14.10.2020: Today's Banking / Financial News

14.10.2020: Today's Banking / Financial News at a Glance

🍒 Bank credit may grow 7% YoY in Q2; NBFC disbursals to pick up QoQ : Banks may register around 7% credit growth year on year (YoY) in the quarter ended September and non-banking financial companies (NBFCs) may see a pick-up in disbursements, said analysts. Asset quality is expected to remain stable as the moratorium, in effect through much of the quarter, would have saved stressed accounts from turning bad. The Supreme Court being standstill on non-performing asset (NPA) classification will also keep a lid on lenders’ bad-loan numbers. “We expect banks/NBFCs within our coverage to report credit growth of 7.3/5.8% YoY vs. 8.2/7.1% in 1QFY21,” HDFC Securities said in a recent note, adding, “Deposit growth is likely to have exceeded credit growth for our coverage banks, and we expect large private banks within our coverage to have fared particularly well on this front.” Analysts at the broking firm said they would watch disbursals under the credit guarantee scheme, collection efficiency trends and early-bucket delinquencies. Bank-level commentary on the utilisation of the Covid-related stress resolution framework and additional provisions related to the pandemic will also be closely tracked. Besides bank announcements, the markets are waiting for judicial outcomes related to the classification of accounts as NPA and the levy of compound interest in case of accounts under moratorium. - financial express

🍒 Gross NPAs of banks may jump to 11.5% by end of this fiscal, says rating agency CARE : Indian banks are likely to restructure around 4-5 percent of the overall bank credit outstanding while the Gross NPA (non-performing assets) ratio is likely to be 11-11.5 percent by end of FY21, CARE Rating said in a note on Tuesday. Restructuring refers to relaxing the repayment terms of borrowers. This is done either by cutting interest rates, providing a loan moratorium or extending the repayment period. Banks need to set aside a higher amount as provisions for restructured loans. This will impact their profitability. “Further, the asset quality data post the Covid-19 lockdown is uncertain due to a developing regulatory scenario; multiple stakeholder objectives and moratorium computation with various firms have varying ways of computing moratorium,” said the rating agency in the note. The GNPA ratio of SCBs stood at 8.2 percent in Q1FY21 against 9.5 percent in Q1FY20. Scheduled Commercial Banks’ asset quality has seen some improvement (GNPA reduction) due to recoveries and higher write-offs.-moneycontrol

🍒 BoB may consider 50:50 split between staff at branches, WFH employees : State-owned Bank of Baroda (BoB) may consider adopting a model in the next few years where it will deploy 50 per cent of its employees at the branches and the balance would work from home, its Managing Director and CEO Sanjiv Chadha said. "I think it is quite possible that over the next 4-5 years, BoB is looking at having a workforce, only 50 per cent of which may be fully full-time employed at branches and the balance would be working from home," Chadha said at an HR conclave organised by the Indian Banks' Association (IBA). Currently, 80 per cent of the bank's staff is deployed at the branches. In July, State Bank of India's then chairman Rajnish Kumar said the lender would institute 'work-from-anywhere (WFA)' at the bank. The bank expects to save Rs 1,000 crore from it. Chadha further said that currently, not all customers are coming to the bank branches. - Business standard

🍒 SBI Card kick-starts festive season offers with cashback, discounts across various brands : SBI Card on Tuesday said it has kick-started festive season offers in line with the changing shopping trends and customers will be offered discounts as well as cashback across a host of brands. With over 1,000 offers across 2,000 cities, SBI Card endeavors to bring customers a rewarding shopping experience on their festive season purchases, it said in a release. The festive offers that star

ted from October 1, will run till November 15, 2020. "This year we have curated over 1,000 offers, with national and local merchants, both in store and online, across 2,000 cities, to enable our cardholders great benefits across all the categories. "In addition, to make festive purchases more affordable, SBI Card customers can avail EMI purchase facility at over 1.3 lakh stores," said Ashwini Kumar Tewari, MD & CEO, SBI Card.. - economic times

