31/10/2020 Today's Banking / Financial News

31/10/2020 Today's Banking / Financial News at a Glance

🍒 RBI board mulls future course for weaker banks : Should weaker banks hold back lending and expansion till they are totally out of the woods? Or, is there a better chance to improve their financials if the regulator allows them to lend and grow? The question cropped up at last week’s meeting of the central board of the Reserve Bank of India (RBI) – with opinions of directors divided on the matter. Five banks – Central Bank of India, IDBI Bank, Indian Overseas Bank, Uco Bank and Lakshmi Vilas Bank – are now under the RBI prompt corrective action (PCA) framework that brings in multiple restrictions aimed at conserving capital of banks and better their loss-absorption capacity. The curbs would be lifted only after fresh directives from the regulator. “Some of the (board) members felt that a delay in lifting the restrictions could prolong the recovery of these banks post Covid. Instead, RBI should let them hire and chase business. It was a general discussion... members had different views and no decision was reached. The matter is likely to be referred to the BFS,” said a person aware of the discussion. (The Board for Financial Supervision, or BFS, undertakes consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies). - economic times

🍒 Retail investors will get to own more of public sector banks, says Nirmala Sitharaman : Finance Minister Nirmala Sitharaman is all for greater public participation in the banking sector. The government will have to work out the modalities for that, she said while sharing her plans for the sector. “I would, probably in the later part of next year, focus on some more retail participation in ownership of the banks,” she told BusinessLine in an exclusive interview through video conference. “We had earlier approved consolidation of 10 banks into four. In the last few years, the Centre has infused about ₹3,50,000 crore by way of capital into public sector banks for regulatory and growth purposes. Governance reforms would be carried out in these banks, so that they become more competitive. A few among them will be encouraged to approach the capital market to raise additional capital,” she added. - Business Line

🍒 RBI launches latest surveys on consumer confidence, inflation expectations : The Reserve Bank has launched the latest round of surveys to capture consumer confidence and inflation expectations of households, which are useful inputs for its monetary policy. The central bank has been regularly conducting Consumer Confidence Survey and Inflation Expectations Survey of Households (IESH). The results of these surveys "provide useful inputs for monetary policy", the RBI said while announcing the launch of the November 2020 round of CCS and IESH through two statements. The next meeting of the RBI Governor-headed Monetary Policy Committee (MPC) is scheduled for December 2 to 4, 2020. - Business Standard

🍒 SBI targets digital delivery of retail loans by June: MD : State Bank of India (SBI) is looking at providing digital delivery of all retail loans by June 2021, scaling it up from the current level of 60%, said CS Setty, managing director – retail and digital banking, on Thursday. He exhorted non-banking finance companies (NBFCs) to look beyond lending to industry and commercial real estate and to bring down their collection costs for pooled loans. SBI has 50 professionals in its data sciences department and it plans to expand its strength to 110. This department, which works on the bank’s artificial intelligence/machine learning (AI/ML) capabilities, has helped it identify a majority of its leads in the retail lending segment, Setty said at an NBFC seminar, organised by the Ficci. - Financial Express

🍒 Despite heavy provisioning, Canara Bank’s Q2 profit up 5.31% : Heavy provisioning has impacted Canara Bank’s profits. The bank has posted a 5.31 per cent higher profits for second-quarter of FY 2020-21 at ₹466.41 crore as against ₹442.86 crore posted in the same period last year. The bank’s profits got impacted due to ₹4,021.34 crore provisions (other than tax) and contingencies for Q2, as against last year’s ₹2,109.97 crore. For Q1 of this fiscal, the bank had made a provision of ₹3,826.61 crore. For Q2, the bank’s total income grew by 46.24 per cent at ₹22,681.05 crore as against ₹15,509.36 crore recorded last year. EPS for the quarter stood at ₹3.21 as against ₹5.88 posted last year.- Business Line

🍒 HDFC Bank offers cashback to merchants to encourage digital transactions : With a view to drive digital payment adoption among the merchant segment, HDFC Bank has launched cashback offers and other incentives for small and medium-sized merchants across the metro, semi-urban and rural markets. A merchant using the bank's merchant App, QR code, PoS or Payment gateways, across all segments, including electronics, apparel, grocery, stand to win assured cashback and prizes on volume build-up, EMI or digital transactions. "This is a first for the bank, where we are extending the festive treats campaign for even the entire small and medium merchants in our network across the country. This programme is not just for merchants based in metros, but also in semi-urban and rural markets," HDFC Bank Head - Payments, Consumer Finance, and Digital Banking Parag Rao told PTI. - Business Standard

🍒 IndusInd Bank Q2 profit down 53% : Private sector lender IndusInd Bank’s net profit in the second quarter of the fiscal more than halved with lower fee income and rise in provisions. For the quarter ended September 30, 2020, IndusInd Bank registered a 53.2 per cent decline in net profit to ₹647.04 crore against ₹1,383.37 crore in the same period last fiscal. Its total income fell by 1.64 per cent to ₹8,731.05 crore in the quarter under review from ₹8,877.02 crore a year ago. Net interest income for the quarter ended September 30, 2020, increased by 12.7 per cent to ₹3,278 crore from ₹2,909 crore in the same period last fiscal. - Business Line

🍒 Karur Vysya Bank Q2 net up 82% : Karur Vysya Bank has reported an 82 per cent jump in net profit at the end of the second quarter of this fiscal when compared to the corresponding quarter of the previous year. The bank’s net profit rose to ₹115 crore, up from ₹63 crore during Q2 of FY20. Operating profit was up 4 per cent at ₹449 crore (₹431 crore), net interest income improved marginally to ₹601 crore, and non-interest income was almost flat at ₹272 crore. The net profit at the end of the first half of the current fiscal stood at ₹220 crore (₹136 crore) and the operating profit at ₹923 crore (₹876 crore). Other income during the first half rose by 7.5 per cent to ₹589 crore. - Business Line

🍒 IndusInd expects restructuring book to be in control: CEO : IndusInd Bank expects its total restructured book to be in "single digits" even as it stepped up provisions to deal with any Covid related uncertainties. "We are still in the process for identifying accounts for restructuring and we expect it to be in the low single digits. We have got some requests for restructuring but they are not substantial," CEO Sumant Kathpalia said in a conference call with reporters. The bank's total slippages at just 19 basis points of its loan book or Rs 400 crore were made up by the Rs 495 of recoveries and upgrades the bank had in the quarter ended September. One basis point is 0.01 percentage point. Kathpalia said the bank's guidance of credit costs at 92 basis points could change because of the restructuring allowed by the RBI.. - economic times

🍒 Axis Bank's JV deal with Max Life hits yet another regulatory wall : Axis Bank has yet again revised the terms of its deal with Max Financial to form a joint venture involving the latter's life insurance entity after the previous agreement was deemed not in line with existing laws by the Reserve Bank of India. As per the revised deal, Axis Bank now plans to acquire up to 9% as opposed to the earlier agreed upon 17% of the equity share capital of Max Life while its subsidiaries Axis C

apital and Axis Securities will together acquire up to 3%, the private lender said in a regulatory filing on Friday. Furthermore, the Axis entities part of the revised deal will also hold a right to further acquire an additional stake of up to 7% in Max Life in tranches. This deal, however, is subject to approvals from the regulatory authorities including RBI and Irdai.- economic times

