PRADHANMANTRI JAN DHAN YOJANA

➡"PRADHANMANTRI JAN DHAN YOJANA"

Prime Minister Narendra Modi on August 28 launched his government's mega scheme 'Pradhan Mantri Jan Dhan Yojana', an ambitious scheme for comprehensive financial inclusion. According to Prime Minister, in a country where 40 per cent of the population does not have access to banking services, this programme would mark the beginning of the end of "financial untouchability" and rid the country of poverty. The scheme has been started with a target to provide 'universal access to banking facilities'. On the inaugural day, a record 1.5 crore bank accounts were opened across the country, the largest such exercise on a single day possibly anywhere in the world. Currently, around 41% of the population is unbanked, of which 33% are in urban areas and 46% in rural.

Salient points of Prime Minister’s ambitious Jan Dhan Yojana are given below:

✅1. About 15 million accident insurance policies done on a single day and same number of bank accounts opened.

✅2. Programme held at around 77,000 locations.

✅3. Target to cover 7.5 crore households with at least one account will be achieved by Jan 26, 2015.

✅4. Coverage of all households with at least one basic banking account.

✅5. Account holders will be provided zero-balance bank account with RuPay debit card, in addition to inbuilt accidental insurance cover of Rs 1 lakh.

✅6. Additional Rs.30,000 free life assurance cover for those opening bank accounts before Jan 26, 2015.

✅7. Holders can avail overdraft of Rs 5,000 subject to satisfactory operations of the account for six months.

✅8. Universal access to banking facilities for all households through a bank branch or a fixed point business correspondent called "Ba".

✅9. Financial literacy to be imparted up to village level.

✅10. Under the Jan Dhan Yojana, all benefits from the Centre/states/local bodies are proposed to be transferred to the accounts of beneficiaries.

✅11. Platform has been built by the National Payment Corporation of India that connects all banks and all telephone networks in the country. With the introduction of new technology introduced by National Payments Corporation of India (NPCI), a person can transfer funds, check balance through a normal phone.

✅12. Mobile banking for the poor would be available through National Unified USSD Platform (NUUP) for which all banks and mobile companies have come together.

✅13. The second phase of rollout will involve providing micro-insurance to people and schemes like 'Swavalamban'.

✅14. Households being targeted instead of only being villages targeted earlier.

✅15. For the entire exercise, the existing banking network will be strengthened - it will rope in an additional 50,000 business correspondents and set up about 7,000 branches and 20,000 new automated teller machines, in the first phase.

✅16. PMJDY also aimed at eliminating corruption as it would facilitate routing of subsidies directly into the accounts of intended beneficiaries.

✅17. Presently, one account is being opened for one adult of each household and by 2018, the mandate is to make it two per household, with the compulsory inclusion of the lady of the house.

✅18. The government would institute a credit guarantee fund post-August 2015.

10.10.2020: Today's Banking / Financial News

10.10.2020: Today's Banking / Financial News at a Glance

🍒 RBI delivers without a policy rate cut : As widely expected, the Monetary Policy Committee maintained status quo on the key policy rate, with inflation rate holding above the RBI’s comfort level. But the MPC brought pre-Diwali cheer by giving a ‘whatever it takes’ assurance to revive growth, as it looked at the “current inflation hump as transient”. The 5:1 vote of the six-member MPC in favour of a continued accommodative stance “at least during the current financial year and into the next financial year”, also offered markets an extended comfort on rates and liquidity. - Business Line

🍒 Bankers' reaction to RBI keeping status quo on rates, maintaining 'accommodative' stance : The six-member Monetary Policy Committee (MPC) on Friday unanimously voted for keeping the policy repo rate unchanged as retail inflation has been above its upper tolerance level of 6 per cent for several months. The Committee decided to continue with the accommodative stance as long as necessary – at least during the current financial year and into the next financial year – to revive growth on a durable basis and mitigate the impact of Covid-19 on the economy, while ensuring that inflation remains within the target going forward. To provide impetus towards reviving the economy, the Reserve Bank of India (RBI) announced specific additional measures to enhance liquidity support for financial markets; provide regulatory support to improve the flow of credit to specific sectors, among others.- Business Line

🍒 RBI policy overall positive, growth-oriented, say experts : Financial sector participants on Friday said RBI's decision to keep the key repo rate unchanged is an accommodative approach to manage inflation while keeping growth as target, amid the current economic conditions. The Monetary Policy Committee (MPC) evaluated domestic and global macroeconomic and financial conditions and voted unanimously to leave the policy repo rate unchanged at 4 per cent, RBI Governor Shaktikanta Das said in his policy statement for the bi-monthly monetary policy review. "It also decided to continue with the accommodative stance of monetary policy as long as necessary - at least during the current financial year and into the next year - to revive growth on a durable basis and mitigate the impact of COVID-19, while ensuring that inflation remains within the target going forward," Das said. - economic times

🍒 SBI urges SC to dismiss plea against wind up UBHL : The State Bank of India (SBI) on Thursday urged the Supreme Court to dismiss a plea by Vijay Mallya’s firm United Breweries Holdings (UBHL) against its winding up for failure to pay admitted liabilities to creditors as per the corporate guarantees extended to the defunct Kingfisher Airlines. SBI senior counsel Mukul Rohtagi told a bench led by Justice UU Lalit that Mallya is facing bankruptcy proceedings in the UK, besides extradition proceedings. “Appeals should be dismissed as Mallya is behind all this and is playing ducks and graces,” he said, requesting the apex court to give it some more time to seek “other instructions and also find about the ongoing proceedings.” - Financial express

🍒 RBI raises retail exposure threshold for banks : The Reserve Bank of India (RBI) has upped the absolute threshold limit for maximum aggregated retail exposure of banks to one counterparty to ₹7.5 crore from ₹5 crore. This move is aimed at facilitating higher credit flow to the retail segment, which mainly consists of individuals and small businesses (with turnover of up to ₹50 crore). This increased exposure limit is in respect of all fresh as well as incremental qualifying exposures, and is in harmonisation with the Basel guidelines. “This measure is expected to expand credit flow to small businesses,” the RBI said.- Business Line

🍒 HDFC Bank takes festive offers to rural India to pump up credit growth : Private lender HDFC Bank has taken its “festive treats” offering to its semi-urban and rural markets in a bid to prop up credit growth. The bank will use its network of 1.2 lakh village level entrepreneurs (VLEs) and tap over 3,000 plus hyperlocal merchants and traders to offer customized deals at the regional level. According to the lender, customers will get special deals on all banking products from loans to bank accounts. This includes home loans, 2-wheeler loans, car loans, tractor loans, gold loans or business growth loans. Customers can avail of flat 5% to 15% off in various categories of products.- economic times

🍒 RBI’s move to rationalize home loan risk weightage to support higher lending : The Reserve Bank of India’s decision to rationalize the risk weights on home loans and link them to Loan-to-Value (LTV) ratio is expected to bolster the real estate sector with higher lending, property developers said. Until now, the risk was linked to both size of the home loan and loan to value and the move to link it to only the latter is likely to help lenders on the capital adequacy front enabling them to provide more loans. “The decision to rationalise the risk weights on home loans and link them to Loan to value ratios only will give a boost to the real estate sector. Particularly this step would benefit borrowers of higher value loans. It would ensure that more credit is available to borrowers,” said Niranjan Hiranandani, President (National) NAREDCO. “This move is a much appreciated step recognising the role of the real estate sector in generating employment and economic activity.” The decision, according to property developers, has come at the right time and will help projects in all segments and price points. - economic times

🍒 Relief to exporters: RBI discontinues automatic caution-listing system : The Reserve Bank of India on Friday announced discontinuing the system-based automatic caution-listing of exporters, a move aimed at providing flexibility to exporters in terms of realisation of export proceeds. Exports have been adversely impacted by the pandemic-related contraction in external demand, RBI Governor Shaktikanta Das said during a virtual press conference after the meeting of the Monetary Policy Committee. "In this environment, it is crucial to provide flexibility to exporters in the realisation of export proceeds and to empower them to negotiate better terms with overseas buyers," he said.- economic times

