Put on a protein-rich diet

The latest RBI annual report is thinner; it has less than half the number of pages that the previous issues had. According to Executive Director Deepak Mohanty, the report has been put on a ‘protein-rich' diet! Less mass, but rich in assessment. At a media interaction at the release of the report, Dr Subir Gokarn, Deputy Governor, explained in detail: “Till two years ago this used to be a 500-page document, which most people found very difficult to lift, including myself. Which is why, as soon as I came in, I insisted that it be brought down to 200 pages. We are trying to stick with that. We are also contributing to paper conservation. If things that you require are not there, remember that every new element requires more paper.”  

HBL 

Women part of top brass at PSBs

For quite sometime, woman CEOs like Chanda Kochhar, Shikha Sharma, Naina Lal Kidwai, Kalpana Morparia and Kaku Nakhate have been making waves in the world of finance, being at the helm of leading private and foreign banks. Public sector banks, on the other hand, have seen a bit of a dry spell, barring Renu Challu, MD, State Bank of Hyderabad. Of late, there has been a resurgence of women in the public sector as well. Nupur Mitra, an ED at Indian Overseas Bank, is set to take charge as chief of Dena Bank. Besides, a host of executive directors in large public sector banks are women. These include RV Iyer at Central Bank, Archana Bhargava at Canara Bank, and Shubhalakshmi Panse at Vijaya Bank.

TOI

Coming soon: Automated cash deposit machines

New Delhi : Soon, you may be able to deposit cash in specially designed ATMs and get an instant alert on your cell phone confirming immediate credit to your account.  Banks are exploring options for automated cash deposit machines, after tasting success in allowing cash withdrawals through ATMs. At least, two public sector banks – State Bank of India and Punjab National Bank - are testing such facilities here, inform sources in the know. To start with, the banks are placing such machines in branches or designated centres for premium customers as a pilot project. Later, upon wider acceptance, banks will consider putting them at ATM kiosks next to cash dispensers. Internationally, many countries allow the use of ATMs as “recyclers” – allowing customers to deposit and withdraw cash from the same machine. In fact, in such recyclers, the cash deposited by one customer can be immediately disbursed to the next customer seeking cash withdrawal. However, bank officials here are not clear on whether same funds can be recycled according to policy.  “The RBI may insist that cash accepted be processed, and kept in a vault before you can disburse the same money to others,” said a bank official. Other issues to be tackled here by banks include how to place deposit machines in the small space provided for cash withdrawal ATM kiosks.  “In fact, international companies have to design special software in these deposit ATMs to verify the Rs 1,000 currency note which has a large Mahatma Gandhi image — this is probably the largest image verification required across currencies. The US dollar notes of all denominations are of the same size,” said a source.  In the PNB cash deposit machine, the customer has to punch his account number and also provide his mobile number. The machine counts the amount and gives a receipt. As the machine is linked to the core banking network, the credit is immediately given to the customer's account. The banks' future strategy on usage of such machines will depend on the response they get in the pilots. There will have to be critical mass. “The day is not far off when cash deposits are done through such machines in a big way,” banking industry sources said. 

HBL

RBI to issue guidelines for Basel III implementation

The RBI has said Indian banks would adhere to the globally agreed timeline for implementation of Basel III norms and guidelines in this regard will be issued in the near future. "The RBI is examining the Basel III regulations and will issue guidelines to the extent applicable for banks operating in India in due course of time," the RBI's annual report said. Basel III is the new regulatory framework designed to correct the deficiencies in regulation that led to the global financial crisis of 2008. It is to be noted that in the wake of financial crisis, the Basel Committee on Banking Supervision (BCBS) has initiated several post-crisis reform measures, mainly in terms of building on the Basel II capital adequacy framework. Though Basel III can be viewed as a modification of the Basel II framework, it differs significantly in terms of its comprehensiveness, it said. "The RBI would adhere to internationally agreed phase-in period starting in January 1, 2013, for implementation of Basel III," it said. Implementation of the Basel III norms is scheduled to commence from January 1, 2013, and has to be completed by January 1, 2019. Apart from revising the definition of regulatory capital, it said Basel III is much wider in terms of its risk coverage clauses and encompasses measures to address systemic risks. The RBI observed that implementation of Basel III has thrown up significant challenges for both banks and banking supervisors alike. It said that availability of an adequate amount of capital, both in terms of quality and quantity, "provides significant comfort to begin implementation of the new framework" as per the time schedule fixed by the BCBS.

