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☕ 03.06.2020: Today's Banking / Financial News at a Glance
🍒 SC rejects plea to exclude lockdown period for calculating limitation for cheque : The Supreme Court Tuesday dismissed a plea seeking a direction to exclude the time period of COVID-19 lockdown for calculating the limitation for presentation of cheque or demand draft as directed by the Reserve Bank of India (RBI) in November 2011. In its November 4, 2011 directive, the RBI had said that “with effect from April 1, 2012, banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument”. A bench headed by Justice R Banumathi, which heard the matter through video-conferencing, said that the issue raised in the plea relates to “policy decisions” and the court cannot issue such direction. “In this writ petition filed under Article 32 of the Constitution of India, the petitioner-in-person seeks relief to exclude the time period of lockdown for calculating the limitation for presentation of cheque/demand draft as directed by the Reserve Bank of India vide notification dated November 4, 2011,” the bench, also comprising Justices Indu Malhotra and Aniruddha Bose, said. “In our considered view, this is the policy decisions to be taken up by the Reserve Bank of India regarding which the court cannot issue any direction,” the bench said in its order. The apex court dismissed the plea “as not maintainable”. The nation-wide lockdown had started on March 25 amid the spread of coronavirus pandemic. - Financial Express
🍒 SBI cuts savings deposit rates by 5 bps to 2.7% : India’s largest lender State Bank of India has reduced its savings deposit interest rate by 5 basis points (bps) to 2.7%, according to the bank’s website. The cut has been effective for all deposits from 31 May and is the second reduction in savings deposit rates in FY21 after the last reduction of 25 bps in April. On 11 March, the bank had lowered its savings bank interest rate to 3% for all customers. Before the cut in March, it used to pay 3.25% on balances of up to ₹1 lakh and 3% on balances above ₹1 lakh. Flush with liquidity and lack of credit growth, most lenders have resorted to lower deposit rates. - Live Mint
🍒 ICICI Bank cuts interest rate on saving deposits by 25 bps : ICICI Bank on Tuesday said it has cut interest rate on saving deposits by 25 basis points (bps). The new rates will come into effect from Thursday, it said in a regulatory filing. The private sector lender has cut interest rate on all deposits of less than Rs 50 lakh to 3 per cent, a reduction of by 25 bps as against the existing 3.25 per cent. Likewise, for deposits of Rs 50 lakh and above, the account holders will earn interest of 3.50 per cent, down from 3.75 per cent currently. - economic times
🍒 SBI creates new vertical to service agri/allied sectors, micro/small enterprises : State Bank of India (SBI) has created a separate Financial Inclusion & Micro Market (FI&MM) vertical to offer loans predominantly for agriculture & allied activities, and micro/small enterprises. India’s largest bank, in a statement, said about 8,000 branches in rural and semi-urban areas have been identified for providing specialised services to the micro segment, including micro credit for small businesses and farmers. The thrust is also to improve service quality and availability of banking services through the bank’s vast network of over 63,000 Customer Service Points in rural, semi-urban, urban and metro areas, it added. The new vertical, which will be headed by Sanjeev Nautiyal, Deputy Managing Director, will provide a boost to the micro-finance sector. Rajnish Kumar, Chairman, SBI, said, “The key elements of creating the FI&MM vertical are to bring sharper focus to different business lines and improve the quality of interaction with customers at the branch. “This is a key initiative by SBI to cater to financial requirements of people residing in the hinterlands, as part of its financial inclusion journey. The new FI&MM vertical will provide an opportunity to serve the small business, agri and allied segments so that they can run their businesses smoothly, especially in the current times of uncertainty.” - Business Line
🍒 Banks left with no choice but to park money with RBI: SBI Chairman Rajnish Kumar : Admitting that lending activities have not taken off despite the measures taken by the government and central bank, State Bank of India Chairman Rajnish Kumar on June 2 said that the impact of recent reforms may not be visible in the near term. "Banks are left with no choice but to put money in the RBI. Deposits have increased in the last two months but lending has not. The doomsday scenario on banks with respect to Non-Performing Assets (NPAs) is overstated, but we don't know what will happen after six months," he said at a virtual session organised by the Confederation of Indian Industry. "Individuals and businesses, government and the financial sector need to work together to absorb the impact of the crisis to bring back economic growth. The three vital elements bearing the brunt of the current crisis are Individuals and businesses, governments and the financial sector," said Kotak Mahindra Bank CEO, Uday Kotak. - Moneycontrol.com
🍒 Banking sector needs recapitalisation of Rs 4 lakh crore: Uday Kotak : Industry leaders said on Tuesday that the banking and financial sectors need structural reforms to propel economic growth as the country aspires to become self-reliant in the face of coronavirus crisis and enters the 'Unlock Phase 1.' The banking sector has loans of Rs 100 lakh crore and a capital of Rs 11 lakh crore to 12 lakh crore while the banking losses are about Rs 3 lakh crore to 4 lakh crore, said CII President-Designate Uday Kotak. "Banks are in the business of banking but they are unable to lend. The banking sector needs recapitalisation of Rs 3 lakh crore to 4 lakh crore," he said while addressing the 125th annual session of the Confederation of Indian Industry (CII). Kotak said the government, the industry in general and the financial sector are bearing the brunt of Covid-19 pandemic. - Economic Times
