24.09.2020: Today's Banking / Financial News

24.09.2020: Today's Banking / Financial News at a Glance

🍒 RBI says it has no information on loans of top 100 wilful defaulters written off by banks :The Reserve Bank of India said it has no information about loans of the top 100 defaulters and wilful defaulters that banks had written off, just over four months after it had put the total write-off of the largest 50 wilful defaulters at Rs 68,600 crore. “The information sought is not available with us,” the central bank said in a recent response to an RTI petition by a Kolkata-based activist, who had sought details on the loans that had been written off, along with the amount that each of the 100 defaulters and wilful defaulters had owed to banks and the period when the loans to them had been sanctioned and disbursed. “No defaulter information is collected as such by us,” the RBI said, responding to another query, which was part of an RTI petition. ET has seen a copy of the RBI response dated August 31. - Economic Times

🍒 No clamour or rush for restructuring of loan: SBI Chairman, Rajnish Kumar : Contrary to market expectations, there was not too much demand or clamour for restructuring of loans as permitted by RBI recently to beat the COVID-19 related stress, SBI Chairman Rajnish Kumar said. He expects not more than Rs 1.5 lakh crore worth loans would avail restructuring benefit even though people have projected it to be around Rs 8 lakh crore. "On the banking side, what I am saying, there is not too many demand. It may be contrary to what the public discourse is. Reasons could be many. One is lot of clean-up has already happened and lot of deleveraging done. More than the banks, corporates themselves are reluctant to carry the tag of restructuring. That is the feeling I am getting," he said.- Economic Times

🍒 SBI to levy 1% more on working capital under debt restructuring : State Bank of India will charge 1 per cent above the current pricing on working capital loans for limits sanctioned under the resolution framework. Any concessions provided during the resolution period will result in right of recompense (compensation for loss). There will be a change in pricing to offset the cost of additional provisions that the bank has to make for extending the benefits under the resolution, according to SBI’s frequently asked questions for debt recast for non-personal segment. Promoters of units or firm will have to bring in minimum contribution (capital infusion) of 10- 15 per cent of the additional loan facilities sanctioned under the resolution plan. - Business Standard

🍒 55% of customers may seek loan recast: Paisabazaar survey : More than half the customers may approach their banks for loan restructuring, although 40 per cent of those who took the moratorium could afford to pay their EMIs, a new survey by Paisabazaar.com has found. “Fifty-five per cent of the customers responded that they would approach their lender to restructure their loan in some form to provide relief. Though this includes many whose income has not been affected due to the coronavirus pandemic and, hence, their lenders may not find them eligible for a loan recast plan,” said the survey report ‘Dealing with Debt - How India plans to pay EMIs’. A total of 8,616 participants, in the age group of 24-57 years, responded to the survey and had outstanding debt of over ₹1 lakh. The responses were registered from 37 cities. - Business Line

🍒 IDFC First Bank to launch contactless debit card facility next week : IDFC First Bank on Wednesday said it will launch contactless debit card-based payment facility, SafePay, next week allowing transactions up to Rs 20,000 per day. IDFC First Bank is set to launch the digital facility that will allow payments by simply waving one's smartphone against a near field communication (NFC)-enabled PoS terminal, the bank said in a release. Users can simply wave, pay and go, making the payment process not only touch-free but also faster, simpler and safer, it said. The bank also claimed it is the first such facility to be made available in an integrated mobile banking app. - Business Standard

🍒 Compliance officer for banks prescriptive, not right thing: Ex-SBI MD : The prescriptive way of having a dedicated compliance officer is not the right thing and by initiating such a move, which is in line with other countries, the Reserve Bank is making the compliance function as the overall incharge of a lender, a senior banker said on Tuesday. V G Kannan, who served as the chief executive of industry lobby Indian Banks Association till recently after retiring as the managing director of SBI, said the risk function is as important and it cannot be equated with that of compliance. Earlier this month, the RBI asked banks to appoint chief compliance officers (CCO) with a view to getting uniformity in the approach followed by lenders. "The prescriptive way of having a compliance officer may not be the right thing. It should be left to the individual organization depending on their perception of the risks, Kannan said speaking at a NSE webinar. He explained that some banks can be absolutely compliant even without such an officer and also made it clear that he does not wish the banks to be completely non-compliant as well. - Business Standard

