☕ 30.06.2020: Today's Banking / Financial News at a Glance
🍒 Central Bank of India Q4 net loss narrows to ₹1,529 crore : Central Bank of India’s net loss narrowed to ₹1,529 crore in the fourth quarter ended March 31, 2020, against ₹2,477 crore in the year-ago quarter. The public sector bank, which is currently under prompt corrective action, had reported a net profit of ₹155 crore in the quarter ended December 31, 2019. Net interest income (difference between interest earned and interest expended) was up 20 per cent year-on-year at ₹1,926 crore (₹1,603 crore in the year-ago quarter). Other income, comprising commission/ exchange, profit on sale of investments, recovery in written-off accounts and profit on exchange transactions, was down 30.51 per cent y-o-y at ₹795 crore (₹1,144 crore in the year-ago quarter). Operating profit was down 66 per cent at ₹517 crore (₹1,519 crore in the year-ago quarter). Provisions : Loan-loss provision burden came down 64 per cent y-o-y to ₹1,628 crore (₹4,583 crore). However, provision on investments rose 65 per cent y-o-y to ₹445 crore (₹270 crore). Provision on standard assets, too, rose to ₹167 crore against a write-back of ₹89 crore in the year-ago period. The bank, as a prudent measure, has made an additional provision of ₹307 crore in respect of one borrower classified as substandard asset (NPA) in the quarter ended March 31due to uncertainty of recovery. As per the notes to accounts, Central Bank extended moratorium on advance accounts of ₹33,577 crore, which were special mention account (SMA)/overdue category as on March 1. Further, it has extended the benefit of asset classification in advances accounts having outstanding of ₹2,865 crore and has made provision of ₹143 crore on these advances amount to during current quarter. Gross non-performing assets (NPAs) declined to 18.92 per cent of gross advances as of March-end 2020 against 19.99 per cent as of December-end 2019. Net NPAs position improved to 7.63 per cent of gross advances as of March-end 2020 against 9.26 per cent as of December-end 2019. - Business Line
🍒 IOB converts landmine of NPAs into goldmine, says CEO : Indian Overseas Bank (IOB), which has been under the Reserve Bank of India’s prompt corrective action (PCA) since October 2015, is now out of the woods, says Karnam Sekar, MD and CEO. He strongly feels that the regulator may not have second thoughts on taking the bank out of the PCA as it has diligently undertaken course correction to ensure that it is not in breach of any of the risk thresholds. The ‘landmine’ of non-performing assets (NPAs) in the public sector bank has now been converted into a ‘goldmine’ due to aggressive provisioning over the last few quarters, emphasised Sekar in an interview with BusinessLine. The bank now has to only dig (undertake recovery) so that it can write-back the provisions to bolster the bottomline every year, he added. In an interesting twist of fate, the Sri Venkateswara Agricultural University (Tirupati) graduate will retire on June 30 from the very bank that handed him his first job appointment letter as Probationary Officer (PO) in 1983. Sekar, however, started his 37-year long banking career with State Bank of India in the same year. - Business Line
🍒 Top public sector banks have loans worth at least ₹7.9 tn under moratorium : The top five state-owned banks in India have at least ₹7.9 trillion of loans under moratorium, including loans to borrowers whose loans became stressed even before the Covid-19 pandemic hit cashflows and repayment capabilities. While this is only a partial picture, and the total amout of loans under moratorium for these five banks could eventually be much higher, it does provide an early indication of Covid-19's impact on repayment capabilities. The five banks are State Bank of India (SBI), Bank of Baroda (BoB), Punjab National Bank (PNB), Bank of India and Canara Bank. Also, in the absence of any standard disclosure format, different banks have used different metrics for moratorium disclosures. - Live Mint
🍒 COVID-19 impact: RBI may opt for loan recast for select sectors : The Reserve Bank of India (RBI) has begun spadework for a one-time loan restructuring scheme for some sectors severely hit by the COVID-19 pandemic, according to sources. The Indian Banks' Association (IBA) and many other bodies have made representation to both the government and the RBI for the one-time restructuring in the wake of massive disruptions caused by the pandemic. The central bank has taken note of all the suggestions, and a detailed examination of various recommendations are being undertaken, the sources said.Based on the assessment, contours would be framed for the sector that may be eligible for the loan recast, the sources said adding that something in this respect should come towards the end of August when the six-month moratorium comes to an end. Some of the sectors that may compete for loan recast are hospitality, tourism, aviation and construction. - economic times
