30.12.2020: Today's Banking / Financial News

30.12.2020: Today's Banking / Financial News at a Glance

🍒 Rolling back of Covid related policy relaxation could impact banks: RBI : The performance of Indian banking improved in the fiscal year 2020 when they reported a profit on an aggregate basis after two years of losses, the RBI said in its yearly assessment report. It said the banking system's bad loans fell and the capital buffer improved, but they need to be vigilant about competition from nimbler tech rivals. The RBI also expressed concern over rolling back policy support given to the bank’s to deal with the Covid-19 pandemic in the last 8 months. “In 2020-21, as policy support is rolled back, the impact of the COVID-19 pandemic may dent the health of the banks and non-banks,” the regulator said as part of its report on trends and progress of banking. The RBI also said that the turnaround of the banking system depended on the pace of economy returning to growth path. “Improvement in the health of the banking sector henceforth hinges around the pace and shape of economic recovery,” it said. “The challenge is to rewind various relaxations in a timely manner, reining in loan impairment and adequate capital infusion for a healthy banking sector.” - economic times

🍒 Former Economic Affair Secretary Atanu Chakraborty likely to be next HDFC Bank chairperson : India’s largest private sector lender HDFC Bank is set to appoint former economic affairs secretary Atanu Chakraborty, as the next part-time chairman of the bank, two people aware of the development said. The request was submitted to the Reserve Bank of India by the HDFC Bank board on December 28, one of the persons cited above said. “The HDFC bank board submitted Chakraborty's name for the position to the RBI on December 28 for approval,” a source in the know said. The tenure of current part-time Chairman Shyamala Gopinath will end on January 1, 2021. Gopinath, former deputy governor of the Rese­rve Bank of India, has been serving in the position since January 2, 2015. HDFC Bank did not comment while Atanu Chakraborty could not be immediately reached for comment. - economic times

🍒 Loan restructuring requests much lower than estimated: Analysts : With the loan restructuring window coming to a close, analysts are cutting the estimates on loan recast by banks to 2.5-4.5% of their total advances from the previously projected 6-8%. Analysts are also forecasting lower credit provisions and better profitability for banks in the next fiscal year starting April 1, on the back of improved asset quality with a quick economic turnaround. Owing to an ongoing case in the Supreme Court over loan moratorium, loan restructuring requests have been much lower than previously estimated. A sharper-than-expected improvement in economic activities as well as liquidity support through the emergency credit line guarantee scheme have also helped. Ratings firm ICRA has cut its loan restructuring estimate to 2.5-4.5% of total advances as against 5-8% estimated earlier. - economic times

🍒 ICICI Bank to acquire 9.09% stake in Myclassboard Educational Solutions : Private sector lender ICICI Bank on Tuesday said it will acquire 9.09 per cent stake in online school management platform Myclassboard Educational Solutions. The acquisition will be done through a cash consideration of ₹4.5 crore. “ICICI Bank has entered into an agreement dated December 28, 2020, in relation to an investment in Myclassboard Educational Solutions Private Limited (MESPL),”the lender said in a regulatory filing. The acquisition is expected to be completed by end of February 2021. “Post investment, ICICI Bank will hold 9.09 per cent stake in MESPL through acquisition of 100 equity shares and 1,04,890 Cumulative Compulsorily Convertible Preference Shares on fully diluted basis,” the bank said, adding that since the acquisition of shareholding is below 10 per cent, regulatory approval is not required. MESPL is an educational technology company set up in December 2009. - Business Line

🍒 CCI dismisses unfair practices complaint against 4 credit rating agencies : The Competition Commission of India (CCI) on Tuesday dismissed a complaint alleging that CRISIL Ltd, India Ratings and Research Pvt Ltd, CARE Ratings Ltd and ICRA Ltd indulged in unfair business practices. The ruling came on a complaint filed by Brickwork Ratings India Pvt Ltd. The informant, Brickwork Ratings, alleged that the opposite parties -- CRISIL, India Ratings and Research, CARE Ratings and ICRA -- contravened the provisions of the Competition Act by means of collusive bidding and bid rigging, and also indulged in below cost predatory pricing. Brickwork Ratings averred that the credit rating agencies are involved in anti-competitive practices in contravention of the provisions of the Competition Act which is causing an appreciable adverse effect on the competition in India as well as on the Indian economy, CCI said in an order. Brickwork Ratings asked the the Commission to order "investigation into formation of cartel and collusive bidding by the opposite parties in the tender processes of various PSUs for the period 2009 till date." - Business Standard

🍒 Dhanlaxmi Bank proposes to appoint Shivan JK as new CEO, seeks shareholders' nod : Debt-ridden Dhanlaxmi Bank has proposed Shivan JK as its new Managing Director and Chief Executive Officer (CEO) and has sought shareholders' approval for the same. Shivan retired as Chief General Manager of State Bank of India and handled various roles, including forex operations. It has soug ht the approval from its shareholders to authorise the board to appoint Shivan as MD and CEO of the bank, Dhanlaxmi Bank said in a notice of postal ballot. The development came a day after the Reserve Bank of India (RBI) appointed its General Manager D K Kashyap on the bank's board for two years. - Live Mint

🍒 Banks' gross bad loans ratio fell to 7.5% at Sept-end: RBI : The Reserve Bank of India (RBI) today released a report on the performance of the banking sector during 2019-20 and 2020-21, so far. The report, Trend and Progress of Banking in India 2019-20, is based on the impact of Covid-19 on banking and non-banking sectors and the way forward. During 2019-20 and first half of 2020-21, scheduled commercial banks (SCBs) consolidated the gains achieved after the turnaround in 2018-19. The gross non-performing assets (GNPAs) ratio of scheduled commercial banks declined from 9.1% at end-March 2019 to 8.2% at end-March 2020 and further to 7.5% at end-September, the Reserve Bank of India (RBI) said on Tuesday. - Live Mint