🍒 SBI’s core banking operations hit by connectivity issues : State Bank of India (SBI) on Tuesday said all delivery channels (except ATMs and POS machines) will be affected as intermittent connectivity issues have delayed making its Core Banking System (CBS) available to its customers. SBI has a multi-channel delivery model, which includes digital, mobile, ATM, internet, branches and business correspondent (BC) outlets. CBS is an IT platform that networks all the operations of a bank, including branches, ATMs, POS, etc., enabling a customer to transact from any branch of the bank or seamlessly transact digitally. “We regret the inconvenience caused and request you to bear with us. Normal service will resume soon,” SBI said. - Business Line

🍒 Karnataka Bank Q2 net rises to ?119 crore : Karnataka Bank registered a net profit of ?119.35 crore in the second quarter of FY21 against a profit of ?105.91 crore in the corresponding period of FY20, recording a growth of 12.69 per cent during the period. The net interest income of the bank increased to ?574.87 crore in the second quarter of FY21 against ?498.72 in Q2 of FY20. The fee-based income of the bank stood at ?174.63 crore (?233.45 crore) during the period. Speaking to BusinessLine after the meeting of the board of directors of the bank, which was conducted through videoconferencing to approve the financial results for Q2 on Tuesday, Mahabaleshwara MS, Managing Director and CEOof the bank, said the lender was able to effectively navigate the Covid-affected first half of FY21 by mainly focusing on containing the interest expenses - Business Line

🍒 RBI’s ?1-lakh crore long-term repo operation will push credit growth, say analysts : The ‘on-tap’ targeted long-term repo operation (TLTRO), which the Reserve Bank of India (RBI) will conduct, for a total amount of up to ?1-lakh crore can help push up credit growth, according to experts. As exposure under the scheme is exempt from LEF (large exposure framework) norms, this will open up more investment opportunities for banks, according to State Bank of India’s research report “Ecowrap”. “The ?1-lakh crore on-tap TLTRO window is a good measure by RBI, especially ahead of festival season...The previous TLTROs were intended to remove mismatches in liquidity or their (non-banking finance companies and microfinance institutions) asset liability, whereas this window will open avenues for lending and help create demand in the festival season,” said CH SS Mallikarjuna Rao, MD & CEO, Punjab National Bank. - Business Line

🍒 Deepak Kochhar produced before PMLA court, remanded to ED's custody till Oct 17 : Seeking further custody of businessman Deepak Kochhar in a money laundering case, the Enforcement Directorate (ED) Tuesday produced him before the special Prevention of Money Laundering Act (PMLA) court here. The couple- Deepak and wife Chanda, the former ICICI Bank chief executive and Videocon Group chairman, Venugopal Dhoot are accused in a money-laundering case registered more than a year and half ago by the ED. Defence counsel, Vijay Aggarwal, argued that the federal agency cannot seek Kochhar's custody as he still requires post-discharge care after being hospitalised for Covid-19. - economic times

🍒 Mastercard partners Indian start-up Signzy for global rollout of Video KYC : Mastercard, a global technology company in the payments industry, has partnered with Signzy, a RegTech startup based in India, for global rollout of Signzy’s video-based KYC (Know Your Customer) solution for its banking customers. With this partnership, Mastercard customers will benefit from a completely paperless, remote and secure onboarding solution for end-users. It maybe recalled that Reserve Bank of India (RBI) had in January this year amended its KYC norms allowing banks and other lending institutions regulated by it to use Video based Customer Identification Process (V-CIP), a move which will help them onboard customers. Signzy’s Video KYC solution will enable end-users to complete and submit their KYC application from the safety and security of their homes. This would be 99 per cent faster than the traditional paper-based KYC process. Signzy is an Artificial Intelligence-powered Robotic Process Automation platform for financial services.. - Business Line

