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☕ 08.06.2020: Today's Banking / Financial News at a Glance
🍒 PSBs disburse Rs 8,320-cr loan to MSMEs under emergency credit line scheme : The Finance Ministry on Sunday said public sector banks have disbursed Rs 8,320 crore till June 5 under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, hit hard by the coronavirus-induced lockdown. PSBs have sanctioned loans worth Rs 17,705.64 crore under the 100 per cent ECLGS starting June 1.The scheme is the biggest fiscal component of the Rs 20-lakh crore Self-Reliant India Mission package announced by Finance Minister Nirmala Sitharaman last month."As of 5 June 2020, #PSBs have sanctioned loans worth Rs 17,705.64 crore under the 100 per cent Emergency Credit Line Guarantee Scheme, out of which Rs 8320.24 crore have been disbursed," Sitharaman said in a tweet.State Bank of India (SBI), the country's largest lender has sanctioned Rs 11,701 crore, while disbursement was nearly half at Rs 6,084.71 crore at the end of June 5.It is followed by Punjab National Bank (PNB) with a sanction of Rs 1,295.59, but disbursement was less than one-fifth at Rs 242.92 crore. On May 21, the Cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector. - economic times
🍒 Indian Overseas Bank cuts MCLR by up to 30 basis points : The sector lender Indian Overseas Bank (IOB) has cut marginal cost of funds based lending rate (MCLR) by up to 0.30 per cent across all tenors, which will bring down cost for consumer loans. The benchmark one-year MCLR, against which most of the consumer and retail loans are priced, has been cut by 0.20 per cent from June 10, IOB said in a release on Sunday.IOB reduced its interest rate on loans linked to MCLR by 30 basis points in overnight tenor and by 20 bps in one month to one year tenors.Hence, loans linked to MCLR will become cheaper, said the Chennai-based state owned bank.The bank has also reduced its interest rate on loans linked to Repo Linked Lending rate (RLLR) from 7.25 per cent to 6.85 per cent per annum, IOB said. - Business Line
🍒 HDFC Bank nets 2.5 lakh new customers through instant account opening in lockdown j: Despite the lockdown, the largest private sector lender HDFC Bank has been able to add 2.5 lakh new customers in the last 40 days through an online facility which helps open savings accounts instantly, sources said. The account is created using a "limited know your customer (KYC)" requirement provision, and the customer has a year's time after the instant account opening to update full details, the sources told. The 'Instant Account App' was launched in late April, when there was strict lockdown across the country. Banks were classified as an "essential service" and allowed to be open, but the lockdown meant fewer customer footfalls, making the online alternative helpful to open new deposit accounts."All the 2.5 lakh accounts which have been opened are new bank customers," a source said, adding that the minimum average monthly balance requirement is Rs 10,000 for metro cities, Rs 5,000 for semi urban centres and Rs 2,500 for rural centres.Most of the accounts which have been opened are from containment zones and red zones in metros and urban areas, the sources said, adding that semi-urban and rural areas have also seen activity.The account is opened using basic KYC details like Aadhaar card, a valid PAN (permanent account number) and one-time password via SMS, and gets activated instantly. A bulk of the transactions being witnessed with such accounts are online shopping and cardless cash withdrawals at automated teller machines (ATMs) which can be started using the app, they said.- economic times
🍒 Indian lenders need capital to face virus, says Uday Kotak : India should prepare to inject capital into state banks and private-sector lenders need to strengthen their balance sheets, to help bolster the economy against the coronavirus pandemic, according to a senior banker. I do believe the government will have to be ready to support public sector banks with capital,” said Uday Kotak, the billionaire founder of Kotak Mahindra Bank Ltd. A legacy of bad loans, a shadow banking implosion and a historic bank bailout in March have left Indian lenders weakened coming into the lockdown, which has stalled the economy and led to a surge in unemployment. According to a Credit Suisse Group AG report last month, the lenders need to raise $20 billion of capital, of which state banks will require $13 billion, to strengthen buffers against potential loan defaults. “My advice to both private-sector banks and non-bank financial companies is: make yourself stronger, fortress your balance sheets,” Kotak said in an interview. “And if that means raising capital, go ahead and do it.” - economic times
