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31.12.2020: Today's Banking / Financial News

31.12.2020: Today's Banking / Financial News at a Glance

🍒 Union Bank gets shareholder approval to raise up to Rs 6,800 crore : Shareholders of Union Bank of India on Wednesday approved the bank's proposal for raising up to Rs 6,800 crore equity capital to fund business growth. During the Extraordinary General Meeting (EGM), the shareholders passed the special resolution with the requisite majority for raising capital through FPO (Follow-on Public Offering) /Rights or QIP (Qualified Institutional Placement) or preferential allotment, the bank said in a regulatory filing. It would raise the fund during the current fiscal. "In order to meet the minimum capital and leverage ratio requirements under the Basel III guidelines for the expansion of business assets and based on the estimated growth, your directors have decided to raise equity share capital up to Rs 6,800 crore," the bank had said in its EGM notice to shareholders. The bank will utilise the raised capital for general business purposes, it said. - Business Standard

🍒 SBI to roll out new cheque payment system from January 1 : State Bank of India (SBI) will implement the 'positive pay system' for cheques from January 1, 2021. Re-confirmation of key information will be required for payments beyond Rs 50,000. SBI said on its website, "As per RBI guidelines, we are introducing Positive Pay System (PPS) w.e.f. 01/01/2021 to ensure added security where the cheque issuer now needs to provide details such as account number, cheque number, cheque amount, cheque date payee name with respect to the cheque payments." A couple of months ago, the Reserve Bank of India (RBI) took a decision to launch a 'positive pay system' for cheque. In August MPC, RBI governor Shaktikanta Das announced this system to keep customers safety in focus and to decrease the cases of crime and fraud with regard to cheque payment. - moneycontrol.com

🍒 RBI may red-flag Punjab and Sind Bank's Rs 5,500-crore zero-coupon bonds : The Reserve Bank of India (RBI) may red-flag the Rs 5,500-crore zero-coupon bonds issued towards recapitalising (recap) Punjab and Sind Bank (P&SB) in its current form, and ask it to hold the instrument in the held-to-maturity (HTM) portfolio at a discount and not at face value. “This (structure) has to be reworked. It is bad accounting, and has implications for the broader debt market. You can’t create equity out of thin air,” said a top source. “It can be abused as an instrument if such accounting norms are allowed,” said another source. It was, however, pointed that while zero-coupon bonds per se towards bank recap – a novel idea – is not a problem, it is the accounting treatment that has created opposition to the idea. And to that extent, the Centre may have to rethink its fiscal maths if it is to use the instrument for recap. - Business Standard

🍒 Yes Bank elevates Niranjan Banodkar as CFO, Adlakha as HR head : Yes Bank, which was rescued by the Reserve Bank in March after a huge run-on, on Wednesday promoted two key senior management personnel as the chief financial officer and head of human resources. The bank, now majority-owned by State Bank of India, has promoted Niranjan Banodkar as the group Chief Financial Officer(CFO) and Anurag Adlakha as the group Chief Human Resources Officer. In an exchange filing, Yes Bank said these appointments were approved by the board, on the recommendation of the nomination and remuneration committee and also of the audit committee. New HR head replaces Deodutta Kurane, who will be retiring from the bank soon, it said adding both the appointments will be effective January 1. - economic times

🍒 Small yet focused approach makes City Union Bank an interesting bet : With every disruption in the banking sector, whether asset quality-led or caused by a change in preference, the industry has reinvented itself to offer new products or to diversify into new territories. The 115-year-old Tamil Nadu-headquartered City Union Bank (CUB), however, is an exception. After starting as an outfit catering to small businesses, CUB remains committed to the segment and draws roughly 72 per cent of business from Tamil Nadu, and nearly 90 per cent from southern India. Being a small and medium enterprise (SME) centric bank, on a steady state basis it has drawn 35 per cent of its business from SMEs and about 15 – 17 per cent from the traders (see table), irrespective of the environment for SMEs. Normally, the Street is wary of banks with a high concentration risk. CUB, however, enjoys preference with 18 out of 28 analysts polled by Bloomberg recommending ‘buy’ (8 ‘hold’ ratings). At 2.8x FY21 estimated book, the stock also trades at a premium to larger peers such as Federal Bank and RBL Bank. - Business standard