🍒 RTGS to be available 24x7x365 from Dec 2020 : The Reserve Bank of India (RBI) in its Statement on Development and Regulatory Policies has announced that the money transfer facility, RTGS, will be available round the clock, 24 hours a day, 7 days a week from December 2020. Under the current rules, the transfers can be made between 7 AM and 6 PM on all working days except for the second and fourth Saturday of the month and on Sundays. The announcement comes after the RBI made the NEFT facility available 24X7 from December 16, 2019. In its statement the central bank said, "In December 2019, the National Electronic Funds Transfer (NEFT) system was made available on a 24x7x365 basis and the system has been operating smoothly since then. The large-value RTGS system is currently available for customers from 7.00 am to 6.00 pm on all working days of a week (except 2nd and 4th Saturdays of the month). - economic times

🍒 Digital Apnayen campaign gives further push to digital payment adoption : The Digital Apnayen Campaign, which was rolled out on August 15 to encourage customers to use digital banking channels, has propelled digital payment adoption with banks having on-boarded 1.58 crore customers in less than two months since launch, the Finance Ministry said on Friday. It has also resulted in deployment of 50,000 Point of Sales (PoS) terminals, over three lakh QR codes, and 18,000 BHIM Aadhaar pay devices in just 45 days, the Department of Financial Services tweeted on Friday. This campaign was launched under the aegis of the government’s Digital India initiative. .- Business Line

🍒 RBI expects real GDP to fall by 9.5% : India’s recovery is likely to be a three-speed recovery predominantly, with individual sectors showing varying paces depending on sector-specific realities, according to Reserve Bank of India (RBI) Governor Shaktikanta Das. For the year 2020-21 as a whole, the central bank expects real GDP to decline by 9.5 per cent, with risks tilted to the downside: (-)9.8 per cent in Q2 (July-September) 2020-21; (-)5.6 per cent in Q3 (October-December); and 0.5 per cent in Q4 (January-March 2021). Real GDP growth for Q1 (April-June) 2021-22 will see a rebound, with the RBI placing it at 20.6 per cent. “There is currently an animated debate about the shape of the recovery. Will it be V, U, L, or W? More recently, there has also been talk of a K-shaped recovery. “In my view, it is likely to predominantly be a three-speed recovery, with individual sectors showing varying paces, depending on sector-specific realities,” said the Governor in his bi-monthly monetary policy address. - Business Line

🍒 Co-origination scheme expanded to include all NBFCs, HFCs : All non-banking financial companies, including housing finance companies, will now be included in the co-origination scheme as part of efforts for greater financial inclusion and give more operational flexibility to lending institutions. The move is also expected to give a boost to housing finance. “Based on the feedback received from the stakeholders to better leverage the respective comparative advantages of the banks and NBFCs in a collaborative effort, and to improve the flow of credit to the unserved and underserved sector of the economy, it has been decided to extend the scheme to all NBFCs (including HFCs) to make all priority sector loans eligible for the scheme and give greater operational flexibility to the lending institutions, while requiring them to conform to the regulatory guidelines on outsourcing, KYC,” said the RBI’s Statement on Developmental and Regulatory Policies. - Business Line

🍒 With ‘slog overs’ and ‘strike form’, RBI chief describes state of play : With the IPL season in full swing, Reserve Bank of India Governor Shaktikanta Das on Friday chose cricketing terminologies to suggest that some of the worst-hit sectors of the economy can use “slog overs” to rescue the “innings”. “Open their accounts” and “strike form” also found a place in the Governor’s statement as he shared his views on the pandemic-hit economy after the Monetary Policy Committee (MPC) decided to leave key benchmark rate unchanged and maintain an accommodative stance. Trying to explain the process of recovery for the Covid-19-hit economy, Das said, “In my view, it is likely to predominantly be a three-speed recovery, with individual sectors showing varying paces, depending on sector-specific realities.” He added that sectors that would “open their accounts” the earliest are expected to be those that have shown resilience in the face of the pandemic and are also labour-intensive. - Business Line

🍒 CBI books HDIL promoters Wadhawans for Rs 200-crore loan fraud in YES Bank : The CBI has booked HDIL promoters Rakesh Wadhawan and Sarang Wadhawan, along with other directors and auditors in the firm, in an alleged Rs 200-crore loan fraud in Yes Bank involving Mack Star, officials said Friday. After registering the case, the CBI searched the residence of Rakesh Wadhawan and his son Sarang in Mumbai, they said. The agency also carried out searches at nine other premises in Mumbai, including two offices of HDIL, they said. It is alleged that Yes Bank had given loan to Mack Star in which HDIL was a minority shareholder. - Business Line

🍒 Cheaper big-ticket home loans to give realty sector a boost : Home loans over ₹75 lakh may get cheaper, with the RBI’s move to link risk weights for home loans with the loan-to-value (LTV) ratio. The LTV is the ratio of the loan amount to the value of the property.In a move that could reduce banks’ capital requirement and ease rates to boost demand, the RBI has rationalised risk-weights for new housing loans sanctioned up to March 31, 2022. Such loans will now attract a risk weight of 35 per cent where the LTV is less than or equal to 80 per cent, and a risk weight of 50 per cent where the LTV is more than 80 per cent but less than or equal to 90 per cent.The measure is expected to particularly give relief to big ticket loans above ₹75 lakh.According to an SBI report, these loans constitute around 12-15 per cent of the total housing loan portfolio, where the risk weight is higher.Assuming a growth of 20 per cent for the next 18 months, this could reduce the capital requirement of around ₹500 crore, which can enable banks to ease rates to boost demand, the report said. Punjab National Bank MD & CEO CH. SS Mallikarjuna Rao said that the move will give impetus for high value houses. - Business Line

🍒 PE investors, foreign banks taking majority stakes may rescue old pvt banks : For the past two weeks, old private banks — those that existed during bank nationalisation — have hit the headlines for wrong reasons. Whether Lakshmi Vilas Bank (LVB) or Dhanlaxmi Bank, issues around corporate governance, mismanagement, differences between promoter groups and even the effectiveness of shareholder activism were being raised — which ultimately question whether the Reserve Bank of India (RBI) has monitored these banks adequately. Several of these banks were placed under the Prompt Corrective Action (PCA) framework of additional regulator scrutiny but this does not seem to have stemmed the rot (see table). “Placing banks under PCA alone would not do good; there needs to be scrutiny on what went wrong and a viable road map for the banks to exit PCA,” said Abizer Diwanji, partner and national leader-financial services, EY India. In effect, he is advocating that banks under distress be treated differently so that an effective rescue plan can be worked out. - Business Standard

🍒 CARE Ratings downgrades LVB debt instruments over plunge in net worth : CARE Ratings has downgraded Lakshmi Vilas Bank (LVB)'s tier-II bonds totalling Rs 618.70 crore, citing a sharp decline in net worth caused by losses in FY20 and in Q1 of FY21. The development comes two days after Brickwork Ratings downgraded the lender's debt to 'BWR B+'/ Credit Watch with negative implications for the lender's long-term bonds of Rs 50.50 crore, and a day after LVB received an indicative non-binding offer from the Clix Group. LVB has reported a capital adequacy ratio (CAR) and Tier-I CAR of 0.17 per cent and -1.83 per cent (negative), respectively, as on June 30, 2020 (1.12 per cent and -0.88 per cent as March 31, 2020) as against the regulatory requirement of 10.875 per cent and 8.875 per cent. - Business Standard

🍒 Series-VII of the sovereign gold bond opens for subscription from October 12 : The Series-VII for Sovereign Gold Bonds 2020-21 will be open for the period October 12-16 with a settlement date on October 20. The issue price of the bond during the subscription period would be ₹5,051 per gram, an official release said. The Government, in consultation with the Reserve Bank of India, has decided to allow a discount of ₹50 per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors the issue price of Gold Bond will be ₹5,001 per gram of gold, the release added. - Business Line

🍒 Forex reserves surge to life-time high of $545.638 billion : The country’s foreign exchange reserves rose by USD 3.618 billion to reach a life-time high of USD 545.638 billion in the week ended October 2, 2020, the RBI data showed. In the previous week ended September 25, the reserves had declined by USD 3.017 billion to USD 542.021 billion. During the reporting week, the increase in forex kitty was on account of a rise in foreign currency assets (FCA), a major component of the overall reserves. FCA increased by USD 3.104 billion to USD 503.046 billion in the week ended October 2, the data showed.