🍒 With more innovations, ATM networks may see rebound in FY22 : Amid rise in digital payments, the number of ATMs in the country may continue to decline until the end of this fiscal due to the consolidation of public sector banks and macro factors, including the economic slowdown, but could resurface with more functionalities in FY22. ATM operators also remain hopeful of an increase in interchange fees, which, they believe, will be a boost to the sector. “If the government and RBI want ATM infrastructure, especially in the rural areas, they will have to consider a hike in interchange fees,” noted a spokesperson of industry body Confederation of ATM Industry (CATMi), adding that there is sufficient infrastructure in urban areas, along with digital payments. Anurag Nigam, Head of ATM-managed services, India and Philippines, FIS, also said an increase in interchange fee will act as natural incentive for some banks to deploy ATMs and will also help white-label ATM operators. “Bank amalgamation cameinto effect this year and there are economies of scale, which will lead to some reduction in the number of ATMs. Also, there is some amount of pure play involved as many industries have closed down, so there will be some impact,” he noted. - Business Line

🍒 With PMFBY scheme being optional for farmers, crop insurance premium de-grows in Sept : Crop insurance premium declined in September this year after recording positive growth in the previous months, possibly due to the lesser number of States participating in PMFBY, the scheme being optional for farmers, and a long delay in claims. The gross direct premium for Agricultural Insurance Corporation of India de-grew by 19.3 per cent in September when compared to a year ago.Data from IRDAI revealed that gross direct premium for AIC stood at ?2,569.64 crore in September 2020against ?3,187.57 crore in September 2019. However, between April and September 2020, AIC registered a 10.63 per cent growth in gross direct premium to ?7,250.80 crore against ?6,554.36 crore in the same period a year ago. - Business Line

🍒 Karnataka Bank appoints new Additional Director : Karnataka Bank has appointed Uma Shankar as Additional Director (non-executive, independent) at its board meeting on October 13. The appointment will be effective from November 1. A press release by the bank said on Tuesday that Uma Shankar is a former Executive Director of Reserve Bank of India (RBI). She was with the RBI for over 37 years in different capacities. Her core competence is in the financial sector supervision, but she has also been responsible for currency management, foreign exchange and internal accounting and administration. - Business Line

🍒 ‘Small-ticket advances to go fully digital’ : The pandemic has led to the evolution of straight through processing (STP) of loans, with banks pushing pre-approved loans to the micro, small and medium enterprise (MSME) segment and small-ticket advances going fully digital, according to Rajkiran Rai G, Deputy Chairman, Indian Banks’ Association (IBA). “For example, in the case of MSMEs, we have a back-office for processing loans. We pushed SMS to the customer that he has a pre-approved loan. “So, the number of visits he is required to make to the branch, which would otherwise have been 5 to 6, has come down to only one visit for documentation. And in some of the cases, even that is being done away with,” said Rai at IBA’s 3rd Annual Banking HR Conclave. - Business Line

🍒 Covid-specific insurance can be renewed till March 2021 with portability: IRDAI : The Insurance Regulatory and Development Authority of India (IRDAI) has permitted renewability, migration and portability of Covid-specific standard health policies, Corona Kavach and Corona Rakshak.In a circular issued on Tuesday, the insurance regulator said these policies of any tenure may be renewed for further terms of three and half months, six and half months or nine and a half months as per the option exercised by the policyholder.orona Kavach and Corona Rakshak polices are permitted to be renewed till March 31, 2021. “Renewal, if any, may be done before the expiry of the existing policy contract. There will be no imposition of any additional waiting period of 15 days and the coverage should be continued seamlessly,” the IRDAI said. The change in sum insurance can be opted by the policyholder during the renewal period.- Business Line

