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  Home Financial and Banking News 2010 (India)
                                      Financial and Banking News 2009
                                         Financial and Banking News 2008    



   Mastermind behind Rs 300 crore Citibank fraud held
Gurgaon, December 30, 2010: Citibank manager Shivraj Puri, accused of cheating investors of Rs 300 crore, surrendered before police and was taken into custody Thursday, almost two days after one of India's biggest banking frauds earlier estimated to be worth Rs.100 crore came to light, officials said. 'Puri surrendered at around 12.30 p.m. He has been taken into custody and will be presented before the court later in the day,' Gurgaon Police Commissioner S.S. Deswal told reporters. He said that more arrests could be made after Puri's 
   According to police, Hero group had invested Rs.200 crore in Puri's account and Rs.100 crore were invested by individual account holders. Puri had further invested the money in five major brokerage companies, including Religare, Okaya and Bonanza. Puri reportedly managed to con high net worth investors after forging Securities 
and Exchange Board of India (SEBI) documents purportedly offering lucrative returns which he said enjoyed Citibank's backing.

  India central bank to boost liquidity

  MUMBAI, December 16, 2010 (Reuters) - India's central bank left interest rates on hold on  Thursday but warned inflation was still well above its comfort level and  unveiled steps to address persistently tight liquidity, adding to the possibility that it will resume monetary tightening in January. 
  The Reserve Bank of India has been the most aggressive major central bank in Asia, lifting interest rates six times since March to fight surging prices being spurred by rising food costs in an economy growing at nearly 9 percent. Thursday's liquidity moves, combined with the prospect of renewed inflationary pressures, increased the likelihood that the central bank's next rate increase could come next month. 

  Indian banks to double share in global pool by FY15

  December 13, 2010 (PTI): The share of domestic lenders in the global banking space is slated to almost double to 2.8 per cent by 2015 from 1.5 per cent at the end of 2009, says a McKinsey & Company report. "The share of the domestic banking industry within the global space will almost double to 2.8 per cent by the end of fiscal 2015. This was 1.5 per cent at the end of FY09", it says, adding that the banking and financial sector would remain the mainstay of the Indian economy. "At the end of FY09, the revenue of the domestic banking industry stood at USD  2850 billion, which will scale to nearly USD 4000 billion by the end of FY15,"  it further said. Besides, the report says that the next decade that will see a faster consolidation among Indian banks will have at least five-six of them in the global 100 top banks league.
  At present, the market capitalisation of top five banks led by State Bank of India, ICICI Bank, and Punjab National Bank, will rise from 55 per cent in 2005 to 66 per cent by the end of this fiscal. During the past one decade, the revenues of the domestic banks have grown more than four-fold from USD 11.8 billion in 2001 to USD 46.9 billion in 2010, while their net profit has soared nearly nine-fold to USD 12.06 billion in 2010 from a 
paltry USD 1.41 billion in 2001.

  CBI arrests bank officials on bribery charges
  MUMBAI, November 25, 2010 (Reuters): The Central Bureau of Investigaiton (CBI) said on Wednesday it had arrested at least eight officials from banks and financial institutions on charges of taking bribes to grant large
corporate loans, the country's third big corruption scandal in the past few months. Officials arrested include the chief executive of LIC Housing Finance , a general manager of state-run Central Bank of India and senior officials at state-run Punjab National Bank and Bank of India , said a joint director of the Central Bureau of Investigaiton (CBI). The agency declined to provide financial details of the charges.

