29.10.2020: Today's Banking / Financial News

29.10.2020: Today's Banking / Financial News at a Glance

🍒 SBI signs $1-b loan deal with JBIC : State Bank of India (SBI) has signed a loan agreement amounting to up to $1 billion with Japan Bank for International Cooperation (JBIC). India’s largest bank, in a statement, said the ‘untied’ loan is intended to provide funds for manufacturers, suppliers and dealers of Japanese automobiles in India.As per the statement, $600 million will be financed by JBIC and $400 million by other participating banks. JBIC will provide a guarantee for the portion co-financed by the participating banks – SMBC, MUFG Bank, Mizuho Bank, Shizuoka Bank and Bank of Yokahama. - Business Line

🍒 SBI ties up with global education platform edX : State Bank of India (SBI) has entered into a strategic partnership with global non-profit education platform edX, where the bank will offer its Massive Open Online Courses (MOOCs) on the platform from Novemberonwards. Initially, SBI will be offering three courses – Unleashing Creativity at the Workplace, Relationship Marketing Strategy for Financial Services, and Conflict Resolution, said SBIin a statement. “The duration of these courses would be for four to six weeks, with an expected spend of two to three hours per week on a course. Interested learners need no specific academic qualifications to apply for the same,” said SBI. - Business Line

🍒 Loans against FDs, bonds, shares out of Nirmala Sitharaman's relief plan : Loans against fixed deposits, bonds and shares will not be eligible for relief under the government scheme for an ‘ex gratia’ payment to borrowers of up to Rs 2 crore. However, in the case of credit card dues, the government has clarified that the outstanding as on February 29 will be eligible for relief. The government on Tuesday released FAQs (frequently asked questions) on its scheme to provide ex gratia payment for the difference between simple and compound interest for borrowers of up to Rs 2 crore. This is available for the period of moratorium (March 1 to August 31, 2020) announced by the RBI. The FAQs clarify that for calculating the Rs 2-crore loan amount limit, banks will take into account all borrowings and not just a single loan. - economic times

🍒 Jan Dhan accounts rise 60% amid pandemic, help stifle crime: SBI Research: The Covid-19 pandemic has led to a 60% increase in opening of new Jan Dhan accounts and they are acting as a deterrent to crime in several states, an SBI research report has said. Latest data showed that the total number of Pradhan Mantri Jan Dhan Yojana accounts stood at over 41 crore with a total balance of Rs 1.31 lakh crore. Since April 1, around 3 crore accounts were opened, with deposits of Rs 11,060 crore. The average balance of PMJDY accounts increased to Rs 3,400 in April and declined thereafter to Rs 3,168 in September and marginally increased to Rs 3,185 in October, the report said. - economic times

🍒 Interest waiver: Outstanding as of Feb 29 to be reference for ex gratia relief : The loan outstanding as of February 29 would be the reference amount for calculating the differential interest amount under the 'scheme for grant of ex gratia payment of difference between compound interest and simple interest' according to the FAQs released by the Finance Ministry. The Reserve Bank on Tuesday asked all lending institutions, including non-banking financial companies, to ensure that the scheme of waiver of interest on interest for loans up to Rs 2 crore for the six-month moratorium period is implemented by November 5, as decided by the government. Last Friday, the government had announced the scheme for grant of ex gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts. The lending institutions have been asked to complete the exercise of crediting the amount in the accounts of borrowers by November 5.. - economic times

🍒 Amazon Pay ICICI Bank credit card crosses 10-lakh issuance milestone : Amazon Pay and ICICI Bank on Wednesday announced that the bank has issued about 14 lakh Amazon Pay ICICI Bank credit cards. “In the process, the credit card has become the fastest in the country to cross the milestone of 10 lakh, in less than 20 months of its launch,” they said in a statement. Amazon Pay and ICICI Bank introduced the co-branded credit card, powered by Visa, in 2018. Sudipta Roy, Head – Unsecured Assets, ICICI Bank, said the bank enabled video KYC facility across the country in June 2020, thereby allowing new-to-bank customers to apply for the credit card seamlessly from anywhere in the country. “We believe that with this facility, more customers will be able to apply for the card in a contactless and safe way,” he said “To make digital payments more convenient and seamless we have introduced instant issuance of cards in under 60 seconds and 100 per cent digital video KYC enabled issuance. It is the trust that customers have in us that encourages us to further innovate on behalf of them,” said Vikas Bansal, Director and Head Financial Services, Amazon Pay. - Business Line