🍒 PSBs restart the pending post-merger work after lockdown : State-run bank mergers are getting a new life after being in suspended animation for two months. With the lockdown being lifted, Punjab National Bank, Union Bank of India, Canara Bank and Indian Bank have begun the pending post-merger relocation and organisational realignment exercise. Some of the top executives, who were stranded due to lockdown, have begun taking up their new roles and redrawing strategies at head offices, people familiar with the matter said.However, the realignment and rationalisation of branches are yet to begin, even as field general manager offices started functioning to push credit growth in line with the government objectives. “We have kept the disruption to the minimum by retaining officials at same or nearby centres as far as possible. Where there is merger of zones, there is certain relocation necessary. Now it will definitely gain momentum with opening up of flights,” said Padmaja Chunduru, chief executive at Indian Bank. However, she said that the organizational restructuring begun even through the Covid period. - economic times
🍒 ‘Unscrupulous entities imitating RBI mails for fraudulent purposes’ : The Reserve Bank of India (RBI) has cautioned members of the public as well as financial institutions to beware of some unscrupulous entities/scamsters imitating its mails for fraudulent purposes. Most of such mails are sent using fake domains, which do not belong to the RBI, but these could be deceptively similar involving use of words such as RBI, Reserve Bank, payment, the central bank said in a statement.Members of the public as well as financial institutions are, therefore, requested to be careful about such fraudulent activities before taking cognizance or any action on such mails, the statement added. - economic times
🍒 Punjab National Bank reduces lending rate linked to repo by 40 bps : Punjab National Bank (PNB), the country's second-largest state-owned lender, on Monday said it has reduced its repo-linked lending rate (RLLR) by 40 basis points (bps) to 6.65 per cent from 7.05 per cent. The bank's marginal cost of funds-based lending rate (MCLR) has also been revised downwards by 15 bps across all tenors.The lender has cut its saving fund deposit rate by 50 bps with a maximum of 3.25 per cent, effective July 1, a release said. It has further reduced its term deposit rates in various maturities bucket with a maximum rate of 5.50 per cent for deposits of specified maturities, effective Monday. - Business Standard
🍒 Despite lockdown, SBI Card reports daily spends at over Rs 175 cr in May : SBI Cards and Payments Services has said that customers continued using their credit cards during the coronavirus lockdown and due to the unique nature of business the average daily spends were in upwards of Rs 175 crore during May. The company which is promoted by the country's largest lender State Bank of India (SBI) and goes by the brand name SBI Card said it has been focusing on business continuity since the first lockdown (late March) was announced, and has been continuously scaling up business operations since then. SBI Card has undertaken a detailed scenario analysis of the unprecedented economic situation caused by the Covid-19 crisis and has developed strategies to manage its business impact, it said in a regulatory filing. On the spending side, it said credit card as a product has an advantage of continuous customer engagement due to the unique nature of business. - Business Standard
🍒 Moody's downgrades SBI, HDFC Bank after sovereign rating cut, explained : A day after downgrading India’s sovereign rating, Moody's Investors Service on June 2 downgraded two top Indian banks - State Bank of India (SBI) and HDFC Bank - and took rating actions on nine other Indian banks. Moody's has downgraded the long-term local and foreign currency deposit ratings of HDFC Bank and SBI and has taken a cautionary stance on their rating outlook. - Moencycontrol.com
🍒 Indian banks start trading in non-deliverable forward mkts for first time : Foreign branches of Indian banks and those located in the International Financial Services Centre (IFSC) in GIFT City traded in non-deliverable forwards (NDF) for the first time on Monday. The RBI in the past was against this market, but gave way when it was found that the offshore volume in rupee trading is higher than the onshore one. There was no statement yet from IFSC on the first day trade, but some of the banks spoke on condition of anonymity. - Business Standard
🍒 Moody's rating downgrade not surprising: SBI report : The downgrade of India's sovereign rating by Moody's has not come as a surprise as global rating agencies have lowered ratings and outlook of about 21 emerging economies following COVID-19 outbreak, SBI said in a report on Tuesday. India's sovereign rating was downgraded by Moody's to Baa3 with a negative outlook on the pretext of prolonged period of slower growth, rising debt and stress in financial system. Apart from sovereign rating downgrade, Moody's has taken rating actions on 11 Indian banks. - economic times
🍒 Moody’s takes rating actions against 11 banks : Moody’s Investor Services on Tuesday took rating action against 11 Indian banks, which included a downgrade of the long-term local and foreign currency deposit ratings of State Bank of India and HDFC Bank. This follows its downgrade of India’s sovereign rating to Baa3 from Baa2 with a negative outlook on Monday.The ratings action has been taken against Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Export-Import Bank of India, HDFC Bank, Indian Overseas Bank, IndusInd Bank Limited, Punjab National Bank, SBI and Union Bank of India.“The banking sector has been affected given the disruptions to India’s economic activity from the coronavirus outbreak, which is weakening borrowers’ credit profiles. Moody’s regards the coronavirus outbreak as a social risk under its environmental, social and governance framework, given the substantial implications for public health and safety,” it said in a statement. - BusinessLIne
🍒 The poor bring more business to banks in April : Loans to the economically weaker sections in April was nearly 40% higher than loans to big corporates, indicating low credit demand for investments while also pointing to the need for borrowings to keep the poor going at a time when economic activities came to a virtual standstill. Even as overall bank credit contracted by Rs 1.1 lakh crore in April, many segments such as loans to weaker sections, large corporates, NBFCs and retail trade were in the positive territory. But significantly, loans to weaker sections under 'priority sector' at Rs 12,381 crore were 40% higher than loans to large corporates at Rs 8,846 crore, according to the data released by the Reserve Bank of India on sectoral deployment of bank credit. A bulk of the increase in such loans could be due to the relief package announced by the government in March. - economic times