🍒 RBI to conduct fresh OMO purchase of govt securities : The Reserve Bank of India (RBI) has decided to conduct simultaneous purchase of Government Securities (G-Secs), maturing between 2027 and 2031, and sale of 182 day and 364 day treasury bills (DTBs) under Open Market Operations (OMO) for ₹10,000 crore each on July 2. The decision to conduct special OMO follows review of current and evolving liquidity and market conditions, the RBI said in a statement. Specifically, the central bank will be purchasing four G-Secs or GS – 6.79 per cent GS 2027; 7.26 per cent GS 2029; 6.68 per cent GS 2031; and 6.57 per cent GS 2033 – using the multiple price auction method aggregating ₹10,000 crore. The RBI said there is no security-wise notified amount. The RBI will be selling four DTBs – two 182 DTBs maturing on October 15 and October 22, 2020; and two 364 DTBs maturing on April 22 and April 29, 2021. The RBI said there is no security-wise notified amount. - Business Line
🍒 Axis Bank appoints LIC MD T C Suseel Kumar on its board : Axis Bank on Monday appointed Life Insurance Corporation of India (LIC) managing director T C Suseel Kumar on its board as non-executive member. LIC is one of the promoters of Axis Bank. The proposal relating to the appointment of Kumar as the additional non-executive (nominee) director of the bank will be subject to the approval of shareholders at the 26th Annual General Meeting, Axis Bank said in a regulatory filing. - Financial Express
🍒 Yes Bank to auction Essel, SKIL Infra properties in July to recover dues : Yes Bank will next month auction properties of Essel group firm Essel Infraprojects and SKIL Infra to recover dues of Rs 1,368.16 crore. The private bank on July 8 will auction properties owned by Essel Infraprojects in Mumbai. It has also put under the hammer properties owned by another group firm Rama Associates. It selling properties to recover dues of Rs 556.53 crore, according to public notice by Yes Bank. The bank took symbolic possession of their properties on January 8 and 10, 2020, the notice said. The sale of immovable assets is under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002. "The e-auction will take place on July 8, 2020, for recovery of Rs 556,52,30,349.63 as on November 6, 2019, together with further interest, costs, charges and expenses thereon with effect from November 7, 2019, due to the secured creditor from Essel Infraprojects Ltd (borrower or mortgagor 1) and Rama Associates Ltd (mortgagor 2)," according to the auction notice. - Business Line
🍒 Dhanlaxmi Bank chairman resigns 8 months before end of tenure : Kerala-based private sector lender Dhanlaxmi Bank said on Monday that Sanjeev Krishnan, part-time chairman and independent director has resigned from his role, with eight months of his term still remaining. The bank said in a regulatory filing on Monday that the Krishnan has resigned with effect from 29 June, citing personal reasons. He was appointed on the board of the bank in February 2018. Speaking to Mint over phone, Krishnan said that the Reserve Bank of India (RBI) had appointed him to effect a turnaround in the bank and he has now resigned after the bank made profit of ₹65.78 crore in FY20. “I was appointed for a very specific purpose, which I now think I have been able to achieve and therefore did not want to continue in my post," said Krishnan. - Live Mint
🍒 RBI needs to revisit policy restricting big corporates from promoting banks: R Gandhi : Former RBI deputy governor R Gandhi on Monday said the central bank needs to relook at rules restricting large corporates from promoting banks and allow single entity to hold up to 26 per cent by having the necessary safeguards. He said the needs and aspirations of the Indian economy make it necessary to look at sources of large capital from entering the banking fray, so that large projects can be supported and also pitched for a renewed thrust to be given to the wholesale banks model.Gandhi, who used to take care of the critical banking regulation and supervision functions at the Reserve Bank, said in the last four years since the central bank made licensing for universal 'on-tap', no serious application has been received for floating banks.The comments come in the backdrop of the RBI forming an internal working group to look into private bank ownership and control earlier this month, which will look at promoters' holding, requirement of dilution, control and voting rights of private banks. "In my view, obviously, such a serious stake as 26 pc for a promoter or a strategic investor will certainly be good for the long term interest of the bank and banking industry," Gandhi said, speaking at a seminar organised by EPS, a payment system company. - economic times
🍒 RBI seeks extension for Monetary Policy Committee members : The Reserve Bank of India is seeking extension of the tenure of external members on its rate-setting panel until March due to the Covid-19 pandemic, government officials with knowledge of the matter said. The central bank has written to the Finance Ministry and the letter is under consideration, the officials said, asking not to be identified as the matter is not public. Three of the six-member Monetary Policy Committee are external representatives and their appointment is for a term of four years and they are ineligible for re-appointment, according to rules.The term of academics Chetan Ghate, Pami Dua and Ravindra Dholakia -- the external members appointed to the MPC in 2016 with a mandate to target consumer prices within a range of 2%-6% -- is due to end in September. RBI Governor Shaktikanta Das, his deputy Michael Patra and executive director Janak Raj are the others who make up the panel. Spokesmen for the Finance Ministry as well as that of the central bank were not immediately available for a comment. - economic times
