☕ 06.06.2020: Today's Banking / Financial News at a Glance
🍒 Banks to face action if loans to MSMEs are delayed: Anurag Thakur : The Centre on Friday assured MSME entrepreneurs of “corrective action” if banks delayed or created unwarranted hurdles towards disbursal of the ₹3,00,000-crore loans allocated to them as a part of fiscal stimulus and coronavirus relief package. According to Anurag Thakur, Union Minister of State for Finance and Corporate Affairs, banks would face consequences if they create unwanted hurdles or delays in disbursals. He pointed out that it was brought to the Ministry’s notice that a few bank officials at the branch level were creating problems in loan disbursals. This led to strong corrective action being taken against those officials. “This money is meant for entrepreneurs and (it) should reach them. If you (MSMEs) are facing any such delay, please write to us and corrective actions will be taken and the loan will be disbursed,” Thakur said while responding to a question from an attendee during a webinar organised by the Merchants Chamber of Committee and Industry. - Business Line
🍒 SBI Q4 net profit jumps four-fold to ₹3,581 crore : State Bank of India (SBI) reported a huge jump in fourth quarter standalone net profit at ₹3,581 crore against ₹838 crore in the year ago quarter. A 31 per cent decline in loan loss provisions at ₹11,894 crore against ₹17,336 crore in the year-ago period supported the bottomlineNet interest income (difference between interest earned and interest expended) dipped marginally by 0.81 per cent to ₹22,767 crore against ₹22,954 crore in the year ago period.Non Interest Income, including fee income, profit/loss on sale of investments, forex income and miscellaneous income) increased by 5 per cent to ₹13,346 crore (₹12,685 crore).Domestic net interest margin (NII/ total interest earning assets) declined to 2.94 per cent in the reporting quarter against 3.02 per cent.Gross non-performing assets (NPAs) declined to 6.15 per cent against 7.53 per cent. Net NPAs declined to 2.23 per cent of net advances against 3.01 per cent.Slippages during the quarter were lower at ₹8,105 crore against ₹16,525 crore in the preceding quarter. - Business Line
🍒 Covid impact: SBI sanctions loans worth ₹17,116 cr : State Bank of India (SBI), on Friday, said it has sanctioned Covid-19-related loans aggregating ₹17,116 crore so far. Further, 22 per cent of its customers have availed loan repayment moratorium. The aforementioned loan sanctions include emergency lines sanctioned to micro, small and medium enterprise (MSME) customers. India’s largest bank said it has opened up Covid-19-specific credit lines for quick assessment and loan sanction, and reduced margins and reassessed working capital cycle for customers. The borrowers belonging to sectors impacted by Covid-19 constitute only 4.50 per cent of the bank’s total domestic advances of ₹20.65-lakh crore. The sectors impacted by Covid-19, as per the bank’s analyst presentation, are: other private sector non-banking finance company (SBI’s exposure: ₹29,530 crore); independent power producers – rated below ‘A-’(₹27,554 crore); commercial real estate, excluding lease rental discounting (₹26,665 crore); tourism, hotel and resorts (₹9,268 crore); and aviation (₹466 crore). - Business Line
🍒 SBI Q4: Slippages fall, but weak loan growth and higher provisions impact earnings : SBI’s results offer a bitter-sweet medley of comforting and worrying trends, notable fall in slippages and higher provision cover, but lower loan growth and fall in net interest margin. But for the sale of some portion of its investment in SBI Cards & Payments to the tune of ₹2,731 crore that bumped up earnings, net profit for the bank would have been nearly flat (compared to last year) in the March quarter. Weak core performance, coupled with notable rise in provisions (sequentially), impacted the overall earnings of the bank. After the sharp rise in slippages to ₹16,525 crore in the December quarter (which included a large HFC account of about ₹7,000 crore), slippages halved to ₹8,105 crore in the March quarter, which does lend respite. Hence, despite the bank having recognised huge stress in the corporate as well as agri book over the past year, risk of rise in delinquencies in the retail book remains. While the bank’s provision cover going up over the past year is a positive, Covid related provisions to the tune of ₹938 crore made by the bank is much lower than that of private peers such as HDFC Bank, Axis and ICICI Bank. The management of SBI, however, stated that it will continuously monitor the developments and make provisions proactively as and when required. With several moving parts around asset quality, provisions (ageing of large bad loan book), moratorium, recoveries (hit due to one-year suspension of fresh insolvency pleas) and credit offtake, earnings could remain volatile over the coming quarters. Healthy capital ratios and potential to unlock value in subsidiaries, however, provide buffer to absorb losses in the coming year.- Business Line
