☕ 22.06.2020: Today's Banking / Financial News at a Glance
🍒 Many PSBs walking extra mile to provide succor to corporate borrowers: Bankers : Many of the public sector lenders such as State Bank of India and Indian Bank are walking the extra mile to provide succor to distressed corporate borrowers as they decide to keep interest rates unchanged even for the ones that faced credit rating downgrades in the past three months, bankers said. These banks have ordered their staff to not to raise borrowing costs for those companies facing rating action which in the normal circumstances would have faced an automatic increase in borrowing costs and tightening of lone covenants, they said. Punjab National Bank chief executive SS Mallikarjuna Rao has also confirmed the development, saying his bank has not raised rates even if there was a downgrade and SBI chairman Rajnish Kumar told industrialists that there’s an internal circular to that effect. “Interest rates have fallen significantly over the past few months and we are passing on the benefit to every corporate, irrespective of the rating action being taken on them. So, in a way, we have maintained a status quo,” Indian Bank general manager for corporate credit VS Narayanan said. While the Reserve Bank of India has granted permission to banks to provide a six month moratorium to all borrowers there have been many disputes as banks used their discretion. A similar moratorium was not available for those whose bonds were falling due and the rating companies continued to downgrade. Even the non-banking finance companies struggled to benefit from the moratorium. Reports from rating companies ICRA, India Ratings & Research and CARE Ratings show that there have been about 11 downgrades for every upgrade in April and May. Crisil would release the aggregate number of its rating action post-lockdown only in September. A rating downgrade reflects rising credit risks and therefore typically attracts higher interest rates as banks seek premium on credit risk. - Economic Times
🍒 Punjab National Bank plans to hit capital market in Q4 : The country’s second largest lender Punjab National Bank is planning to hit capital markets in the fourth quarter this fiscal to raise funds to help meet growth needs and regulatory requirements. At the moment, the bank is sufficiently capitalised with the capital adequacy ratio of 14.14 per cent at the end of March 2020, PNB Managing Director S S Mallikarjuna Rao told PTI in an interview. “However, we will finalise the opening balance sheet of amalgamated entities in the next board meeting in July. Probably then the bank will get an actual estimate of the capital (requirement),” he said.“We will be planning (capital raising) somewhere around end of third quarter or beginning of fourth quarter. By this time we would have declared two quarterly balance sheet of the amalgamated entities,” he said. Besides, he said, the bank has a lot of headroom available in terms of AT 1 and Tier II bonds. PNB amalgamated Oriental Bank of Commerce and United Bank of India with itself effective April 1 this year. With the merger, the bank now has about 11,000 branches, more than 13,000 ATMs, one lakh employees and a business mix of over Rs 18 lakh crore. Total domestic business of PNB at the end of March 2020 stood Rs 11.81 lakh crore. - financial express
🍒 Likely job cuts, salary reductions to have relatively low impact on SBI: Chairman : SBI Chairman Rajnish Kumar has assured shareholders that the likely job cuts and salary reductions in the wake of COVID-19 pandemic will leave 'relatively low level' of stress on the bank as the proportion of business from government and quasi-government sector is high. In a letter to the bank's shareholders, Kumar exuded confidence that despite economic headwinds, the robust performance achieved by the country's largest lender State Bank of India (SBI) in 2019-20 will continue in the current financial year. "...despite the economic headwinds, the Bank is well prepared to adjust to the challenges posed by the COVID-19 pandemic. I am more than hopeful that the robust performance achieved in FY20 will continue in FY21 as well," the SBI chairman said. Observing that the full impact of COVID-19 outbreak will be felt in the current financial year, Kumar said from the bank's point of view, the true impact of COVID pandemic must also consider the behavioral impact on bank's customers, and composition of portfolio, among others. "For instance, likely job cuts and salary reductions will have relatively low level of stress on account of higher proportion of Govt/ Quasi Govt. sector customers," he said in the letter, as per SBI's annual report. "As of now, only 21.8 per cent of the customers have availed the benefit of moratorium. Furthermore, the Bank was able to achieve 98 per cent branch operability as well as 91 per cent alternate channel operability during the period of lockdown," Kumar added. - economic times
