Today's Banking / Financial News at a Glance 19.06.2020

☕ 19.06.2020: Today's Banking / Financial News at a Glance

🍒 Finance Ministry begins next round of selection process for Executive Directors at PSBs : The Finance Ministry has kicked off the next round of selection process for Executive Directors at nationalised banks. The Department of Financial Services (DFS) has asked nationalised banks to furnish the details of bank officers serving on the highest level below the board of the bank in which the officer is employed.Details of only those officers who have completed at least two years as General managers or/and Chief General Manager and have three years of residual service as on April 1 need to be furnished to the DFS, official sources said.Indications are that the Banks Board Bureau ( BBB) will conduct the interviews for the ED posts in the last week of this month.After the mega bank merger in April 1 that saw 10 PSBs getting consolidated into four, the country has only 12 state-owned banks.It may be recalled that the Finance Ministry, last September, allowed PSBs with a total business of over ₹10-lakh crore to create Chief General Manager (CGM) posts as per their business needs. This was seen as part of the PSB governance reforms undertaken by the Centre for empowerment of bank boards.The CGMs are to act as an administrative and functional layer between the existing levels of General Manager and Executive Director. The number of CGM posts created should not exceed the ratio of 1:4 between the total number of posts of CGM and GM, the DFS had then stipulated. - Business Line

🍒 RBI approves re-appointment of Prakash Chandra as non-exec Chairman of RBL Bank : Bank on Thursday said the Reserve Bank of India has approved the re-appointment of Prakash Chandra, Independent Director, as Non-Executive (Part-Time) Chairman of the bank till July 23, 2021. “Chandra’s reappointment and revision in his remuneration had also been approved by the board of directors pursuant to the recommendation of the Nomination and Remuneration Committee of the Board, which shall be placed for the approval of the members of the bank at the ensuing Annual General Meeting,” it said in a regulatory filing.- Business Line

🍒 90% borrowers didn’t defer EMI: SBI to Supreme Court : State Bank of India, the largest bank in the country, told the Supreme Court on Wednesday that 90% of borrowers did not avail the moratorium till August 31 on repayment of loans through EMI to question the brouhaha caused by PILs over waiver of interest on interest accrued on deferred EMIs. Appearing for SBI, senior advocate Mukul Rohatgi said, “Nearly 90% of borrowers have not availed the moratorium and are paying their EMIs regularly during the lockdown period. If on one hand the compound interest in deferred EMIs are not charged from borrowers, and on the other hand the banks are bound to pay compound interest on depositors' money, how will the banks survive?”The bench said it was not asking for waiver of interest during the moratorium period, but asking the finance ministry, the Reserve Bank of India and banks to consider waiving interest on interest that would accrue on the deferred EMIs. Solicitor general Tushar Mehta said moratorium did not mean either waiver of interest or interest on interest but it was decided not to levy penalty on delayed EMIs. “The RBI has taken a stand (that it would be imprudent to waive interest on interest which would cause havoc in the banking industry). It is now for the banks to take an appropriate decision. Banks are under obligation to pay interest on deposits,” Mehta said. - Economic Times

🍒 Plenty of liquidity available in the system: SBI chairman Rajnish Kumar :  State Bank of India (SBI) chairman Rajnish Kumar on Thursday said that there is enough liquidity available in the system and also interest rates have moderated to a large extent. Speaking at a webinar organised by Bharat Chamber of Commerce, Kumar said that both the RBI and the government have taken measures to bring back the economy, derailed by the pandemic, back on track. "The government and the RBI have taken measures to bring back the economy to the path of revival", he said.Kumar said the RBI has been giving calibrated responses quickly and ensured that there is enough liquidity in the system.According to him, interest rates have also moderated to a large extent.He said that government has taken steps to make direct bank transfers, a lot of emphasis on helping the MSMEs and announced reforms in the areas of agriculture, defence and mining for creating a favourable investment climate."I believe the situation is returning to normal and many businesses are back to normal operating at 70 to 80 per cent capacity. Some of them have also started exports", he said. According to him, the rural economy will play a critical role in the revival process. - economic times

