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☕ 05.06.2020: Today's Banking / Financial News at a Glance
🍒 Bank NPAs may worsen to 11.6 pc by end of this fiscal due to coronavirus pandemic: Report : Gross non-performing assets (NPAs) of banks are likely to worsen to 11.3-11.6 per cent by the end of this financial year from 8.6 per cent as of March 2020, due to disruptions caused by the coronavirus pandemic, according to a report. Fresh gross slippages are estimated to be at 5-5.5 per cent of standard advances during 2020-21, which will increase the banks' credit provision and impact their earnings, rating agency ICRA said in a report.With an increase in stress on asset quality and profitability, state-owned banks may need Rs 45,000-82,500 crore of capital in this financial year under a weak credit growth scenario, it said. "The RBI moratorium to borrowers was extended by another three months till August 31, 2020, and we expect the asset quality stress is likely to reflect only in third and fourth quarters of 2020-21 results," the rating agency's sector head (financial sector ratings) Anil Gupta said. - economic times
🍒 SC seeks finance ministry's reply on waiver of interest on loans during moratorium period : The Supreme Court Thursday sought finance ministry's reply on waiver of interest on loans during the moratorium period after the RBI said it would not be prudent to go for a "forced waiver of interest" risking financial viability of the banks. The top court said there are two aspects under consideration in this matter - no interest payment on loans during the moratorium period and no interest to be charged on interest. A bench of Justices Ashok Bhushan, Sanjay Kishan Kaul and M R Shah said that these are challenging times and it is a serious issue as on one hand moratorium is granted and on other hand interest is charged on loans. The bench was hearing a plea, filed by Gajendra Sharma, in which he has sought a direction to declare the portion of RBI's March 27 notification "as ultra vires to the extent it charges interest on the loan amount during the moratorium period, which create hardship to the petitioner being borrower and creates hindrance and obstruction in 'right to life' guaranteed by Article 21 of the Constitution of India". - economic times
🍒 RBI asks SC to not allow interest waiver in moratorium period; says EMIs can be deferred, not waived off : The Reserve Bank of India told the Supreme Court that a forced interest waiver will make a huge dent in the stability of the financial institutions, therefore, the court should reject the plea seeking interest waiver in the loan moratorium period. RBI has estimated a loss of nearly Rs 2 lakh crore if the SC allows interest waiver in the moratorium period. In the wake of the coronavirus pandemic-led financial crisis faced by many people, the RBI had earlier announced a loan moratorium period of three months, which was further extended for three more months. While the provision allowed no penalty on non-payment of the principal amount, the interest on EMI kept on accumulating. The central bank pointed out that the petitioner had misinterpreted the moratorium as a waiver, which was actually a deferment of existing and current liabilities. The central bank argued that the interest waiver will adversely affect the business of banks and hurt their financial stability. It said that the banks must remain sound and profitable to ensure the safety of depositors and the financial stability of the country. Stating income on interest as an important source of earnings, it added that borrowing or a loan is in the nature of a commercial contract between the lender and borrowers and that the interest rate reflects the same. - Financial Express
🍒 Uday Kotak against waiver of interest during moratorium period : CII president and banker Uday Kotak on Thursday opined against any waiver of interest during the moratorium period saying there cannot be an unequal game wherein banks pay the depositors but do not earn interest on loans. In his first press conference as CII president, Kotak was responding to a question on the ongoing case in the Supreme Court on waiver of interest during the moratorium period. "...banks are intermediaries between depositors and borrowers. So, we (cannot) have a situation where borrowers get moratorium, banks have an obligation to serve depositors both on principal plus interest. Therefore, we cannot have a one-sided contract where we allow moratoriums on interest to the borrowing side," said Kotak.- economic times
🍒 PNB lowers rates on savings account deposits by 50 bps : Following industry peers, Punjab National Bank (PNB) on Wednesday announced to lower interest rate on savings account deposits by 0.50 percentage point, effective July 1. For deposits up to Rs 50 lakh, the new interest rate will be 3 per cent, down by 0.50 per cent from 3.50 per cent. Deposits of Rs 50 lakh and above will earn interest of 3.25 per cent as against 3.75 per cent currently. The rate of interest on savings fund deposit has been reduced with effect from July 1, 2020, Punjab National Bank said in a tweet. "Interest shall be paid on a daily product basis at the rate of 3 per cent per annum in accounts where the end-of-day balance is up to Rs 50 lakh and at the rate of 3.25 per cent per annum in accounts where the end-of-day balance is above Rs 50 lakh. Interest shall be credited at end of each quarter i.e. February, May, August and November," PNB said.- economic times
🍒 Indian Bank eases procedures for MSME lending, offers 3 new products : Securing finance has always been a challenge for MSMEs (micro, small and medium enterprises). Post Covid-19, things have become ever more complicated. To help MSMEs access funds easily, Chennai-headquartered Indian Bank has launched new products and, more importantly, simplified procedures in accessing them. The three new products will help them meet their requirements in terms of working capital. The schemes include Covid emergency loan, reassessment of working capital loan, and guaranteed emergency credit line. “Both manufacturing and service sectors need this emergency loan to improve their working capital. These facilities may be utilised quickly and MSMEs can restart their business. Also, we have simplified the procedure of appraisal and sanctioning powers given to field level functionaries to ensure quick disbursements,” MK Bhattacharya, Executive Director of Indian Bank, told BusinessLine. - Business Line
