Banking Current Affairs -3 (April 4-5, 2012)

Yes Bank gets $75-mn loan from IFC

  • The International Finance Corporation (IFC), a member of the World Bank Group, has decided to give $75 million loan to Yes Bank to help expand its network, reach out to small and medium enterprises (SMEs) and agricultural clients, and increase portfolio 3.5 times to $7.7 billion by 2016.
  • This investment will be in the form of a 15-year subordinated bond. It is expected to strengthen the bank’s capital base significantly.
  • YES Bank is one of the few banks to provide direct microfinance services to villages, in line with IFC’s financial inclusion strategy. According to IFC, nearly 80 per cent of India’s population lack access to formal financial services and only 30,000 of India’s 600,000 villages have a bank.
  • Micro, small and medium enterprises in India are constrained by lack of adequate management skills, modern technologies, industrial infrastructure and financial access.
  • IFC seeks to bridge the financing gap and enhance the capacity of the sector. This funding comes at a time when there is little international appetite for investment of this volume and tenor.

NABARD signs agreement with Uttarakhand to waive off weaver’s loan

  • National Bank for Agriculture and Rural Development (Nabard) has entered into agreement with Uttarakhand Government to waive off loans to all weavers’ loans up to Rs. 50,000.
  • The MOU has been signed between Nabard and the government of Uttarakhand for implementation of this package for revival and restructuring of handloom weavers’ structure in the state.

Stuart Milne: New CEO of HSBC India

  • Hong Kong and Shanghai Banking Corporation (HSBC) has appointed Stuart Milne as chief executive officer for its India business.
  • Milne has replaced Stuart A Davis who is moving to a new position within the bank after a three-year stint in this role.
  • Prior to this appointment, Milne was the country manager of Japan since 2007. In that role he served as the president and chief executive officer of HSBC, chairman of HSBC Securities (Japan) and chairman of HSBC Global Asset Management (Japan) KK.

Knowledge Bytes

  • Naina Lal Kidwai, a director at HSBC in Asia-Pacific, is currently the country head of the bank in India.
  • India was the sixth most profitable market for the bank after Hong Kong, China, the UK, Brazil and Canada.

19 Banks consortium approves financial restructuring plan of Air India

  • The SBI led consortium of 19 banks has approved the financial restructuring plan of Air India recently. The financial restructuring plan includes debt restructuring of Rs 18,000 crore by the banks and a committed equity infusion by the government.
  • It would need Cabinet approval, which is expected in the mid of April 2012.

World Bank Group President Robert B Zoellick visits Chennai

  • World Bank Group president, Robert B Zoellick recently visited to the Chennai office of the Development Bank. The Chennai office provides corporate, financial, accounting, administrative and IT services to its operations around the globe.
  • Zoellick also visited the energy-efficient ‘green’ building, featuring carbon sensors, automated lighting, air-conditioning systems, and water recycling plants of the Chennai Office.

Knowledge Byte:

  • The 500 strong staff of World Bank office in Chennai works in a 128,000-square ft facility, which is the largest World bank-owned building outside of its Washington DC headquarters.

RBI to Conduct Open Market Operations

  • Reserve Bank of India has recently infused Rs. 10,000 crore via open market operations (OMOs) to ease the tight liquidity conditions.
  • Open Market Operations is a quantitative tool of monetary policy of the Reserve Bank of India which includes buying and selling of securities in the money market by the central bank.
  • RBI said that this step was consistent with the stance of monetary policy and was based on the current assessment of prevailing and evolving liquidity conditions. In the recently conducted OMO, RBI purchased four government securities, including the current 8.79 per cent 10-year benchmark government bonds maturing in 2021.

RBI Relaxes FDI Investment norms for Indians

  • RBI has recently announced a slew of revisions aimed at liberalising the norms for direct investment abroad by Indian residents. These include liberalisation in regulations on qualification shares, professional services rendered and ESOP (employee stock option plan) schemes.
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