$3.75bn loan to South Africa by world bank

The World Bank has sanctioned $3.75 billion loan to South Africa for the development of wind and solar power plants to meet the country's energy requirements.

The bank's board of executive directors approved the loan that will go towards energy supply and financing of solar and wind power plants.

"Without an increased energy supply, South Africans will face hardship for the poor and limited economic growth," said Obiageli K. Ezekwesili, World Bank vice president for the Africa Region.

Ajay Banga becomes MasterCard CEO

WASHINGTON: An entirely India-educated financial pundit climbed a world corporate pinnacle on Monday with MasterCard Inc, the ubiquitous financial company, naming Pune-born, Delhi-educated, IIM-Ahmedabad alum Ajay Banga as its CEO.

Banga will take over the top position from current CEO Robert Selander on July 1, only ten months after being hired from CitiGroup as a potential successor.

Banga joined MasterCard as president and chief operating officer from Citigroup Inc. last August, and was given a $4.2 million signing bonus he could keep if he wasn’t named CEO by June 30, 2010, according to a regulatory filing. Banga will retain his title as president when he becomes CEO.

CitiGroup is also led by a CEO of Indian origin, Vikram Pandit, as is PepsiCo (CEO Indra Nooyi), which, like MasterCard, is headquartered in a small town called Purchase in New York.

Purchase, accidentally named so because the British who bought the land from Native Americans put down the word on the map, is also home to J.P.Morgan, another financial institution with a wealth of Indian talent in its upper echelons.

Mastercard’s announcement about elevating Banga, who is a turbaned Sikh, came the same day Prime Minister Manmohan Singh is visiting the U.S for the Nuclear Security Summit in Washington DC. In recent years, the much-admired community from India has made strenuous efforts to apprise Americans of their distinctive religion and culture, with even the White House responding by celebrating the birth anniversary of Guru Nanak Dev for the first time last year, a point President Obama conveyed to Prime Minister Singh when they met in November.

Banga was born in Khadki outside Pune, where his father, an army officer, was posted. He grew up and schooled across India, successively in Secunderabad, Jalandhar, Delhi, Hyderabad and in Shimla, where he finished his schooling.

He rejected an army career his father was keen he pursue and instead later took a BA in Economics Honors from Delhi University and later an MBA from the Indian Institute of Management, Ahmedabad.

In that sense, he is an entirely India-minted executive who has reached the top of an international company; others like Pandit and Nooyi have U.S degrees in addition to the ones they earned in India.

Banga started his career at Nestle and joined Citigroup in 1996 as head of marketing in India for the consumer business. Incidentally, his brother M.S Banga is the former chairman of Hindustan Lever Limited.

In 2000, Ajay Banga was promoted to head CitiFinancial and the U.S. consumer assets division. In 2002 he took over the retail bank in North America – his first stint in the U.S -- and in 2005 he was named to head Citigroup’s international consumer-banking and finance businesses.

He moved to Hong Kong in early 2008 after being named to oversee all of the bank’s businesses in Asia, including credit cards and consumer banking, institutional banking, wealth management and alternative investments, before returning to US last year to join MasterCard.

Banga’s task ahead is clear – to chase down leader Visa at a time both networks are said to be benefiting from consumers’ increased shift to plastic.

Card-based transactions are now starting to exceed cash and checks in the U.S. By 2013, card- and electronic-based payments will account for 63 percent of an estimated $9 trillion in U.S. consumer transactions, according to industry experts.

Tough competition seen in banking sector

There will be more competition in banking, with the finance minister announcing that RBI is considering issue of fresh bank licences to private sector players and finance companies if they meet the RBI eligibility criteria. Religare, Shriram Group, Birla group, Anil Ambani group and Bajaj group have said that they would be interested in a banking license and are awaiting guidelines while South based Sundaram Finance has said it is not interested in a banking license. Among finance companies, Indiabulls had also earlier shown an interest in getting into banking. Lenders such as IDFC, Exim Bank and SIDBI have also shown interest for a banking licence. There are currently 15 old private sector banks and seven new private sector banks.

Source:ingvysyabank.com

'FOREIGN' tag‎ for ICICI Bank and HDFC Bank

Banking majors HDFC Bank, ICICI Bank and Yes Bank are synonymous with Indian banking except that they are no longer considered Indian!

The commerce ministry on Monday said that it intends to stick to recent changes made to the FDI policy and not make any exceptions. The ministry suggested that banks will also be subject to the rule which says that any company with foreign holding more than 50 per cent will be deemed a "foreign entity."

"As far as the ownership and control are concerned, that has been defined with clarity, calculation of the FDI is also much simpler. The policy has worked well," said Union Commerce and Industry Minister Anand Sharma.

The changes made to the FDI policy last year say: "For a company to be treated as Indian, foreign investments, including ADRs, GDRs, FCCBs, convertible preference shares and NRI holdings, should remain below 50 per cent."

Going by that definition, the other five banks which are likely to get impacted by this are Yes Bank, IndusInd Bank, Federal Bank, ING Vysya and Development Credit Bank.

