PNB Pune circle to have 16th branch

Punjab National Bank (PNB) is opening its 16^th branch in Pune. Anil Bhan, Pune circle head of PNB informed that the new branch will be inaugurated at Hinjewadi and it will start operations from December 5.

As per press note at present the Pune Circle of the bank is covering nine districts of western Maharashtra but after the opening of this branch it will have a total of 50 offices under its jurisdiction. PNB is having a nationwide network of about 4,600 offices.

Bhan, “Taking into consideration the diverse requirements of customers, we have opened 6 more branches in Pune Circle in the last one year. We have also provided 26 more ATMs. With this, the total number of ATMs has now become 44. Through Internet banking, customers can do banking operations from anywhere now”.

He further added, “We are committed to meet the necessities of customers like home loans, car loans and education loans. During the current financial year alone, we have disbursed more than Rs 175 crore under various retail schemes”.

He informed that there major focus will be on providing loans to students to pursue higher studies. “During the current financial year, we have sanctioned loans amount to Rs 10.54 crore to 280 students”.

To instill the banking habit in young students and poor stratum of society, the bank will also provide the facility of ‘zero balance PNB Vidyarthi and PNB Mitra accounts’, and this scheme will not carry any service charges. The press release stated “In the Pune Circle, with a view to provide relief to distressed farmers, we have waived/written off agriculture loans of Rs 551 lakh of 1,689 farmers,”.

Hinjewadi has developed as an important IT hub, therefore considering this fact bank new branch at Hinjewadi is expected to focus on IT companies and professionals.

PNB for second time reduces rate, others may follow suit

Punjab National Bank (PNB) a public sector lender on Wednesday reduced its benchmark prime lending rates by 100 basis point. This is the second reduction done in four weeks. It is believed this might encourage those banks to cut rates that have left rates unchanged.

The bank informed in a stock exchange filing that by the coming Monday, PNB’s benchmark prime lending rate (BPLR) will come down to 12.50 per cent. It further added the revised BPLR will be applicable for all existing and new accounts linked with BPLR where rates are being charged at BPLR and above.

Earlier on October 31, PNB had reduced BPLR by 50 basis points. “Since interest rates have moved southward, we have decided to cut rates. Quality of assets is crucial and we want to send a message to good borrowers,” the bank’s chairman and managing director K C Chakrabarty said.

An HDFC Bank executive when contacted said the bank will be reviewing rates next week at the asset-liability committee meet. According to Axis Bank sources bank is looking at the cost of funds. “It appears that the lending and deposit rates may follow a downward trend. We expect a decision soon,” the executive added.

While the United Bank of India Chairman & Managing Director S C Gupta said that it will be thinking a cut of 50 basis point in deposit rates on Monday. “We have to take a call on lending rates. If other banks lower their rates, we will follow suit,” he added.

Indian Banks Association Chairman T S Narayanasami stated private banks, which have so far not reduced their lending rates, are believed to do so in the coming days. But the Banks like Union Bank of India, which have already reduced their lending rates, said that they have no plans to review lending rates immediately as deposit rates are continued to be high.

“During the same time last year, deposit rates were 150 basis points lower than the current rate. Unless deposit rates fall, there is little chance of a review in PLR,” said Union Bank Executive Director T Y Prabhu.

However PNB also said that it is planning to reduce peak deposit rate from 10.50 per cent a year to 9.50 per cent for deposits with tenure of one-three years. As a result, interest rates in the time period with maturities of 180 days and above have also been reduced by 25 to 100 basis points with effect from December 1.

Moreover there is an expectation of further measures by RBI in the coming days to increase growth, central bank governor D Subbarao is planned to meet the heads of large banks on Friday to evaluate the liquidity situation and take stock of credit flow.

Union Bank launched mobile banking service

A public sector lender, Union Bank of India, has launched its mobile banking service, 'Umobile' which will enable its customers perform basic banking activities including account-to-account fund transfer through mobile phones.

Its Chairman and Managing Director M V Nair told reporters that bank is also planning to roll out the service free of charge for its customers for a period of six months. Customers will be able to transfer funds up to Rs 5,000 per day between two accounts of Union Bank.