🍒 Bank of Maharashtra announces cut in repo-linked lending rate by 40 bps to 7.05% : State-owned Bank of Maharashtra (BoM) on Friday announced reduction in its repo-linked lending rate (RLLR) by 40 basis points (bps) to 7.05 percent. The revision in RLLR rates will be effective from June 8, the bank said in a release. "Now, all retail loans (housing, education, vehicle), loans to MSMEs, which are linked to RLLR, will be available at cheaper rates," the lender said. Most of the banks have passed on the benefit of reduction in 40 bps in repo rate announced by the Reserve Bank of India in May through cuts in their RLLR. Recently, some lenders, including Punjab National Bank, Bank of India and UCO Bank, slashed their lending rates linked to repo rate by 40 bps. Pune-headquartered BoM also said it will cut its marginal cost of funds-based lending rates (MCLR) by 20 bps across all tenors from June 8. - Moneycontrol.com
🍒 Corporate insolvency suspension ordinance promulgated : The much-awaited ordinance suspending initiation of Corporate Insolvency Resolution Process (CIRP) in the country was issued on Friday, bringing relief to lakhs of companies facing defaults of their debt obligations due to the Covid-induced lockdown since March 25. It has now been stipulated that no application for a CIRP can be filed for any default arising on or after March 25 (when lockdown began) for six months or such further period as may be notified for this purpose. However, this facility cannot exceed one year, according to the ordinance. - Business Line
🍒 India Post Payment Bank's network helped government transfer financial benefits of $54 million: NITI Aayog CEO : The vast network of India Post Payment Bank helped the government transfer financial benefits of $54 million through 2.1 million transactions, mostly in rural and unbanked areas in the first month of lockdown, NITI Aayog CEO Amitabh Kant said. Kant outlined the multiple challenges the country faced with the imposition of nationwide lockdown to prevent the spread of Covid-19. "There were multiple challenges for delivering financial benefits as access to ATMs and bank mitras was highly curtailed because of restrictions on mobility and location,” he said. Kant was addressing a webinar on financial inclusion jointly hosted by NITI Aayog and MicroSave Consulting. SBI chairman Rajnish Kumar, however, said the entire financial ecosystem of the country was efficient in ensuring swift transfer of funds from government to the beneficiaries through the sound banking network while following social distancing during the Covid-19 pandemic. - economic times
🍒 MPC minutes show RBI feels it may take years to repair economy : Economic activity has been hit badly by the two-month nationwide lockdown and as a result, growth outlook has deteriorated sharply and the country is likely face demand-side issues going ahead. That’s the view RBI’s Monetary Policy Committee (MPC) took on the economy before slashing the short-term interest rate by 40 basis points last month.Minutes of the MPC released on Friday showed RBI Governor Shaktikanta Das expressing concern that the impact of the pandemic on the domestic economy turned out to be far more severe than initially anticipated. The high-frequency indicators for March-April 2020 also suggested a collapse in demand. “Bank credit growth continues to be tepid, suggesting weak demand,” he said, adding that supply-side is expected to ease gradually as the lockdown-related restrictions get phased out. - economic times
🍒 Banks to install contactless ATMs to cut down on touch : With reduced hand contact becoming the norm in the wake of the coronavirus pandemic, banks are set to deploy contactless ATMs. A prototype has been developed by payments company AGS Transact Technologies, which uses the bank’s mobile app to interface with the machine after scanning a QR code on the screen. Traditionally, the ATM has been using a magnetic stripe card for identification of the accountholder and the PIN for authorisation. To use the contactless ATM, the customer has to use the bank’s smartphone app to scan a QR code on the screen and enter the amount and ATM PIN in his mobile, and collect the cash without touching the machine. AGS Transact, which manages 70,000 ATMs for banks, is in the process of implementing this contactless solution for two banks. It is also in discussions with four more. While the changes are related to software, implementation could take up to eight weeks, given that banks have multiple service providers for mobile banking, ATM operations and maintenance of their ATM switch.- economic times
