☕22.09.2020: Today's Banking / Financial News at a Glance
🍒 Privatise select PSU banks, dilute role of DFS: Raghuram Rajan : Former RBI Governor Raghuram Rajan on Monday suggested the government to privatise select public sector banks, set up a bad bank to deal with NPAs and dilute the role of Department of Financial Services. The reforms are necessary to ensure growth of the banking government without the periodic boom-bust cycles, said a paper titled 'Indian Banks: A Time to Reform?' co-authored by Rajan and former Reserve Bank Deputy Governor Viral Acharya. "Re-privatization of select PSBs can then be undertaken as part of a carefully calibrated strategy, bringing in private investors who have both financial expertise as well as technological expertise; corporate houses must be kept from acquiring significant stakes, given their natural conflicts of interest," the paper said. "Winding down Department of Financial Services in the Ministry of Finance is essential, both as an affirmative signal of the intent to grant bank boards and management independence and as a commitment not to engage in 'mission creep' when compulsions arise to use banks for serving costly social or political objectives," the paper noted. According to the paper, private asset management and national asset management 'bad banks' should be encouraged in parallel to the online platform for distressed loan sales. "The national public sector 'bad bank' could serve as a vehicle to aggregate loans, create management teams for distressed firms, and possibly buy and hold distressed assets in a sector like power till demand returns. "It could provide fall-back prices for loans sold by PSBs," the paper suggested. - Live Mint
🍒 BBB recommends 13 names for appointment as executive directors in PSU banks : The Banks Board Bureau (BBB) has recommended to the government names of 13 general managers of various public sector banks (PSBs) for appointment as executive directors. BBB, the headhunter for state-run banks and financial institutions, interviewed 28 candidates over a period of two days for vacancies of executive directors. The list of selected candidates would be sent to the Department of Financial Services to get the Appointments Committee of Cabinet (ACC) approval. The Banks Board Bureau interfaced with 28 candidates from various public sector banks for 13 clear vacancies of Executive Directors in PSBs, the Bureau said in a notification on Sunday. The Bureau recommended the names of Swarup Kumar Saha, Debadatta Chand, K Satyanarayana Raju, Nitesh Ranjan, Sangram Keshari Mohapatra, Monika Kalia, Swarup Dasgupta and Karthikeyan M, Ishraq Ali Khan, Vivek Wahi, S Srimathy, B Vijayakumar A and Raghavendra V Kollegal. Rajeev Puri, Imran Amin Siddiqui, Brij Mohan Sharma, Prakash Kumar Sinha, Vikas Kumar and Monoj Das are in the Reserve list, it said. - Business Standard
🍒 State Bank of India kicks off restructuring of retail loans : State Bank of India (SBI), the country's largest bank has kicked off its due diligence for restructuring of retail loans by announcing a two step process to which includes allowing customers to check their eligibility for restructuring through its website. Customers have to enter their loan account number, income pre Covid, current income and also expected income in the near term for the bank to assess whether they are eligible. They will be given a reference number valid for 30 days to visit the bank's branches and chalk out a restructuring plan. "Instead of people coming to branches to check whether they qualify they can just check on the website. For a loan to be eligible we will need to ascertain that Covid has had an impact on the customers income and we will also have to get some confidence that he or she will be able to repay in the future," said CS Setty, managing director, retail and digital banking at SBI. - economic times
🍒 Banks not risk averse, they are being prudent: SBI chairman Rajnish Kumar : Asserting that there is muted demand for loans, SBI Chairman Rajnish Kumar on Monday said banks are not risk averse but they are being prudent in these trying times to avoid a repeat of the post-2008 scenario when there was "dilution" in credit underwriting standards. Data clearly shows that investment in the economy has come down, the head of the country's biggest lender said. "If the capex (capital expenditure) is not happening and investment in the economy is not happening at the same pace, then obviously this is a demand issue and the risk aversion would be where there is a demand and banks are not lending," he said at a virtual event organised by AIMA. - economic times
🍒 SBI opens online window for restructuring retail loans: Here's how to use it : The State Bank of India (SBI) announced today that it has launched an online portal for smooth and hassle-free implementation of restructuring of retail loans such as home loans, auto loans etc. According to a press release issued by the bank, retail customers can access the portal at https://bank.sbi/ or https://sbi.co.in to check their eligibility instantaneously for loan recasts by providing income details. Using the portal, borrowers also the option of requesting a moratorium of 1-24 months and extension of their loan term. SBI has launched this facility, after the Reserve Bank of India (RBI) allowed banks to provide loan restructuring options to individual borrowers. The Finance Minister Nirmala Sitharaman had asked banks to roll out these restructuring schemes by September 15, 2020.- economic times
