☕ 11.06.2020: Today's Banking / Financial News at a Glance
🍒 FM Sitharaman asks banks to consider lowering interest rates: Report : Finance Minister Nirmala Sitharaman has asked banks to conduct board-level talks on further interest rate cuts for loans. The move is aimed at pushing economic activity. Pointing out that interest rate transmission is negligible, Sitharaman told bankers to take up the matter at the board level, a source told the Business Standard. “The government was sceptical about a slower monetary rate transmission by public sector banks (PSBs) till now,” the source added.Moneycontrol could not independently verify the report. The Reserve Bank of India (RBI) has, since February, cut the repo rate by 185 basis points. The repo rate - the rate at which commercial banks borrow from the RBI – now stands at 4 percent. Banks have transmitted 120-140 bps till date, a PSB executive told the paper adding that any more cuts would hurt finances. “Depositors need to keep in mind that banks have to be viable… bringing down interest rate on loans without reducing the deposit interest rate wouldn’t make sense. By trying to bring down the rate, banks cannot kill the depositors’ franchise,” the source noted. - Moneycontrol.com
🍒 SBI to have 8 standardised desks at retail branches : State Bank of India (SBI) is planning to roll-out a new streamlined delivery process, entailing setting up eight standardised desks, in its 21,734 retail branches from July 1, to ensure better crowd management, optimise staff productivity and bring uniformity in customer experience. This move comes in view of the evolving banking scenario, with increasing customer base (currently at about 49 crore), enhanced product and service requirements and stiff competition.India’s largest bank wants to have eight standardised desks in its branches — *Single Window Operator (SWO), Customer Service Desk (CSD), Account Opening Desk (AOD), Investment Desk, Advances Desk, Customer Support Executive (CSE), Cash Management Desk (CMD) and Forex Desk* — with dedicated work assigned to them. SBI’s attempt to introduce these desks is aimed at de-cluttering branches, transforming them from being transaction oriented to business oriented, and improving service delivery. This also comes in the backdrop of the share of transactions through alternative channels increasing to 91 per cent by March-end 2020 (from 88 per cent by March-end 2019) and the share of transactions through branches decreasing to 9 per cent (12 per cent). Alternative channels include digital (internet, mobile, unified payments interface and YONO financial application, among others); ATM and Cash Deposit Machine; and Business Correspondent. - Business Live
🍒 Bank of Baroda, Union Bank of India reduce lending rates : State-run lenders Bank of Baroda (BoB) and Union Bank of India (UBI) on Wednesday announced cut in their marginal cost of funds-based lending rates (MCLR) across all tenors. While the BoB's MCLR cut of 15 basis points (bps) is effective from June 12, the 10 bps revision in UBI's rates would come into force on June 11. Bank of Baroda has revised its one-year MCLR to 7.65 per cent from 7.80 per cent, a release said.Its six-month MCLR has been revised downwards to 7.50 per cent from 7.65 per cent earlier.In a separate release, UBI said its one-year MCLR has been reduced to 7.60 per cent from 7.70 per cent.The six months, three months and one-month MCLR of UBI have been cut to 7.45 per cent 7.30 per cent and 7.15 per cent respectively.The country's largest lender State Bank of India (SBI) has reduced its MCLR by 25 basis points across all tenors from Wednesday. - Business Line
🍒 HDFC Bank cuts MCLR by 5 bps : HDFC Bank has cut its marginal cost of funds-based lending rate (MCLR) by 5 basis points (bps) across tenors.The rate cut is effective from Monday (June 8), according to its website.HDFC Bank said its overnight MCLR stands reduced to 7.30 per cent, while one-month MCLR is 7.35 per cent.One-year MCLR, to which many of the consumer loans are tied, will now be 7.65 per cent, while three-year MCLR has been set at 7.85 per cent.The move comes amid similar steps taken by the peers after two rate cuts by the Reserve Bank of India (RBI) in order to help the economic growth rise in the aftermath of the Covid-19 pandemic. The RBI has cut its key rates by 115 bps since March. Banks review their MCLR every month. Lately, some part of the lending has also been linked directly to external benchmarks, such as the repo rate, for a better transmission of policy actions. - Business Line
🍒 State Bank of India offers up to Rs 1 crore for CFO role; thrice Chairman's annual salary : A job advertisement by country's largest lender State Bank of India (SBI) has caught everyone's attention. It has also revived an old debate of relatively low pay of public sector bank employees. According to the advertisement posted on its website, SBI said it will offer Rs 75 lakh to 1 crore as annual compensation for the role of Chief Financial Officer (CFO) on a three-year contract.Now compare this with SBI Chairman's remuneration. According to SBI’s annual report, Rajnish Kumar received less than Rs 30 lakh in FY 19. To be precise, Kumar’s annual compensation was Rs 29.5 lakh for FY19. As compared with this, HDFC Bank's CEO got an annual compensation of Rs55 crore. Other private, foreign bank CEOs too get comparable high annual package. For long, the huge difference between compensation levels of public sector bank employees and their private sector counterparts has been a matter of debate in banking industry. Poor pay has been cited as the prime reason for exodus of talent from public sector to private entities. This also affects the morale of bankers in a highly competitive banking sector.- Moneycontrol.com
