur (Tamil Nadu) headquartered bank is not actively
pursuing an acquisition at this point in time. (BL dt.27.12.2012 p.8)

RBI may release final guidelines in January:
Year 2013 could ring in some good news for bank aspirants. The Reserve Bank of India (RBI),
currently giving final touches to the proposed bank licence norms, is likely to release the final
norms in January, according to RBI sources. However, the process of inviting the applications
might not start immediately, sources added. After the final norms are issued, the central bank is
11

expected to set up an external committee, to screen applications. After the panel is set up, RBI
will start accepting applications. It could take some time for fresh applications to come in,
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sources said. (BS dt. 28.12.2012 p.6)


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Cannot mandate banks to check creditworthiness of buyers: ECGC:
Despite the government auditor insisting Export Credit Guarantee Corp of India Ltd (ECGC)
mandate banks to check the creditworthiness of foreign buyers of Indian goods, the latter says it
is not in a position to do so due to the structure of the credit insurance products it sells. In a
recent report tabled in Parliament, the Comptroller and Auditor General of India (CAG) had said
ECGC, which provides credit insurance support to exporters and banks, should insist on obtaining
from banks a certificate that due diligence had been carried out on the creditworthiness of the

the cover is only when an account becomes a non-performing loan account. So, if one particular
(BS dt.
28.12.2012 p.6)

If 2 large borrower banks go under, 9 other banks would fail:
Simultaneous failure of two large borrower banks would trigger the failure of nine other banks
and result in a loss of over 18 per cent of the tier-1 capital of the system, a financial stability
report published by the Reserve Bank of India says. According to the study, these two large
borrower banks have remained in the inner core of the banking system consistently over the past

indicates that the failure of the large lenders in the system could have a significant downstream
impact on the availability of liquidity in the system and could also cause a few other banks to be,
(BL dt. 29.12.2012 p.8)

Bancassurance norms may expose banks to reputational risks:
The Reserve Bank of India on Friday said the draft guidelines on bancassurance, which were
released by insurance regulator Insurance Regulatory and Development Authority (IRDA), may
draft in October, banks can sell
insurance products by playing either a corporate agent or a broker to insurance firms. Corporate

products. Those opting to be a broker will have to first withdraw from their existing
bancassurance partnership. (BS dt. 29.12.2012 p.3)

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Agriculture & Other Priority…..
Exim Bank to refinance $500 mn SME loans :
Exim Bank today said it would refinance USD 500 million in loans given by commercial banks for
their technology upgrade to boost lending to export- oriented small businesses. "We have taken
an approval to launch the scheme about a month back and will make it operational before the
end of the fiscal," Exim Bank C&MD Mr TCA Ranganathan said. He said banks can aggregate their
portfolios devoted to technology upgrade by export-oriented SMEs in the manufacturing sector
and get it refinanced from the Exim Bank. (FE dt. 13.12.2012 p .8)

ICICI Bank opens 101 rural branches:
The largest private sector lender, ICICI Bank, said it has launched 101 gramin branches in six rural
states, as it looks to increase its presence in areas where banking facilities are not available. Each
of the gramin branch will have at least three employees and will initially not have ATMs attached
to the branch. ICICI Bank now has about 400 rural branches, with 5,000 customer service points
covering 10,000 villages in the country. The branches have been opened in 19 remote districts
across Maharashtra, Rajasthan, Andhra Pradesh, Gujarat, Madhya Pradesh and Tamil Nadu . (FE
dt. 14.12.2012 p.8)

Govt to increase women SHG members to 70 mn in 5 yrs:
The Centre is planning to increase the number of members in women self-help groups (SHGs) to
70 million in the next five years from the present 30 million, effectively bringing one member
each from all the families of below poverty line into the fold of the National Rural Livelihood
Mission (NRLM). The ministry was working through NRLM to replicate the SHG movement into
North India and also eastern parts of the country, Mr Jairam Ramesh, Rural Development Minister
said. At present, the movement was mostly confined to South Indian states with 80 per cent of
bank loans under the SHG-bank linkage going into just four states of Andhra Pradesh, Karnataka,
Tamil Nadu and Kerala. (BS dt. 17.12.2012 p.4)

Bank credit to MSMEs up 9% in 2011-12:
Credit flow to MSMEs by public and private sector banks increased by nine per cent in 2011-12.
According to Minister of State for Finance Mr Namo Narain Meena, banks disbursed Rs 7.12 lakh
crore in 2011-12, as compared to Rs 6.53 lakh crore in 2010-11.The allocation of 60 per cent of
advances to micro and small enterprises (MSEs) to micro enterprises is taking place in three
stages 50 per cent in 2010-11, 55 per cent in 2011-12 and 60 per cent in 2012-13, said the
minister. (BS dt. 18.12.2012 p.12)

RBI firm, talks tough on Nabard warehousing refinance:
The RBI has asked the Nabard to come clean on its controversial warehousing refinance scheme.
In a communication last week, the RBI has talked tough, asking Nabard to comply with regulatory
directions in this regard. Nabard was censured for (i) charging higher interest rate than
prescribed; and (ii) converting RIDF-XVII into a refinancing scheme for warehousing
infrastructure lending. Nabard had charged an interest rate of 8 per cent, against the prescribed
6.5 per cent for 2011-12. (BL dt. 28.12.2012 p.8)

