24.05.2020: Today's Banking / Financial News at a Glance
🍒 Economic package: Banks to go all out in pushing MSME loans : After finance minister Nirmala Sitharaman met heads of public sector banks on Friday, lenders said they plan to zealously implement the government’s plan for credit push to small businesses. At least four state-owned banks -- Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India-- pledged their support to economic relie package, including the ₹3 trillion of government-backed loans for micro, small and medium enterprises (MSMEs). Banks, led by their lobby body Indian Banks’ Association (IBA) had sought a loan guarantee scheme from the government to push credit to small businesses, hit hard by the lockdown.Padmaja Chunduru, chief executive of Indian Bank said that the finance minister emphasised on the quick disbursal of additional loans to MSMEs, to simplify process, formats and documentation. “During deliberations, the banks decided to focus also on tier II and tier III towns in all states to ensure needy MSMEs get the succour. Head of public sector banks welcomed the ₹3 trillion fully-guaranteed loan component to MSMEs and assured the FM that all eligible units will get these loans promptly," said Chunduru. Meanwhile Central Bank of India chief executive Pallav Mohapatra was quoted by PTI as saying that the finance minister took stock of the situation and reviewed the progress of various schemes. "All the banks are very-very optimistic about the schemes that have been announced in the recent past by the government to support the economy. State-run banks’ sanction in the covid-19 period is more than the corresponding period last year, which was a normal year," said Mohapatra. - Live Mint
🍒 Extend loan automatically to all eligible borrowers without fear of 3Cs: Finance Minister Nirmala Sitharaman to banks : Finance Minister Nirmala Sitharaman on Saturday said banks have been asked to extend loans automatically to eligible borrowers without fear of 3Cs -- CBI, CVC and CAG. She said clear instructions have been given in a meeting with CEOs and MDs of public sector banks and financial institutions on Friday that the banks should not be scared to extend loans as 100 per cent guarantee is being given by the government. In case of default, the individual bank or official will be hauled up, she said in a conversation with BJP leader Nalin Kohli uploaded on the party's social media platforms."Yesterday, I reiterated that by saying, if a decision goes wrong, and if there is a loss, the government has given 100 per cent guarantee now. It is not at all going to be on the individual official and on the bank, and therefore without fear they should take this automatic route in the sense, everybody eligible for additional term loan and additional working capital should be given," she said. As part of the Rs 20.97 lakh crore comprehensive economic package, the government announced the Emergency Credit Line Guarantee Scheme (ECLGS) worth Rs 3-lakh crore for the MSME sector, hit hard by the coronavirus crisis. - economic times
🍒 BoB says 65% customers opted for moratorium : About 65% of Bank of Baroda (BoB) customers have opted to take the moratorium offered by the bank following a Reserve Bank of India (RBI) directive, CEO Sanjiv Chadha said in a conference call with journalists. "We have offered the moratorium to all borrowers and those who don't want it have to opt out. So those who are not paying are automatically considered for the scheme. Our calculations show that about 65% of borrowers have opted for it," Chadha said.BoB's numbers are higher than some peer banks like State Bank of India (SBI) which had said that only 20% of its borrowers had opted for the moratorium. Chadha however said he expects the nunbers to come down. "We expect that number to come down as the lockdown eases and cash flows improve," Chadha said.Some customers will come back and choose to pay off loans as the moratorium could mean higher compounded interest payments in the future.Chadha however has refused to give a blanket moratorium for NBFCs saying that the bank like many of its large peers will look at that sector on a case to case basis. "Even if we give them moratorium it just makes about 5 to 7% of payments for some of these entities. They also have other means to raise funds like targeted long term repos. Some of them have build up their liquidity profiles post IL&FS. We will engage with them on a case to case basis and see how best we can help them," Chadha said. - economic times