🍒 Jana SFB upbeat on ‘collection efficiency’ backed by steady improvement in repayments : Jana Small Finance Bank expects its collection efficiency to improve to 97-98 per cent by November this year backed by a steady improvement in repayments. According to Ajay Kanwal, MD & CEO, Jana SFB, the collection efficiency was close to 87 per cent in September and is expected to improve to 90-92 per cent in October. “Covid has proved to be a challenge for all of us, and now the main task would be to stabilise the book, and by that, I mean taking collection efficiency back to 99 per cent. On the overall book level, we have reached a collection efficiency of 87 per cent till September and hope to be 90-92 per cent by October and 97-98 per cent by November. By the year-end we will be back to normal (around 99 per cent),” Kanwal told BusinessLine.- Business Line

🍒 NPS fails to enthuse traders, self employed : The National Pension Scheme (NPS) for traders, shopkeepers and self-employed has failed to make an impact, a senior Labour Ministry official has said. Latest data shows total enrolment at 42,207, which was around 34,000 in February. The scheme was launched on September 12, 2019. “We are not seeing interest from traders, self employed etc for the scheme,” the official told BusinessLine. He said there could be many reasons for this, including high yield options such as stock market or even small savings, availability of benefit after attaining age of 60 and small pension amount. “For a youth of 25 today, the pension amount of ₹3,000 at the age of 60 may not be of use for him,” he explained. - Business Line

🍒 Max Financial profit up 26% in Q2 : Max Financial Services (MFS), on Friday, reported a 26 per cent increase in consolidated net profit for the second quarter ended September 30, 2020, at ₹81 crore. Aided by higher investment income, consolidated revenues grew 50 per cent year-on-year to touch ₹7,020 crore for the quarter ended September 30. The bottomline performance for the quarter under review was bolstered by reversal of impairment loss on investments.- Business Line

🍒 Nabard HI profit rises 8% to ₹2,361 crore : The National Bank for Agriculture and Rural De velopment (Nabard) reported an 8.26 per cent increase in net profit at ₹2,361 crore in the half-year ended September 30, 2020, against ₹2,180.86 crore in the year-ago period. The government-owned development financial institution’s (DFI) loans portfolio increased to ₹4,95,095 crore as of September-end 2020, registering growth of 20.83 per cent from ₹4,09,743 crore last year. - Business Line

🍒 Give ‘deposit-accepting licences’ to all non-bank lenders above a threshold: EY-FICCI report : India should grant ‘deposit-accepting licences’ to all non-bank lenders that are credit rated ‘A’ and above by at least two credit rating agencies and having capital/networth of over ₹1,000 crore, a joint report by EY-FICCI has recommended. This recommendation forms part of the slew of measures suggested to provide a level-playing field for non-bank lenders (NBFCs and HFCs). The EY-FICCI report, ‘Non Banking Finance Sector in India – Building Resiliency’, calls for a level-playing field for all non-bank lenders while ensuring that the interest of depositors, especially small depositors, are not compromised.- Business Line

🍒 Bank lending expanded by over Rs one trillion in Sept: Soumya Kanti Ghosh : Credit growth to industry was 'nil' in September, but banks stepped up their lending to the micro-small and medium enterprises, while depending largely upon services for their loan book growth, according to data released by the Reserve Bank of India (RBI) data showed on Thursday. Growth in credit to industry, which was nil in September, had grown at 2.7 per cent YoY in September 2019. Credit to ‘medium’ enterprises expanded by 14.5 per cent. Analysing the data, State Bank of India (SBI) group chief economic advisor Soumya Kanti Ghosh said on a month-on-month basis, September actually saw a huge amount of credit activity by banks. - Business Standard

🍒 Now you can pay with PhonePe at 20 lakh shops in Maharashtra, without scanning QR code : PhonePe, one of the leading payment platform in the country, on Friday announced that it is now available as a payment option at over 20 lakh shops in Maharashtra. The platform reported a massive 64% year-on-year increase in its offline stores in the western state, the company said. From large retail chains to small shops and neighbouhood kirana stores, PhonePe offers offline payment option at over 1.3 crore shops across the country. The firm has recently introduced several new features to help "offline merchant partners grow their business and attract more customers". The ‘stores' tab available on the PhonePe app, enables "a seamless connection between PhonePe’s 23 crore customers and offline shops at scale throughout the country," the company mentioned. - Live Mint

🍒 Crop, tractor loans ineligible for ex-gratia relief as they fall into Agri allied activity, clarifies FinMin : The Ministry of Finance today clarified that agriculture and allied activity loans will not be eligible for the interest on interest waiver announced by the government last week. It added that crop and tractor loans will not be a part of the eight segments or classes eligible under the scheme as they come under agriculture and allied activities loans. It is to be noted that the government had recently announced the scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts. The government had notified that loan accounts with sanctioned limits and outstanding not exceeding Rs 2 crore will be eligible for the scheme and such accounts should be standard in the books of the lending institutions as of the cut-off date of 29 February 2020. The governmnet added that the benchmark rate applicable for such relief would be the contract rate used by the credit card issuers for the purpose of EMI loans. According to the scheme, the ex-gratia relief is to be credited to the account of all eligible borrowers without any requirement to apply. - Financial Express

🍒 Lakshmi Vilas Bank to send two more names to RBI for top post, favours local CEO : Troubled lender Lakshmi Vilas Bank (LVB) will recommend to the Reserve Bank of India (RBI) two more candidates for the post of MD & CEO. Interviews will be completed by November, persons in the know indicated. The bank had earlier sent a list of three candidates, but the RBI had allowed it to add more names to the list. Shakti Sinha, independent director and part of the three–member committee of directors approved by the RBI to run day-to-day operations at cash-starved LVB, told FE the lender will be conducting interviews to find more suitable candidates. - Financial Express

🍒 India's forex reserves surge $5.4 billion to all-time high of $560.532 billion : The country's foreign exchange reserves swelled by $5.412 billion to touch an all-time high of $560.532 billion in the week ended October 23, RBI data showed on October 30. In the previous week ended October 16, the reserves stood at $555.12 billion after increasing by $3.615 billion. During the reporting week, the surge in the forex kitty was mainly on account of an increase in foreign currency assets (FCA), a major component of the overall reserves. FCA rose by $5.202 billion to $517.524 billion, the RBI's weekly data showed.

🍒 Gold rate flat at Rs 50,840 per 10 gram, down 0.75% for the week : Gold prices remained unchanged at Rs 50,840 per 10 gram in the Mumbai retail market after a decline of three days on sluggish global cues as markets remain cautious ahead of the US presidential election. The precious metal was trading with marginal gain as the dollar gave up gains pushing safe-haven inflows to bullion. The rate of a 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,130, Rs 46,569 and Rs 50,840, respectively, plus 3 percent GST. Silver prices declined by Rs 1,504 to Rs 59,926 per kg from its closing on October 29.