BS

Some delay in licences will beef up banking

....Once again, we should examine the aspect in regard to the kind of banking that would be permitted to the new entrants. They would require sizeable capital, at least Rs 1,000 crore to begin with. An ability to increase capital by another Rs 1,000 crore in a span of following three years may be very essential. If we evolve a separate order of banking for regional and community activities, then perhaps the capital requirement could be less; however this seems unlikely......

Continue reding.............. 

Banks lose out on deposits, savings instruments gain

This may appear contrary to popular belief, but it’s true. Bank deposits, despite their safety and ease of operations, seem to be fast losing their charm among Indian households as the best place to park money in. Over the past three years, households have increasingly preferred to save their growing disposable incomes in government-backed savings instruments and long-term insurance products, rather than in bank deposits. In 2010-11, bank deposits accounted for 42% of all household savings, a sharp drop from 53% in 2008-09, data released by the Reserve Bank of India (RBI) last week in its latest annual report showed. Effectively, on an average, of every Rs100 as household saved, it set aside Rs42 in bank deposits (fixed and savings) compared to Rs53 three years ago. Investment in life insurance products and government-backed savings instruments such as national savings certificates (NSCs) and post-office savings, appear to have caught the fancy of households. The share of government-backed savings instruments in household savings saw a major spike to 6.5% in 2010-11 from 1.4% three years ago. Such instruments offer 8% annualised return compared to 4% in savings bank accounts.  Likewise, investment in life insurance products have grown sharply during the period, with its share in savings growing to 24.2% from 21.0% three years ago, implying nearly a quarter of an average household's savings are now moving here. Experts attributed the changing savings pattern to growing financial literacy, aggressive product selling by insurance companies and seeking of better investment returns. “The data clearly reflects greater awareness of financial products,” Ranjeet Mudholkar, CEO of Financial Planning Standards Board India, told HT. “Plain bank deposits cannot match the returns given by several other products. This is a welcome trend, mirroring how India is slowly becoming a nation of investors from pure savers.” The taxability of bank deposits, low returns and longer procedural practices also appear to be deterrents. “Post-office savings, unlike bank deposits, do not require a lot of paper work. One can deposit in cash, open multiple accounts and quoting PAN for small deposits is not mandatory,” said Delhi-based financial planner Surya Bhatia. “Its likely that people are preferring to invest more and more of their additional disposable income in government savings products because of higher returns after setting aside a certain portion as liquid deposits in banks,” said Lovaii Navlakhi, managing director and chief financial planner of Bangalore-based International Money Matters.

HT

Plastic push

Read the fine print before you give in to the temptation of credit cards, suggests Srikumar Bondyopadhy

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Braving bribery in rural areas - PUSHPA GIRIMAJI

Recently, I had written about how banks flout the guidelines of the Reserve Bank, the Indian Banks Association and the government on education loans and how the banking ombudsman had in many such cases come to the rescue of consumers. Well, here’s an interesting follow-up on that story. And I wish to write about it as it opens our eyes to the ground reality in many parts of the country vis-à-vis government schemes and programmes aimed at helping the economically weaker sections of society. A consumer from Uttar Pradesh called me up saying that his son had got admission for a BTech course in Roorki and he urgently needed Rs 3 lakh, but the manager of the public sector bank in his village had told him that there was no such loan. I told him that the bank was obviously misleading him and he should complain to the nodal officer of the bank.  Apparently, the manager’s attitude changed completely when he spoke about the nodal officer. He was asked to fill up the loan application form and promised that the loan would be sanctioned in a couple of days. On this assurance, the consumer, who runs a small paan shop in the village, even paid for his son’s college admission fee. What happened next was shocking. First came a demand for Rs 50,000 for releasing the loan and when the consumer met it by borrowing from a friend, there was a further demand for Rs 20,000. When he failed to meet it, he was told that he would not get the loan. Fortunately, the consumer had a witness — the person from whom he had borrowed the money — to the demand and also receipt of bribe. He had also marked the currency notes for identification. I told him to get a statement from the witness, have it attested, write down his own complaint and take it to the senior manager of the bank branch that had a supervisory control over the village branch. Obviously news travels fast in villages and even as he got the statements ready, he was called to the bank and his money returned with an assurance that the loan amount would be released in seven days. The consumer, in turn, had to promise not to complain. Is this how things work in certain small towns and villages? My advice to consumers is, please do not give in to the demand for bribe. Complain. Remember, in addition to the nodal officers of the banks, you can complain to the RBI (www.rbi.org.in) too. 