🍒 AU Small Finance Bank Q2 net profit up 87% : AU Small Finance Bank reported an 87.2 per cent jump in net profit to ₹321.87 crore in the second quarter of this fiscal from ₹171.94 crore a year ago. Its net interest income grew by 24 per cent on a year-on-year basis to ₹561 crore in the quarter ended September 30, 2020, though other income fell by 6 per cent to ₹141 crore. Its provisions declined to ₹574 crore in the second quarter of this fiscal, 6 per cent lower than ₹610 crore a year ago. “The bank carries ₹278 crore of Covid-19-related provisions, which constitute about 1 per cent of gross advances,” said AU Small Finance Bank in a statement on Wednesday.- Business Line

🍒 RBI report: States to re-prioritise revenue spends; sharp cutback in capex on the cards: Over the past decade, States have been cutting back their capital expenditure significantly to rein in their fiscal deficit. With Covid-led disruptions leading to large shortfalls in revenues receipts and rise in revenue expenditure, States are expected to cut back on capex spend more significantly this fiscal, according to the RBI Annual Report on State Finances: 2020-21. States have cut back capex by almost 0.5 per cent of GDP in recent years; the cut in 2019-20 was the steepest at 0.6 per cent of GDP. The pandemic-led disruption in capex activity in the first half of this fiscal and steep shortfall in revenues is expected to lead to deeper cuts in capex spend in 2020-21 (in relation to what was budgeted earlier in the year). - Business Line

🍒 Google Pay is now back for iPhone users in India :   New users can now download the latest version 115.2 from the App Store while existing users will be required to update the app. The Google Pay for India (Tez) app is now back up on Apple’s App Store. The app had been temporarily taken down from Apple’s App Store to fix specific issues. The app was unavailable on the App Store for almost two days. The app was available for Android users. Google, in a statement, had previously said that the app had been briefly taken down from the App store as it was working to fix issues with payment failures. “A small number of Apple iOS users might experience persistent payment failures on their transactions. Our teams are working to fix it at the earliest. Meanwhile, affected users can reach out to Google Pay support through the app for help. We apologise for the inconvenience to our users,” a Google spokesperson had said in a statement. - Business Line

🍒 Gold-loan NBFCs will see up to 18% growth in AUM in FY21 : Gold loan non-banking finance companies (NBFCs) will see a 15-18 per cent growth in assets under management in fiscal 2021 as demand for gold loans would rise with the Covid-19 pandemic-driven lockdowns being lifted slowly and economic activity clawing back, according to Crisil Ratings. Demand for gold loans would rise, especially from individuals meeting urgent personal requirements and from micro enterprises for working capital to restart businesses, the credit rating agency said. Crisil observed that gold loans would be preferred also because NBFCs and banks have tightened their underwriting norms for other loans, leading to cautious lending to micro and small enterprises, traders and the self-employed.  - Business Line

🍒 RBL Bank Q2 net profit surges to ₹144 cr : Private sector lender RBL Bank’s net profit shot up to ₹144.16 crore in the second quarter of fiscal against ₹54.13 crore in the same period a year ago. For the quarter ended September 30, 2020, its total income was ₹2,533.47 crore, about 1.3 per cent lower than ₹2,567.68 crore a year ago. Net interest income increased by 7 per cent to ₹932 crore in the second quarter of the fiscal from ₹869 crore a year ago. Net interest margin was 4.34 per cent as on September 30, 2020, versus 4.35 per cent a year ago. ther income increased by three per cent on an annual basis to ₹456 crore in the quarter under review. - Business Line