🍒 Extension of moratorium on loan repayment to affect liquidity conditions of NBFCs: Icra : The extension of moratorium on loan repayments till August by the Reserve Bank of India will impact non-banking financial companies' (NBFCs) collections and affect their liquidity conditions, says a report. In March, RBI had announced a three-month moratorium on loan repayments due between March 2020 and May 2020. Last month, the central bank further extended the moratorium by three months. Most NBFCs carried adequate on-balance sheet liquidity as of March 2020, which, along with access to funding lines, would be sufficient to meet their three-month requirements, according to the report by rating agency Icra."However, the extension of moratorium till August 2020 could adversely impact their collections than the previously anticipated levels," its vice president and sector head (financial sector ratings) A M Karthik said in the report. About 30-75 per cent NBFCs' asset under management (AUM) is under repayment moratorium though not all lenders have extended a moratorium to NBFCs. - economic times
🍒 Bank lending targets under Rs 20 lakh crore stimulus unfeasible: Former RBI deputy Governor Gandhi : Former RBI Deputy Governor R Gandhi has expressed doubt over the efficacy of the government's stimulus package, terming the aim of Rs 7.9 lakh crore-uptick in lending to small businesses, agriculture and power discoms as not "feasible". On Monday, PTI erroneously reported that Gandhi was a former RBI Governor. Speaking at a webinar hosted by payment system company Electronic Payments and Services, Gandhi said that the RBI needs to re-introduce a one-time restructuring package and mere moratoriums will not suffice in unprecedented times like the COVID-19 pandemic. - Moneycontrol.com
🍒 Financial data of 70 lakh BHIM users compromised says cyber security company, NPCI denies claim : Israel-based vpnMentor has discovered a “massive” breach of sensitive financial data affecting 7 million users connected to India’s mobile payment app BHIM, the company said in its blog. As per the report, a campaign website was being used to sign users and businesses to the app and data thus acquired was being stored on a publicly accessible misconfigured Amazon Web Services S3 bucket. The research team, led by Noam Rotem and Ran Locar made the discovery as part of its web mapping project. “Our researchers use port scanning to examine particular IP blocks and test different systems for weaknesses or vulnerabilities. They examine each weakness for any data being exposed. Our team was able to access this S3 bucket because it was completely unsecured and unencrypted,” the company said in its blog post. - moneycontrol.com
🍒 Pressure on foreign banks to cut India exposure grows after Moody's downgrade : A clutch of foreign lenders with large exposures to Indian corporates may be forced to sell loans held by them with the latest revision of India’s sovereign ratings by Moody’s, downgraded to the lowest investment grade category on Monday. According to multiple people aware of the ongoing negotiations, foreign banks already aware of the impending risks have begun negotiations to sell loans held by them, including those given to some of the best rated corporates in India. “Most foreign banks follow the sovereign ceiling policy practiced by all major rating agencies which means that if there is a downward revision of sovereign rating, the credit rating of corporate debt issuers of that country will fall in tandem irrespective of the issuer's financial standing" said the first person cited above. “In such situations they typically reduce their exposure by exiting or part selling their loan portfolios" the first person added. - Live Mint
🍒 Weaker non-banks find it tough to raise debt even as moratorium eludes : Smaller and weaker non-bank financiers face more difficulty in raising debt compared to their peers with stronger parentage as risk aversion intensifies amid the covid-19 crisis. The covid-19 pandemic has affected the funding of most non-banking financial companies (NBFCs) with bond spreads over the three-year government securities rising by another 50-70 basis points (bps), against the 250-300 bps existing spread. Spreads indicate the difference between yield of a particular bond and yield on the government securities (Gsec), with same maturity. Experts said smaller and weaker non-bank financiers have either not been able to raise money or have had to settle for less at a higher rate. For instance, Aadhar Housing Finance Ltd and IndoStar Capital Finance Ltd informally tested the waters in the last few months but decided against resorting to bond markets owing to tepid investor interest. IndoStar recently raised ₹1,225 crore from Brookfield, but in equity capital. - Live Mint
🍒 Lenders weigh changes in ICA for speedy resolution : Consortium lenders are planning to accord greater rights to the lead lender by amending their inter-creditor agreements (ICA), two people aware of the matter said, aimed to speed up decision-making in debt resolution as they brace for a surge in bad loans. Under ICA, lenders jointly appoint a lead bank which functions on behalf of the entire group, and crafts a resolution plan to be approved by two-thirds of the members. According to the persons cited above, who spoke on condition of anonymity, the Indian Banks’ Association (IBA) is discussing the changes, which will take effect once approved by its members. “Instead of the earlier norm of getting majority lenders to approve all decisions, some will be left to the lead lender. We are trying to make the minimum voting requirement dynamic, depending on the requirement," said the first of the two bankers quoted above. - Live Mint
🍒 DBS Bank partners with TCIL for real time payments to truck drivers : DBS Bank has partnered with Transport Corporation of India Limited (TCIL) to facilitate real time payments for truck drivers. “With this solution, TCIL truck drivers receive an instant credit into their bank account, which they can then swipe at terminals or withdraw cash using ATMs,” DBS Bank said in a statement on Tuesday, adding that given the large volumes of transactions, and round-the-clock nature of the operations, it proposed setting up a UPI-based real-time payments solution which is available 24x7x365. - Business Line
