Personal finance Tuesday

IDBI Bank ties up with World Resources Institute; ICICI Home Search and Ekta Group tie up for Ekta Parksville; HDFC Mutual Fund floats HDFC FMP 35D September 2010 (3); M&M signs MoU with Allahabad Bank for car loans and commercial vehicle finance; Bank of Baroda, Development Credit Bank increase base rates

IDBI Bank ties up with World Resources Institute

IDBI Bank has signed a memorandum of understanding (MoU) with US-headquartered World Resources Institute (WRI), an environmental research institute. WRI has a global reach, working with more than 400 partners in 50 countries. IDBI Bank has entered an MoU with WRI for financing micro, small & medium enterprises (MSMEs) in India for implementing ESCO (Energy Saving Company) projects. Broadly, the issues focused by WRI include climate change, ecosystem protection, environmental governance, green markets, sustainable transportation, etc.

The MoU with WRI envisages IDBI Bank as the official partner/financier which would enable the Bank to develop financial products to meet the needs of ESCO projects, besides implementing the ESCO projects in select MSMEs who have potential for energy savings in their units.

IDBI Bank has also introduced a 'SME Smart Line of Credit' which offers a pre-approved line of credit that would be available to both new and existing MSME customers in the form of term loan/working capital or both (fund-based/non-fund based limit) to meet their unexpected or sudden business needs.

With a view to provide door step banking services to MSME borrowers, the Bank has introduced the facility of online application form on its website. Under this, the prospective customer can apply for various credit facilities from anywhere in the country. The Bank has also put in place a web-based application for the MSME borrowers to enable them to track the status of their applications submitted to the Bank online. The system, among the first of its kind in the banking industry, would usher in transparency in the processing of loan applications, enabling the borrower to know the stage of processing of the loan application.
On 1st October, IDBI Bank had entered a special partnership with the Small Industries Development Bank of India (SIDBI) for joint financing of MSME clients across the country.  Initially, the co-financing facility would be rolled out in 10 centres viz., Ahmedabad, Bangalore, Chennai, Coimbatore, Delhi, Indore, Jaipur, Lucknow, Ludhiana and Rajkot and subsequently, would be extended across the country. Common documentation would be done under pari passu basis, which would facilitate MSME clients to get funds smoothly. IDBI Bank would provide the working capital and SIDBI would provide the term loan.

ICICI Home Search and Ekta Group tie up for Ekta Parksville

ICICI Home Search in association with Ekta Group provides an opportunity to buy apartments in Mumbai. ICICI Home Search is a division of ICICI Finance Company Ltd. Located in Virar, the project - Ekta Parksville will be completed in approximately three years. The booking is open up to seventh floor. There would be four to seven apartments on each floor in different towers. The cost of 1BHK is Rs13.9 lakh onwards. Minimum investment on booking is Rs6.95 lakh. The cost of 2 BHK is Rs19.84 lakh onwards and minimum investment on booking is Rs9.92 lakh. The cost for 3BHK is Rs29.02 lakh onwards and minimum investment on booking is Rs14.51 lakh. The lock in period for investors is 12 months.

This is a pre-launch property hence not yet approved by ICICI Bank Home Loans for funding. Ekta Parksville will include amenities like club house, children's play area, community party lawn, library, jogging track, health club etc.

HDFC Mutual Fund floats HDFC FMP 35D September 2010 (3)

HDFC Mutual Fund has launched HDFC FMP 35D September 2010 (3), under HDFC Fixed Maturity Plans-Series XIV. The Scheme is a close-ended income scheme. The investment objective of the Plan is to generate income through investments in debt/money-market instruments and government securities maturing on or before the maturity date of the Plan. The Plan will invest 60%-100% of assets in debt and money-market instruments and the remaining in government securities.

The Scheme offer growth and dividend (payout) option. During the new fund offer (NFO), the units will be offered at face value of Rs10 per unit. The exit load is nil. The NFO closes on 11th October. The minimum investment amount is Rs5,000. The minimum target amount is Rs1 crore. CRISIL Liquid Fund Index is the benchmark index. Bharat Pareek and Anand Laddha are fund managers.

M&M signs MoU with Allahabad Bank for car loans and commercial vehicle finance

Mahindra & Mahindra Ltd (M&M) has signed a memorandum of understanding (MoU) with Allahabad Bank. The agreement will enable M&M customers to avail of vehicle finance services from any branch of Allahabad Bank, in addition to over 100 delivery channels for retail lending through 27 centralised retail banking boutiques and 75 retail banking boutiques across the country.

For car loans, loan amount of up to 85% will be granted of the cost of vehicle on the road. This includes one time registration along with first time road tax & insurance charges etc. The interest rates for car loans start from 10% to 10.5%.

For commercial vehicle loans, which are lesser than Rs5 lakh up to 80% on road cost will be granted and for loans greater than Rs5 lakh up to 90% on road cost will be granted. The interest rates for commercial vehicle start from 8.75% to 10.5%.

