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☕ 18.05.2020: Today's Banking / Financial News at a Glance
🍒 Covid-19: SBI asks branches to up vigil against financial crimes : Realising that the Covid-19 pandemic could spawn ‘innovation’ in financial crimes, State Bank of India (SBI) has asked its operating units to be vigilant against criminals, who may try to open new accounts containing terms such as ‘Covid / Corona’ and in the name of charitable institutions/Non-Governmental Organisations (NGOs). This move comes in the backdrop of concerns that the situation arising out of Covid-19 may be exploited by criminals, especially cyber-criminals, to indulge in fraudulent activities, money laundering, terrorism financing, and other forms of financial crimes. Given that the Covid-19 situation has substantially restricted the conventional criminal activities, SBI impressed on its units that more and more criminals may resort to cybercrime and also innovate to exploit the situation. - Business Line
🍒 No fresh insolvency to be initiated for 1 year under IBC: FM : In a bid to give relief to companies defaulting on loans due to the COVID-19 stress, Finance Minister Nirmala Sitharaman on Sunday said no fresh insolvency will be initiated for one year under the Insolvency and Bankruptcy Code. Also, coronavirus-related debt will be excluded from definition of default, she said. Minimum threshold to initiative insolvency proceeding has been raised to Rs 1 crore from Rs 1 lakh to benefit MSMEs, she said adding that an Ordinance will be promulgated to bring this change in IBC. She also announced decriminalisation of the Companies Act in violations involving minor technical and procedural defaults including shortcoming in CSR reporting, inadequacies in board report, filing defaults and delay in holding AGM. Majority of the compoundable offences sections will be shifted to internal adjudication mechanism (IAM), she said adding that amendments will be brought through an Ordinance and will de-clog the criminal courts and NCLT. - Business Line
🍒 Reserve Bank makes $21-billion cut to US treasury holdings in March : The Reserve Bank of India (RBI) reduced its US treasury holdings by $21 billion in March, even as it is silently buying a huge amount of bonds from the secondary market. The data released by the US Treasury Department shows India held $156.5 billion of US treasury papers in March, down from $177.5 billion in February. In March 2019, India held $152 billion of US treasury assets. US treasury holdings typically rise and fall with a country’s foreign exchange reserves. By the end of March 2020, India’s foreign exchange reserves were $474.66 billion; in February, they were about $481.54 billion. In March 2019, the reserves were about $412 billion. In the calendar year so far, foreign investors have liquidated $18.24 billion from the equities and debt market. Most of the outflow, $15.7 billion, happened in March. Saudi Arabia, Brazil, and India were the top three countries to shed the US assets in March. - Business Standard
🍒 Economic stimulus package includes Rs 8 lakh crore liquidity measures by RBI: FM Sitharaman : Finance Minister Nirmala Sitharaman on Sunday said the Rs 20 lakh crore economic stimulus package to deal with the fallout of COVID-19 includes Rs 8.01 lakh crore of liquidity measures announced by the Reserve Bank since March. The stimulus totals to Rs 20.97 lakh crore, she said, adding this also comprises the Rs 1.92 lakh crore package of free foodgrain and cooking gas to poor and cash to some sections announced in March.The five part stimulus package announced beginning May 13 comprised Rs 5.94 lakh crore in the first tranche that provided credit line to small businesses and support to shadow banks and electricity distribution companies.The second tranche included free foodgrain to stranded migrant workers for two months and credit to farmers, totalling Rs 3.10 lakh crore.Spending on agri infrastructure and other measures for agriculture and allied sectors in the third tranche totalled to Rs 1.5 lakh crore.The fourth and fifth tranches that dealt mostly with structural reforms totalled to Rs 48,100 crore, she said. - economic times
🍒 12 lakh EPFO members withdraw Rs 3,360 cr retirement savings during lockdown: FM : Finance Minister Nirmala Sitharaman on Sunday said around 12 lakh members of the Employees' Provident Fund Organisation (EPFO) withdrew Rs 3,360 crore retirement savings during the coronavirus-induced lockdown. Earlier, on March 28, the EPFO allowed formal sector workers to withdraw a non-refundable advance from their retirement savings to deal with the hardships due to the lockdown. The government on March 25 imposed a nationwide lockdown to fight the coronavirus pandemic. Unveiling the fifth and final tranche of the Rs 20-lakh crore economic package, Sitharaman on Sunday said 12 lakh members of the EPFO have withdrawn as non-refundable advance of Rs 3,360 crore during the past two months. The EPFO, under the Union labour and employment ministry, has settled a total of 12 lakh claims under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) package. - economic times