🍒 Will give emergency credit but first pay up earlier dues, some banks tell MSMEs : “We will give you the loan under the Guaranteed Emergency Credit Line (GECL) scheme but use the money to pay up your existing loan dues," that’s what some banks tell micro, small and medium enterprises (MSMEs) seeking to avail the credit guarantee scheme. Some banks are adding a clause to this effect to the GECL loan offer, effectively denying the cash support for MSMEs for fresh spending. “I run a small leather shoe manufacturing unit. When I approached the bank for a loan under this scheme, they have given me a letter saying the loan will be given but I have to use this amount to pay back an earlier line of credit. This means I can’t use this money for my business revival,” said an MSME owner on condition of anonymity. - moneycontrol.com
🍒 Its official! 39% of all loans in banking system now under 6-month moratorium : It is now official. The Reserve Bank of India (RBI) has said an estimated Rs 38.68 lakh crore of the total Rs 100 lakh crore worth of loan outstanding in the banking system are now under the six month moratorium as part of COVID-19 relief package. The figure has been arrived at by taking into consideration an average 65 per cent loan moratorium requests from corporate and retail borrowers from their outstanding loan book of Rs 60 lakh crore as on December 31, 2019. This Rs 60 lakh crore outstanding loan excludes the working capital loans and the loans disbursed between January to March of 2020. While most of the PSBs are yet to declare percentage of moratorium book, the two big banks recently announced a higher percentage share of loans under moratorium. Bank of Baroda has declared that roughly 65 per cent of its loan book by value term is under moratorium. Similarly, IDBI Bank, which was till recently a public sector bank before insurance giant LIC's takeover, has also declared a high moratorium book share of 65-70 per cent. - Business Today
🍒 Lockdown impact: Public sector banks need ₹45,000-82,500 crore capital in FY21 : India’s public sector banks will require ₹45,000-82,500 crore of capital in FY21 as the covid-19 pandemic is expected to increase asset quality pressures, said rating agency Icra. According to a report by Icra on Thursday, with earlier expectations of improved asset quality and profitability, the capital requirements for public sector banks (PSBs) was estimated at ₹10,000-20,000 crore for FY21 and the government had also expected PSBs to raise capital from markets. However, now with worn out capital cushions and expected increase in stress on asset quality and profitability, PSBs will require ₹45,000-82,500 crore of capital even in a scenario of low credit growth of 3-4% during FY21. “Further, the investors’ appetite towards these banks will continue to remain weak amid prevailing uncertainties" said Anil Gupta, sector head (financial sector ratings), Icra. - Live Mint
🍒 IndusInd Bank becomes India's first bank to launch an app for opening a current accounts : The IndusInd Bank today launched a mobile application based facility where customer can open current bank account in just few hours. The new facility can be used to open current accounts for all kinds of businesses including proprietorship, partnership as well as private and public limited companies, the bank said. IndusInd Bank will be the first bank in India to introduce a mobile app based service for opening a current bank account. Gone are those days when you have go to bank with your Know Your Customer (KYC) documents to open a bank account. Equipped with the bank’s "Indus Corporate" mobile app, bank officials can now capture and verify information about customers and their businesses in real-time, the private sector lender said.- Live Mint
🍒 Charging interest during loan moratorium 'detrimental', says SC bench : A Supreme Court bench, on Thursday, observed that the charging of interests by banks during the six-month moratorium period on term loans was ‘detrimental’, and sought a response from the Finance Ministry and the Reserve Bank of India. This comes a day after the RBI submitted to the apex court that a waiver of interest on loans will impact the financial viability of the country’s financial sector and that the banks could forego about Rs 2 trillion in interest income if interests are waived off for the six months duration of the moratorium. The three judge bench, comprising justices Ashok Bhushan, Sanjay Kishan Kaul, and MR Shah, set the next hearing in the matter for June 12, and asked Solicitor General Tushar Mehta to file Finance Ministry and RBI’s response by then. - Business Standard
🍒 SBI to raise up to $1.5 bn via overseas bonds this financial year : The country’s largest lender, State Bank of India, plans to raise long-term funds up to $1.5 billion through bonds from international markets in the current financial year (FY21). The executive committee of the central board will meet on June 11 to examine the status and decide on long-term fundraising plans.The lender may raise the money through a public offer and/or private placement of senior unsecured notes in the US dollar or any other convertible currency this financial year, it said. Bankers associated with international fundraising said lenders such as SBI raise funds from global markets on a regular basis for lending operations and to repay financial instruments that mature during the course of the year. Apart from market borrowings, SBI also uses bilateral arrangements and taps multilateral agencies for raising funds. - Business Standard
🍒 Business correspondents body seeks Rs 5,000 incentive for its agents for next six months : The Business Correspondents Federation of India (BCFI) has sought a Rs 5,000 incentive per agent for the next six months as an incentive to help them tide over difficulties in the lockdown. “In the last two months, there has been a surge in transactions, and a decline in range of viable transactions. Low ticket withdrawals increase the cost of servicing for BCs, on account and their average income has gone down,” noted Seema Prem, CEO, FIA Global.While some banks such as State Bank of India and Union Bank of India have been helping, the BCFI has called for the incentive for agents. Harish Raghu, CEO, Saggraha, also noted the moratorium had led to stoppage of collection activities, while disbursements were also low. - Business Line