As foreign entities, these banks may face restrictions on investments in their insurance subsidies and also potentially face a limit on future branch expansion plans.

It is this fear that has left the chiefs of the country's top banks worried even as they continue to argue that they remain "Indian banks."

"Our management continues to be Indian. We continue to remain as a bank of Indian origin. Beyond that the classification of shareholding does not really impact our day-to-day performance," ICICI Bank managing director and chief executive Chanda Kochhar said in Mumbai on Monday.

"We, in any case, do not invest in equity shares of other companies in a big way. So in that sense, it does not really change life for us," Kochhar explained.

The second largest private sector lender HDFC Bank's managing director Aditya Puri also echoed a similar view, saying the FDI policy does not create any issue for the bank and that the bank continues to be an Indian lender with voting rights resting with Indians.

"Voting rights are with Indians. There is no issue as such. The fact is that we are an Indian bank and the voting rights are with Indians. Then how can you say we are a foreign bank," Puri quipped.

The RBI and the commerce ministry have been in discussion over the changes in FDI norms and how banks are expected to deal with them.

With the commerce ministry suggesting that IT is not willing to budge, it may now be up to the RBI to offer some clarity on how banks should adjust to the new regulations without impacting the growth potential of their domestic operations.

ING Vysya to focus on retail banking

Private lender ING Vysya Bank will focus on retail and emerging corporates this fiscal to increase its balance sheet and expand the branch network in the northern and western region.

'We are looking at all the four major business segments - big and emerging corporates, small and medium enterprises (SME) and retail - for growth,' Peter Staal, head of Banking-Asia, Americas and UK, told reporters here Thursday.

Speaking to reporters on the sidelines of a seminar on `Doing Business with the Netherlands' organised by the Confederation of Indian Industry (CII), he said: 'ING Vysya Bank has got licence to open 60 branches in India. We are strong in South India and would like to expand in West and North.'

On growing the bank's balance sheet size, he said the focus will be on increasing the retail deposits for the liabilities side.

He said the bank will grow the asset side by financing commercial vehicles and the emerging corporates which have a turnover of Rs.150 crore-Rs.1,000 crore.

Currently emerging corporates constitute around 20 percent of the bank's business.

Source: Sify

Saving account made more interesting by Reserve Bank of India norms

In a uniquely Indian compromise, the computer industry had to actually strip out some of the abilities of their PCs (and those PCs would compare extremely unfavourably with a child’s PC today) and they coined a quaint name for these machines — Advanced Ledger Posting Machines. The trade unions consented to the use of these machines. Over time, the march of technology just overtook all the opposition and today, it would be difficult to spot a bank branch that’s not fully computerised and connected to a centralised system.

Why I am being nostalgic? 
Well the lack of computers spawned some systems that somehow survived the onslaught of computers in the late 90s and the first decade of this century. Among them was the practice of calculating interest on savings bank account on the minimum balance between the 10th and the end of the month. This was necessary since it would have been impossible to manually calculate the interest based on the daily balance system for the tens of millions of savings bank accounts with the banks.

Somehow, this practice persisted despite the vanishing of constraints that had created this practice in the first place. 
Kudos to RBI, then, for removing these last vestiges of an old-world system. This change makes a bigger difference than we may think.
Refer Bank account 1. Under the daily reducing basis method, the product is divided by the number of days (30 in this case) to get the average balance. It is on this amount that interest is paid. Hence,Rs 774,300/30 = Rs 25,810 as average balance. Interest @ 3.5% for 30 days on the amount = Rs 74.25.

This big jump (more than double) comes from Rs 33 under the old method. If that does not sound substantial, multiply that by 12 months and the millions of savings bank accounts, and you get a rough idea of the money savers have been losing so far. In fact, just one entry where the saver receives a sum from say, his trading account and within 3 days, pays it back to the broker, triples the interest payable from the old system ( See bank account 2).
Clearly, the days where savers who maintained large balances in their savings account bought liquid mutual funds to enhance returns are now past.

With daily reducing interest available on the savings bank balance itself, this will become the most convenient way to keep short-term large money. Also, short-term deposits (7-30 days) that yield hardly 2-3% will either vanish or see their rates harden beyond 3.50% at least. Even large entities may open savings bank accounts to get some return on their short-term liquidity.

Retail investors will be able to apply for public offerings without losing interest. “Application Supported by Blocked Amount”
(ASBA), will be more profitable as on the blocked amount, the interest will be paid on a daily basis, making applying less expensive.

There will be more cheer if the government emulates the RBI and changes some of its own archaic rules. Say for PPF accounts, the interest is payable on the minimum balance between the 5th of the month and the end of the month (I have always wondered which bureaucrat invented the date of 5th instead of the 10th that was always being used by the banking industry).

The reason this change has to be made by the government is because although the money is deposited with specified banks, it belongs to the government under the scheme.

To sum, the Reserve Bank needs to be applauded. Now, if you plan your withdrawals methodically, you will earn a better return on money kept in the savings account.

The writer is CEO, Apna Paisa, a price comparison engine for loans, insurance and investments. 
He can be reached at hrdna@apnapaisa.com

Source:dnaindia