He added in addition, it will also enable for customers to make balance enquiry and avail mini-statements using the m-banking service.

"Union Bank is the first public sector bank to offer the mobile banking product. The bank is also looking at to offer other features like bill payments through this service by the end of this year," Nair said.

Customers can use this service by registering through Union Bank's ATMs by providing mobile number and can download the application from the bank's website.

Union Bank has launched mobile banking in collaboration with leading technology service provider Financial Software & Systems.

Public sector banks hike interest rate on FCNR deposits

Two public sector banks PNB and Dena bank have raised their FCNR and NRE term deposit rates after the announcement of an increase in interest rate ceiling by 50 basis points on non-resident deposits by the Reserve Bank of India.

Both the banks have increased rates by half a percentage points on non-resident deposit schemes across all maturities in dollar, British pound, euro and Australian and Canadian. The increase will be with immediate effect.

According to banks statements on the dollar deposits the interest rate has been hiked to 4.21 per cent for a maturity of 1-2 years from 3.71 per cent. For the maturity of 2-3 years, the rate has been revised to 3.52 per cent, as against 3.02 per cent.

While on the tenure of 3-4 years, the interest rate has been raised to 3.81 per cent from 3.31 per cent and on 4-5 years term deposit the new rate is at 3.95 per cent and the rate for fixed deposit for five years has been hiked at 4.14 per cent.

PSBs to give vehicle loans in ‘cautiously’ as pvt banks trim vehicle lending

Some of the private banks have stopped giving auto loans due to which consumers are finding difficulty as well as there has been significant fall down in the auto loans.

Public sector banks are coming forward to offer vehicle finance. Senior bank officials, car dealers and industry experts say that public sector banks are planning to increase their vehicle finance portfolios in a ‘cautiously aggressive’ manner.

Earlier private lenders were aggressive in the vehicle finance portfolio but due to increasing interest rates and delinquency levels, private banks, are moving forward in this sector cautiously. Senior bank official stated the genuine car buyers have been affected by this behavior of private sector lenders.

“Some private banks have decided to reduce their exposure to vehicle finance and we are trying to capitalize on this. However, we will adopt a ‘cautious but aggressive’ policy in order to ensure that we do not burn our fingers,” said Mr T.M. Bhasin, Executive Director, United Bank of India.

Mr Bhasin told Business Line that UBI has worked out plans to focus on vehicle finance in a big way during this festive season. “We are focusing on customers who have a salary-linked account with our bank. This will ensure that the loan extended is secure,” he said.

A senior official at the bank Allahabad Bank has a proposal of growing its car loan portfolio by 20 per cent in 2008-09. “There is a greater thrust on vehicle finance and we are looking at tying up with manufacturers,” he said. He further pointed out that as on September 2008 bank’s total vehicle finance portfolio stood at Rs 300 crore.

However a senior official at State Bank of India said that the bank is one of the large players in the segment and its portfolio increase is not related to the reduced exposure of private banks.

“We have been doing well in vehicle finance. Both our products and delivery system are moving down well with our customers,” said the official who did not wish to be identified.

The official stated that SBI is financing approximately one lakh cars each year and has plans to grow this by 33 per cent in 2008-09.

A senior official at Maruti Suzuki said: “Public sector banks have a wider reach and a long association with their customers. They therefore have the track record of their customers. This makes it easier to lend and also ensure that the customer does not default on his payments. Moreover, private banks lack transparency and have a multiple interest-rate structure which acts as a deterrent for some customers,” he added.

He told that Maruti Suzuki and SBI have a longstanding tie-up.

He further added that Maruti Suzuki has also tied up with SBI subsidiaries and is planning to tie up with Punjab National Bank.

PNB Bhutan branch will start operating by March 2009

Punjab National Bank is country’s second largest public sector lender bank will be starting its operations in Bhutan by March next year. For this bank has signed up a memorandum of understanding with the local partner in Bhutan.

"We have recently signed an MoU with the a prominent local business house and are in the process of obtaining regulatory approval from the Bhutan for the operation," Punjab National Bank General Manager Ranjan Dhawan told PTI.

The Reserve Bank of India has given the approval to PNB.