🍒 YES Bank board may take a call on Monday to raise Rs 10,000 cr via FPO : The YES Bank board is meeting on Monday to take a call to raise up to Rs 10,000 crore via a follow-on share sale to help boost its capital base. The bank is likely to file for its offer document soon after the board clears the fundraising plan. The shares for the FPO (follow-on public offer) will be priced as per the Securities and Exchange Board of India (Sebi) formula. YES Bank closed at Rs 28 a share on Friday, giving it a total market valuation of Rs 35,141 crore. An email sent to YES Bank did not elicit any response. The bank has received offers from foreign portfolio investors (FPIs) to buy up to 9.98 per cent stake and some of them plan to convert it into unsponsored American Depository Receipts (ADRs), said a source close to the development. According to the plan submitted to the banks, which hold stakes in YES Bank after the ailing lender’s bailout, the FPIs will first acquire YES Bank shares and some of these FPIs then plan to place these shares as underlying cover for the unsponsored ADRs. The route will require clearance from both the Reserve Bank of India and Sebi. - Business Standard
🍒 Credit growth will come from retail, MSMEs: SS Mallikarjuna Rao, PNB MD : Punjab National Bank (PNB) is confident that its balance sheet won’t be impacted due to the Covid-19 pandemic, except for some stress in limited sectors such as telecom. In a telephonic interview, Managing Director and Chief Executive Officer SS Mallikarjuna Rao tells Somesh Jha about the bank’s prospects and plans for the year There is a requirement and commitment of banks towards the micro, small and medium enterprises (MSMEs), which have been impacted badly due to Covid-19. They are working hard to come back to normally. We expect a robust comeback from the MSMEs in October, particularly in some sectors. Hospitality and travel segments may not recover immediately but less labour-intensive sectors and highly technology-oriented industries will come back fast. We need to provide support to them. The government has also launched a credit guarantee scheme. We expect growth in retail and MSME immediately but bigger segments will take time and will probably happen from January. -Business Standard
🍒 Yes Bank, Affordplan launch co-branded cashless card for heathcare needs : Yes Bank has partnered with fintech startup Affordplan to launch a co-branded health card on Saturday to address healthcare needs. The co-branded healthcare card will enable families plan and manage their finances for their healthcare needs, Yes Bank said in a release. In addition, Yes Bank's wallet has also been integrated on Affordplan Swasth to enable wallet QR scan for making payments to merchant partners empaneled on the app.People will be able to get a goal-based savings projection chart for medical treatment based on treatment input, access healthcare services and treatments at a discounted price.The co-branded card will have flexible recharges from Rs 100 up to a maximum balance of Rs 1 lakh. The programme has an inbuilt rewards platform, which provides wellness related products and services in the form of rewards and incentives to customers. It is contactless and eliminates cash transactions for the safety of customers at hospitals and pharmacy stores, the bank said. - economic times
🍒 HDFC Bank to raise ₹50,000 crore via debt securities : Private sector lender HDFC Bank plans to raise ₹50,000 crore in the next 12 months by issuing various debt securities. The decision was taken at the board of directors meeting held on June 20, HDFC Bank, which is the country’s largest private sector lender, said in a regulatory filing."The Board of Directors has approved the issue of perpetual debt instruments (part of additional tier I capital), tier II capital bonds and long term bonds (financing of infrastructure and affordable housing) up to a total amount of ₹50,000 crore," it said. The bank’s AGM will be held on July 18 through video-conferencing or other audio-visual means. - Business Line