Give farmers easy access to Kisan Credit Card scheme-Finmin:
The Finance Ministry has asked banks to provide farmers easier access to the Kisan Credit Card
scheme, a move that comes after a decline in farm loans disbursed by the state-run banks. The
13

Ministry has, among other measures, advised the banks against charging any processing fee for a
card limit of Rs 3 lakh and asking for a separate margin on crop loans. Farmers will also be
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exempt from submitting documents related to the land title at the time of annual renewal of the


Canara Bank

card, even if the land is already hypothecated to the bank due to a charge against a previous loan,
because there is no risk of change in the land ownership. The measures follow a decline in loan
disbursals to the sector in the first half of the current fiscal by a few banks, including Central
Bank of India(-78.60%), IDBI Bank (-41.71%) and Canara Bank (-3.75%), compared with the year-
ago period. (ET dt. 28.12.2012 p.11)

SIDBI, IOB ink pact to launch risk sharing facility
Small Industries Development Bank of India signed a memorandum of understanding with
Indian Overseas Bank to launch the scheme of risk sharing facility-II for guaranteeing collateral-
free credit facilities to MSEs. Under the scheme, collateral free and /or third party guarantee free
credit facilities over Rs 100 lakh and up to Rs 200 lakh sanctioned to eligible MSEs are proposed to
be guaranteed through select member lending institutions of Credit Guarantee Fund Trust for
Micro and Small Enterprises. (BL dt. 22.12.2012 p.5)

2 RRBs in Karnataka amalgamated:
According to the directions of the Uni
the Chikmagalur Kodagu Gramin Bank, a regional rural bank (RRB), sponsored by Corporation
Bank, was amalgamated with Cauvery Kalpataru Grameena Bank, sponsored by State Bank of
Mysore. In a release to exchanges, Corporation Bank said the amalgamation comes into effect
from November 1 vide notification. (BL dt. 29.12.2012 p.8)

Priority sector lending targets:
Banks may struggle to meet their priority sector lending targets this financial year despite
improvement in farm credit disbursements, feel analysts. In October, 2012 credit growth
remained weak with slowdown particularly pronounced in the industrial and services sectors.
While growth in personal loans segment was stable, agri credit witnessed sharp increase. (BS
dt. 04.12.2012 p4)

Andhra Bank cuts rates on educational loans:
Andhra Bank has announced reduction in interest rates for fresh education loans. For educational
loans between Rs 4 lakh and Rs 7.5 lakh, the interest rate has been reduced from 14.25 per cent
to 13.25 per cent. Loans over Rs 7.5 lakh will carry a lower rate of 12 per cent, down from the
13.25 per cent, the bank said in a statement. For girl students, a further concession of 0.50 per
cent has been decided. Also, to encourage meritorious students, an interest concession of 0.50
per cent has been introduced on education loans - this is for students securing 90 per cent or
above. In respect of loans for pursuing PG courses, a similar interest rebate of 0.50 per cent is
allowed to students who secured 80 per cent or above at degree/graduation level examination,
the statement added. (BL dt.06.12.2012 p.6)
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BASEL…..
SBI expecting Rs 4,000 cr from govt this fiscal:
State Bank of India said it is expecting around Rs 4,000 crore infusion from government this fiscal
that will ramp up its capital base to over 13 per cent. "I think the government will give us capital
and it should be around Rs 4,000 crore. What mode it will be, is a matter that is being
discussed," Managing Director and Chief Financial Officer Mr Diwakar Gupta said."We have given
various options and it is the call of the government to decide how they would like to infuse the
equity," he said. The Rs 4,000-crore capital infusion is adequate for us as that can keep the capital
base above 13 per cent, Mr Gupta added. At the end of the September quarter, SBI's capital
adequacy ratio, a key indicator of a bank's financial strength expressed as a ratio of capital to
risk-weighted assets, stood at 12.63 per cent, from 11.4 per cent in the year-ago quarter. (FE
dt.06.12.2012 p.8)

IndusInd Bank board clears QIB allot ment:
IndusInd Bank on Wednesday said its board has approved allotment of 52.1 million equity shares
t of the issue of equity shares of ace value of Rs
10 each of the company to qualified institutional buyers. The Finance Committee of the Board of

The equity shares at a price of Rs 384 per share, including a premium of Rs 374 per share,
aggregates to Rs 2,000.63 crore to QIBs, it said. (Mint dt. 6.12.2012 p. 11)

ICICI Bank raises 100-mn Swiss francs:
ICICI Bank has raised foreign exchange resources worth Swiss francs 100 million (over $100
million) through seven year bond. The bond is priced at a coupon and re-offer yield of 2.75 per
cent. This was the first offering by ICICI Bank in Swiss currency. Deutsche Bank was the sole
banker to the issue. Mr David Greenbaum, Head, Debt Capital Markets, Deutsche Bank (South
Asia), said a combination of stable market conditions, lack of recent emerging markets issues in
Swiss francs, and reverse inquiries from several key investors supported this opportunistic issue.
(BS dt. 12.12.2012 p.5)

Deutsche Bank infuses funds:
Deutsche Bank AG on Thursday said it infused Rs.1,054 crore into its Indian operations to fund

R
said in a statement. This is the second capital infusion in 2012 after the German lender invested
Rs.455 crore to strengthen Indian operations in March. (Mint dt. 14.12.2012 p. 10)