🍒 No corporate loan sanctions, renewals without LEI code: IRDAI : The Insurance Regulatory and Development Authority of India (IRDAI) has asked insurers not to grant loan renewals or enhancements if the borrowers do not get the LEI code from the Legal Entity Identifier India Ltd. In a circular, IRDAI has asked insurers and others regulated by it to get the Legal Entity Identifier (LEI) code on or before July 31, 2020.The IRDAI also asked the insurers to advice their corporate borrowers having total exposure of Rs 50 crore and above to obtain LEI code on or before June 30, 2020 and provide the same. The Indian insurance regulator further said borrowers who do not obtain LEI code should not be granted loan renewals or enhancements and no new loans be sanctioned without the LEI code.- economic times
🍒 Lenders red flag new home loans, put fresh disbursements on hold : As the home loan market in India, comprising close to 50% of the retail loan segment, goes through a churn over the growing economic uncertainty, lenders are hitting the brakes on fresh disbursements of sanctioned facilities. According to industry watchers, a growing number of banks and NBFCs are reappraising sanctioned loans, carefully vetting the financial condition of the borrower since the beginning of the lockdown in March this year. Jorty M Chacko, executive director, IDBI Bank said that the bank is evaluating home loan disbursements to understand the repayment capacity of the borrowers under the changed scenario. “You see the risks associated with retail lending have undergone considerable shift owing to covid-19 and we have tightened the norms to take care of such risks. All home loan cases logged in prior to covid-19 but not sanctioned are re-logged in as per the new norms. We have restricted lending to some segments and suspended lending to some sectors," said Chacko. According to a Mumbai-based public sector banker, the rechecking of documents in the wake of coronavirus is more prevalent for loans that have got in-principle sanctions through digital channels. These loans, the banker said, are getting stricter relooks before being disbursed. “The point here is that if your take-home salary has been slashed, then our assessment of your home loan limit will also change. It will be difficult for the customer to repay large loans in that situation and we want to avoid getting into another bad debt trap," said the public sector banker. - Live Mint
🍒 Expect things to return to normal in next 90 days: Arvind Kapil, HDFC Bank : Private sector lender HDFC bank is expecting a return to normalcy over the next 90 days as the lockdown gets lifted across the country. Speaking exclusively to Mint, Arvind Kapil, retail banking head at HDFC Bank, said that demand for loans remains intact as is evident from the way auto and two-wheeler loans have seen over 50% run rate since lockdown 1.0 was lifted in May. “As the lockdown opens up, everything will normalise. I expect to normalise over the first 30-90 days. The only anxiety is that of businesses opening up. However we see a robust economy coming back pretty fast. In two-wheeler segment we are seeing 85% run rate and we started barely one month ago. Auto is already at 50% run rate. They are talking about 75% run-rate in the second month. People are talking about greenshoots. Therefore India’s demand is for real," Kapil said. Out of a total loan book of ₹9.93 lakh crore, HDFC Bank currently has a retail loan book worth ₹4.94 lakh crore. Auto loans constitute 16% and two-wheelers constitute 1.9% of the retail loan book portfolio. HDFC bank is currently beefing up its digital presence to reach out to both new and old customers. This is evident from its recent tie-up with Maruti Suzuki to disburse auto loans digitally. - Live Mint
🍒 Nothing should be done to hurt interest of depositors: Uday Kotak : The banking laws are aimed at protecting depositors and nothing should be done to jeopardize their interest, newly elected CII president Uday Kotak has said, as the Supreme Court looks into the matter of interest waiver during moratorium period. Terming banks as converters, the seasoned banker said, depositors' money is lent to borrowers and money earned from borrowers are paid as interest to savers. "The Banking Regulation Act is an Act made primarily for protection of depositors' money. Therefore we should not be doing anything, which hurts the depositors' money," he told PTI in an interview. "I am glad that the RBI has taken a position and I support it fully," Kotak said, adding the lender, which has lent money borrowed from depositors, would face problems if the interest was not paid during the moratorium period. Meanwhile, the apex court asked the Solicitor General Tushar Mehta to file the response from the government side on the issue by June 12. With regard to stress in the NBFC sector, Kotak said there are three issues including asset side problems. "Many NBFCs have very large exposure against land and real estate, and some have very large exposure against unsecured consumers. So, there is a concentration issue which they are facing on the asset side," he said. - Live Mint