🍒 Rupee settles 8 paise higher at 73.16 : The rupee has settled 8 paise higher at 73.16 against the US dollar on Friday as the Reserve Bank of India decided to keep the benchmark interest rate unchanged. At the interbank forex market, the rupee opened at 73.21 against the American currency, gained some ground to touch an intraday highe of 73.09, but gave up some of its gains towards close. On Thursday, the rupee closed at 73.24 against the US dollar.

08.10.2020: Today's Banking / Financial News

 08.10.2020: Today's Banking / Financial News at a Glance

🍒 Govt appoints M Rajeshwar Rao as new deputy governor of RBI : The Centre late Wednesday appointed M Rajeshwar Rao as the new deputy governor of the Reserve Bank of India. He is currently an executive director at the banking regulator. The Appointments Committee of the Cabinet approved the appointment as the search for the incumbent was on since August.The Financial Sector Regulatory Appointment Search Committee (FSRASC), which had included the cabinet secretary, RBI governor and the financial services secretary, interviewed candidates on August 21.RBI executive directors M Rajeshwar Rao and Lily Vadera were the top contenders to succeed NS Vishwanathan as the central bank's fourth deputy governor, ET reported on August 25. Rao, a career central banker, has spent 36 years at the RBI across various departments including regulation and supervision and different regional offices of the regulator. - economic times

🍒 State Bank of India's new chief, Dinesh Khara, says top priority to maintain loan book quality : India's largest lender, State Bank of India's newly appointed chairman said that his focus areas as he takes over will be maintaining the quality of the loan book while ensuring that provisioning requirements are met. At a time when the Indian banking system is hamstrung by the pandemic, SBI is witnessing credit growth of around 6-7% while business is "70-80% back to pre COVID-19 levels," for the bank, Dinesh Kumar Khara, Chairman, SBI said in a press briefing after taking over the reins on Wednesday. Before taking over as chairman, Khara was a managing director at the bank and was responsible for overseeing global markets and subsidiaries of SBI. Khara has been appointed as chairman for a three-year term. Though concerns for SBI in certain segments remain due to the economic disruption caused by the pandemic, overall the stress in loan books is not a cause of worry yet, added Khara. - economic times

🍒 Indian Overseas Bank, Another PSB to Write Off Rs41,392 Crore in 8 Years; Recovers Just 17% : Indian Overseas Bank (IOB) is the latest to join other big banks that have written off bad loans worth thousands of crores of rupees and recovered paltry amounts from defaulters. Strangely though, IOB refused to share this information under the Right to Information (RTI) Act and instead asked the applicant to check its annual reports. Data shared by Pune-based RTI activist Vivek Velankar shows that IOB has written off a massive Rs41,392 crore as technical write-offs in the past eight-year period from FY12-13 to FY19-20. As against these write-offs, the recovery was just 17% or Rs7,253 crore. - moneylife.in

🍒 Banks say government's interest waiver will add to costs, spark litigation : Indian bankers fear the government's decision to waive some interest payments on loans under a COVID-19 support plan will create unnecessary work for lenders and lead to more litigation, without providing much of a boost for the sagging economy. In an Oct. 2 filing with India's Supreme Court, seen by Reuters, the government said it is amending a controversial clause in a relief plan that allowed distressed borrowers to skip repayments for six months but then charged them "interest-on-interest" on the delayed payments, putting them deeper in debt. The change will waive the compounded interest component on small business loans and some personal debts from March to August. The government will bear the cost, which could be as high as $1 billion, according to analysts. - economic times

🍒 HDFC to give instant loans up to Rs 40 lakh for customers' medical bills at Apollo Hospitals : HDFC Bank on Wednesday announced a tie-up with Apollo Hospitals through which its customers can avail unsecured loans of up to Rs 40 lakh to pay for medical expenses incurred at the healthcare chain. The loans will be disbursed almost instantly as and when a need for money arises, and the hospital patients who are customers of HDFC Bank will also receive preferential treatment, its Chief Executive Officer and Managing Director Aditya Puri told reporters. Apollo Executive Vice-Chairperson Shobana Kamineni said HDFC Bank has 65 million customers who can take advantage of this facility. She stressed that while availing health insurance is necessary, it does not cover all the aspects despite providing cashless facilities and hence, such a tie-up will help. - economic times

🍒 Interest subvention for MSMEs: Govt to include Co-operative Banks as Eligible Lending Institutions : The Government of India has decided to include Co-operative Banks as Eligible Lending Institutions whereby their MSMEs (micro, small and medium enterprises) borrowers can get interest subvention with effect from March 3, 2020. The Government had announced the ‘Interest Subvention Scheme for MSMEs 2018’ on November 2, 2018, for Scheduled Commercial Banks. The scheme provides for an interest relief of 2 per cent per annum to eligible MSMEs on their outstanding new/incremental term loan/working capital during the period of its validity, the RBI said in a notification issued to Primary (Urban) Co-operative Banks, State Co-operative Banks and District Central Co-operative Banks. The coverage of the scheme is limited to all term loans/working capital to the extent of ₹1 crore. - Business Line

🍒 PM SVANidhi-SBI integration to ease processing of loan applications : The Ministry of Housing and Urban Affairs (MoHUA), on Wednesday, launched the Application Programming Interface (API) integration between the Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) and the State Bank of India’s eMudra portal to ease the process of receiving and processing of loan applications. The aim of this integration is to provide benefits to street vendors seeking working capital loans under the PM SVANidhi scheme. Besides SBI, MoHUA also plans to explore similar integration with the other banks in the days to come. - Business Line

🍒 At 41 million real-time transactions a day, India leads the world: Report : Thanks to the pandemic, the country has become the global leader in real-time financial transactions with 41 million transactions per day, which is more than double that of the last year, says an international report. The Covid-19 pandemic has seen India doubling its every day real-time transactions at 41 million, says the latest report from FIS, which is a leading provider of technology solutions for merchants, banks and capital markets firms globally. According to the report released on Wednesday, six other countries also saw more than doubling of their real-time payment transactions year-over-year, while four saw at least a twofold increase in transaction value. - Business Line

🍒 Bandhan Bank's collection efficiency improves in September : Bandhan Bank's average collection efficiency has improved 92% at the end of September from 76% three months back, while it has seen its loan book grow 20% year-on-year. Liquidity coverage ratio was at comfortable 157% as against the current regulatory stipulation of 90%, the bank said. Collection efficiency for microfinance loans was 89% while it was 98% for mortgage loans, according to provisional data submitted to the stock exchanges. Loans and advances including off-balance sheet loans and loans under Reserve Bank of India's targeted long term repo operation (TLTRO) stood at Rs 76724 crore from Rs 64186 crore a year back. - economic times

🍒 Jammu & Kashmir Bank extends CMD’s term by six months : Jammu & Kashmir Bank, on Wednesday, said the Reserve Bank of India (RBI) has extended the term of RK Chhibber, Chairman and Managing Director of the bank, by a further period of six months. In a regulatory filing, the bank said the extension is with effect from October 10or till the appointment of MD and CEO, whichever is earlier. The bank informed the exchanges on July 7 that the term of Chhibber has been extended by a further period of three months with effect from July 10,or till the appointment of MD and CEO, whichever is earlier.. - Business Line

🍒 SEBI move on AT-1 bonds: Marginal impact expected on banks’ fund-raising plans : Retail investors will be safeguarded, but the fund-raising plans of some PSBscould be marginally impacted by the decision of the Securities and Exchange Board of India (SEBI) to tighten the regulations for additional Tier-1 or AT-1 bonds. Retail investors do not invest significantly in these bonds. Experts said that at least ₹90,000 crore of such AT-1 bonds are outstanding as on date, and private sector banks are unlikely to tap this source, given the developments at YES Bank, where it wrote back such bonds worth ₹8,415 crore, makingretail investors more cautious. However, the quantum of bonds already invested in by retail investors is difficult to assess. - Business Line

🍒 Barclays to enter new European private banking markets in 2021 : Barclays plans to enter four new European private banking markets in 2021, its regional manager for the business told Reuters. Gerald Mathieu, who in September became Barclays’ private banking head for Europe outside Britain, said the British bank was looking to start up the business in France, Italy, Spain and Germany next year. “These are the countries where we see a lot of opportunities, also because we have a very strong footprint of corporate and investment banking locally,” Mathieu said in an interview. “The idea is to have a capital-light approach and work in very close collaboration with the investment bank locally, targeting family offices, ultra high net worth individuals, and some qausi-corporate or institutional clients.” The bank said it was too early to disclose hiring plans. - Business Line