Indian Overseas Bank is hopeful that the Centre would soon infuse some capital in the public
sector lender, Mr M. Narendra, C&MD, has said. This public sector lender had sought capital
support of Rs 1,500 crore from the central government for the current financial year. IOB
currently has Tier-I capital of 7.63 per cent and the expectations are that the capital support from
the Centre would help lift the Tier- ting for the right market
conditions. A decision on the timing of perpetual bonds issuance will have to be taken by the end
(BL dt. 17.12.2012 p.5)

Axis Bank Lines Up 6,000cr Share Sale:
15

Axis Bank is looking to sell as many as 4.58 crore new shares to boost its capital before the Basel-
III norms kick in, which at current prices may help it fetch more than 6,000 crore. The lender,
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headed by Ms Shikha Sharma, will be the second private sector bank to raise funds this year after


Canara Bank

IndusInd Bank. City Union Banks rights share sale is underway while YES Bank and Development
Credit Bank are also in the process of raising equity. ICICI Bank and HDFC Bank may also reach out
to investors in the coming months for funds as the market for equity issuances opens up and the
need to raise funds increases to meet capital norms. (ET dt. 18.12.2012 p.1)

Chidambaram promises more funds to public sector banks
The Centre is committed to infusing more capital into public sector banks (PSBs), Finance
Minister Mr P.Chidambaram said. Replying to the discussions on the Banking Bill in Lok Sabha, Mr
Chidambaram said that another Rs 15,000 crore capital will be infused in PSBs before end-March.
He said that the Bill would pave the way for PSBs to raise capital through every accepted mode
including rights issue, bonus shares without diluting their public sector character. (BL dt.
20.12.2012 p.5)

Disinvestment funds may be used for bank recapitalisation from FY14:
In a bid to fast-track recapitalisation of the public sector banks and insurance companies, the
Ministry of Finance has proposed to set up an empowered group of ministers headed by Finance
Minister Mr P Chidambaram to use the disinvestment proceeds for this purpose from the next
fiscal year. The propos
productive use of funds from PSU stake sales which were earlier used to finance capital needs of
social sector schemes. The proposal mooted by department of disinvestment has garnered
support from the other departments of Finance Ministry. (FE dt. 21.12.2012 p.9)

Union Bank to raise Rs.1500 cr via bonds:
State-owned Union Bank of India said it would raise up to Rs 1,500 crore from bonds over the
next three months. The decision to raise funds was taken at the Board meeting held on
December 22 , UBI said in a BSE filing. The Board approved raising of additional capital funds not
exceeding Rs 1,500 crore during the year 2012-13 by way of issue of Tier-I and Tier-II capital
bonds as per eligibility, it said. Meanwhile, another public sector lender Bank of Maharashtra
(BoM) has cleared raising up to Rs 1,350 crore from various bonds. BoM plans to raise up to Rs
350 crore from Tier-I unsecured, non convertible, subordinated, perpetual bonds (Innovative
Perpetual Debt Instruments), the bank said. (FE dt. 25.12.2012 p.8)

SBI needs to infuse over Rs 12k cr in 2 years-MD:
State Bank of India will need to raise around Rs 12,000-17,000 crore of capital over the next two
yers to meet its business requirements, said SBI MD and CFO Mr Diwakar Gupta. Mr Gupta said
this number was arrived at after taking into account the Basel III norms. He said in short term, the
At the end
of the September quarter, the bank had a capital adequacy ratio of 12.63% with tier I capital
standing at 8.97%. (FE dt. 28.12.2012 p.13)

Govt bank can alter share capital:
Sate-owned banks can now increase capital while issuing preference shares, right issues or bonus
shares without being limited by the earlier ceiling of Rs 3,000 crore, the Finance Ministry said. (BS
dt 22.12.2012 p.3)

Basel III norms in India from April:
The Reserve Bank has rescheduled the start date for implementing Basel III norms to April 1, 2013
from January 1. The central bank said it would closely monitor the progress on implementation in
other countries, particularly major ones who are the members of the Basel committee. (FE
16

dt.29.12.2012 p.1)
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Bonds… Money Market….
UBI to raise Rs 300 cr from bonds:
United Bank of India said it proposes to raise Rs 300 crore from bonds to fund its business
growth. The bank has finalised the issue of unsecured, non-convertible, perpetual debt
instrument of Rs 1 lakh each at par for an amount of Rs 200 crore with a green shoe option of
another Rs 100 crore on private placement basis, United Bank of India said. (BS dt. 04.12.2012
p.4)

Bonds remain mixed:
Government Securities (G-Sec) ended mixed, on alternate bouts of buying and selling. The 8.33
per cent G-Sec maturing in 2026 firmed up to Rs 100.54 from Rs 100.38 yesterday, while its yield
moved down to 8.26 per cent from 8.28 per cent. (BS dt. 05.12.2012 p.4)

Credit Growth…..
Festive season: Cheer for banks in retail credit:
The reduction in interest rates by banks in home loans has finally helped them garner a higher
month-on-month growth this festive season. The growth in home loan dues in absolute terms
was Rs 7,200 crore on a month-on-month basis in October, compared with a growth of Rs 3,046

retail loans for banks. (BS dt. 01.12.2012 p3)

As retail falters, banks set eyes on unsecured loans:
The slowdown in growth of bank loans is spreading to the last bastion - retail - forcing lenders to
raise their portfolio of unsecured loans after a gap of four years when rising defaults during the

tegy to follow for banks like us with a large
- -oriented strategies followed by some in
(ET dt. 03.12.2012 p.1)

