SBI to partner with Elavon and Visa

Mumbai: Country's largest lender State Bank of India said it has selected U.S.-based Elavon and Visa International as its joint venture partners for merchant acquiring business. Merchant acquiring business is facilitation of payment through debit or credit card at the retail outlets.

The business would include acquiring bank identification numbers (BINs) from the schemes, as well as managing services for point of sale (PoS) terminals among others. The managed services would include deployment of POS terminals at customer locations, their replacement, merchant training and maintenance, to name a few. Meanwhile, SBI is planning to place about 1.50 lakh POS terminals for debit and credit card payments across the country in the next fiscal. It plans to deploy six lakh POS terminals in the first five years of its operations.

The terms of arrangement are being worked out, SBI informed the Bombay Stock Exchange. RBI has already approved the setting up of a wholly owned subsidiary for conducting merchant acquiring business by SBI in the name of SBI Payment Services. Last year, the bank had floated Request for Proposal (RFP) for selection of joint venture (JV) partner for merchant acquiring business.

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RBI approves Nokia mobile money transfer

Mumbai: The Reserve Bank of India has permitted YES Bank to provide mobile money services in association with Nokia. The pilot in Pune will end in a couple of months, the result of which will presumably be inputs for the RBI to regulate the roll-out of the services in India, reports M. Ramesh of BusinessLine.

For a customer to start using this service, he has to first go to any of the Nokia retail outlets and fill a form which makes you an account holder with YES Bank. Nokia promises that the process will not take more than 15 minutes. Then he can deposit an amount at the Nokia outlet and in minutes the 'credit' appears on the mobile phone. After this, he can make payments at shops, pay electricity and water bills and even transfer funds to another person.

Obopay, a California-based company, in which Nokia has a stake, offers the technology back-up for YES Bank. Obopay charges two percent of the value of payments as commission, except for utility bills, where the payment would be between Rs. 5 and Rs. 10 a transaction.

Currently, only YES Bank is offering such a service, but soon other banks could follow suit. Nokia has initiated discussions with a few other banks, but since it is up to the banks to apply for permission to the RBI, Nokia does not want to disclose their names or suggest a timeline for the launch of the service.

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46 Indian banks' staff get their salary increased

Mumbai: Employees' unions and the Indian Banks Association (IBA) Tuesday signed here a five-year wage agreement providing for a 17.5 percent hike in pay from 2007 to around 775,000 staffers of 46 banks whose annual wage bill will go up by Rs.5,200.

"We are satisfied with the wage agreement that is effective from 2007. The new settlement, apart from increasing the wages for clerical staff and officers, would also provide the employees one more option to join the pension scheme," C.H. Venkatachalam, convenor of the United Forum for Bank Unions, told IANS from Mumbai.

The settlement covers 26 public sector banks, 12 private banks and 8 foreign banks and would benefit 477,000 workmen employees and 275,000 officers.

According to Venkatachalam, the additional cost for the government banks will be Rs.4,816 crore. For private banks, the financial load would be Rs.400 crore.

Under the agreement all the remaining 260,000 employees and officers who are now covered by contributory provident fund would be given a chance to join the pension scheme - a long pending demand of the unions.

"More than 50,000 retirees will also get the option to join the pension scheme," Venkatachalam said.

The settlement will be effective from November 2007 to October 2012.

Employees' unions and the IBA negotiated the wage settlement for nearly 30 months.

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Reserve Bank to hike rates

New Delhi: The Reserve Bank of India (RBI) is expected to continue increasing the repo and reverse repo rates in months to come, said a senior official of HDFC Bank.

"We expect the central bank to continue to pace its policy rate tightening cycle towards a 75-100 basis points (bps) hike in the repo and reverse repo rate over the remainder of FY11. A further 25-50 bps in cash reserve ratio (CRR) over the course of financial year most likely concentrated in second quarter of FY11," Abheek Barua, the bank's chief economist, said.

Barua, reacting to RBI's annual monetary policy statement unveiled Tuesday, added: "Lending rates unlikely to inch up significantly before June-July 2010 but see rate hardening kicking in Q2FY11. We expect lending rates to move higher by 75-100 bps over the course of FY11."

RBI Governor D. Subbarao in his annual monetary policy statement increased the repo and reverse repo rates by 25 bps to 5.25 percent and 3.75 percent.

Subbarao also increased the CRR by 25 bps to 6 percent of commercial banks net demand and time liabilities effective from Apr 24 and in the process sucked out Rs.12,500 crore from the banking system.

"RBI's action of increasing reverse repo, repo rate and CRR by 25 bps each was more in line with current macro-economic and inflation trend. However, it was lower than the expected," said Devendra Kumar Pant, Director, Fitch Ratings.

According to Edwelweiss Capital economist Siddhartha Sanyal, the current tightening is being accepted favourably by the markets as it was on the expected lines.

"Even after such tightening (and factoring in a few more doses in the coming months), policy rates will still stay far below their "steady-state" levels - long-term average level of repo rate in India is around 6.0-6.5 percent," he said.

Pradeep Jain, chairman of Parsvnath Developers, said, "While the increased CRR, Repo and Reverse repo rates will check any runaway growth in money supply, the impetus on infrastructure lending will ensure that economic growth will continue unchecked."

"For realty sector the focus on infrastructure growth is a welcome sign. I don't foresee any increase in interest rates on home loans in the first quarter of the current fiscal as currently there is sufficient liquidity in the market, but definitely the banks shall be raising the lending rates in the longer run," he said.

However, in the near term home buyers will not find interest rate as a stumbling block in their buying decisions, Jain added.

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IndusInd Bank to unveil credit card

Bangalore: To extend its reach to the customers, IndusInd Bank plans to enter the credit card segment. The bank expects a turnover of around Rs. 500 crore from the new business in its very first year, reports Rupee Times.

Talking to Rupee Times, Paul Abraham, CEO of IndusInd Bank said, "So far, our retail lending has been entirely secured. We want to move towards unsecured lending. A credit card will complete the suite of products. We expect the credit card business to pick up in the next three years and will target around Rs 500-crore business in the first year."

The bank has partnered with IIT- Madras to provide the technology for this facility. "From a manufacturer to a dealer, everyone across the chain can avail themselves of credit under one umbrella. The objective is to disburse credit faster and, thereby, help us grow the loan book," said Ramesh Ganesan, EVP head - Transaction Banking, IndusInd Bank.

In the last financial year, the bank has shown commendable performance owing to higher margins and increased loan book. It posted a net profit of Rs 97.96 crore in three months to March 2010, a 94 percent jump year-on-year. Total income stood at Rs.852.57 crore, a growth of nine percent.

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