☕ 20.06.2020: Today's Banking / Financial News at a Glance

🍒 PSBs disburse 52% of the loans sanctioned under emergency credit line guarantee scheme : tate-owned lenders have sanctioned loans worth ₹40,416 crore under the emergency credit line guarantee scheme, out of which, 52% of the credit has already been disbursed, as of June 18, the finance ministry said. “As of 18 June 2020, PSBs have sanctioned loans worth ₹40,416 crore under the 100% Emergency Credit Line Guarantee Scheme, out of which ₹21,028.55 crore has already been disbursed," the finance minister Nirmala Sitharaman’s office said in a tweet on Friday. The government has been prodding banks to increase credit disbursal to support small businesses as the imposition of the nationwide lockdown disrupted businesses and brought economic activity to a standstill. Since the beginning of the month, Sitharaman already met heads of public and private sector banks, as well as non-bank lenders to implement ECLGS to provide liquidity support to small businesses. The minister had also urged them to maintain proactive outreach at branch level and keep forms for ECLGS simple and formalities at minimum. - Live Mint

🍒 Corona impact: Union Bank of India says profitability to be impacted in Q1 & Q2 : Public-sector lender Union Bank of India on Thursday said its profitability in the June and September quarters may be impacted due to slower economic activity during the lockdown period amid the Covid-19 pandemic. The lender has provided the disclosure after markets regulator Securities and Exchange Board of India (Sebi) asked companies to make detailed disclosures about the impact of the novel coronavirus pandemic on their businesses. Bank of India had also disclosed earlier that its profitability would be impacted in the first half of financial year 2021. Union Bank of India, however, maintained that the bank was adequately capitalised to take care of current and future operations. The bank also said it expected normalcy to be restored by third and fourth quarters of FY21. “Though there was an impact on recovery, loan default risk has been largely minimised on account of grant of moratorium,” Union Bank of India said. Reserve Bank of India (RBI) had granted moratorium to borrowers for three months from March 1, which was further extended till August 31 by the regulator. Union Bank had provided moratorium to all its customers, unless a customer gave consent for paying instalments. - Financial Express

🍒 Bank credit grows 6.24 percent, deposits rise 11.28 percent :  Bank credit and deposits grew 6.24 per cent and 11.28 per cent to Rs 102.54 lakh crore and Rs 139.55 lakh crore, respectively, in the fortnight ended June 5, according to the latest data from the Reserve Bank of India. In the fortnight ended June 7, 2019, bank loans had stood at Rs 96.51 lakh crore and deposits at Rs 125.40 lakh crore. On a fortnightly basis, bank advances grew 0.3 per cent or Rs 32,022.49 crore to Rs 102.54 lakh crore in the week to June 5 as against Rs 102.22 lakh crore in the week ended May 22, 2020.Deposits grew 0.9 per cent, or Rs 1.25 lakh crore, on a fortnightly basis, the RBI data showed. In a recent report, Crisil Ratings had said that bank credit growth is likely to nosedive to a multi-decadal low of 0-1 per cent this fiscal as economic activity is sharply impacted by the COVID-19 pandemic. - economic times

🍒 Government scheme loans have higher NPAs, corporate loans 'under control', says SBI chief Rajnish Kumar : Small-ticket government scheme loans have a higher number of bad loans than corporate loans, State Bank of India (SBI) Chairman Rajnish Kumar said, Speaking at the Bharat Chamber of Commerce’s e-session on the banking system, he said corporate bad loans are now "under control", Business Standard reported.“NPAs in Kisan Credit Card (KCC) loans are at par with Mudra loans. In Mudra loans, the gross NPA was close to 15 percent. However, with a new digital model in place, NPAs stood at close to 10 per cent," he pointed out. Singh also spoke about loan moratoriums, noting that enthusiasm for the scheme was subdued as borrowers feared "cost implications" and "increased liability" at this point of time. Commenting on loans disbursed to medium, small and micro enterprises (MSMEs), Singh said SBI has over the past 15 days disbursed 60 percent of the loans sanctioned to 2 lakh MSMEs, adding: “Our data analysis shows that MSMEs are managing this crisis very well.” He also noted that businesses are "near to normal" after Unlock 1.0 – operating at 75-85 percent capacity and some industries also experiencing growth in exports. "But more investment in the infrastructure sector was needed for growth to come back. Sectors like aviation, tourism and hospitality remained under stress," he said. - moneycontrol.com