🍒 Survey finds that 90% respondents worried about savings and financial future : t’s no surprise that the current pandemic and resultant economic slowdown has made people more concerned about their financial health. But a recent survey has found that as many as 90 per cent of respondents are concerned about their savings and financial future and 94 per cent plan to be more careful about spending. A survey conducted by digital lending platform IndiaLends revealed that the pandemic has severely affected the financial health of salaried and professional individuals and 82 per cent of respondents said they are struggling to make ends meet. The survey was conducted across 5,000 respondents. - Business Line
🍒 Modifications in National Pension Scheme financially untenable: Finance Ministry : The Finance Ministry has ruled out proposals by a federation of central and state governments employees seeking modification in the National Pension Scheme, saying its corpus is invested in a prudential manner to ensure optimal returns and suggested that changes will be financially untenable. The response comes following a petition to the Prime Minister's Office (PMO) by Manjeet Singh Patel, president of Delhi unit of the National Movement for Old Pension Scheme (NMOPS), seeking revival of the old pension scheme on account of uncertain returns, besides raising other matters. -economic times
🍒 Covid: SBI Card foresees adverse impact on revenues : SBI Cards and Payment Services Limited (SBI Card) foresees adverse impact on its revenues due to the ongoing pandemic. Revenues are likely to be adversely impacted due to the lower spends and disruption in new account acquisitions, which may not be compensated through higher interest income following the payment moratorium offered to its customers, said Hardayal Prasad, MD and CEO, in a business update on Covid-19. - Business Line
🍒 Uday Kotak sells 5.6 crore shares, pares stake in Kotak Bank : Uday Kotak, veteran banker and Managing Director and CEO of Kotak Mahindra Bank, is estimated to have raised nearly ₹6,950 crore through the block deal of 5.6 crore shares of the private sector bank on Tuesday. According to data with BSE, Societe Generale, Citigroup Global Markets Mauritius, Abu Dhabi Investment Authority, Goldman Sachs Singapore, Morgan Stanley Asia Singapore, and HDFC Standard Life are some of the investors who purchased the shares. The transactions in the block deal took place at the higher end of the price band at ₹1,240 apiece. - Business Line
🍒 Fall in bank credit may delay jewellery sector recovery : The stress due to the lack of bank lending to the gems and jewellery industry is much more evident with unorganised and small-scale players. Since the financial scam broke out in January 2018, bank lending to this industry is on a consistent decline. As on March 2018, outstanding credit to this industry stood at ₹72,700 crore, which declined by ₹600 crore in FY19. Credit growth further witnessed a sharp fall of ₹12,500 crore in FY20. The outstanding credit to this industry stood at ₹59,600 crore as of this March-end. Such cautious bank lending can create further stress on liquidity. - Business Line
🍒 BankBazaar raises bridge round of ₹45 crore from new and existing investors : BankBazaar.com has raised a bridge round of ₹45 crore in financing from a new investor WSV ― a joint venture fund of Walden International and Korean company SKTA, along with existing investors including Amazon, Sequoia India, Experian and Eight Roads. “BankBazaar has spent the last decade in building world-class infrastructure to enable Indians access financial products online from leading lenders across the country. In the post-Covid-19 world, the demand for contactless finance is going to grow exponentially, and this round of funding will help us accelerate our plans to implement contactless access to credit. This round of funding reiterates our investors’ trust in our vision of contactless finance as the future of personal finance and in our ability to make it a reality,” said Adhil Shetty, CEO, BankBazaar. - Business Line
🍒 Indian rupee rebounds 18 paise to close at 75.36 against US dollar : The rupee on Tuesday rebounded by 18 paise to close at 75.36 (provisional) against the US dollar after Prime Minister Narendra Modi asserted that the country will get back its economic growth. The rupee opened lower at 75.57 at the interbank foreign exchange market and moved between 75.62 and 75.36 during the day trade. The currency finally settled at 75.36 against the US dollar, registering a rise of 18 paise over its previous close of 75.54.
🍒 Equities overlook Moody's downgrade ratings; Sensex, Nifty end 1.50% higher : Equity benchmark Sensex jumped 522 points higher and ended at 33,825.53, while the Nify rose 152.95 points to 9,979.10 on Tuesday, led by index-heavyweights Kotak Bank, Bajaj FinServ, Bajaj Finance, HDFC, Indus Ind Bank, Axis Bank, Titan and L&T amid positive cues from global markets. According to analysts, gradual easing of the lockdown boosted investor sentiment which further strengthened with the buoyancy in the global markets. Besides, the news of the timely arrival of monsoon also aided the surge. After opening on a tepid note at 33.3030.52, the 30-share index gradually gathered steam in the mid-session hitting a high of 33,866.63, before ended higher by 522.01, or 1.57%, at 33,825.53. Similarly, NSE Nifty advanced 152.95 points or 1.56 per cent to 9,979.10. Bajaj Finance was the top gainer in the Sensex pack, rising over 8 per cent, followed by Kotak Bank, IndusInd Bank, Axis Bank and PowerGrid. On the other hand, Bharti, Maruti, ITC,Nestle, Hindustan UniLever and HeroMotoCorp were among the laggards.
🍒 Gold price steady at Rs 47,075 per 10 gram, silver gains : Gold prices were steady at Rs 47,075 per 10 gram in the Mumbai bullion market on rupee appreciation and increasing US-China trade war. The rate of 10 gram 22-carat gold in Mumbai was Rs 43,121 plus 3 percent GST, while 24-carat 10 gram was Rs 47,075 plus GST. The 18-carat gold quoted at Rs 35,306 plus GST in the retail market. Silver prices rose Rs 210 to Rs 49,540 per kg from its closing on June 1.
🍒 Shares of Central Bank of India in Stock Market : 80% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, shares closed at Rs.14.84 against Prev Close Rs.14.29. In NSE, shares closed at Rs.14.85 against Prev close Rs.14.30..