🍒 Indian banks face tough operating environment in near term: Fitch : Fitch Ratings on Tuesday said Indian banks face a tough operating environment in the near term as stressed loans and write-offs increase due to the economic fallout from the coronavirus pandemic. It said limited room for fiscal support, fragilities in the financial system and a continuing rise in COVID-19 cases are hampering normalisation of activity. "Indian banks face a tough operating environment in the near term, as stressed loans and write-offs increase as a result of the economic fallout from the coronavirus pandemic, but a swift economic recovery will be critical to limiting loan losses in what is likely to be a protracted period of weakness in the asset-quality cycle," Fitch Ratings said in a statement. - Business Standard

🍒 Indian banks say govt interest waiver will add to costs, spark litigation : Indian bankers fear the government's decision to waive some interest payments on loans under a COVID-19 support plan will create unnecessary work for lenders and lead to more litigation, without providing much of a boost for the sagging economy. In an Oct. 2 filing with the Supreme Court, seen by Reuters, the government said it is amending a controversial clause in a relief plan that allowed distressed borrowers to skip repayments for six months but then charged them "interest-on-interest" on the delayed payments, putting them deeper in debt. The change will waive the compounded interest component on small business loans and some personal debts from March to August. The government will bear the cost, which could be as high as $1 billion, according to analysts - Business Standard

🍒 SBI is future-ready and in Dinesh Khara's safe hands: Rajnish Kumar : Former State Bank of India (SBI) chairman Rajnish Kumar said in his farewell message that he had made the bank ‘future-ready’ and that the lender is in safe hands with Dinesh Khara as the new chairman. Kumar’s last day in office was on October 6. He had been in the bank as chairman for three years and in total served the bank in various capacities for almost 40 years. “I am happy that I am leaving the bank ‘future-ready’ for the next Chairman--Mr Dinesh Khara--to take it further ahead. Future is all about possibilities and I believe that the best is yet to come. I wish all the best for his new assignment. I can say with no hesitation that I am leaving SBI in safe hands,” Kumar said in his farewell message to SBI employees. - Business Standard

🍒 IndusInd Bank Q2 deposits grow 10.26% : Private lender IndusInd Bank registered a 10.26% year-on-year increase in its deposits and a 2% rise in its net advances during September quarter. However, the bank’s current account savings account (CASA) ratio in the September quarter declined 100 basis points year-on-year to 40.4%. In a provisional data released on exchanges, the bank said that its deposits grew by 10.26% to Rs 2.28 lakh crore, compared to Rs 2.07 lakh crore in the same period last year. - financial express

🍒 Bandhan Bank says advances up 3% since June quarter : Kolkata-based private sector lender Bandhan Bank on October 7 said its total advances grew 3 percent in the second quarter while deposits were up 9 percent. Total advances grew to Rs 76,724 crore as on September 30 compared with Rs 74,331 crore as on June 30, the bank said in a stock exchange update. Deposits grew to Rs 66,153 crore from Rs 60,610 crore during the period - Moneycontrol.com

🍒 ICICI Prudential Life Insurance to raise up to Rs 1,200 crore via NCDs : ICICI Prudential Life Insurance on Wednesday said it will raise up to Rs 1,200 crore by issuing non-convertible debentures (NCDs) on private placement basis. "The Board of Directors has at their meeting held on October 7, 2020 approved raising capital by issuance of subordinated debt instruments in the nature of rated, listed, redeemable, unsecured, fully paid-up, non-cumulative, non-convertible debentures (NCDs) up to Rs 12 billion,” ICICI Prudential Life Insurance Company said in a regulatory filing.- Moneycontrol.com

🍒 Interest subvention on MSME loans extended until end of March 2021: RBI : The two percent interest subvention scheme for micro, small and medium enterprises (MSMEs) on loans extended by co-operative banks has been extended till March 31 next year, the Reserve Bank of India said on October 7. The terms of the scheme have also been tweaked. The government had announced the 'Interest Subvention Scheme for MSMEs 2018' in November 2018 for scheduled commercial banks for two financial years 2018-19 and 2019-20. It has been extended for the financial year 2020-21. Co-operative banks also became as eligible lending institutions effective from March 3, 2020.- Moneycontrol.com

🍒 Govt recognises need for further stimulus at an appropriate time: Sanjeev Sanyal : Principal Economic Adviser Sanjeev Sanyal on Wednesday said the government recognises the need for further stimulus at an appropriate time to perk up demand in the economy, hit by COVID-19. Addressing the 115th AGM of PHD Chamber of Commerce and Industry, he said there was space on the monetary and fiscal side to implement further stimulus. With the outbreak of COVID-19 pandemic, the government announced Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan Yojana, followed by the unveiling of Rs 20.97 lakh crore Aatmanirbhar Bharat Abhiyan package, which many analysts said fell short of addressing demand concern. “However, we recognise that there is a need for providing further stimulus to the economy at some point in time as may be appropriate,” he said. This is not something that is new, he said, adding that Finance Minister Nirmala Sitharaman recently mentioned this. - financial express

🍒 ‘Atmanirbhar Bharat’ should not result in protectionism: Raghuram Rajan : Former Reserve Bank governor Raghuram Rajan on Wednesday said the ‘Atmanirbhar Bharat’ campaign of the government should not result in protectionism, adding that such policies had not worked in the past. Observing that it is not yet clear to him what the government means by ‘Atmanirbhar Bharat’, Rajan said if it is about creating an environment for production, then it is a re-branding of the Make in India initiative. “If it is about protectionism, unfortunately India has raised tariffs recently, (then) it does not make any sense to my mind to go that way because we tried that before. “We had a licence permit raj earlier…that protectionism was problematic, it enriched a few corporations but basically was a source of poverty for many of us,” he said. Rajan was addressing a virtual event organised by economic think tank ICRIER. - financial express

🍒 Gold prices fall sharply to Rs 50,287/10 gm, silver tanks Rs 2,240/kg : Gold prices tanked Rs 757 to Rs 50,287 per 10 gram in the Mumbai retail market on rupee appreciation against the dollar and strength in equity markets. The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 37,715, Rs 46,063 and Rs 50,287, respectively, plus 3 percent GST. Spot gold was trading up $10.10 at $1,888.23 an ounce at 12:05 GMT in London trading.Silver prices plunged Rs 2,240 to Rs 58,872 per kg from its closing on October 6.

🍒 TCS reports 6.45% profit in Q2; to buyback up to Rs 16,000 cr in shares : TCS has delivered a broad-based performance, signalling a fast-track recovery in its growth as clients increasingly rely on technology to overcome economic stress created by the ongoing pandemic. India’s largest software exporter posted a net profit of ₹7,504 crore for the September-ended quarter, a 6.45 per cent growth compared to the ₹7,049 crore posted in the June-ended quarter. However, on a year-on-year basis, profits dipped 6.8 per cent compared to ₹8,058 crore in the corresponding period last year. “We are not out of the woods as yet due to the economy and Covid-19, but the underlying demand recovery seen in our clients can be sustained,” said Rajesh Gopinathan, Chief Executive Officer and Managing Director, TCS. - Business Line

🍒 Sensex surges for 5th day on RIL boost; TCS results eyed : After opening on a weak note, the 30-share BSE Sensex gained ground to end 304.38 points or 0.77 per cent higher at 39,878.95.Similarly, the broader NSE Nifty jumped 76.45 points or 0.66 per cent to close at 11,738.85.The Sensex has now gained 1,905.73 points in five sessions, while the Nifty has advanced 516.45 points. Index heavyweight Reliance Industries spurted 2.13 per cent a day after its retail arm raised Rs 5,512.50 crore from Abu Dhabi Investment Authority (ADIA) for a 1.20 per cent stake.Bajaj Auto, Maruti, UltraTech Cement, and ONGC were among the other prominent gainers.IT major TCS inched up 0.78 per cent ahead of its quarterly results. On the other hand, Bajaj Finance, PowerGrid, Sun Pharma, Tata Steel, NTPC and Bajaj Finserv were among the laggards, skidding up to 4.12 per cent.