Yes Bank to expand retail portfolio:
o boost its retail portfolio, buoyed by its success in
raising low-cost deposits. On Wednesday, Yes Bank will announce a tie-up to distribute credit
cards from American Express Co. for a fee after having teamed up with Dewan Housing Finance
Corp. Ltd (DHFL
suite. We will be predominantly an originator for these cards with an aim to gain expertise,
experience and increase our product depth when retail becomes our number one business in

Loan growth picks up on retail demand:

as demand from home loan and retail borrowers picked up. Bank loans grew 3.1% to Rs 49.6
trillion during October-November from 2.2% in the April-September period, according to the RBI

(Mint dt. 13.12.2012 p.11)
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last few months,
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Canara Bank

Banks unlikely to cut lending rates:
Bankers would like to wait for a signal from the RBI before taking a call on lending rate cuts. With
RBI deciding to keep key interest rates unchanged on Tuesday, top lenders led by SBI, ICICI Bank
and HDFC Bank said they would leave loan rates unchanged. SBI Chairman Mr Pratip Chaudhuri

quo. Mr M Narendra, C&MD of IOB, said base rate cuts will be difficult to implement till March
(FE dt. 19.12.2012 p.8)

RBI begins check on collateral adequacy for corporate loans:
With a rise in corporate loan d
Reserve Bank of India has sought information on adequacy of collateral and securities on
corporate loans. The central bank, which had already begun work to assess the challenge from
non-performing assets, has expanded the exercise to check the readiness to face further pressure

move, a top executive with a small private bank said the purpose was to ensure banks had
adequate collateral for loans when they went for recoveries. (BS dt. 21.12.2012 p.1)

Bank credit growth expected at 15.6% by end of FY13:
Deposit growth at 13.3% for the fortnight ended 14 December has increased marginally. Credit
growth, however, has decreased marginally to 16.3% this fortnight. Credit deposit ratio further
increased 10 basis points over the previous fortnight to 77.1%. Deposit growth still near seven-
year low. Deposit growth marginally recovered to 13.3%, compared with 12.8%, which is the
lowest since April 2005, during the previous fortnight, led by a better time-deposits growth,
which at 13.8%, was marginally better than 13.2% in the previous fortnight. Credit growth, at
16.3% was lower than 17% the previous fortnight. (Mint dt. 28.12.2012 p.17)

Slowdown to impact demand for bank credit in 2013: Report
Slackening demand for credit and pressure on asset quality are some of the challenges that the
Indian banking sector is facing in 2013. This could, in turn, because banks to increase their focus
on fee income to maintain their margins intact, said a report on the banking sector by Dun &
Bradstreet India. According to the Reserve Bank of India's second quarter review of monetary

forecast earlier to 5.8 per cent. Any further slowdown in the Indian economic growth is likely to
impact the demand for bank credit, according to the Indian Banking Sector Outlook for 2013. (BS
dt.25.12.2012 p.5)

Cards…..

RBI prescribes rules for co-branded debit cards:
The RBI prescribed guidelines for banks to issue co-branded debit cards and pre-paid instruments
igence
in respect of the non-banking entity with which they intend to enter into tie-up for issue of such
cards to protect themselves against the reputation risk they are exposed to in such an
arrangement, the RBI said. (FE dt. 13.12.2012 p.8)

Issue only online debit cards, RBI tells banks:
In a bid to hasten the process of penetration of pre-paid instruments, the Reserve Bank of India
18

said that banks may issue debit cards, including co-branded debit cards, without seeking prior
approval from it. The RBI also prohibited banks from issuing offline-debit cards henceforth.
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In a
move that will put and end to the practise of banks pestering customers with their credit card
offers, the central bank ordered that banks should not dispatch a card to a customer, unless
solicited. (BL dt. 14.12.2012 p.6)

Govt on credit card complaint:
The Reserve Bank has received a large number of complaints relating to credit cards against
lenders such as SBI, ICICI Bank and HDFC Bank for reasons like penal and late payment charges
during the last fiscal, Parliament was informed. These were, however, lower than those received
in 2010-11. During 2011-12, Reserve Bank of India (RBI) has received 5,198 complaints against
State Bank of India (SBI), followed by ICICI Bank (1,211) and HDFC Bank (1,153), Finance Minister
Mr P Chidambaram said in a written reply to the Lok Sabha. (BS dt. 15.12.2012 p.3)

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Deposits…...
Corporation Bank launches two new term deposits:
Corporation Bank has launched two new term deposit products -
- with effect from December 4. A bank release said that Corp Super Gain is
offered for 222 days with an interest rate of 9 per cent. Corp Super Gain Plus is offered for 444
days with an nterest rate of 9.25 per cent. For both the new schemes the minimum amount of
deposit is Rs 10,000 and the maximum is Rs 5 crore. The release said that there is no penalty for
premature closure.(BL dt. 04.12.2012 p.6)

Deposit growth at nine-year low:
The banking sector could soon see a worsening liquidity situation that could crimp credit offtake
if the -year
low in the fortnight ended November 30 where it grew 12.76%, RBI data showed. The last time
deposit growth dipped below 13% was in December 2003. Outstanding deposits of banks stood
at Rs 64, 42,835 crore as on November 30, a growth of just 5.4% for the financial year. (FE dt.
14.12.2012 p. 8)

SBI: Reduce fixed deposit minimum tenure to 3 days:
The SBI has requested the RBI to reduce the minimum tenure for fixed deposits to three days

facilities, the experience and so on. In fact, I am requesting RBI, time and again, that the tenure of

said. (BS dt. 21.12.2012 p.6)