🍒 Canara Bank announces credit support for borrowers affected by COVID-19 : Canara Bank has announced credit support for all its borrowers who have been affected by the COVID-19. The Canara Credit Support is extended as a quick and hassle-free loan to overcome temporary liquidity mismatches for payment of statutory dues, salary/wages/electricity bill, rent etc., the bank said in a statement.The bank has since sanctioned nearly six lakh loans amounting to Rs 4300 crore under agriculture, SHGs and retail categories, it said.It has employed various strategies like SMS, call centres, emails and personal calls to reach out to the eligible borrowers to explain the facility in order to sanction the loan.The bank said it has also sanctioned more than Rs 60,000 crore of advances to corporates and MSMEs from March 2020 till date. Canara Bank's MD and CEO, L V Prabhakar, said: We are sure that once the lockdown is completely lifted, our customers would be able to avail the sanctioned facilities to the full extent and improve their business. - economic times
🍒 BoB plans to sanction Rs 10,000 crore emergency working capital facility for Covid-19 affected businesses : Bank of Baroda (BoB) will sanction Rs 10,000 crore as emergency working capital facility to COVID-19 affected businesses, including micro, small and medium enterprises (MSMEs), according to Sanjiv Chadha, MD & CEO. The BoB chief emphasised that extending emergency working capital is the right thing to do by the Bank’s clients so that they can survive the impact of the pandemic and gradually return to normalcy. Among the measures announced on May 13 by the Government under the “Atmanirbhar Bharat Abhiyaan” package, Banks will be providing additional working capital finance of 20 per cent of their outstanding (MSME) credit as on 29 February 2020. These loans will be 100 per cent guaranteed by the Government. - Business Line
🍒 Return on credit higher than return on banks surplus funds deployed with RBI: Brickwork Ratings : The one-year return on credit that banks can earn by lending to corporates is high at about 8 per cent vis-à-vis the return of 3.35 per cent they will earn by parking their excess funds with the Reserve Bank of India (RBI), according to an analysis of return on funds deployed by banks by Brickwork Ratings (BWR). The additional profit that banks would have earned had they given loans instead of deploying their surplus funds with RBI is about Rs 34,000 crore, the credit rating agency said. Referring to banks deploying about Rs 7 lakh crore (as on May 21) at the RBI’s reverse repo window, BWR assessed that this could have fetched them around Rs 23,450 crores as interest. However, if these funds were deployed as loans to corporates (‘AA’ to ‘BBB’ rating), the earning for banks would have been around Rs 57,445 crore in a year. - Business Line
🍒 DCB Bank Q4 net profit down 29 per cent : Private sector DCB Bank posted a 29 per cent fall in its net profit to Rs 69 crore in the fourth quarter of 2019-20 with a sharp rise in provisions as against a net profit was Rs 96 crore a year ago. Its total income grew by eight per cent to Rs 434 crore in the quarter ended March 31, 2020 as compared to Rs 400 crore a year ago.Net interest income rose by eight percent to Rs 324 crore while non-interest income increased by 11 per cent to Rs 110 crore in the January to March 2020 quarter.Provisions surged to Rs 118.24 crore in the fourth quarter of last fiscal versus Rs 34.78 crore a year ago.“Both 2019- 2020 and fourth quarter profit before tax was impacted by Rs 63 crore Covid-19 Regulatory Package Provision. The bank conservatively made more provision than required as per guidelines,” DCB Bank said in a statement on Saturday. In 2019-20, the bank’s net profit rose by a modest four per cent to Rs 338 crore from Rs 325 crore in 2018-19. - Business Line
🍒 Franklin Templeton's debt funds hit as Essel Infra defaults on NCDs : In a fresh jolt to investors, Franklin Templeton Mutual Fund (MF) has said that Essel Infraprojects (EIL) has defaulted on its non-convertible debentures (NCDs). Four of the fund house's debt schemes that are being wound up had made investments in these NCDs. Though the fund house has said that the event does not have any impact on the net asset value (NAV) of the scheme, it has not entirely marked down its investments. “These NCDs are currently valued at Rs 92 crore in our portfolios, i.e., at 15 per cent of the maturity value after providing a haircut of 85 per cent,” the fund house said in a statement. The four schemes had a maturity value (including redemption premium) of Rs 616 crore. - Moneycontrol.com