The Telegraph

RBI panel may propose reserve, provisioning rules for non-banking finance cos

MUMBAI: A panel constituted by the Reserve Bank of India may suggest provisioning and reserve requirement rules for non-banking finance companies that will narrow the gap between these lenders and banks, two people familiar with the thinking of the committee said.  "In terms of risk management, there will be movement closer to that of banks," said a person familiar with the group's deliberations. "The room available for regulatory arbitrage should no longer be there with some reserve requirements," he added.  For the first time in more than a decade, the central bank in May formed a committee under former Deputy Governor Usha Thorat to address issues relating to non-banking finance companies (NBFCs). The group was asked to focus on the definition and classification of finance companies and may make its suggestions public as early as this week.  Finance companies that have few restrictions on sectoral lending, group-wise exposure, lending against shares and real estate loans are seen as creating risk to the system since they borrow from banks. Any seize-up in lending due to a crisis similar to the 2008 meltdown may put even the banks at risk, the person added. The recommendations will address these issues. Some of the proposals could crimp the profitability of finance companies. Bank loans to NBFCs have risen 55% in fiscal 2011, prompting the RBI to call it 'lazy banking'. Gold loans such as the ones offered by Muthoot Finance and Mannapuram Finance are growing at 50% annually. Securitisation of loans and assignment transactions have raised red flags.  The committee included, among others, Sanjay Labroo, director, central board of RBI and Rajiv Lall, MD and CEO of IDFC. But there were no representatives from deposittaking finance companies, leading to fears that their interests may not be protected.

ET

Reserve Bank of India's income and reserves

This refers to the report “RBI’s income grows 12.7% in 2010-11” (August 26). Viewed in the context of the central bank’s income declining in 2009-10 by 46 per cent over 2008-09 (from Rs 60,732 crore to Rs 32,884 crore), the 12.7 per cent rise, achieved mainly by an increase in income from domestic sources, is not a matter of great comfort — especially because the growing size of RBI’s balance sheet calls for augmenting the reserves. Actually, there is a case for the government of India to forgo receipt of surplus income from the central bank, at least till RBI’s reserves position reaches the targeted level of 12 per cent of the Bank’s asset size. Transfer of surplus profit to the government this year was lower by around 25 per cent.

The reserves – contingency reserve (CR) plus asset development reserve (ADR) – as a percentage of total assets had come down from 11.89 in 2008-09 to 11.15 in 2009-10. In 2010-11, the corresponding percentage has shrunk to 10.34. The table gives the details of transfer from the Bank’s income to reserves and to the government during the past five years. Against the tentative target of 12 per cent of asset size for reserves (CR plus ADR) indicated by the Bank in earlier annual reports, the position improved from 10 per cent in 2005-06 to 11.89 per cent in 2008-09, after making up for a dip to 9.57 per cent in 2007-08. In 2009-10, a year that was particularly good for government finances, RBI transferred as much as 57 per cent of gross income to the government, bringing the reserves down to 11.15 per cent of the Bank’s asset size. A central bank with a strong balance sheet will be an added support to the government when fiscal policy is in rough weather. To ensure that external compulsions do not dilute the strength of RBI’s balance sheet, the government should take measures to augment the share capital of RBI after carrying out appropriate amendments to the RBI Act. It should be obligatory on the government’s part to maintain RBI’s capital and reserves at a certain level (say, at 12 per cent of the balance sheet size). Till such time, RBI should be allowed to retain surplus income by transfer to reserves. Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, the central bank’s reserves need to be augmented on an ongoing basis. RBI, on its part, should think in terms of generating reasonable income from deployment of captive funds it is mandated to manage, without compromising on the safety of investments. In this context, the addition to holdings in gold was a welcome beginning. The Bank should, at this stage seriously consider realignment of its portfolios especially under forex reserves.

M G Warrier, Mumbai (BS)

Move to pare govt stake in banks afoot

"If you want to sustain a strong expansion of bank credit, there has to be large bank capital. This can be done only in two ways… either reduce shareholding of government to a minority and still control them or infuse fresh capital,” Planning Commission Deputy Chairman Montek Singh Ahluwalia told............