🍒 UFBU calls for safe transportation, insurance coverage of ₹50 lakh for bankers : The United Forum of Bank Unions (Maharashtra State) has sought safe transportation for employees, branches to be run with 50 per cent staff, and insurance coverage of ₹50 lakh, among others, in the backdrop of 11 bank employees losing their lives due to Covid in the Mumbai metropolitan region. Devidas Tuljapurkar, Convenor, UFBU (Maharashtra), in a letter to the Secretary, Department of Financial Services, said the State-Level Bankers’ Committee (SLBC), Maharashtra, should be advised to arrange for safe transportation, which employees can avail within a radius of about 2 km from his/her residence to his/her work place. The demand for transportation comes as majority of bank employees working in Mumbai city branches / offices stay in the suburbs or outside and many travel from beyond Mumbai urban agglomeration areas. “The banks are not providing any conveyance facility to these employees and public transport such as local railway, metro are shut down. BEST services are very few with less frequency and State Transport Department is not allowing bank employees under the pretext that they are not covered under essential services,” said Tuljapurkar.- Business Line
🍒 Depositors urge RBI chief to revive PMC Bank, ensure withdrawal of insured amount of ₹5 lakh : Scam-hit Punjab & Maharashtra Co-operative (PMC) Bank’s beleaguered depositors have represented to Reserve Bank of India Governor Shaktikanta Das that their bank should be revived and that they should be allowed to immediately withdraw at least the insured amount of ₹5 lakh to take care of their needs amid the Covid-19 pandemic. The representation, made under the aegis of PMC Depositors’ Forum, was pursuant to a Delhi High Court order (May 28) in the Bejon Kumar Misra (consumer rights activist) vs Union of India and others case. The court observed that “upon receipt of any representation from any individual or group of depositors in this regard, the decision shall be taken by the concerned respondent authority within a period of four weeks”. Chander Purswani, President, and SP Rao, Treasurer, PMC Depositors’ Forum, in a letter to the Governor, underscored that most of the depositors, especially senior citizens, depend on the interest on their fixed deposits in the bank for meeting monthly expenses. - Business Line
🍒 MasterCard, Axis Bank and Worldline launch Soft POS : MasterCard, Axis Bank and Worldline on Thursday launched Soft POS, which can turn smartphones into merchant Point of Sale (POS) terminals. "Merchants who have traditionally accepted cash payments, now have a simpler and more secure way to manage transactions," Axis Bank said in a statement, adding that merchants can start using Soft POS almost instantly as the online registration process with the acquiring bank takes less than 30 minutes.The solution is available as a white label solution to all banks and payment aggregators in the industry, it further said. It also provides for face-to-face payments with Bharat QR and NFC payments, as well as remote payments for home deliveries via link-based payments. - Business Line
🍒 Standard Chartered Bank starts operations at IFSC GIFT City : British lender Standard Chartered Bank's local unit has started operations from the International Financial Services Centre, becoming the first global bank to commence operations from the special economic zone in Gandhinagar. Presence at the newly built IFSC GIFT City can help the lender expand its business in trade, lending, financial market transactions and other structured products, a statement said. - Economic Times
🍒 RBI to release daily payments data to facilitate research : The Reserve Bank of India on Thursday said that it will start publishing daily data transactional volumes of prominent payment systems such as RTGS, NEFT, IMPS, AEPS and UPI. Additionally, the data will also include the withdrawals made at ATMs and cash availability with business correspondents. “This initiative to disseminate payment systems activities data on a daily frequency is expected to facilitate better research and also contribute to innovations in payment systems,” the central bank said in a press release. As per the first set of data published by the banking regulators for 3rd June, 4.3 lakh transactions worth Rs.3 lakh crore was transacted through RBI’s RTGS channel. - economic times
🍒 Final instalment of Rs 500 to women Jan Dhan account holders from Friday: FinMin : Women Jan Dhan bank account holders will start getting the third and final instalment of Rs 500 from Friday in line with the announcement made by Finance Minister Nirmala Sitharaman in March. To help the poor tide over the COVID-19 crisis, the government on March 26 announced an ex-gratia payment of Rs 500 to be credited to women Jan Dhan account holders for the next three months starting from April. Instalment of Rs 500 for June has been sent to the bank accounts of PMJDY women beneficiaries under Pradhan Mantri Garib Kalyan Package. Beneficiaries are requested to follow the schedule to visit banks and CSPs and money can also be withdrawn via ATMs and BCs, the Financial Services Department under the Finance Ministry informed through a video message. - economic times
🍒 IL&FS COO N Sivaraman decides to quit : After leading the asset monetisation efforts of cash-strapped Infrastructure Leasing and Financial Services (IL&FS) for almost one-and-a-half years, N Sivaraman has decided to part ways with the group, a source said. L&T Group veteran, Sivaraman was appointed as the group's chief operating officer (COO) in November 2018. He was also heading the infrastructure investment trusts (InvIT) programme. His last day at the group will be July 31, 2020, the source said. - economic times
🍒 IRDAI unlikely to tweak 4% interest rate for discontinued Ulips : The regulator is unlikely to offer any relief to insurance companies to stop paying the minimum 4 percent guaranteed return on discontinued funds of unit-linked insurance plans (Ulips). While the life insurers had written to the regulator in May, sources told Moneycontrol that a tweak in paying the mandatory 4 percent rate of interest is not feasible. “Policyholders who may have put in all their savings in Ulips will lose out,” said an official. - Moneycontrol.com