Bank of Baroda, Development Credit Bank increase base rates

Bank of Baroda and Development Credit Bank have increased their base rates by 50 basis points. Bank of Baroda has increased its base rate to 8.5% from 8% with immediate effect, which will make loans from the bank costlier. Development Credit Bank has also raised its benchmark lending rate to 8.25% from 7.75% with effect from today. The base rate is the benchmark rate below which banks are not allowed to fix their lending rates.

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Govt says CWG may add $5 bn to economy, create 2.5 mn jobs

New Delhi: The government today said the ongoing Commonwealth Games (CWG) may add about $5 billion to the Indian economy and create about 2.5 million jobs in the next few years, reports PTI.

Inviting the business community of Commonwealth nations to invest in India, minister of state for agriculture and consumer affairs K V Thomas said opportunities for business during sports events are very large.

"It is estimated that the (Commonwealth) Games will have an economic outcome of close to $5 billion over the next few years and succeed in adding 2.5 million new jobs. In fact, we will be gaining from this event for the next many years," Mr Thomas said at the Commonwealth Business Forum here.

He said the 12-day-long games will create a new brand image for India as a global player, helping it strengthen and deepen the business partnership with Commonwealth countries.

"The opportunities for business during sports events are very large. In Delhi, itself, the estimates for the city infrastructure, sports venues and other necessities stand at close to $10 billion," he said.

Mr Thomas said sectors like agriculture, infrastructure, modern technology, manufacturing and services have huge opportunities and potential for the 71-nation Commonwealth grouping.

"The business opportunities derived from agriculture in India are enormous and not sufficiently exploited by overseas businesses. India has 14 agri zones and is capable of producing a wide variety of grains, fruits and vegetables," he added.

He said India faces a large technology deficit in terms of agriculture productivity.

"Our yields are far lower per unit area than that of other countries. This has implications for companies in technology and machinery, agri inputs such as fertilisers, biotechnology and other areas," Mr Thomas said.

"The absorption capacity of the Indian farming sector for such technology and advanced equipment is high," he said.

He said that with the country's economy likely to grow by over 10 per cent in the next few decades, "This is the time to be in India, this is time to invest in India and this is the time to partner India's development saga."

Two-way trade between India and Commonwealth nations currently stands at about $80 billion, which is expected to grow manifold in the coming years.

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Financial inclusion not an option, a compulsion: Rangarajan

Jaipur: Stressing that "financial inclusion is no longer an option, but a compulsion", Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan today said growth of the bank-SHG (Self Help Group) linkage programme would give a boost to the micro finance sector, reports PTI.

Delivering the key note address at a seminar here on microfinance and financial inclusion, Rangarajan said that expansion of the business correspondents programme would also contribute to growth of the sector.

"Bank-SHG linkage programme and expansion of business correspondents model will constitute the main pillars of the future development of bank-related micro finance, even as other forms of micro finance institution will continue to grow," Mr Rangarajan said.

"The bank-SHG linkage scheme has proved to be an effective way of providing credit to very small borrowers and this needs to be further strengthened. This has worked well and has contributed significantly to financial inclusion, as the financial inclusion attained through SHGs is sustainable and scalable on account of its various positive features," he said.

"One of the distinctive features of the programme has been the high recovery rate. However, the spread of SHGs is very uneven and is more concentrated in southern states. This regional imbalance needs to be corrected," the former RBI governor said.

He said that in order to increase the outreach of the banking sector, the Reserve Bank of India (RBI) has permitted banks to use the service of specified institutions as intermediaries for providing banking services.

However, Mr Rangarajan said it is regrettable that the scheme has not taken off in a big way.

"The business facilitator and correspondent model needs to be effectively implemented, as the model has high potential. Banks must take the initiative to remove the obstacles that come in the way of an extended use of facilitators and correspondents," Mr Rangarajan said.

"The recent announcement of the RBI to allow the corporates with a wide network of retail outlets to become business correspondents is a welcome step," he said.

"However, one critical issue in the effective use of this model revolves around as to who should bear the additional transaction costs resulting from the employment of facilitators and correspondents. This, of course, depends upon the level of use.

"When large transactions, such as those involved in the Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA), are entrusted to the banks with compensation, the scheme can take off," he said.

He also suggested ways to strengthening the banking sector in rural areas.

Mr Rangarajan said that rural branches must go beyond merely providing credit and suggested that in districts where the population per branch is much higher that the national average, commercial banks should be encouraged to open branches.

He said that a simplified document for the grant of small loans must also be evolved.

He also focused on issues related to the average size of loans, low cost institutions having a rural bias, local feel and pro-poor focus and the role of technology.

"In the task of making service available to everyone, technology has an important role to play. The required outreach into interiors with low operational cost is only possible with the use of appropriate technology," he said.

"Technology has to be leveraged to create channels beyond branch networks to reach the unbanked and to extend to them banking services similar to those dispensed from branches," he said.

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