🍒 Capital Float reaches 1 million customers; Rs 9,000 cr loans disbursed : Digital financial services provider Capital Float on Tuesday said it has crossed the one million customers milestone and has disbursed over USD 1.2 billion (Rs 9,000 crore) till date to small businesses and retail borrowers. Capital Float has crossed 'one million lifetime customers' as more Indians find value in the company's credit services, it said in a release. Since the onset of COVID-19, the company has seen demand surge for its small-ticket digital credit facilities, particularly for making purchases online. It is now adding approximately 150,000 new customers per month, and is on track to double its existing customer base by the end of the year, it added. The company has disbursed over USD 1.2 billion (Rs 9,000 crore) till date to its MSME and retail customers spread across 300 cities in India. - Business Standard

🍒 How City Union Bank, Federal Bank have sustained investor interest : The underpinning similarity between Federal Bank and City Union Bank (CUB) is their years of establishment as banks which span over several decades. Despite their regulatory classification as old private sector banks, despite the disagreement between bank chiefs over it, the other similarity lies in their ability to chart a strong trajectory and to harvest their deep rooted connection with the small and medium enterprise (SMEs). It is probably because of this that despite their regional peers such as Lakshmi Vilas Bank and Dhanlaxmi Bank running into serious trouble, stocks of Federal Bank and CUB have remained outliers with gains of 10 per cent and 7.7 per cent, respectively, since September 24, when trouble started brewing for their two peers. But the similarities end here. Whether in terms of size of business, the manner of diversification or even in terms of market capitalisation, both banks are poles apart. - Business Standard

🍒 Gold prices steady at Rs 51,147/10 gm on subdued global cues : Gold prices were steady at Rs 51,147 per 10 gram in the Mumbai retail market on a weaker rupee and lacklustre global cues. The precious metal traded flat in today’s session on rebound dollar after hitting a session low of $1,915/oz. The rate of 10 gram 22-carat gold in Mumbai was Rs 46,851 plus 3 percent GST, while 24-carat 10 gram was Rs 51,147 plus GST. The 18-carat gold quoted at Rs 38,360 plus GST in the retail market. Silver prices declined Rs 418 to Rs 62,188 per kg from its closing on October 12.

🍒 Sensex, Nifty end marginally higher after choppy trade; IT stocks shine : Rising for the ninth session in a row, the 30-share BSE Sensex ended 31.71 points or 0.08 per cent higher at 40,625.51. The broader NSE Nifty inched up 3.55 points or 0.03 per cent to 11,934.50. HCL Tech was the top gainer in the Sensex pack, rising around 4 per cent, followed by Kotak Bank, Infosys, Reliance Industries, UltraTech Cement and Tech Mahindra.On the other hand, Titan, Sun Pharma, ICICI Bank, Axis Bank, SBI and Bajaj Finance were among the main laggards.According to analysts, the recent recovery in the mark

et was led by expectations of fiscal stimulus from the government, which has failed to cheer investor sentiment. IT stocks continued to gain momentum ahead of crucial Q2 results and better earnings visibility, they added.

🍒 Rupee open: INR slips 13 paise to 73.41 against USD : The rupee depreciated 13 paise to 73.41 against the US dollar in opening trade on Tuesday tracking strengthening American currency. The Indian currency opened at 73.41 against the US dollar at the interbank forex market, down 13 paise over its previous close.

13.10.2020: Today's Banking / Financial News

13.10.2020: Today's Banking / Financial News at a Glance

🍒 Central Bank of India too Writes Off Rs17,239 Crore Bad Loans of Big Defaulters and Recovers Just 7% in 8 Years : Following the footsteps of other large banks from the public sector, Central Bank of India too wrote off Rs17239.74 crore and recovered a paltry 7% or Rs1205.92 crore over the past eight financial years from big defaulters. As it has become a norm with public sector banks (PSBs), Central Bank too denied sharing names of big defaulters under the Right to Information (RTI) Act. Information shared by the bank to Pune-based RTI activist Vivek Velankar shows that the Central Bank has written off Rs17,239.74 crore as technical write-offs in the eight-year period from FY12-13 to FY19-20. As against these write-offs, the recovery was just 7% or Rs1205.92 crore. This applies only to loan defaults of Rs100 crore and more. In its reply, the bank says, "Year-wise recovery in particular accounts of Rs100 crore and above is not available with us. However, total recovery in those accounts till FY2019-20 is Rs1,205.92 crore." - moneylife.