🍒 Yes Bank appoints Anurag Adlakha as Chief Human Resources Officer : Private sector lender Yes Bank has appointed Niranjan Banodkar as the Group Chief Financial Officer of the bank. Banodkar is currently responsible for the Strategy and Planning function as well as driving the Sustainability agenda at Yes Bank. He will replace Anurag Adlakha, who has been appointed Chief Human Resources Officer. Adlakha is replacing Deodutta Kurane, who would be retiring from the service of the bank. “Both these appointments will be effective January 1 2021,” the lender said in a statement. The decisions were taken at a meeting of the board of directors of Yes Bank on Wednesday. - Business Line

🍒 Rs 8 lakh crore worth loans were written off by Indian banks in the last decade : Indian banks wrote off loans worth around Rs 8,83,168 crore in the last ten years, a significant chunk of which came from government-owned banks, the latest data from the Reserve Bank of India shows. Of this, public sector banks (PSBs) alone wrote off Rs 6,67,345 crore worth loans since 2010. This is about 76 percent of the total written-off loans in the decade, while private banks wrote off loans worth Rs 1,93,033 crore constituting about 21 percent of the total chunk. Foreign banks wrote off Rs 22,790 crore loans or 3 percent of the total write-off, the RBI data showed. In the financial year 2019-2020 alone, banks wrote off a total of Rs 2,37,206 crore or about a quarter of the total loan write-offs in the last one decade. Of this, Rs 1,78 lakh crore was by PSBs and Rs53, 949 crore by private banks. These figures do not take into account the loans written off by small finance banks, which is a relatively smaller portion. - moneycontrol.

🍒 Private banks’ operating profit share rises to 43.4% at PSBs’ cost : Net profits of scheduled commercial banks (SCBs) turned around in FY20 after losses in the previous two years. Although PSBs incurred losses for the fifth year in a row, the quantum of losses shrank. Payment banks (PBs) could not break-even as they incurred high initial capital expenditure and wage bills. The improvement in financial performance also reflected an increase in trading income on profit booking in the light of favourable yield movements. In line with the increasing share of private banks (PVBs) in banking assets, their share in operating profits also increased to 43.4% in FY20 at the cost of PSBs. The consolidated balance sheet of SCBs has grown in H1FY21 after a deceleration in FY20 on account of subdued economic activity, deleveraging of corporate balance sheets and muted business sentiment impacting credit supply. - financial express

🍒 Budget 2021 expectations | Govt support may be required again to recapitalise public banks : The recent attempt by a few public banks to raise equity capital from the markets saw a relatively tepid response with participation largely limited to a few state-run institutions, raising questions on the ability of these banks to raise external capital. This is the situation despite the massive recapitalisation of public banks entailing a capital infusion of Rs. 3.16 lakh crore during FY2016-2020. Given the weak profitability outlook for these banks even in FY2022, the investors’ interest towards these banks is likely to remain muted. Increasing credit growth from the banking system would require active participation from public banks as they still account for 2/3rd of the banking sector credit. Accordingly, the Government of India (GoI) may need to continue supporting these banks in FY2022 as well. - moneycontrol.

🍒 Deposits of public sector banks surge amid pandemic stress : Deposits for public sector banks (PSBs) grew at a higher pace than usual despite their lower deposit rates and amid stress on a few private banks. Term deposit mobilisation of public sector banks quadrupled but it decelerated sharply for private banks, the Reserve Bank of India said. For the banking sector as a whole, term deposits – contributing almost 60% of total deposits – moderated, reflecting the easing of interest rates and the lure of returns on competing asset classes. Foreign banks aggressively raised low-cost current and saving account (CASA) deposits, although their share in total deposits is low. “During 2020-21 so far, deposits with PSBs grew at a higher pace than usual, partly reflecting perception of their safe-haven status,” RBI said in its report on Trend & Progress of Banking in India. - economic times