🍒 Sensex ends 135 points lower; Telecom, banking and auto stocks take hit : The 30-share index ended lower by 135.478 points or - 0.34 per cent, to 39,614.07. The benchmark fell to an intraday low of 39,241.87 and recouped some of its losses in late session. It ended yesterday at 39,749.85. On the NSE, the Nifty too was down 28.40, or 0.24 per cent, to 11,642.40. The index touched a low of 11,535.45 in the mid-session.However, the overall market breadth was almost even with positive bias on the BSE. Out the 2,751shares traded, the declining scrips were slightly lesser at 1,239, while the number of advancing shares was at 1,339. Major losere were Bharti Airtel, Bajaj Finance, Maruti, Hindusan UniLever, ICICI Bank, Infosys, Bajaj Auto, HDFC and Kotak Bank 

🍒 Rupee slumps 23 paise, settles below 74/USD level : The rupee continued its downward journey on Thursday, sliding another 23 paise to settle at 74.10 against the US dollar, tracking weak domestic equities and strong American currency amid global risk aversion. At the interbank forex market, the domestic unit opened weak at 74.02 against the greenback, then lost further ground and finally closed at 74.10 against the American currency, showing a fall of 23 paise over its previous close..

29.10.2020: Today's Banking / Financial News

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

28.10.2020: Today's Banking / Financial News

28.10.2020: Today's Banking / Financial News at a Glance

🍒 RBI asks lenders to implement compound interest waiver scheme : The Reserve Bank on Tuesday asked all lending institutions, including NBFCs, to implement the waiver of interest on interest for loans up to ₹2 crore for the six months moratorium period beginning March 1, 2020. On October 23, the government had announced the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts. The scheme mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest for the period between March 1, 2020 to August 31, 2020 by respective lending institutions.- Business Line

🍒 RBI: Difficult years ahead for States, and federalism : The next few years are going to be challenging for States due to the impact of the Covid-19 pandemic, which could also leave lasting scars on federalism, the Reserve Bank of India has cautioned. With States in the frontline of the battle against Covid, their fiscal arithmetic for 2020-21 is likely to suffer, the central bank said in its report, State Finances — A Study of Budgets of 2020-21. According to the report, States’ combined GFD (Gross Fiscal Deficit) is projected to widen beyond 4 per cent of GDP in the baseline scenario, higher than the budgeted 2.8 per cent of GDP for 2020-21.- Business Line

🍒 Centre initiates groundwork for IDBI Bank stake sale : The Centre is initiating plans to sell stake in IDBI Bank, though the exact modalities for the transaction are likely to be finalised later. The Finance Ministry is likely to seek Cabinet approval over the next few weeks for selling its stake in IDBI Bank, sources close to the development said, but added that this would be the first step and that the transaction could take place towards the end of the fiscal year or early next fiscal.The Centre currently holds a 47.11 per cent stake in IDBI Bank, and may consider selling stake in two to three tranches.State-owned Life Insurance Corporation of India, which owns a 51 per cent stake in the bank, has also been alerted on the proposal, but it is unclear whether it will divest stake in the bank as of now. The insurer may choose to prune its stake in the bank at a later time when valuations are more attractive. “As of now, work has begun on the initial proposal,” said a person familiar with the development.- Business Line

🍒 PMJDY usage more frequent in areas prone to crime: SBI report : Usage of the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts increases over time in regions that are more prone to theft, according to State Bank of India’s economic research report ‘Ecowrap’. The report underscored that empirical research suggests that PMJDY accounts work as a primary vehicle for labour remittances, apart from increased lending, smoothing consumption, increased spending on healthcare and most importantly the usage is more frequent in areas that are more crime prone. Acknowledging that the genesis of crime can also be traced to interplay of various social, economic, demographic, local and institutional factors, apart from putting more money in accounts at the lower strata of society, there is evidence of PMJDY accounts having some impact on crime, the report said .- Business Line

🍒 Atal Pension Yojana: PFRDA enables online on-boarding through banks’ own portal : Savings bank customers may soon get another channel for online on-boarding to the Atal Pension Yojana (APY) — a government-backed pension scheme targeted at the unorganised sector — without having to use Net banking or a mobile App. Pension regulator PFRDA has now allowed APY-Points of Presence (PoPs) to introduce an alternate channel for online on-boarding of their existing Savings account of customers through the bank’s own web portal. Currently, some banks are providing online APY account opening through Net Banking or mobile app. However, a large number of bank customers who are eligible are not using either of the facilities. In such cases, these bank customers are not able to open an APY account through online/digital mode. To solve this issue, PFRDA has enabled the facility of ‘Online Paperless On-boarding of Subscribers using the Web Portal’, sources said. - Business Line

🍒 SIDBI's 'Standup Mitra' portal records over 96,000 loan sanctions : The Small Industries Development Bank of India (Sidbi) on Tuesday said its 'Standup Mitra' portal has recorded over 96,000 loan sanctions worth over Rs 21,000 crore as of September end. The portal, developed by Sidbi, was launched in April 2016 to extend online financial assistance to the unserved and underserved segment of the society without the need of visiting any bank branch, and apply for loan online under the Stand-Up India scheme. The Standup Mitra portal "has successfully recorded more than 96,000 loan sanctions worth more than Rs 21,000 crore as on September 30, 2020," Sidbi said in a release. - Business Standard

🍒 Massive jump in Jan Dhan accounts during pandemic; labour remittances touch pre-Covid levels : The coronavirus pandemic has led to a massive surge in PM Jan Dhan Yojana accounts since the beginning of the ongoing financial year. The total number of PMJDY accounts stood at 41.05 crores with a total balance of Rs 1.31 lakh crore, said the SBI Ecowrap report. Since 1 April, around 3 crore accounts were opened, with a total rise in deposits of Rs 11,060 crore in those accounts. The pandemic has led to a 60 per cent increase in the opening of new Jan Dhan accounts, the report added. PMJDY accounts work as a primary vehicle for labour remittances, apart from increased lending, smoothing consumption, and increased spending on healthcare. The research further stated that there was a significant reduction in remittances due to lockdown and it touched the lowest level in April. However, it increased in June and July, and in the month of September, it has just crossed the pre-COVID level as witnessed in February. Thus, it seems migrant labourers are coming back in adequate numbers to workplaces for livelihood and that too much before Diwali as was largely expected, the report added. - financial express

🍒 RBI asks Lakshmi Vilas Bank to reconsider names proposed for new MD & CEO : The Reserve Bank of India has asked Lakshmi Vilas Bank (LVB), which is in the midst of a merger process with Clix group, to reconsider the names proposed for the post of new MD & CEO, a senior official said on Tuesday. In September, shareholders of the cash-strapped private sector lender had voted out seven board members, including MD & CEO S Sundar, at the annual general meeting. Subsequently, RBI appointed a three-member Committee of Directors (CoD) comprising independent directors Meeta Makhan, Shakti Sinha and Satish Kumar Kalra. “In the first round, we had done interviews of three candidates and sent the names to RBI. But the Reserve Bank has come back to us saying that we have to reconsider. So, we have started the process again. Now, we are broadening our search with more candidates,” Shakti Sinha told PTI. He noted that appointing a new MD & CEO is a complex and long process, and right now, the process of merger with Clix group assumes more significance. - financial express

🍒 CSB Bank, IIFL Finance join hands to offer gold loans in untapped locations : Private sector lender CSB Bank has tied up with IIFL Finance to offer gold loans in untapped locations, including rural areas. Under the partnership, IIFL, a non-banking financial company, will act as a business correspondent of CSB Bank and will source new business from markets where CSB Bank does not have adequate branch network. IIFL, with its vast branch network, would help CSB Bank penetrate the lower strata of customers and rural areas, where the bank currently does not have adequate reach. This arrangement would result in scaling up of the customer base, a joint statement said. - moneycontrol.