🍒 New Deputy Governor to oversee 6 departments at RBI : Newly-appointed Deputy Governor M Rajeshwar Rao will oversee six departments at the Reserve Bank of India (RBI). The six departments that Rao will manage are: Regulation; Communication; Enforcement Department; Inspection; Legal ; and Risk Monitoring.The Appointments Committee of the Cabinet had approved the appointment of Rao, Executive Director, RBI, to the post of Deputy Governor on October 7.The fourth Deputy Governor’s position was vacant since NS Vishwanathan quit his position in March, about three months ahead of the completion of his term. Following the elevation of Rao, the RBI now has four Deputy Governors. The other three Deputy Governors are – BP Kanungo, MK Jain and MD Patra. - Business Line

🍒 Lakshmi Vilas Bank board meeting on Oct 15 to consider rights issue : A meeting of the Board of directors of Lakshmi Vilas Bank Limited will be held on Thursday, October 15, to consider and approve the issue of Securities of the bank to existing shareholders on a rights basis. The issue will be subject to necessary regulatory and statutory approvals, LVB informed the exchange. It may be recalled that the Board and shareholder meetings of LVB held on August 26 and September 25, respectively, approved the raising of funds by way of issuance of equity shares or other eligible security. These included global depository receipts, American depository receipts, foreign currency convertible bonds, fully/partly convertible debentures and other instruments, aggregating to not more than Rs l,000 crore. Sources said the lender plans to raise Rs 500-700 crore via rights issue. Many of the existing institutional investors are expected to participate and subscribe to it in order to protect the investments they have already made. - Business Standard

🍒 Exim Bank extends $400 mn soft loan to Maldives for connectivity project : India has extended a USD 400 million (about Rs 2,932 crore) soft loan to Maldives through the Exim Bank to finance a connectivity project in the nation of islands, a statement said on Monday. The Export-Import Bank of India (Exim Bank) on behalf of the Government of India has extended a Line of Credit (LoC) of USD 400 million for undertaking Greater Male's connectivity project in Maldives, the bank said. The loan agreement was inked in Male on Monday between Exim Bank General Manager Nirmit Ved and Maldives' Finance Minister Ibrahim Ameer. With the signing of the above agreement, Exim Bank has till date extended three LoCs worth a cumulative USD 1.2 billion to Maldives, on behalf of India. Exim Bank said the soft loans to Maldives have funded connectivity, water, sewerage projects, Addu Development Project, an international cricket stadium, Gulhifalhu port, Hanimaadhoo airport and road construction work. - Business Standard

🍒 Kotak Sec less optimistic on linkages between changes to risk weight and loan growth : Kotak Securities Ltd (KSL) said it is less optimistic on the linkages between changes to risk weight and loan growth, interest rates or credit flow. “It is most likely that there is lack of confidence between lenders to take risk, while borrowers may be less certain of the near-term outlook on their financials leading to a lower off take,” said the wholly-owned subsidiary of Kotak Mahindra Bank in a report. The Reserve Bank of India (RBI), in its bi-monthly monetary policy on October 9, had announced two primary measures for the banking system to provide liquidity and improve credit flow by modifying the definition pertaining to retail/SME loans. - Business Line

🍒 Axis Bank collaborates with Google Pay, Visa to launch a new ACE Credit card : Axis Bank on Monday announced the launch of its ACE Credit Card in India in collaboration with Google Pay and Visa. The card meant to help with digital payments. From application to issuance, with the entire user journey for the credit card application will be done digitally. For essential use cases, including mobile recharges and bill payments made via Google Pay, users can earn a cashback.of 5 per cent. The company is also offering 4 per cent-5 per cent cashback for expenses on food ordering, online grocery delivery, cab rides for transactions made on partner merchant platforms such as Swiggy, Zomato, BigBasket, Grofers and Ola. There is also an unlimited 2 per cent cashback on other transactions (terms and conditions applied). - Business Line