Federal Bank, Dena Bank raise deposit rates by 25-30 bps:
Despite the interest rates having a softer bias, with the central bank indicating rate cuts during
the fourth quarter of the financial year, some banks have increased deposit rates by 25-35 basis
points on Monday in select maturities.Federal Bank raised the deposit rate by 25 basis points in 1-
3 year domestic term deposits to nine per cent and Dena Bank increased it in the one year and
above one year to less than two years bucket by 35 basis points to 9.1 per cent. (BS dt.25.12.2012
p.4)

BoI hikes rates on bulk deposits:
Public sector lender Bank of India raised interest rates on select bulk deposits, to retain its deposit
base even as the government wants all public sector banks to cut their bulk deposit portion to
15% of total deposits by March end. BoI raised interest rates on deposits worth Rs 10 crore and
above by 25 bps to 9%. In a notification to the stock exchange, the bank said it has raised rates on
bulk deposits which fall in the maturity period ranging from one year and above to less than two
years. (FE dt.28.12.2012 p.10)

RBI order on special deposit scheme:
The Reserve Bank of India has asked all banks to promptly pay the interest on the special deposit
scheme to customers on January 1. The interest rate payable will be 8.6% from January-March
and 8.8% from April-December 2012. Banks can pay customers the interest through various
payment options such as electronic transfer or account payee cheques. (FE dt. 25.12.2012 p.8)
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Economy…..
BS poll - Street divided on RBI action in Dec policy review:
A Business Standard poll conducted among prominent fund managers and economists, shows
that the Reserve Bank of India is likely to keep interest rates unchanged in its mid-quarter review
of the monetary policy, scheduled for December 18. However, the street seems to be divided on
whether the central bank would opt for another round of cut in the cash reserve ratio. In 2012 so
far, Reserve Bank of India has reduced cash reserve ratio by 175 basis points to ensure that the
credit flow to productive sectors is not affected. It had reduced interest rate by 50 basis points in
April the first time in three years but it has put the brakes on it since.(BS dt. 05.12.2012 p.1)

Current account deficit not sustainable-
t is not sustainable and needs to be curbed to a more
sustainable level of 2.5% of gross domestic product, said a top official of the Reserve Bank of India

medium-term to accelerate efforts towards structural reforms that help boosting our

Mr Deepak Mohanty, Executive Director. (FE dt. 08.12.2012 p.8)

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Financial Inclusion & MFI…..
KVG Bank plans to open ultra-small branches:
The Karnataka Vikas Grameena Bank (KVG Bank), a Dharwad-based Regional Rural Bank
sponsored by Syndicate Bank, has chalked out a strategy to speed up financial inclusion roll-out
by opening ultra-

Sambasiva Reddy, Chairman of the bank, told. (BL dt. 12.12.2012 p.17)

Gear up for Direct Cash Transfer:
Finance Minister Mr P Chidambaram asked banks to gear up for implementation of the ambitious
cash transfer scheme, which seeks to transfer money directly into beneficiary accounts in 51
districts from January 1. "There is lot of work to be done from January 1. There are huge burden,
huge responsibility going to fall on your shoulders. It is banks that have to make cash transfer
scheme successful. I know you can do it," Mr P Chidambaram said. (ET dt. 22.12.2012 p.4)

Cash transfers: Govt seeks adequate banking facilities:
To ensure adequate banking coverage even in less populated states in the run-up to the rollout of
the direct cash transfer scheme, the Finance Ministry has asked banks to ensure that there is at
least one bank branch or business agent in every village council area. In a 20 December circular,
the Ministry directed banks to use a mix of business correspondents and common service centres
to ensure banking is available to the beneficiary. The Finance Ministry has also asked banks to use
common service centres in places where there are no banking agents or where their performance
is not satisfactory, especially for opening accounts. As per data available with the Reserve Bank of
India, villages covered through business correspondents constituted almost 80% of the total in
the financial inclusion plan. (Mint dt.27.12.2012 p.4)

FM terms direct cash transfer a 'pure magic':
Describing the proposed direct cash transfer scheme a 'pure magic' that calls for a big
responsibility on banks for its implementation, Finance Minister Mr P Chidambaram said the
bankers need to work with the government for the scheme to be successful. The Finance Minister

responsibility that rests on bankers. I appeal to all banks to work with the government to make
(BS dt. 23.12.2012 p.3)

Govt to pay banks for direct cash transfers:
In a bid to incentivise banks for facilitating direct cash transfers to Aadhaar-enabled accounts -
which may not bring any business to the banks - the government is considering paying them a
transaction fee. A business model is being worked out to help banks recoup their transaction
costs. Although the transaction costs would vary depending on the frequency of withdrawals and
deposits from a bank account, the government is considering paying a transaction fee for all last-
mile payments to the banks at the rate of 3.14 per cent of the amount of transaction with a cap
of Rs 20 a transaction. (BS dt. 29.12.2012 p.4)
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Minsitry of Finance
Decision on fund infusion this week:
The government said it will decide about Rs 15,000 crore capital infusion in the public sector
banks to store up their ca

o
(Mint dt. 04.12.2012 p.21)