🍒 SBI general meeting to go virtual on June 17, shareholders to cast e-votes : The country’s largest lender, State Bank of India, will conduct a virtual meeting of shareholders on June 17, to enable them to elect four directors to its central board. As per market regulator Sebi’s order, the general meeting can be conducted virtually via a video conference or Other Audio-Visual Means (OAVM). The bank proposes to hold an election for four directors via e-voting by shareholders, SBI said in statement.The virtual meeting is being organised following requests from various stakeholders in view of the Covid-19 lockdown restrictions. Shareholders will be allowed to e-vote for electing the directors as per the provisions of the SBI Act and SBI General Regulations, 1955. The Bank has avoided physical meetings for major events the past few months, for the well-being of all stakeholders and in compliance with the lockdown restrictions, it added. - Business Standard
🍒 ‘Karnataka Bank business to be muted in H1 due to economic slowdown’ : Karnataka Bank is expecting business to be muted during the first half of FY21 due to economic slowdown across sectors.Thereafter, depending on the government packages, economic stimulus, calibrated response of the regulators and State governments, business is likely to bounce back, the Mangaluru-headquartered Bank said in an exchange filing.Accordingly, the private sector bank is expecting a moderate growth in banking business during the second half of FY21.“Due to subdued business environment the demand for credit may be muted initially, thus affecting the topline of the bank, which has already been factored into while drawing the business plan for the current financial year. “Additional provision of 10 per cent to be maintained in respect of loan assets where asset classification benefits is taken is already frontloaded in the Q4 (January-March) FY20 results,” the bank said in the filing. - Business Line
🍒 Lakshmi Vilas Bank appoints B K Manjunath as non-exec, independent director : Lakshmi Vilas Bank (LVB) on Wednesday said it has appointed B K Manjunath as its non-executive and independent director. The bank's board of directors at its meeting on Wednesday co-opted B K Manjunath as additional director, LVB said in a regulatory filing. Manjunath has been classified as non-executive and independent director, it said.Manjunath is a member of the Institute of Chartered Accountants of India and practising as a chartered accountant.He has an experience of over 30 years in audit, accountancy, taxation, finance, business management and administration. He had also served as an independent director of the bank between 2008 and 2015, and as its part-time chairman during the June 2017-June 2020 period, LVB said. - economic times
🍒 PNB collected Rs 268 cr as ATM transaction charges, annual maintenance fee in FY20 : Punjab National Bank collected around Rs 268 crore as ATM transaction charges and annual maintenance fee on debit cards during 2019-20 fiscal, according to an RTI reply. The public sector lender collected Rs 152.88 crore from customers by levying annual maintenance charges (AMC) on debit cards. While Rs 115.21 crore was garnered by way of levying a fee on ATM transactions, the bank said in a response to a Right to Information (RTI) filed by Madhya Pradesh-based RTI activist Chandra Shekhar Gaur. In response to a query about the AMC on debit cards, New Delhi-based PNB said, "AMC for Punjab National Bank is Rs 150 per year plus taxes (for classic, platinum and international debit cards). AMC for Kisan Credit Cards, Mudra, PMJDY and cards issued under other government schemes is nil." - economic times
🍒 PMC Bank case: High Court seeks info on health condition of Wadhawans : The Bombay High Court has sought details from the Maharashtra government about the health condition of HDIL promoters Rakesh Wadhawan and Sarang Wadhawan, arrested on charges of money laundering in the multi-crore PMC Bank fraud case. The court has also asked in which barrack of the Mumbai-based Arthur Road prison they are lodged. Justice Bharati Dangre was on Tuesday hearing petitions filed byHousing Development and Infrastructure Ltd (HDIL) promoters Rakesh Wadhawan and his son Sarang Wadhawan, seeking bail on medical grounds. The petitioners also claimed that there are no proper facilities in the jail in view of the COVID-19 outbreak. - economic times