🍒 FDI routed through Mauritius: RBI move will create transparency and accountability on the source of funding : The Reserve Bank of India’s stance that financial firms can not be set up with funds from Mauritius or other non-FATF-compliant jurisdictions is likely to bring more transparency and accountability into funding in the sector, according to players. But experts have also said the government must clarify on foreign direct investments from Mauritius into the sector. Industry watchers point out that the last few months have seen a surge in investments from China, which is routed from countries such as Mauritius and Cayman Islands. - Business Line

🍒 Rs 11.1 trillion: Amount RBI pumped into banking system to boost liquidity : Measures taken by the Reserve Bank of India during the Covid crisis were driven by the need to expand liquidity in the system sizeably, in order to ensure that financial markets and institutions function normally in the face of Covid-related dislocations, consistent with the monetary policy stance. The liquidity measures were taken as per the revised liquidity management framework introduced on February 14, this year. The central bank reduced the policy repo rate by 40 bps on May 22, on top of a 75 bps reduction on March 27, and introduced a number of liquidity enhancing initiatives that stabilised the bond yields even on the face of a Rs 12 trillion borrowing programme. “In order to make it relatively unattractive for banks to passively park funds with the Reserve Bank and to encourage their deployment for on-lending to productive sectors of the economy, the policy interest rate corridor was widened to 90 bps through a reduction of 25 bps in the reverse repo rate on April 17, 2020,” said the RBI’s monetary policy report. - Business Standard

🍒 ₹10,000 festive advance scheme: Govt to give pre-loaded RuPay cards : In a move to boot consumer demand in the economy during the festive season, the government on Monday announced a slew of schemes such as payment of cash in lieu of LTC and ₹10,000 festival advance to government employees. Festival advance along with similar advances were abolished on the recommendation of the 7th pay commission. But to spur consumer demand in an economy hit by coronavirus pandemic, the government decided to restore it as a one-time measure. "All Central Government employees can now get an interest-free advance of Rs. 10,000, to be spent by 31st March, 2021 on the choice of festival of the employee. The interest-free advance is recoverable from the employee in maximum 10 instalments," the Finance Ministry said in a statement. - Live Mint

12.10.2020: Today's Banking / Financial News

12.10.2020: Today's Banking / Financial News at a Glance

🍒 Five of 12 PSU bank stocks trade near face value : Five out of 12 public sector banks are trading near the face value of their equity shares on bourses regardless of a rally in stock benchmark indices, according to an analysis. Shares of state-run Indian Overseas Bank are even trading below the face value of Rs 10 per share. On the BSE, the stock closed at Rs 9.27 on Friday when the benchmark index Sensex closed at 40,509. The Chennai-based bank tapped the market first in September 2000 offloading part of the government’s stake at par or at the face value of Rs 10 per share. Remaining four public sector banks of Bank of Maharashtra, UCO Bank, Punjab & Sind Bank and Central Bank of India are trading near the face value of Rs 10 per share. Shares of Punjab & Sind Bank closed at Rs 10.81 per unit, Bank of Maharashtra’s at 11.29 per unit on Friday. Mumbai-based Central Bank of India is slightly better positioned with closing price of Rs 12.45 per share followed by Kolkata-based UCO Bank at 12.14 per unit. Religare Broking Ltd Chief Operating Officer Gurpreet Sidana said, “We’ve witnessed a remarkable recovery in the benchmark in the last few months but the PSU banking pack is still struggling. After the initial rebound, mostly PSU banking stocks are again hovering closer to their 52-week lows.” There are multiple overhangs on the sectors including asset quality concerns, subdued business environment and low credit offtake causing deterioration in stock prices, he said. Central Bank of India plans to mop up Rs 5,000 crore of equity capital through various modes, including follow on public offer and rights issue, to maintain its capital adequacy ratio. As per Basel III regulations, banks are required to maintain minimum common equity tier-1 (CET 1) ratio of 5.50 per cent plus capital conservation buffer (CCB) of 2.50 per cent in the form of equity capital, tier-1 ratio of 9.50 per cent and overall CRAR of 11.50 per cent. - financial express