Mittal at disinvestment dept:
Secretary in the Department of Financial Services Mr D K Mittal has been given additional charge
of the disinvestment department, current Secretary in the disinvestment department Mr
Mohannad Haleem Khan retired on November 30. Mr Mittal, a 1977 batch IAS officer of the Uttar
Pradesh cadre, was appointed the Secretary in the Department of Financial Services in August
last year. (BS dt. 04.12.2012 p.5)

Everyone has right to banking, says FM:
Ahead of the rollout of Aadhaar-enabled direct benefits transfer scheme on January 1, 2013,
Finance Minister P Chidambaram said like education, work, food and speech, banking services are
vour by providing services such as educational
loans and loans to self-help groups, but are only doing their duty. People have a right to get

deposits from individuals and institutions and lending to big companies, but it means reaching

er said. (FE
dt. 22.12.2012 p.8)

Banks need Rs 1 lakh crore in 5-10 years-FM:
Finance Minister Mr P Chidambaram said the public sector banks would need around Rs 1 lakh
crore capital over the next 5-10 years. The Minister said the government intended to capitalize
the banks so they could meet especially Basel norms. By March-end the government will infuse Rs

Minister also urged the banks to look to consolidation -20
(BS dt. 23.12.2012 p.3)

Exit non-core biz to help conserve capital, FinMin tells banks:
The need to conserve capital has prompted the Finance Minister to ask PSB chiefs to stick to the
knitting (banking) and come out of all non-core activities. Referring to the fact that the global
crisis had revealed that banks should adhere to their core activities, the Minister, at a meeting
last month, underlined the need for PSBs to come out of all related activities. Finance Minister Mr
P. Chidambaram told the PSB chiefs that banks should concentrate on core banking functions to
improve their capital base. (BL dt. 24.12.2012 p.5)
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Interest rate cut needed to boost growth, says Montek:
Planning Commission pitched for lowering of interest rate to boost economic growth which is
beginning to look up after moderating to 5.4 per cent in the first half of the current fiscal. "Over a
longer period of time, steps are needed to bring down the interest rate. RBI looks at these things
independently and we should give them freedom to decide (about interest rates)", Plan panel
Deputy Chairman Mr Montek Singh Ahluwalia said while commenting on Reserve Bank's mid-
quarter review. (FE dt. 19.12.2012 p.8)

Forex Inflows…..

ended November 23, the Reserve Bank of India (RBI) data show. The reserves had gone down by
$32.7 million to $293.52 billion in the previous week. The Forex had declined by $781.5 million to
$293.55 billion for the week ended Nov 9. The foreign currency assets (FCA) - the biggest
component of the Forex reserves - increased by 1.44 billion at $260.13 billion, according to the
weekly statistical supplement released by the RBI. (BL dt. 01.12.2012 p.8)

Forex reserves raise $1.63 billion:
Foreign Exchange reserves rose $1.63 billion to $296.63 billion on the back of increase in foreign
currency assets. Foreign currency assets rose $1.61 billion to $262.11 billion. Gold reserves
remained unchanged to $27.8 billion while SDRs from IMF increased $15.4 million to $4.43 billion
. The reserve position with IMF also rose $7.8 million to $2.27 billion. (BS dt. 22.12.2012 p.3)

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Housing Worries…..
Union Bank cuts home loan rates by 25 bps:
Union Bank of India (UBI) said it has cut interest rates on home loans above Rs 30 lakh by 25 bps.
While loans up to Rs 75 lakh are being approved on the base rate of 10.5%, loans between Rs 75
lakh and Rs 5 crore are offered at 10.75% with effect from Thursday. The move which is expected
UBI also cut
rates on education loan by 150-200 bps, while giving additional 50 bps concession to girl
students. Education loan up to Rs 7.5 lakh are now offered at 12.75%, while loans above that limit
are offered at 12.5% starting Thursday. The bank had already waived processing fees on all home
and auto loans under a special festival season scheme. (FE dt. 01.12.2012 p.8)

Indian Bank may merge finance arm:
Indian Bank was planning to merge its housing finance arm, Ind Bank Housing Ltd, with itself by
March 31, and was looking for a consultant to advise it on the same, a senior bank official said.
(BS dt. 08.12.2012 p.3)

You can soon apply and get SBI home loan sanctioned online:
State Bank of India intends to turn up the heat on its competitors in the retail loans segment.
-based customer acquisition solution that
will allow prospective customers to not only apply for home loans but also generate in-principle
loan sanction letter online. The move to have an online customer acquisition solution could save
the net-
the formalities associated with getting a home loan. (BL dt. 17.12.2012 p.5)
Central Bank of India planning new scheme for low-cost homes:
Central Bank of India is targeting a business of Rs 10,000 crore from the home loan segment in
the current financial year while planning to launch a new scheme for affordable housing. Of the
target, the Bank has touched Rs 7,900 crore and expects to cover the remaining portion before
March-end, according to Mr Ram Sangapuri, General Manager-Retail, Central Bank of India.
Central Bank is also planning to announce a new scheme to provide affordable housing for
socially and economically backward. Under the new scheme, loans of up to Rs 5 lakh will be given
to people without any guarantee or surety along with several other flexible terms, the bank
official said. He said the bank was conducting a series of property expos across the country. (BL
dt. 16.12.2012 p.3)
State Bank waives guarantor for shifting home loans:
According to a senior SBI official, the bank will allow existing borrowers to shift their home loan
by waiving the third-party guarantor clause. This is an added attraction, beside the lower interest,
10% for loans up to Rs 30 lakh and 10.15% for loans above Rs 30 lakh, that SBI is charging.
According to the SBI official, this clause was proving a hindrance for many borrowers. However,
this clause is waived only for loans that have been serviced for two years. (BS dt. 18.12.2012 p.4)
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Human Resources…..