🍒 Will ensure banks pass on rate cut benefits to consumer: Finance Minister Nirmala Sitharaman to India Inc : Finance Minister Nirmala Sitharaman has assured that she will ensure banks pass on the rate cut benefits to consumers, so the interest burden on them eases, industry body PHDCCI said on Friday. She was addressing members of the PHD Chamber of Commerce through a video conference here. "Hon'ble @FinMinIndia @nsitharaman assured that she will personally ensure that #banks transfer benefits of the #ratecuts to end consumers at the earliest," PHDCCI said in a tweet. Last month, the RBI slashed the benchmark repurchase (repo) rate, the price at which banks borrow from the central bank, by 40 basis points to a historic low of 4 percent. RBI Governor Shaktikanta Das had said monetary policy transmission to banks' lending rates has continued to improve. "The 1 year median marginal cost of funds-based lending rate (MCLR) declined by 90 bps (February 2019-May 15, 2020). The weighted average lending rate (WALR) on fresh rupee loans has cumulatively declined by 114 bps since February 2019, of which 43 bps decline occurred in March 2020 alone," he had said. The finance minister also assured that the government will continue to respect and facilitate the wealth creators of India to restore job creation and promote economic growth. "Hon'ble @FinMinIndia @nsitharaman request @phdchamber to continue its good to work in sending continuous representations to improve & restart the industry effectively & continue development & economic growth of #India," it said. Maximum governance and minimum government intervention is the main objective promoted by the government, she said.- moneycontrol.com

🍒 RBI committee on ATMs mooted charging customers for withdrawals above ?5,000 : A Reserve Bank of India (RBI) committee on ATM fees had recommended charging customers for every withdrawal above ?5,000, according to a copy of an unreleased report obtained through a Right to Information (RTI) query. "To discourage high cash withdrawals from ATMs, only cash withdrawal transactions up to (and including) ?5,000 to be considered for free transactions. Banks may levy charges on the customer for every individual transaction above ?5,000," said the report of the committee led by then chief executive of the Indian Banks’ Association, V G Kannan. It was submitted to the central bank on 22 October, 2019, but never released.
When Srikanth L had sought the report under RTI, the public information officer (PIO) had rejected the request saying it was held by RBI in fiduciary capacity and was exempt under Section 8 (1) (e) of the RTI Act. The report of the committee to review ATM interchange fee structure was made available only after an appeal against the RBI response. Mint has reviewed a copy of the report placed in the public domain by Srikanth. "Fiduciary capacity does not arise in this case, as the committee itself was formed by RBI and announced as part of Monetary Policy Committee on 6 June, 2019. This is a committee report and the same has to be made public, as with other committee reports of RBI," the first appellate authority had agreed with the appeal. According to the report, the cost of operating ATMs has gone up whereas the interchange fees and the cap on customer ATM usage charges has not been reviewed since 2012 and 2008, respectively. The committee had also expressed concern over the lack of new ATM deployments especially in semi-urban and rural centres. - Live Mint

🍒 NPAs rise in tandem as MFIs gross loan portfolios grow by 29% in FY20 : Even as the gross loan portfolio of the microfinance sector registered a growth of 29.26 per cent on a year-on-year basis last financial year, the portfolio at risk continued to be on the higher side. According to data released by MFIN (Microfinace Institutions Network), the microfinance representative body, the gross loan portfolio (GLP) of the MFI sector as on March 31, 2020 was Rs 2,31,788 crore, against 1,79,314 crore as on 31st March 2019. At the same time, the PAR>30 (portfolio of risk for more than 30 days), increased from about one per cent at the end of Q4 of FY19 to nearly 1.79 per cent at the end of Q4 of FY20. “The PAR figures continue to show an increasing trend as compared to previous quarters, but the portfolio health is still within acceptable limits,” according to MFIN publication. During FY20, NBFC-MFIs received a total of Rs 42,150 crore in debt funding (from banks and other financial Institutions). This represents a growth of 33 per cent compared to FY18-19, when they received Rs 31,688 crore. - Business Standard

