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Volume 1, Issue 1
Issue 9 20th April, 2012
Weekly
www.learnwithflip.com
RBI cuts rate, signals pause
RBI, in the last three year, decreased the
repo rates for first time in order to boost
economic growth. Market was expecting
rate cut of 25 basis points but RBI surprises
everyone with brave 50 basis points rate
cut. After this, many banks have started
planning to change interest for both lending
& depositing.
FLIP’s View: Finally rate trajectory took
downward turn. Experts see that RBI is
tilting towards growth from its strict anti
inflationary stance. Lowering rates by
banks will surely affect EMI amount
positively and we can see upward revive in
growth and investments.
Rupee slides to 3-month low; RBI
intervention unlikely
The rupee fell below 52 versus the dollar to
a new three-month low. Widening current
account deficit, rising oil prices and lower
growth rates are cited as major reasons
behind this fall. Though situation is
worsening there are no signs of
intervention by RBI
FLIP’s View: Strong demand for US dollar
in global market is making situation worse.
Though near term outlook seems negative
for rupee, it would be interesting to see
whether trend will reverse after RBI cutting
rates and creating scope for growth.
The week that was….
www.learnwithflip.com
BFS Roundup @ FLIP
Standard Chartered Bank is the only foreign
company to be listed in India through an IDR.
Kotak Mahindra Bank was established in 1985 as a
non-banking financial company. In February 2003 it
got the license to carry banking operations in India.
Today, it is one of the fastest growing private sector
banks in India. Apart from regular retail banking
products it also offers Investment products like
Mutual Funds, Life Insurance, and other services like
brokerage, investment banking etc. It has 8
international offices as well.
Executive Vice chairman & MD
Mr. Uday Kotak
Business Units Banking, Mutual Funds, Securities, Life Insurance
Employee
Strength 20000+
Key People
Mr. C. Jayram – Executive Director
Mr. Deepak Gupta
Executive Director
Kotak Mahindra Bank goes LIVE on Finacle
10.2 - On 1st March 2012, Kotak Mahindra
Bank successful implemented Finacle 10.2
universal banking solution (developed by
Infosys) across 335 bank branches. The entire
implementation, which replaced the Bank’s
legacy core banking system, was completed in
18 months. Kotak Bank has taken this step with
the objective of becoming future-ready and
driving its ambitious growth plans.
More Details in Page2
Recruiter in the limelight Kotak Mahindra Bank …..
Did you know?
BFS Roundup @ FLIP
www.learnwithflip.com
Term of the Week
CASA
The CASA (current and savings account) ratio is the ratio of deposits in the current and savings
accounts of a bank, to its total deposits. A higher CASA ratio is considered good for a bank as it is
generally a cheaper source of funds.
Current and saving accounts are withdrawable on demand, and hence are also called demand
deposits. It is due to this feature, that they also carry a low rate of interest.
Hence, higher the CASA ratios better the net interest margin, which means better operating efficiency
of the bank. (Net interest margin is difference between total interest income and
expenditure and is shown as a percentage of average earning assets.). E.g.
Case I Case II
Total deposits – INR 1000 Total deposits – INR 1000
From CASA – INR 300 @interest rate 4% From CASA – INR 500 @interest rate 4%
From term deposits – INR 700 @interest rate 9% From term deposits – INR 500 @interest rate 9%
Bank lends same INR 1000 at 10% interest rate Bank lends same INR 1000 at 10% interest rate
CASA ratio = 300/1000 = 30% CASA ratio = 500/1000 = 50%
Banks net earning = 1000*10% - 300*4% -
700*9%
= 100-12- 63 = 25
Banks net earning = 1000*10% - 500*4% -
500*9%
= 100-20- 45 = 35
NIM = 25/1000 = 2.5% NIM = 25/1000 = 3.5%
Above example clearly indicates that higher income from CASA will improve the net interest margin as the cost of this fund is relatively lower.
Example of a bank having a relatively higher CASA ratio in India is HDFC Bank.
Recruiter in the limelight (contd.)…
FLIP’s View
The Bank is one of the fastest growing new generation private sector banks. It is expanding
across geographies as well as business verticals. In the coming years, the Retail Bank and
the securities business should see some fresh and lateral hiring. The bank provides multiple
avenues for lateral and vertical growth.