🍒 RBI says 37.91% of loans were under moratorium as of August-end : Loans under moratorium have not significantly declined since April 2020, when 50% of outstanding loans were under moratorium according to Reserve Bank of India (RBI) data. In a response to a Right to Information (RTI) query filed by FE, the RBI has said 37.91% of outstanding loans in the banking system were under moratorium as on August 31, 2020. According to provisional data provided by the regulator, 41.33% of loans in public sector banks (PSBs) were under moratorium till August this year. Similarly, loans under moratorium in private banks remained at 33.96% and the same was 20.93% for foreign banks. Data shared by the RBI show that 12.09% fewer borrowers (by value) were granted moratorium in the second phase, compared to the first phase. In its financial stability report released in July, the RBI said 50% of total outstanding in the banking system was under moratorium as on April 30, 2020. The regulator had earlier allowed customers to avail a repayment break for six months – between March and August. The moratorium was granted in two phases of three months each starting March 1. - financial express

🍒 Banks need to gear up to meet new challenges following unwinding of measures to combat COVID: RBI : Cautioning of imminent stress in the banking sector after unwinding of the measures taken to combat the impact of COVID-19, the Reserve Bank on Tuesday said banks will need to adapt and adjust themselves to meet the upcoming challenges. The Reserve Bank of India (RBI), in its report on ‘Trend and Progress of Banking in India 2019-20’, said that the central bank initiated timely measures to relieve stress on bank balance sheets, corporates and households following the outbreak of the coronavirus pandemic. Observing that banking soundness indicators are obscured under the asset quality standstill, it said, banks are raising capital in preparation of the imminent stress. “With the moratorium coming to an end, the deadline for restructuring proposals is fast approaching and with the possible lifting of the asset quality standstill, banks’ financials are likely to be impacted in terms of asset quality and future income. “Going forward, banks will have to adapt and adjust to the rapidly evolving economic landscape due to these challenges and also the entry of niche players and emerging financial technologies,” the report said. - financial express

🍒 NHB slaps Rs 47,000 fine on GIC Housing Finance : Housing finance regulator National Housing Bank (NHB) has imposed a fine of Rs 47,000 on GIC Housing Finance for violation of the guidelines. The fine was imposed by NHB on Monday, the company said in a regulatory filing on Tuesday. “Based on the examination of the issue, including the submission made by the company in the matter, the National Housing Bank has decided to levy a penalty of Rs 47,000 for delayed and non-submission of returns,” it said. The company has been directed to pay the fine along with applicable GST of 18 per cent within 10 days from the date of receipt of the letter dated December 28, 2020. - financial express

🍒 NBFCs profitability may dampen due to loan impairment, lower credit demand: RBI report : The profitability of non-banking finance companies (NBFCs) may be ‘dampened’ going ahead due to the loan impairment and lower credit demand, the Reserve Bank of India (RBI) said in its Report on Trend and Progress of Banking in India 2019-20. “Going forward, profitability of NBFCs may be dampened due to loan impairment, lower credit demand and a tendency to preserve cash,” the RBI report released on Tuesday said. Due to loan moratorium and asset classification standstill, asset quality shored up. However, many NBFCs have made additional provisioning as per expected credit loss (ECL) norm; and bolstered their capital position by ploughing back dividends, it said. In order to mitigate the impact of COVID-19, the RBI allowed lending institutions to grant a moratorium on payment of instalments of term loans due between March 1, 2020, and May 31, 2020, which was later extended till August 31, 2020. - financial express

🍒 Cashaa to launch crypto bank : Cashaa, a blockchain-based fintech, has joined hands with United Multistate Cooperative Society, a credit cooperative society, to launch crypto bank joint venture UNICAS that allows users to transact in cryptocurrency and fiat from one account. While the online services of UNICAS has already gone live, as many as 14 physical branches will be rolled out by January 2021 across the NCR, Rajasthan and Gujarat. UNICAS plans to rapidly expand to 100 branches by the end of 2022. “This will allow us to build, scale and offer customised financial and crypto products for the Indian market,” said Dinesh Kukreja, CEO of UNICAS, in a statement. - Business Line

🍒 Standard norms for travel insurance mooted : Regulator IRDAI on Monday proposed standard guidelines for travel insurance with a view to ensuring uniformity and certainty about coverage, exclusions and terms of coverage for domestic as well as international travel. The exposure draft, on which the IRDAI has invited comments from the stakeholders by January 6, 2021, includes standard terms and conditions, customer information sheet and use and file format. The draft details out the coverage and exclusions under domestic and overseas travel insurance. The insurance company will pay as compensation to the legal heirs/nominee the amount stated as sum insured if the insured suffers accidental bodily injury while overseas and this is the sole and direct cause of his Death within the period of 365 days, it said. - Business Line

🍒 ANZ India Business Chamber signs MoU with Spring Up Capital to help start-ups : Chennai-headquartered ANZ India Business Chamber (ANZIBC), a non-profit organisation primarily focusing on promoting Indo-Australian trade, on Tuesday, said that it had signed an MoU with the Pune-based start-up accelerator Spring Up Capital to facilitate investments and business for their members to grow in the international market. In a statement, ANZIBC said that the chamber is also working with several Australian brands to expand in the Indian market, particularly from the education, franchising, health supplements, cleaning products and renewal energy. - Business Line

🍒 Covid-19: Over 40% of borrowers availed loan moratorium benefit : Customers accounting for 40.43 per cent of outstanding loans in the financial system availed the benefit of moratorium allowed by the Reserve Bank of India (RBI) for borrowers affected by the COVID-19 pandemic as on August 31, 2020. As per “Report on Trend and Progress of Banking in India 2019-20,” most sectors reported lower outstanding loans under moratorium in August 2020 compared to April 2020. However, Micro, Small and Medium Enterprises (MSMEs) registered a marginal increase. The number of MSMEs customers availing moratorium increased to 78 per cent in August 2020, reflecting sector’s stress. - Business Line

🍒 About 4.37 crore ITRs for FY'20 filed till December 28 : Around 4.37 crore income tax returns for fiscal 2019-20 (Assessment Year 2020-21) have been filed till December 28, the I-T department said on Tuesday. With just three days left for the deadline for income tax return (ITR) filing for individuals to end, the tax department asked taxpayers not to wait and file returns early. "Over 4.37 crore Income Tax Returns for AY 2020-21 have already been filed till 28th of December, 2020. Hope you have filed yours too! If not filed as yet, don''t wait. File your #ITR for AY 2020-21 TODAY!,” the Income Tax department tweeted. This includes over 2.44 crore taxpayers filing ITR-1, over 95.64 lakh filing ITR-4, over 53.12 lakh ITR-3 and over 32.30 lakh filing ITR-2. The deadline to file I-T returns by individual taxpayers for 2019-20 fiscal (Assessment Year 2020-21) ends on December 31, 2020, while the same for taxpayers whose accounts require to be audited is January 31, 2021. - moneycontrol.