🍒 HDFC Bank sets minimum outstanding at ₹25,000 for restructuring retail loans : The country’s largest private sector lender HDFC Bank has set out a minimum outstanding of ₹25,000 for restructuring of retail loans. “Minimum outstanding balance required to convert the card or loan outstanding is ₹25,000,” the lender has answered in the frequently asked questions (FAQs) on loan restructuring. “The reduction of income and its financial impact on the customer will be reviewed by the bank basis the documents or information provided which does show the drop in cash flow due to the Covid-19 impact. The bank will assess the viability of the customer to pay the restructured EMIs basis the documents provided, before granting the restructuring,” it further said, adding that the repayment track record of the customer, and the responses given by the customer while claiming moratorium earlier will also be factored in the restructuring decision. Customers can visit the bank’s website or contact the relationship manager to fill the application. “The link for application will be updated shortly,” it further said. - Business Line

🍒 HDFC to raise up to Rs 5,000 crore by issuing bonds : Mortgage lender Housing Development Finance Corporation Ltd (HDFC) on September 23 said it will raise up to Rs 5,000 crore by issuing bonds on a private placement basis. The issue size for the secured redeemable Non-Convertible Debentures (NCDs) will be Rs 2,500 crore with an option to retain oversubscription of up to Rs 2,500 crore, HDFC Ltd said in a regulatory filing. - Moneycontrol.com

🍒 Parliament passes Labour Bills, making it easier for employers to hire and fire workers : Parliament on Wednesday passed the three key labour reform bills that will provide greater flexibility to employers to hire and fire while ensuring social security for workers. The three bills---- Code on Occupational Safety, Health and Working Conditions, Industrial Relations Code and Social Security Code, were passed in the Upper House by voice vote amid boycott by the opposition over suspension of eight members. Replying to the debate on the three labour reforms bills in the house, labour Minister Santosh Gangwar said: "The purpose of labour reforms is to provide a transparent system to suit the changed business environment."- Economic Times

🍒 A year later, PMC Bank depositors still struggling to get their money back : For depositors of the tainted Punjab and Maharashtra Cooperative (PMC) Bank, the situation is not very different from what it was almost a year ago when the RBI placed withdrawal restrictions on the bank after the mega scam involving misreporting of loans with senior bank officials' involvement came to light. Exactly one year ago, on September 23, 2019, the Reserve Bank of India had superseded the board of the multi-state urban cooperative bank and placed it under various regulatory restrictions after detection of certain financial irregularities. Initially, the RBI had allowed depositors to withdraw Rs 1,000 which was later raised to Rs 1 lakh per account to mitigate their difficulties. In June this year, the RBI had extended the regulatory restrictions on the cooperative bank by another six months till December 22, 2020. - Business Standard

🍒 Morgan Stanley Fund bets big on private banks in India : A Morgan Stanley fund is betting some private-sector lenders in India will emerge from the coronavirus pandemic stronger than others. Kristian Heugh, co-manager of the $4.3 billion Asia Opportunity fund, expects private banks with strong deposit franchise and quality underwriting standards will gain market share from both state-owned lenders and the weaker private ones. “The events of this year are likely to accelerate both these factors strong banks will gain share at a faster pace and the pace of digital adoption has picked up sharply,” Heugh said in an interview. His Asia excluding Japan-focussed equity fund was up 37 per cent this year through August. - Business Line

🍒 JP Morgan says India making progress on global debt index debut : Measures taken by Prime Minister Narendra Modi’s government in opening the sovereign debt market to foreigners have boosted prospects for inclusion in major global indexes, according to JPMorgan Chase & Co. “India is making progress toward opening up its market to foreign investors and establishing a track record for future inclusion in major bond indices, including the GBI-EM Global Diversified Index,” JPMorgan Index Research Team said by email. Reuters on Monday reported JPMorgan had kept Indian bonds out of its flagship indexes. - Business Line

🍒 UTI AMC to launch Rs 3,000 crore-IPO on September 29; SBI, LIC, T Rowe to divest stake : UTI Asset Management Company will launch its initial public offering for subscription on September 29. The company plans to raise Rs 3,000 core via the issue, sources pivy to the matter told Moneycontrol. The public issue will consist of an entire offer for sale of 3,89,87,081 equity shares by State Bank of India, Life Insurance Corporation of India (LIC), Punjab National Bank, Bank of Baroda and T Rowe Price International. State Bank of India, LIC and Bank of Baroda are going to divest 1,04,59,949 equity shares each, while PNB and T Rowe Price International 38,03,617 equity shares each via offer for sale. - Moneycontrol.com