🍒 Axis Bank, Kotak Mahindra Suddenly Cuts Credit Limits By 90%: Banks Losing Trust In Customers? : The private lenders have reduced the credit card limits of its customers between 30-90%. The customers living on credit due to salary cut or job loss are facing difficulties. According to a report in the ET, Axis Bank has trimmed the credit card limits of nearly 2,00,000 customers with effect from April 15. According to Axis Bank’s quarterly report in December 2019, the lender had a 12.6% market share while it had 10.7% share in the total credit card spending. Kotak Mahindra Bank has also reduced credit card limits of its customers.When enquired about the matter, a Kotak Mahindra Bank official told the business daily that this is a routine exercise. Additionally he said, “Analysing credit worthiness and card spend behaviour of credit card holders is our regular ongoing exercise and is not unique to the current period,” the business daily quoted Ambuj Chandna, president – consumer assets, Kotak Mahindra Bank as saying. “Based on credit card spends and repayment data, we analyse credit limits of customers, and offer to increase a customer’s credit card limit or reduce the credit limit in certain cases.” - trak.in
🍒 IRDAI warns IFFCO Tokio for wrong information : The Insurance Regulatory and Development Authority (IRDAI) has warned IFFCO Tokio General Insurance Company for furnishing wrong information and delaying filing of returns. In an order, IRDAI Chairman Subhash C Khuntia directed the insurer “to put in place necessary systems for furnishing correct data and to ensure compliance with regulatory provisions”. - Business Line
🍒 Cholamandalam Investment net profit declines 85 per cent to ₹43 cr in March quarter : Cholamandalam Investment and Finance Co Ltd (CIFCL) on Wednesday reported a 85 per cent decline in net profit to ₹43 crore in the fourth quarter ended March, due to higher provision of ₹504 crore related to the COVID-19 pandemic and the possible macroeconomic threats. The diversified financial services company had reported a net profit of ₹292 crore in the corresponding period last year. “We had made a one-time provision of ₹504 crore, which impacted our profitability. Had this provision not there, our PAT (profit after tax) would have been around ₹370 crore during the period,” its Executive Vice-President and CFO Arulselvan D said. - Business Line
🍒 Recoveries from stressed assets may slip 30-40%, says ICRA : The returns from stressed assets are set to fall 30-40 percent this fiscal due to the COVID-19 outbreak and suspension of new proceedings under the Insolvency and Bankruptcy Code (IBC). According to a report by ICRA, financial creditors may gain between Rs 60,000-70,000 crore from stressed assets in FY21 compared to Rs 1 trillion in FY20. The economic conditions may also lead to a lower number of corporate insolvency resolution proceedings (CIRPs) yielding resolution plans and bigger haircuts for lenders, which will further push down gains for the year, it added. - Moneycontrol.com
🍒 RIL rights issue subscribed 1.59 times : Reliance Industries said it has achieved successful closure of the country’s largest rights issue of Rs 53,124.20 crore. It was subscribed approximately 1.59 times, cumulating to an overall commitment of over Rs 84,000 crore. The public part of the rights issue was subscribed 1.22 times. The allotment of equity shares will happen on or about June 10. The rights shares are expected to be listed on the BSE and NSE on or around June 12 under separate ISIN. - Business Line
🍒 Private bank stocks tumble; IndusInd, Kotak, Axis Bank fall 3%; PSBs buck the trend : Shares of most banking companies, especially private sector ones, traded with losses in the intraday trade on June 4. The Nifty Bank index was 2.22 percent down at 20,475 around 13:55 hours, with 10 stocks in the red and two in the green.Nifty Private Bank index was 2.61 percent down at 11,184.90 with all stocks in the red at that time. However, the Nifty PSU Bank index was 1.79 percent up at 1,307.40 with 10 stocks in the green and 2 in the red at that time. Shares of RBL Bank and Bandhan Bank cracked up to 6 percent, while those of IndusInd Bank, Axis Bank and IDFC First Bank was down up to 4 percent. Shares of heavyweights, such as ICICI Bank and HDFC Bank were down about 2 percent.
🍒 Rupee settles 10 paise lower at 75.57 against US dollar : The rupee depreciated 10 paise to provisionally close at 75.57 against the US dollar on Thursday as strengthening US dollar and weak domestic equities weighed on investor sentiment. Forex traders said sustained foreign fund inflow and the revival of business activities supported the local unit, but concerns about US-China trade tiff dragged the local unit down.
🍒 Sensex ends 128 points lower; Nifty holds above 10K : Equity benchmark Sensex fell below 34,000 mark and ended 128 points lower on Thursday. The Nifty too ended lower by 32.45 points to 10,029.10. On the BSE, out of the 2,608 shares traded today, the number of advancing scrips was higher at 1,309, while that of decliners at 1,143.After opening at 34,072.50, the Sensex touched a high of 34,310.14, fell steadily thereafter and ended lower by 128.84 points or 0.38 per cent, at 33,980.70.Similarly, NSE Nifty fell 32.45 points or 0.32 per cent to 10,029.10.Major losers were Asian Paints, Bajaj Finance, HDFC, Kotak Bank, IndusInd Bank, Axis Bank, L&T, HDFC Bank, Ultracemco and M&M that fell up 4.50 per cent. Top gainers which provided support to markets were Tech Mahindra, Sun Pharma, Bharti Airtel, HCL Tech, Power Grid and Reliance.
🍒 Gold dips marginally to Rs 46,767 per 10 gram, silver slips : Gold prices slipped by Rs 78 to Rs 46,767 per 10 gram in the Mumbai bullion market on a stronger dollar-rupee and rally in global equity markets on optimism over an economic recovery. The rate of 10 gram 18-, 22- and 24-carat gold in Mumbai was Rs 35,134, Rs 42,839 and Rs 46,767 plus 3 percent GST. Silver prices fell Rs 365 to Rs 47,930 per kg from its closing on June 3.
🍒 Shares of Central Bank of India in Stock Market : 89% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, shares closed at Rs.15.94 against Prev Close Rs.15.97. In NSE, shares closed at Rs.15.95 against Prev close Rs.15.90..