🍒 Axis Bank posts net profit of ₹1,623 crore in Q2 : Private sector lender Axis Bank reported a standalone net profit of ₹1,628.67 crore for the second quarter of the fiscal against a net loss of ₹112.08 crore a year ago. For the quarter ended September 30, 2020, the bank’s total income grew by 2.8 per cent to ₹19,870.07 crore when compared to ₹19,333.57 crore in the same period last fiscal. The bank’s net interest income grew by 20 per cent to ₹7,326 crore in the July to September 2020 quarter from ₹6,102 crore in the same period last fiscal. Net interest margin for the second quarter of this fiscal was 3.58 per cent against 3.51 per cent a year ago. - Business Line

🍒 Board size matters for better performance of banks: study : Empirical results suggest that board size of a Bank matters, with more board members exerting pressure for performance by better monitoring and control, according to a working paper put together by two IIM Professors. “At the same time, they (more board members) bring a wide variety of expertise which are performance-enhancing. We also find that better performance is associated with higher compensation. “High-powered incentives might motivate the board members to actively contribute in the monitoring and advisory roles,” said Abhiman Das, Professor, Indian Institute of Management (IIM), Ahmedabad and Balagopal Gopalakrishnan, Assistant Professor, IIM, Kozhikode, in the paper. - Business Line

🍒 Healthy core performance, prudent provisioning can mitigate asset quality risks : Amid industry-wide challenges on credit offtake and deposit accretion (for a few private banks), Axis Bank put up a good show in the September quarter. Healthy growth in core net interest income, backed by improvement in disbursements across segments, good traction in deposits, higher fee income, strong capital ratios and prudent provisioning, are key positives that can hold the stock in good stead over the medium term. However, as is the case for the entire banking sector, asset quality uncertainty continues to weigh on Axis Bank. As such, the bank’s asset quality was under pressure before the Covid-led disruption, with slippages steadily rising in the first three quarters of FY20.- Business Line

🍒 Covid-19: Mahindra Finance expects loan recast worth Rs 6,000 crore : Mahindra and Mahindra Financial Services expect to restructure loans worth Rs 6,000 crore of 0.15 million customers under RBI's loan Covid-19 regulatory package. It will also work to keep net Non-Performing Assets (NPAs) below four per cent in the current fiscal end. Out of 1.6 million customers, 100,000-150,000 accounts are likely to come up for restructuring. That amount would be around Rs 6,000 crore. Some customers have sought an additional two-three months to repay, meaning they would start to repay from January. Another set of customers have sought reduction of Equated Monthly installments (EMI) for six months, said Vice Chairman and Managing Director Ramesh Iyer in an analyst call post Q2FY21 results. Its loan book rose to Rs 64,389 crore at the end of September 2020 from Rs 63,793 crore a year ago. - Business Standard

🍒 Banks turn to AI to curtail loan frauds : Banks such as state-run Punjab National Bank (PNB) are looking to deploy an artificial intelligence-enabled early warning signal system that crawls the web for information on borrower's activities, including news articles and social media. Having burnt its fingers in the Nirav Modi scam and seen quite a few wilful defaults, Punjab National Bank has decided to outsource its early warning signal (EWS) system. So far, the bank has been using an in-house system but wants an external agency to revamp it. Some of the capabilities sought by the bank are artificial intelligence, web crawling, optical character recognition (OCR) for triggering the early warning signal. The bank has put out a public notice seeking bids from interested parties According to the notice, the bank wants a solution capable of giving early warning signals on a dynamic basis, based on information collected from various internal and external sources. This, the bank said, will aid timely corrective action in such loan accounts. - Live Mint

🍒 Deutsche Bank rebound hinges more than ever on trading unit : Five quarters into a historic restructuring of Deutsche Bank AG that aimed to emphasize lending and reduce reliance on trading, Chief Executive Officer Christian Sewing is more dependent on the securities unit than he has ever been. Germany’s largest lender on Wednesday reported a 47% jump in debt trading, beating all but one of the large investment banks so far and prompting Sewing to lift the outlook. The boost propelled the firm to an unexpected third-quarter profit, even as the corporate bank around which the CEO built his strategy continued to shrink amid negative interest rates and the worsening pandemic. - Live Mint