🍒 Getting an online personal loan may not be easy : Getting a personal loan online to tide over the current financial crisis could prove to be a tad difficult as many fintech digital lenders are turning extra cautious, especially towards new borrowers. Firms point out that while demand for personal loans has gone down in the current lockdown, the extended moratorium on term loans till August 31 is also making them more prudent in their policies. According to Gaurav Chopra, Founder and CEO of IndiaLends and President, Digital Lending Association of India, there are issues on both demand and supply sides since the Covid-19 pandemic broke out. “Lenders are concerned about the ability of people to repay loans. A major part of lending used to happen through physical means for banks but that has dried up. The six-month moratorium has also put a question mark on how far borrowers will be able to repay. Also, many NBFCs have not been granted moratorium by their banks,” he said, adding that demand is also muted as consumers do not require personal loans for holidays and weddings. - Business Line
🍒 Top-10 firms add Rs 2.46 lakh crore in market cap; RIL biggest gainer : The 10 most valued Indian companies together added a whopping Rs 2.46 lakh crore in market valuation last week, led by heavyweight Reliance Industries. During the last week, the BSE benchmark Sensex surged 1,863.14 points or 5.74 per cent. The market capitalisation of Reliance Industries Ltd (RIL), the country's most valued firm, jumped by Rs 73,156.71 crore to Rs 10,02,006.10 crore. HDFC Bank's market valuation zoomed Rs 46,036.95 crore to Rs 5,67,697.09 crore and that of Kotak Mahindra Bank advanced Rs 30,888.39 crore to Rs 2,65,080.63 crore. The valuation of Tata Consultancy Services (TCS) surged Rs 28,724.5 crore to Rs 7,68,525.91 crore and that of HDFC climbed Rs 18,524.25 crore to Rs 3,05,931.57 crore. In the ranking of top-10 firms, RIL retained its number one slot, followed by TCS, HDFC Bank, HUL, Airtel, HDFC, Infosys, Kotak Mahindra Bank, ITC and ICICI Bank..
All the Best… Have a Good day..
☕ 08.06.2020: Today's Banking / Financial News at a Glance
🍒 PSBs disburse Rs 8,320-cr loan to MSMEs under emergency credit line scheme : The Finance Ministry on Sunday said public sector banks have disbursed Rs 8,320 crore till June 5 under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, hit hard by the coronavirus-induced lockdown. PSBs have sanctioned loans worth Rs 17,705.64 crore under the 100 per cent ECLGS starting June 1.The scheme is the biggest fiscal component of the Rs 20-lakh crore Self-Reliant India Mission package announced by Finance Minister Nirmala Sitharaman last month."As of 5 June 2020, #PSBs have sanctioned loans worth Rs 17,705.64 crore under the 100 per cent Emergency Credit Line Guarantee Scheme, out of which Rs 8320.24 crore have been disbursed," Sitharaman said in a tweet.State Bank of India (SBI), the country's largest lender has sanctioned Rs 11,701 crore, while disbursement was nearly half at Rs 6,084.71 crore at the end of June 5.It is followed by Punjab National Bank (PNB) with a sanction of Rs 1,295.59, but disbursement was less than one-fifth at Rs 242.92 crore. On May 21, the Cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector. - economic times
🍒 Indian Overseas Bank cuts MCLR by up to 30 basis points : The sector lender Indian Overseas Bank (IOB) has cut marginal cost of funds based lending rate (MCLR) by up to 0.30 per cent across all tenors, which will bring down cost for consumer loans. The benchmark one-year MCLR, against which most of the consumer and retail loans are priced, has been cut by 0.20 per cent from June 10, IOB said in a release on Sunday.IOB reduced its interest rate on loans linked to MCLR by 30 basis points in overnight tenor and by 20 bps in one month to one year tenors.Hence, loans linked to MCLR will become cheaper, said the Chennai-based state owned bank.The bank has also reduced its interest rate on loans linked to Repo Linked Lending rate (RLLR) from 7.25 per cent to 6.85 per cent per annum, IOB said. - Business Line
