11.10.2020: Today's Banking / Financial News

11.10.2020: Today's Banking / Financial News at a Glance

🍒 ACC extends tenure of 3 Executive Directors of PSU banks : The Appointments Committee of the Cabinet (ACC) has approved the extension of the term of three Executive Directors (EDs) in various Public Sector Banks (PSBs). The Department of Financial Services in the Finance Ministry had made these proposals based on the recommendations of the Banks Board Bureau (BBB). While Matam Venkata Rao, Executive Director of Canara Bank, has been given an extension of two years -- beyond his earlier term that expired on October 8, the term of Ajay Kumar Srivastava, Executive Director of Indian Overseas Bank, has also been extended by two years from the same date. The ACC has also approved the extension of the term of Debashish Mukherjee, Executive Director of Canara Bank for a period of two years from February 18, 2021 -- when his current term is due to expire, according to an executive order issued by the Department of Personal Training. - Business Line

🍒 'Interest on interest': Can’t go beyond relief already announced, Centre tells SC : Amid demands for succour from sectors such as real estate, the Centre on Friday said it would not be possible to add to the already announced financial relief packages and waive compound interest for the six-month loan repayment moratorium period. It also urged the Supreme Court against getting into sector-specific financial assistance, arguing that fiscal policy is the exclusive domain of the Union government. The Centre clearly indicated it would not be possible to revise the Rs 2 crore limit on loans that would benefit from its proposal. It said this had been arrived at after considerable deliberations. “Fiscal policy is the remit of the government,” the finance ministry said an affidavit. - economic times

🍒 Reserve Bank of India appeals to Supreme Court to allow NPA classification : India's central bank has appealed to the country's top court to let banks classify loans as nonperforming, saying a ban imposed to help borrowers in the COVID-19 pandemic could greatly harm the nation's financial system. The Reserve Bank of India, in a filing to the Supreme Court late on Friday, warned that failure to immediately lift an interim stay on banks classifying any loan as a non-performing asset (NPA) would also undermine the central bank's regulatory mandate. The court granted the stay last month, responding to a plea filed by an Indian optician, later joined by a wide range of borrowers whose income or revenue was hit by the COVID-19 pandemic. The court is set to rule on the matter on Tuesday. The ruling could have far-reaching consequences not only for millions of borrowers, but also for banks and the country, as state-run banks dominate the sector. - economic times

🍒 Government allows bulk transfer of provident fund from exempted establishments : In a move aimed at improving the ease of doing business, government has allowed bulk transfer of provident fund from exempted establishments to the Employees' Provident Fund Organisation in one go. The move is expected to benefit 1500 exempted establishments of EPFO. Till now exempted establishments had to approve and transfer the funds one-by-one for each member. Consequently, larger establishments requiring to transfer the funds of many employees each day, found the process very cumbersome and time taking. Under the new facility, exempted establishments can bulk upload data and transfer the funds for large number of members, through a single payment. "This will enhance ease of doing business by increasing the speed of funds transfer for exempted establishments," EPFO said in a statement.- economic times

🍒 Moratorium period exceeding six months may result in vitiating overall credit discipline: RBI to SC : A loan moratorium exceeding six months might result in “vitiating the overall credit discipline”, which will have a “debilitating impact” on the process of credit creation in the economy, the Reserve Bank of India has told the Supreme Court. In an af

fidavit filed in the apex court in the loan moratorium case, the RBI has said that a long moratorium period could impact credit behaviour of borrowers and increase the risks of delinquencies post resumption of scheduled payments. The banking regulator fled the affidavit in pursuance to the apex court's October 5 order asking the Centre and the RBI to place on record the K V Kamath committee recommendations on debt restructuring because of COVID-19 related stress on various sectors as well as the notifications and circulars issued so far on loan moratorium.- economic times

🍒 PSBs on-board 1.5 crore account holders on digital payment modes in 45 days : The Finance Ministry on Friday said that public sector banks (PSBs) have on-boarded about 1.5 crore customers on digital payment modes in just 45 days of launch of the ‘Digital Apnayen’ campaign. The campaign, aimed at encouraging customers to use digital banking channels, was launched on August 15 under the aegis of the government’s Digital India initiative. “Pushing digital payment adoption further with the #DigitalApnayen campaign! Started on 15th Aug’20, DFS’s campaign has already onboarded >1.58 Cr. Customers and has resulted in deployment of 50k PoS, >3L QR codes & 18k BHIM Aadhaar pay devices in just 45 days,” Department of Financial Services said in a tweet. Under the campaign, banks were asked to on-board a minimum 100 new customers including merchants and financial inclusion account holders by each branch on digital payment mode. - financial express