🍒 Future actions to stimulate economy will depend on how COVID crisis pans out: FM Nirmala Sitharaman ; A day after the RBI projected economic contraction in 2020-21, Finance Minister Nirmala Sitharaman on Saturday said future fiscal policy actions to stimulate the economy will depend on how COVID-19 pandemic pans out. The government has already announced a Rs 20.97 lakh crore economic package, which includes Reserve Bank's Rs 8.01 lakh crore worth of liquidity measures till May 17. Sitharaman said making a "realistic assessment" of economic growth would be difficult at this point of time as there is no clarity on when the pandemic would retreat.- Moneycontrol.com
🍒 RBI may continue to step in from time to time to keep rupee volatility in check : The Reserve Bank of India (RBI) on May 22 slashed the repo rate by another 40 bps and reinforced its image of a pro-growth institution. The RBI gave precedence to reviving growth despite uncertainties on the inflation front. The RBI highlighted that headline inflation could remain firm in H1FY21 but could moderate thereafter. Rather than giving a projection on inflation, it stated that its forward guidance on inflation is directional. The RBI acknowledged that challenging times for the economy on growth front lie ahead on account of demand compression and supply disruption, justifying the need for further accommodation.- Moneycontrol.com
🍒 SBI warns customers on Cerberus banking virus : The State Bank of India (SBI) has issued an advisory for its customers against the Cerberus Trojan malware. “Beware of fake SMSs claiming to provide big offers or information on current pandemic via unknown links or downloading apps from unknown sources, as they are meant to cheat you,” reads the tweet from the official Twitter handle of SBI. In the post, the country’s biggest public sector bank also shared an image which is captioned ‘Cerberus Alert’. Seems to be inspired from the latest web series - Pataal Lok, it advises users to be vigilant against frauds which is equivalent to the ‘Swarg lok’. Clicking on unknown links despite being aware of Cerberus Trojan malware is categorised as ‘Dharti lok’. Whereas ending up as a victim of Cerberus Trojan malware is ‘Pataal lok’ equivalent for online banking users. - Times of India..
🍒 RBI comes to rescue of cash-strapped large corporations, gives these relaxations : The Reserve Bank of India came to the rescue of cash-strapped large corporations on Friday. With a view to facilitating flow of credit flow to large corporates, Reserve Bank of India (RBI) governor Shaktikanta Das on Friday raised the exposure limit of banks to a group by 5% to 30%. This relaxation will be available till June 30, 2021. “Many corporates were not able to draw additional funds from banks as their exposure limit was hit,” a senior PSU bank official told FE. This short-term measure will allow additional credit flow to corporates that need money due to Covid-19 pandemic, he added. Karthik Srinivasan, group head, Financial Sector Ratings, Icra, is of the view that this move may help certain large banks with competitive costs of funds to increase their exposure, as large groups otherwise borrow at competitive rates from bond markets. “With volatility in bond markets, this could also enable banks/corporates to meet funding requirements,” he added. - Financial Express
🍒 State runs out of money for crop loan waiver : The Maha Vikas Aghadi (MVA) government, which had assured complete crop loan waiver, has run out of money even though over 11 lakh farmers are yet to get the benefit of the scheme. This came to light during the crop review meeting conducted by chief minister Uddhav Thackeray. A state government press communiqué stated that 60% target of the crop loan waiver scheme has been achieved. “About 32 lakh farmers were to be provided Rs20,000 crore. So far, 19 lakh farmers have been provided Rs12,000 crore. However, due to lack of funds, Rs8,100 crore loans of 11.12 lakh farmers could not be waived off,” adds the communiqué. In order to provide relief to these farmers, district central cooperative banks (DCCBs) have been asked not to consider these farmers as defaulters and provide them fresh crop loans. The government has not made it clear whether the remaining 11.12 lakh farmers would be extended the crop loan waiver benefit in future. - Times of India.