  Reserve Bank of India raised interest rates

  Mumbai, November 02, 2010 (Reuters): Reserve Bank of India raised interest rates for the sixth time this year
on Tuesday to tame inflation, and indicated that the increase was likely to be its last in the near term. The Reserve Bank of India raised its lending and borrowing rates by 25 basis points each, as expected by most analysts. The RBI lifted the repo rate, at which it lends to banks, to 6.25 per cent and raised the reverse repo rate, at which it absorbs excess cash, to 5.25 per cent. 
  "Based purely on current growth and inflation trends, the Reserve Bank believes that the likelihood of further rate actions in the immediate future is relatively low," Reserve Bank of India Governor Duvvuri Subbarao said in his second quarter monetary policy review. 
  As expected, the RBI left the cash reserve ratio unchanged at 6 per cent. The central bank said in a report on Monday that inflation remained "above the comfort level", similar to comments from Finance Minister Pranab Mukherjee, who said inflation was a matter of concern. Wholesale inflation rose to 8.62 per cent in September on higher food prices from 8.5 per cent in August. It was in double digits for six straight months through July. 
Asia's third-largest economy is on track to grow at 8.5 per cent in the fiscal year that ends in March.

  SBI hikes interest rates, EMIs to increase

  October 20, 2010: Country's largest lender State Bank of India (SBI) today increased base rate or the minimum lending rate for new borrowers by 0.10 per cent to 7.6 per cent. The bank has also increased its benchmark prime lending rate (BPLR) by 0.25 per cent to 12.5 per cent. The new rates will be effective from Thursday.  The hike will impact existing customers more than new ones because the hike in BPLR (which is applicable to existing customers) is more than the hike in the base rate (for new customers). This means that EMIs or installments for all types of loans including car, home and consumer durables will increase. 
   The bank has hiked the base rate by a smaller amount to lure new customers in the festive season, analysts said.  This is the first review of the base rate since it was introduced in July this year. As per the RBI guideline, banks have to review their base rate every quarter. 
  The revision in base rate follows the RBI's move to raise short-term lending (repo) and borrowing (reverse repo) rates in its September monetary review. After RBI raised its policy rates, the cost of funds for banks have incresed. However, SBI's rates are competitive as compared to other banks because it has access to a large base of low cost deposits called the current account savings account deposits or CASA.  Earlier this month, SBI hiked fixed deposit rates by up to 0.75 per cent. The bank raised deposit rates from 0.25-0.75 per cent across various maturities. Source: NDTV Profit

RBI hikes repo rate by 25 bps, reverse repo rate by 50 bps 
  MUMBAI, September 16, 2010: The Reserve Bank on Thursday raised key policy rates by up to 50
basis points for the fifth time this year, a decision that will make loans expensive and help check inflation, but give better returns to small savers. As part of its first mid-quarterly review of monetary policy, the RBI upped its key short-term lending (repo) rate by 25 basis points and borrowing (reverse repo) rate by 50 basis points to 6 per cent and 5 per cent, respectively.
  The decision has been guided by the need to contain inflation, which is currently at 8.5 per cent (food inflation has touched 15.10 per cent), as a hike in rates will lead to a rise in cost of funds for banks and will make loans expensive. This, in turn, will reduce consumption. "Rate of interest may have to go up. Banks have to take a view at the end of the quarter. Till September 30, I do not expect any change. Pressure is there to increase rates in the near term", said Bank of Maharashtra chairman and managing director Allen Pereira. Source: The Times of India

  Reserve Babk of -India raises key rates

  MUMBAI July 27, 2010 (Reuters) - India's central bank on Tuesday raised interest rates more forcefully than expected in the face of inflation that has held stubbornly above 10 percent for the past five months. The RBI lifted the repo rate, at which it lends to banks, by 25 basis points to 5.75 percent, in line with expectations, but raised the reverse repo rate, at which it absorbs excess cash from the system, by 50 basis points to 4.50 percent.  Economists and investors had expected a 25 bps increase in the reverse repo rate.