🍒 HDFC Bank nets 2.5 lakh new customers through instant account opening in lockdown j: Despite the lockdown, the largest private sector lender HDFC Bank has been able to add 2.5 lakh new customers in the last 40 days through an online facility which helps open savings accounts instantly, sources said. The account is created using a "limited know your customer (KYC)" requirement provision, and the customer has a year's time after the instant account opening to update full details, the sources told. The 'Instant Account App' was launched in late April, when there was strict lockdown across the country. Banks were classified as an "essential service" and allowed to be open, but the lockdown meant fewer customer footfalls, making the online alternative helpful to open new deposit accounts."All the 2.5 lakh accounts which have been opened are new bank customers," a source said, adding that the minimum average monthly balance requirement is Rs 10,000 for metro cities, Rs 5,000 for semi urban centres and Rs 2,500 for rural centres.Most of the accounts which have been opened are from containment zones and red zones in metros and urban areas, the sources said, adding that semi-urban and rural areas have also seen activity.The account is opened using basic KYC details like Aadhaar card, a valid PAN (permanent account number) and one-time password via SMS, and gets activated instantly. A bulk of the transactions being witnessed with such accounts are online shopping and cardless cash withdrawals at automated teller machines (ATMs) which can be started using the app, they said.- economic times
🍒 Indian lenders need capital to face virus, says Uday Kotak : India should prepare to inject capital into state banks and private-sector lenders need to strengthen their balance sheets, to help bolster the economy against the coronavirus pandemic, according to a senior banker. I do believe the government will have to be ready to support public sector banks with capital,” said Uday Kotak, the billionaire founder of Kotak Mahindra Bank Ltd. A legacy of bad loans, a shadow banking implosion and a historic bank bailout in March have left Indian lenders weakened coming into the lockdown, which has stalled the economy and led to a surge in unemployment. According to a Credit Suisse Group AG report last month, the lenders need to raise $20 billion of capital, of which state banks will require $13 billion, to strengthen buffers against potential loan defaults. “My advice to both private-sector banks and non-bank financial companies is: make yourself stronger, fortress your balance sheets,” Kotak said in an interview. “And if that means raising capital, go ahead and do it.” - economic times
🍒 No corporate loan sanctions, renewals without LEI code: IRDAI : The Insurance Regulatory and Development Authority of India (IRDAI) has asked insurers not to grant loan renewals or enhancements if the borrowers do not get the LEI code from the Legal Entity Identifier India Ltd. In a circular, IRDAI has asked insurers and others regulated by it to get the Legal Entity Identifier (LEI) code on or before July 31, 2020.The IRDAI also asked the insurers to advice their corporate borrowers having total exposure of Rs 50 crore and above to obtain LEI code on or before June 30, 2020 and provide the same. The Indian insurance regulator further said borrowers who do not obtain LEI code should not be granted loan renewals or enhancements and no new loans be sanctioned without the LEI code.- economic times
🍒 Lenders red flag new home loans, put fresh disbursements on hold : As the home loan market in India, comprising close to 50% of the retail loan segment, goes through a churn over the growing economic uncertainty, lenders are hitting the brakes on fresh disbursements of sanctioned facilities. According to industry watchers, a growing number of banks and NBFCs are reappraising sanctioned loans, carefully vetting the financial condition of the borrower since the beginning of the lockdown in March this year. Jorty M Chacko, executive director, IDBI Bank said that the bank is evaluating home loan disbursements to understand the repayment capacity of the borrowers under the changed scenario. “You see the risks associated with retail lending have undergone considerable shift owing to covid-19 and we have tightened the norms to take care of such risks. All home loan cases logged in prior to covid-19 but not sanctioned are re-logged in as per the new norms. We have restricted lending to some segments and suspended lending to some sectors," said Chacko. According to a Mumbai-based public sector banker, the rechecking of documents in the wake of coronavirus is more prevalent for loans that have got in-principle sanctions through digital channels. These loans, the banker said, are getting stricter relooks before being disbursed. “The point here is that if your take-home salary has been slashed, then our assessment of your home loan limit will also change. It will be difficult for the customer to repay large loans in that situation and we want to avoid getting into another bad debt trap," said the public sector banker. - Live Mint