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Damodaran Committee Report on Banks Customer Service – S.S.Tarapore

In May 2010, the Reserve Bank of India (RBI) set up a Committee on Customer Service in Banks, with a galaxy of stars from the banking industry, consumer interests and headed by the redoubtable Mr. M. Damodaran who has many significant credits to his brilliant career but he would be remembered by millions of unit holders as the saviour of the Unit Trust of India. The 151 page Report, was to be submitted by the end of September 2010 but was submitted only on July 4, 2011; the undue delay is not explained. Nonetheless, the Report is power packed with a number of vital recommendations and it is hoped that the RBI and banks will give serious attention to time- bound implementation of the Report. It would be the height of public irresponsibility if the vital recommendations are allowed to gather dust as invariably happens to most official Reports.

The first item in the terms of reference relates to ` customer service in banks- approach, attitude and fair treatment to customers from retail, small and pensioners segment' In this short column it is just not possible to do justice to all the breath- taking recommendations, and hence here focus would be to selectively discuss a few issues relating to the first term of reference. It is indeed commendable that the Committee has undertaken considerable footwork across the length and breadth of the country consulting an array of stakeholders. While the Report covers a wide variety of issues, it would have been of great interest for the Common Person to know more about the results of the Committee members several in cognito visits to bank branches. This would have provided vital information on the ground level situation. It is unfortunately the general perception of the Common Person is that the quality of banking service depends on who you are and who you know. While one cannot expect totally flawless service when dealing with a multitude of customers, banks should be able to measure up to the service provided by say the airlines or the railways. The basic tenet of fair treatment should, among other things, be based on minimum courtesy and behavioural standards. It is interesting that the Committee refers to ` rude relationship managers' ( Page 45 of the Report).

What was the experience of the Committee members in the course of their in cognito visits? Dr.Y. V. Reddy, as Governor, would often agonise why we cannot develop a culture in our banking system of saying ` please sit down', ` I will try and resolve your problem' or even say ` sorry'. It is unfortunate that after so much effort at improving customer service ` rudeness' in dealing with the ` Common Person' is the norm rather than the exception.

The Report emphasizes the right of every citizen for a simple deposit account and reasonableness of charges. Witness the recent uproar in the banking industry when the RBI released a Discussion Paper on Deregulation of the Savings Bank Deposit Rate. Banks have vowed that they would unleash a war of terror on small depositors by imposing punitive charges and offer differential interest rates to depositors. Banks have threatened that if the RBI deregulates the Savings Bank Deposit interest rate they would not undertake financial inclusion.

More than customer education is the need for education of bank officials- top downwards that banking is a public service industry and not a private fiefdom. The death of a depositor is an agonizing period for the bereaved family and despite explicit instructions by the RBI on how to handle such cases, there are reports of banks using highhandedness in dealing with such cases. The Committee does well to stress the need for the Banking Codes and Standards Board of India ( BCSBI) to undertake Rating of banks on customer service. A prerequisite for this is that the RBI and banks have to empower the BCSBI to look into the books of banks on issues relating to customer service. In the absence of such empowerment, the BCSBI just cannot undertake the Rating of banks. The Committee makes out a strong case for raising the deposit insurance ceiling from Rs 1 lakh to Rs 5 lakh.

There are two basic prerequisites for this. First, the deposit insurance agency should be empowered to prescribe differential premia. Secondly, the deposit insurance agency should be empowered to regulate and supervise banks on matters relating to bank deposits, akin to the US Federal Deposit Insurance Corporation ( FDIC). This is a matter of the RBI accepting an independent empowered deposit insurance agency. The Committee recommends that there should be an effective grievance redresssal system within banks such as an ` Internal Ombudsman'. This would avoid issues quickly escalating to the Banking Ombudsman or the Consumer Courts. The number of complaints are not reflective of the extent of problems faced by customers as most customers are afraid of reprisals by bank officials. The Committee recommends prioritized service for the disabled and senior citizens by effective crowd management. Again, there is merit in doorstep service for the disabled, especially senior citizens. Providing a Common Call Centre for all banks is fraught with problems. As it is, banks telephone lines are never attended to and a Common Call number would accentuate customers' difficulties. Although single window operations are already mandated, even in the case of techno- savvy banks a customer has to queue up a number of times to update passbooks, draw cash and submit cheques for crediting. It is praiseworthy that some public sector banks excel in this area. While the Committee makes a number of recommendations to facilitate techno- savvy customers, attention should not be diverted from the bulk of customers who need traditional banking services.

FPJ

Dismal scenario- ''Agricultural growth is the only bright spot.''