🍒 Fintech, digital lenders launch schemes for MSME credit : As banks are being prodded by the government to extend liquidity support to micro, small and medium enterprises (MSMEs), a number of digital lenders and non-bank finance companies are jumping aboard to offer fast credit solutions to these firms. In recent weeks, many such players have announced plans to provide funding to the sector, which needs ready cash solutions to restart operations after the Covid-induced lockdown. For instance, U GRO Capital, a technology-first, small-business lending platform, plans to roll out an end-to-end digital lending platform for the sector and plans to reach out to five lakh MSME clients. To be launched on July 1, the Sanjeevani platform will offer unsecured loans between ₹10 lakh and ₹25 lakh for a duration of two to 36 months, and secured loans between ₹50 lakh and ₹2 crore for seven to 10 years. It also plans to offer an in-built, up-front, moratorium up to three months to aid businesses whose working capital cycles have been disrupted either by supply-chain breakages, labour issues or adverse cash flows during the national lockdown. - Business Line
🍒 HDFC Bank plans to raise up to Rs 50,000 crore through bond issuances : Private sector lender HDFC Bank plans to raise up to Rs 50,000 crore by issuance of unsecured perpetual debt Instruments, Tier II Capital Bonds and Long Term Bonds in the domestic market in one or more tranches. The bank will consider "to Issue Unsecured Perpetual Debt Instruments (part of Additional Tier I capital), Tier II Capital Bonds and Long Term Bonds (financing of infrastructure and affordable
housing) on a private placement basis and in this regard to consider and, if thought fit, to pass the following resolution, as a special resolution," it said. The plan is among the agenda items listed for the annual general meeting on July 18, the bank said. The agenda also includes the appointment of Renu Karnad as a non-executive director and reappointment of Kaizad Bharucha as an executive director. - Moneycontrol.com
🍒 Bullish on India, Mastercard plans to invest $1 billion in next five years : Mastercard, a technology company in the global payments industry, remains committed to invest $1 billion in India over the next five years despite ongoing Covid-19 challenges. The proposed investments, which will be on top of the $1 billion that Mastercard invested in Indian market in the last five years, will be focussed on building digital payment infrastructure and providing technology and innovation in the digital payments space, said Vikas Varma, Chief Operating Officer, South Asia, Mastercard. “Mastercard remains bullish in this market and completely relentless in the way we commit ourselves to the growth potential of the Indian market. The current Covid-19 situation may have led to volume contraction (in April to June quarter), but in general, we don’t see a long-term impact whatsoever from digital payments standpoint brought about by Covid-19. If anything, consumers will become more savvy and smarter and pay more heed to new forms of payments that are more convenient and more safe. There will only be more digital payments,” he told BusinessLine.- Business Line
🍒 Equitas SFB to offer gold loans to customers : Equitas Small Finance Bank is offering gold loans to customers to meet their cash requirements. “Loans secured by gold jewellery of customers, repayable by monthly instalments or interest modes scheme rather than on one-time repayment basis only. Average ticket size of loans is in the range of ₹30,000 to ₹40 lakh. The maximum loan tenure for any scheme is 24 months,” it said in a statement on Monday. The gold loan is processed through easy documentation and instant cash is available. NACH repayment is also available for this product. Customers can avail this loan by visiting a nearest branch of Equitas SFB, it further said, adding that customers availing gold loans can repay through EMIs and Equitas SFB also offers overdraft facility on this product. - Business Line
🍒 Too-big-to-fail banks mostly a thing of the past, say regulators : Reforms to the global financial system following the banking crisis a decade ago have cut the risk of taxpayers having to rescue lenders again but some gaps still need plugging, the Financial Stability Board (FSB) said on Sunday. After the crisis the FSB, which coordinates regulation for the Group of 20 rich and emerging economies (G20), introduced rules that require the world's biggest banks like Goldman Sachs, HSBC and Deutsche Bank, to issue special debt that can be written down in a markets meltdown. This and other reforms sought to prevent banks being "too big to fail" - when governments ride to their rescue if they are in serious trouble. - Live Mint
🍒 Ex-RBI governor Rangarajan gets lifetime achievement award on Stats Day : Former Reserve Bank of India governor C Rangarajan was on Monday conferred with the lifetime achievement award for his contribution to statistics on the occasion of Statistics Day. In his acceptance speech, Rangarajan highlighted the importance of credibility of official statistics.Besides heading RBI and the Prime Minister’s Advisory Council, Rangarajan was chairman of the National Statistical Commission, set up in 2000 to review the statistical system.Speaking on the occasion, chairman of the Economic Advisory Council to the Prime Minister, Bibek Debroy, said Covid-19 has raised the issue of paucity of government expenditure and the need for its re-prioritization towards the health sector Chief statistician Pravin Srivastava said the government will launch e-Sigma that will capture data using mobile devices. - economic times