Have a Good day.
☕ 03.06.2020: Today's Banking / Financial News at a Glance
🍒 SC rejects plea to exclude lockdown period for calculating limitation for cheque : The Supreme Court Tuesday dismissed a plea seeking a direction to exclude the time period of COVID-19 lockdown for calculating the limitation for presentation of cheque or demand draft as directed by the Reserve Bank of India (RBI) in November 2011. In its November 4, 2011 directive, the RBI had said that “with effect from April 1, 2012, banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument”. A bench headed by Justice R Banumathi, which heard the matter through video-conferencing, said that the issue raised in the plea relates to “policy decisions” and the court cannot issue such direction. “In this writ petition filed under Article 32 of the Constitution of India, the petitioner-in-person seeks relief to exclude the time period of lockdown for calculating the limitation for presentation of cheque/demand draft as directed by the Reserve Bank of India vide notification dated November 4, 2011,” the bench, also comprising Justices Indu Malhotra and Aniruddha Bose, said. “In our considered view, this is the policy decisions to be taken up by the Reserve Bank of India regarding which the court cannot issue any direction,” the bench said in its order. The apex court dismissed the plea “as not maintainable”. The nation-wide lockdown had started on March 25 amid the spread of coronavirus pandemic. - Financial Express
🍒 SBI cuts savings deposit rates by 5 bps to 2.7% : India’s largest lender State Bank of India has reduced its savings deposit interest rate by 5 basis points (bps) to 2.7%, according to the bank’s website. The cut has been effective for all deposits from 31 May and is the second reduction in savings deposit rates in FY21 after the last reduction of 25 bps in April. On 11 March, the bank had lowered its savings bank interest rate to 3% for all customers. Before the cut in March, it used to pay 3.25% on balances of up to ₹1 lakh and 3% on balances above ₹1 lakh. Flush with liquidity and lack of credit growth, most lenders have resorted to lower deposit rates. - Live Mint
🍒 ICICI Bank cuts interest rate on saving deposits by 25 bps : ICICI Bank on Tuesday said it has cut interest rate on saving deposits by 25 basis points (bps). The new rates will come into effect from Thursday, it said in a regulatory filing. The private sector lender has cut interest rate on all deposits of less than Rs 50 lakh to 3 per cent, a reduction of by 25 bps as against the existing 3.25 per cent. Likewise, for deposits of Rs 50 lakh and above, the account holders will earn interest of 3.50 per cent, down from 3.75 per cent currently. - economic times
🍒 SBI creates new vertical to service agri/allied sectors, micro/small enterprises : State Bank of India (SBI) has created a separate Financial Inclusion & Micro Market (FI&MM) vertical to offer loans predominantly for agriculture & allied activities, and micro/small enterprises. India’s largest bank, in a statement, said about 8,000 branches in rural and semi-urban areas have been identified for providing specialised services to the micro segment, including micro credit for small businesses and farmers. The thrust is also to improve service quality and availability of banking services through the bank’s vast network of over 63,000 Customer Service Points in rural, semi-urban, urban and metro areas, it added. The new vertical, which will be headed by Sanjeev Nautiyal, Deputy Managing Director, will provide a boost to the micro-finance sector. Rajnish Kumar, Chairman, SBI, said, “The key elements of creating the FI&MM vertical are to bring sharper focus to different business lines and improve the quality of interaction with customers at the branch. “This is a key initiative by SBI to cater to financial requirements of people residing in the hinterlands, as part of its financial inclusion journey. The new FI&MM vertical will provide an opportunity to serve the small business, agri and allied segments so that they can run their businesses smoothly, especially in the current times of uncertainty.” - Business Line
🍒 Banks left with no choice but to park money with RBI: SBI Chairman Rajnish Kumar : Admitting that lending activities have not taken off despite the measures taken by the government and central bank, State Bank of India Chairman Rajnish Kumar on June 2 said that the impact of recent reforms may not be visible in the near term. "Banks are left with no choice but to put money in the RBI. Deposits have increased in the last two months but lending has not. The doomsday scenario on banks with respect to Non-Performing Assets (NPAs) is overstated, but we don't know what will happen after six months," he said at a virtual session organised by the Confederation of Indian Industry. "Individuals and businesses, government and the financial sector need to work together to absorb the impact of the crisis to bring back economic growth. The three vital elements bearing the brunt of the current crisis are Individuals and businesses, governments and the financial sector," said Kotak Mahindra Bank CEO, Uday Kotak. - Moneycontrol.com
🍒 Banking sector needs recapitalisation of Rs 4 lakh crore: Uday Kotak : Industry leaders said on Tuesday that the banking and financial sectors need structural reforms to propel economic growth as the country aspires to become self-reliant in the face of coronavirus crisis and enters the 'Unlock Phase 1.' The banking sector has loans of Rs 100 lakh crore and a capital of Rs 11 lakh crore to 12 lakh crore while the banking losses are about Rs 3 lakh crore to 4 lakh crore, said CII President-Designate Uday Kotak. "Banks are in the business of banking but they are unable to lend. The banking sector needs recapitalisation of Rs 3 lakh crore to 4 lakh crore," he said while addressing the 125th annual session of the Confederation of Indian Industry (CII). Kotak said the government, the industry in general and the financial sector are bearing the brunt of Covid-19 pandemic. - Economic Times