🍒 Gold prices today struggle for 6th day, down ₹6000 from record highs : Gold prices in India traded in a narrow range for the sixth day in a row amid mixed global cues. On MCX, February gold futures were up 0.11% to ₹50,067 per 10 gram. In the previous five sessions, gold had remained in the ₹50,000 to ₹50,500 range. Silver today on MCX edged down 0.24% to ₹68,650 per kg. In global markets, gold rates were slightly higher today after US President Donald Trump's approved a stimulus package.

🍒 Nifty moves past 13,950; Sensex 47,500 : After opening at 47,466.42, the BSE Sensex hit a peak of 47,639.92 almost immediately and is currently hovering (9:30 am) around 47,635.78, a gain of 282 points over the previous day's close. Similarly, the Nifty50 index has crossed the 13,900-mark seamlessly and hit a high of 13.957.30. The broader index is currently ruling with a gain of 0.55 per cent or 76 points at 13,949.20. Except PoweGrid, Nestle India and L&T, all other BSE Sensex stocks are ruling in the green with IndusInd Bank (3.36 per cent), HCL Technologies (1.66 per cent) and Axis Bank 1.27 per cent.

🍒 Rupee ends 6 paise higher at 73.49 against US dollar : The rupee appreciated by 6 paise to close at 73.49 (provisional) against the US dollar on Monday, tracking weakness in the American currency and positive domestic equities. The sustained foreign fund inflows also supported the rupee, traders said. At the interbank forex market, the domestic unit opened at 73.52 against the US dollar and witnessed an intra-day high of 73.47 and a low of 73.61. The local unit finally settled at 73.49 against the American currency, registering a rise of 6 paise over its previous close..

29.12.2020: Today's Banking / Financial News

29.12.2020: Today's Banking / Financial News at a Glance

🍒 PNB completes IT integration of all branches of Oriental Bank of Commerce and United Bank of India ; State-owned Punjab National Bank (PNB) on Monday said it has completed IT integration of all branches of erstwhile United Bank of India with itself. This is in continuation to the IT integration of all branches of erstwhile Oriental Bank of Commerce undertaken last month, PNB said in a statement. The amalgamation of Oriental Bank of Commerce and United Bank of India into PNB came into effect from April 1, 2020. “With this PNB has concluded the integration and migration of databases of both banks, which brings all the customers on the common platform and enable them to transact seamlessly across bank’s network as well as use PNB’s digital Banking platforms like Internet Banking and Mobile Banking,” it said. The entire migration has been completed without effecting any change in customer account numbers, debit cards or net banking credentials, the bank added. - financial express

🍒 Bank of Baroda launches digital lending platform : Bank of Baroda (BoB) has launched its Digital Lending Platform (DLP), which will allow prospective retail loan seekers to get loans digitally through a paperless process The Platform provides ‘in-principle approval’ for home, car and personal loans in 30 minutes without human intervention, the public sector bank said in a statement. The bank will also offer ‘Online Loan against Fixed Deposits’ via DLP. Prospective loan seekers can avail the DLP facility through multiple channels — website, mobile banking, internet banking and social media as well, it added. With the launch of DLP, BoB said personal loan disbursements will be completely digitised first, followed by MSME (micro, small and medium enterprises) and agriculture disbursements. The bank envisages that the digital share of disbursement in retail lending will grow to 74 per cent over five years. - Business LIne

🍒 SBI, PNB, other Indian banks see sharp fall in NPAs; these reasons to thank for improved asset quality : India’s largest PSU banks — State bank of India (SBI) and Punjab national bank (PNB) — saw a significant fall in non-performing assets in the fiscal’s second quarter. SBI, which accounts for the highest share of PSU Banks’ GNPAs at 20 per cent, reported the highest asset quality improvement in the second quarter. Its GNPA ratio fell to 5.3 per cent in September 2020, compared to 7.2 per cent in the same month last year. Another large PSU bank, PNB that accounts for 16 per cent share in overall PSU banks’ GNPAs, saw a fall in NPAs at 13.4 per cent in September 2020, compared to 16.8 per cent in the last year. The improvement in asset quality has majorly been due to recoveries and higher write-offs by the multiple banks. SBI alone had recoveries to the tune of Rs 4,038 crores and has written off loans worth Rs 5,617 crores, according to Care Ratings. Among other PSU banks, NPAs of Bank of India fell from 16.31 per cent to 13.79 per cent on year in Q2; Bank of Maharashtra (16.86 per cent to 8.81 per cent); Indian Overseas Bank (20 per cent to 13.04 per cent); and NPAs fof UCO Bank fell from 21.87 per cent to 11.62 per cent on-year in Q2. - financial express

🍒 Gross NPAs of banks may rise to 10.1-10.6% by March 2021: Icra : Banks' gross non-performing assets (NPAs) and net NPAs are expected to rise to 10.1-10.6 per cent and 3.1-3.2 per cent, respectively by March 2021, Icra said Monday. The agency also expects net NPA to decline to 2.4-2.6 per cent by March 2022. "As moratorium on loan repayments is over and though we await the Honourable Supreme Court directive on asset classification, the GNPAs and NNPAs for banks are likely to rise in near term to 10.1-10.6 per cent and 3.1-3.2 per cent, respectively by March 2021 from 7.9 per cent and 2.2 per cent, respectively as of September 2020," the rating agency said in a report. - economic times