🍒 RBI makes TLTROs on-tap, extends fund use to loans : The Reserve Bank of India (RBI) on Friday expanded on its liquidity measures to make the targeted long term repo operations (TLTRO) available on tap and extend the use of money raised under this window to loans given by banks. Industry executives and analysts said while the expanded scheme is meant to enable smaller firms to access funds, details on eligibility will be key. The new format is also aimed at leaving banks with few excuses to not lend aggressively, NBFC chiefs said. RBI governor Shaktikanta Das said that the central bank will conduct on-tap TLTROs with tenors of up to three years for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate. The scheme will be available up to March 31, 2021, with flexibility with regard to enhancement of the amount and period after a review of the response to the scheme. Liquidity availed by banks under the scheme has to be deployed in corporate bonds, commercial papers, loans and non-convertible debentures issued by entities in specific sectors over and above the outstanding level of their investments in such instruments as on September 30, 2020. - financial express

🍒 Care Ratings downgrades Lakshmi Vilas Bank’s debt instruments : Care Ratings has downgraded a slew of unsecured redeemable non-convertible subordinated lower tier II bonds already issued by Lakshmi Vilas Bank (LVB) and additional tier- I bonds that are yet to be issued by the troubled private sector lender. Majority of the ratings have been revised down to Care BB- negative (double BB minus, outlook negative) from Care BB+ negative (double B plus, outlook negative). The revision in ratings assigned to various debt instruments of LVB to the tune Rs 618.70 crore factors in the sharp decline in the net worth due to significant losses reported in FY20 and Q1FY21. The bank reported total CAR and tier I CAR of 0.17% and (-)1.83%, respectively, as on June 30, 2020, Care Ratings said. - financial express

🍒 RBI extends SLR holdings in HTM category till March 2022 : n order to provide certainty to banks, Reserve Bank of India (RBI) on Thursday extended the time period for statutory liquidity ratio (SLR) holdings in held to maturity (HTM) category by one year till March, 2022. Earlier in September, the central bank had increased the limits of SLR holdings under HTM category to 22% from previous 19.5% of the net demand and time liabilities (NDTL) till March, 2021.This dispensation is available to banks for securities acquired between September 1, 2020 and March 31, 2021. Bankers feel that move by RBI will provide cushion in terms of planning for them. “The opening of HTM window upto March 31, 2022 is a much needed move, otherwise we were worried about planning after March, 2021, ” a senior bank official told FE. “In the absence of this order, we were supposed to shift these securities from HTM category to available for sale (AFS) category from first quarter of next financial year.” The investment portfolio of banks is classified under held to maturity (HTM), available for sale (AFS) and held for trading (HFT) category. The holding of securities under HTM provides cushion for banks from valuation changes. - financial express

🍒 RBI allows HFCs to lend with banks under co-origination model : The Reserve Bank of India (RBI) on Friday allowed housing finance companies (HFCs) to collaborate with banks for priority sector lending under co-origination model. In 2018, RBI had put in place a framework for co-origination of loans by banks and non-banking financial companies (NBFCs). However, HFCs were not allowed to co-lend with banks under this model. Lenders believe that move from RBI may bring down interest rates for HFCs. Although, this model has not taken a broad shape since inception, bankers said that latest move from RBI may bring best of banks and NBFC together. Dinesh Kumar Khara, chairman, State Bank of India (SBI), said that the decision to operationalise the co-origination model is right as it brings the best of banks and NBFC together. This will surely increase the reach of the financial sector at such a critical point, he added. In an interaction with CNBC TV 18, S S Mallikarjuna Rao, MD and CEO, Punjab national Bank (PNB), said the interest rate may come down for loans given by housing finance companies as a result of co-lending. Although, co-lending has not taken a broad shape since 2018, but we expect it to go little further at least in housing segment, he further said. - financial express

🍒 ‘Regulators have ignored handholding’ : Just like the Securities Appellate Tribunal (SAT), which was set up to hear and dispose of appeals against orders passed by the market regulator Securities and Exchange Board of India (SEBI), it is time to create an appellate tribunal for the Reserve Bank of India (RBI) to make the banking regulator accountable and its decisions more transparent, said former Supreme Court Justice BN Srikrishna on Friday. He was speaking at the BusinessLine Knowledge Series webinar on ‘Is the long arm of the regulator hurting the markets?’. The webinar, powered by BSE, was moderated by Palak Shah, Senior Assistant Editor, BusinessLine.- Business Line

🍒 LIC to offer 24 cr shares at ₹320/per share for Vedanta delisting : Life Insurance Corporation (LIC) is likely to seek ₹320 per share from Vedanta promoters in the delisting issue of the company, sources told Business Line. Data from stock exchange website showed that around 40 crore shares were being offered at ₹320 and there were only 2 orders offering such huge number of shares. The confirmed quantity was around 4 crore shares and cumulative confirmed quantity stood at around 40 crore shares. LIC holds about 24 crore shares in the company and is its largest non-promoter shareholder. -

Deputy Governor of RBI

The appointments committee of the Cabinet has cleared the name of M Rajeswar Rao for the post of Deputy Governor, Reserve Bank of India (RBI), the government said in a release on October 7.

Rao is presently Executive Director at RBI.

An economics graduate and a MBA, he is also a CAIIB. He joined RBI in 1984 and as career central banker has exposure in various aspects of central bank functioning. He was earlier in charge of risk monitoring department and has also worked as the Banking Ombudsman, New Delhi and in RBI’s regional offices at Ahmedabad, Hyderabad, Chennai and New Delhi.

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.