🍒 Nearly 15 per cent of State Bank of India's Mudra loan portfolio turned bad :  About 15 percent of State Bank of India's Mudra loan portfolio has turned bad, in sync with the concerns raised by Reserve Bank of India over the growing stress on the government's loan scheme for micro enterprises and partnership firms. The bank had sanctioned Rs 33800 crore Mudra loans in FY19. SBI chairman Rajnish Kumar said that the bank has adopted digital process for lending under Mudra scheme and that it has tested some success in containing non-performing assets. “We have tweaked the model and changed it to e-mudra," Kumar said. "Some parameters are changed and now the NPA ratio has reduced to 10% in new loans. The entire process is now end-to-end digitised," he said in a video call with businessmen, organised by the Bharat Chamber of Commerce . The Shishu Mudra scheme under which loans upto Rs 50,000 are disbursed have seen the highest delinquency ratio, sources in the bank said. - economic times

🍒 NPAs in corporate loans now under control, says SBI's Rajnish Kumar : While corporate non-performing assets (NPAs) are now under control, in some small ticket loans, the bad loans remain on a higher side, according to Rajnish Kumar, Chairman, State Bank of India. “Now corporate NPAs are under control. We notice some higher NPAs in small ticket government scheme loans. In the agriculture sector, NPAs in Kisan Credit Card (KCC) loans are at par with Mudra loans,” he said, answering a question on the extent of NPAs in the banking system at an e-session organised by the Bharat Chamber of Commerce on Thursday."In Mudra loans, the gross NPA was close to 15 per cent," he said. "However, with a new digital model in place, the NPAs in the new loans, NPAs was close to 10 per cent," he further said.He added that in the last 15 days, SBI had sanctioned loans to about 200,000 MSMEs and of this, nearly 60 per cent loans had been already disbursed. “Our data analysis shows that MSMEs are managing this crisis very well,” he said. - Business Standard

🍒 Spike in bank deposits in Jan-May due to borrowings, not savings: Report : The sudden spike in bank deposits in the past few months is on account of a rise in overall borrowings of both central and state governments and not due to an increase in savings, according to a report.  To safeguard their money, depositors are also selecting banks that can provide safety to their money, India Ratings and Research said in the report.During January-May 2020, aggregate deposits in the banking system grew Rs 7.05 trillion as compared with Rs 4.65 trillion in the corresponding period last year.Bank credit, however, grew by only Rs 2.2 trillion during January-May 2020, against Rs 2.84 trillion during January-May 2019."The sudden surge in bank deposits is due to a rise in overall borrowings of both the central and state governments, rather than increased savings," the report said. - Business standard

🍒 PNB Housing Finance witnesses sharp fall in customers opting for moratorium : PNB Housing Finance on Thursday said it has seen a sharp decline in requests for moratorium from its customers, with its asset under management (AUM) under the scheme falling from 56 per cent in the March-May period to 31 per cent as of June 5. The mortgage lender has given an opt-in route to accepting customers’ requests. On March 27, the Reserve Bank of India (RBI) announced moratorium of repayment of term loans till May 31. It was later extended till August 31. “As on June 5, 2020, under phase-1 (March-May), approximately 56 per cent of the company’s AUM have opted for moratorium, whereas under phase-2, approximately 31 per cent of the AUM have opted for moratorium indicating a sharp drop in customers requesting the moratorium,” the company’s Managing Director and CEO Neeraj Vyas said in a call with analysts post the fourth-quarter results. - Financial Express

🍒 Regulators, FinMin to work towards preserving financial stability: FSDC : The sub-committee of the Financial Stability and Development Council (FSDC) unanimously resolved that every participating regulator and the Finance Ministry will do whatever is necessary to revive the economy and preserve financial stability. Given the prevailing extraordinary circumstances due to the pandemic, all regulators and the ministry will continue to remain alert and watchful of the emerging challengesand interact more frequently, both formally and informally, saidthe Reserve Bank of India (RBI) in a statement. At the 24th meeting of the FSDC sub-committee, which was chaired by RBI Governor Shaktikanta Das, the proposal to set up of an Inter Regulatory Technical Group on Fintech (IRTG-Fintech) and the National Strategy on Financial Education (NSFE) 2020-2025 were discussed. - Business Line