🍒 2021 will witness lot of regulatory efforts channelled towards virtual assets: SBI official : The use of crowdfunding websites create additional risk and the year 2021 will see a lot of regulatory effort channelled towards virtual assets, a senior SBI official said on Monday. Addressing a virtual 'AML/CFT Conference 2020', Sujit Kumar Varma, SBI's Deputy Managing Director (Corporate Accounts Group) said that the trade-based money laundering remains a significant risk. " The use of crowdfunding websites, although not entirely new, create an additional risk as these are specially designed to solicit funding and can be misused for terror financing," he said. Varma also noted that crypto currencies and its potential means to finance terrorism is a significant threat especially when is anonymous in nature. "The year 2021 will see a lot of regulatory effort channelled towards virtual assets. The year 2021 will also likely witness the introduction of more rules and regulations for virtual assets service providers," he said. - economic times

🍒 Axis Bank prunes overseas presence as it consolidates local business : Axis Bank is pruning its overseas operation as part of a strategy of focusing Indian market. It closed branches in Shanghai and Colombo last month while it is in the process of winding up Hong Kong Branch, senior bank officials said. It is also looking to surrender its UK banking subsidiary license and close operations by April 2021. India’s third largest private sector lender is looking to optimize overseas operations in line with the overall corporate strategy. The plan is to consolidate the services related to corporate banking, trade finance, treasury and risk management solutions through its Dubai, Singapore and GIFT city branches. Axis also has representative offices in Dhaka, Abu Dhabi and Sharjah. Axis’ group executive for wholesale banking Ganesh Sankaran said that the bank is closing down branches where it does not have corresponding business opportunities. “We will only continue with our overseas branches and offices in a well thought manner where they have deep synergies with Indian operations and business goals," he said. - economic times

🍒 Break-even year for bleeding PSU banks : The economy has shrunk 15.7% in the first half, jobs have been lost, incomes have contracted and uncertainty hangs over high-contact services with the survival of many in doubt. India has the second-highest ratio of net non-performing assets (NPAs) among the G-20 nations. And this is expected to go up when the Supreme Court stay on NPA classification gets lifted. Given this setting, it may seem highly incongruous to expect NPAs in Indian banks to bottom out in the fourth quarter of 2020-21. Yet, this is what is likely to happen. It now appears that not only have banks dodged an explosion of bad loans, but they also solved some historical problems. For instance, NBFCs were facing a huge credit crunch in March and there were fears that they might default. The targeted long-term repo operations and other schemes enabled them to refinance loans that were coming up for repayment in the current fiscal. While none of the RBI or government relief measures were available for companies that had defaulted, these bad loans have been addressed through provisions. “After six years of losses, FY2021-22 may be the break-even year for public sector banks. This year, there is a possibility that they will make a loss if the stress will materialise according to our estimates,” said Anil Gupta, Icra VP and sector head. - economic times

🍒 PMC Bank money laundering case: ED summons Sanjay Raut's wife for questioning on December 29 : The ED has summoned Varsha Raut, wife of Shiv Sena MP Sanjay Raut, for questioning in the PMC Bank money laundering case on December 29, officials said on Sunday. Varsha Raut has been asked to appear before the federal agency in Mumbai. This is the third summons issued to her after she skipped the earlier two on health grounds, they said. The summons for questioning has been issued to her under the provisions of the Prevention of Money Laundering Act (PMLA). The ED wants to question Varsha Raut with regard to "receipt" of some funds that were allegedly siphoned from the bank, official sources claimed. The ED had filed a PMLA case to probe the alleged loan fraud in the Punjab and Maharashtra Co-operative (PMC) Bank in October last year against the Housing Development Infrastructure Ltd (HDIL), its promoters Rakesh Kumar Wadhawan and his son Sarang Wadhawan, its former chairman Waryam Singh and ex-managing director Joy Thomas.- economic times

🍒 Govt to soon initiate Bank Investment Company : The government is likely to set in motion the process of establishing a Bank Investment Company (BIC) to hold its stake in public sector banks (PSBs) following substantial consolidation in the public sector banking space and clean-up of banks’ balance sheet in the last couple of years. With the banking space seeing fast-paced changes vis-a-vis business models and technology, top bankers feel now is the right time to set up a BIC so that decisions can be taken quickly without the fear of the 3Cs — Central Vigilance Commission, Comptroller and Auditor General and Central Bureau of Investigation. BIC was mooted in 2014 by the Reserve Bank of India’s (RBI) PJ Nayak Committee Report to review governance of boards of banks. - Business Line

🍒 Flexible inflation targeting: “If it ain’t broke, don’t fix it”, say RBI officials : Maintaining the inflation target at 4 per cent is appropriate for India in the backdrop of the steady decline in trend inflation to 4.1- 4.3 per cent since 2014, according to Reserve Bank of India (RBI) working paper. The aforementioned observation assumes significance given that the flexible inflation targeting/ FIT (formally instituted in June 2016), which commits the RBI to a consumer price inflation (CPI) target of 4 per cent with an upper and lower tolerance band of +/- 2 per cent, has to be reviewed by end-March 2021. The paper’s authors — Harendra Kumar Behera, Director, and Michael Debabrata Patra, Deputy Governor, RBI — underscored that: “The credibility bonus accruing to monetary policy warrants smaller policy actions to achieve the target (FIT). This points to maintaining the inflation target at 4 per cent into the medium-term. If it ain’t broke, don’t fix it.” - Business Line

🍒 AU Small Finance, ICICI Pru Life tie up to offer life insurance solutions : AU Small Finance Bank on Monday announced a strategic partnership with ICICI Prudential Life Insurance to offer life insurance solutions. AU Banks said the tie-up aims to deliver "paperless, secure, and hassle-free life insurance" to over 1.8 million customers through digital platforms across 700 banking touchpoints in 13 states and 2 Union territories. “AU Bank has always worked with the core Dharma of ‘customer centricity’. Expanding our bouquet of financial services and customer value proposition, we wanted to associate with an additional life insurance partner to add value to our existing range of products & services while helping our customers to plan for better financial security," said Uttam Tibrewal, executive director of AU Small Finance Bank. - Business Standard