All the Best… Have a Good day..
🍒 Economic package: Banks to go all out in pushing MSME loans : After finance minister Nirmala Sitharaman met heads of public sector banks on Friday, lenders said they plan to zealously implement the government’s plan for credit push to small businesses. At least four state-owned banks -- Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India-- pledged their support to economic relie package, including the ₹3 trillion of government-backed loans for micro, small and medium enterprises (MSMEs). Banks, led by their lobby body Indian Banks’ Association (IBA) had sought a loan guarantee scheme from the government to push credit to small businesses, hit hard by the lockdown.Padmaja Chunduru, chief executive of Indian Bank said that the finance minister emphasised on the quick disbursal of additional loans to MSMEs, to simplify process, formats and documentation. “During deliberations, the banks decided to focus also on tier II and tier III towns in all states to ensure needy MSMEs get the succour. Head of public sector banks welcomed the ₹3 trillion fully-guaranteed loan component to MSMEs and assured the FM that all eligible units will get these loans promptly," said Chunduru. Meanwhile Central Bank of India chief executive Pallav Mohapatra was quoted by PTI as saying that the finance minister took stock of the situation and reviewed the progress of various schemes. "All the banks are very-very optimistic about the schemes that have been announced in the recent past by the government to support the economy. State-run banks’ sanction in the covid-19 period is more than the corresponding period last year, which was a normal year," said Mohapatra. - Live Mint
🍒 Extend loan automatically to all eligible borrowers without fear of 3Cs: Finance Minister Nirmala Sitharaman to banks : Finance Minister Nirmala Sitharaman on Saturday said banks have been asked to extend loans automatically to eligible borrowers without fear of 3Cs -- CBI, CVC and CAG. She said clear instructions have been given in a meeting with CEOs and MDs of public sector banks and financial institutions on Friday that the banks should not be scared to extend loans as 100 per cent guarantee is being given by the government. In case of default, the individual bank or official will be hauled up, she said in a conversation with BJP leader Nalin Kohli uploaded on the party's social media platforms."Yesterday, I reiterated that by saying, if a decision goes wrong, and if there is a loss, the government has given 100 per cent guarantee now. It is not at all going to be on the individual official and on the bank, and therefore without fear they should take this automatic route in the sense, everybody eligible for additional term loan and additional working capital should be given," she said. As part of the Rs 20.97 lakh crore comprehensive economic package, the government announced the Emergency Credit Line Guarantee Scheme (ECLGS) worth Rs 3-lakh crore for the MSME sector, hit hard by the coronavirus crisis. - economic times
🍒 BoB says 65% customers opted for moratorium : About 65% of Bank of Baroda (BoB) customers have opted to take the moratorium offered by the bank following a Reserve Bank of India (RBI) directive, CEO Sanjiv Chadha said in a conference call with journalists. "We have offered the moratorium to all borrowers and those who don't want it have to opt out. So those who are not paying are automatically considered for the scheme. Our calculations show that about 65% of borrowers have opted for it," Chadha said.BoB's numbers are higher than some peer banks like State Bank of India (SBI) which had said that only 20% of its borrowers had opted for the moratorium. Chadha however said he expects the nunbers to come down. "We expect that number to come down as the lockdown eases and cash flows improve," Chadha said.Some customers will come back and choose to pay off loans as the moratorium could mean higher compounded interest payments in the future.Chadha however has refused to give a blanket moratorium for NBFCs saying that the bank like many of its large peers will look at that sector on a case to case basis. "Even if we give them moratorium it just makes about 5 to 7% of payments for some of these entities. They also have other means to raise funds like targeted long term repos. Some of them have build up their liquidity profiles post IL&FS. We will engage with them on a case to case basis and see how best we can help them," Chadha said. - economic times