All the Best… Have a Good day.
☕ 05.06.2020: Today's Banking / Financial News at a Glance
🍒 Bank NPAs may worsen to 11.6 pc by end of this fiscal due to coronavirus pandemic: Report : Gross non-performing assets (NPAs) of banks are likely to worsen to 11.3-11.6 per cent by the end of this financial year from 8.6 per cent as of March 2020, due to disruptions caused by the coronavirus pandemic, according to a report. Fresh gross slippages are estimated to be at 5-5.5 per cent of standard advances during 2020-21, which will increase the banks' credit provision and impact their earnings, rating agency ICRA said in a report.With an increase in stress on asset quality and profitability, state-owned banks may need Rs 45,000-82,500 crore of capital in this financial year under a weak credit growth scenario, it said. "The RBI moratorium to borrowers was extended by another three months till August 31, 2020, and we expect the asset quality stress is likely to reflect only in third and fourth quarters of 2020-21 results," the rating agency's sector head (financial sector ratings) Anil Gupta said. - economic times
🍒 SC seeks finance ministry's reply on waiver of interest on loans during moratorium period : The Supreme Court Thursday sought finance ministry's reply on waiver of interest on loans during the moratorium period after the RBI said it would not be prudent to go for a "forced waiver of interest" risking financial viability of the banks. The top court said there are two aspects under consideration in this matter - no interest payment on loans during the moratorium period and no interest to be charged on interest. A bench of Justices Ashok Bhushan, Sanjay Kishan Kaul and M R Shah said that these are challenging times and it is a serious issue as on one hand moratorium is granted and on other hand interest is charged on loans. The bench was hearing a plea, filed by Gajendra Sharma, in which he has sought a direction to declare the portion of RBI's March 27 notification "as ultra vires to the extent it charges interest on the loan amount during the moratorium period, which create hardship to the petitioner being borrower and creates hindrance and obstruction in 'right to life' guaranteed by Article 21 of the Constitution of India". - economic times
🍒 RBI asks SC to not allow interest waiver in moratorium period; says EMIs can be deferred, not waived off : The Reserve Bank of India told the Supreme Court that a forced interest waiver will make a huge dent in the stability of the financial institutions, therefore, the court should reject the plea seeking interest waiver in the loan moratorium period. RBI has estimated a loss of nearly Rs 2 lakh crore if the SC allows interest waiver in the moratorium period. In the wake of the coronavirus pandemic-led financial crisis faced by many people, the RBI had earlier announced a loan moratorium period of three months, which was further extended for three more months. While the provision allowed no penalty on non-payment of the principal amount, the interest on EMI kept on accumulating. The central bank pointed out that the petitioner had misinterpreted the moratorium as a waiver, which was actually a deferment of existing and current liabilities. The central bank argued that the interest waiver will adversely affect the business of banks and hurt their financial stability. It said that the banks must remain sound and profitable to ensure the safety of depositors and the financial stability of the country. Stating income on interest as an important source of earnings, it added that borrowing or a loan is in the nature of a commercial contract between the lender and borrowers and that the interest rate reflects the same. - Financial Express
🍒 Uday Kotak against waiver of interest during moratorium period : CII president and banker Uday Kotak on Thursday opined against any waiver of interest during the moratorium period saying there cannot be an unequal game wherein banks pay the depositors but do not earn interest on loans. In his first press conference as CII president, Kotak was responding to a question on the ongoing case in the Supreme Court on waiver of interest during the moratorium period. "...banks are intermediaries between depositors and borrowers. So, we (cannot) have a situation where borrowers get moratorium, banks have an obligation to serve depositors both on principal plus interest. Therefore, we cannot have a one-sided contract where we allow moratoriums on interest to the borrowing side," said Kotak.- economic times
🍒 PNB lowers rates on savings account deposits by 50 bps : Following industry peers, Punjab National Bank (PNB) on Wednesday announced to lower interest rate on savings account deposits by 0.50 percentage point, effective July 1. For deposits up to Rs 50 lakh, the new interest rate will be 3 per cent, down by 0.50 per cent from 3.50 per cent. Deposits of Rs 50 lakh and above will earn interest of 3.25 per cent as against 3.75 per cent currently. The rate of interest on savings fund deposit has been reduced with effect from July 1, 2020, Punjab National Bank said in a tweet. "Interest shall be paid on a daily product basis at the rate of 3 per cent per annum in accounts where the end-of-day balance is up to Rs 50 lakh and at the rate of 3.25 per cent per annum in accounts where the end-of-day balance is above Rs 50 lakh. Interest shall be credited at end of each quarter i.e. February, May, August and November," PNB said.- economic times
🍒 Indian Bank eases procedures for MSME lending, offers 3 new products : Securing finance has always been a challenge for MSMEs (micro, small and medium enterprises). Post Covid-19, things have become ever more complicated. To help MSMEs access funds easily, Chennai-headquartered Indian Bank has launched new products and, more importantly, simplified procedures in accessing them. The three new products will help them meet their requirements in terms of working capital. The schemes include Covid emergency loan, reassessment of working capital loan, and guaranteed emergency credit line. “Both manufacturing and service sectors need this emergency loan to improve their working capital. These facilities may be utilised quickly and MSMEs can restart their business. Also, we have simplified the procedure of appraisal and sanctioning powers given to field level functionaries to ensure quick disbursements,” MK Bhattacharya, Executive Director of Indian Bank, told BusinessLine. - Business Line