🍒 SBI to seek additional security for resolution of non-personal loans : State Bank of India has said it will seek additional security in the form of personal guarantee of promoters of unlisted companies and ask promoters to pledge their shares for listed entities as part of the loan-restructuring process. In its frequently asked questions (FAQs) on the resolution framework for Covid-19-related stress other than personal segment loans, SBI said a processing fee or upfront fee of 0.25 per cent of the aggregate limits will also be payable. Further, for term loans and working capital loans, the interest cost would be increased by 100 basis points over the current pricing on working capital loans. - Business Line
🍒 P Manikandan quits as Chief General Manager of Dhanlaxmi Bank : P Manikandan, Chief General Manager of the Kerala-based Dhanlaxmi Bank, has dismissed rumours of his being sacked from the post following an RBI directive for not adhering to good corporate governance practices. “I have submitted my resignation from the services of Dhanlaxmi Bank due to personal reasons. The same was submitted to the Managing Director on September 18 at 4 pm and the Board accepted the same. This is the fact,” he said when BusinessLine sought his response on the news.- Business Line
🍒 Reserve Bank of India looks to sort out e-KYC matter for non-bank lenders : The Reserve Bank of India and the government are working closely on how to allow the Aadhaar-based digital customer authentication facility to non-bank entities to help them to reach out and cater to a wider section of population, two people familiar with the matter said. This assumes significance amid the spread of coronavirus when physical proximity is best avoidable. At present, only banks are allowed to do customer identification online through OTP (one-time password) based Aadhaar card authentication. The government has been hesitant to give non-banks entities the access to the Unique Identification Authority of India’s (UIDAI) database following the complaints of misuse of it. Non-bank lenders and microfinance companies which are not allowed to do so, are lobbying for similar facilities. - economic times
🍒 Yes Bank to get fresh forensic investigation into its top 10 defaulters : Yes Bank is looking to conduct an in-depth investigation of its top 10 accounts that have either turned bad or have been declared fraudulent, three people aware of the development said. The private lender is looking to conduct a forensic investigation of a few ADAG Group companies, its exposure to Essel Group, Essar Group and Cox & Kings. In some of these cases the first round of forensic investigation was carried out by a group of lenders, which Yes Bank was part of. According to the people in the know, Yes Bank is looking to get a digital forensic audit and asset tracing probe on some of the top accounts. While Yes Bank did not respond to an email query, its chief Prashant Kumar had hinted about a planned approach against defaulters last month. - economic times
🍒 Google Pay, Visa partner for card-based payments with tokenisation : Google Pay on Monday announced the rollout of tokenisation across its platform that will enable users to safely transact with their debit or credit cards. Through tokenisation, Google Pay Android users can use their debit or credit card to make payments through a secure digital token attached to their phone without having to physically share their credit or debit card details. The feature will also facilitate use of tap-to-pay feature on near-field communications (NFC)-enabled point of sale (PoS) terminals and online merchants, a statement said. "Working in close partnership with Visa and banking partners, this feature is now available to all users of Axis and SBI Card, with Kotak and more banks expected to follow suit very soon," it added.- economic times
🍒 HDFC Bank denies charges by US law firm; to defend vigorously in lawsuit : Largest private sector lender HDFC Bank on Monday denied the allegations of misleading claims levelled by a US-based law firm to seek damages in a class action suit. The bank vowed to defend itself “vigorously” in the lawsuit and added that the response to the lawsuit will be ready by early next year. Rosen Legal last week filed the class-action suit seeking damages for the losses incurred by investors because of alleged "materially false and misleading" representations by HDFC Bank. It had specifically named the bank's chief executive and managing director of over 25 years, Aditya Puri, his designated successor Sashidhar Jagdishan and company secretary Santosh Haldankar as defendants..- economic times