He told the JV is having the paid-up capital of Rs 30 crore and has been named as Druk PNB Ltd.

He told that the venture might be operational in the January-March quarter 2009.

He added in the beginning the venture will have two-to-three branches which would be extended in due course of time.

In addition, the bank is also planning of starting overseas operations in four locations - Norway, Dubai, Shanghai and Singapore in the near future.

The bank has submitted an application for regulatory approval for a representative office in Norway.

RBI has already given approval for the up gradation of the bank's Shanghai (China) representative office to a branch.

Further PNB has plans of up gradation of its representative office in Dubai International Financial Centre (DIFC) into a branch.

Simultaneously, the bank has walked out of the Malaysian joint venture led by Bank of Baroda.

LIC & PNB launched insurance scheme for credit- linked women SHGs

Life Insurance Corporation, the country’s largest insurer and Punjab National Bank the second largest public sector lender together have launched a life insurance scheme for credit-linked women self help groups in order to provide life and permanent disability cover.

This is the first time such program has been launched on a national level, after the announcement by finance minister P Chidambaram in his budget speech this year. Initially the scheme will be covering 5,000 members of SHGs credit-linked to PNB and the annual premium is Rs 200 from which 50% of this will be contributed by the insured and the rest will come from the Social Security Fund of the central government. You may also check out PNB home loan here to get the rates which would help you to compare the rates from all other lenders available in the market.

Currently there are 30 lakh SHGs credit linked to banks. In the budget speech for this fiscal, Chidambaram had allocated Rs 500 crore to the corpus of Social Security Fund.

In case of death of insured person or gets permanently disabled in an accident, LIC will pay Rs 75,000, while in case of normal death, Rs 30,000 will be paid. In case of permanent partial disability, the insured will get Rs 37,500.

“The claim would be settled only after adjusting the outstanding credit against the member in favour of PNB,” LIC chief (SBU – Pension and Group Schemes) P Satyanandam said.

Under this scheme the insured is entitled for a scholarship of Rs 1,200 per annum for her children studying in 9 th -12 th standard.

At present LIC is offering life and permanent disability cover to people in 44 categories, and covers 35,000 SHGs.

LIC main aim is to cover 2.5 lakh self help groups in 2008-09 under the scheme.

“I am confident that we would exceed (the target) by launching such programs in collaboration with other public sector banks, which were advised by the finance minister to facilitate expansion of such services,” Satyanandam said.

“LIC is also in talks with Oriental Bank of Commerce and Punjab & Sind Bank for the scheme,” the insurer’s divisional manager (Pension and Group Schemes) Narendra Kumar said.

“PNB has announced 2008-09 as the financial inclusion year. The bank is opening no-frills account for the poor and is providing them an overdraft limit of Rs 2,000.”

“We have already opened 7 lakh such accounts. The bank would bring 1.5 crore homes and 7.5 crore people under the financial inclusion programme by 2010,” PNB’s executive director J M Garg said.

PNB to launch schemes for farmers

Punjab National Bank (PNB), to save farmers from the cruel hands of money-lenders is planning to launch debt-swap scheme. Farmer get trapped in cruel cycle of debt trap when he takes loan from private money lenders who charge high interest varying from 50% to 200% against the loan.

Farmers keep paying the interest while the principle amount remains the same. Under this initiative taken by PNB, farmers will be able to take loan up to Rs 50,000 to repay the loan to money lenders.

After the state level bankers committee meeting (Haryana) J M Garg executive director, PNB told FE, “Farmers don’t need to produce documents if they want to take loan up to Rs 25,000. If the amount is above 25,000 then bank will carry out the verification procedure. To ensure the money is being rightly used, the bank will procure the certificate from money lenders declaring that debt has been written-off. The scheme will be introduced first in northern region and later will be launched in other parts of the country. Bank will charge the interest rate based on prime lending rate (PLR) from farmers”. Last year PNB had distributed agriculture loan of Rs 20,000 crore and still has a target of around Rs 25,000 crore for this fiscal. On the other hand the finance ministry has taken a decision that at least 3% of the target for agriculture in 2008-9 will be earmarked for giving loans under ‘Debt Swap scheme’.