🍒 Banks flush with liquidity, but can't lend recklessly: SBI official : Banks are flush with liquidity but there are no credit demands from the private sector amidst coronavirus crisis, a senior State Bank of India (SBI) official said on Tuesday. However, the lenders at this juncture still have to be prudent in their lending decisions and cannot be "reckless", Sujit Varma, Deputy Managing Director (Corporate Finance), State Bank of India, said, while addressing a webinar. "Our chairman has mentioned that wherever there is a bankable proposal, we are willing to fund that, which we keep on saying as well. SBI being the largest bank, I can tell you that we are always willing and we are ready to play our part and extend that support to help the economy and various industries," he said.There is a general perception that banks are increasingly becoming risk averse, he said, adding that one of the analysts mentioned that banks have actually moved from being risk averse to risk-phobic.The webinar was organised by the PHD Chamber of Commerce and Industry on 'Corporate Finance - Emerging Issues, Challenges and Opportunities - During COVID-19'. He said there is a complete lack of fresh investments by businesses.- economic times
🍒 RBI’s new payment aggregators’ norms: Enabling innovation and customised services for merchants : Payment Aggregators have long played a characteristic role in the payments ecosystem as intermediaries. The new RBI norms on Payment Aggregators and Payment Gateways (‘PA Guidelines’) represent a major policy change. Key changes introduce flexibility and control which were unavailable previously, thereby creating scope for innovation and new services by PAs, and thus new advantages for merchants. Changes of this nature are always welcome, and the recent zero MDR rule, which makes innovation and value added services crucial for the survival of payment service providers, makes these particularly timely for PAs.Governed formerly by the Intermediary Directions, a PA’s functions included only collection and settlement of payments via nodal accounts, with ancillary services like managing refunds and chargebacks. - moenycontrol.com
🍒 FinMin releases third instalment of Rs 6,195 crore to 14 states under post devolution revenue deficit grant : The Finance Ministry on June 10 released the third monthly installment of Rs 6,195 crore to 14 states as of 'Post Devolution Revenue Deficit Grant' to provide additional resources during COVID-19 crisis. "The government on June 10, 2020, released Rs 6,195.08 crore to 14 states as the third equated-monthly installment of the post devolution revenue deficit grant as recommended by the 15th Finance Commission. This would provide them additional resources during the corona crisis," the Office of Finance Minister Nirmala Sitharaman said in a tweet.- moenycontrol.com
🍒 Commercial banks still risk averse: West Bengal FM Amit Mitra : West Bengal finance minister Amit Mitra on Tuesday said the commercial banks have put Rs 6 lakh crore back in the Reserve Bank of India coffers and were earning at 2.5% reverse repo rate since industries have no borrowing appetite and the banks, too, were cautious of lending. He said the Centre has offered Rs 3-lakh-crore stimulus for the MSMEs but a fact check through the state-level bankers’ committee meeting shows that banks want to be risk-averse for fear of fresh non-performing assets while there was no demand for loans. .- financial express
🍒 ‘Mortgages’ share in asset securitisation market fell in FY20’ : India’s securitisation market is expected to remain tepid in H1FY21 due to the uncertainties emerging from Covid and economic slowdown. Rating agency Icra said on Tuesday that the share of mortgages in the loan pools securitised dropped to 31% in FY20 from 48% in FY19 as some large housing finance companies (HFCs) with a significant presence in the market found few takers for their loans. The rating firm expects overall securitisation volumes in the first half of FY21 to be hit by the Covid-19 pandemic. “The drop was seen largely because a couple of large HFCs who were very active in the market were not finding investors because their home-loan credit profile had sharply deteriorated,” said Abhishek Dafria, vice-president and sector head — structured finance, Icra. The asset classes which saw an uptick in their share of the securitisation pie were vehicle loans (29% in FY20 against 24% in FY19), small business loans (7% against 2%), tractor loans (4% against 1%) and gold loans (6% against under 1%). - Financial Express
🍒 Frame policy for employment of migrants in home states, suggests SBI report : The government should come out with a policy for gainful employment of migrant labourers in their home states, especially in Uttar Pradesh, Bihar, Jharkhand and West Bengal, an SBI report suggested on Wednesday. The report further said that the government can create a comprehensive data base on migrant workers on the basis of travel history on Shramik special trains, call detail records and record of social sector schemes. "With approximately 58 lakh migrants having gone back to home states like Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal and more expected, we need a properly crafted policy of gainfully employing such migrant labourers in home states," said SBI Ecowrap. After the government imposed nation-wide lockdown on March 25, 2020 to curb the spread of coronavirus, lakhs of migrant workers returned to their home states. "...we need to build up a comprehensive database of migrant workers and formulate a policy for unorganised sector workers. Tracking the call detail records (CDRs) juxtaposed with travel history of the migrant labourers from Shramik Trains could be the first starting point of constructing such database," suggested the SBI report. - Live Mint.