🍒 Rupee recovers by 13 paise; ends 2-day losing streak : Snapping its two-day losing streak, the rupee strengthened by 13 paise to settle at 73.33 against the US dollar on Wednesday helped by positive domestic equities and foreign fund inflows. At the interbank forex market, the domestic unit opened at 73.53 against the US dollar, but gained ground during the day and finally settled at 73.33, registering a rise of 13 paise over its last close of 73.46.

07.10.2020: Today's Banking / Financial News

07.10.2020: Today's Banking / Financial News at a Glance

🍒 FM launches Indian Bank’s business mentoring programme for MSMEs : Public sector lender Indian Bank has come out with ‘MSME Prerana’, an online Business Mentoring Programme for MSMEs. The bank says it is the first-of-its-kind initiative by a bank in the country for the (MSME) sector. . The initiative was formally launched by Union Minister of Finance & Corporate Affairs, Nirmala Sitharaman, at the bank’s headquarters in Chennai on Tuesday. To empower entrepreneurs MSME Prerana is for empowering entrepreneurs through skill development and capacity building workshops in the local language. The programme is in collaboration with Poornatha & Co, a firm that designs Entrepreneurial Development Programmes in vernacular using online web-based interactive sessions and case studies, according to a statement. - Business Line

🍒 RBI to announce monetary policy on October 9 : The Reserve Bank of India will announce monetary policy on October 9. "The next meeting of the Monetary Policy Committee (MPC) is scheduled during October 7 to October 9, 2020," the RBI said in a release. The government on Monday had appointed three eminent economists Ashima Goyal, Jayanth R Varma and Shashanka Bhide as members of the rate-setting Monetary Policy Committee of the RBI. Live Mint

🍒 Government names Dinesh Khara as the new SBI chief : The government today gave its nod to the Banks Board Bureau’s recommendation, thereby appointing Dinesh Khara as the chairman of SBI- country’s largest public sector bank .The term of Rajnish Kumar, who was appointed for a period of three years comes to an end on Tuesday. With Khara’s elevation, one of the four MD positions will also fall vacant. A few weeks later, at the end of October, another MD - Arijit Basu - is also set to complete his term. This would leave two positions vacant by the month-end. The senior-most of the three Managing Directors (MDs) at the public lender was picked by the BBB on August 28 for the vacancy. - economic times

🍒 Govt appoints Shashank Bhide, Ashima Goyal and Jayant Verma as new MPC members : The government has appointed economists Shashank Bhide, Ashima Goyal and Jayanth R Varma as independent members to the Monetary Policy Committee. The finance ministry issued a notification to this effect late Monday. Shashank Bhide is currently a senior advisor at the New Delhi-based think tank National Council for Applied Economic Research, while Goyal is a professor at the Indira Gandhi Institute of Development Research in Mumbai. Jayant R Varma is currently a professor at the Indian Institute of Management, Ahmedabad.- economic times

🍒 Bank of Baroda launches festive offers for home, car loans : Ahead of the festive season, state-run Bank of Baroda (BOB) on Tuesday said it has rolled out offers for home and car loan borrowers. The lender said it is offering a waiver of 0.25 per cent in the existing applicable rates for Baroda Home Loans (under take over cases only) and Baroda Car Loans. “With the introduction of these retail loan offers for this festive season, we intend to gift the existing loyal customers and also offer new-to-bank customers an attractive proposition for availing car loans or shifting their home loans who will be benefited from lower rates and waiver of processing fee on offer,” the bank's head and general manager (mortgage and other assets) H T Solanki said in a release. - economic times

🍒 Indian Bank launches its first Customer Acquisition & Processing Centre in Chennai : Chennai-headquartered public sector lender Indian Bank on Monday opened its first centralised Customer Acquisition & Processing Centre (CAPC) in Chennai. Its branches in Tamil Nadu and Puducherry will be brought under CAPC before December 2020 and other branches across the country will be brought under the CAPCs in a phased manner, said Executive Director of the Bank MK Bhattacharya, who inaugurated the CAPC, here. Over the next 30 days, 40 branches in Chennai will be brought under CAPC. He said

the account opening process at branch is a very critical, sensitive and time bound exercise. Regulators expect banks to have a consolidated view of customers and their transactions across businesses and jurisdictions. - Business Line

🍒 HDFC Bank’s loans grow 16% in Q2, deposits 20% : HDFC Bank on Monday said that its advances for the second quarter rose 16% over the previous year, while deposits increased by 20%. The growth is much higher than the banking sector, which recorded a 12% year-on-year growth in deposits and 5.3% in advances until September 11. According to the bank’s statement to the stock exchanges, its deposits at the end of September stood at Rs 12.3 lakh crore as compared to Rs 10.2 lakh crore a year ago. Advances rose to Rs 10.4 lakh crore from Rs 9 lakh crore. The country’s largest private sector bank said the share of current and savings accounts in its deposits rose to 42% in September 2020 from 39% a year ago. During the quarter, the bank purchased home loans worth Rs 3,026 crore (against Rs 7,016 crore in the previous year) from its parent HDFC. - economic times

🍒 Centre 'may disinvest 5% stake' in LIC : The government may sell just five per cent stake in state-owned Life Insurance Corporation of India, which could help it raise upwards of ₹50,000 crore. Sources close to the development said the government is hoping to go ahead with the proposed disinvestment in LIC, and wants to list it by February next year. However, instead of a 10 per cent disinvestment, it may consider a small stake sale, given the expectation of its high valuation. A formal plan is yet to be finalised and is still under discussion. “This will depend on the valuation arrived at and the market conditions and investor appetite at the time. A straight listing process in the domestic bourses may be an easier exercise at present,” noted a person familiar with the development. “Inter-ministerial discussions are on, and it is expected to be a key priority going ahead,” said the source, adding that the Finance Ministry will move necessary amendments to the LIC Act in the Winter Session of the Parliament. - Business Line

🍒 HDFC Bank assures employees that jobs, bonuses are safe : Private sector lender HDFC Bank’s Managing Director and CEO Aditya Puri has assured employees that their jobs and bonuses are safe. His comments come amid the Covid-19 pandemic and economic uncertainty that has resulted in job losses and salary cuts at many companies. “Not only are your jobs secure, your increment is secure. Your bonus and your promotion is secure,” he told the bank’s employees in a video message last week. He also assured them that the bank remains well capitalised and that its portfolio is not under any strain. He also hinted that the lender may post robust performance in the second quarter and in the quarters coming ahead. “The bank is doing well. We have all the capital that we need. Our portfolio is not under strain,” said Puri, who retires at the end of the month. - Business Line

🍒 SBI looking to hive off Yono into separate subsidiary: Chairman Rajnish Kumar : The country's largest lender State Bank of India is actively looking to hive off its digital platform Yono into a separate subsidiary, its chairman Rajnish Kumar said. Yono or You Only Need One App is the lender's integrated banking platform. "We are in discussions with all our partners to hive it (Yono) off as a separate subsidiary," Kumar said at an annual banking and finance conference - Sibos 2020, organised by the Society for Worldwide Interbank Financial Telecommunications (SWIFT). Recently, Kumar had said that Yono's valuation could be around USD 40 billion. "The statement (on valuation of Yono) which I made was that if I look at valuations of all start-ups and compare, then definitely Yono should not be less than USD 40 billion. As of now, we have not done any valuation exercise but that is what I believe is the potential," Kumar clarified.- economic times

🍒 Axis Bank joins top private lenders to offer pay hikes; salaries to be raised by up to 12% : India’s third-largest private lender is joining its larger rivals in offering pay hikes to staff even as the economic fall out of the coronavirus pandemic threatens profit growth. Axis Bank Ltd. will increase staff salaries between 4% and 12% from Oct. 1 based on performance, according to people with knowledge of the plans. The Mumbai-based lender, which has about 76,000 employees, also paid bonuses to its staff, the people said, asking not to be identified because the matter is private. HDFC Bank Ltd., the country’s largest private lender by assets, boosted salaries in April based on performance and also paid bonuses, other people with knowledge of the matter said. ICICI Bank Ltd., the second-biggest privately-held lender, gave about 80% of its 100,000 employees a bonus and pay rise from July, according to different people aware of the plans.- economic times