🍒 Was forced to remove UPI cashback to get relisted on Android Play Store: Paytm : Paytm, on Monday, said it was forced to remove the UPI cashback and scratch cards campaign in order to comply with Google’s mandate and get re-listed on the Android Play Store. “Offering both is legal in India, and cashback was being given following all rules and regulations set by the government,” it said in a statement, adding that it was “arm-twisted” by the search engine major to comply with its biased Play Store policies that are meant to artificially create Google’s market dominance. After getting temporarily de-listed, Paytm app was restored on the Play Store in a few hours, it further said. - Business Line
🍒 IRDAI permits video-based identification for KYC : Insurers can now use video-based identification process (VBIP) in Know Your Customer (KYC) process for insurance policies. With a view to simplifying the KYC process by leveraging various electronic platforms to make it customer-friendly, the Insurance Regulatory and Development Authority of India (IRDAI) has permitted all life, general and standalone health insurers to use VBIP as an optional. “Insurers may undertake VBIP by developing an application, which facilitates KYC process for either online or face-to-face personal verification through video,” said the regulator in a circular released on Monday. - Business LIne
🍒 Banks moved $2 trillion, defying money laundering orders: ICIJ : A new investigation by the International Consortium of Investigative Journalists (ICIJ) says JPMorgan Chase & Co., Deutsche Bank AG and several global banks kept profiting from powerful and dangerous players in the past two decades even after the US imposed penalties on these financial institutions. The report, based on leaked documents obtained by BuzzFeed News and shared with the consortium, said that in some cases the banks kept moving illicit funds after receiving warnings from US officials. The documents identified more than $2 trillion in transactions between 1999 and 2017 that were flagged by financial institutions internal compliance officers as possible money laundering or other criminal activity, the report said. The top two banks are Deutsche Bank, which disclosed $1.3 trillion of suspicious money in the files, and JPMorgan, which disclosed $514 billion, the analysis found.- Business LIne
🍒 FinCEN files: Almost all Indian banks named for suspicious transactions : Between 2010 and 2017, a number of Indian banks, irrespective of ownership – public, private and foreign -- helped facilitate transactions red-flagged by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for suspected money laundering, terrorism, drug dealing and financial fraud, latest leaks suggest. International Consortium of Investigative Journalism (ICIJ) obtained the top-secret Suspicious Activity Reports or SARs, worth more than $2 trillion globally. These transactions are not outright evidence of frauds or proof of nefarious activities, but are red-flagged by the US authority as suspicious. While the data dump is available on the organisation’s website, so far it has meticulously tracked down 18,153 transactions totaling $35 billion, in which links between both sending and beneficiary banks have been established. The transactions were done between 2000 and 2017. - Business Standard
🍒 IDBI Bank to raise Rs 11,000 cr through QIP; six merchant bankers appointed : IDBI Bank is all set to roll out its mega fund raising exercise in November. Sized at Rs 11,000 crore, the qualified institutional placement (QIP) will be the bank’s maiden equity raise in over five years and also the first ever since it came under the fold of Life Insurance Corporation of India (LIC) in 2018. Six investment banks – ICICI Securities, Axis Capital, SBI Capital Markets, IIFL Securities, Credit Suisse and IDBI Capital Markets have been appointed to manage the QIP. Shareholders of IDBI Bank approved the QIP on July 15, 2020. The equity issuance is expected to hit the market within weeks after the bank declares its September quarter results, which is likely to be published in October. “We are in the initial stages of reaching out to investors. Responses have been reasonable so far, especially from domestic institutional investors,” said a banker aware of the development. - Business Line
🍒 mPokket to disburse instant loans of ₹1,200 cr this fiscal : Lending platform mPokket on Monday said it will disburse ₹1,200 crore loan to college students and young working professionals this fiscal year, an increase of over 70% from 2019-20. mPokket, an instant loan app, had disbursed about ₹700 crore in the last fiscal. "mPokket will disburse ₹1,200 crore in 2020-21," the company said in a statement. The firm has a user base of more than 1 million KYC-approved borrowers and the number is expected to reach 1.5 million by the end of this fiscal ending March 2021. - Live Mint
🍒 SBI raises ₹7,000 crore via Basel III compliant bonds : The country's largest lender State Bank of India on Monday said it has raised ₹7,000 crore by issuing Basel III compliant bonds. "The Committee of Directors for Capital Raising at its meeting of held today on September 21, 2020 accorded its approval to allot 70,000 Basel III compliant non-convertible, taxable, redeemable...debt instruments in the nature of debentures aggregating to ₹7,000 crore, to bond subscribers," SBI said in a regulatory filing.The allotment of bonds to the subscribers took place on the same date i.e. September 21, 2020, it added. The bonds qualify as tier II capital of the bank, and has face value of ₹10 lakh each, bearing coupon rate of 6.24% per annum payable annually for a tenor of 10 years, it said. - Live Mint