  Bank of Rajasthan to merge with ICICI Bank

  MUMBAI, 18 May 2010 : Promoters of Bank of Rajasthan have decided to merge the bank with the countryís largest private sector bank- ICICI  BoR informed the stock exchange that it received a communication from Sanjay Kumar Tayal, director and one of the promoters to convene a board meeting on May 18 as they have entered into an agreement with ICICI Bank for proposing an amalgamation. ICICI Bank board is also meeting today evening. 
  ICICI Bank is learnt to have indicated that itís willing to pay more than BoRís present market valuation. ICICI Bank scrip today closed at Rs 889.35in the Bombay Stock Exchange, down by 1.45% while the BoR scrip rose sharply by 19.95% to Rs 99.5. According to banking circles, the Tayals, who acquired BoR a decade ago, have been under pressure to sell the old private bank which is  grappling with directives from Sebi and RBI. In March, Sebi banned 100 entities allegedly holding BoR shares on behalf of the promoters from all stock market activities. 
  A little earlier, RBI had slapped a penalty of Rs 25 lakh on the bank for a string of violations like deletion of records in the bankís IT system, irregular property deals and lapses in the accounts of a corporate group. Source: The Economic Times

  RBI hikes repo, reverse repo rates & CRR by 25 bps
  MUMBAI, April 20, 2010 (PTI): Aiming to tackle near double-digit inflation, the Reserve Bank today hiked key lending and borrowing rates, as also the mandatory cashTop gainers, losers & recos reserves banks park with it, by 0.25 per cent. But lenders said the move would not lead to any immediate increase in commercial and personal loan rates. 
  The RBI increased repo and reverse repo, the rates at which it lends to and borrows short-term money from banks, by 25 basis points. It also hiked CRR, the portion of money that commercial banks deposit with the central bank, by an identical percentage -- a move that would suck out Rs 12,500 crore from the system. The increase would come into effect on April 24. Commenting on RBI's annual monetary policy for 2010-11, Finance Minister Pranab Mukherjee said, these measures "should have a gentle impact on tightening money in the economy and should dampen further inflationary pressure." 
  While the RBI sees inflation easing to 5.5 per cent by the end of the current fiscal from 9.9 per cent in March, Mukherjee asserted that it would be lower than RBI's estimate. Top executives of banks, including Oriental Bank of India and IDBI Bank, said that the RBI move would not translate into any immediate hike in interest rates. Industry chamber FICCI secretary general Amit Mitra said the RBI  move would put pressure on interest rates, but lending rates would not go up immediately. 
Hike in repo and reverse repo, the rates at which RBI lends and borrows from banks, to 5.25 and 3.75 per cent respectively, will raise the cost of fund for the lenders and would temper the demand 
for loans and, in turn, consumer spending. 

  Govt to raise fuel prices in major cities

  NEW DELHI, March 31, 2010 (Reuters) : Government will raise the prices of petrol by 1.1 percent from Thursday in major cities that will migrate to Euro IV-compliant fuel, a government official said, to help oil firms recover investment made for plant upgrade. "The hike will be effective from midnight tonight," said Sudhir Bhargava, additional secretary in the federal oil ministry, adding petrol prices would be raised by 0.50 rupees (about 1 U.S. cent) a litre.
  Diesel price in leading cities including Mumbai would be hiked by 0.26 rupees a litre, while in Delhi it will rise by more than 2 rupees because of taxes. "Delhi government has raised VAT (value added tax) on diesel, which will be implemented from tomorrow. Due to this, diesel prices will go up by 2.35-2.37 rupees a litre in Delhi," Bhargava said, in addition to the rise across major cities. India is keen to cut emissions as Asia's third largest economy expands rapidly and aims to catch up with fuel quality in Europe, which now follows Euro V standards.
  While 13 big cities will migrate to Euro IV-compliant fuel from Thursday, the rest of the country will switch over to Euro III-compliant fuel by October. Bhargava said the increase in fuel prices is aimed at helping the oil firms, which sell fuel at government-fixed low rates, to recover the investment of about 320 billion rupees made on plant upgrades to produce cleaner fuels.In Delhi, petrol will cost 47.93 rupees and diesel will be priced at 38.10 rupees a litre, he said.