🍒 Axis Bank, Vistara launch co-branded forex card : Vistara and Axis Bank on Tuesday launched a co-branded forex card that can load up to 16 currencies. The card has locked-in exchange rates and the card holder will accrue 3 award points on Club Vistara for every USD 5 or an equivalent value spent, the airline said in a press release. Club Vistara (CV) is the airline's frequent flyer program. "Customers also get awarded 500 CV Points as a Welcome Bonus on signing up (for the forex card)," it said. - economic times

🍒 DHFL case: Auditor reports fraudulent transactions worth Rs 2,150 crore : Debt-ridden mortgage lender DHFL on Tuesday said that fraudulent transactions worth Rs 2,150.84 crore by way of undervaluing the company's insurance subsidiary have been detected by transaction auditor Grant Thornton. DHFL is undergoing resolution process under the Insolvency and Bankruptcy Code. Earlier this year, the company's administrator roped in Grant Thornton to conduct an investigation into the affairs of the mortgage firm. According to the auditor's report, the Rs 2,150.84 crore-fraud was in relation to the undervalued and fraudulent nature of certain agreements entered into by the DHFL when the company sold its stake in Pramerica Life Insurance Ltd to DHFL Investments Ltd (DIL), as per a regulatory filing. - economic times

🍒 Airtel Payments Bank eases transactions for merchants : Merchants associated with Airtel Payments Bank can receive payments by smartphone acting as a point-of-sale (POS) machine at zero commission charges. Airtel, on Tuesday, upgraded the app with “Smart ePOS” and “On-Demand Settlement” features. Merchants can select the Smart ePOS option in the Airtel Payments app, and a QR code will appear on the mobile screen for the payments to be made. The amount will get credited immediately to the merchant bank account linked to the app. “This eliminates the need to have a physical QR code or the need to carry an additional device to receive payments for home deliveries,” the company said. - economic times

🍒 ICICI Bank launches debit card for customers availing loan against securities : Private sector lender ICICI Bank has introduced a debit card facility for customers availing themselves of Loan Against Securities (LAS). The card is available on the Visa platform and can be used across all domestic merchant establishments to make POS and online transactions like payments on e-commerce portals among others, using the sanctioned LAS amount. “The debit card will be issued to new customers who avail themselves of LAS and will be automatically renewed upon renewal of the LAS account. Customers get a digital debit card within one business day of availing LAS and will get the physical card within seven business days. Existing customers of LAS will also get this card shortly,” ICICI Bank said in a statement on Tuesday. The card offers a maximum daily transaction limit of ₹3 lakh each for POS and online transactions. - Business Line

🍒 India’s first B2B Crypto trading exchange DigitX launched : DigitX, country’s first Business-to-Business (B2B) Crypto trading exchange has commenced its trading operations. In a highly potential yet challenging market, DigitX aims to deliv

er transparency and security with its Platform armed with features to bring about a much-needed trust and confidence for the investors and traders of Crypto. This crypto trading exchange brings along a network of pre-verified, trained and closely monitored Trusted Links(members) to ensure a secure Crypto trading ecosystem. - Business Line

🍒 Moody’s sees NPLs doubling across 14 APAC economies by 2022, led by India, Thailand : Moody’s Investors Service, problem loans, non-performing loans (NPLs), economic conditions, credit rating agency, pandemic, return on tangible assets (ROTAs), coronavirus, tangible common equity (TCE) Moody’s Investors Service has projected that problem loans or non-performing loans (NPLs) will double on average across the 14 APAC (Asia-Pacific) economies by 2022, led by India and Thailand as economic conditions severely worsen. Banks in India and Thailand expect to see the largest increases in NPLs due to the greater severity of economic shocks to their economies and the historically poor performance of certain loan types, as per the global credit rating agency’s assessment. - Business Line

🍒 ED files rejoinder in SC opposing bail to DHFL promoters : The Enforcement Directorate (ED) has filed a rejoinder affidavit in the Supreme Court opposing the Bombay High Court’s order granting bail to Kapil Wadhawan and Dheeraj Wadhawan, promoters of Dewan Housing Finance Corporation Ltd, in a case related to money laundering charges linked to YES Bank The ED has dismissed the Wadhawans’ claims that the complaint was filed late. In the affidavit, the ED said that the complaint was filed well within the time frame stipulated under law. It said that the complaint was filed via email initailly due to the ongoing pandemic-related issues. BusinessLine has seen the rejoinder filed by ED. - Business Line

🍒 Rajnish Kumar bids adieu as SBI boss after 40-year stint with bank : Rajnish Kumar, 62, will bid farewell to State Bank of India this evening, after having served the institution for 40 years, the last three of those as Chairman. Kumar is hanging his boots at a time when the banking sector as a whole is facing an unprecedented crisis. Credit growth is at 40-year lows, reflecting the problems of an economy in the midst of a slowdown. Public sector banks’ stressed assets ratios have been in double digits for the last seven years, and Reserve Bank estimates bank NPAs may rise to the highest level in 20 years by March next year due to the pandemic-induced stress. Under Rajnish Kumar, the bank’s gross bad loans reduced by a third from Rs 1,86,115 crores in Q2 FY18 to Rs 1,29,661 crores in Q1 FY21. During the same period, the ratio of gross NPAs fell from 9.97 percent to 5.44 percent, and provision coverage ratio improved significantly from 65.1 percent to 86.3 percent. For FY20, the bank posted a historic high profit of almost Rs 14,500 crores, another feather in the Chairman’s cap. Kumar leaves the bank a lot more resilient than when he took charge on October 7, 2017. His biggest achievement, perhaps, is the swift and sure turnaround of the troubled Yes Bank, which was executed under Kumar’s chairmanship. The bank saw unprecedented support from the entire banking industry, helmed by State Bank of India, which pumped in the capital in the bank to take a majority stake, and brought much-needed comfort to investors and depositors alike. - cnbctv18

🍒 LIC Housing Finance disburses Rs 2,115 crore subsidy to over 1 lakh CLSS customers : Leading mortgage lender LIC Housing Finance has disbursed Rs 2,115 crore worth of subsidies to its customers under the credit-linked subsidy scheme (CLSS) as part of PM Awas Yojana since its inception in 2017, a top company official said. Under this scheme, the second-largest mortgage player has disbursed more than Rs 12,000 crore of affordable housing loans to 1,01,521 borrowers till September-end, Siddhartha Mohanty, the managing director and chief executive of LIC Housing Finance, told PTI. - financial express

🍒 Credit Wise Capital raises $6 million from family offices, angels : Credit Wise Capital (CWC), a consumer finance NBFC, has raised $6 million in a seed-funding round, which saw participation from marquee angel investors. The company intends to use these funds to grow its dealer network, increase geographical expansion, improve collection technology and underwriting models. The round witnessed investments from Ajay Goel, Stanford Business School alum and serial investor, Anuj Golecha, founder of Venture Catalysts, Gaurav Gandhi, director at EssGee group, Anup Agarwal, director of Shanti Group and Gaurav Singhvi among others.- Business Line

🍒 Private equity investments hit record high of $28.66 billion in 2020 : Private equity investments in India hit a record high of $28.66 billion till September end this calendar year, significantly over the $16.27 billion invested in entire 2019. In 2018, PE investments stood at $10.8 billion. Although PE investments in volume terms have seen a huge surge so far in 2020, there has been a drop in the number of deals, which came in at 560 so far this year as against 663 in entire 2019, data available with Refinitiv, a global provider of financial markets data, showed. In the last four years including 2020, the total PE investments have touched nearly $70 billion. - Business Line

🍒 September gold imports fall 59% YoY to 4-month low : India's gold imports in September fell 59% from a year earlier to the lowest level in four months, a government source said on Tuesday, as a drop in prices from a record high failed to lure buyers, which were postponing purchases anticipating more significant drop. The world's second-biggest consumer of the precious metal imported around 11 tonnes of gold in September, down from 27 tonnes a year ago, the source said. Business Line

🍒 Gold back above Rs 51,000 per 10 gram after 14 days, silver crosses Rs 61,000/kg : Gold prices rose by Rs 546 to Rs 51,044 per 10 gram in the Mumbai retail market on rupee depreciation and subdued global cues. The precious metal is trading flat, tracking a weak dollar and on worries over a global economic recovery. The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,283, Rs 46,756 and Rs 51,044, respectively, plus 3 percent GST. Silver prices surged Rs 1,001 to Rs 61,112 per kg from its closing on October 5.