🍒 RBI to set up ₹500-cr fund to expand payment infrastructure : The Reserve Bank of India on Friday announced the creation of a ₹500 crore Payments Infrastructure Development Fund (PIDF) to encourage deployment of Point of Sale (PoS) infrastructure (both physical and digital modes) in tier-3 to tier-6 centres and the North-East. The central bank, in a statement, said it will make an initial contribution of ₹250 crore to the PIDF covering half the fund and the remaining contribution will be from card-issuing banks and card networks operating in the country. The PIDF will also receive recurring contributions to cover operational expenses from card-issuing banks and card networks. The Reserve Bank will also contribute to yearly shortfalls, if necessary. The PIDF will be governed through an Advisory Council and managed and administered by the RBI. “Over the years, the payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc. To provide further fillip to digitisation of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in underserved areas,” the RBI said. - Business Line
🍒 NPA meter for moratorium loans to start ticking from September : SBI Chairman Rajnish Kumar on Friday said that 82 per cent customers have paid two or more instalments of loans during the COVID-19 period. "There are 92 per cent customers who have paid one or more instalments, while only 13 per cent customers in the corporate segment have availed moratorium and the amount is insignificant," said Kumar in a media interaction. The bank, however, did not give the percentage share of moratorium book in terms of value. The banks such as Bank of Baroda and IDBI Bank have announced that 65 per cent of their loan book is under moratorium. The private banks have seen one third of their book in terms of value under moratorium. SBI's domestic loan book is around Rs 20 lakh crore. "We haven't calculated the value of moratorium. We are monitoring the number of customers or the accounts," said Kumar. - Business Today
🍒 HDFC looking to raise $1 billion via partial stake sale: Report : Housing Development Finance Company (HDFC) is reportedly considering a partial stake sale to raise $1 billion in anticipation of loan demand once the economy fully opens up. The Mumbai-based non-banking finance company (NDFC) is in talks with multiple investment bankers and a decision is expected soon, sources told The Economic Times. While bankers have advised an institutional stake sale, HDFC has not finalised its decision yet, they added.The issue could be conducted in multiple tranches, sources added. Moneycontrol could not independently verify the report. - moneycontrol.com
🍒 MSMEs facing difficulties in accessing COVID-related relief packages: Karnataka SSI body : MSMEs are seriously concerned about the implementation of the emergency COVID-19-related packages meant as relief for industry as they face innumerable difficulties in accessing benefits at the level of banks, according to Karnataka Small Scale Industries Association (KASSIA). For one, guidelines issued under the Emergency Credit Link Guarantee Scheme (ECLGS) are not uniform and different banks have framed their own guidelines leading to confusion and hardship in making use of the schemes at a time when industries are in dire straits, KASSIA President R Raju said in a statement. "The same confusion exists with regard to moratorium on the repayment of installments and interest as well as other compliances. While some banks may be transparent and forthcoming, a number of others are unsure and place hurdles in the way of the MSME customers in accessing these benefits," he said. KASSIA has received a number of complaints and representations from its members about the difficulties in accessing the schemes.- moneycontrol.com
🍒 RBI pushes back billionaire Hinduja brothers’ plan to raise stake in IndusInd Bank : India’s central bank pushed back on the billionaire Hinduja brothers’ plan to raise stake in IndusInd Bank Ltd., which has lost more than 70% of its market value this year, according to people familiar with the matter. The Reserve Bank of India has conveyed the decision to the IndusInd founders Srichand and Gopichand Hinduja, the people said, asking not to be named as the information is not public. The brothers had applied to the central bank for approval to raise their stake in the lender to 26% from less than 15%, the bank said in an exchange filing in April. IndusInd Bank was the worst-hit member of the country’s benchmark index this year, after the central bank effectively took control of troubled lender Yes Bank Ltd. in March. Shares of IndusInd have fallen 72% this year on concerns about the founders borrowing money against its shares, worsening asset quality, and erosion of low-cost deposits. The IndusInd founders, led by the Hinduja brothers, repaid a secured loan backed by the lender, their representative said in April. Representatives for Hinduja, IndusInd and the RBI didn’t respond to requests for comment. - financial express