Citigroup to cut 11,000 jobs, take $1 billion in charges:
Citigroup Inc will eliminate 11,000 jobs worldwide, about 4 percent of its total staff, in a move to
save as much as $1.1 billion a year in expenses, the company said. The move will initially result in
pre-tax charges of $1 billion to fourth-quarter earnings, the company said in a statement. The
move is the first major action to restructure the company since directors named Mr Michael
Corbat Chief Executive Officer in October after becoming impatient with former CEO Mr Vikram
Pandit. "We have identified areas and products where our scale does not provide for meaningful
returns," Mr Corbat said in a statement. (BS dt.06.12.2012 p.10)
Marginal rise in complaints against PSBs, says FM:
The government on Friday said there has been a marginal increase in the number of customer
l increase in the

Mr P Chidambaram said in a written reply to the Lok Sabha. The total number of complaints
against the PSBs stood at 48,180 during 2011-12, higher than 42,724 during 2010-11 and 41,924
during 2009-10, he said. (FE dt. 08.12.2012 p.8)
INFLATION
Inflation remains primary concern for RBI-Gokarn:
RBI Deputy Governor Dr Subir Gokarn said inflation continues to the primary concern for the
central bank. His comments come amid growth in the second quarter falling to 5.3% in July-
September period, triggering demands for a rate cut by the RBI to boost the economy. RBI should
not do anything that provides some short-term stimulus to growth but also raises the risk of

Few candidates line for post of executive directors at state-run banks:
The appointment committee is scheduled to interview candidates, who are general managers, for
the post of executive directors in state-run banks. But a number of banks will not have their
candidates appearing for the interview this time since they fall short of the mandated two years
of service experience as general managers and a residual service of three years. Banks such as
Punjab National Bank, Punjab & Sind Bank, Indian Bank and Indian Overseas bank are not
sending any candidates. Interestingly, Allahabad Bank and Dena bank are sending five candidates
each, while Canara Bank, Andhra Bank and Corporation Bank will have three of its officials
pitching for the job. (ET dt. 12.12.2012 p.13)

Bank employees push for 5-day week, write to govt:
Even as banks extend their working hours for business expansion, employees are clamouring for
a cut in the number of working days from six to five. Renewing their long-pending demand for a
5-day working week, the staff unions said a rejuvenated work force will fetch better business. In
the changed global scenario and taking cue from other offices, the unions are now aggressively
pitching for a 5-day week charter. Spearheading the cause, the National Union of Bank Employees
has decided to create awareness among bank employees on this demand. The union has
submitted a memorandum on the introduction of a 5-day week in banks to the Finance Ministry
and IBA. (FE dt. 13.12.2012 p.8)
26

In a first, SBI takes its officers' body to court:
For the first time in its 200-year history,
Page

court for resorting to a work-to-rule agitation and demonstrations in September that hit the


Canara Bank

December 3 restrained the association from holding demonstrations, hunger strikes and relay

plan to introduce
seven-day banking to meet the challenges of growing competition. (BS dt. 17.12.2012 p.1)

Members of 4 bank unions go on strike:
A section of public sector banks employees went on nation-wide strike on Thursday to protest the
Banking Laws (Amendment) Bill, partially affecting normal banking operation in some banks.
Employees of four bank unions participating in strike are from All India Bank Employees
nd National
Union of Bank Employees. Operation were affected in those banks where these unions have a
strong presence. (BS dt. 21.12.2012 p. 8)

Corporation Bank to hire 2,433 this fiscal:
Corporation Bank plans to recruit 2,433 personnel during 2012-13, according to its Chairman and
Managing Director Mr Ajai Kumar. Of these, nearly 1,100 will be in the officer cadre and the rest
in clerical cadre, Mr Ajai Kumar told. The bank is in the process of building a talent pool,
particularly in specialised areas such as risk management, forex, IT, credit, including agriculture,
etc. The recruitment process is in progress and is expected to be completed by the end of the
month, he said. (BL dt. 20.12.2012 p.5)

Karnataka Bank share frenzy under SEBI lens:
The recent frenzy surrounding the Karnataka Bank stock has come under a regulatory glare. The
Securities and Exchange Board of India (SEBI) is investigating the share price movement in recent
ate-sector player. SEBI
is said to have sent letters to some traders and investors with sizeable positions, seeking an
explanation about the nature of their transactions. Karnataka Bank shares, which closed at Rs
h of Rs 195.50 on December 10, after rising almost
140 per cent in three months. The jump was fuelled by speculation that the Mangalore-

lender. Both firms had vehemently denied this. Sources said the stock could have come under
(BS dt. 20.12.2012 p.1)

Ashwani Kumar is CMD of Dena Bank:
Ashwani Kumar has been appointed as Chairman & Managing Director, Dena Bank, for a period
of five years from the date of taking over charge of the post on or after January 1, 2013, vide
notification dated November 6, 2012. According to the Government notification, Ashwani Kumar,
who is the Executive Director of Corporation Bank, will function as Executive Director at Dena
Bank on attachment basis with effect from December 17, 2012, till December 31, 2012, or until
further orders. (FE dt. 25.12.2012 p.5)

