Crisil anticipates that banks will sharply increase deposit rates in the second half of the year as credit growth is expected to pick up. RBI has outlined plans to upgrade rural banks across India by providing them with technical and financial support totaling 100 crore rupees. RBI has also warned banks to limit investments in zero coupon bonds due to the high risks involved, especially for long term bonds.

1. SUBMITTED BY:-AMRINDER SINGHMBA-2AWEEKLY NEWS ON BANKING SECTOR

2. Crisil anticipates sharp trudgein bank rates As per the foremost national rating agency Crisil, banks might probably stridently trudge their deposit charges in the subsequent half with lenders anticipating a muscular credit increase renewal during the remainder of the year. Making a note of it that the retort of the bankers to the balanced tapering of financial stepladder by the Reserve Bank has been calculated and plodding during the initial half of the year, Crisil anticipates the climb to be pointed in the subsequent half and expressed that this might be emphasized if the Central Bank upshot any more hike in the subsequent half.According to the Crisil Ratings head SumanChowdhury today that Crisil feel that the credit off take might be significantly elevated in H2 as the credit order was by temperament back-ended in the nation provided the joyful and agricultural yield seasons in the subsequent half.Further he added that, banks had endorsed loans to a swing of huge infrastructure projects that had get hold of the essential endorsements and assembled equity, and might be anticipated to now begin drawing down loans.

3. Rural Banking Sectors Will BeEmpowered and Upgraded RBI has chalked out new plan to spoon feed rural banks which are spread in India.In this connection, Finance Minster has declared that the government has already activated 100 crore rupees worth project to offer both technical and financial aids to the underdeveloped banking sectors for the speedy progression. RBI top brass has been instructed to take appropriate measures for empowering rural banks.As per the reports of experts, there are 82 different rural banks on regional basis. There are 15,475 sister branches all over the country. According to statisticians and researchers, the total outstanding loan amount of these rural banks was Rs 83,562 crore in the year of 2009-10.At the same time, the total volume of deposits is amounting to Rs 1, 42,814 crore. The finance ministry is taking special measures to minimize the severity of bad loans which will obstruct the growth of the economy of the country.

4. RBI warns banks on investing in zero coupon bondsThe Reserve Bank of India has warned the banks to put a conservative limit on their investment in zero coupon bonds which also include the non bank finance companies (NBFCs).RBI has advised the banks to invest in zero coupon bonds only if the issuer builds up a sinking fund and invests in liquid investments or securities such as government bonds.The investments in zero coupon bonds on a large scale could be a risk to the banks and it could harm the economy and banking operations of the country.RBI said on its website that the risk factor could be significantly higher especially for long term zero coupon bonds. This investment plan has not been used frequently by the companies as it holds a big risk over the interest rates fluctuations.

5. SBI aiming to raise capital forits subsidiaries Perhaps the government of India has decided to endorse the decision of SBI which aims to set up a financial holding company in the country. It is to be mentioned here that the holding company of the bank will help SBI to raise capital and the money will be then used to expand the business of the subsidiaries. According a board member working with the state-run banking giant, the model of the holding company will help SBI to raise capital for expanding the business activities of its subsidiaries. It may be noted here that the company is aiming to pump in money into the private equity, reinsurance, mezzanine financing and credit enhancement business with the money that is aimed to be raised. Moreover, the bank may also look at the option of pumping in money to the insurance business as well. For the record, the government is the largest shareholder in the banking giant with a 59% stake.

6. SMS services not available to bank customers As the government has now decided to put its foot down on bulk SMS service in wake of the pending judgment in the Ayodhya title suit, it is expected that the bank customers and a host of equity traders in the country will stop getting transaction alerts on their mobile phones.In fact, the government has made it clear that bulk SMSes will be banned till a further notice is issued.ICICI Bank is one of the names that has informed its customers about the same from the website.In a usual scenario, the consumer gets a SMS on his cellphone for the transaction that has been done via the internet and the ATM.However, market watchers are afraid of the fact that the user will now not be aware about the fraudulent activities that my take place due to the unavailability of this service.