🍒 Aditya Birla Capital Q4 net profit down 44% : Aditya Birla Capital reported a 44.4 per cent drop in its consolidated net profit at ₹143.67 crore in the fourth quarter of FY20 against ₹258.40 crore a year ago. Revenue was up 1.4 per cent to ₹5,122 crore in the quarter ended March 31, 2020, against ₹5,050 crore a year ago.For FY20, it reported a 5.6 per cent increase in consolidated net profit to ₹919.78 crore versus ₹870.94 crore in FY19.In the NBFC business, it made additional Covid-related provisions of ₹163 crore in the fourth quarter last fiscal.“Aditya Birla Capital’s retailisation strategy has led to the active customer base growing to nearly two crore. The overall assets under management across asset management, life insurance and health insurance were over ₹3-lakh crore,” it said in a statement, adding that the overall lending book (NBFC and Housing Finance) stood at ₹59,159 crore. - Business Line
🍒 Covid-19: General insurers to work with TPAs, hospitals to come out with standardised rates : With the rapid spread of novel coronavirus leading to soaring medical bills for many patients, general insurance companies are now working with hospitals and TPAs to arrive at standard treatment costs for the infection. Sources close to the development said the Insurance Regulatory and Development Authority of India (IRDAI) has asked industry body General Insurance Council to arrive at standardised rates for treatment of Covid-19 in about a month’s time.“The IRDAI has asked general insurers and TPAs to discuss with hospitals and arrive at common standardised rates. Much depends on the cooperation from the hospital management,” said an executive with an insurance company. “We will have to get in touch with all hospitals. It can be done only by TPAs. It is a mammoth and not-so-easy task. Co-morbidity will change the whole scenario. A young man with no other problems but only Covid-19 will have a different treatment, but a patient with other complications will require intensive treatment. The rates will be different and will vary from hospital to hospital as well as place to place,” said another general insurer. - Business Line
🍒 HDFC Bank launches summer treats : With the easing of the lockdown restrictions, private sector HDFC Bank on Friday announced a special Summer Treats campaign with offers for both merchants and, salaried and self-employed customers. “Efforts to curb the spread of Covid-19 have changed consumer lifestyles and demands. Work from home and school from home have resulted in increased demand for phones, tablets, computers and related accessories. Demand for safe digital payments and private transport is also rising,” it said in a statement, adding that as shops and businesses begin to reopen, they too have requirements for business finance. As part of the campaign, the bank will offer no cost EMI and no down payment for large appliances, discounts and cashbacks on select brands and 50 per cent extra reward points on online spend using credit cards.- Business Line
🍒 Northern Arc Capital secures $50 million of debt financing from DFC : Northern Arc Capital, a non-banking finance company (NBFC) that provides access to debt capital for under-banked individuals and businesses, on Friday announced that it has received a commitment of $50 million of debt financing from the US International Development Finance Corporation (DFC). In a press release, the debt financing company said the funds will be used to support the growth and liquidity needs of its institutional clients as well as lend to small businesses and individuals. “It will be deployed to support women entrepreneurship and employment, food security and water, sanitation and hygiene,” Northern Arc added.- Business Line
🍒 Govt 'clear and unapologetic' about privatisation of PSUs: Sanjeev Sanyal : The government is clear and unapologetic about privatisation of public sector enterprises as part of reforms, Principal Economic Advisor Sanjeev Sanyal said on Friday. Last month, Finance Minister Nirmala Sitharaman had announced that there will be a maximum of four public sector companies in strategic sectors while state-owned firms in other segments will eventually be privatised. This will be part of a new coherent Public Sector Enterprises Policy to be formulated to push reforms in central public sector enterprises (CPSEs), she had said while announcing the fifth and last tranche of over Rs 20 lakh crore 'Amtmanirbhar Bharat Abhiyan' package. - economic times
🍒 Chola rolls out realignment strategy with digital push : Cholamandalam Investment & Finance Company Ltd (CIFCL) has embarked on a revamped business strategy with a digital push amid maintaining a strong liquidity position. “The company leadership is committed to navigating this Covid-19 crisis successfully. Cholamandalam has been actively focussing on realigning its business strategy in the near term to mitigate the impact of Covid on the performance. “We have readied the business execution strategy for identified areas such as disbursements,” said Arun Alagappan, Managing Director of the company, at the company’s Q4 investor conference call. “We have been in constant interaction with auto OEMs in assessing their strategy and are planning our action to sync with their moves,” he said. - Business Line