🍒 Asset quality pressure on banks to moderate by FY22-end, says Icra : Asset quality pressure on banks in India is likely to moderate with net non-performing assets (NPAs) declining to 2.5 per cent by March 2022 (FY22) from an estimated 3.1 per cent in March 2021, according to rating agency Icra. The loan restructuring volume is likely to be lower at 2.5-4.5 per cent of advances than initial estimates of 5-8 per cent of advances, it added. Icra said in a statement that moratorium on loan repayments is over, though the Supreme Court directive on asset classification is awaited. In this backdrop, the Gross NPAs are likely to rise to 10.1-10.6 per cent by March 2021 from 7.9 per cent in September 2020. The Net NPAs would also move up to 3.1-3.2 respectively by March 2021 from 2.2 per cent as of September 2020 on elevated credit provisions during H2FY21 as well. - Business Standard

🍒 Airlines seek easier Kamath panel's parameters on loan restructuring : Indian airlines, struggling with a pandemic-related demand slump, have sought from banks and the Reserve Bank of India (RBI) relaxations in the K V Kamath panel’s parameters on loan restructuring. Bank executives have said while they are sensitive to the requirements of the aviation sector, unless there are relaxations at a regulatory level, airlines may not find success in recasting loans. Sources said SpiceJet, GoAir, Vistara, and regional airline TruJet had approached lenders for restructuring their loans. SpiceJet and GoAir have also approached banks for fresh loans as working capital. Executives of private airlines have said while they have asked for relaxations in their negotiations with lenders, it has been conveyed to the RBI through the Ministry of Civil Aviation that the cash flow of airlines may remain under pressure for some more time and the eligibility criteria will be difficult to meet. They also want banks to be more amenable to giving fresh credit lines. “In our communication with lenders, we have pointed out that airlines will require at least one more year to come back to profitability. While the government has allowed opening up almost 80 per cent operations, this lean quarter of the post-holiday season (January-March) will stress profitability as there will be more capacity but fewer passengers,” said an executive of a private airline. - Business Standard

🍒 CAG writes to RBI on banks' status post-recap over the past 5 years : The Comptroller and Auditor General of India (CAG) has written to the Reserve Bank of India (RBI), seeking details of the performance of state-run banks after their recapitalisation (recap) over the past five years. The CAG has also requested it to share the details of a study, if any, with the government. “This (development) should be seen in the context of the opportunity cost of state-run banks’ recap, given the limited fiscal space available,” said a source, adding, “It’s probably part of the steps towards sizing the true value of these banks ahead of privatisation and bringing uniformity in the standards for recap.” The CAG’s communiqué to the RBI ahead of the 2021-22 Budget also puts the spotlight on the latter’s supervisory architecture. This is because of its linkage with the health of state-run banks, more so after the central bank’s asset quality reviews undertaken in recent years. As articulated by former RBI governor, Urjit Patel, the banking regulator holds that it has relatively less say in the governance of state-run banks. The CAG’s message to the RBI comes within a year of its Report on Trend and Progress of Banking in India (T&P: 2018-19), which noted that “the financial health of state-run banks should be assessed by their ability to access the capital markets rather than looking at the government as a recapitaliser of the first and last resort”. - Business Standard

🍒 Maintaining 4% inflation appropriate for India: RBI paper : Maintaining 4 per cent inflation is appropriate for India as targeting a lower rate could impart deflationary bias to the monetary policy, said a Reserve Bank paper. Under the current dispensation, the RBI has been mandated by the government to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side. The paper, authored by RBI Deputy Governor Michael Debabrata Patra and another official Harendra Kumar Behera, has found a steady decline in trend inflation to 4.1-4.3 per cent since 2014. "A target set too below the trend imparts a deflationary bias to monetary policy because it will go into overkill relative to what the economy can intrinsically bear in order to achieve the target. - Live Mint

🍒 Debt recasts by banks to be lower than estimated at 2.5-4.5% of loans: Icra : Indian banks are expected to restructure loans of fewer borrowers than was originally estimated, with 2.5-4.5% of advances now likely to get recast, rating agency Icra said on Monday. It said that loan recast requests are much lower than previously estimated, supported by sharper-than-expected improvement in economic activities as well as liquidity support through emergency credit line guarantee scheme. Accordingly, Icra has revised the estimate downward to 2.5-4.5% of advances as against 5-8%, estimated earlier. Anil Gupta, sector head – financial sector ratings, Icra said, with expectations of sustained collections and lower restructuring, the asset quality is expected to improve further with net non-performing asset (NPA) declining to 2.4-2.6% by March 2022. “This will lead to lower credit provisions and better profitability in FY2022," said Gupta.- Live Mint

🍒 Lenders look to give mobile apps a facelift : Banks are upgrading their mobile applications to make it easier for customers to complete most transactions without having to visit branches with the apps emerging as the most preferred customer-interface for lenders after the pandemic. The Reserve Bank of India (RBI) has repeatedly nudged banks to strengthen their information technology infrastructure and recently took the unprecedented step of asking India’s largest private lender, HDFC Bank Ltd, to halt new digital banking initiatives till it fixes problems that have caused three outages in its e-banking services since 2018. State-run Bank of Baroda (BoB), for instance, is looking to redesign its mobile app, which had 11.43 million downloads on Google Play Store at the end of March. The bank is hiring an agency to identify the difficulties faced by customers before redesigning the app. - Live Mint

🍒 Take shareholders’ nod before appointing Shivan as MD & CEO, RBI tells Dhanlaxmi Bank : The Reserve Bank of India (RBI) has asked the Dhanlaxmi Bank Board to get shareholders’ approval before appointing JK Shivan as the next managing director and CEO of the bank. The move is considered somewhat unusual since typically, the board appoints the candidate recommended by the regulator as additional director and then seeks the shareholders approval at the next AGM . The board of Dhanlaxmi had sent a list of five candidates to RBI for its approval after the incumbent Sunil Gurbaxani was voted out by majority of shareholders. An independent director the bank told FE the RBI must be concerned that the shareholders voted out a person nominated by the RBI. Gurbaxani was voted out from the post of MD and CEO by more than 90% of the shareholders on October 1 at the first AGM held after he was appointed in February 2020. - financial express

🍒 Suryoday Small Finance Bank gets SEBI nod to float IPO : Markets regulator Securities and Exchanges Board of India (SEBI) has granted the go-ahead to small lender Suryoday Small Finance Bank to float its Initial Public Offering (IPO). This IPO comprises fresh issuance of 1,15,95,000 equity shares and an offer for sale of up to 84,66,796 equity scrips by existing shareholders, according to the draft papers filed with the regulator, PTI reported. Those offering shares through the Offer for sale (OFS) route include International Financial Corporation (IFC), Gaja Capital, HDFC Holdings, IDFC First Bank, Kotak Mahindra Life Insurance Company, DWM (International) Mauritius Ltd and Americorp Ventures. After filing its preliminary papers in October, the small lender got SEBI's observation on December 23, per an update on the regulator's portal. - moneycontrol.