🍒 Paytm Money launches ETFs starting ₹16 in equity, ₹44 in gold and ₹120 for NIFTY : Paytm Money, a wholly-owned subsidiary of digital financial services platform Paytm, has launched Exchange-Traded Funds (ETFs) on its platform, post-approval from the Securities and Exchange Board of India (SEBI). These are passive funds that are listed on NSE/BSE and traded like regular equity shares proving the merits of mutual funds along with the return potential of stocks. Paytm Money said that it believes that ETF is an essential part of an investor’s portfolio and all Indians must invest in it. Therefore, the company has made it convenient for new investors by facilitating ETF investments for as low as ₹ 16 in Equity, ₹ 44 in Gold and ₹ 120 for NIFTY. .- Business Line 

🍒 BharatPe launches digital gold on its platform : BharatPe, a leading merchant payment network, has announced the launch of digital gold on its platform. The launch of this new category of fintech product is in line with the company’s commitment to offer the entire gamut of financial products to Small and Medium Enterprises (SMEs). Through this latest offering, BharatPe’s merchants will be able to buy and sell 99.5 per cent pure24-carat gold. Merchants can choose to buy in rupees or grams, any time of the day and from anywhere, by using the BharatPe app. - Business Line

🍒 Banks relieved as government notifies reimbursement of compound interest : Banks are relieved at the government notification waiving off only compounded interest as it will restrict their losses without burdening the fisc much. On Tuesday, the Reserve Bank of India (RBI) issued a notification directing banks to follow the government order reimbursing small borrowers with loans up Rs 2 crore that have paid compounded interest on their loans between March 1 and August 31. Bankers said the government's clarity and its notification committing to bear the difference between the rates have lifted a major over hang over banks. "This issue has now been taken care off. The fact that the government has given a timeline for crediting the losses to banks is very positive because at one time we were not sure of what the court would say and whether we will have to bear the burden," said a bank CEO. - economic times

🍒 Yes Bank starts physical takeover of Anil Ambani’s Reliance Group HQ in Mumbai : Yes Bank has started the process for obtaining physical possession of Reliance Centre, the headquarters of Anil Ambani’s Reliance Group in Mumbai. The bank is seeking to either sell the property to realise its dues, or may move its headquarters there. In July, the private lender had taken symbolic possession of the sprawling complex situated off the Western Express Highway and overlooking the Mumbai airport. The action was taken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act to recover dues of Rs 2,892 crore from Reliance Infrastructure. In terms of the act, the bank has to give a two-month notice before taking possession, which the bank had done in May. - economic times

🍒 MSMEs suffered 'triple whammy' during COVID lockdown; reverse migration added to woes : India’s micro small and medium enterprises (MSMEs) suffered a ‘triple whammy’ because of the COVID lockdown in India. Along with other factors, massive reverse migration too took a toll on the MSMEs, said the central bank in a report. “The lockdown was a triple whammy for the MSME sector in India – supply disruption; domestic demand shock; and external demand decline,” said the RBI.India has 63.4 million MSMEs which contribute significantly to the country’s economy. The sector accounts for 45 per cent of manufacturing output, more than 40 per cent of exports and employs about 120 million people. “MSMEs have taken a bigger hit than other sectors, particularly because of the spatial distribution of the pandemic that is skewed towards states with a higher share of MSMEs, more so micro and small enterprises,” RBI said in the report.- moneycontrol.

🍒 Gold prices slip marginally to Rs 51,043/10 gm, silver rises by Rs 285/kg : Gold prices fell marginally by Rs 195 to Rs 51,043 per 10 gram in the Mumbai retail market on a stronger rupee and lacklustre global cues. The precious metal steadied around $1,900 per troy ounce as investors weighed fading prospects of financial aid before next week’s US presidential elections. The rate of a 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,282, Rs 46,755 and Rs 51,043, respectively, plus 3 percent GST. Silver prices rose Rs 285 to Rs 61,991 per kg from its closing on October 26.

🍒 Rupee settles 13 paise higher at 73.71 against US dollar : The rupee pared early losses and settled 13 paise higher at 73.71 against the US dollar on Tuesday, tracking positive domestic equities. At the interbank forex market, the domestic unit opened on a weak note at 73.94 against the greenback, but soon recovered the lost ground and finally closed at 73.71, registering a gain of 13 paise over its previous close of 73.84 against the US currency. During the session, the domestic unit witnessed an intra-day high of 73.71 and a low of 73.94 against the greenback.

🍒 JM Financial clocks 7.31 per cent rise in Q2 net profit : Diversified financial services firm JM Financial has posted a 7.31 per cent rise in net profit of ₹139.06 crore in the second quarter ended September 30, riding mainly on its investment banking, Wealth Management and Securities (IWS) business. “Despite a tough business environment, our investment banking, wealth management and securities businesses remained resilient by demonstrating strong performance. We continue to maintain liquidity buffers and healthy leverage ratios,” JM Financial Group Managing Director Vishal Kampani said. - Business Line

🍒 Angel Broking records highest ever quarterly PAT at ₹74.6 crore in Q2 : Angel Broking, which recently got listed on the bourses, has reported its highest ever quarterly profit after tax (PAT) at ₹74.6 crore for the second quarter ended September 30, 2020. This is substantially higher than the net profit of ₹48.3 crore recorded in the first quarter this fiscal and ₹18.9 crore in the second quarter of last fiscal. Total income for the quarter under review stood at ₹317.9 crore, up 29 per cent over total income of ₹246.6 crore in the previous quarter. The board of directors has recommended a second interim dividend of ₹4.15 per equity share of ₹10 each. - Business Line

🍒 Sensex rallies 376 points higher led by banking, financials stocks : The BSE benchmark Sensex ended higher by 376.60 points, or 0.94%, at 40,522.10. The benchmark had touched a low of 39,978.39 in the opening trading session, but steadily improved on buying support.On the NSE, the Nifty too rebounded from an initial low of 11,723, and touched a high of 11,899.05 before settling at 11,889.40, gaining 121.65 points over its previous close of 11,767.75. Indices were led by gains in index-heavyweights such as Kotak Bank, NTPC, Nestle, Asian Paint, Bajaj Auto, UltraCem Co, L&T and Tech Mahindra amid negative trend in other Asian markets.- Business Line.