PNB has another plan in the process, the setting up of agriculture hubs across the country. Explaining about this venture Garg said, “Our branches are getting overburdened with handling loan processing applications in agriculture sector, which usually cause unnecessary delays.

To solve these problems various hubs will be introduced where specialized staff will take care of the applications which will simplify the cumbersome procedure. The idea is that one hub will cater to the cluster of 20 branches”.

PNB, OBC reduce interest rates on non-resident deposits w.e.f. August 1

From August 1 country's second largest public sector lender Punjab National Bank and Oriental Bank of Commerce have lowered interest rate on Foreign Currency Non-Resident (B) deposit schemes for dollar, British pound and euro.

Banks in a press statement stated the interest rate on US dollar deposits for a maturity of 1-2 years has been reduced to 2.5 per cent from 2.56 per cent. While for the maturity of 2-3 years, the rate has been reduced to 2.75 per cent as against 2.85 per cent.

The interest rate for tenure of 3-4 years has been lowered to 3.11 per cent from 3.20 per cent and for 4-5 years term deposit the rates have been revised to 3.34 per cent and the fixed deposit for five years it is 3.49 per cent.

The bank statement stated the interest rate on NRE Term deposits, for August is 3.25 per cent for maturities of one year to less than two years as compared to 3.31 per cent last month and 3.50 per cent for maturity in between 2-3 years. It further added the interest rate has been pegged at 3.86 per cent for the maturity of 3-5 years against 3.95 per cent earlier.

PNB hikes deposit rates & PLR by 100 bps

After the Reserve Bank of India announcement of hike in the short-term inter-bank lending rates (repo rate) and mandatory cash reserve (CRR) by 0.50 per cent and 0.25 per cent, Punjab National Bank (PNB) has raised its benchmark prime lending rate (PLR) by 100 basis points to 14 per cent with effect from August 1.

PNB is country’s second-largest public sector bank by assets has also decided to hike its deposit rates by 75-100 basis points across various maturities to make them more competitive in the market. The deposit rate hike will also be applicable from August 1.

Dr K. C. Chakrabarty, PNB Chairman & MD, told reporters, “These decisions have been taken today looking at the extraordinary situation prevailing and to provide better returns to the depositors. Today the inflation rate is almost 12 per cent. We will not be able to induce the people to save unless we increase the deposit rates. We also hope to protect our net interest margin at 3.5 per cent”.

PNB to decide on revising of interest rates by June-end

On Thursday public sector lender Punjab National Bank announced that by the end of this month it will take decision on revising the interest rates in the wake of hike in the short-term lending rate by quarter percent by the Reserve Bank.

Punjab National Bank Chairman and Managing Director K C Chakrabarty told reporters "We will take a call on increasing deposit and lending rates by the end of this month. Our ALCO (Asset Liability Committee) would examine".

On June 11 RBI had raised the repo rate by 0.25 per cent to 8 per cent in view of this some of the banks have raised both the deposit and lending rates.

Although the country's largest lender SBI at present has decided against upward revision of the interest rate.

Yesterday, Bangalore-based public sector lender Vijaya Bank announced the hike in deposit rates by 0.3 per cent to 8.8 per cent for maturity between 1-2 years.

Bank of Baroda is also expected to review the interest rates during the month.

During the week, private sector lender Yes Bank has also increased its Prime Lending Rate by 0.5 per cent to 16 per cent and the deposit rates by same percentage points.

Previously the bank had increased its fixed deposit rate to 9.5 per cent against 9 per cent while for senior citizens it was raised to 10 per cent compared to 9.5 per cent earlier.

Last week another private sector lender, Jammu & Kashmir Bank revised its PLR by 1 per cent to 14 per cent last week.

PNB signs MoU with IL&FS Cluster Development Initiative to finance manufacturing activities

Punjab National Bank (PNB) signed a MoU with IL&FS Cluster Development Initiative; with this the bank will be actively involving with financing of manufacturing activities. Under this agreement bank will be providing finance for industrial infrastructure projects in the country.

However the growth in the manufacturing sector has dipped to 3% in March 2008 as compared to a 16% increase a year ago. Meanwhile bank has ruled out revising deposit rates upwards in the immediate future, triggered by concerns on rising inflation.