🍒 Reserve Bank of India proposes tougher rules for housing finance companies :  The Reserve Bank of India has proposed tougher rules for housing finance companies (HFC), including lending and investment curbs in group entities to prevent conflict of interest, while changing the definition of "housing finance" and setting thresholds to identify the bigger players that are systemically important to the mortgage industry. The central bank said that HFCs can either take exposure on the group company in real estate business or lend to retail individual home buyers in the projects of group entities, but not do both. This is aimed at addressing the “concerns on double financing due to lending to construction companies in the group and also to individuals purchasing flats from the latter,” RBI said in a draft regulation. “As regards extending loans to individuals who choose to buy housing units from entities in the group, the HFC would follow arm’s length principles in letter and spirit.” - economic times

🍒 Rupee Co-operative Bank posts operating profit of Rs 19.55 crore for FY20  : The troubled Rupee Co-operative Bank on Thursday reported an operating profit of Rs 19.55 crore for FY20 on curtailing employee-related expenses and growth in treasury income. The bank, which has been under an RBI-appointed administrator for the last four years, said its joint proposal to merge with the Maharashtra State Co-operative Bank (MSC Bank) is pending the mandatory approvals and hoped the regulator will take a pragmatic call on the same.Further pressing for the merger, the bank said it has learnt that MSC Bank is desirous of getting into retail banking, and stressed that this is an area of strength for Rupee Co-op Bank. In a statement, it said the COVID-19 pandemic has hurt recovery efforts. The bank has recovered over Rs 258 crore from borrowers in the last four years. - Moneycontrol.com

🍒 City Union Bank reports Rs 95.25 crore loss for March quarter : City Union Bank on Thursday reported a loss of Rs 95.25 crore for the fourth quarter ended March 2020, due to a spike in bad loan provisionings. The private sector lender had posted a net profit of Rs 175.11 crore during the corresponding quarter of the previous financial year 2018-19.Sequentially, the bank had registered a net profit of Rs 192.43 crore in the December 2019 quarter. The bank's provisioning for bad loans and contingencies had to be raised multi- fold to Rs 450.38 crore in the March 2020 quarter, against Rs 90.67 crore in the year-ago period, City Union Bank said in a regulatory filing. - Business Line

🍒 HDFC AMC’s offer-for-sale closes; retail investors’ portion subscribed 82 per cent : HDFC Asset Management Company’s offer-for-sale (OFS) by promoter Standard Life Investments closed on Thursday, with retail investors subscribing 82 per cent of the portion reserved for them. Retail investors bid for 9,87,191 shares on Thursday as against 12 lakh scrips on offer, translating into a subscription of 82 per cent, according to data available with the National Stock Exchange. On Wednesday, OFS attracted robust response from non-retail investors as the category was subscribed 2.6 times on Wednesday. The two-day OFS mechanism closed on Thursday.Standard Life offered to sell a total of 60 lakh shares, representing 2.82 per cent stake, through the OFS. The floor price for the OFS was fixed at Rs 2,362 each, a 6.92 per cent discount to the closing price of Rs 2,537.65 on Tuesday. In the event of oversubscription, Standard Life planned to sell another 60 lakh equity shares. Overall, Standard Life planned to offload 1.2 crore equity shares or 5.64 per cent stake of the fund house. - financial express

🍒 India’s economy to recover very fast: HDFC MD Aditya Puri : HDFC Bank MD and CEO Aditya Puri has said Indian GDP will recover “very fast” and pointed out that it is essential to get the growth rate back to the pre-Covid levels. The largest lender in the private sector will emerge from the Covid-19 pandemic “way way stronger” than it ever was, Puri said in an e-mail to the bank’s employees earlier this month.It can be noted that the economy is widely expected to contract in FY21, with some analysts pegging the GDP to decline by 5 per cent. The entire first quarter has been a washout due to the continuing lockdowns with only essential services being allowed to operate.Earlier on Thursday, worries over growth led global agency Fitch to revise down its outlook on the sovereign to “negative” while affirming the rating. “The Covid crisis is a health crisis which killed supply and over a period of time demand as well. However, I am confident in the future of India and even brighter future of HDFC Bank. The GDP and the country will recover very fast,” Puri, the founder chief executive of the lender who has been at the helm for 25 years, said. - Business Line