🍒 ICICI Bank and Google Pay collaborate to bring digital registration of FASTag : ICICI Bank has announced that it is collaborating with Google to issue FASTag. It has become the first bank to join hands with Google Pay for the issuance of FASTag. Customers will now be able to order, track and recharge ICICI Bank FASTag via the Google Pay app. Sajith Sivanandan, Business Head, Google Pay said, “NETC FASTag is an important milestone in bringing the efficiencies of digital payments into transit and making interstate travel frictionless. We are very pleased to be joining hands with ICICI Bank to extend the facility of NETC FASTag purchase to millions of users across India through Google Pay. This is a great example of an entire ecosystem working in concert to bring ease and convenience to the lives of users in a very tangible way.” - moneycontrol.

🍒 Sensex, Nifty scale new heights on positive global cues : The BSE benchmark Sensex settled up by 380.21 points or 0.81 per cent at its all-time closing high of 47,353.75. The index also scaled its fresh record intra-day peak of 47,406.72. The NSE Nifty ended 123.95 points or 0.90 per cent up at new closing high of 13,873.20. It also touched its all-time intra-day high of 13,885.30. On the Sensex chart, Titan, SBI, L&T, IndusInd Bank, Ultratech Cement, HDFC Bank and Asian Paints were top gainers. While, HUL, Sun Pharma, Dr Reddy and Bajaj FinServ closed with losses. Of the Sensex constituents, 26 stocks settled with gains and 4 with losses.

🍒 Rupee ends 6 paise higher at 73.49 against US dollar : The rupee appreciated by 6 paise to close at 73.49 (provisional) against the US dollar on Monday, tracking weakness in the American currency and positive domestic equities. The sustained foreign fund inflows also supported the rupee, traders said. At the interbank forex market, the domestic unit opened at 73.52 against the US dollar and witnessed an intra-day high of 73.47 and a low of 73.61. The local unit finally settled at 73.49 against the American currency, registering a rise of 6 paise over its previous close.

🍒 Gold price rises by 1%, silver rate surges 3% : Gold and silver prices surged today in Indian markets tracking firm international prices. On MCX, February gold futures rose by 0.97% to ₹50,561 per 10 grams and silver prices went up by 3.14% to ₹69,578. Though gold has recovered from lows of below ₹48,000, it remains significantly lower than the August highs of ₹56,200. Similarly, silver had also almost touched ₹80,000 per kg in the same month. Gold closed at ₹50,073 on Thursday and silver closed at ₹67,509 on Wednesday on MCX..

28.12.2020: Today's Banking / Financial News

28.12.2020: Today's Banking / Financial News at a Glance

🍒 PNB puts 3 stressed accounts up for sale : State-run Punjab National Bank (PNB) has put up for sale three stressed accounts, including Birsa Institute of Technology (Trust), with total outstanding dues of nearly Rs 34.50 crore. "We intend to place three accounts for sale to ARCs/NBFCs/other banks/FIs etc, on the terms and conditions stipulated in the bank's policy, in line with the regulatory guidelines," PNB said in an auction notice. The three accounts are Mangalam Oil Industries with outstanding dues of Rs 10.77 crore, Alliance Fibres Ltd (Rs 18.31 crore) and Birsa Institute of Technology (Trust) (Rs 5.41 crore). Mangalam Oil Industries and Alliance Fibres are based out of Ahmedabad and the third one is based in Raipur. The sale process is being undertaken by bank's Stressed Assets Targeted Resolution Action (SASTRA) Division. The SASTRA division is tasked to enhance bank's recovery mechanism post the massive fraud caused by the jewellers duo Nirav Modi and Mehul Choksi, unearthed in early 2018. - economic times

🍒 PMC Bank money laundering case: ED summons Sanjay Raut's wife for questioning on December 29 : The ED has summoned Varsha Raut, wife of Shiv Sena MP Sanjay Raut, for questioning in the PMC Bank money laundering case on December 29, officials said on Sunday. Varsha Raut has been asked to appear before the federal agency in Mumbai. This is the third summons issued to her after she skipped the earlier two on health grounds, they said. The summons for questioning has been issued to her under the provisions of the Prevention of Money Laundering Act (PMLA). The ED wants to question Varsha Raut with regard to "receipt" of some funds that were allegedly siphoned from the bank, official sources claimed. The ED had filed a PMLA case to probe the alleged loan fraud in the Punjab and Maharashtra Co-operative (PMC) Bank in October last year against the Housing Development Infrastructure Ltd (HDIL), its promoters Rakesh Kumar Wadhawan and his son Sarang Wadhawan, its former chairman Waryam Singh and ex-managing director Joy Thomas. - economic times

🍒 Muthoottu Mini Financiers ties up with Exide Life Insurance to provide life insurance products : Muthoottu Mini Financiers Ltd has announced a strategic partnership with Exide Life Insurance Company Limited to provide life insurance products through its branches. The tie-up will enable Muthoottu Mini Financiers Ltd to expand offerings to its customers by becoming a ‘One Point Stop’ for all their financial needs. The Bengaluru-based Exide Life Insurance serves over 15 lakh customers, with a wide range of investments products. The partnership will enable Muthoottu Mini Financiers, which has a customer base of more than 30 lakh, to facilitate greater brand awareness for Exide Life Insurance. “We would be promoting business through our 806 branches across the country. With the strategic alliance now bringing in Exide Life Insurance Company’s offerings into our large bouquet of products, we are on the way to becoming a ‘One Point Stop’ for our esteemed customers for all their financial needs,” Mathew Muthoottu, Managing Director, said. - Business Line