🍒 Banks need Rs one lakh crore for NPAs, growth, says Reserve Bank of India : The Reserve Bank of India (RBI) has said that banks will need additional capital of up to one and a half percentage points of risk-weighted assets in its assessment of the impact of Covid-19 on lenders. Given that total bank loans are around Rs 104 lakh crore, the capital requirement would be more than Rs 1 lakh crore. “Preliminary estimates suggested that potential recapitalisation requirements for meeting regulatory purposes as well as for growth capital may be to the extent of 150 basis points (100bps = 1 percentage point) of the common equity tier I (CET I) ratio for the banking system,” the RBI said in its report on ‘Trend and progress of banking in India’ released on Tuesday. According to the RBI, gross non-performing assets (NPAs) declined from 9.1% as of March 2019 to 8.2% at end-March 2020 and further down to 7.5% in end-September 2020. - economic times

🍒 Banking sector sees improvement in health during FY20, says Reserve Bank of India : The performance of the Indian banking sector improved in fiscal 2020, when lenders reported a profit on an aggregate basis after two years of losses, the central bank said in its yearly assessment report. The banking system's bad loans fell and capital buffer improved, but banks need to be vigilant about competition from nimbler tech rivals, the Reserve Bank of India said. The RBI also expressed concern over rolling back the policy support given to banks to deal with the Covid-19 pandemic in the last eight 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 in India. The RBI said the turnaround of the banking system depended on the pace of the economy returning to a 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

🍒 IFSCA permits banking units to transfer assets through participation pacts : The International Financial Services Centres Authority (IFSCA) on Wednesday allowed Banking Units (BUs) to transfer assets to/from other financial institutions, persons resident in India and persons resident outside India through any internationally recognised standard risk participation agreement. The above dispensation is expected to encourage risk participation of foreign currency assets through BUs in IFSC instead of banks in foreign jurisdictions, IFSCA said in a statement. The first IFSC in the country has been set up at the Gujarat International Finance Tec-City (GIFT) in Gandhinagar. Transfer of assets through the risk participation agreement route is a common practice in many jurisdictions especially in the field of trade finance, it said. "Such risk participation is undertaken as a bilateral contract under a standard document called a risk participation agreement between the two institutions (buying and selling entity). One of the common standard risk participation agreement is the Master Risk Participation Agreement (MRPA) developed by the Bankers Association for Finance and Trade (BAFT)," it said. The IFSCA was established on April 27 this year with its head office in Gandhinagar. - economic times

🍒 ITR filing deadline extended from Dec 31 to January 10, 2021 for these taxpayers : The government has extended the deadline to file income tax return (ITR) for FY 2019-20 for individuals from the current deadline of December 31, 2020, to January 10, 2021. The extension of the deadline is for those individuals whose accounts are not required to be audited and who usually file their income tax return using ITR-1 or ITR-4 forms, as applicable, as per the press release dated December 30, 2020. This is the third time that the government has extended the deadline to file ITR - first from the normal deadline of July 31 to November 30, 2020, and then to December 31, 2020. As per the press release, the deadline for other taxpayers whose accounts are required to be audited (including partners of a firm) and/or those who have to submit report in respect to international financial transactions has been extended to February 15, 2021.. - economic times

🍒 Krazybee Services appoints Gopalakrishna as Independent Director : Krazybee Services Private Limited, a non-deposit taking non-banking financial company (NBFC-ND-SI), has appointed G Gopalakrishna, former Executive Director (ED) of Reserve Bank of India (RBI) as an Independent Director on its Board. Gopalakrishna has been a career Central Banker with RBI for over 33 years in various capacities and retired as Executive Director (ED) in 2014. During his stint as ED RBI, he was overseeing the Department of Banking Supervision, Dept of Non-Banking Supervision and Foreign Exchange Department, among others. - Business Line

🍒 ICICI Lombard launches online platform for SMEs ; Private insurer ICICI Lombard General Insurance has launched an online platform for small and medium enterprises to buy or renew insurance. “The new interface will serve as a convenient platform for SME owners to buy or renew insurance products, endorse their insurance policies, and register claims. Through this platform, business owners can opt for different insurance options such as marine insurance, workmen compensation,” it said in a statement. “The SME segment is relatively more vulnerable to multiple risks and has been significantly impacted by the pandemic. With this one of its kind online platform for business insurance, we are empowering SMEs to avail our business insurance solutions conveniently at any time and from anywhere in a contactless manner,” said Sanjeev Mantri, Executive Director at ICICI Lombard. - Business Line