🍒 Irdai asks insurers, TPAs to disclose infra details of hospitals in network : Insurance Regulatory and Development Authority of India (Irdai) has asked insurers and third party administrators (TPA) to disclose medical infrastructure details of hospitals in their provider network. Insurers and TPAs have been asked to provide details of medical infrastructure of hospitals including bed strength, number of doctors (both full time and part time), qualified nurses, intensive care unit beds, doctors as well as nurses exclusively available for ICU and the accreditation received by the hospital in their provider network. These details will have to be updated by the insurers at the end of every financial year and disclosed by the end of June. Apart from the details of medical infrastructure, the insurers will also have to disclose details such as doctor-bed ratio, nurse-bed ratio, average admission time, average discharge time, average length of stay for medical cases, average length of stay for surgical cases, and C section rate. These directions will come into effect from April, 2021 and the data for financial year ending March 2021 has to be published before end of June, 2021. - Busines Standard
🍒 Overseas borrowing of NBFCs zooms 100% in FY20 : Even as fundraising in the domestic market continued to pose a challenge for non-banking financial companies (NBFCs), the overseas borrowing of such entitieswitnessed a 100 per cent jump in FY20. According to RBI data, external commercial borrowings (ECB) of India Inc touched a fresh high of $51 billion in FY20. Financial services sector, which covers NBFCs, housing finance companies (HFCs) and microfinance institutions (MFIs), alone raised close to $21 billion or 40 per cent of the total borrowing. In FY19, the sector raised close to $11 billion or 25 per cent of the $42 billion raised by Indian corporates. - Business Line
🍒 HDFC hosts online property show in Delhi NCR region : Housing finance company HDFC is hosting an online property show for Delhi NCR region and is in plans to conduct a similar event for Mumbai. The move comes at a time when most of the real estate market is seeing muted demand due to the economic uncertainty brought about by the coronavirus pandemic and national lockdown. “HDFC is hosting a mega online property show featuring over 150 projects from more than 75 renowned developers in the Delhi NCR region. We also plan to extend this to properties in the Mumbai Region next week,” it said in a statement on Wednesday. The Delhi online property showcase is a month-long event which would allow potential customers to browse and compare projects online and also apply for a loan on HDFC’s online application platform. - BusinessLine
🍒 All kind of loans and contractual transactions can't be put under moratorium: SEBI to SC : Almost all industries in the country have been suffering due to COVID-19 pandemic but all kinds of loan and contractual transactions cannot be put under the moratorium, the Securities and Exchange Board of India (SEBI) has told the Supreme Court. SEBI filed an affidavit in this regard in the apex court which had sought its stand on a plea which sought a clarification on whether the RBI's circular regarding moratorium on loan repayment amid the pandemic applies to Non-Banking Financial Corporations (NBFCs) and if real estate firms are eligible for it.While seeking dismissal of the plea filed by an association of real estate developers, the SEBI said that it appears to be "proxy litigation" where the petitioners have raised grievances and issues relating to NBFCs and Housing Finance Corporations (HFCs) rather than issues relating to their own members."That not only the real estate sector but almost all the industries in India have been suffering due to pandemic COVID-19 and as a result of this, it does not imply that all kinds of loan and contractual transactions are to be put to under moratorium," the affidavit said. - Economic Times
🍒 Fitch sees revenue destruction of $8.5 trillion in global corporate portfolio by 2022 : There could be a revenue destruction of $8.5 trillion in Fitch Ratings’ global corporate portfolio by 2022 based on its baseline coronavirus pandemic scenario. The global credit rating agency said the oil and gas sector dominates this calculation due to the high global expenditure in this sector.“Our (global revenue-weighted) curves suggest that revenue loss will be concentrated in five sectors that have accounted for 70 per cent of our negative rating actions so far: oil and gas, retail, leisure, transport, and manufacturing. “These sectors represent just 50 per cent of portfolio revenue but account for 77 per cent of the lost revenue,” said Fitch in its report, ‘The Road Back: Post-Lockdown Assumptions for Global Corporates (What Coronavirus Does to a $26-Trillion Corporate Portfolio)’. - Business Line