🍒 RBI doubles withdrawal limit for PMC depositors : Reserve Bank of India (RBI) has doubled the withdrawal limit for depositors of Punjab & Maharashtra Co-operative Bank (PMC) to Rs 1 lakh from Rs 50,000, it said in a press release. With this relaxation 84% of the bank's depositors will be able to withdraw their entire account balance up from 78% earlier."Further, on a review of the bank’s liquidity position, its ability to pay the depositors and with a view to mitigating the difficulties of the depositors during the prevailing COVID-19 situation, it has also been decided to further enhance the limit for withdrawal to Rs 1,00,000 per depositor, inclusive of Rs 50,000 allowed earlier," the RBI added. The bank has been placed under RBI restrictions since September last year and its withdrawal limit was last raised in November. On Friday, RBI also extended the directions on the bank for a further period of six months from June 23, 2020 to December 22, 2020 subject to review. - economic times

🍒 HDFC looking to raise up to Rs 14,000 crore to bolster liquidity and expand business : India’s largest private sector mortgage financier Housing Development Finance Corporation (HDFC Ltd) is all set to join fellow heavyweights like RIL, Bharti Airtel and Kotak Mahindra Bank and raise capital to strengthen its balance sheet. A committee of directors of the firm today approved a massive fund raising exercise of up to Rs 14,000 crore in one or more tranches through a combination of financial instruments. Earlier this week, Moneycontrol had exclusively reported about the mega fundraising plans of the Deepak Parekh-led housing finance powerhouse. The report had said HDFC Ltd  was looking to raise  around Rs 12,000 crore in multiple tranches via a combination of a QIP and an NCD (non-convertible debenture ) + warrant or FCCB ( foreign currency convertible bond route) . It had added that the firm wanted to boost its capital buffers due to the uncertainty caused post the outbreak of COVID-19 and potential concerns on asset quality. - moneycontrol.com

🍒 Bandhan Bank says collection efficiency improves to 55% in second week of June  : Private sector lender Bandhan Bank said that its collection efficiency has improved to around 55 percent in the second week of June with the easing of lockdown restrictions allowing field workers to reach out to borrowers at the grassroots. The bank with predominantly high microfinance exposure has a 26000-strong field workforce who form the backbone of its repayment collection mechanism. "Field collections are improving. It would have been even better had the cyclone Amphan not happened," Bandhan Bank managing director Chandra Shekhar Ghosh told ET. "We started collection from the first week of June while we had offered a moratorium on loan repayment to all micro borrowers in the first phase till May," he said. The bank on Thursday held a video call with investors to assure the market about its repayment efficiency among others.Its stock price jumped over 4.5 percent to Rs 284 at 2 pm on BSE. - economic times

🍒 Former RBI Governor Urjit Patel named NIPFP chairman, to take charge from June 22 : Former Reserve Bank governor Urjit Patel will take charge as chairman of the National Institute of Public Finance and Policy (NIPFP) from June 22, the economic think tank said on Friday. Patel will replace Vijay Kelkar, who assumed office on November 1, 2014 “National Institute of Public Finance and Policy is privileged to have Dr. Urjit Patel, former Reserve Bank Governor, as its Chairperson for a four-year term commencing June 22, 2020,” the economic think tank said in a statement. “NIPFP records its deep sense of appreciation and gratitude for the significant contributions made by the outgoing Chairman, Dr. Vijay Laxman Kelkar during his tenure which has immensely helped the institute towards scaling to its present level of growth and effectiveness,” it added.- moneycontrol.com

🍒 Government invites bids to appoint pre-Transaction Advisor for LIC IPO : The government on Friday initiated the process of selling part of its stake in the nation’s largest insurer, Life Insurance Corporation of India. As on date, it is fully owned by the Central Government. The insurer’s initial public offer (IPO) is expected to hit the market during the second half of the current fiscal. The Department of Investment and Public Asset Management (DIPAM) under the Finance Ministry issued a Request for Proposal (RFP) regarding engagement of pre-Transaction Advisors for partial disinvestment of the government’s equity shareholding in LIC through an IPO. The proposal is to engage up to two pre-IPO Transaction Advisors from reputed professional consulting firms/ investment bankers/ merchant bankers/ financial institutions/ banks, independently (not in consortium) for facilitating or assisting DIPAM in the preparatory processes leading to the IPO of LIC India. - Business Line

🍒 ICICI Bank divests stake in ICICI Lombard for ?2,250 cr : ICICI Bank on Friday said it has divested 3.96 per cent stake in ICICI Lombard General Insurance Company for ?2,250 crore. Following this, the bank’s shareholding in the insurer stands at approximately 51.9 per cent.While announcing its results for the quarter ended March 2020 on May 9, 2020, the bank had stated that it would look at further strengthening the balance sheet as opportunities arise. Pursuant to the approval of its board, the bank has divested 18,000,000 equity shares of face value of ?10 each of ICICI Lombard General Insurance Company, ICICI Bank said in a filing to BSE. - Business Line