🍒 Ahead of DHFL voting, Oaktree fires fresh salvo against Piramal bid : Ahead of the three week long voting starting Monday to decide on the new owner of Dewan Housing Finance Limited (DHFL), Oaktree has fired yet another salvo by attacking the bid of its nearest competitor Piramal Enterprises. In a letter sent on Sunday evening to members of the committee of creditors, the RBI appointed administrator, Oaktree has said it is concerned that despite its bid offering maximum value for all stakeholders, it appears “there is a consistent campaign to misrepresent information on Oaktree’s bid. Information is not only being presented in an incomplete and inaccurate manner but also in order to discredit Oaktree’s bid and favour the Second Highest Bidder.” - economic times

🍒 Centrum Microcredit raises $5.55 million from Singapore’s IIX : Centrum Microcredit Ltd, the micro-finance arm of diversified Centrum Group, has raised $5.55 million (about ₹41 crore) debt from Singapore-based impact investing and sustainability organisation Impact Investment Exchange (IIX). The micro-finance firm, which has presence across nine States, will use the funding to provide financial assistance to women entrepreneurs. “It is our vision to create a positive, social and economic impact in the lives of low-income household by improving access to finance to women entrepreneurs. This is our first international fund raise and the funds will be used to improve the livelihood of women in India,” Prashant Thakker, Centrum Microcredit Executive Director and Chief Executive Officer, told BusinessLine. - business line

🍒 Oaktree’s bid to ‘convince’ DHFL lenders : In a last-ditch effort to convince the lenders to DHFL, Oaktree Capital has sent a fresh letter to the CoC stating that evaluation of its offer based on incorrect information could be subject to judicial, administrative and investigative review. Sources said Oaktree has expressed concerns that its bid is being misrepresented despite offering maximum value to the stakeholders. Oaktree has highlighted that in terms of total recovery being offered to financial creditors as well as net present value, its financial proposal is clearly superior to all other PRAs. The total recovery for lenders according to Oaktree’s resolution plan is envisaged at ₹38,400 crore and the NPV could be about ₹36,418 crore. Sources said Oaktree has stated that the total cash amount that the CoC would receive immediately on the implementation of its resolution plan would be about ₹17,400 crore. - business line

🍒 Piramal highlights its bid for DHFL while responding to Oaktree's concerns : Responding to Oaktree Capital’s concerns on the DHFL resolution process, the Piramal Group highlighted its bid for the debt-ridden housing finance company. “The Piramal plan merges DHFL with a AA rated entity, offers over ₹10,000 crore of equity immediately, and provides clarity on quality and secondary market valuation of NCDs. The alternative plan is a highly leveraged structure with minimal equity,” said a Piramal spokesperson. - Business Line.

27.12.2020 : Today's Banking / Financial News

27.12.2020 : Today's Banking / Financial News at a Glance

🍒 Bad debt fear keeps private banks away from street vendor loans : Last week, a branch manager of a leading state-run bank in Madhya Pradesh wrote to the municipal commissioner seeking “cooperation” as several of the 160 street vendors, who were given loans under the PM SVANidhi scheme, had not paid a single instalment, turning them into non-performing assets (NPAs). While executives in the branch described it as routine communication, several bankers point to it to argue that their worst fears are coming true at a time when several state government officers are pushing for rapid disbursement of loans. Although banks have been reluctant to push the Rs 10,000-loan to street vendors, the finance ministry, which controls the fate of state-run bank chiefs, has got them to dole out loans. Not surprisingly, public sector players have disbursed 92% of the loans so far with private banks being less obliging. - economic times

🍒 Bounce rate of auto debit transactions remains high amid lenders’ claims of improved collection efficiencies : Is there rising financial stress amongst small and retail borrowers after the end of the loan moratorium, despite banks and NBFCs reporting collection efficiencies at about 90 per cent of pre-Covid levels? Anecdotal evidence as well as a quick search of social media indicate that many borrowers indeed continue to face headwinds due to job losses and salary cuts amid the ongoing Covid-led economic uncertainty. This also seems to be corroborated by data from the National Payments Corporation of India from its National Automated Clearing House (NACH) platform, which reflects the elevated number of unsuccessful auto debit requests. The bounce rate of auto debit transactions has been hovering over 40 per cent since June as against 31 per cent at the start of 2020 before the pandemic. In November, of the 8.69 crore auto debit transactions recorded on the NACH platform, 3.52 crore were unsuccessful. In comparison, just 2.4 crore transactions out of 7.77 crore requests were returned in January. - Business Line

🍒 SEBI names Krishnamurthy as ‘observer’ for Franklin e-voting : Market regulator SEBI on Saturday announced the appointment of TS Krishnamurthy as the observer for ‘e-voting’ on winding-up of six debt schemes of Franklin Templeton Mutual Fund (FTMF). SEBI’s announcement came several hours after the e-voting had commenced on Saturday morning. On December 9, the Supreme Court had directed SEBI to appoint an observer.

Krishnamurthy, age 76, is the former chief election commissioner of India and the ex-chairman of share depository company CDSL where he worked till 2019. SEBI said it had appointed the observer on December 18. But the announcement was made on Saturday after the Chennai Financial Markets and Accountability (CFMA), an investor lobby group, approached the Supreme Court seeking clarity over the observer. - Business Line

🍒 Dhanlaxmi Bank may appoint former SBI official J K Shivan as its MD & CEO : Dhanlaxmi Bank Limited is planning to appoint J K Shivan as the Managing Director & CEO of the Bank. Shareholders of Kerala-based Dhanlaxmi Bank had voted against former managing director and CEO Sunil Gurbaxani on September 30. He, however, alleged that directors put pressure on him to quit after he raised various governance issues. The Board of Directors of the bank recommended a panel of candidates to Reserve Bank of India for appointment as Managing Director & CEO. One of the candidates recommended by the Board was Shivan. The banking regulator has directed the Bank to submit a proposal before it after the appointment of Shivan is approved by the shareholders. Therefore, the Board of Directors have placed the proposal for the consent of the shareholders authorising the bank to appoint Shivan as Managing Director & CEO. Shivan has over 37 years of experience in SBI. - Business Standard

🍒 Gold prices fell 0.46% this week to Rs 50,064/10 gm, bias remains bullish for short term : Gold prices declined to settle at Rs 50,064 per 10 gram on December 24 as participants trimmed their position as seen by the open interest. The precious metal ended the week with a loss of Rs 231 or 0.46 percent. The yellow metal traded in the positive territory for two out of four sessions in a holiday-shortened week as markets were shut on Friday for Christmas and thin volume, but manage to close above the key psychological barrier of Rs 50,000/10 grams for second successive weeks tracking the general weakness in dollar and EU and the UK clinched a narrow Brexit deal. In the retail market, the bullion metal closed at Rs 49,995 per gram on Thursday up 0.29 percent on a weaker dollar and subdued global cues..

