The Tribune, Chandigarh, India

ICICI ups deposit rates up to 75 bps
Lending rates also likely to go up

Mumbai/New Delhi, July 31
India's second-largest lender, ICICI Bank, today hiked deposit rates across various maturities by up to 0.75 per cent with immediate effect, signalling a possible hike in lending rates as well.

"We have increased our deposit rates effective today across various maturities. The increase is more or less by 0.25 per cent. In some tenors, the hike is by 0.5-0.75 per cent," ICICI Bank managing director and CEO Chanda Kochhar told reporters here.

There was a possibility that the lending rates of ICICI Bank could be hiked in the future, Kochhar said, but added that a decision in this regard will be taken after assessing the overall impact on the cost of funds.

"It (hike in lending rates) is quite possible," she said.

Q1 profit up 17 pc at Rs 1,026 cr

Meanwhile, ICICI Bank today reported a 16.8 per cent jump in net profit at Rs 1,026 crore for the first quarter ended June 30, 2010, over the same period last year, on the back of lower provisioning.

The bank had recorded a profit of Rs 878 crore in the year-ago period.

However, the bank said its total income fell by 18.7 per cent at Rs 7,493 crore against Rs 9,223 crore in the corresponding quarter a year ago.

PNB raises lending rates

Punjab National Bank has announced raising its prime lending rates by 75 basis points to 11.75 per cent, making loans to its existing borrowers dearer.

The public sector lender also announced increasing interest rates on term deposit rates by up to 75 basis points for various maturities.

The bank added that the current increase in BPLR would not adversely impact the customer interest as the new customers will come under the base rate system. Existing borrowers also have an option of switching over to the base rate, which makes the impact of hike in BPLR minimal, the bank added.

Union Bank

Earlier today, Union Bank of India announced a hike in its lending and deposit rates with effect from August 4.

The bank has increased deposit rates by 0.25-1 per cent across maturities. It also upped the Benchmark Prime Lending Rates (BPLR) by 0.5 per cent to 12.25 per cent from 11.75 per cent, a release said here.

With the increase, one-year maturity deposits will now attract a rate of 6.75 per cent, from the previous 6.5 per cent.

Also, rates for short-term deposits of 91 days to less than six months and six months to less than 9 months have been increased from 3.5 per cent to 4.5 per cent and 4.5 per cent to 5 per cent respectively, the bank said. — PTI

Aviation Notes
Facilities at T-3 below global standards
by KR Wadhwaney

What is the difference between foreign countries and India when an ultra-modern, international product is launched?

In foreign countries, the authorities test facilities for days/weeks before launching a product for public. They see to it that the product has caught the imagination and approval of masses.

In India, the process is reverse. The authorities, ever self-seeking and in needless haste, throw open the valued product to public before enough trial runs. They make a hash of it and get mixed or hostile reaction. They do it in haste and repent it in leisure. This has been happening because politicians and bureaucrats continue to be over-zealous to secure ‘shabhash’.

The ultra-modern and spacious Terminal-3, constructed by a private operator, was inaugurated on July 3 by the Prime Minister and Congress president Sonia Gandhi. But during these 24 days, the authorities did not test the facilities as systematically, as the occasion warranted. As a result of this shortsightedness, many half-backed areas were visible when international operations started on July 28.

As if these man-made shortcomings were not enough, the Providence also played its role.

The autotrack-III radar, a highly sensitive and sophisticated system still undergoing validation trial at the Indira Gandhi International Airport (IGIA), chose this vital moment to crash. It happened at precisely 5.30 pm and blinked until 6.16 pm. It spoiled the show. Luckily, autotrack-II standby radar system was in operation and this considerably reduced the glitches. There were moments when ATCs were called upon to handle/guide flights manually. According to commanders, the functioning of the ATCs was exemplary and they truly carried the day of reckoning.

What was, however, a cause for concern was that the air traffic controllers (ATCs) hummed one tune and top-notch officials of the Airports Authority of India (AAI) and the Delhi International Airport Limited (DIAL) talked differently. The ATCs are the nervecentre in the sphere for landings and taking-offs of aircraft. They need equipment, which functions correctly. But when it does, the men at the helm should not make a futile attempt in defending the indefensible.

The flyers, incoming and outgoing, had mixed responses. All were unanimous at the ‘swank’ infrastructure that has been raised at the Terminal-3. But the facilities for passengers and visitors are far below international standards.