🍒 Microfinance sector surges about 30% in fiscal FY20 :  India's microfinance sector had surged about 30 percent in the fiscal FY20 with loan outstanding reaching to Rs 2.32 lakh crore before Covid-19 and lockdown started making its impact. Out of this, gross loan portfolio of NBFC-MFIs stood at Rs 74,371 crore, reflecting a 31 percent rise, the Microfinance Institutions Network (MFIN) said. NBFC-MFIs have a network of 14,275 branches between them. Banks hold about the largest share of micro-credit with total loan outstanding of Rs 92,281 crore, which is about 40 percent of the total portfolio. NBFC-MFIs are the second largest provider with 32 percent share. Small finance banks with Rs 40,556 crore cumulative portfolio have 17.5 percent share with the balance remaining with other NBFCs and small MFIs. The asset liability management (ALM) analysis of NBFC-MFIs shows that they are well placed in terms of ALM across various buckets, MFIN said in a note. "It is evident from the ALM analysis that borrowings of MFIs are of longer term while assets are of shorter-term. As a result, they have a comfortable gap as on March 31 to manage their obligations for the April–June quarter," it said. - economic times

🍒 Veteran banker Pralay Mondal heads to Prem Watsa’s CSB Bank as President : Private sector lender CSB Bank on Friday announced the appointment of Pralay Mondal as the organisation’s President who will lead its retail, SME, operations and IT functions. Mondal will join the bank in September 2020. ET has reported on June 15, that Mondal had quit Axis Bank merely a year after joining as its retail head. Sources indicated that Mondal will eventually be promoted as the CEO of the Thrissur based bank which is majority owned by Canadian Billionaire Prem Watsa. Currently, the bank is headed by CVR Rajendran. - economic times

🍒 Sudden rise in deposits due to higher govt borrowing: Ind-Ra report : The sudden surge in bank deposits is due to a rise in overall borrowings of both the central and state governments, rather than increased savings, India Ratings and Research said in a report on Thursday. While deposit growth at banks has been strong, there has been a concentration of deposits in favour of large banks and away from new-age private banks, regional banks and small finance banks (SFBs), the report added.“As against the common myth, Ind-Ra believes that this growth in deposits has not been on account of a surge in savings. Not only the lockdown has caused a significant decline in the overall purchases, it has also eroded the income and wealth of producers and sellers; therefore, there is almost not much impact on aggregate savings,” the report said. Moreover, even in the normal course, spending happens through the transfer of money between various modes in the banking system, without affecting aggregate deposits (barring a portion of sustained cash-based transactions).Therefore, spending in an economy (other than imports and cash transactions) has almost zero-sum impact on its aggregate banking deposit, India Ratings said. - financial express

🍒 Housing Ministry, SIDBI sign MoU for special micro-credit facility for street vendors : The Ministry of Housing and Urban Affairs (MoHUA) and Small Industries Development Bank of India (SIDBI), on Friday, signed an MoU to engage SIDBI as the implementation agency for the PM Street Vendor’s AatmaNirbhar Nidhi (PM SVANidhi), a special micro-credit facility for street vendors. “As per the MoU terms, SIDBI will implement the PM SVANidhi Scheme under the guidance of the MoHUA. It will also manage the credit guarantee to the lending institutions through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE),” said an official release. - Business Line

🍒 India's forex reserves up by $5.94 billion to hit record $507.64 billion  : India's forex reserves rose substantially by $5.942 billion to touch a life-time high of $507.644 billion in the week to June 12, helped by a significant jump in the foreign currency assets (FCA), RBI data showed. In the previous week ended June 5, the foreign exchange reserves had crossed the half-a-trillion mark for the first time after it surged by a massive $8.22 billion and reached $501.703 billion, according to the weekly data released by the Reserve Bank of India. In the reporting week, the foreign currency assets, a major component of the overall reserves, rose by $5.106 billion to $468.737 billion..- moneycontrol.com

