ICICI Bank Managing Director Chanda Kochhar and four levels of the bank’s senior executives – directors, group executives, senior general managers and general managers – decided to forego their bonuses for 2015-16 after a sharp plunge in the institution’s fourth quarter net profit. Performance bonus would, however, be paid to employees in the grades of deputy general manager and below. The decision was taken by its executive management, which includes Ms. Kochhar and executive directors N S Kannan, K Ramkumar, Rajiv Sabharwal and Vishakha Mulye.
The State Bank of India (SBI) began the process of merging its associate banks – State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore, and the relatively-newer Bharatiya Mahila Bank.
The merged entity’s market share in total bank deposits will increase to 22.5-23 per cent from 17 per cent, while its total business will be over Rs 35 lakh crore. Thus, SBI, in its new avatar, will have one-fourth of the deposit and loan market.
SBI’s staff strength will increase by 35-49 per cent, while branch network will increase by 6,000 units. At present, SBI has more than 15,000 branches in the country. The merger move comes after the government announced a road map for bank consolidation during the Budget. This was required to build size, seen as necessary to fund the huge infrastructure financing needs of the country.
The Reserve Bank of India has come out with draft rules that propose a minimum capital of Rs 500 crore for granting on-tap licence to new ‘universal banks’ that can function like high-street lenders offering loans, accepting deposits and carrying out fee-based services. Industrial houses and conglomerates with more than 40 per cent of total business from non-financial activities will be barred from promoting banks. Conglomerates with assets of Rs 5,000 crore and 60 per cent of their business in financial services can apply for a banking licence, according to the new rules. Corporates will not be allowed to hold more than 10 per cent in a bank.
The Reserve Bank India (RBI) has allowed foreign banks to invest up to 10 per cent in local, private lenders and supranational institutions such as the Life Insurance Corporation of India. The move will help them to shore up capital and possibly encourage consolidation in the sector. The new steps announced by the central bank could even cover rescues led by overseas banks, marking a radical new direction in policy. The central bank also doubled the stake that individuals and institutions can acquire in private banks to 10 per cent. Non-regulated, non-diversified and unlisted financial entities can acquire stakes of up to 15 per cent.