🍒 Rajan, Acharya may be off mark: PSU banks need strategy and focus to survive, not privatisation as remedy : It is interesting that two of India's biggest brand-name economists, former Reserve Bank governor Raghuram Rajan and former deputy governor Viral Acharya, have spoken for the "re-privatisation" of public sector banks even as the nation debates a controversial couple of agriculture reform bills splitting the political class. As we shall see, the twain may well be inter-linked. As it happens, the rockstar economists (Acharya literally wields the guitar as well as an amateur musician) are officially ensconced back in their chairs in US academia. They may well be far removed from both India and its political economy though they do have their logic. They are speaking more from the orthodoxy of market economics in full-employment economies and its implicit ideological baggage in saying what they did. No doubt, in a globally integrated economy such as India with a substantial market to maintain, their words ought to carry weight. Reports on the paper the two economists have authored says a "select" few PSU banks may be privatised. It is not clear if they intend this only as part of a structured solution with a focus on ownership — which is not a bad idea — or whether they want a situation where all state-run banks are intended to be privatised. - first post

🍒 Digital payments soar manifold in 5 years to FY20: RBI : Concerted efforts by the Reserve Bank to move to a non/less-cash economy by pushing digital payments have begun to pay rich dividends as the volume of such payments has jumped manifold in the past five years, the latest data from the central bank showed. Between 2015-16 and 2019-20, digital payments have grown at a compounded annual growth rate of 55.1 per cent - from 593.61 crore in the year to March 2016 to 3,434.56 crore in the year to March 2020. In absolute terms, value has grown from Rs 920.38 lakh crore to Rs 1,623.05 lakh crore during this period, clipping at an annual compounded rate of 15.2 per cent. Giving a year-wise data, in 2016-17 digital payments jumped to 969.12 crore from 593.61 crore in the previous year in volume terms, while in value the same rose to Rs 1,120.99 lakh crore. - economic times

🍒 Govt may consider allowing GST deposit on cash basis: PwC report : The government may consider allowing India Inc to deposit GST on cash basis to help them tide over the liquidity woes during the COVID-19 pandemic, a PwC report said. It said while formalising its support strategy for the industry in the next phase, the government could also consider suspending GST payments for select sectors during the COVID-19 period. In its report titled 'Reimagining GST@3', PwC said cash liquidity support schemes that advance business continuity are the need of the hour. "The government has announced a timely budgetary support scheme in line with the relief packages of various developed nations. Despite these steps, much ground remains to be covered," it said. - economic times

🍒 RBI to move to next generation treasury application for managing forex, gold reserves : In a bid to improve its functioning, the Reserve Bank has decided to move to the Next Generation Treasury Application (NGTA) for managing the country's foreign exchange and gold reserves. The NGTA, according to the RBI, would be a web-based application providing scalability, maneuverability and flexibility to introduce new products and securities, besides supporting multi-currency transactions and settlements. The NGTA, for which the RBI has invited bids from eligible vendors, would be supporting various transactions in asset classes like Fixed Income (FI), Forex (FX), Money Market (MM) and Gold. "RBI proposes to implement the NGTA which would be used for managing the foreign exchange reserves in a more efficient way, mitigate risk, achieve operational efficiencies, dealing in various asset classes and reporting," the bid document said.- economic times