🍒 LIC Housing Fin Q4 profit falls 40% to ?421 cr : LIC Housing Finance Ltd (LICHFL) reported a 40 per cent decline in fourth quarter standalone net profit at ?421 crore against ?694 crore in the year-ago quarter. A 11 per cent year-on-year (y-o-y) increase in total expenses, including finance costs, fees and commission expenses and other expenses, and a 38 per cent rise in tax expense, weighed on LICHFL’s bottomline. The board has recommended a dividend of ?8 per equity share of ?2 each (400 per cent), subject to approval of the members of the company. Net interest income (difference between interest earned and interest expended) declined 9 per cent to ?1,089 crore (?1,202 crore in the year-ago quarter). - Business Line

🍒 Esaf Bank MD elected as Chairman of Sa-Dhan : K Paul Thomas MD and CEO of ESAF Small Finance Bank has been elected as the Chairman of Sa-Dhan, the largest association of community development finance institutions in India.

🍒 The announcement was made at the 22nd annual general meeting of Sa-Dhan. Mukul Jaiswal, MD, Cashpor Micro Credit, was elected as Co-Chair, and HP Singh, CMD, Satin CreditCare Network Ltd, as Treasurer of Sa-Dhan. Paul Thomas said that he is positively looking forward as the Chairman of Sa-Dhan, the oldest organisation of financial inclusion institutions in the country. “Sa-Dhan has played a crucial role in building the standard practice norms for the sector. I strongly believe in the importance of promoting responsible finance to protect the interests of under-served and un-served borrowers,” he said. - Business Line

🍒 PMC Bank: RBI increases withdrawal limit to ?1 lakh : The Reserve Bank of India (RBI) on Friday doubled the limit for withdrawal for the depositors of the troubled Punjab & Maharashtra Co-operative Bank to ?1 lakh per depositor. This increase in limit is inclusive of the ?50,000 withdrawal allowed earlier“With the above relaxation, more than 84 per cent of the depositors of the bank will be able to withdraw their entire account balance,” according to the central bank’s statement. Simultaneously, the validity of RBI’s Directions on the Bank has been extended for a further period of six months from June 23, 2020 to December 22, 2020 subject to review. - Business Line

🍒 City Union Bank shares fall 5% after company posts Q4 loss; stock trading volumes surge : City Union Bank share price fell over 5 percent intraday on June 19 after the company reported a loss for the fourth quarter ended March 2020.  The stock price shed over 44 percent in the last 6 months and was quoting at Rs 129.00, down Rs 7.95, or 5.81 percent at 09:58 hours. It has touched an intraday high of Rs 132.50 and an intraday low of Rs 122.40. - moneycontrol.com

🍒 Indian rupee settles 6 paise lower at 76.20 against US dollar : The rupee settled 6 paise lower at 76.20 (provisional) against the US dollar on Friday as strengthening of the US currency and rising COVID-19 cases weighed on investor sentiment. The rupee opened at 76.28 against the US dollar, regained some lost ground and finally settled for the day at 76.20 against the US dollar, down 6 paise over its previous close. It had settled at 76.14 against the greenback on Thursday.

🍒 Gold rises for second straight day to Rs 47,653, silver slips : Gold prices edged higher for the second successive day by Rs 157 to Rs 47,653 per 10 gram in the Mumbai bullion market, tracking global cues and rupee depreciation. The metal gained as worries grew over coronavirus cases in Beijing and the US. The rate of 10 gram 22-carat gold in Mumbai was Rs 43,650 plus 3 percent GST, while 24-carat 10 gram was Rs 47,653 plus GST. The 18-carat gold quoted at Rs 35,740 plus GST in the retail market. Silver prices fell Rs 265 to Rs 48,095 per kg from its closing on June 18.

🍒 Sensex gains 520 points, Nifty ends above 10,200 : The equity markets on Friday continued its strong momentum to close higher for the second straight day. The BSE Sensex ended 1.53 per cent higher at 34,731 while the Nifty50 index added 1.51 per cent to finish at 10,244.Among the sectoral indices, the Nifty Realty index ended as the best performer, gaining 6.4 per cent. The Nifty Bank, Nifty Auto and Nifty Media ended with gains of over 1.5 per cent each.The sectoral laggards were Nifty IT and Nifty Metal indices. Market breadth was positive in favour of advances with 1,785 stocks on the BSE while 862 ended lower, and 152 remained unchanged.

🍒 Shares of Central Bank of India in Stock Market : 75% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, shares closed at Rs.16.53 against rs.16.39. In NSE, shares closed at Rs.16.55 against Rs.16.45...

All the Best… Have a Good day.