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Allahabad Bank leads PSBs in FD rates

Author: Dasari Sreenivasa Rao/Thursday, March 12, 2020/Categories: Exclusive

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Allahabad Bank leads PSBs in FD rates

Allahabad Bank is leading the pack of public-sector banks (PSBs) that offer highest fixed deposit (FD) rates in India. The top PSBs that offer six per cent or more on fixed deposits with less than one year term, include Central Bank of India (CBI), Indian Overseas Bank (IoB), Punjab & Sind Bank, United Bank of India (UBI), according to a latest data compiled by Bankbazaar.com.

India's largest PSBs-- State Bank of India (SBI) and Bank of Baroda (BoB)-- are offering 5.5 per cent FD rate.

India's largest PSBs-- State Bank of India (SBI) and Bank of Baroda (BoB)-- are offering 5.5 per cent FD rate. Andhra Bank, Bank of Maharashtra, Indian Bank, Syndicate Bank and Canara Bank are offering 5.75 per cent FD rate.

Among the foreign banks, DBS Bank and Standard Chartered are offering 6.25 per cent and 6.45 per cent FD rates respectively.

Coming to private banks, Suryoday Small Finance Bank is highest FD rate of 7.75 per cent followed by Lakshmi Vilas Bank (LVB) with 7.35 per cent, YES Bank with 7.15 per cent and IDFC First Bank wit seven per cent. Leading private banks -- HDFC Bankm IcICI Bank and Axis Bank are offering 6.05 per cent, six per centand and 6.4 per cent respectively.

Private banks under pressure

In the recent past, the Indian private banking sector has been suffering from a gamut of issues including the major impact of poor corporate governance and rising non-performing assets (NPAs) in addition to YES Bank saga. It recalls the Global Trust Bank (GTB) episode in 2004. Subsequently, RBI took a decision to merge the crisis-ridden GTB was merged with the Oriental Bank of Commerce (OBC).

HDFC Bank took over two crisis-hit banks -- Centurion Bank of Punjab (CBoP) and Times Bank. RBI is keeping tabs on malfunctioning banks to ensure good corporate governance in the domestic banking sector.

Apart from institutions such as IDBI, ICICI, HDFC and UTI, the Centurion Bank, Bank of Punjab, Times Bank, Global Trust Bank and IndusInd Bank of the Hindujas were given licenses as private banks. Barring IndusInd, all the others have been merged into other banks.

As per the merger scheme, Allahabad Bank will be amalgamated into Indian Bank. The Board has fixed March 23 as Record Date for issuing and allotting equity shares of Indian Bank to the shareholders of Allahabad Bank as per the swap ratio.

Another PSB major Indian Bank has announced a share swap ratio of 115 equity shares of Rs 10 each of its for every 1,000 shares of Rs 10 each of Allahabad Bank.

In a regulatory announcement, Indian Bank said its Board of Directors at a meeting approved the fair equity share exchange ratio of 115 equity shares of Indian Bank for every 1,000 shares of Allahabad Bank which is subject to the statutory and regulatory approvals.

According to Indian Bank, a Grievance Redressal Committee headed by Chitra Venkataraman, Retired Judge of Madras High Court, has been set up to address the grievances of minority shareholders - those shareholders who either : (a) individually or collectively hold at least one percent of the total paid up equity capital of any of Indian Bank or Allahabad Bank; or (b) are one hundred shareholders acting collectively, either of Indian Bank or Allahabad Bank.

Among the merged private banks, GTB since 2001 slipped into scams and controversies, thereby casting shadows over the credibility of the bank and its management. The overexposure to capital markets and huge NPAs led GTB into a financial mess. When the GTB tried to cover up its monumental NPAs through under provisioning, the RBI - the central bank and the regulatory authority for banks in India, appointed an independent team to review the finances of the bank and this revealed various financial discrepancies kept covered by the bank.

After this, RBI imposed a three-month moratorium on GTB on the ground of wrong financial disclosures and within two days, the bank was merged with the public sector OBC and lost its separate identity.

Former RBI Governor YV Reddy wrote in his memoirs 'Advice & Dissent' that soon after he assumed charge as Governor in September 2003, he decided to clean up GTB.

 

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