27.10.2020: Today's Banking / Financial News

27.10.2020: Today's Banking / Financial News at a Glance

🍒 SBI raises Rs 5,000 cr by issuing Basel-III compliant bonds : The State Bank of India (SBI) on Monday said it has raised Rs 5,000 crore by issuing Basel-III compliant bonds. The committee of directors of capital raising met on Monday and accorded its approval to allot 50,000 Basel-III compliant non-convertible, taxable debt instruments, SBI said in a regulatory filing. The debentures qualifying as tier II capital of the bank of face value of Rs 10 lakh each, at par, bearing a coupon of 5.83 per cent aggregating to Rs 5,000 crore were allotted to bond subscribers on October 26, 2020, it said. - financial express

🍒 IDBI Bank Consolidated September 2020 Net Interest Income (NII) at Rs 1,703.20 crore, up 3.85% Y-o-Y : Net Interest Income (NII) at Rs 1,703.20 crore in September 2020 up 3.85% from Rs. 1640.1 crore in September 2019. Quarterly Net Profit at Rs. 332.63 crore in September 2020 up 109.64% from Rs. 3,448.88 crore in September 2019. Operating Profit stands at Rs. 1,269.00 crore in September 2020 up 23.07% from Rs. 1,031.10 crore in September 2019. IDBI Bank EPS has increased to Rs. 0.32 in September 2020 from Rs. 4.46 in September 2019. IDBI Bank shares closed at 39.75 on October 23, 2020 (NSE) and has given 89.29% returns over the last 6 months and 28.64% over the last 12 months. - Moneycontrol.

🍒 Indian Bank Standalone September 2020 Net Interest Income (NII) at Rs 4,144.04 crore, up 122.43% Y-o-Y : Net Interest Income (NII) at Rs 4,144.04 crore in September 2020 up 122.43% from Rs. 1863.0391 crore in September 2019. Quarterly Net Profit at Rs. 412.28 crore in September 2020 up 14.98% from Rs. 358.56 crore in September 2019. Operating Profit stands at Rs. 2,994.95 crore in September 2020 up 99.43% from Rs. 1,501.77 crore in September 2019.Indian Bank EPS has decreased to Rs. 3.65 in September 2020 from Rs. 7.29 in September 2019. Indian Bank shares closed at 61.25 on October 23, 2020 (NSE) and has given 25.64% returns over the last 6 months and -51.52% over the last 12 months. - Moneycontrol.

🍒 UCO Bank Standalone September 2020 Net Interest Income (NII) at Rs 1,393.15 crore, up 10.03% Y-o-Y : Net Interest Income (NII) at Rs 1,393.15 crore in September 2020 up 10.03% from Rs. 1266.21 crore in September 2019. Quarterly Net Profit at Rs. 30.12 crore in September 2020 up 103.38% from Rs. 891.98 crore in September 2019. Operating Profit stands at Rs. 1,330.32 crore in September 2020 up 10.21% from Rs. 1,207.04 crore in September 2019. UCO Bank EPS has increased to Rs. 0.03 in September 2020 from Rs. 1.21 in September 2019. UCO Bank shares closed at 12.55 on October 23, 2020 (NSE) and has given 3.29% returns over the last 6 months and 6.36% over the last 12 months. - Moneycontrol.

🍒 Yes Bank Standalone September 2020 Net Interest Income (NII) at Rs 1,973.37 crore, down 9.72% Y-o-Y : Net Interest Income (NII) at Rs 1,973.37 crore in September 2020 down 9.72% from Rs. 2185.91 crore in September 2019. Quarterly Net Profit at Rs. 129.37 crore in September 2020 up 121.56% from Rs. 600.08 crore in September 2019. Operating Profit stands at Rs. 1,360.03 crore in September 2020 down 6.75% from Rs. 1,458.44 crore in September 2019. Yes Bank EPS has increased to Rs. 0.06 in September 2020 from Rs. 2.46 in September 2019. Yes Bank shares closed at 13.30 on October 23, 2020 (NSE) and has given -50.83% returns over the last 6 months and -75.71% over the last 12 months. - Moneycontrol.

🍒 Rs 3,600 crore recovered from Vijay Mallya, SBI-led consortium of banks tells Supreme Court : The State Bank of India (SBI)-led consortium of banks told the Supreme Court on October 26 that around Rs 3,600 crore had been recovered from fugitive businessman Vijay Mallya so far. Senior Advocate Mukul Rohatgi, representing the SBI-led banks consortium, also informed the apex court that Rs 11,000 crore were still needed to be recovered from Mallya, The Times of India reported. The top court dismissed a petition filed by Mallya's United Breweries Holdings Limited (UBHL) challenging a Karnataka High Court order upholding the closing of the company for recovery of dues payable by Kingfisher Airlines Ltd, news reports suggest.- Moneycontrol.

🍒 Interest waiver to be credited by 5 Nov : Lenders will have to pay up by 5 November the interest on interest charged on loans of up to ₹2 crore for the six-month repayment moratorium period, the government said, 10 days after being pulled up by the Supreme Court. The finance ministry announced the waiver on interest on interest on Saturday, along with details of implementation. To be sure, borrowers will still have to pay the simple interest on their loans. The scheme for “grant of ex-gratia payment" is applicable for the six-month period of 1 March to 31 August. The money will be routed through lending institutions, the ministry said in a circular for banks and other lending institutions. The lender has to credit the amount to the borrower’s account before 5 November, the deadline set by the Supreme Court for giving relief to consumers ahead of Diwali. Thereafter, lenders will have to claim reimbursement from the government by 15 December. - Live Mint

🍒 75% of borrowers to benefit from interest waiver: Crisil : Over 40 per cent of system credit and 75 per cent of borrowers will benefit from interest-on-interest concession under the recently announced government scheme, according to Crisil Ratings. This will cost the exchequer about ₹7,500 crore. The cost to exchequer would have halved if waiver was allowed only where moratorium was availed of, as per the credit rating agency’s analysis. “From a borrower’s perspective, the benefit would be relatively higher for those who had availed of higher-yielding loans. “Consequently, borrowers of unsecured, micro and gold loans will benefit more than those who had taken home loans,” the credit rating agency said. - Business Line

🍒 Yes Bank to trim branches, ATMs and office spaces to lower costs : Yes Bank has chalked out a plan to close non-performing branches and ATMs, reduce office space by moving to a revolving desk layout and renegotiate contracts with vendors, landlords and contractors, as it seeks to cut costs and save up to Rs 600 crore this year. The cost savings will directly go into the bank's bottom line and make profit more sustainable, chief executive Prashant Kumar told ET in an interview. In the quarter ended September, the bank converted 35 rural branches into low-cost business correspondent centres which together with other measures like digitisation and renegotiating contracts with vendors helped in reducing total operating expenses by 21%, contributing to its profit. Kumar said such measures will continue. - economic times

🍒 RBI encourages investment in sovereign bonds as part of liquidity measures : The Reserve Bank of India is making longer-tenor sovereign bonds attractive again. Quantum Mutual Fund has moved to the 10-14 year segment after staying in duration of up to three years in August in its 691 million rupees ($9.4 million) Dynamic Bond Fund. UTI Asset Management Co. has turned overweight on bonds maturing in up to 15 years, after cutting duration two months ago. The strategy change was prompted by a series of liquidity measures announced by the Reserve Bank of India earlier this month, including doubling the size of open market operations. That’s spurred expectations that the central bank would intervene regularly to keep yields anchored. Confidence over RBI support has even outweighed concern over the government’s plan to increase debt sales. - Business Standard.