The Reserve Bank of India’s annual report would not receive the attention it receives now, if the issues and the scenario it reports about were normal. But these are difficult times for the economy, with a scaled down target of growth, soaring inflation, troubled financial markets and unfavourable global circumstances. These are the factors that have caused concern to the bank in the last many months and they will continue to preoccupy it in the near future.  It is quite clear about the big threat to the economy, posed by inflation. It knows it has a role to fight it, and is frank about it. It warns against accepting the present high levels as the ‘’new normal’’, but sees the rate at about 7 per cent by the end of the financial year. It has raised the policy rates 11 times since March 2010 and the report has indicated it would continue thke harsh stance in the near future. It hopes that monetary policy may help to curb the second round effects of supply side inflation. But there is a note of dismay over the lack of support from the government for its actions. Even this is not new. The RBI has expressed this sentiment in the past also. It has said that two years of inflation have ‘’laid bare its imitation…in the absence of adequate supply response’’ from the government. It is not only global factors which are inhibiting growth and fuelling inflation. Weak external demand and high commodity prices are a reality but factors like the inability to ramp up supply, continuous project delays, which are internal, had a major role in the deterioration of the economic situation. There are other worries too. The fiscal budget for the current year is likely to go beyond budgetary projections. The government’s capital spending has gone down while overall expenditure has gone up. If growth slows down, which is likely, revenues will decline and the deficit will widen further. At the same time the fiscal ability to act in a difficult situation is more limited than during the 2008 global crisis.  Investment may fall and there is a downside risk to industrial growth. All these paint a gloomy picture where only better agricultural growth prospects remain a bright spot. Overall, the report is not an encouraging one, but it is realistic. Its suggestions and recommendations should receive the government’s urgent attention.

DH

Job scenario improves in India on high industrial growth: RBI

.... Available data provides evidence of creation of additional employment opportunities, though at a slower pace when compared with the high economic growth experienced in recent years,” according to the latest annual report of Reserve Bank of India.......

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Economists fear Q1 growth below 8%

A majority of economists do not think the country’s economy will clock even eight per cent growth in the first quarter (April-June) of this financial year. Though they expect economic growth to pick up in the last two quarters, most do not peg the expansion at over eight per cent for the current financial year, compared to 8.5 per cent a year ago. The Reserve Bank of India (RBI), in its recent annual report, also did not rule out the possibility of economic growth slipping below eight per cent, though it maintained the projection of eight per cent expansion. Many economists believed the projection of 8.4 per cent economic growth rate for the first two quarters and 8.6 per cent for the entire financial year, given by the finance ministry in its background note, seemed highly optimistic. The first-quarter GDP numbers will be out on Tuesday. Shubhada Rao, chief economist, YES Bank, pegged the first-quarter growth at 7.4 per cent on slowing in manufacturing and policy status quo. “The first-quarter numbers are getting muted due to the not-so-positive IIP (Index of Industrial Production) numbers. The services sector shows some strength, but banking may show slightly slower growth,” Rao said. Where IIP numbers for April and May grew at a sluggish 6.3 per cent and 5.6 per cent respectively, the June numbers were quite robust at 8.8 per cent. However, industrial production in the April-June quarter stood at 6.8 per cent, compared to 9.6 per cent a year ago. Manufacturing growth was just 7.5 per cent in the first quarter against 10.3 per cent a year ago, despite a strong pick-up in June. D K Joshi, chief economist, Crisil, has estimated the first-quarter GDP growth at 7.5 per cent due to lacklustre consumption and an overall slowing trend. He has pegged growth for the entire fiscal year at 7.7-7.8 per cent. “For the April-June quarter, GDP growth would be at 7.7 per cent, as very little activity takes place in the first quarter. The demand starts picking up only in late August,” said Madan Sabnavis, chief economist, CARE Ratings. According to Anis Chakravarty, senior economist at Deloitte, Haskins & Sells, export numbers going up steadily is a positive sign amid the general slowdown in various sectors. “We estimate GDP to grow at 8.1 per cent in the first quarter and 8.4 per cent for the whole financial year,” he said. Despite the worry of a possible euro zone collapse, the economists did not seem perturbed about a major impact on our growth numbers. “India’s trade with the euro zone is not much, except with Germany. If the euro stops being viable, it would still not impact India directly, but through a chain reaction,” said Chakravarty. According to him, Germany and France have a cushion to absorb and address the impact. Rao, however, felt the euro crisis might have an impact on India’s exports and called for addressing the supply-side issues. “Due to the interest rate trajectory, growth is moderating, which would also have its repercussions in the years to come.” Overall inflation has been over nine per cent since December 2010, when skyrocketing onion prices had pushed up the rate of price rise. Due to high inflation, RBI had to go for a rate hiking spree, which many said was responsible for slow pace of economic growth. Even though economic growth stood at 8.5 per cent during the last fiscal, compared to 8 per cent in the previous year, economic expansion came to a six-quarter low of 7.8 per cent in the last quarter of 2010-11. If economic growth indeed falls below eight per cent in Q1 of this fiscal, it would be the second quarter in a row to be reporting so. Before the last quarter of 2010-11, economic growth had been above 8 per cent for four quarters in a row. In its annual report, RBI had said there are major downward risks to growth in the current fiscal if global financial conditions worsen, global recovery weakens further or food and non-food commodity price inflation remains high.