🍒 US SEC not to take action against ICICI Bank in provisioning probe : ICICI Bank on Tuesday said the US Securities and Exchange Commission (SEC) has concluded a probe into the bank’s bad-loan provisioning exercise and decided not to take any enforcement action against it. The probe dates back to 2018, when the lender had received requests for information from the SEC investigatory staff for an enquiry relating to the timing and amount of the bank’s loan impairment provisions taken under US GAAP (generally accepted accounting principles). “The Bank has via its legal counsel received a communication from the United States Securities and Exchange Commission (‘SEC’) that they have concluded their investigation into the Bank’s loan impairment provisions under US GAAP and that the SEC does not intend to take any enforcement action against the Bank,” ICICI Bank said in a notification to the exchanges. - financial express

🍒 UPI volumes fall in these two states, even as jump in all other states; sharpest rise in 7 sisters : Uttar Pradesh and Haryana are the only two Indian states that saw a contraction in the UPI payments volume in the first quarter of the current fiscal year. Except for these two states, all the states, including those with a decline in IMPS volume, saw growth in UPI transaction volume, according to the latest RBI report. The growth in the volume of UPI payments was highest in the north-eastern states. While the volume surged 57.3 per cent in India during Q1, the states in the north-east reported growth in excess of 140 per cent. The trend highlights the user preference of UPI over IMPS during the pandemic, on account of its ease of usage and operability, especially for small value transactions. It is to be noted that economically advanced states like Maharashtra and Delhi, which account for a higher share of total digital transactions, saw a significant fall in Immediate Payment Service (IMPS) transaction volume during the first quarter, compared to the fall of 9.6 per cent in all-India average. - financial express

🍒 PNB Housing Finance Q2 net down 15% at Rs 313 crore : PNB Housing Finance on Wednesday reported a 15 percent decline in net profit at Rs 313 crore for the quarter ended September. The housing finance company had posted a net profit of Rs 367 crore during the corresponding period of the previous fiscal. Total revenue during the July-September period of FY21 declined by 9 percent at Rs 2,022 crore, as against Rs 2,230 crore in the same period of 2019-20, PNB Housing Finance said in a statement. Net interest margin stood at 3.5 percent as compared to 3.2 percent earlier, while the gross margin (net of acquisition cost) stood at 3.5 percent as against 3.4 percent a year earlier. - Moneycontrol

🍒 Gold prices flat at Rs 50,989/10 gm, IBJA says sales in south India back to normal levels : Gold prices fell marginally (Rs 54) to Rs 50,989 per 10 gram in the Mumbai retail market on a firm dollar and weak global cues. The precious metal has been trading in a narrow range for the last few weeks as the dollar ticked higher, with investors awaiting next week’s US Presidential election and lack of progress on a stimulus package. The dollar trades trade firm at 93.59, up 0.72 percent, against a basket of major currencies on safe-haven buying. The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,242, Rs 46,706 and Rs 46,706, respectively, plus 3 percent GST.   Silver prices dropped Rs 561 to Rs 61,430 per kg from its closing on October 27.

🍒 Sensex plunges 600 points; Nifty cracks below 11,750 : After hitting a low of 39,774.60 during the day, the 30-share BSE index ended 599.64 points or 1.48 per cent lower at 39,922.46. Similarly, the broader NSE tanked 159.80 points or 1.34 per cent to close at 11,729.60.IndusInd Bank was the top loser in the Sensex pack, shedding over 3 per cent, followed by HDFC, ICICI Bank, Tech Mahindra, Bajaj Finance, UltraTech Cement and Tata Steel.On the other hand, Bharti Airtel was the top gainer, rallying more than 4 per cent, after the country’s second-largest telecom operator reported its highest-ever quarterly consolidated revenue, helping it narrow losses in the July-September period.

🍒 Rupee settles 16 paise lower at 73.87 against US dollar : The rupee depreciated 16 paise and settled at 73.87 against the US dollar on Wednesday as heavy selling in the domestic equity market and strengthening American currency weighed on investor sentiment. At the interbank forex market, the rupee opened on a positive note at 73.70 against the greenback, but soon pared the gains and closed for the day at 73.87, registering a decline of 16 paise over its previous close