🍒 RBI's debt restructuring scheme sees few takers in corporate world: Banks : The Reserve Bank of India’s (RBI’s) loan restructuring scheme for Covid-19-affected borrowers has seen few takers in the corporate world so far, according to bank executives who have seen very little interest in it from their corporate accounts. Under the scheme, borrowers’ accounts will not be downgraded as sub-standard or ‘non-performing’ if their loans are restructured. Rather, they will retain their ‘standard’ status. But the fear of a negative impact on their credit rating is holding companies back. “There is not much interest among corporates to go for restructuring since the biggest fear is the impact of credit ratings on firms. We have received only four to five enquiries, which haven’t been confirmed, for accounts with exposure in the range of Rs 100-1,000 crore,” said the managing director (MD) and chief executive officer (CEO) of a large state-owned bank. - Business standard

🍒 Kotak Mahindra Bank Q2 profit up 27% : Private sector lender Kotak Mahindra Bank reported a 26.7 per cent increase in standalone net profit to ₹2,184.84 crore from ₹1,724.48 crore in the second quarter this fiscal, led by a sharp rise in its income and lower provisions. Total income increased by 3.8 per cent to ₹8,288.08 crore in the July to September 2020 quarter from ₹7.986.01 crore a year ago. Net interest income for the quarter ended September 30, 2020, increased 17 per cent to ₹3,913 crore from ₹3,350 crore a year ago. Net interest margin for the second quarter was at 4.52 per cent. Other income shot up by 18.6 per cent to ₹1,452.03 crore in the quarter under review. - Business Line

🍒 Sashidhar Jagdishan to take charge as MD & CEO of HDFC Bank : HDFC Bank, the country’s largest private sector lender, will have a new chief from October 27 when Sashidhar Jagdishan takes charge as Managing Director and CEO. “Aditya Puri has retired as the Managing Director of the bank at the end of business hours on October 26 upon reaching 70 years of age, in accordance with the tenure approved by the Reserve Bank of India,” the lender said in a regulatory filing, adding that the board places on record its deep and sincere appreciation for the exceptional contribution made by Puri. Puri was the bank’s MD since its inception in 1994. Jagdishan too joined HDFC Bank in 1996. - Business Line

🍒 PNB scam case: UK court rejects Nirav Modi’s latest bail attempt : A UK court on Monday rejected the latest bail plea of fugitive diamond merchant Nirav Modi, who has been lodged in a London prison since his arrest on an extradition warrant in March last year. The application was reportedly made on the basis of “new evidence”, but the Westminster Magistrates’ Court District Judge Samuel Goozee was not convinced to reverse previous bail rejections in Modi’s case. The 49-year-old jeweller, fighting extradition to India on charges of fraud and money laundering in the estimated $2-billion Punjab National Bank (PNB) scam case, has made around six previous attempts at bail — at the magistrates’ court as well as at the High Court level.- Business Line

🍒 SBI Life Q2 net profit rises to ₹300 crore : SBI Life Insurance net profit more than doubled to ₹299.73 crore in the second quarter of the fiscal from ₹129.84 crore a year ago. The private sector life insurer registered a robust 27.2 per cent in net premium income to ₹12,857.95 crore for the quarter ended September 30, 2020, from ₹10,111.51 crore in the same period last fiscal. In statement on Monday, SBI Life Insurance said its new business premium has increased by 15 per cent to ₹9,000 crore from ₹7,820 crore in the first half of the fiscal year 2020-21. - Business Line

🍒 Mahindra Finance Q2 net profit up 34% : Mahindra and Mahindra Financial Services reported a 33.7 per cent increase in consolidated net profit at ₹352.5 crore in the second quarter of the fiscal against ₹263.6 crore a year ago. Its total income increased by 4.6 per cent to ₹3,070.5 crore in the quarter ended September 30, 2020, against ₹2,936.48 crore during the corresponding quarter of last year. In a statement on Monday, Mahindra Finance said it has considered an additional charge of ₹433 crore during the second quarter this fiscal and ₹910 crore in the first half of the fiscal due to a management overlay, to reflect deterioration in the macroeconomic outlook. “As of September 30,2020, the cumulative amount of management overlay provisions stood at ₹1,484 crore,” it said. - Business Line

🍒 Small HFCs may be unable to comply with RBI’s minimum fund norms: Report : The top 20 or so housing finance companies (HFCs), which hold over 70 per cent of the market share, already comply with the minimum net owned fund (NOF) requirement of ₹20 crore prescribed by the Reserve Bank of India (RBI) in its revised regulatory framework for HFCs. However, smaller HFCs may face issues while raising the capital and may choose to be reclassified in other categories of NBFCs (non-banking finance companies) or exit the segment, CARE Ratings said in a report. Currently, around 100 HFCs are registered with the National Housing Bank (NHB). - Business Line

🍒 DHFL lenders set October 30 deadline for revised offers, flay Wadhawan : Lenders of Dewan Housing Finance (DHFL) have asked for revised offers with no “conditional plans” from the four existing bidders, who will have to submit the new plans to own the troubled non-banking finance company and its different assets by Friday evening, a new deadline set. The committee of creditors (CoC) met Monday analysing the bids it had received from Oaktree, SC Lowy, Adani Capital and Piramal Group. It will likely meet on Saturday to take a call on revised bids, three people with knowledge of the matter told ET. Lenders are in favour of negotiating hard with bidders as they aim to maximise value of assets. - economic times

🍒 Customer spending getting back to pre-COVID levels: AU Small Finance Bank : AU Small Finance Bank on Monday said customer spending is getting back to pre-COVID levels and its festive season offer has witnessed 23 per cent rise in per day debit card spends. The 'AU Shopping Dhamaka' was launched on September 21 and will go on till November 22. AU Small Finance Bank is experiencing an increase of 23 per cent in per day debit card spends. Overall, point-of-sale (PoS) and e-commerce transactions witnessed a surge of 16 per cent since the launch of the festive offers, it said in a release. The bank is already witnessing a bounce back in spending to pre-COVID levels, it added. - economic times

🍒 Kotak Mahindra denies takeover talks with IndusInd, but says its open for M&A opportunities : Kotak Mahindra Bank on Monday denied takeover talks with IndusInd Bank but said they were open to M&A opportunities. News agency Bloomberg had reported that Kotak Mahindra Bank is exploring a takeover of smaller rival IndusInd Bank to create the nation’s eighth-largest financial firm by assets. “Not saying no to any of those growth avenues but certainly not on this one,” said Jaimin Bhatt, group CFO, Kotak Mahindra Bank. “When we raised capital in the first quarter of this year, we did talk about the fact that we will look at acquisitions, whether it is companies or assets.” The bank which raised more than Rs 7500 crore through a QIP route in May this year said it has enough capital cushion to explore inorganic opportunities. “Right now, that is cushion of capital. We will have to get into, whether it is right opportunities, whether it is growing on the organic track,” Bhatt added. “As we see green-shoots coming in, we will be open to growing advances book also. We have all the building blocks ready to be growing. Having capital is cushion but we will use it judiciously.” - economic times