Federal Bank offers stock options to staff:
Kerala-based private sector lender Federal Bank Ltd has offered 2.4 million employee stock
options (ESOPS) worth Rs114 crore to 7,851 employees of the bank. An ESOP is a call option
granted by a company to its shareholders as part of the remuneration package. These options can
be converted into shares at a later stage. This is the second time Federal Bank is offering the
options to employees since 2011. (Mint dt. 29.12.2012 p.10)
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Infrastructure…..
IDBI Bank might come to the rescue of IDFC consortium:
The Union government is working on a plan to get IDBI Bank into the controversial Delhi-Gurgaon
Expressway project, to save the lenders involved from trouble in case of cancellation of the
contract. The government plans to put in place a mechanism to bail out the IDFC-led consortium,
which had invested Rs 1,600 crore as debt in the project. IDFC, Bank of India, Punjab National
Bank, Oriental Bank of Commerce and State Bank of Bikaner and Jaipur have exposure of Rs 1,600
crore to the project. Mr R M Malla, Chairman of IDBI Bank, did not deny that the bank was in

(BS dt. 15.12.2012 p.1)

Banks tap finmin over worries of power NPAs:
Cautioning that loans of around Rs 2.3 lakh crore to private-sector power companies are on the
verge of turning bad, public sector banks including the SBI, PNB and Oriental Bank of Commerce

of help. PNB C&MD Mr K

of fuel linkage.
Many power stations are not able to generate power, sell it and get returns on their investments.
(FE dt. 24.12.2012 p.1)

Liquidity…..
RBI may ease norms for FII inflows:
The Reserve Bank of India may ease norms for foreign investors, including permitting them to
trade in currency futures and allow repurchase facility in commercial papers (CPs) and certificate
of deposits (CDs), to boost the stagnant bonds market. "We are thinking if foreign institutional
investors can be allowed to trade in currency futures," said Mr H R Khan, Deputy Governor,
Reserve Bank of India. "We are now flexible on residual maturity and lock-in period," he said
referring to restrictive norms for foreign funds in holding domestic bonds. (ET dt. 13.12.2012
p.10)

Banks borrow Rs 1.7 lakh cr from RBI, highest in FY13:
Borrowing by banks under the RBI daily Liquidity Adjustment Facility (LAF) touched a record high
for the financial year, at Rs 170,140 crore. It was Rs 164,615 crore yesterday. The system generally
sees such high borrowing in March, when liquidity is invariably tight. On March 30, banks had
borrowed Rs 197,510 crore under the LAF. (BS dt. 21.12.2012 p.6)

RBI buys Rs 7,912 cr of G-Secs:
As part of its programme to infuse liquidity, the RBI bought Rs 7,912 crore of G-Seces through
OMOs against a target of Rs 8,000 crore. Three securities were on offer for the OMOs conducted.
The central bank bought the 8.33% bonds maturing in 2026 at Rs 100.72, yielding 8.24%. On the
8.19% bonds maturing in 2020, the RBI set a cut-off price of Rs 100.04, yielding 8.18%. (BL dt.
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22.12.2012 p.5)
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Mutual Funds & Capital Market…..
I-bank alliances to tap cross-border deals on the rise:
An increasing number of Indian investment banks (I-banks) are forging alliances with overseas I-
banks with a strong regional presence for handling cross-border deals. Axis Capital Markets
(India) Ltd and IDFC Capital Ltd have entered into such arrangements recently; Kotak Mahindra
Capital Co. Ltd has just got into a new tie-up on top of two it already had; Ambit Corporate
Finance Pte Ltd and ICICI Securities Ltd (I-Sec) are scouting for partners. I-Sec already has two such
alliances. With the majority of India-specific cross-border deals being clinched by foreign banks,
these alliances are a low-cost solution for Indian I-banks seeking to compete with global banks,
said I-bankers. (Mint dt. 21.12.2012 p.8)

SEBI chief hits out at merchant bankers:
Securities and Exchange Board of India (SEBI) chairman Mr U K Sinha said the credibility of the
investment banking community had taken a hit as retail investors were now wary of investing in
public offers. The regulator lashed out at the investment banking fraternity for not acting in the
interests of retail investors, pointing out that the bulk of the public offers are currently trading

primary market. This is a question of credibility for all of us and we have to take serious steps to
(FE dt. 20.12.2012 p.1)

Bank of Baroda to issue shares to govt
State-owned Bank of Baroda (BoB) on Wednesday said it would raise Rs. 1550 crore by issuing
preference shares to the government. The board at its meeting held on 24 December 2012, has
approved issuance of shares of face value Rs. 10 each, for an amount up to Rs. 1550 crore, on
preferential basis in favour of the Government of India, BoB said in a filing to the BSE. The prices
of the shares would be decided as per the SEBI norms, it said. Preference shares are given higher
ranking over common shares but subordinate to bonds in terms of claims. (Mint dt. 27.12.2012
p.9)

Axis Bank is top debt arranger this year too:
Axis Bank has retained its leadership position in arranging bond sales this year, with the number
of debt issues rising 24% amid a scramble by companies to cut funding cost. And HDFC Bank,
which is building out investment banking, sneaked into the top 5. In an increasingly competitive
market, Axis Bank raised its market share to 18.8%, from 15.6% a year earlier, according to
Bloomberg data. The private bank managed 257 issues, while ICICI Bank, at second position, saw
its market share falling to 10.3%, from 12.8%. The bank managed 190 issues. (ET dt. 29.12.2012
p.5)
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