🍒 RBL Bank expects dip in new credit cards, spends in FY21 : RBL Bank, which derives 18 per cent of its loan portfolio from credit cards, is expecting new plastic issuances to halve and a fall in spends as well in FY21 but is confident of the overall revenues from the segment remaining intact, a senior official has said. However, the economic climate will result in an increase in credit costs, or money being set aside for possible loan losses, by over 30 per cent in the cards segment, the official told . Usually, banks have a lower reliance on the credit cards segment for their advances because it is an unsecured product, but it's segmental head Harjeet Toor said the bank has been using a slew of analytics capabilities to grow in the category without increasing its delinquencies.He explained that revenues will be stable largely on the back of the three months' moratorium in loan repayments announced by the RBI, as interests keep getting compounded for the non-payees, adding to its overall income. Nearly a fourth of its overall credit card portfolio of Rs 10,500 crore has opted for the moratorium, he said. - economic times
🍒 Total fiscal impact of 'Rs 20L cr package' to be Rs 1.50 lakh cr: Report : New stimulus measures unveiled by Finance Minister Nirmala Sitharaman on Sunday will cost Rs 40,000 crore, taking the actual fiscal impact of all the steps announced over the past few days to Rs 1.50 lakh crore or 0.75 per cent of the GDP, a report said. Prime Minister Narendra Modi had announced a relief package of Rs 20 lakh crore or about 10 per cent or GDP last week. However, many of the measures unveiled have been in the form of moves like loan guarantees which do not entail an immediate fiscal cost. Earlier on Sunday, Sitharaman announced the fifth and final tranche of the government's stimulus package to revive the coronavirus-hit economy. She said the stimulus package includes the Rs 8.01 lakh crore of liquidity being made available by the RBI. "We estimate that the actual fiscal impact on the budget will be only Rs 1.5 lakh crore (0.75 per cent of GDP), based on our calculations and assumptions made during the series of announcements," Barclays' Chief India Economist Rahul Bajoria said. - economic times
🍒 Stimulus 2.0: FM’s Rs 11.03 lakh crore doleouts leave Dalal Street sulking : Finance Minister Nirmala Sitharaman has walked a tightrope between providing relief, taking care of the fiscal space and avoiding a sovereign rating downgrade while announcing Stimulus 2.0 to tide over the coronavirus crisis, and the measures have fallen short of market expectations. Over the last five days, the FM announced a slew of measures spanning liquidity boosts to NBFCs, MSMEs, relief for realtors, migrant labourers, agriculture, mining and defence sectors, to opening up all sectors for private entities among others.This is a part of the Prime Minister Narendra Modi’s Rs 20 lakh crore “Atmanirbhar Bharat Abhiyan” to help businesses and individuals tide over the Covid-19 crisis.Government announced Rs 11.03 lakh crore of measures this week, adding to the earlier measures announced by it and the Reserve Bank of India (RBI). Stimulus from earlier measures was Rs 1.92 lakh crore, while the actual size of RBI’s measures was Rs 8 lakh crore.“The entire package has been quite disappointing. They are trying to avoid a rating downgrade. It is not a time to do the balancing act,” said Abhimanyu Sofat, Vice president, Research, IIFL Securities According to Sofat, the government could have moved to reduce GST or personal income tax. - economic times
🍒 Bank unions raise concerns over FM’s stimulus package : Bankers and bank unions have expressed concerns about the economic stimulus package outlined by Finance Minister Nirmala Sitharaman and have called for more protection and improved conditions for bank employees who have been working during the lockdown. Many bankers raised questions on Twitter on wage revision, pointing out that while bankers have been carrying out operations on a daily basis amid the national lockdown and novel coronavirus infection, their demands for wage hike have been pending. “Banks have been the fulcrum of the economy, especially at this juncture when there is a pandemic and our service is not being recognised by the government,” said Soumya Datta, General Secretary, All-India Bank Officers’ Confederation (AIBOC), adding that the merger of the public sector banks was done at a most “inopportune time” and could be demotivating to the morale of public sector bank employees. “Privatisation is totally a wrong measure. Also, there should be more measures to ensure recovery of bad loans, especially when the non-performing assets of banks are near ₹10-lakh crore. This is half the size of the ₹20-lakh crore economic package,” noted CH Venkatachalam, General Secretary, All-India Bank Employees’ - Business Line