🍒 IndusInd Bank denies takeover talks with Kotak Mahindra Bank : Private lender IndusInd Bank denied having any exploratory takeover talks with peer Kotak Mahindra Bank and said the former has unstinted support from its promoters, the Hinduja family. Earlier in the day news agency Bloomberg had reported that Kotak Mahindra Bank is exploring a takeover of smaller rival IndusInd Bank to create the nation’s eighth-largest financial firm by assets. “IndusInd Bank categorically denies any such developments, its malicious and incorrect,” the bank said in an email response. “The Promoter of IndusInd Bank, IndusInd International Holdings Limited (IIHL), reiterate their full support to the IndusInd Bank, now and always.” - economic times

🍒 Rival ICICI Bank expresses gratitude towards Aditya Puri for his contribution to banking : Showing its gratitude towards one of the doyens of India's banking industry, rival ICICI Bank thanked Aditya Puri, the outgoing HDFC Bank boss, for his contribution towards the sector. In a tweet, the ICICI Bank said, " #ICICIBank thanks you, Mr. Aditya Puri, for your contribution to the Indian banking industry. Throughout your illustrious career spanning decades, you have been an inspiration to many. We wish you the very best for your future endeavours." HDFC has named Sashidhar Jagdishan as the next CEO who will replace Aditya Puri who is set to retire today after a glorious 25 years at the helm. Jagdishan will assume the position of the CEO from tomorrow. - economic times

🍒 Gold loan company Muthoot Finance to raise upto Rs 2,000 cr via debentures : Gold loan company Muthoot Finance Ltd plans to raise upto Rs 2,000 crore through public offering of Secured Redeemable Non-Convertible Debentures (NCDs) to deploy funds in lending business.

🍒 The proposed debenture issue will have a base issue size of Rs 100 crore with an option to retain oversubscription upto Rs 1,900 crores aggregating upto tranche limit of Rs 2,000 crore. The issue opens on October 27, 2020 and closes on November 20, 2020 with an option to close at an early date or extend the date to be decided by the Board of Directors or NCD committee. The Secured NCDs proposed to be issued under this Issue have been rated “AA” by CRISIL and “AA” by ICRA. These ratings indicate “high degree of safety regarding timely servicing of financial obligations”. - Business Stnadard

🍒 SAT clearing more cases now than before Covid-19 pandemic, shows data : The Securities Appellate Tribunal (SAT), which hears appeals against decisions by major financial regulators, had 560 pending appeals as of September end, according to information obtained by Business Standard through an application filed under the Right to Information Act. Additional data shared by the tribunal showed that this is largely because of appeals filed in the past two months. August and September each saw over 80 appeals to the SAT. However, the disposal of cases by the tribunal has also gone up over the past two months, owing to the multiple steps it has taken to ease the caseload amidst the Covid-19 pandemic. - Business Standard

🍒 Oaktree, Piramal ahead in race to acquire DHFL : US-based Oaktree Capital and Piramal Enterprise are ahead in the race to acquire the stressed DHFL. According to documents reviewed by BusinessLine, Oaktree has made an offer for the entire portfolio at about ₹28,103 crore. It will pay ₹10,357 crore as upfront cash recovery amount to settle the admitted financial creditor claims through existing cash and cash equivalent available with the corporate debtor and infusion of fresh equity or debt. Additionally, it will issue ₹15,800 crore to the financial creditors as non-convertible debentures with a quarterly coupon of 6.5 per cent with a seven-year tenure. It has also proposed to pay towards admitted employee claims. - Business Line

🍒 Gold rates flat at Rs 51,238 per 10 gm; price could reach Rs 67,000 in next 12 months, says Motilal Oswal : Gold prices were steady at Rs 51,238 per 10 gram in the Mumbai retail market on a weaker rupee and muted global cues. The precious metal had gained 0.62 percent last week in the domestic market. The rate of 10 gram 22-carat gold in Mumbai was Rs 46,934 plus 3 percent GST, while 24-carat 10 gram was Rs 51,238 plus GST. The 18-carat gold quoted at Rs 38,429 plus GST in the retail market. Silver prices dropped by Rs 839 to Rs 61,706 per kg from its closing on October 23.

🍒 Rupee settles 23 paise lower at 73.84 against US dollar : The rupee depreciated 23 paise and settled at 73.84 (provisional) against the US dollar on Monday as muted domestic equities and strong American currency weighed on investor sentiment. The local unit opened at 73.77 at the interbank forex market, then lost further ground and finally settled at 73.84 against the greenback, registering a decline of 23 paise over its previous closing price of 73.61.

🍒 Sensex, Nifty drop 1.35%; Metals, Auto stocks fall sharply : The Sensex ended at 40,145.50, down by 540.00 points, or 1.33%, from its previous close of 40,685.50. Similary, the NSE Nifty has lost 177.70 points or 1.36 per cent to 11,767.75. Among the major losers which pulled the markets down were Bajaj Auto, Tata Steel, Reliance, Bajaj Finance, Asian Paint, M&M, ICICI Bank, HDFC Bank and Kotak Bank and Tech Mahindra. Stocks that bucked the weak market were IndusInd Bank, Nestle, Kotak Mahindra Bank, PowerGrid, TCS, L&T and Hindustan Unilever

26.10.2020: Today's Banking / Financial News

 26.10.2020: Today's Banking / Financial News at a Glance

🍒 RBI Governor tests positive for Covid-19 : The Reserve Bank of India Governor Shaktikanta Das has tested positive for Covid-19 but is asymptomatic. “I have tested Covid-19 positive. Asymptomatic. Feeling very much alright. Have alerted those who came in contact in recent days. “Will continue to work from isolation. Work in RBI will go on normally. I am in touch with all Deputy Governors and other officers through VC and telephone,” the Governor said in a tweet. In his statement in the minutes of the monetary policy committee meeting, Das emphasised that monetary policy has to provide adequate support to ensure a robust revival of the economy from the devastating effects of Covid-19, while at the same time ensuring that any persistence of elevated inflation does not lead to an unanchoring of inflation expectations. “With the supply side disruptions seen to drive the current inflationary pressures likely to be transient and expected to wane out in the months ahead as the economy normalises, there is merit in looking through the current high levels of inflation and persevere with the accommodative stance for monetary policy as long as necessary to revive growth on a durable basis,” said the Governor, who is leading RBI’s fightback against the impact of Covid on the economy. - economic times

🍒 Yes Bank lacked cost control; aim to cut operational expenses by 20% in FY21: CEO Prashant Kumar : Yes Bank lacked a culture of cost control, and under the new management, the lender is targeting to reduce operational expenses by 20 per cent in FY21 by rationalizing branches and ATMs, giving up unwanted leased spaces and renegotiating rents, a top official has said. The city-based lender is experiencing delays in loan recovery efforts as big defaulters are approaching courts, its new chief executive and managing director Prashant Kumar told PTI. Kumar was asked to lead Yes Bank in March after its rescue by a SBI-led consortium of lenders after alleged governance lapses under co-founder and chief executive Rana Kapoor. The bank reported a 21 per cent reduction in operating expenses in September quarter. "Unfortunately, there was no control on costs," Kumar said, adding that a global consultant has charted out a step-by-step agenda to reduce spending through which it aims to save 20 per cent on operating expenses in FY21 over FY20. - economic times