🍒 Jana SFB expands its branch network to 601 : Jana Small Finance Bank digitally inaugurated 18 bank branches in Maharashtra. With the conversion of its asset centres to bank branches, Jana Bank’s presence in Maharashtra will reach 70 and 601 all India. Maharashtra is the second highest of the 22 States where the bank has a presence. Staying true to their promise of paise ki kadar, Jana Bank is all set to increase its footprint across rural India. Jana Small Finance Bank started its journey in Maharashtra in 2010 and have served over 15 lakh customers in the State who are mainly women. The bank offers unsecured loans to women under the group loan model as well as individual loans for small businesses. - Business Line

🍒 Flat growth for life insurance industry in FY21: Murlidhar : The life insurance industry’’s growth in the current fiscal is likely to stay flat amid sharp traction seen in the protection business and ₹5 lakh income tax exemption will have a short term negative impact, a top life insurance official said on Wednesday. In the private sector players, the additional premium income saw a de-growth of four per cent in the first half of the fiscal while some companies attained healthy growth. Companies that could offer complete digital onboarding and servicing platforms immediately grew, he said. “This has been an unprecedented year. The industry is likely to remain flattish. However, we will stay ahead of the industry. In the first half our additional premium had grown by 16 per cent,” Kotak Mahindra Life Insurance MD & CEO G Murlidhar said. - Business Line

🍒 SFBs should focus on bottomlines to withstand adverse shocks: RBI : Small Finance Banks (SFBs) may need to focus on their bottomlines as and when financial conditions tighten, according to a Reserve Bank of India (RBI) report. The “Report on Trend and Progress of Banking in India 2019-20” observed that the prevailing easy liquidity conditions facilitate borrowings and refinance on which SFBs rely. Currently, there are 10 SFBs in the country. The central bank said the risk absorption cushions in the form of provision coverage ratio (PCR) is low in some SFBs, impacting their ability to withstand adverse shocks. - Business Line

🍒 Kapil Wadhawan submits alternative proposal for DHFL : Kapil Wadhawan, the erstwhile promoter of Dewan Housing Finance Corporation Ltd (DHFL), has submitted an alternative proposal that he contends is better than the bids submitted as part of the resolution process until now. Noting that there is a possibility of a potential litigation amongst the bidders, he urged that his proposal be considered by the RBI, the advisors to the DHFL Administrator and the committee of creditors (CoC). “You will appreciate that the alternative proposal that I have now made is significantly better than the bids made by any of the bidders by a wide margin. It is apparent that the bidders are offering no real value for the wholesale book and are seeking to retain for themselves the profits that they will earn through further retail lending,” Wadhawan said in a fresh letter to RBI Governor Shaktikanta Das, DHFL’s Administrator R Subramaniakumar and the CoC. - Business Line

🍒 Just 2.1% of TLTRO funds went to NBFCs that needed them most: RBI report : Banks deployed more than 70 per cent money raised through targeted long-term repo (TLTRO) in papers issued by AAA-rated non-banking finance companies (NBFC), defeating the very purpose of the special liquidity operations. The top-rated NBFCs did not need special assistance from the RBI or banks. They had enough access to the debt markets and had a comfortable liquidity position. The whole idea of launching the TLTRO funds, in various batches, was to provide system level liquidity as well as “targeted liquidity to sectors and entities experiencing liquidity constraints and restricted market access.” Clearly, banks did not do it, data released by RBI’s Trend and Progress Report showed. - Business Standard

🍒 Fintechs may pose a challenge to banking sector over the next few years : At an inter-block cricket match in Purnea district early this year, all sorts of loans were on offer around the ground, with banners bearing cell numbers. None of these banners bore the names of banks but apps that could process instant loans with few questions asked. This is just the kind of activity that Reserve Bank of India Governor Shaktikanta Das warned in a December 23 press release would result in individuals and small businesses “falling prey to growing number of unauthorised digital lending platforms (or) mobile apps on promises of getting loans in quick and hassle-free manner”. But this explosion of app-based lending, a digitised extension of the informal, below-the-radar channels that flourish in India, underlines the growing importance of fintech companies of all hues. Even before banks can reach credit to the “unbanked” through such measures like Jan Dhan, these companies have moved in and are creating what Nobel laureate George Akerlof would describe as a lemons market — where it is difficult to distinguish between a good and a bad product. There are no industry-wide estimates of how large India’s digital lending segment has grown. In 2018, Boston Consulting Group estimated that it could be a $100-billion market for India by 2023 across all segments. - Business Standard