🍒 Infra push: Centre infuses ₹5,297.60 crore capital in IIFCL : The Centre has infused ₹5,297.60 crore into the equity capital of infrastructure lender India Infrastructure Finance Company Ltd (IIFCL). This capital infusion — which happened on March 30 – has taken the paid-up capital of the company to ₹9,999.2 crore.This increase in paid up capital would enable IIFCL to create requisite headroom to provide finance to more number of Infrastructure projects in the country, an official release said. IIFCL, which is entirely Government owned, will now have increased exposure limits for individual projects and developer groups, would be able to comfortably maintaining its Capital to Risk Adjusted Ratio (CRAR) as per RBI Regulations/Directions and approach the markets to attract more borrowings, the release added. - Business Line
🍒 YES Bank scrip gains over 2% as Madhu Kapur and family withdraw case from Bombay HC : Shares of YES Bank closed nearly 2 per cent higher on the BSE on Wednesday after Madhu Kapur and other family members withdrew a case against the private sector lender filed in Bombay High Court in 2013.The families of the bank’s two promoters – Rana Kapoor and Madhu Kapur – were in the legal fight over the right to nominate directors to the board. Madhu Kapur is the wife of the bank’s co founder Ashok Kapur who passed away in 2008. “The plaintiffs had sought the following three broad categories of reliefs in the suit – recognition of the plaintiffs’ rights to participate in the management of the bank, restrain individual directors from acting as such or holding themselves out as directors of the bank, and restrain the defendants from making or continuing with any application to any regulator and authorities for reclassifying the plaintiffs’ shareholding into a non-promoter shareholding,” YES Bank said in a regulatory filing on June 9. - Business Line
🍒 IndusInd Bank gains for fourth straight day, comes close to 3-month high : Extending the gains into the fourth consecutive session, shares of IndusInd Bank ended 7.93 percent up at an almost three-month high of Rs 500.70 on BSE on June 10. In the last four trading sessions, the stock has risen 21 percent. Experts attributed the rise to bottom-fishing along with technical factors. "A further 10-15 percent cannot be ruled out on the higher side, which can take it to Rs 530-540 kind of levels. There should be a stop loss of Rs 475 for the next one or two weeks," Taparia said. - moneycontrol.com
🍒 Gold up for third straight day; experts say Mumbai jewellery business will be back to normal by Oct : Gold prices rose for the third successive day by Rs 161 at Rs 47,005 per 10 gram in the Mumbai bullion market on weakness in the US dollar and stronger equity market. The yellow metal gained on demand for safe-haven metal and ahead of the Federal Reserve comment on the US economy and future course of action. The rate of 10 gram 22-carat gold in Mumbai was Rs 43,057 plus 3 percent GST, while 24-carat 10 gram was Rs 47,005 plus GST. The 18-carat gold quoted at Rs 35,254 plus GST in the retail market. Silver prices rose Rs 125 to Rs 47,820 per kg from its closing on June 9.
🍒 Market updates: Sensex rallies 290 points to 34,247, IndusInd Bank shines : The BSE Sensex surged 290 points on Wednesday following gains in index heavyweights Reliance Industries, HDFC and ICICI Bank amid persistent foreign fund inflows. After hitting an intra-day peak of 34,350.17, the 30-share benchmark settled 290.36 points, or 0.86 per cent, higher at 34,247.05.Similarly, the NSE Nifty climbed 69.50 points, or 0.69 per cent, to 10,116.15.IndusInd Bank was the top gainer in the Sensex pack, rallying around 8 per cent, followed by Kotak Bank, Reliance Industries, HDFC, Axis Bank and SBI.On the other hand, Hero MotoCorp, Tata Steel, Bajaj Auto and ONGC were among the laggards.
🍒 Rupee settles marginally higher at 75.59 against US dollar : The rupee pared early gains to settle on a flat note at 75.59 (provisional) against the US dollar on Wednesday ahead of the US Federal Reserve’s monetary policy decision, even as domestic equities were trading on a positive note.
🍒 Shares of Central Bank of India in Stock Market : 79% of moneycontrol users recommend selling Central Bank of India Shares. In BSE, shares closed at Rs.16.64 against Prev Close Rs.15.99. In NSE, shares closed at Rs.16.70 against Prev Close Rs.15.95.
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