🍒 DHFL Committee of Creditors to discuss four offers on Monday : The Committee of Creditors (CoC) to the beleaguered DHFL will Monday begin discussing the four offers that lenders have received for the debt laden housing finance company (HFC). There will be a presentation on the offers made during the bidding process that ended on Saturday, sources said. Lenders will get to know who has bid what and the conditionalities, they said. It may be recalled that Oaktree Capital, which offered the highest recovery to lenders, has offered Rs 28,000 crore for the entire company. The others in the fray are Adani Group, which is learnt to have offered about Rs 1,600 crore for the wholesale portfolio and slum redevelopment asset; Piramal Enterprises, which has offered about Rs 15,000 crore for the retail portfolio; and Hong Kong’s private banking firm SC Lowy. It may take another fortnight before the winning bidder is selected, banking industry sources said. - Business Line

🍒 Prashant Kumar, tasked to lead YES Bank's revival, braces for Covid impact : The chief executive officer of Yes Bank Ltd., who helped the lender emerge from India’s biggest-ever bailout, is girding for fallout from the pandemic. The coronavirus outbreak has “created a problem” on the loan book, even as progress has been made on fixing key drawbacks such as weak governance, fund-raising challenges and declining deposits, Prashant Kumar said in a phone interview Saturday. It’s “very, very difficult to estimate the impact,” Kumar said. “With the fundamental issues taken care of, we want to control costs and increase profit to deal with any adverse impact on the credit due to the pandemic.” Yes Bank returned to profit in the quarter ended September and Kumar made provisions for potential covid-related losses. When regulators seized the lender in March, its depositors had been fleeing and the bank was struggling to attract investors. State Bank of India bought a stake in Yes Bank and Kumar was plucked from the government-controlled lender to lead the turn around. His predecessor, Rana Kapoor, who co-founded Yes Bank in 2003 and built it into India’s fastest-growing lender, was forced out by the central bank in 2018 amid a dispute over reporting of bad debts. “The market wasn’t even sure how much rot was still in the loan book,” Kumar said. - Business Standard

🍒 Bitcoin rallies to reach highest level in over a year with PayPal support : Bitcoin has breached the $13,000-mark for the first time since July 2019 after online payments company PayPal decided to allow the customers to buy, sell and hold this and other virtual coins using its online wallets. PayPal customers will also be able to use cryptocurrencies to shop at the 26 million merchants on its network starting in early 2021. The Calfornia-headquartered company plans to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first. The service will be available to PayPal account holders in the US in the coming weeks. The company plans to expand the features to Venmo and select international markets in the first half of 2021. The move has been welcomed by cryptocurrency experts and enthusiasts in India as well. "PayPal offering services to its customers to buy or sell cryptocurrencies is a positive sign for the overall ecosystem. Given the strong distribution and reach of PayPal, the huge user base of over 346 million globally, and many merchants around the world, with this service, it has given direct access to cryptocurrencies to numerous users," said Sumit Gupta, CEO and co-founder, CoinDCX, a Bain Capital-backed cryptocurrency exchange. "Although the users can't redeem their Bitcoin outside PayPal, I believe it is a good starting step and it is likely that other major global payment players will follow the lead." - Business Standard

🍒 LIC IPO may spill over to next fiscal : The mega initial public offering of Life Insurance Corp (LIC) may spill over to the next fiscal as the government will first look at the independent actuarial valuation of the country''s largest insurer, a top official has said. Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said the pre-IPO work of LIC is going on at four stages -- appointment of advisors for ensuring compliance, legislative amendment, LIC''s internal software changes to come out with its ''embedded value'' and appointing an actuary for vetting LIC's actuarial valuation. The government plans to amend the Act under which the state-run LIC was set up to prepare for the sale. A stake sale in LIC is crucial for meeting a record Rs 2.1 lakh crore disinvestment target set for the current fiscal ending March 31, 2021. - moneycontrol.com

🍒 IRDAI proposes changes in insurance advertisement regulations : In a bid to protect consumers, regulator IRDAI has proposed to prohibit insurers from issuing advertisements that make claims which are beyond reasonable expectations of performance. The unfair and misleading advertisements will include those which fail to clearly identify the product as insurance and describe benefits that do not match the policy provisions, the regulator said in the draft Insurance Regulatory and Development Authority of India (Insurance Advertisements and Disclosure) Regulations, 2020. The Insurance Regulatory and Development Authority of India (IRDAI) is seeking to come out with new advertisement regulations and has invited comments from stakeholders on the exposure draft by November 10.- moneycontrol.com

🍒 LTC cash voucher scheme: How government employees can avail benefits : Central government employees can submit multiple bills of goods and services purchased in their own name to avail the benefit of the LTC (Leave Travel Concession) cash voucher scheme, according to the Finance Ministry. The Expenditure Department, under the Ministry, has issued a set of FAQs (Frequently Asked Questions) on LTC cash voucher scheme, clarifying that an employee can also avail the scheme utilising the applicable LTC fare without leave encashment. The government on October 12 announced the LTC cash voucher scheme under which central government employees can purchase any goods or services with GST rate of 12 per cent or above to avail the benefit. Till now, employees got LTC benefits only on travels made, or had to forgo the amount.- moneycontrol.com

🍒 FPIs remain net buyers in October so far amid better than expected financial results : Foreign portfolio investors (FPI) remained net buyers in Indian markets in October so far, pumping in a net ₹17,749 crore in the month as better than expected quarterly results, the opening of the economy, and resumption of business activities kept investors’ interest intact. In equities, FPIs invested a net sum of ₹15,642 crore and the debt segment saw an inflow of ₹2,107 crore during October 1-23, the depositories data showed. The total net investment during the period under review stood at ₹17,749 crore. - Business Line

🍒 Franklin Templeton to move Supreme Court against HC order to wind up six debt schemes : Franklin Templeton India plans to move the Supreme Court against the Karnataka High Court order making it mandatory to seek investors approval for winding up the six debt schemes even while upholding Trustees decision to close down the scheme. In a note to investors, Sanjay Sapre, President, Franklin Templeton Asset Management (India) said on basis of initial review the fund house believes it may be necessary to appeal aspects of the order in the Supreme Court even while the fund house is still in the process of studying the order. - Business Line

🍒 Six of top 10 most valued firms add Rs 86,684 crore in m-cap : Six of the top 10 most valued Indian firms added a cumulative Rs 86,683.71 crore in market valuation last week, with HDFC twins emerging as the biggest gainers. On the top 10 chart, HDFC Bank, HDFC, ICICI Bank, Kotak Mahindra Bank, Bharti Airtel and HCL Technologies were gainers. While, Reliance Industries Ltd (RIL), Tata Consultancy Services (TCS), Hindustan Unilever Ltd (HUL) and Infosys saw erosion in their market valuation. HDFC Bank, India’s biggest private sector lender, witnessed its valuation soar by Rs 20,198.59 crore to stand at Rs 6,80,092.72 crore. - Business Line.