🍒 Govt may get RBI to monetise fiscal deficit in second half of FY21 : After sidestepping the idea for the first half (H1) of 2020-21 (FY21), the Centre is now considering direct monetisation of its fiscal deficit by the Reserve Bank of India (RBI) in the second half (H2), Business Standard has learnt. “It is a high possibility,” said a top government official, when asked if the Centre was considering direct deficit monetisation. “In the latter half of the year, we will have a clearer picture of the economic damage the Covid-19 pandemic has unleashed, and may require further resources to provide support to the economy,” the official added. A final decision will be taken before the borrowing calendar for October 2020-March 2021 is announced in late September. Officials say the borrowing plan for April-September has already been factored in by the markets, even after a hike in the programme. - Business Standard
🍒 PFRDA introduces OTP-based onboarding for NPS scheme : Pension fund regulator PFRDA on Monday said it has introduced one-time password (OTP) based onboarding facility for the National Pension System (NPS) scheme. In its endeavour to provide digital solutions, the Pension Fund Regulatory and Development Authority (PFRDA) has already enabled the opening of online NPS account in a paperless manner through e-signature, it said in a statement. To further facilitate ease of NPS Account opening, the subscribers are now permitted to open their NPS account through OTP also, PFRDA said. - Business Line
🍒 RBI liquidity support helps equities, not debt: Report : Unprecedented liquidity may have led to a rally in equities, but that's not trickling down to loans and bonds market with the spread between the benchmark government bond yields and a triple AAA firm's loan rates remaining higher than what it was before Covid 19 breakout, says a report by State Bank of India economist. SBI's analysis shows that the spread between benchmark government bond yield and a triple AAA firm's loan rate in May was over 100 basis points (one bps in 0.01 per cent) compared to 90-100 bps before COVID-19. " The data points to increase in caution and risk perception is high towards corporate loans compared to equities " said S K Ghosh, group chief economist at SBI. " As a result, we are seeing money moving to equities" But in line with the global market recovery and RBI liquidity support of over Rs one lakh crore, Indian stock market is rebounding gradually, despite weak economic activity, slow demand revival, weak corporate earnings and unrest at international border, the SBI research report said. - economic times
🍒 GIC Housing Finance Q4 profit halves to Rs 26 crore : GIC Housing Finance on Monday reported a 48 per cent decline in its net profit to Rs 26.40 crore for the fourth quarter ended March 31. The company had posted a net profit of Rs 50.9 crore in the January-March quarter of 2018-19. Its total income also came down to Rs 317.08 crore, compared with Rs 324.31 crore in the year-ago period, GIC Housing Finance said in a regulatory filing. - Moneycontrol.com
🍒 Gold prices surge to near record high of Rs 48,554 per 10 gram, silver jumps : Gold prices climbed Rs 320 to Rs 48,554 per 10 gram in the Mumbai bullion market on weakness in the dollar and firm global cues. The precious metal edged higher as a surge in coronavirus cases worldwide deepened worries of a global economic recovery, boosting safe haven demand. The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 36,416, Rs 44,475 and Rs 48,554 plus 3 percent GST. Silver prices jumped Rs 280 to Rs 48,565 per kg from its closing on June 26.
🍒 Rupee rises 9 paise to 75.56 against US dollar : The rupee opened on a flat note and rose nine paise to 75.56 against the US dollar in early trade on Monday as weak greenback restricted the losses stemming from concerns over rising Covid-19 cases. The rupee opened on a flat note at the interbank forex market at 75.64 against the US dollar, then gained some ground and touched 75.52 against the US dollar, before being quoted at 75.56, up 9 paise over its last close.
🍒 Sensex, Nifty end lower in volatile day : Equity benchmark Sensex ended over 200 points and the Nifty has lost 70 pointson Monday dragged by losses in index-heavyweights Axis Bank, Tech Mahindra, SBI, L&T, IndusInd Bank, Bajaj Finance ICICI Bank and Infosys amid negative cues from global markets. The 30-share index ended 209.75 points, or 0.60 per cent, lower at 34,961.52, while the NSE Nifty fell 70.60 points, or 0.68 per cent, to end at 10,312.40.Axis Bank was the top loser in the Sensex pack, dropping around 5 per cent, followed by Tech Mahindra, IndusInd Bank, ICICI Bank, SBI, L&T and Infosys. On the other hand, Hindustan Uni Leve, ITC, Sun Pharma, M&M, Bharti Airtel and Kotak Bank were among the gainers.
🍒 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.20.27 against Prev Close Rs.19.79. In NSE, shares closed at Rs.20.25 against Prev Close Rs.19.80..
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