🍒 Registered Valuers Organisations: IBBI standardises meeting norms of Disciplinary Committee and Appellate Panel : Insolvency regulator IBBI has clamped down on varying practices in the conduct of meetings of the Disciplinary Committee (DC) and the Appellate Panel (AP) of the Registered Valuers Organisations (RVO), which are the frontline organisations for the development and regulation of valuation profession. It has come up with series of directions to be followed by the DC and AP of the RVO while conducting their meetings including stipulation that meetings be held only if there is an agenda and preferably through a video conferencing facility, keeping in view the current pandemic. Accordingly, the meeting of the DC will be held for considering the issue or disposal of a show cause notice to a member, said an IBBI circular. The meeting of an AP would be held to consider the issues raised in the appeal filed by the aggrieved against the order passed by the DC, the circular added. - Business Line

🍒 'Banks, NBFCs to witness increased polarisation,' says HDFC Securities. Here are the top picks : Despite an uptick in real economic activity and fresh disbursals, there has been a slower year-on-year credit growth. "Disclosures by select lenders and trends in non-food credit growth suggest this too. We expect banks/NBFCs with our coverage to report credit growth of 7.3/5.8% YoY vs. 8.2/7.1% in 1QFY21," says a report by HDFC Securities. The broker's report on banks and NBFCs state that the deposit growth is likely to have exceeded credit growth for their coverage banks, and they expect large private banks to have fared particularly well on this front. HDFC Securities expect the space to witness increased polarisation in the space. "Consequently, larger banks with sufficient capital, strong granular liability franchises, and a good asset quality track record are expected to emerge stronger," says the report by HDFC Securities. ICICI Bank (SoTP of ₹496), Axis Bank (SoTP of ₹619), and City Union Bank (TP of ₹196) are HDFC Securities top picks among the banks. CIFC (TP of ₹289) is their top pick in the NBFC space. - Live Mint

🍒 Irdai panel for lower entry-level capital for micro-insurance companies : An Irdai committee has suggested reduction in entry-level capital requirement for standalone micro-insurance companies to Rs 20 crore from the current Rs 100 crore with a view to accelerate expansion of this segment of insurance market in the country. The committee set up by the Insurance Regulatory and Development Authority of India (Irdai) to suggest steps to promote micro-insurance said that like other nations India too will need to attract multiple players if it wants to substantially increase insurance penetration. “This is all the more urgent in the current context of the COVID-19 pandemic when millions of Indians, especially in the informal sector, have lost their livelihoods, are now leading more insecure lives and are falling back into poverty,” the report of the committee said. It noted that for low-income families, calamities such as illnesses, accidents, death or the loss of assets often have very grave financial consequences. Such events can push these families deeper into poverty as their meagre resources get depleted. Many get drawn into debt traps as they borrow beyond their means, sell productive assets, take children out of school or put them to work, compromise on food, or leave sickness untreated, it said. - financial express

🍒 FPIs pump in net Rs 1,086 crore so far in October : Foreign portfolio investors (FPI) have invested Rs 1,086 crore on a net basis so far in October in Indian markets, tracking encouraging factors including improved GST collection, acceleration in economic activity and positive global cues. According to the depositories data, overseas investors pumped in a net Rs 5,245 crore into equities and withdrew Rs 4,159 crore from the debt market during October 1-9. This translated into a total net inflow of Rs 1,086 crore. In September, FPIs were net sellers at Rs 3,419 crore. - moneycontrol.com

🍒 Sensex, Nifty jump 4% last week; will the rally sustain? Here's what 10 top analysts say ; Market benchmarks logged gains for the seventh consecutive day in a row on October 9, the longest winning streak seen so far in 2020. The S&P BSE Sensex reclaimed mount 40K, while Nifty50 closed above 11900 levels and is on track to retest record highs by December 2020.For the week, the action was limited to benchmark indices as broader markets saw profit booking. The S&P BSE Sensex rose 4.6 percent while the Nifty50 was up 4.3 percent for the week ended October 9 compared to a 0.3 percent fall seen in the S&P BSE Midcap index, and a flat closing seen in the S&P BSE Small-cap index for the same period. The market is teeming with positivity. However, in-between profit-booking cannot be ruled out, experts believe. - moneycontrol.com

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.