🍒 Bank fraud: 24 directors of Ghaziabad bank booked for embezzling around Rs 100 crore : Twenty-four directors of Ghaziabad’s now defunct Mahamedha Cooperative Bank have been booked for allegedly misappropriating around Rs 100 crore, according to an FIR lodged here. The case was lodged following an audit by a company engaged by the Cooperative Department. The company in its report named the errant directors and officials. In a complaint to police, Cooperative Department Assistant Commissioner and Registrar Devendra Singh alleged the bank officials sanctioned loans to ineligible customers. He said Rs 99.85 crore was embezzled. Devender Singh said properties of seven people who took hefty loans from the bank have been attached. Properties of other borrowers will also be attached, he said. The case will be investigated by the cooperative cell of the UP police, SP (City) Abhishek Verma told PTI. One of the directors named in the FIR is already dead. - financial express
🍒 Over 1,634 cr digital transactions registered in Apr-Aug: Dhotre : Digital payments have witnessed an increase with 1,634.92 crore digital transactions being conducted between April-August this year, the Parliament was informed on Monday.Digital payments have increased in the country during the last three years from 2,071 crore digital transactions in FY2017-18 to 3,134 crore in FY2018-19, and further to 4,572 crore in FY2019-20, Minister of State for Electronics and IT Sanjay Dhotre said in a written reply to the Lok Sabha. In FY2020-21 (till August), 1,634.92 crore digital transactions were registered, he said, adding that final data for July and August 2020 has not yet been published by RBI. Replying to a separate question, Dhotre said 306.47 crore transactions were registered in April, 329.22 crore in May and 412.14 crore in the month of June this year. “In the wake of COVID-19 pandemic, digital payments have increased as people are adopting more digital payments as these are easy, convenient and safe and enable a contactless mode of payment,” Dhotre said. - financial express
🍒 SBI Life Insurance inks pact with Yes Bank to sell insurance policies : SBI Life Insurance on Monday said it has signed bancassurance agreement with Yes Bank to offer a comprehensive bouquet of life insurance solutions to the bank’s customers across the country. As part of the partnership, SBI Life’s diverse range of individual and group insurance solutions will be offered to the customers of Yes Bank through the bank’s branches spread across 28 states and 8 Union Territories in India The agreement was signed by Rajan Pental, Global Head – Retail Banking, Yes Bank and AVS Sivaramakrishna, Regional Director-Mumbai region, SBI Life Insurance, in the presence of Mahesh Kumar Sharma, MD & CEO, SBI Life and Ravi Krishnamurthy, President-Zone 1, SBI Life, among others. - Moneycontrol.com
🍒 CBI books Kwality for defrauding Bank of India, other banks of Rs 1,400 crore : The Central Bureau of Investigation (CBI) on September 21 said it has registered a case against Delhi-based private company Kwality and its directors, among others, on allegations of causing a loss of approximately Rs 1,400.62 crore to a consortium of banks led by Bank of India. The company's directors Sanjay Dhingra, Siddhant Gupta, and Arun Srivastava have been named in the complaint along with other unknown persons. The case was filed following a complaint by Bank of India. - moneycontrol.com
🍒 Gold prices ease to Rs 51,341/10 gm on stronger dollar, silver plunges Rs 1,764/kg : Gold prices fell Rs 279 to Rs 51,341 per 10 gram in the Mumbai market on rupee appreciation against the dollar and weak global cues. The precious metal prices slipped as the dollar rebounded on safe-haven buying ahead of Federal Reserve Chairman Jerome Powell’s speech later this week. The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,506, Rs 47,028 and Rs 51,341, respectively, plus 3 percent GST. Silver prices declined Rs 1,764 to Rs 64,141 per kg from its closing on September 18.
🍒 Sensex tumbles over 800 points on global sell-off; Auto, Media stocks top drag : The 30-share BSE index ended 811.68 points or 2.09 per cent lower at 38,034.14. The NSE Nifty tumbled 254.40 points or 2.21 per cent to finish at 11,250.55. Traders also said that valuations of the market was a concern for investors as analysts believed a healthy correction in the market was in the offing. IndusInd Bank was the top loser in the Sensex pack, tanking over 8 per cent, followed by Bharti Airtel, Tata Steel, ICICI Bank, M&M, Maruti, Axis Bank and ONGC. On the other hand, Kotak Bank, Infosys and TCS were the gainers.
🍒 Rupee settles 7 paise higher at 73.38 against US dollar : The rupee strengthened seven paise and closed at 73.38 (provisional) against the US dollar on Monday, even as the domestic equity market traded with significant losses. At the interbank forex market, the domestic unit opened at 73.43 against the US dollar and finally settled for the day at 73.38 against the greenback, registering a rise of 7 paise over its previous close.
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