🍒 Canara Bank announces credit support for borrowers affected by COVID-19 : Canara Bank has announced credit support for all its borrowers who have been affected by the COVID-19. The Canara Credit Support is extended as a quick and hassle-free loan to overcome temporary liquidity mismatches for payment of statutory dues, salary/wages/electricity bill, rent etc., the bank said in a statement.The bank has since sanctioned nearly six lakh loans amounting to Rs 4300 crore under agriculture, SHGs and retail categories, it said.It has employed various strategies like SMS, call centres, emails and personal calls to reach out to the eligible borrowers to explain the facility in order to sanction the loan.The bank said it has also sanctioned more than Rs 60,000 crore of advances to corporates and MSMEs from March 2020 till date. Canara Bank's MD and CEO, L V Prabhakar, said: We are sure that once the lockdown is completely lifted, our customers would be able to avail the sanctioned facilities to the full extent and improve their business. - economic times
🍒 BoB plans to sanction Rs 10,000 crore emergency working capital facility for Covid-19 affected businesses : Bank of Baroda (BoB) will sanction Rs 10,000 crore as emergency working capital facility to COVID-19 affected businesses, including micro, small and medium enterprises (MSMEs), according to Sanjiv Chadha, MD & CEO. The BoB chief emphasised that extending emergency working capital is the right thing to do by the Bank’s clients so that they can survive the impact of the pandemic and gradually return to normalcy. Among the measures announced on May 13 by the Government under the “Atmanirbhar Bharat Abhiyaan” package, Banks will be providing additional working capital finance of 20 per cent of their outstanding (MSME) credit as on 29 February 2020. These loans will be 100 per cent guaranteed by the Government. - Business Line
🍒 Return on credit higher than return on banks surplus funds deployed with RBI: Brickwork Ratings : The one-year return on credit that banks can earn by lending to corporates is high at about 8 per cent vis-à-vis the return of 3.35 per cent they will earn by parking their excess funds with the Reserve Bank of India (RBI), according to an analysis of return on funds deployed by banks by Brickwork Ratings (BWR). The additional profit that banks would have earned had they given loans instead of deploying their surplus funds with RBI is about Rs 34,000 crore, the credit rating agency said. Referring to banks deploying about Rs 7 lakh crore (as on May 21) at the RBI’s reverse repo window, BWR assessed that this could have fetched them around Rs 23,450 crores as interest. However, if these funds were deployed as loans to corporates (‘AA’ to ‘BBB’ rating), the earning for banks would have been around Rs 57,445 crore in a year. - Business Line
🍒 DCB Bank Q4 net profit down 29 per cent : Private sector DCB Bank posted a 29 per cent fall in its net profit to Rs 69 crore in the fourth quarter of 2019-20 with a sharp rise in provisions as against a net profit was Rs 96 crore a year ago. Its total income grew by eight per cent to Rs 434 crore in the quarter ended March 31, 2020 as compared to Rs 400 crore a year ago.Net interest income rose by eight percent to Rs 324 crore while non-interest income increased by 11 per cent to Rs 110 crore in the January to March 2020 quarter.Provisions surged to Rs 118.24 crore in the fourth quarter of last fiscal versus Rs 34.78 crore a year ago.“Both 2019- 2020 and fourth quarter profit before tax was impacted by Rs 63 crore Covid-19 Regulatory Package Provision. The bank conservatively made more provision than required as per guidelines,” DCB Bank said in a statement on Saturday. In 2019-20, the bank’s net profit rose by a modest four per cent to Rs 338 crore from Rs 325 crore in 2018-19. - Business Line
🍒 Franklin Templeton's debt funds hit as Essel Infra defaults on NCDs : In a fresh jolt to investors, Franklin Templeton Mutual Fund (MF) has said that Essel Infraprojects (EIL) has defaulted on its non-convertible debentures (NCDs). Four of the fund house's debt schemes that are being wound up had made investments in these NCDs. Though the fund house has said that the event does not have any impact on the net asset value (NAV) of the scheme, it has not entirely marked down its investments. “These NCDs are currently valued at Rs 92 crore in our portfolios, i.e., at 15 per cent of the maturity value after providing a haircut of 85 per cent,” the fund house said in a statement. The four schemes had a maturity value (including redemption premium) of Rs 616 crore. - Moneycontrol.com