🍒 Will give emergency credit but first pay up earlier dues, some banks tell MSMEs : “We will give you the loan under the Guaranteed Emergency Credit Line (GECL) scheme but use the money to pay up your existing loan dues," that’s what some banks tell micro, small and medium enterprises (MSMEs) seeking to avail the credit guarantee scheme. Some banks are adding a clause to this effect to the GECL loan offer, effectively denying the cash support for MSMEs for fresh spending. “I run a small leather shoe manufacturing unit. When I approached the bank for a loan under this scheme, they have given me a letter saying the loan will be given but I have to use this amount to pay back an earlier line of credit. This means I can’t use this money for my business revival,” said an MSME owner on condition of anonymity. - moneycontrol.com
🍒 Its official! 39% of all loans in banking system now under 6-month moratorium : It is now official. The Reserve Bank of India (RBI) has said an estimated Rs 38.68 lakh crore of the total Rs 100 lakh crore worth of loan outstanding in the banking system are now under the six month moratorium as part of COVID-19 relief package. The figure has been arrived at by taking into consideration an average 65 per cent loan moratorium requests from corporate and retail borrowers from their outstanding loan book of Rs 60 lakh crore as on December 31, 2019. This Rs 60 lakh crore outstanding loan excludes the working capital loans and the loans disbursed between January to March of 2020. While most of the PSBs are yet to declare percentage of moratorium book, the two big banks recently announced a higher percentage share of loans under moratorium. Bank of Baroda has declared that roughly 65 per cent of its loan book by value term is under moratorium. Similarly, IDBI Bank, which was till recently a public sector bank before insurance giant LIC's takeover, has also declared a high moratorium book share of 65-70 per cent. - Business Today
🍒 Lockdown impact: Public sector banks need ₹45,000-82,500 crore capital in FY21 : India’s public sector banks will require ₹45,000-82,500 crore of capital in FY21 as the covid-19 pandemic is expected to increase asset quality pressures, said rating agency Icra. According to a report by Icra on Thursday, with earlier expectations of improved asset quality and profitability, the capital requirements for public sector banks (PSBs) was estimated at ₹10,000-20,000 crore for FY21 and the government had also expected PSBs to raise capital from markets. However, now with worn out capital cushions and expected increase in stress on asset quality and profitability, PSBs will require ₹45,000-82,500 crore of capital even in a scenario of low credit growth of 3-4% during FY21. “Further, the investors’ appetite towards these banks will continue to remain weak amid prevailing uncertainties" said Anil Gupta, sector head (financial sector ratings), Icra. - Live Mint
🍒 IndusInd Bank becomes India's first bank to launch an app for opening a current accounts : The IndusInd Bank today launched a mobile application based facility where customer can open current bank account in just few hours. The new facility can be used to open current accounts for all kinds of businesses including proprietorship, partnership as well as private and public limited companies, the bank said. IndusInd Bank will be the first bank in India to introduce a mobile app based service for opening a current bank account. Gone are those days when you have go to bank with your Know Your Customer (KYC) documents to open a bank account. Equipped with the bank’s "Indus Corporate" mobile app, bank officials can now capture and verify information about customers and their businesses in real-time, the private sector lender said.- Live Mint
🍒 Charging interest during loan moratorium 'detrimental', says SC bench : A Supreme Court bench, on Thursday, observed that the charging of interests by banks during the six-month moratorium period on term loans was ‘detrimental’, and sought a response from the Finance Ministry and the Reserve Bank of India. This comes a day after the RBI submitted to the apex court that a waiver of interest on loans will impact the financial viability of the country’s financial sector and that the banks could forego about Rs 2 trillion in interest income if interests are waived off for the six months duration of the moratorium. The three judge bench, comprising justices Ashok Bhushan, Sanjay Kishan Kaul, and MR Shah, set the next hearing in the matter for June 12, and asked Solicitor General Tushar Mehta to file Finance Ministry and RBI’s response by then. - Business Standard
🍒 SBI to raise up to $1.5 bn via overseas bonds this financial year : The country’s largest lender, State Bank of India, plans to raise long-term funds up to $1.5 billion through bonds from international markets in the current financial year (FY21). The executive committee of the central board will meet on June 11 to examine the status and decide on long-term fundraising plans.The lender may raise the money through a public offer and/or private placement of senior unsecured notes in the US dollar or any other convertible currency this financial year, it said. Bankers associated with international fundraising said lenders such as SBI raise funds from global markets on a regular basis for lending operations and to repay financial instruments that mature during the course of the year. Apart from market borrowings, SBI also uses bilateral arrangements and taps multilateral agencies for raising funds. - Business Standard
🍒 Business correspondents body seeks Rs 5,000 incentive for its agents for next six months : The Business Correspondents Federation of India (BCFI) has sought a Rs 5,000 incentive per agent for the next six months as an incentive to help them tide over difficulties in the lockdown. “In the last two months, there has been a surge in transactions, and a decline in range of viable transactions. Low ticket withdrawals increase the cost of servicing for BCs, on account and their average income has gone down,” noted Seema Prem, CEO, FIA Global.While some banks such as State Bank of India and Union Bank of India have been helping, the BCFI has called for the incentive for agents. Harish Raghu, CEO, Saggraha, also noted the moratorium had led to stoppage of collection activities, while disbursements were also low. - Business Line