🍒 Over 300 stocks hit upper circuit as market surges on global cues : Bears have yet again been caught on the wrong foot. Benchmark indices Sensex and Nifty have staged a sharp recovery in line with improved global sentiments since September. Mirroring global sentiments, the Nifty rose 1.38 per cent, or 159 points, to 11,662. The Sensex gained 1.54 per cent, or 600 points, at 39,574. Over 300 stocks hit their upper circuit and 153 rose to new 52-week highs.

🍒 Rupee settles 17 paise lower at 73.46 against US dollar : The rupee pared its initial gains and settled 17 paise lower at 73.46 (provisional) against the US dollar on Tuesday. At the interbank forex market, the domestic unit opened at 73.17 tracking positive domestic equities and a weak greenback, but soon pared the gains and finally closed at 73.46, down 17 paise over its previous close of 73.29.

06.10.2020: Today's Banking / Financial

06.10.2020: Today's Banking / Financial News at a Glance

🍒 Bank Board recommends names for two SBI MDs : The Banks Board Bureau (BBB) Monday recommended the candidatures of Swaminathan Janakiraman and Ashwini Kumar Tewari for the two vacant managing director posts at the State Bank of India. While Janakiraman is now the deputy managing director – finance at SBI, Tewari heads the SBI Cards and Payment Services. Janakiraman had joined the country's largest lender in 1988 as a probationary officer and worked across the verticals both in India and New York. Similarly, Tewari was appointed as MD and CEO at the SBI Cards a few months ago as the incumbent Hardayal Prasad opted for voluntary retirement. In his previous role, Tewari was the country head of the US operations of SBI since April 2017. The BBB interfaced with 16 candidates from various nationalised banks and State Bank of India on October 5, for vacancies of Managing Director in SBI, the bureau said. Two other candidates including Prakash Chandra Kandpal and Alok Kumar Choudhary have been put on the reserve list for the vacancies. - economic times

🍒 SC asks Centre, RBI to file Kamath panel suggestions, their decisions on loan moratorium : The apex court's direction came after the Finance Ministry decided to grant relief to individual borrowers as well as medium and small industries by agreeing to waive compound interest (interest on interest) charged on loans of up to Rs 2 crores for a six-month moratorium period announced due to the pandemic. The Supreme Court asked the Centre and the RBI on Monday to place on record the K V Kamath committee recommendations on debt restructuring in view of COVID-19 related stress on various sectors as well as the notifications and circulars issued so far on loan moratorium. The apex court’s direction came after the Finance Ministry decision to grant relief to individual borrowers as well as medium and small industries by agreeing to waive compound interest (interest on interest) charged on loans of up to Rs 2 crores for a six-month moratorium period announced due to the pandemic. A bench comprising Justices Ashok Bhushan, R Subhash Reddy and M R Shah took up the pleas alleging that banks have decided to charge interest on the EMIs which have not been paid by borrowers from March 1 to August 31, taking benefit of the RBI’s loan moratorium scheme. - financial express

🍒 Bandhan Bank plans giant leap into retail lending as part of its evolution as universal bank : Private sector Bandhan Bank plans a giant leap into retail lending as part of its evolution as a universal bank with a five-year business plan. The predominantly microfinance lender would now go all out with car, two-wheeler, consumer durable loans to raise its profile with urban and semi-urban middle class borrowers, managing director Chandra Shekhar Ghosh told ET. The Kolkata-based lender recently hired Tata Capital's former retail asset head, Vineet Tripathi, to drive the new business lines. Tripathi’s social media profile showed he joined the bank in August. Ghosh said the bank would now energise its 1045 branches to push retail loan products, unlike in the past, when branches were used only to grow liability businesses. - economic times

🍒 Banks relieved as govt will foot bill for interest waiver : The government’s proposal to pick up the tab for the waiver of 'interest on interest' on loans of up to Rs 2 crore clears the uncertainty over bank earnings for the quarter, giving them room to offer liberal loan-rejig terms to stressed borrowers. The relief is likely to cost the Centre Rs 5,000-5,500 crore, according to the finance ministry’s initial estimates. Rating agency ICRA has pegged the cost at Rs 5,000-7,000 crore. Even those eligible borrowers who had not availed of the moratorium will get some relief, possibly through a partial waiver of interest on the principal during the moratorium period. The Supreme Court will on Monday take up the Centre’s affidavit on interest relief submitted on October 3. The government will seek parliament’s nod for the additional expenditure on this count. “It would cost about Rs 5,000-5,500 crore,” a government source told ET. This spending will be over and above Covid-related support of Rs 3.7 lakh crore to micro, small and medium enterprises (MSMEs) as well as Rs 70,000 crore assistance on home loans extended through the Garib Kalyan Yojana besides the Atmanirbhar package announced earlier.- economic times

🍒 September sees strongest recovery since pandemic broke out: HDFC : The Indian economy may be slowly returning to strength with the month of September marking the strongest turnaround since the pandemic broke out, India’s largest mortgage lender indicated on Monday. The lender added that business levels had surpassed those done same time last year. Citing its September quarter numbers HDFC said trends were indicative that business was reverting to pre-Covid levels. “The month of September 2020 has seen the strongest recovery since the outbreak of the pandemic and the levels have exceeded the levels in the corresponding month of the previous year,” HDFC said in an exchange notification. - economic times

🍒 Centre's Interest Waiver Plan Fails To Deal With "Many Issues": Top Court : The Supreme Court today said the centre's affidavit on waiving "interest on interest" on loans up to ₹ 2 crore, frozen during a six-month moratorium granted because of the coronavirus crisis, was not satisfactory and asked for a do-over in a week. The affidavit "fails to deal with several issues raised by petitioners", the court said. The central government has been asked to consider the concerns of the real estate and power producers in fresh affidavits. The Supreme Court also noted that "no consequential orders or circulars" were issued by the government or RBI on enforcing the centre's decisions. The top court was hearing petitions on a waiver of interest on deferred EMIs - or interest on interest - to help small borrowers during the coronavirus pandemic. - ndtv.

🍒 Accumulated loss of 17 RRBs surge to ₹6,467 crore : The three major stakeholders of Regional Rural Banks (RRBs) – Central government, sponsor public sector banks (PSBs) and the government of the State in which they operate – may have to worry about the future of 17 RRBs whose collective accumulated loss soared to ₹6,467 crore as of March-end 2020. Accumulated loss As of March-end 2019, 11 RRBs had a collective accumulated loss of ₹2,887 crore. The Central government has a 50 per cent shareholding in every RRB, with the sponsor public sector bank (PSB)/ commercial bank and the State government holding 35 per cent and 15 per cent stake, respectively. The RRBs with huge accumulated losses as of March-end 2020 include: Bangiya GVB (₹1,048 crore), Odisha GB (₹1,026 crore), Utkal GB (₹963 crore), Madhya Pradesh GB (₹656 crore), Madhyanchal GB (₹548 crore), Uttar Bihar GB (₹377 crore) and Assam GVB (₹372 crore), according to data compiled by the National Bank for Agriculture and Rural Development (NABARD). - Business Line

🍒 YES Bank registers gradual rise in Q2 deposit base : Private sector lender YES Bank has registered a gradual rise in deposit base in the second quarter of the fiscal as it focusses on normalcy and stability under the new management. According to provisional data released by the bank to the stock exchanges for the quarter ended September 30, 2020, its deposits have increased by 15.7 per cent to ₹1,35,815 crore from ₹1,17,360 crore as on June 30, 2020. It also marks a 28.9 per cent rise since March 31when total deposits were down at ₹1,05,364 crore. YES Bank had a new management and Managing Director and CEO in March after the Reserve Bank of India and the government worked out a reconstruction scheme for the troubled lender. The bank’s deposit base had witnessed a gradual erosion over the past few quarters. - Business Line