🍒 ICICI Pru Life declares ₹788-crore bonus : Private sector ICICI Prudential Life Insurance on Thursday announced a bonus of ₹788 crore for its bouquet of participating products. “All participating policies in force as of March 31, 2020, are eligible to receive this bonus, which will be added to their guaranteed maturity or death benefit,” it said in a statement, adding that this is the 14th consecutive year it has declared a bonus.The bonus declared for 2019-20 is 15 per cent higher than 2018-19, and will benefit nearly nine lakh policy-holders, it added. A bonus is the share of profits generated by the company’s participating policy-holder’s funds. - Business Line

🍒 ICICI Home Finance launches affordable housing loan scheme : ICICI Home Finance has launched a special affordable housing loan scheme, with special rates for women, lower and middle income groups. Called SARAL, it aims to fund homes in urban and rural areas. The product has been developed for women, lower, middle income customers and economically weaker sections having maximum household income up to ₹6 lakh annually, it said in a statement on Thursday.SARAL offers affordable housing loans up to ₹35 lakh at an interest rate starting from 7.98 per cent onwards, for a maximum tenure of 20 years, it said. It added that customers with pre-existing loans can also transfer their loans. ICICI HFC’s SARAL loan requires a mandatory woman ownership in rural areas of the country for a household income of ₹3 lakhs to ₹6 lakhs. - Business Line

🍒 Insurance regulator mulls including Covid-19 home treatment costs under health cover : Those who are under home treatment for Covid-19 may get some relief in health cover. The Insurance Regulatory and Development Authority of India (IRDAI) is likely to include home treatment as one of the permissible claims under health cover. “We are actively thinking of including home treatment expenses under permissible category of claims under health cover,’’ Subhash C Khuntia, Chairman, IRDAI told BusinessLine on Thursday. As per the existing norms, expenses incurred on home isolation may not be reimbursed by insurers because they may not need subsequent hospitalisation. Under the norms, pre-hospitalisation expenses are covered by health policies when, subsequently, hospitalisation is involved, but not otherwise. - Business Line

🍒 Rupee settles on a flat note, up 2 paise at 76.14 against US dollar : The rupee settled on a flat note, registering a rise of just 2 paise to 76.14 (provisional) against the US dollar on Thursday, tracking weak US dollar and gains in the domestic equity market. Forex traders said rupee was trading in a narrow range as positive domestic equities and weak US currency supported the local unit, while rising coronavirus cases, border tension with China and foreign fund outflows capped the gains. The rupee opened at 76.17 against the US dollar, and finally settled for the day at 76.14 against the US dollar, up 2 paise over its previous close. It had settled at 76.16 against the greenback on Wednesday.

🍒 Sensex, Nifty end 2% higher lead by banking stocks : The equity indices on Thursday shrugged off mixed cues from the rest of its Asian peers to end two per cent higher. Fitch Ratings has revised the outlook on India's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the rating at 'BBB-'. The downgrading had no impact on the market sentiment.The BSE Sensex ended 2.09 per cent higher at 34,208.05 while the NSE Nifty closed 2.14 per cent higher at 10,091.65.The Sensex hit an intraday high of 34,276.01 and a low of 33,371.52. Similarly, the Nifty touched an intraday high of 10,110.15 and a low of 9,845.05. The market breadth was positive as 1,889 shares advanced, against a decline of 723 shares, while 137 shares were unchanged. The banking stocks were the outperformers today with Nifty Bank and Nifty PSU Bank ending with gains of 3.7 per cent and 2.6 per cent respectively.

🍒 Gold prices gain Rs 119 to Rs 47,496 per 10 gram, silver up Rs 170 per kg : Gold prices climbed Rs 119 to Rs 47,496 per 10 gram in the Mumbai bullion market on global cues. The precious metal edged higher after US Federal Reserve Chairman Jerome Powell in his testimony on June 17 reiterated slower economic growth due to the coronavirus pandemic. The rate of a 10 gram 18-, 22- and 24-carat gold in Mumbai was Rs 35,622, Rs 43,506 and Rs 47,496 plus 3 percent GST. Silver prices rose Rs 170 to Rs 48,360 per kg from its closing on June 18.

🍒 Shares of Central Bank of India in Stock Market : 100% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, shares closed at Rs.16.45 against rs.16.24. In NSE, shares closed at Rs.16.45 against Rs.16.20..

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