26.12.2020 : Today's Banking / Financial News

26.12.2020 : Today's Banking / Financial News at a Glance

🍒 Loan restructuring, other measures announced by govt to cushion PSBs from shock: DFS Secy : Loan restructuring and other measures announced by the government to help the industry hit by the coronavirus pandemic may save public sector banks from "shock" in the next year, a top finance ministry official said. Despite the pandemic, the lockdown and the consequent damage done to the economy, there are quick signs of recovery, Financial Services Secretary Debasish Panda told in an interview. "There is a steady uptick in the credit growth. Retail, home and agriculture loans are doing well, and MSMEs again, with the intervention of the government through the ECLGS and other similar schemes, have also picked up," he said. Panda added that with the window for restructuring now made available by the RBI through the COVID-19 resolution plan, which offers resolution for all kinds of loans, the impact may not be that severe as had been projected earlier. However, it is difficult to exactly predict the numbers, he said. - economic times

🍒 YES BANK retail loan process to become easier and faster as it joins hands with Salesforce : YES BANK has joined hands with Salesforce, a global leader in customer relationship management, to build a next generation technology platform to smoothen its retail lending business. The private lender is the first bank in the country to collaborate with Salesforce for loan origination and processing. This collaboration aims to engage customers with a unified experience and drive aggressive retail led growth for the lender, the bank said in a statement. The Salesforce loan origination system for retail banking will help the bank to provide "personalised solutions and connected banking experiences for consumers across segments". YES BANK's capacity to process higher volumes of loan applications through enhanced automation and progressive API integrations will be bolstered. The new system will be faster and easier than manual loan sanctioning process. The turnaround time for a loan application will be improved, the bank said. It will also enable the bank to launch a new range of innovative products and services to support the evolving needs of customers faster than before. - Live Mint

🍒 Forex reserves up by USD 2.56 bn to record USD 581.131 bn : The country's foreign exchange reserves surged by USD 2.563 billion to touch a record high of USD 581.131 billion in the week to December 18, RBI data showed. In the previous week, the reserves had declined by USD 778 million to USD 578.568 billion. In the reporting week, the increase in reserves was due to a rise in foreign currency assets (FCAs), a major component of the overall reserves. FCAs rose by USD 1.382 billion to USD 537.727 billion, the Reserve Bank of India's (RBI) weekly data showed. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. The gold reserves increased by USD 1.008 billion in the reporting week to USD 37.020 billion in the week ended December 18, the data showed. - economic times

🍒 Aavas Financiers to raise ?100 crore through NCDs : The Executive Committee of the Board of Jaipur-headquartered Aavas Financiers Ltd on Thursday approved the issuance of Non-Convertible Debentures (NCDs) aggregating up to an amount of ?100 crore on a private placement basis. The NCDs, having a face value of ?10 lakh each, are rated, listed, senior, secured, and redeemable, the company said in a regulatory filing. Aavas Financiers (formerly known as Au Housing Finance) is primarily engaged in providing housing loans to customers belonging to low and middle-income segments in semi-urban and rural areas. - Business Line

🍒 Chinese national kingpin in instant loan app fraud : A Singapore-based Chinese national is a mastermind behind the instant loan application fraud that lured several people in Telangana and elsewhere. The app firms are charging high-interest rates (up to 35 per cent) as they disbursed short-tenure loans. If a customer fails in repayment on time, they would harass them by sending messages to all. The Cyberabad police have so far registered eight cases in connection with the fraud. The Cyberabad police, who have deputed teams to different cities to investigate the fraud, have raided a call centre Cubevo Technology Private Limited in Hyderabad. The call centre is headed by a Chinese national, Zixia Zhang, who is currently absconding, Cyberabad Police Commissioner V C Sajjanar has said. - Business Line

🍒 Fintech: Digital payments got a Covid boost in 2020 : In contrast to the gloom cast by the Covid-19 pandemic and lockdown across the economy, digital payments and fintech was one sector, which witnessed record highs in 2020 as a large number of people preferred to stay at home and maintain social distancing. With concerns over contracting novel coronavirus infection from visiting bank branches and using currency notes, many people — not only in metros but also in smaller towns — have started using their smartphones for making payments and even taking loans for smooth banking services. Digital payments touched a record high in 2020 with all channels from the Unified Payments Interface to the Aadhar-enabled Payment System (AePS) registering stellar growth. - Business Line

🍒 3.97 crore ITRs filed for 2019-20 fiscal till December 24 : As many as 3.97 crore taxpayers have already filed their income tax returns for assessment year (AY) 2020-21 (fiscal year 2019-20) till December 24, the Income Tax Department said on Friday. "Over 3.97 crore Income Tax Returns have already been filed till 24th of December, 2020. Have you filed yours as yet? If not, please do it TODAY! File your Return of Income Tax & ....Relax!," the department tweeted. This includes 2.27 crore taxpayers filing ITR-1, 85.20 lakh filing ITR-4, 46.78 lakh ITR-3 and 28.74 lakh filing ITR-2. The deadline to file I-T returns by individual taxpayers for the 2019-20 fiscal (AY 2020-21) ends on December 31, 2020, while the same for taxpayers whose accounts require to be audited is January 31, 2021. The due date has been extended from July 31 and October 31, 2020, respectively in view of the COVID pandemic. - moneycontrol.