🍒 Future actions to stimulate economy will depend on how COVID crisis pans out: FM Nirmala Sitharaman ; A day after the RBI projected economic contraction in 2020-21, Finance Minister Nirmala Sitharaman on Saturday said future fiscal policy actions to stimulate the economy will depend on how COVID-19 pandemic pans out. The government has already announced a Rs 20.97 lakh crore economic package, which includes Reserve Bank's Rs 8.01 lakh crore worth of liquidity measures till May 17. Sitharaman said making a "realistic assessment" of economic growth would be difficult at this point of time as there is no clarity on when the pandemic would retreat.- Moneycontrol.com
🍒 RBI may continue to step in from time to time to keep rupee volatility in check : The Reserve Bank of India (RBI) on May 22 slashed the repo rate by another 40 bps and reinforced its image of a pro-growth institution. The RBI gave precedence to reviving growth despite uncertainties on the inflation front. The RBI highlighted that headline inflation could remain firm in H1FY21 but could moderate thereafter. Rather than giving a projection on inflation, it stated that its forward guidance on inflation is directional. The RBI acknowledged that challenging times for the economy on growth front lie ahead on account of demand compression and supply disruption, justifying the need for further accommodation.- Moneycontrol.com
🍒 SBI warns customers on Cerberus banking virus : The State Bank of India (SBI) has issued an advisory for its customers against the Cerberus Trojan malware. “Beware of fake SMSs claiming to provide big offers or information on current pandemic via unknown links or downloading apps from unknown sources, as they are meant to cheat you,” reads the tweet from the official Twitter handle of SBI. In the post, the country’s biggest public sector bank also shared an image which is captioned ‘Cerberus Alert’. Seems to be inspired from the latest web series - Pataal Lok, it advises users to be vigilant against frauds which is equivalent to the ‘Swarg lok’. Clicking on unknown links despite being aware of Cerberus Trojan malware is categorised as ‘Dharti lok’. Whereas ending up as a victim of Cerberus Trojan malware is ‘Pataal lok’ equivalent for online banking users. - Times of India..
🍒 RBI comes to rescue of cash-strapped large corporations, gives these relaxations : The Reserve Bank of India came to the rescue of cash-strapped large corporations on Friday. With a view to facilitating flow of credit flow to large corporates, Reserve Bank of India (RBI) governor Shaktikanta Das on Friday raised the exposure limit of banks to a group by 5% to 30%. This relaxation will be available till June 30, 2021. “Many corporates were not able to draw additional funds from banks as their exposure limit was hit,” a senior PSU bank official told FE. This short-term measure will allow additional credit flow to corporates that need money due to Covid-19 pandemic, he added. Karthik Srinivasan, group head, Financial Sector Ratings, Icra, is of the view that this move may help certain large banks with competitive costs of funds to increase their exposure, as large groups otherwise borrow at competitive rates from bond markets. “With volatility in bond markets, this could also enable banks/corporates to meet funding requirements,” he added. - Financial Express
🍒 State runs out of money for crop loan waiver : The Maha Vikas Aghadi (MVA) government, which had assured complete crop loan waiver, has run out of money even though over 11 lakh farmers are yet to get the benefit of the scheme. This came to light during the crop review meeting conducted by chief minister Uddhav Thackeray. A state government press communiqué stated that 60% target of the crop loan waiver scheme has been achieved. “About 32 lakh farmers were to be provided Rs20,000 crore. So far, 19 lakh farmers have been provided Rs12,000 crore. However, due to lack of funds, Rs8,100 crore loans of 11.12 lakh farmers could not be waived off,” adds the communiqué. In order to provide relief to these farmers, district central cooperative banks (DCCBs) have been asked not to consider these farmers as defaulters and provide them fresh crop loans. The government has not made it clear whether the remaining 11.12 lakh farmers would be extended the crop loan waiver benefit in future. - Times of India.
All the Best… Have a Good day..
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