🍒 PSBs restart the pending post-merger work after lockdown : State-run bank mergers are getting a new life after being in suspended animation for two months. With the lockdown being lifted, Punjab National Bank, Union Bank of India, Canara Bank and Indian Bank have begun the pending post-merger relocation and organisational realignment exercise. Some of the top executives, who were stranded due to lockdown, have begun taking up their new roles and redrawing strategies at head offices, people familiar with the matter said.However, the realignment and rationalisation of branches are yet to begin, even as field general manager offices started functioning to push credit growth in line with the government objectives. “We have kept the disruption to the minimum by retaining officials at same or nearby centres as far as possible. Where there is merger of zones, there is certain relocation necessary. Now it will definitely gain momentum with opening up of flights,” said Padmaja Chunduru, chief executive at Indian Bank. However, she said that the organizational restructuring begun even through the Covid period. - economic times
🍒 ‘Unscrupulous entities imitating RBI mails for fraudulent purposes’ : The Reserve Bank of India (RBI) has cautioned members of the public as well as financial institutions to beware of some unscrupulous entities/scamsters imitating its mails for fraudulent purposes. Most of such mails are sent using fake domains, which do not belong to the RBI, but these could be deceptively similar involving use of words such as RBI, Reserve Bank, payment, the central bank said in a statement.Members of the public as well as financial institutions are, therefore, requested to be careful about such fraudulent activities before taking cognizance or any action on such mails, the statement added. - economic times
🍒 Punjab National Bank reduces lending rate linked to repo by 40 bps : Punjab National Bank (PNB), the country's second-largest state-owned lender, on Monday said it has reduced its repo-linked lending rate (RLLR) by 40 basis points (bps) to 6.65 per cent from 7.05 per cent. The bank's marginal cost of funds-based lending rate (MCLR) has also been revised downwards by 15 bps across all tenors.The lender has cut its saving fund deposit rate by 50 bps with a maximum of 3.25 per cent, effective July 1, a release said. It has further reduced its term deposit rates in various maturities bucket with a maximum rate of 5.50 per cent for deposits of specified maturities, effective Monday. - Business Standard
🍒 Despite lockdown, SBI Card reports daily spends at over Rs 175 cr in May : SBI Cards and Payments Services has said that customers continued using their credit cards during the coronavirus lockdown and due to the unique nature of business the average daily spends were in upwards of Rs 175 crore during May. The company which is promoted by the country's largest lender State Bank of India (SBI) and goes by the brand name SBI Card said it has been focusing on business continuity since the first lockdown (late March) was announced, and has been continuously scaling up business operations since then. SBI Card has undertaken a detailed scenario analysis of the unprecedented economic situation caused by the Covid-19 crisis and has developed strategies to manage its business impact, it said in a regulatory filing. On the spending side, it said credit card as a product has an advantage of continuous customer engagement due to the unique nature of business. - Business Standard
🍒 Moody's downgrades SBI, HDFC Bank after sovereign rating cut, explained : A day after downgrading India’s sovereign rating, Moody's Investors Service on June 2 downgraded two top Indian banks - State Bank of India (SBI) and HDFC Bank - and took rating actions on nine other Indian banks. Moody's has downgraded the long-term local and foreign currency deposit ratings of HDFC Bank and SBI and has taken a cautionary stance on their rating outlook. - Moencycontrol.com
🍒 Indian banks start trading in non-deliverable forward mkts for first time : Foreign branches of Indian banks and those located in the International Financial Services Centre (IFSC) in GIFT City traded in non-deliverable forwards (NDF) for the first time on Monday. The RBI in the past was against this market, but gave way when it was found that the offshore volume in rupee trading is higher than the onshore one. There was no statement yet from IFSC on the first day trade, but some of the banks spoke on condition of anonymity. - Business Standard
🍒 Moody's rating downgrade not surprising: SBI report : The downgrade of India's sovereign rating by Moody's has not come as a surprise as global rating agencies have lowered ratings and outlook of about 21 emerging economies following COVID-19 outbreak, SBI said in a report on Tuesday. India's sovereign rating was downgraded by Moody's to Baa3 with a negative outlook on the pretext of prolonged period of slower growth, rising debt and stress in financial system. Apart from sovereign rating downgrade, Moody's has taken rating actions on 11 Indian banks. - economic times
🍒 Moody’s takes rating actions against 11 banks : Moody’s Investor Services on Tuesday took rating action against 11 Indian banks, which included a downgrade of the long-term local and foreign currency deposit ratings of State Bank of India and HDFC Bank. This follows its downgrade of India’s sovereign rating to Baa3 from Baa2 with a negative outlook on Monday.The ratings action has been taken against Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Export-Import Bank of India, HDFC Bank, Indian Overseas Bank, IndusInd Bank Limited, Punjab National Bank, SBI and Union Bank of India.“The banking sector has been affected given the disruptions to India’s economic activity from the coronavirus outbreak, which is weakening borrowers’ credit profiles. Moody’s regards the coronavirus outbreak as a social risk under its environmental, social and governance framework, given the substantial implications for public health and safety,” it said in a statement. - BusinessLIne
🍒 The poor bring more business to banks in April : Loans to the economically weaker sections in April was nearly 40% higher than loans to big corporates, indicating low credit demand for investments while also pointing to the need for borrowings to keep the poor going at a time when economic activities came to a virtual standstill. Even as overall bank credit contracted by Rs 1.1 lakh crore in April, many segments such as loans to weaker sections, large corporates, NBFCs and retail trade were in the positive territory. But significantly, loans to weaker sections under 'priority sector' at Rs 12,381 crore were 40% higher than loans to large corporates at Rs 8,846 crore, according to the data released by the Reserve Bank of India on sectoral deployment of bank credit. A bulk of the increase in such loans could be due to the relief package announced by the government in March. - economic times