🍒 UFBU calls for safe transportation, insurance coverage of ₹50 lakh for bankers : The United Forum of Bank Unions (Maharashtra State) has sought safe transportation for employees, branches to be run with 50 per cent staff, and insurance coverage of ₹50 lakh, among others, in the backdrop of 11 bank employees losing their lives due to Covid in the Mumbai metropolitan region. Devidas Tuljapurkar, Convenor, UFBU (Maharashtra), in a letter to the Secretary, Department of Financial Services, said the State-Level Bankers’ Committee (SLBC), Maharashtra, should be advised to arrange for safe transportation, which employees can avail within a radius of about 2 km from his/her residence to his/her work place. The demand for transportation comes as majority of bank employees working in Mumbai city branches / offices stay in the suburbs or outside and many travel from beyond Mumbai urban agglomeration areas. “The banks are not providing any conveyance facility to these employees and public transport such as local railway, metro are shut down. BEST services are very few with less frequency and State Transport Department is not allowing bank employees under the pretext that they are not covered under essential services,” said Tuljapurkar.- Business Line
🍒 Depositors urge RBI chief to revive PMC Bank, ensure withdrawal of insured amount of ₹5 lakh : Scam-hit Punjab & Maharashtra Co-operative (PMC) Bank’s beleaguered depositors have represented to Reserve Bank of India Governor Shaktikanta Das that their bank should be revived and that they should be allowed to immediately withdraw at least the insured amount of ₹5 lakh to take care of their needs amid the Covid-19 pandemic. The representation, made under the aegis of PMC Depositors’ Forum, was pursuant to a Delhi High Court order (May 28) in the Bejon Kumar Misra (consumer rights activist) vs Union of India and others case. The court observed that “upon receipt of any representation from any individual or group of depositors in this regard, the decision shall be taken by the concerned respondent authority within a period of four weeks”. Chander Purswani, President, and SP Rao, Treasurer, PMC Depositors’ Forum, in a letter to the Governor, underscored that most of the depositors, especially senior citizens, depend on the interest on their fixed deposits in the bank for meeting monthly expenses. - Business Line
🍒 MasterCard, Axis Bank and Worldline launch Soft POS : MasterCard, Axis Bank and Worldline on Thursday launched Soft POS, which can turn smartphones into merchant Point of Sale (POS) terminals. "Merchants who have traditionally accepted cash payments, now have a simpler and more secure way to manage transactions," Axis Bank said in a statement, adding that merchants can start using Soft POS almost instantly as the online registration process with the acquiring bank takes less than 30 minutes.The solution is available as a white label solution to all banks and payment aggregators in the industry, it further said. It also provides for face-to-face payments with Bharat QR and NFC payments, as well as remote payments for home deliveries via link-based payments. - Business Line
🍒 Standard Chartered Bank starts operations at IFSC GIFT City : British lender Standard Chartered Bank's local unit has started operations from the International Financial Services Centre, becoming the first global bank to commence operations from the special economic zone in Gandhinagar. Presence at the newly built IFSC GIFT City can help the lender expand its business in trade, lending, financial market transactions and other structured products, a statement said. - Economic Times
🍒 RBI to release daily payments data to facilitate research : The Reserve Bank of India on Thursday said that it will start publishing daily data transactional volumes of prominent payment systems such as RTGS, NEFT, IMPS, AEPS and UPI. Additionally, the data will also include the withdrawals made at ATMs and cash availability with business correspondents. “This initiative to disseminate payment systems activities data on a daily frequency is expected to facilitate better research and also contribute to innovations in payment systems,” the central bank said in a press release. As per the first set of data published by the banking regulators for 3rd June, 4.3 lakh transactions worth Rs.3 lakh crore was transacted through RBI’s RTGS channel. - economic times
🍒 Final instalment of Rs 500 to women Jan Dhan account holders from Friday: FinMin : Women Jan Dhan bank account holders will start getting the third and final instalment of Rs 500 from Friday in line with the announcement made by Finance Minister Nirmala Sitharaman in March. To help the poor tide over the COVID-19 crisis, the government on March 26 announced an ex-gratia payment of Rs 500 to be credited to women Jan Dhan account holders for the next three months starting from April. Instalment of Rs 500 for June has been sent to the bank accounts of PMJDY women beneficiaries under Pradhan Mantri Garib Kalyan Package. Beneficiaries are requested to follow the schedule to visit banks and CSPs and money can also be withdrawn via ATMs and BCs, the Financial Services Department under the Finance Ministry informed through a video message. - economic times
🍒 IL&FS COO N Sivaraman decides to quit : After leading the asset monetisation efforts of cash-strapped Infrastructure Leasing and Financial Services (IL&FS) for almost one-and-a-half years, N Sivaraman has decided to part ways with the group, a source said. L&T Group veteran, Sivaraman was appointed as the group's chief operating officer (COO) in November 2018. He was also heading the infrastructure investment trusts (InvIT) programme. His last day at the group will be July 31, 2020, the source said. - economic times
🍒 IRDAI unlikely to tweak 4% interest rate for discontinued Ulips : The regulator is unlikely to offer any relief to insurance companies to stop paying the minimum 4 percent guaranteed return on discontinued funds of unit-linked insurance plans (Ulips). While the life insurers had written to the regulator in May, sources told Moneycontrol that a tweak in paying the mandatory 4 percent rate of interest is not feasible. “Policyholders who may have put in all their savings in Ulips will lose out,” said an official. - Moneycontrol.com