🍒 Canara HBSC OBC Life Insurance names Deven Sangoi as CIO : Canara HSBC Oriental Bank of Commerce has named Deven Sangoi as its new Chief Investment Officer. The appointment will come into effect from 1st June 2020. HSBC Oriental Bank of Commerce, a joint venture between Canara bank, HSBC Insurance (Asia Pacific) Holdings Limited and Punjab National Bank Canara HBSC OBC Life Insurance names Deven Sangoi as CIOAs a part of his new appointment, Sangoi will be managing investment assets of the company, both equity and fixed income. Anuj Mathur, MD & CEO, Canara HSBC Oriental Bank of Commerce Life Insurance said, “The company management is confident in the experience and exposure that Deven has in his career which will contribute to the company’s growth.” - bfsi.eletsonline.com
🍒 Bank of China starts India operations : Bank of China has started its India operations with a first branch in Mumbai. The is one of the 4 largest state-run commercial banks in China. The bank said in a statement the launch in India comes after a series of successful meetings between Indian prime minister Narendra Modi and Chinese president Xi Jinping in 2018 to strengthen the strategic engagement between the 2 countries. The bank started its operations to facilitate financial transactions related to corporate banking in India. The 107-year-old bank has been designated as a Global Systemically Important Bank for 8 consecutive years. The bank had signed a memorandum of understanding with State Bank of India to facilitate corporate clients of both the banks to access each other’s banking products and services, which will lead to a mutually beneficial relationship. - bankingfrontiers.com
🍒 India's forex reserves surge to all-time high of $493.48 billion : The country's foreign exchange reserves surged $3.43 billion to a fresh all-time high of $493.48 billion for the week ended May 29 on a handsome accretion of the core currency assets, the Reserve Bank of India (RBI) said on Friday. The reserves, which are counted as a key strength as the country faces the economic impact of the COVID-19 pandemic, had risen by $3 billion to an all-time high of $490.044 billion in the previous week. During the week ended May 29, foreign currency assets, a major component of the overall reserves, increased by $3.50 billion to $455.21 billion, data from the RBI showed.
🍒 Sensex ends 306 points higher; SBI jumps 8 per cent on results : Equity benchmark Sensex rallied 307 points on Friday, propelled by gains in index-heavyweights HDFC Bank, ICICI Bank and SBI. After hittng a high of 34,405.43, the 30-share index settled 306.54 points or 0.90 per cent higher at 34,287.24.Similarly, the NSE Nifty rose 113.05 points or 1.13 per cent to 10,142.15.State Bank of India (SBI) was the top gainer in the Sensex pack, surging around 8 per cent, after the country’s largest lender reported an over four-fold jump in standalone net profit at Rs 3,580.81 crore for the March quarter.Tata Motors, Tata Steel, Bajaj Finance, HDFC Bank, NTPC, Axis Bank and ICICI Bank also ended with firm gains.On the other hand, TCS, HUL, Bajaj Auto and Infosys were among the laggards.
🍒 SBI share price rises 7% on strong Q4 number : State Bank of India (SBI) share price rose 7 percent on June 5 after the lender posted strong numbers in the March quarter. The company reported a standalone profit of Rs 3,580.81 crore against a profit of Rs 838.4 crore. Net interest income declined 0.8 percent year-on-year to Rs 22,766 crore due to a moderate loan growth at 6.4 percent. Net profit included Rs 2,731.34 crore on sale of a certain portion of investment in the subsidiary SBI Cards and Payment Services. - moneycontrol.com
🍒 Gold falls Rs 71 to Rs 46,696, down 0.49% for the week : Gold prices slipped Rs 71 to Rs 46,696 per 10 gram in the Mumbai bullion market on June 5 tracking weak global cues and ahead of US non-farm payrolls data. The metal was down Rs 233, or 0.49 percent, for the week. The rate of 10 gram 22-carat gold in Mumbai was Rs 42,774 plus 3 percent GST, while 24-carat 10 gram was Rs 46,696 plus GST. The 18-carat gold quoted at Rs 35,134 plus GST in the retail market. Silver prices fell Rs 130 to Rs 47,800 per kg from its closing on June 4.
🍒 Indian rupee settles on a flat note, slips 1 paisa to 75.58 against US dollar : The rupee surrendered all intra-day gains to provisionally close on a flat note at 75.58 against the US dollar on Friday as investors looked for cues to move forward and take positions.At the interbank forex market, the rupee opened strong at 75.38, but later pared gains and finally settled at 75.58 against the US dollar, down 1 paisa over its last close of 75.57.
🍒 Shares of Central Bank of India in Stock Market : 100% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, shares closed at Rs.16.47 against Prev Close Rs.15.94. In NSE, shares closed at Rs.16.45 against Prev close Rs.15.95.
All the Best… Have a Good day