🍒 Extension of moratorium on loan repayment to affect liquidity conditions of NBFCs: Icra : The extension of moratorium on loan repayments till August by the Reserve Bank of India will impact non-banking financial companies' (NBFCs) collections and affect their liquidity conditions, says a report. In March, RBI had announced a three-month moratorium on loan repayments due between March 2020 and May 2020. Last month, the central bank further extended the moratorium by three months. Most NBFCs carried adequate on-balance sheet liquidity as of March 2020, which, along with access to funding lines, would be sufficient to meet their three-month requirements, according to the report by rating agency Icra."However, the extension of moratorium till August 2020 could adversely impact their collections than the previously anticipated levels," its vice president and sector head (financial sector ratings) A M Karthik said in the report. About 30-75 per cent NBFCs' asset under management (AUM) is under repayment moratorium though not all lenders have extended a moratorium to NBFCs. - economic times
🍒 Bank lending targets under Rs 20 lakh crore stimulus unfeasible: Former RBI deputy Governor Gandhi : Former RBI Deputy Governor R Gandhi has expressed doubt over the efficacy of the government's stimulus package, terming the aim of Rs 7.9 lakh crore-uptick in lending to small businesses, agriculture and power discoms as not "feasible". On Monday, PTI erroneously reported that Gandhi was a former RBI Governor. Speaking at a webinar hosted by payment system company Electronic Payments and Services, Gandhi said that the RBI needs to re-introduce a one-time restructuring package and mere moratoriums will not suffice in unprecedented times like the COVID-19 pandemic. - Moneycontrol.com
🍒 Financial data of 70 lakh BHIM users compromised says cyber security company, NPCI denies claim : Israel-based vpnMentor has discovered a “massive” breach of sensitive financial data affecting 7 million users connected to India’s mobile payment app BHIM, the company said in its blog. As per the report, a campaign website was being used to sign users and businesses to the app and data thus acquired was being stored on a publicly accessible misconfigured Amazon Web Services S3 bucket. The research team, led by Noam Rotem and Ran Locar made the discovery as part of its web mapping project. “Our researchers use port scanning to examine particular IP blocks and test different systems for weaknesses or vulnerabilities. They examine each weakness for any data being exposed. Our team was able to access this S3 bucket because it was completely unsecured and unencrypted,” the company said in its blog post. - moneycontrol.com
🍒 Pressure on foreign banks to cut India exposure grows after Moody's downgrade : A clutch of foreign lenders with large exposures to Indian corporates may be forced to sell loans held by them with the latest revision of India’s sovereign ratings by Moody’s, downgraded to the lowest investment grade category on Monday. According to multiple people aware of the ongoing negotiations, foreign banks already aware of the impending risks have begun negotiations to sell loans held by them, including those given to some of the best rated corporates in India. “Most foreign banks follow the sovereign ceiling policy practiced by all major rating agencies which means that if there is a downward revision of sovereign rating, the credit rating of corporate debt issuers of that country will fall in tandem irrespective of the issuer's financial standing" said the first person cited above. “In such situations they typically reduce their exposure by exiting or part selling their loan portfolios" the first person added. - Live Mint
🍒 Weaker non-banks find it tough to raise debt even as moratorium eludes : Smaller and weaker non-bank financiers face more difficulty in raising debt compared to their peers with stronger parentage as risk aversion intensifies amid the covid-19 crisis. The covid-19 pandemic has affected the funding of most non-banking financial companies (NBFCs) with bond spreads over the three-year government securities rising by another 50-70 basis points (bps), against the 250-300 bps existing spread. Spreads indicate the difference between yield of a particular bond and yield on the government securities (Gsec), with same maturity. Experts said smaller and weaker non-bank financiers have either not been able to raise money or have had to settle for less at a higher rate. For instance, Aadhar Housing Finance Ltd and IndoStar Capital Finance Ltd informally tested the waters in the last few months but decided against resorting to bond markets owing to tepid investor interest. IndoStar recently raised ₹1,225 crore from Brookfield, but in equity capital. - Live Mint
🍒 Lenders weigh changes in ICA for speedy resolution : Consortium lenders are planning to accord greater rights to the lead lender by amending their inter-creditor agreements (ICA), two people aware of the matter said, aimed to speed up decision-making in debt resolution as they brace for a surge in bad loans. Under ICA, lenders jointly appoint a lead bank which functions on behalf of the entire group, and crafts a resolution plan to be approved by two-thirds of the members. According to the persons cited above, who spoke on condition of anonymity, the Indian Banks’ Association (IBA) is discussing the changes, which will take effect once approved by its members. “Instead of the earlier norm of getting majority lenders to approve all decisions, some will be left to the lead lender. We are trying to make the minimum voting requirement dynamic, depending on the requirement," said the first of the two bankers quoted above. - Live Mint
🍒 DBS Bank partners with TCIL for real time payments to truck drivers : DBS Bank has partnered with Transport Corporation of India Limited (TCIL) to facilitate real time payments for truck drivers. “With this solution, TCIL truck drivers receive an instant credit into their bank account, which they can then swipe at terminals or withdraw cash using ATMs,” DBS Bank said in a statement on Tuesday, adding that given the large volumes of transactions, and round-the-clock nature of the operations, it proposed setting up a UPI-based real-time payments solution which is available 24x7x365. - Business Line