☕ 18.05.2020: Today's Banking / Financial News at a Glance
🍒 Covid-19: SBI asks branches to up vigil against financial crimes : Realising that the Covid-19 pandemic could spawn ‘innovation’ in financial crimes, State Bank of India (SBI) has asked its operating units to be vigilant against criminals, who may try to open new accounts containing terms such as ‘Covid / Corona’ and in the name of charitable institutions/Non-Governmental Organisations (NGOs). This move comes in the backdrop of concerns that the situation arising out of Covid-19 may be exploited by criminals, especially cyber-criminals, to indulge in fraudulent activities, money laundering, terrorism financing, and other forms of financial crimes. Given that the Covid-19 situation has substantially restricted the conventional criminal activities, SBI impressed on its units that more and more criminals may resort to cybercrime and also innovate to exploit the situation. - Business Line
🍒 No fresh insolvency to be initiated for 1 year under IBC: FM : In a bid to give relief to companies defaulting on loans due to the COVID-19 stress, Finance Minister Nirmala Sitharaman on Sunday said no fresh insolvency will be initiated for one year under the Insolvency and Bankruptcy Code. Also, coronavirus-related debt will be excluded from definition of default, she said. Minimum threshold to initiative insolvency proceeding has been raised to Rs 1 crore from Rs 1 lakh to benefit MSMEs, she said adding that an Ordinance will be promulgated to bring this change in IBC. She also announced decriminalisation of the Companies Act in violations involving minor technical and procedural defaults including shortcoming in CSR reporting, inadequacies in board report, filing defaults and delay in holding AGM. Majority of the compoundable offences sections will be shifted to internal adjudication mechanism (IAM), she said adding that amendments will be brought through an Ordinance and will de-clog the criminal courts and NCLT. - Business Line
🍒 Reserve Bank makes $21-billion cut to US treasury holdings in March : The Reserve Bank of India (RBI) reduced its US treasury holdings by $21 billion in March, even as it is silently buying a huge amount of bonds from the secondary market. The data released by the US Treasury Department shows India held $156.5 billion of US treasury papers in March, down from $177.5 billion in February. In March 2019, India held $152 billion of US treasury assets. US treasury holdings typically rise and fall with a country’s foreign exchange reserves. By the end of March 2020, India’s foreign exchange reserves were $474.66 billion; in February, they were about $481.54 billion. In March 2019, the reserves were about $412 billion. In the calendar year so far, foreign investors have liquidated $18.24 billion from the equities and debt market. Most of the outflow, $15.7 billion, happened in March. Saudi Arabia, Brazil, and India were the top three countries to shed the US assets in March. - Business Standard
🍒 Economic stimulus package includes Rs 8 lakh crore liquidity measures by RBI: FM Sitharaman : Finance Minister Nirmala Sitharaman on Sunday said the Rs 20 lakh crore economic stimulus package to deal with the fallout of COVID-19 includes Rs 8.01 lakh crore of liquidity measures announced by the Reserve Bank since March. The stimulus totals to Rs 20.97 lakh crore, she said, adding this also comprises the Rs 1.92 lakh crore package of free foodgrain and cooking gas to poor and cash to some sections announced in March.The five part stimulus package announced beginning May 13 comprised Rs 5.94 lakh crore in the first tranche that provided credit line to small businesses and support to shadow banks and electricity distribution companies.The second tranche included free foodgrain to stranded migrant workers for two months and credit to farmers, totalling Rs 3.10 lakh crore.Spending on agri infrastructure and other measures for agriculture and allied sectors in the third tranche totalled to Rs 1.5 lakh crore.The fourth and fifth tranches that dealt mostly with structural reforms totalled to Rs 48,100 crore, she said. - economic times
🍒 12 lakh EPFO members withdraw Rs 3,360 cr retirement savings during lockdown: FM : Finance Minister Nirmala Sitharaman on Sunday said around 12 lakh members of the Employees' Provident Fund Organisation (EPFO) withdrew Rs 3,360 crore retirement savings during the coronavirus-induced lockdown. Earlier, on March 28, the EPFO allowed formal sector workers to withdraw a non-refundable advance from their retirement savings to deal with the hardships due to the lockdown. The government on March 25 imposed a nationwide lockdown to fight the coronavirus pandemic. Unveiling the fifth and final tranche of the Rs 20-lakh crore economic package, Sitharaman on Sunday said 12 lakh members of the EPFO have withdrawn as non-refundable advance of Rs 3,360 crore during the past two months. The EPFO, under the Union labour and employment ministry, has settled a total of 12 lakh claims under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) package. - economic times