🍒 SEBI bars DHFL promoters from accessing securities market : The Securities and Exchange Board of India (SEBI) has barred the promoters of Dewan Housing Finance Corporation Ltd (DHFL) from accessing the securities market or even associating themselves with any listed company. “The promoters of DHFL during the period from April 1, 2006 to March 31, 2019 namely — Kapil Wadhawan, Dheeraj Wadhawan, Rakesh Kumar Wadhawan, Sarang Wadhawan, Aruna Wadhawan, Malti Wadhawan, Anu S Wadhawan, Pooja D Wadhawan, Wadhawan Holding Pvt Ltd, Wadhawan Consolidated Holding Pvt Ltd, Wadhawan Retail Venture Pvt Ltd and Wadhawan Global Capital Ltd (formerly known as Wadhawan Housing Pvt Ltd) — are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly,” SEBI said in its interim ex-parte order. - Business Line

🍒 RBI to intervene to prevent Rupee gains despite signs of leniency: ICICI : India’s central bank will continue to intervene to prevent any sharp appreciation in the rupee, even after signs of leniency toward currency gains in recent weeks, according to ICICI Bank Ltd. The Reserve Bank of India’s forex strategy has been in sharp focus after it stepped away from dogged dollar buying amid large inflows. The perception that the RBI was easing back on greenback purchases was accentuated by a rare comment from policy makers in late August that the appreciating rupee had helped tackle imported inflation. Inflation has spiked in India, with the headline figure above the upper 6% limit of the RBI’s tolerance band for five months. The central bank has a fine balancing act: It is trying to keep liquidity adequate as the economy slumps, while managing large capital flows and trying to keep inflation in check. “We believe that RBI is cognizant of the fact that an overvalued rupee is an adverse terms of trade for local industries and given the challenges on the growth front, a sharp appreciation of the rupee is not desirable,” said B. Prasanna, group head for global markets sales, trading and research at ICICI Bank Ltd. in Mumbai. - Business Standard

🍒 Gold prices slip for third day in a row to touch Rs 50,327 per 10 gram; silver tanks Rs 1,059 : Gold prices gained for the third straight day by Rs 356 to Rs 50,327 per 10 gram in the Mumbai retail market on firm US dollar and weak global cues. The precious metal prices fell below $1,900/oz on global uncertainties over rising coronavirus cases and delay in fiscal stimulus. The rate of 10 gram 22-carat gold in Mumbai was Rs 46,100 plus 3 percent GST, while 24-carat 10 gram was Rs 50,327 plus GST. The 18-carat gold quoted at Rs 37,745 plus GST in the retail market. Silver prices declined by Rs 1,059 to Rs 58,908 per kg from its closing on September 22.

🍒 Rupee gains marginally against US dollar : The rupee appreciated by one paisa to close at 73.57 (provisional) against the US dollar on Wednesday, as investors turned cautious amid weak domestic equities. At the interbank forex market, the rupee opened weak at 73.59 against the greenback and moved in a close range. It finally settled one paisa lower at 73.57 against the American unit.

🍒 Central Bank of India drops over 5% on QIP plan : The floor price for Central Bank of India's share sale through a qualified institutional placement, which opened on Tuesday, has been set at ₹16.18 apiece. The Bank board will meet on Friday to consider and approve the issue price for equity shares to be allotted to qualified institutional buyers, it said in a notice to the stock exchanges. Earlier, the State-owned Central Bank of India said it would raise up to ₹5,000 crore of equity capital through various modes, including follow on public offer, rights issue or QIPs, to maintain its capital adequacy ratio. The shares of the bank dropped over 5 per cent to trade at ₹16.35.

🍒 Sensex, Nifty end marginally lower; Bharti Airtel down 8% : Extending its losses for the fifth straight session, equity benchmark Sensex ended 66 points lower on Wednesday, tracking weakness in Bharti Airtel, TCS and Bajaj Finance despite mostly positive cues from global markets. After opening on a positive note, the 30-share BSE index pared all intra-day gains to settle 65.66 points or 0.17 per cent down at 37,668.42. Similarly, the NSE Nifty fell 21.80 points or 0.20 per cent to close at 11,131.85. Bharti Airtel was the top laggard in the Sensex pack, tanking around 8 per cent, followed by Tata Steel, IndusInd Bank, NTPC, PowerGrid, ONGC and TCS. On the other hand, Axis Bank, HUL, Infosys, Nestle India and HDFC Bank were among the gainers.