🍒 IndusInd Bank Q2: Deposits up 10%, net advances rise 2% : Private sector lender IndusInd Bank registered a 10 per cent increase in its deposits and a two per cent rise in its net advances as on September 30, 2020 compared to a year ago. In provisional data for the second quarter of the fiscal reported to the stock exchanges, the bank said its deposits grew by 10 per cent to ₹2.28 lakh crore as against ₹2.07 lakh crore as on September 30, 2019. Its deposits stood at ₹2.11 lakh crore at the end of the first quarter this fiscal. “Retail deposits and deposits from small business customers amounted to ₹75,610 crore as of September 30, 2020 as compared to ₹67,318 crore as of June 30, 2020,” it said. Net advances grew by two per cent to ₹2-lakh crore as on September 30, 2019 versus ₹1.97-lakh crore a year ago and ₹1.98-lakh crore as on June 30, 2020. CASA ratio was at 40.4 per cent at the end of the second quarter this fiscal compared to 41.4 per cent as on September 30, 2019. - Business Line

🍒 HDFC Bank advances up 16%, deposits rise 20% in Q2 : Private sector lender HDFC Bank registered a 16 per cent increase in advances, along with a 20 per cent growth in deposits in the second quarter of this fiscal.According to a regulatory filing on Monday with provisional numbers for the quarter ended September 30, 2020, the bank said its deposits were up at ₹10.3-lakh crore with a growth of around 16 per cent when compared to ₹8.97-lakh crore as of September 30, 2019. On a quarterly basis, deposits grew by nearly three per cent when compared to ₹10.03-lakh crore as of June 30, 2020. Its deposits amounted to about ₹12.29-lakh crore as of September 30, 2020, a growth of around 20 per cent when compared to ₹10.21-lakh crore as of September 30, 2019, and a growth of around 3 per cent when compared to ₹11.89-lakh crore as of June 30, 2020. - Business Line

🍒 PFRDA plans to rope in consultant for hiving off NPS Trust, structural rejig : Pension regulator PFRDA plans to engage a strategic management consultant to study and make recommendations in critical areas including organisational structure and segregation of roles and responsibilities of NPS Trust. Human resource and technological requirements are also areas that the proposed management consultant will be required to make recommendations, according to the Expression of Interest (EoI) invited from consultants. It maybe recalled that Pension Fund Regulatory and Development Authority (PFRDA) had undertaken the exercise of organisational restructuring in 2017 itself. However, with the proposed changes in the legal framework governing the functions of PFRDA (a Bill is expected in the next session), it has been decided to re-assess the organisational structure in terms of its suitability, effectiveness and its role in meeting the mandate given by the PFRDA Act, 2013. - Business Line

🍒 BFSL, ICSI launch co-branded credit card for Company Secretaries : BOB Financial Solutions Ltd (BFSL), a wholly-owned subsidiary of Bank of Baroda (BoB), and the Institute of Company Secretaries of India (ICSI), have launched an exclusive co-branded credit card for Company Secretaries (CS). The BoB-ICSI Diamond credit card will bring exclusive benefits and conveniences to Company Secretaries, who are influencers and opinion leaders in their own right, and are contributing in building a modern and Atmanirbhar (self-reliant) India, BFSL said in a statement. - Business Line

🍒 3,066 bank employees in Odisha test positive for COVID-19, SBI records largest numbers : More than 3,000 bank employees in Odisha have tested positive for COVID-19 till September 30 and 14 have died, as per the State Level Bankers' Committee (SLBC). Of the 3,066 bank employees who tested positive, a majority – 968 infected and one dead are staff of the State Bank of India (SBI). Among private banks, Axis Bank had 390 staff test positive; private banks on the whole have not seen any employee deaths. Details are as per a letter by SLBC Convenor Arupananda Jena on October 04, ANI reported. The Odisha Gramya Bank has recorded three employee deaths – the highest in a single bank - moneycontrol.

🍒 PNB To lead consortium of banks lending to UP's Gorakhpur Link Expressway : Punjab National Bank (PNB) will lead the consortium of banks that are providing financial assistance to the 91-kilometre-long Gorakhpur Link Expressway project in Uttar Pradesh. The UP cabinet has approved a proposal in this regard. PNB is providing a Rs 750 crore loan for the expressway project. The state government will borrow Rs 2,250 crore in all to complete the project. According to Chief Executive Officer (CEO) of UP Industrial and Expressways Authority (UPIEDA), Awaneesh Awasthi, Union Bank of India, Canara Bank, Indian Bank, Uco Bank, Bank of India and Bank of Maharashtra will be part of the consortium led by PNB. He said work is going on full swing on the expressway and till date 13.47 per cent land filling and 73.56 per cent CNG work has been done. - Business Standard

🍒 Managing people will be key to success for SBI's CFO Charanjit Singh Attra : The appointment of Charanjit Singh Attra as chief financial officer (CFO) of State Bank of India — the first c-suite hire through the lateral route at the public sector bank (PSB) — could open the gate for similar CXO-level appointments in other state-owned lenders. How the 49-year-old chartered accountant handles people-related issues in the country’s largest public sector bank would be keenly watched, both internally and by external stakeholders and peers, say experts from the sector. The PSB has so far only relied on internal talent to fill the position of CFO. Attra’s peers say two things seem to have worked in his favour in getting the coveted job. The 12-odd years spent in a private banking institution — ICICI Bank group — in the early part of his career. - Business Standard

🍒 SBI chairman Rajnish Kumar's YONO app target isn't overblown: Experts : A few weeks back when Rajnish Kumar, chairman, State Bank of India (SBI), said the bank’s YONO app must be valued at $40 billion and subsequently proposed that it be hived off into a separate subsidiary like SBI Cards & Payment Services, critics were doubting the efficacy of the strategy. The answer lies in understanding how the banking landscape has changed globally, and how India is progressing. ICBC, China Construction Bank, HSBC, and JPMorgan Chase ruled the charts in terms of market capitalisation in the US a decade ago. Now, they have made way for Visa, MasterCard, and PayPal, indicating the traditional lending ecosystem may not guarantee business relevance and market ranking for banks. SBI’s YONO, ICICI Bank’s Fino Payments, HDFC Bank’s PayZapp, and Axis Banks’s Freecharge, to name a few, show how Indian banks, too, have grasped this change. A report by Blume Ventures indicates Indian banks spend $11 billion annually towards technology, mostly to digitalise internal systems. - Business Standard

🍒 Gold prices rise to Rs 50,498 per 10 gram on weaker rupee; silver climbs Rs 847 per kg : Gold prices rose by Rs 85 to Rs 50,498 per 10 gram in the Mumbai retail market on rupee depreciation and tepid global cues on October 5. The precious metal is trading flat tracking weak US Dollar amid the signs of progress in US President Donald Trump’s health. The rate of 10 gram 22-carat gold in Mumbai was Rs 46,256 plus 3 percent GST, while 24-carat 10 gram was Rs 50,498 plus GST. The 18-carat gold quoted at Rs 37,874 plus GST in the retail market. Silver prices soared Rs 847 to Rs 60,111 per kg from its closing on October 1.

🍒 Sensex rises 277 points; TCS zooms over 7 per cent : Rising for the third straight session, market benchmark Sensex finished 277 points higher on Monday, propelled by IT and banking counters. Starting off on a high note, the 30-share BSE gauge zoomed to the day’s peak at 39,263.85, before ceding some ground to settle at 38,973.70, up 276.65 points or 0.71 per cent.Likewise, the broader NSE Nifty rose 86.40 points or 0.76 per cent to close at 11,503.35.On the Sensex chart, IT major TCS rose the most, gaining over 7 per cent.In the process, the IT giant became the second Indian firm after Reliance Industries to cross the Rs 10 lakh crore market valuation mark.Other prominent gainers included Tata Steel, Sun Pharma, Infosys, Tech Mahindra, IndusInd Bank, HCL Tech, ICICI Bank, HUL and HDFC Bank. On the other hand, Bajaj Finserv, Bajaj Finance, Bharti Airtel, Bajaj Auto, PowerGrid and ITC were among the major laggards.

🍒 Rupee settles 16 paise lower at 73.29 against US dollar : The rupee depreciated by 16 paise to close at 73.29 (provisional) against the US dollar on Monday even as the domestic equity market was trading with significant gains. The Indian currency opened at 73.16 at the interbank forex market and touched an intra-day high of 73.08 and a low of 73.41 against the greenback.