🍒 RBL Bank expects dip in new credit cards, spends in FY21 : RBL Bank, which derives 18 per cent of its loan portfolio from credit cards, is expecting new plastic issuances to halve and a fall in spends as well in FY21 but is confident of the overall revenues from the segment remaining intact, a senior official has said. However, the economic climate will result in an increase in credit costs, or money being set aside for possible loan losses, by over 30 per cent in the cards segment, the official told . Usually, banks have a lower reliance on the credit cards segment for their advances because it is an unsecured product, but it's segmental head Harjeet Toor said the bank has been using a slew of analytics capabilities to grow in the category without increasing its delinquencies.He explained that revenues will be stable largely on the back of the three months' moratorium in loan repayments announced by the RBI, as interests keep getting compounded for the non-payees, adding to its overall income. Nearly a fourth of its overall credit card portfolio of Rs 10,500 crore has opted for the moratorium, he said. - economic times
🍒 Total fiscal impact of 'Rs 20L cr package' to be Rs 1.50 lakh cr: Report : New stimulus measures unveiled by Finance Minister Nirmala Sitharaman on Sunday will cost Rs 40,000 crore, taking the actual fiscal impact of all the steps announced over the past few days to Rs 1.50 lakh crore or 0.75 per cent of the GDP, a report said. Prime Minister Narendra Modi had announced a relief package of Rs 20 lakh crore or about 10 per cent or GDP last week. However, many of the measures unveiled have been in the form of moves like loan guarantees which do not entail an immediate fiscal cost. Earlier on Sunday, Sitharaman announced the fifth and final tranche of the government's stimulus package to revive the coronavirus-hit economy. She said the stimulus package includes the Rs 8.01 lakh crore of liquidity being made available by the RBI. "We estimate that the actual fiscal impact on the budget will be only Rs 1.5 lakh crore (0.75 per cent of GDP), based on our calculations and assumptions made during the series of announcements," Barclays' Chief India Economist Rahul Bajoria said. - economic times
🍒 Stimulus 2.0: FM’s Rs 11.03 lakh crore doleouts leave Dalal Street sulking : Finance Minister Nirmala Sitharaman has walked a tightrope between providing relief, taking care of the fiscal space and avoiding a sovereign rating downgrade while announcing Stimulus 2.0 to tide over the coronavirus crisis, and the measures have fallen short of market expectations. Over the last five days, the FM announced a slew of measures spanning liquidity boosts to NBFCs, MSMEs, relief for realtors, migrant labourers, agriculture, mining and defence sectors, to opening up all sectors for private entities among others.This is a part of the Prime Minister Narendra Modi’s Rs 20 lakh crore “Atmanirbhar Bharat Abhiyan” to help businesses and individuals tide over the Covid-19 crisis.Government announced Rs 11.03 lakh crore of measures this week, adding to the earlier measures announced by it and the Reserve Bank of India (RBI). Stimulus from earlier measures was Rs 1.92 lakh crore, while the actual size of RBI’s measures was Rs 8 lakh crore.“The entire package has been quite disappointing. They are trying to avoid a rating downgrade. It is not a time to do the balancing act,” said Abhimanyu Sofat, Vice president, Research, IIFL Securities According to Sofat, the government could have moved to reduce GST or personal income tax. - economic times
🍒 Bank unions raise concerns over FM’s stimulus package : Bankers and bank unions have expressed concerns about the economic stimulus package outlined by Finance Minister Nirmala Sitharaman and have called for more protection and improved conditions for bank employees who have been working during the lockdown. Many bankers raised questions on Twitter on wage revision, pointing out that while bankers have been carrying out operations on a daily basis amid the national lockdown and novel coronavirus infection, their demands for wage hike have been pending. “Banks have been the fulcrum of the economy, especially at this juncture when there is a pandemic and our service is not being recognised by the government,” said Soumya Datta, General Secretary, All-India Bank Officers’ Confederation (AIBOC), adding that the merger of the public sector banks was done at a most “inopportune time” and could be demotivating to the morale of public sector bank employees. “Privatisation is totally a wrong measure. Also, there should be more measures to ensure recovery of bad loans, especially when the non-performing assets of banks are near ₹10-lakh crore. This is half the size of the ₹20-lakh crore economic package,” noted CH Venkatachalam, General Secretary, All-India Bank Employees’ - Business Line
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