BS

Inflation to fall to 6% by March 2012: Goldman Sachs

Global banking and research giant Goldman Sachs has said India's headline inflation will fall to 6% by March 2012 due to weakening of demand. "Demand continues to weaken and core inflation, as measured by the non-food manufacturing inflation, is trending lower in sequential terms. We believe this fall in inflation is observed to stay... Going forward, we expect year-on-year headline inflation to slow to 6% by March 2012," Goldman Sachs Global Economics, Commodities and Strategy Research said. In its latest issue of 'Asia Economics Data Flash', it said this is likely to be the case even after factoring in a revision of the July Wholesale Price Index (WPI) number. Headline inflation fell to an eight-month low of 9.22% in July. However, experts have said the numbers are likely to be revised upwards. The government has revised the inflation figure for April to 9.74% from the provisional 8.66%. Similarly, the May number was revised to 9.56% from the provisional 9.06%. "The July data suggests that sequentially, inflation continues to come off sharply. We think that the year-on-year numbers are misleading and do not capture the decline in inflationary pressures since a big spike in first quarter of 2011," Goldman Sachs said.  Goldman's projection is in contrast to forecasts made by the Reserve Bank of India (RBI) and the Prime Minister's Economic Advisory Council (PMEAC). In its Annual Report for 2010-11 released last week, the RBI had said inflation is likely to remain elevated till the third quarter of the current fiscal and then moderate to around 7% by March 2012. The PMEAC, in its Economic Outlook for 2011-12, projected inflation to remain high at around 9% till October, before falling to 6.5% by the end of the fiscal. "There is a slowdown in economic activity in India which is being exacerbated by rising interest rates and headwinds from the global economic environment," Goldman said. The RBI has hiked key policy rates 11 times since March 2010 to curb inflation. India Inc had said the repeated rate hikes have made the costs of borrowing expensive and reduced fresh investments and industrial production.

HT

Weak business mood

Global economic uncertainties and domestic issues such as continuous tightening of monetary policy by the RBI are likely to “adversely” impact the Indian economy till December, industry body Ficci said in its Business Confidence Survey. Both global and domestic factors have dented the level of confidence of corporate houses, with the survey’s overall business confidence index touching a new 12-month low in the quarter ended June.

The Telegraph

Allahaband Bank to expand in China, enter Singapore

State-run Allahabad Bank is mulling an entry into four Asian cities by opening overseas branches, with a view to increase its international footprint, a top official said. "We have approached RBI for four new branches. One in Singapore, another in Dhaka, then Shanghai and Kowloon in Hong Kong," Allahabad Bank Chairman and Managing Director J P Dua told PTI here. However, the Reserve Bank of India (RBI) is yet to give the go-ahead on the proposal, Dua added. At present, the Kolkata-headquartered bank's sole overseas branch is in Hong Kong, while it has a representative office in mainland China's city of Shenzen. Dua also said the bank plans to augment its capital base in the last quarter of the current fiscal, but is yet to decide about the component to be raised and the route to adopt. The bank is targeting higher-than-industry credit growth of 24-25% for the fiscal, which demands capital augmentation, Dua said. "We will see in the last quarter, right now we are comfortable. But as growth takes place, capital is always needed," he said. Dua said apart from utilising the normal routes for tier-I and tier-II augmentation, the bank may again go for a capital infusion from the government, which would increase its majority promoter's shareholding. "Maybe tier-I, maybe tier-II also and there is a third possibility the government may also induct some funds like last year, (when) they gave us Rs 670 crore," he said. At present, the total capital adequacy of the bank stands at 12.75%, of which the tier-I component stands at 8.4%, he said.

BS