Online Outward Foreign Remittance To Be Permitted In India Soon
India’s Central Bank the Reserve Bank of India (RBI) is considering whether to allow online money transfer portals and other non banking entities to offer outward remittance services from India. Currently such facilities are limited to inward remittances and only banks are permitted to provide outward remittance services.
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HDFC And HDFC Bank Hit Up Debt Markets
HDFC, India’s largest non banking mortgage lender plans to raise Rs 1000 Crore or US$ 208 million through the issuance of non-convertible debentures. HDFC plans to issue NCD’s worth Rs 200 crore or US$ 41 million, whilst keeping the option open to raise another Rs 800 crore or US$ 150 million through a green shoe.
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Kochhar’s Appointment Means More Women Reaching The Pinnacle of Indian Banking
ICICI Bank, India’s largest private lender named Chanda Kochhar as its new Chief Executive last week adding to the growing number of females who are part of the top ranks of the industry. Ms Kochhar is a member of an elite group of women bankers in India who run financial institutions including HSBC, ABN Amro, JPMorgan, UBS and ICICI’s insurance division.
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SBI To Open A Whopping 2000 Branches Next Year
State Owned Lender and Indian Banking Major plans to open a phenomenal 2,000 branches in the next financial year, which would mean it opens 166 branches a month or 5 new branches every day for a year.
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RBI Issues Report On Banking In India
The RBI, India’s Central Bank issued a report last Wednesday suggesting the country, with its strong drivers for economic growth, may escape the works of the global credit crisis. The report titled “Trend and Progress of Banking in India, 2007-08” suggests that once the global situation stabilises, India will return to the high growth rates it has been accustomed to over the last decade.
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Housing Finance Companies Facing Increased Pressure To Cut Lending Rates
After state owned banks have reduced interest rates on mortgages of up to Rs 2,000,000 or US$ 42,000, Housing Finance Companies (HFC’s) will face increasing pressure to lower their interest rate charges in order to stay competitive.
HFC’s do not obtain funding from depositors, instead obtaining it from the banking sector or the bond markets. Many are complaining that their cost of funding is showing no signs of easing since most banks are still charging double digit interest rates, some even as high as 13 per cent. This means that in many cases HFC’s funding rate exceeds their average lending rate.
LIC Housing Finance Company (LICFC) and Housing Development Finance Corporation (HDFC), which together command over 70 per cent of HFCs’ market share, charge around 11.5 per cent, whilst Dewan Housing Finance Company charges between 12 and 14 per cent.
The weighted average cost of working funds for HFCs is around 300 basis points higher compared to the public sector banks. current HFC lending rates are 50-100 basis points higher than the State owned banks. After the announcement of a reduction in interest rates, the spread is to increase by a further 225 basis points to 350 basis points (for loans up to Rs 20 lakh), making HFC’s uncompetitive.
“We need to figure out ways for cheaper finance as there is no option left for us but to reduce interest rates to remain competitive and protect our market share,” an HFC CEO, who refused to be named, told the Business Standard.
According to industry estimates, HFCs constitute over 40 per cent of the Rs 120,000 crore housing finance market and share of these companies with respect to the incremental market share is likely to fall to 15 per cent at the end of 2008-09 from around 25 per cent during 2007-08.
With the proposed cheaper window from National Housing Bank (NHB), HFCs are expected to come up with a counter strategy to protect their market share.
“We are waiting for details of the package to understand its impact. We will decide on our counter strategy in a couple of days. However, apart from the proposed NHB fund, we need to explore other alternative avenues of cheaper finance as well,” said LIC Housing Finance Director and CEO R Nair.
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Indian Banks Starting To Cut Deposit Rates
Two State owned banks on Tuesday said they were reducing their deposit rates in what could largely be viewed as a precursor to cuts in lending rates. Indian Bank and Uco Bank both cut their deposit rates within 24 hours of public sector banks announcing the home loan package.
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State Bank of India To Tap Up To Rs 18,000 Crore From Bond Market
State Bank of India (SBI) India’s largest bank said it intends to raise Rs 18,000 crore or US$ 3.8 billion by March 2010, in order to meet its capital requirement and fuel business growth the bank said on Tuesday just a day ahead of its Rs 2,000 crore or US$ 400 million bond issue.
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RBI Sold US$ 20.63 Billion in October
India’s central bank, the Reserve Bank of India (RBI) sold US$ 20.63 billion or Rs 99,024 crore in foreign currency during the month of October to try and prevent the steep depreciation of the Rupee. The amount was a record sale of foreign exchange by the Indian central bank.
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Tata Capital To Raise US$ 200 Million Through Domestic Bond Offering
The Financial unit of Tata Sons, Tata Capital, a non banking finance company (NBFC) plans to raise funds by issuing debt worth Rs 1,000 crore or US$ 208 million. Tata Capital provides services in areas such as capital markets, housing finance, assets and vehicle financing, retail finance, merchant banking and private equity investment.
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