🍒 Survey finds that 90% respondents worried about savings and financial future : t’s no surprise that the current pandemic and resultant economic slowdown has made people more concerned about their financial health. But a recent survey has found that as many as 90 per cent of respondents are concerned about their savings and financial future and 94 per cent plan to be more careful about spending. A survey conducted by digital lending platform IndiaLends revealed that the pandemic has severely affected the financial health of salaried and professional individuals and 82 per cent of respondents said they are struggling to make ends meet. The survey was conducted across 5,000 respondents. - Business Line
🍒 Modifications in National Pension Scheme financially untenable: Finance Ministry : The Finance Ministry has ruled out proposals by a federation of central and state governments employees seeking modification in the National Pension Scheme, saying its corpus is invested in a prudential manner to ensure optimal returns and suggested that changes will be financially untenable. The response comes following a petition to the Prime Minister's Office (PMO) by Manjeet Singh Patel, president of Delhi unit of the National Movement for Old Pension Scheme (NMOPS), seeking revival of the old pension scheme on account of uncertain returns, besides raising other matters. -economic times
🍒 Covid: SBI Card foresees adverse impact on revenues : SBI Cards and Payment Services Limited (SBI Card) foresees adverse impact on its revenues due to the ongoing pandemic. Revenues are likely to be adversely impacted due to the lower spends and disruption in new account acquisitions, which may not be compensated through higher interest income following the payment moratorium offered to its customers, said Hardayal Prasad, MD and CEO, in a business update on Covid-19. - Business Line
🍒 Uday Kotak sells 5.6 crore shares, pares stake in Kotak Bank : Uday Kotak, veteran banker and Managing Director and CEO of Kotak Mahindra Bank, is estimated to have raised nearly ₹6,950 crore through the block deal of 5.6 crore shares of the private sector bank on Tuesday. According to data with BSE, Societe Generale, Citigroup Global Markets Mauritius, Abu Dhabi Investment Authority, Goldman Sachs Singapore, Morgan Stanley Asia Singapore, and HDFC Standard Life are some of the investors who purchased the shares. The transactions in the block deal took place at the higher end of the price band at ₹1,240 apiece. - Business Line
🍒 Fall in bank credit may delay jewellery sector recovery : The stress due to the lack of bank lending to the gems and jewellery industry is much more evident with unorganised and small-scale players. Since the financial scam broke out in January 2018, bank lending to this industry is on a consistent decline. As on March 2018, outstanding credit to this industry stood at ₹72,700 crore, which declined by ₹600 crore in FY19. Credit growth further witnessed a sharp fall of ₹12,500 crore in FY20. The outstanding credit to this industry stood at ₹59,600 crore as of this March-end. Such cautious bank lending can create further stress on liquidity. - Business Line
🍒 BankBazaar raises bridge round of ₹45 crore from new and existing investors : BankBazaar.com has raised a bridge round of ₹45 crore in financing from a new investor WSV ― a joint venture fund of Walden International and Korean company SKTA, along with existing investors including Amazon, Sequoia India, Experian and Eight Roads. “BankBazaar has spent the last decade in building world-class infrastructure to enable Indians access financial products online from leading lenders across the country. In the post-Covid-19 world, the demand for contactless finance is going to grow exponentially, and this round of funding will help us accelerate our plans to implement contactless access to credit. This round of funding reiterates our investors’ trust in our vision of contactless finance as the future of personal finance and in our ability to make it a reality,” said Adhil Shetty, CEO, BankBazaar. - Business Line
🍒 Indian rupee rebounds 18 paise to close at 75.36 against US dollar : The rupee on Tuesday rebounded by 18 paise to close at 75.36 (provisional) against the US dollar after Prime Minister Narendra Modi asserted that the country will get back its economic growth. The rupee opened lower at 75.57 at the interbank foreign exchange market and moved between 75.62 and 75.36 during the day trade. The currency finally settled at 75.36 against the US dollar, registering a rise of 18 paise over its previous close of 75.54.
🍒 Equities overlook Moody's downgrade ratings; Sensex, Nifty end 1.50% higher : Equity benchmark Sensex jumped 522 points higher and ended at 33,825.53, while the Nify rose 152.95 points to 9,979.10 on Tuesday, led by index-heavyweights Kotak Bank, Bajaj FinServ, Bajaj Finance, HDFC, Indus Ind Bank, Axis Bank, Titan and L&T amid positive cues from global markets. According to analysts, gradual easing of the lockdown boosted investor sentiment which further strengthened with the buoyancy in the global markets. Besides, the news of the timely arrival of monsoon also aided the surge. After opening on a tepid note at 33.3030.52, the 30-share index gradually gathered steam in the mid-session hitting a high of 33,866.63, before ended higher by 522.01, or 1.57%, at 33,825.53. Similarly, NSE Nifty advanced 152.95 points or 1.56 per cent to 9,979.10. Bajaj Finance was the top gainer in the Sensex pack, rising over 8 per cent, followed by Kotak Bank, IndusInd Bank, Axis Bank and PowerGrid. On the other hand, Bharti, Maruti, ITC,Nestle, Hindustan UniLever and HeroMotoCorp were among the laggards.
🍒 Gold price steady at Rs 47,075 per 10 gram, silver gains : Gold prices were steady at Rs 47,075 per 10 gram in the Mumbai bullion market on rupee appreciation and increasing US-China trade war. The rate of 10 gram 22-carat gold in Mumbai was Rs 43,121 plus 3 percent GST, while 24-carat 10 gram was Rs 47,075 plus GST. The 18-carat gold quoted at Rs 35,306 plus GST in the retail market. Silver prices rose Rs 210 to Rs 49,540 per kg from its closing on June 1.
🍒 Shares of Central Bank of India in Stock Market : 80% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, shares closed at Rs.14.84 against Prev Close Rs.14.29. In NSE, shares closed at Rs.14.85 against Prev close Rs.14.30..
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