🍒 A year after PMC Bank scam, RBI says NPAs rise in urban co-operative banks : The proportion of gross non-performing assets (NPAs) of urban co-operative banks saw a rise in FY20 to 10.8% as against 7.3% in the previous year, the Reserve Bank said on Tuesday. From a soundness perspective, the number of such lenders bracketed in the lowest "D Category" increased during the last fiscal, the central bank said in the "Trends and Progress of Banking in India" report. It can be noted that dud assets at the poorly governed urban co-operative banks (UCBs) are a major source of stress, and the crisis at lenders like PMC Bank, which continues to be under directions even after one year, can be attributable to high quantum of NPAs. - Live Mint

🍒 Bitcoin jumps to record $28,600 as 2020 rally reaches new heights : Bitcoin on Wednesday jumped to a record $28,599.99, after the digital currency almost quadrupled in value this year amid heightened interest from bigger investors. The world's most popular cryptocurrency was last up 2.3 percent at $28,012.It has surged by nearly half since breaking $20,000 for the first time on December 16. Bitcoin has increasingly seen demand from larger US investors in particular, attracted by its perceived inflation-hedging qualities and potential for quick gains, as well as expectations it would become a mainstream payments method. - moneycontrol.

🍒 India's forex reserves rise by $51.4 billion during April-September 2020 : India's foreign exchange reserves increased by $51.4 billion during April-September 2020 as compared with $19.1 billion during April-September 2019, Reserve Bank of India's balance of payments (BoP) data shows. Apart from this, the foreign exchange reserves in nominal terms rose by $66.9 billion during April-September 2020 as compared with $20.8 billion recorded during the same period in 2019. The central bank on December 30 released the BoP for July-September 2020, based on which the sources of variation in foreign exchange reserves during April-September 2020 are measured. - moneycontrol.

🍒 Gold prices today drop but silver rates jump : Gold prices in India continued to trade in a narrow range as investors assess the impact of the pandemic and the pace of vaccine distribution. They are also keeping a watch on progress of an enhanced stimulus package in the US Senate. On MCX, February futures were down ₹31 to ₹50,008 per 10 gram while silver futures jumped 1% to ₹68,847. In the previous session, gold had ended flat, settling ₹22 higher per 10 gram while silver had declined ₹800 per kg. Gold futures on MCX have remained in the ₹50,500 to ₹50,000 for the past two weeks.

🍒 Sensex, Nifty extend record run on vaccine booster : After a volatile session, the 30-share BSE Sensex closed up by 133.14 points or 0.28 per cent at a record high of 47,746.22. The barometer scaled its all-time intra-day high of 47,807.85. The broad-based NSE Nifty rose by 49.35 points or 0.35 per cent to finish at its lifetime high of 13,981.95. It touched an all-time peak of 13,997 in intra-day trade. Among major Sensex movers, Ultratech Cement rose over 4 per cent, Bajaj Finance by 2.63 per cent and Maruti by 2 per cent. Mahindra and Mahindra, Tech Mahindra, HUL, Kotak Bank, HDFC Bank, Reliance Industries and Asian Paints also finished in the green.

🍒 Rupee rises by 11 paise to end at over 2-month high : Rising for the fifth straight session, the rupee on Wednesday appreciated by 11 paise to close at more than two-month high of 73.31 against the US dollar on the back of foreign fund inflows and a weak greenback in the global markets. At the interbank forex market, the domestic unit opened at 73.35 against the US dollar and witnessed an intra-day high of 73.26 and a low of 73.36. The local unit finally settled at 73.31, registering a rise of 11 paise over its previous close. The rupee had last closed at this level on October 13. On Tuesday, the rupee had settled at 73.42 against the American currency. In the last five trading sessions, the Indian rupee has gained 53 paise. Meanwhile, the dollar index, which gauges the greenback''s strength against a basket of six currencies, fell 0.21 per cent to 89.80.

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.