🍒 Axis Bank, Kotak Mahindra Suddenly Cuts Credit Limits By 90%: Banks Losing Trust In Customers? : The private lenders have reduced the credit card limits of its customers between 30-90%. The customers living on credit due to salary cut or job loss are facing difficulties. According to a report in the ET, Axis Bank has trimmed the credit card limits of nearly 2,00,000 customers with effect from April 15. According to Axis Bank’s quarterly report in December 2019, the lender had a 12.6% market share while it had 10.7% share in the total credit card spending. Kotak Mahindra Bank has also reduced credit card limits of its customers.When enquired about the matter, a Kotak Mahindra Bank official told the business daily that this is a routine exercise. Additionally he said, “Analysing credit worthiness and card spend behaviour of credit card holders is our regular ongoing exercise and is not unique to the current period,” the business daily quoted Ambuj Chandna, president – consumer assets, Kotak Mahindra Bank as saying. “Based on credit card spends and repayment data, we analyse credit limits of customers, and offer to increase a customer’s credit card limit or reduce the credit limit in certain cases.” - trak.in
🍒 IRDAI warns IFFCO Tokio for wrong information : The Insurance Regulatory and Development Authority (IRDAI) has warned IFFCO Tokio General Insurance Company for furnishing wrong information and delaying filing of returns. In an order, IRDAI Chairman Subhash C Khuntia directed the insurer “to put in place necessary systems for furnishing correct data and to ensure compliance with regulatory provisions”. - Business Line
🍒 Cholamandalam Investment net profit declines 85 per cent to ₹43 cr in March quarter : Cholamandalam Investment and Finance Co Ltd (CIFCL) on Wednesday reported a 85 per cent decline in net profit to ₹43 crore in the fourth quarter ended March, due to higher provision of ₹504 crore related to the COVID-19 pandemic and the possible macroeconomic threats. The diversified financial services company had reported a net profit of ₹292 crore in the corresponding period last year. “We had made a one-time provision of ₹504 crore, which impacted our profitability. Had this provision not there, our PAT (profit after tax) would have been around ₹370 crore during the period,” its Executive Vice-President and CFO Arulselvan D said. - Business Line
🍒 Recoveries from stressed assets may slip 30-40%, says ICRA : The returns from stressed assets are set to fall 30-40 percent this fiscal due to the COVID-19 outbreak and suspension of new proceedings under the Insolvency and Bankruptcy Code (IBC). According to a report by ICRA, financial creditors may gain between Rs 60,000-70,000 crore from stressed assets in FY21 compared to Rs 1 trillion in FY20. The economic conditions may also lead to a lower number of corporate insolvency resolution proceedings (CIRPs) yielding resolution plans and bigger haircuts for lenders, which will further push down gains for the year, it added. - Moneycontrol.com
🍒 RIL rights issue subscribed 1.59 times : Reliance Industries said it has achieved successful closure of the country’s largest rights issue of Rs 53,124.20 crore. It was subscribed approximately 1.59 times, cumulating to an overall commitment of over Rs 84,000 crore. The public part of the rights issue was subscribed 1.22 times. The allotment of equity shares will happen on or about June 10. The rights shares are expected to be listed on the BSE and NSE on or around June 12 under separate ISIN. - Business Line
🍒 Private bank stocks tumble; IndusInd, Kotak, Axis Bank fall 3%; PSBs buck the trend : Shares of most banking companies, especially private sector ones, traded with losses in the intraday trade on June 4. The Nifty Bank index was 2.22 percent down at 20,475 around 13:55 hours, with 10 stocks in the red and two in the green.Nifty Private Bank index was 2.61 percent down at 11,184.90 with all stocks in the red at that time. However, the Nifty PSU Bank index was 1.79 percent up at 1,307.40 with 10 stocks in the green and 2 in the red at that time. Shares of RBL Bank and Bandhan Bank cracked up to 6 percent, while those of IndusInd Bank, Axis Bank and IDFC First Bank was down up to 4 percent. Shares of heavyweights, such as ICICI Bank and HDFC Bank were down about 2 percent.
🍒 Rupee settles 10 paise lower at 75.57 against US dollar : The rupee depreciated 10 paise to provisionally close at 75.57 against the US dollar on Thursday as strengthening US dollar and weak domestic equities weighed on investor sentiment. Forex traders said sustained foreign fund inflow and the revival of business activities supported the local unit, but concerns about US-China trade tiff dragged the local unit down.
🍒 Sensex ends 128 points lower; Nifty holds above 10K : Equity benchmark Sensex fell below 34,000 mark and ended 128 points lower on Thursday. The Nifty too ended lower by 32.45 points to 10,029.10. On the BSE, out of the 2,608 shares traded today, the number of advancing scrips was higher at 1,309, while that of decliners at 1,143.After opening at 34,072.50, the Sensex touched a high of 34,310.14, fell steadily thereafter and ended lower by 128.84 points or 0.38 per cent, at 33,980.70.Similarly, NSE Nifty fell 32.45 points or 0.32 per cent to 10,029.10.Major losers were Asian Paints, Bajaj Finance, HDFC, Kotak Bank, IndusInd Bank, Axis Bank, L&T, HDFC Bank, Ultracemco and M&M that fell up 4.50 per cent. Top gainers which provided support to markets were Tech Mahindra, Sun Pharma, Bharti Airtel, HCL Tech, Power Grid and Reliance.
🍒 Gold dips marginally to Rs 46,767 per 10 gram, silver slips : Gold prices slipped by Rs 78 to Rs 46,767 per 10 gram in the Mumbai bullion market on a stronger dollar-rupee and rally in global equity markets on optimism over an economic recovery. The rate of 10 gram 18-, 22- and 24-carat gold in Mumbai was Rs 35,134, Rs 42,839 and Rs 46,767 plus 3 percent GST. Silver prices fell Rs 365 to Rs 47,930 per kg from its closing on June 3.
🍒 Shares of Central Bank of India in Stock Market : 89% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, shares closed at Rs.15.94 against Prev Close Rs.15.97. In NSE, shares closed at Rs.15.95 against Prev close Rs.15.90..
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