The swapping of out Air India flight did not cause any confusion. The flight from east landed first instead of the flight from west, as was planned. The national carrier officials handled the situation well...but, according to reports, the lounges for passengers and visitors were sparsely done. There were complaints of shortage of snacks and drinking water. According to lady passengers, the restroom facilities were below standard.

There were heaps of complaints by taxi operators. Their objection was that two rules were in operation - one for favourites and another for commoners. The consensus was that the authorities had not done enough ‘home work’ towards city side management.

Investor Guidance
PPF a/c can be extended any number of times
by AN Shanbhag

Q: You have written that “One need not start a fresh PPF account and continue it for all of 15 years — just extend the old one for five years at a time, indefinitely” I shall feel obliged if you kindly provide notification number/GO number or reference for the above as some banks refuse.

— Narottam Lal

A: As per Sec. 9(3) of PPF Scheme, at its maturity, the account can be continued for a block of 5 years. The note under this Section states — “A subscriber may at his option (to be exercised before the expiry of the first year of every extended block period) avail of this facility for a further block of 5 years on expiry of 20 years or on expiry of 25 years and so on, from the end of the year in which the initial subscription was made.” The words “and so on” make it clear that this facility is available for any number of blocks on expiry of each of the extended period. Many of the officers of the account offices wrongly feel that the account can be extended only for two terms.

Provision for senior citizens

Q: Under 3.1 on page 8 of the DTC_2 Note, it is stated that investments made in PPF ( and others ) prior to commencement of DTC shall continue under EEE “ for the full duration of the financial instrument “.

Since PPF has a provision for two extensions of 5 years each, it needs to be ensured in the fine print that these extensions are considered integral to the scheme.

The purpose would be to ensure coverage for senior citizens who may not be able to utilise a fresh PPF account and have considered these extensions in making their saving plans. If required, this provision could be limited to those above the age of 60 /65.

Since there is little else specially directed to help senior citizens, this will be a welcome step and your support to this will help.

— Vijay Mendiratta

A: Yes, you are right. The government may use its powers to change the structure of PPF either when the amended Tax Code is published in the public domain or even after the Tax Code becomes operational. We hope for the best.

Advance tax

Q: While preparing the income tax return I found that the tax is due for more than Rs 5,000 but below Rs 10,000. Please advise whether the interest is payable or not on the amount due for late payment of the same, which I should deposit in every quarter.

— Suresh Mittal

A: All taxpayers are required to pay advance tax in spite of the fact that most of their income is subject to TDS. If the tax payable for the year is Rs 5,000 or more (raised to Rs 10,000 by the recent FA09), advance tax is payable.

Karta of HUF

Q: I have been a regular reader and benefitted a lot by your guidance/answers in your weekly column in The Sunday Tribune. Kindly enlighten me on my below mentioned query:

I am Karta of my HUF comprising my wife and two minor children. Kindly enlighten me whether my wife will become Karta on my death. If correct, please guide whether there are any major difficulties/ court procedures for transmission/ transition of Bank Accounts /FDRs /Demat Account, etc of my HUF with my wife as new Karta, as there is no provision of nomination in case of HUF.

Please guide me as I am hesitant about making savings/investments in the name of HUF only because of this reason.

— Sanjeev Gupta

A: In the case of your unfortunate death, your wife has a right to become a Karta since she would be the senior-most member of the HUF. The Hindu Succession (Amendment) Act, 2005, has amended Sec. 6 of Hindu Succession Act, 1956, mainly to give the same rights and privileges to daughters as was enjoyed by the sons of the family. Accordingly, w.e.f. 20.12.04 -

1. In a Joint Hindu family governed by the Mitakshara law, the daughter of a coparcener shall,

a) by birth become a coparcener in her own right in the same manner as the son;

b) have the same rights in the coparcenary property as she would have had if she had been a son;

c) be subject to the same liabilities in respect of the said coparcenary property as that of a son, and any reference to a coparcener shall be deemed to include a reference to a daughter of a coparcener.

There are no major difficulties for your wife to take over as Karta.

NRI status

Q: I am aware of the 182 days rule to maintain my NRI status. For this year I am cutting it quite fine. Which is why I want to know the treatment for the days of travel? How does one account for the day that I left India (for the better part of the day I was in the flight and technically had left India) as well as the day of return?

— Mitesh Shah

A: Regardless of how many days you have spent in India, both the days of travel (of leaving India and coming into India) have to be counted as days spent in India. In other words, these will be counted for arriving at the 182 days rule for determining NRI status.

The authors may be contacted at wonderlandconsultants@yahoo.com