According to statement released by the bank, the bank’s SME portfolio was at Rs 18,198 crore. There is no margin money requirement for loans up to Rs 2 lakh under SME advances. The bank is giving loans up to Rs 50 lakh to micro and small enterprises without third-party collateral security under the credit guarantee scheme.

Punjab National Bank chairman KC Chakrabarty pointed out that under the MoU, the bank will be financing the various industrial infrastructure projects covering various manufacturing sectors. These projects include common infrastructure facilities like effluent treatment plants, hazardous waste disposal, water supply, green field industrial parks, up gradation of existing industrial estates, quality control labs, design centers etc.

He told bank will be allocating an estimated Rs 2,500 crore for such projects. These projects are expected to open up around 1,00,000 jobs over the next five years. Besides financing the common facilities or industrial park infrastructure, the bank will also be financing the various SME units coming up in these industrial parks for their various credit needs.

The term loans for fixed assets will also be provided, apart from the working capital loans for their operational needs. Bank will be taking up all the financial responsibility of the various industrial units. About 45% of the total contribution to manufacturing comes from small and medium units. The cluster development initiative of IL&FS is a group company of IL&FS and has been created to meet the various needs of the industrial clusters.

Under the MoU, the company will be responsible for sourcing of the projects, project structuring, project development, engineering & procurement, project management and supervision, due diligence and project monitoring. Although bank deposits are getting eroded with rising inflation, Punjab National Bank on Tuesday said that there is no immediate plan to increase deposit rates.

Recently the country’s largest bank, SBI, had raised deposit rates effective this month. “Inflation is higher. There would be pressure on interest rates. At present, there is no plan to increase deposit rates,” Mr Chakrabarty said. Position on interest rates appear to be stable, he said, in fact the interest rates are still higher than the inflation and there is incentive for depositors.

By the end of the week May 24, inflation stood at 8.24%, making earnings from one-year deposits to be negative. The return on fixed deposits having tenure with less than one year, earn a rate of less than 7%. However some pressure is showing up on the margin because of increase in cash reserve ratio (CRR), the percentage of deposits which commercial banks have to keep with the Reserve Bank of India. It is being expected that there are less chances of another hike in CRR.

In April, RBI had hiked CRR by 0.75% to suck out around Rs 27,000 crore from the economy to cool down inflation. Earlier this week, ICICI Bank CEO KV Kamath stated liquidity is good and there is no signs of any rate hike. “As of now, there is no signaling of interest rate hike,” he had said.

PNB to setup new overseas branches

A senior official of the State-run Punjab National Bank informed that bank will be opening its new branches in Shanghai and Norway, set up a subsidiary in Canada and a representative office in Singapore this fiscal.

Executive Director J.M. Garg told reporters on the sidelines of an industry conference that the bank has also signed a preliminary joint venture agreement with a private partner for the setting up of a bank in Bhutan where the Indian bank will hold a majority stake.

He informed the bank will be up grading its representative office in Dubai into a offshore banking unit to conduct institutional banking operations.

Currently bank branches are operating in Hong Kong, a subsidiary in London and a small operation in Kabul, which together generate a business of $300 million, he said.

PNB to launch credit card business in second-half of this fiscal

State-owned Punjab National Bank (PNB) will be launching its credit card business in the second-half of this fiscal year. A top bank official informed that bank is likely to launch its credit card business in the second-half of this fiscal and will be signing an agreement with Visa or Mastercard for the venture.

J M Garg told reporters on the sidelines of a seminar, "We expect the credit card business to get operational in a period of six months and would tie-up with Visa or Mastercard for the business. We have finalized the business strategy for the proposed card business, PNBs Executive Director."

Garg told PNB is in talks with a few potential players for its subsidiary as the bank has plans to part from around 26 per cent stake in its subsidiary, PNB Gilts, sometime this fiscal.

Bank is looking at a better pricing for the deal and is having talks with a few players. He said I expect to close the deal sometime in the present fiscal when market conditions are conducive for that (the deal).

Speaking about its overseas operations, Garg said that the bank will be setting up a subsidiary in Canada and a representative office in Singapore apart from up gradation of its existing representative office in Dubai.