🍒 Banks prefer sovereign bonds to credit during lockdown : Weak credit demand, ample deposits and the ability to cherry-pick borrowers have flooded Indian lenders with liquidity during the lockdown, prompting them to beef up holdings of government bonds. Such bond holdings, measured by the statutory liquidity ratio (SLR), have grown by 259 basis points (bps) between 27 March and 5 June to 27.97%, showed data from the Reserve Bank of India (RBI). A bank’s SLR is expressed as its investments in central, state government and other approved securities as a percentage of its net demand and time liabilities (NDTL). The RBI mandates a minimum SLR holding of 18%. Experts said a mix of surplus liquidity, risk-aversion and the attractiveness of government securities has led to banks investing more in SLR bonds. “These are safe investments and giving relatively better returns. This trend will continue as long as the demand for bank credit is low and banks are cherry-picking their customers," said Madan Sabnavis, chief economist, Care Ratings. - Live Mint
🍒 After 70 per cent jump in FY20, liquidation cases under IBC set to surge amid Covid crisis : With the Covid-19 pandemic causing a massive disruption in all spheres, finding bidders for the cases already admitted under IBC for resolution appears a herculean task. As such, the number of cases being pushed into liquidation under IBC, on failure to find a resolution plan, has shot up sharply over the past two years. Of the 3,774 cases admitted so far (until March 2020), according to recent data released by IBBI, liquidation has been ordered in 914 cases; only 221 cases have seen approval of the resolution plan. The number of cases pushed into liquidation has risen sharply over the past two years. In FY20, 518 cases under IBC moved into liquidation, a 70 per cent jump from the previous year. A recent amendment to the Insolvency and Bankruptcy Code (IBC), promulgated through an ordinance, has suspended fresh insolvency proceedings against a debtor for a default occurring on or after March 25 for a period of six months (this can be extended up to one year). The move is aimed at offering relief to stressed companies, particularly MSMEs, and to prevent many of them being pushed into insolvency and, subsequently, liquidation, owing to the weak economic environment. - Business Line
🍒 DHFL Q4 loss widens to ₹7,635 crore on fair value changes in loan portfolio : The net loss of scam-hit Dewan Housing Finance Corporation Ltd (DHFL) widened in the fourth quarter of FY20 to ₹7,635 crore, against ₹2,223 crore in the year-ago quarter. The net loss in the reporting quarter was mainly due to the net loss on fair value changes jumping about five-fold to ₹12,403 crore (₹2,383 crore in the year ago quarter).As of March-end 2020, the company’s housing and other loans portfolio declined 32 per cent year-on-year to stand at ₹66,203 crore (₹97,978 crore). As per the notes to accounts, the wholesale loan portfolio aggregating ₹49,585 crore (following classification of this portfolio as ‘held for sale’ in the year ended on March 31, 2019) has been ‘fair valued’ as of March 31, 2020, at ₹30,732 crore. Overall, total assets (total financial assets + total non-financial assets) declined 19 per cent to ₹85,838 crore as of March-end 2020 (₹1,06,475 crore). Total financial liabilities, including debt securities, borrowings (other than debt securities), deposits and subordinated liabilities during the period declined 7 per cent to ₹91,229 crore (₹98,200 crore). - Business Line
🍒 Liquidator has overriding right on company’s assets over tax department: NCLT : The revenue department cannot attach the assets of a company in liquidation if the liquidator has already taken in account its tax dues, the bankruptcy court has said. The principal bench of the National Company Law Tribunal (NCLT) in New Delhi ruled that the liquidator has overriding powers under the Insolvency and Bankruptcy Code to take over both movable and immovable assets of a corporate debtor. The June 15 ruling came in a case between the liquidator of S Kumars Nationwide Ltd (SKNL) and the revenue department. It is likely to set a precedent while deciding on other similar matters as well where the revenue department has attached the bank accounts of the corporate debtors. The lawyers for Om Prakash Agarwal, the liquidator of SKNL, argued that the revenue department had already submitted its claims and those were admitted by the company as well. Moreover, the tax dues are considered as operational creditor claims. The tax department is entitled to claim its dues under the distribution provisions of the IBC, but cannot appropriate the monies lying in the company’s accounts by showing an attachment order, Agarwal’s lawyers had argued. The tax department claimed that it had made an attachment against the money lying in the company’s bank account since 2017 and that it had not attached any immovable property. NCLT acting president BSV Prakash Kumar, while allowing the plea filed by the liquidator, directed the revenue department to vacate the attachment on the bank account. - economic times.
All the Best… Have a Good day..
No comments:
Post a Comment