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WEEKLY FINANCIAL SNIPPETS – 10/11/2018

  1. FOUR PUBLIC SECTOR BANKS MAY COME OUT OF PCA SHACKLES: Four Public Sector Banks (PSBs) are expected to come out of the RBI’s Prompt Corrective Action (PCA) framework based on their improved financial performance. The turnaround should happen by the end of the third quarter. This shows that PSBs are diligently and sincerely following the action plan shared with the government. The banks expected to come out of PCA include Bank of India, Corporation Bank and Bank of Maharashtra. The government will site this example to persuade RBI to relax the PCA norms which is one of the issues over which the government and RBI are in conflict.
  1. GOVERNMENT TO INFUSE Rs. 3,054 CRORE IN ALLAHABAD BANK: The government is releasing Rs. 3,054 crore to Allahabad Bank during the current fiscal. The bank has been informed by the government about the fresh capital infusion of Rs. 3,054 crore towards contribution of the Central Government in the preferential allotment of equity shares. Allahabad Bank’s Capital Adequacy Ratio as per Basel-III stood at 6.88% by the end of first quarter of the current fiscal and the government owned 71.81% stake in the Bank.
  1. RBI SLAPS Rs. 1 CRORE FINE ON FINO PAYMENTS BANK: The Reserve Bank of India has slapped a monetary penalty of Rs. 1 crore on Fino Payments Bank Ltd for contravention of the direction to stop opening of new accounts until further instructions. Fino Payments Bank was asked by RBI to stop all new account opening activities after the RBI found out that there were few accounts with the bank with deposits in excess of Rs 1 lakh, which goes against the licensing criteria of a Payments bank.
  1. NBFC FUND CRUNCH BEGINS TO HIT REAL ESTATE SECTOR: With The Non-Banking Finance Companies (NBFCs) facing liquidity crunch, Real Estate Developers and home buyers are being hit badly as in several cases sanctioned home loans are not being released and funds committed earlier under construction linked home loan schemes are also not being released. The cash crunch has also pushed the home loan interest rates by 50 to 100 basis points and for developers the increase can be as much as 300 basis points (which is 3% more). With funds drying up, several smaller NBFCs are trying to liquidate their loan portfolios to raise funds.
  1. SBI REDUCES DAILY ATM WITHDRAWAL LOMIT TO Rs. 20,000: In an attempt to address the growing incidence of ATM frauds and boost digital transactions, State Bank of India has reduced its daily ATM cash withdrawal limit to Rs. 20,000/- from Rs, 40,000/- earlier on its Classic Debit Cards. This will surely impact many SBI customers since these cards constitute a sizeable chunk of the bank’s card portfolio.
  1. 75 LAKH NEW TAX FILERS ADDED TO INCOME TAX NET THIS FISCAL YEAR: About 75 lakh new tax filers have been added to the income tax payers list so far in this fiscal year .The number of policy and enforcement measures undertaken to check tax evasion are among the reasons for achieving these numbers. The target is to add 1.25 crore fresh tax filers by the end of this fiscal.
  1. PROFITS OF PRIVATE SECTOR BANKS TAKE A DENT DUE TO HIGH PROVISIONING: Net Profit of 17 private sector banks fell by 1.6% in September Quarter on account of higher levels of provisioning and contingencies. On account of the new guidelines issued by RBI on Non-Performing Assets in February 2018, many top private sector banks had to raise their provisioning levels compared to last year.
  1. BANK’S CONSUMER DURABLE LOAN PORTFOLIO FALLS BY 82%: Most of the banks are shying away from disbursing consumer durable loans probably due to the fear of delinquencies. Outstanding loans in this segment dropped to Rs. 3,225 crore in September 2018, a sharp 82% decline compared to last year. This space is taken over by NBFCs as their exposure to consumer durable loans has increased by 41.5%.


This post first appeared on IMPACT OF DEMONITIZATION OF CURRENCY IN INDIA IN 2016, please read the originial post: here

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WEEKLY FINANCIAL SNIPPETS – 10/11/2018

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