  RBI to go with rate rise plan, exit stimulus 

  Mumbai, March 25, 2010  Rate hikes by the Reserve Bank of India (RBI) will continue as part of its
plan to 'exit' from the low interest rate policy followed since September 2008, in a bid to check inflationary pressures. "It is better to take rate action now and continue the exit strategy. We may have to sacrifice on growth in the near term," D. Subbarao, governor of RBI said after participating in the convocation function of the Indira Gandhi Institute of Development Research (IGIDR). "India could not have sustained strong economic growth with high inflation rate. In the medium- term, high inflation would threaten sustained economic growth," Subbarao added.
  RBI has raised the repo rate (at which RBI lends to banks) and reverse repo rate (at which it pays on bank deposits with it) by 0.25 per cent to five per cent and 3.5 per cent, respectively in the wake inflation measured through wholesale price index (WPI), which touched 9.9 per cent in February.The unexpected move surprised the markets, which were not expecting a hike in rates before the April 20 credit policy. Source: Mail Today
  Bank frauds are on the rise 
  NEW DELHI, February 01, 2010: The best banks for investors authority than the Reserve Bank of India says that bank frauds are on the rise. What's more, public sector banks, perceived to be safer 
bets than private banks, beat the latter in the swindling game. Crores of rupees are disappearing from bank accounts or are being used deceitfully everyday. Recently, a bank branch manager  recklessly sanctioned housing loans for the purpose of flats. On spot verification by the Central Bureau of Investigation (CBI), on the behest of the bank's chief vigilance officer, it transpired that the three storeyed building was constructed as a hotel. 
  Further investigation revealed that the branch manager had sanctioned many other housing loans against fabricated agreements of sale in fictitious names. By the time, the investigation was  completed the bank had been duped of Rs 25 cr. Information collated by the CBI which Sunday ET is in possession of, bank fraudsóthe central investigation body tracks frauds valuing only a crore or aboveóamount doubled in 2008-09 from Rs 659 cr in  2007-08 to Rs 1,404 cr. The number of such frauds also rose from 177 to 212. "The focus is on expeditious completion of investigation, close follow up of under-trial cases to conclude them without delay," says a CBI  spokesperson. The CBI conducts its investigations through differ-ent wings--the Anti-Corruption Bureau, Bank Securities & Fraud Cell and the Economic Offences Wing. 
  The rising number of frauds has also got the central bank concerned. "It's high time banks strengthen their fraud management practices. In their bid to quickly expand and grow, they are losing focus on risk control," a senior official of the bank, who did not want to be named, says. 
  Not that the RBI isn't aware of the rising trend. In September last year, it had blamed senior management at banks for their failure to have proper risk management mechanism. It had then advised the banks to form a special committee chaired by their CEOs, who could oversee fraud investigation and make monitoring centralised rather than  leaving it to the regional centres. 
Source: The Economic Times 

  RBI hikes CRR by 75 bps to 5.75 pct 

  January 29, 2010: Reserve Bank of India increased mandatory cash reserve of banks held by it by 75 basis points in a bid to suck excess liquidity to combat rising inflation. However, short-term lending and borrowing rates between RBI and banks were kept  unchanged, leading to speculation that banks' commercial lending rates may not change.
  The apex bank also upped its economic growth projection to 7.5 per cent from its earlier estimate of 6 per cent for the current fiscal. The 75-basis point increase in cash reserve ratio to 5.75 per cent is expected to suck out at least Rs 36,000 crore from the system. The move is to check food 
inflation spreading to other sectors.
  According to RBI estimate, inflation is likely to touch 8.5 per cent by this fiscal-end from over 7 per cent in December. Earlier in October, the apex had projected the rate of price rise to be at 6.5 per cent by March-end. Central Bank of India Executive Director Arun Kaul said CRR hike is more than 
market expectation, definitely liquidity would go down and may have some impact on interest rate.
Source: Yahoo! India News











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