🍒 Expect things to return to normal in next 90 days: Arvind Kapil, HDFC Bank : Private sector lender HDFC bank is expecting a return to normalcy over the next 90 days as the lockdown gets lifted across the country. Speaking exclusively to Mint, Arvind Kapil, retail banking head at HDFC Bank, said that demand for loans remains intact as is evident from the way auto and two-wheeler loans have seen over 50% run rate since lockdown 1.0 was lifted in May. “As the lockdown opens up, everything will normalise. I expect to normalise over the first 30-90 days. The only anxiety is that of businesses opening up. However we see a robust economy coming back pretty fast. In two-wheeler segment we are seeing 85% run rate and we started barely one month ago. Auto is already at 50% run rate. They are talking about 75% run-rate in the second month. People are talking about greenshoots. Therefore India’s demand is for real," Kapil said. Out of a total loan book of ₹9.93 lakh crore, HDFC Bank currently has a retail loan book worth ₹4.94 lakh crore. Auto loans constitute 16% and two-wheelers constitute 1.9% of the retail loan book portfolio. HDFC bank is currently beefing up its digital presence to reach out to both new and old customers. This is evident from its recent tie-up with Maruti Suzuki to disburse auto loans digitally. - Live Mint
🍒 Nothing should be done to hurt interest of depositors: Uday Kotak : The banking laws are aimed at protecting depositors and nothing should be done to jeopardize their interest, newly elected CII president Uday Kotak has said, as the Supreme Court looks into the matter of interest waiver during moratorium period. Terming banks as converters, the seasoned banker said, depositors' money is lent to borrowers and money earned from borrowers are paid as interest to savers. "The Banking Regulation Act is an Act made primarily for protection of depositors' money. Therefore we should not be doing anything, which hurts the depositors' money," he told PTI in an interview. "I am glad that the RBI has taken a position and I support it fully," Kotak said, adding the lender, which has lent money borrowed from depositors, would face problems if the interest was not paid during the moratorium period. Meanwhile, the apex court asked the Solicitor General Tushar Mehta to file the response from the government side on the issue by June 12. With regard to stress in the NBFC sector, Kotak said there are three issues including asset side problems. "Many NBFCs have very large exposure against land and real estate, and some have very large exposure against unsecured consumers. So, there is a concentration issue which they are facing on the asset side," he said. - Live Mint
🍒 Getting an online personal loan may not be easy : Getting a personal loan online to tide over the current financial crisis could prove to be a tad difficult as many fintech digital lenders are turning extra cautious, especially towards new borrowers. Firms point out that while demand for personal loans has gone down in the current lockdown, the extended moratorium on term loans till August 31 is also making them more prudent in their policies. According to Gaurav Chopra, Founder and CEO of IndiaLends and President, Digital Lending Association of India, there are issues on both demand and supply sides since the Covid-19 pandemic broke out. “Lenders are concerned about the ability of people to repay loans. A major part of lending used to happen through physical means for banks but that has dried up. The six-month moratorium has also put a question mark on how far borrowers will be able to repay. Also, many NBFCs have not been granted moratorium by their banks,” he said, adding that demand is also muted as consumers do not require personal loans for holidays and weddings. - Business Line
🍒 Top-10 firms add Rs 2.46 lakh crore in market cap; RIL biggest gainer : The 10 most valued Indian companies together added a whopping Rs 2.46 lakh crore in market valuation last week, led by heavyweight Reliance Industries. During the last week, the BSE benchmark Sensex surged 1,863.14 points or 5.74 per cent. The market capitalisation of Reliance Industries Ltd (RIL), the country's most valued firm, jumped by Rs 73,156.71 crore to Rs 10,02,006.10 crore. HDFC Bank's market valuation zoomed Rs 46,036.95 crore to Rs 5,67,697.09 crore and that of Kotak Mahindra Bank advanced Rs 30,888.39 crore to Rs 2,65,080.63 crore. The valuation of Tata Consultancy Services (TCS) surged Rs 28,724.5 crore to Rs 7,68,525.91 crore and that of HDFC climbed Rs 18,524.25 crore to Rs 3,05,931.57 crore. In the ranking of top-10 firms, RIL retained its number one slot, followed by TCS, HDFC Bank, HUL, Airtel, HDFC, Infosys, Kotak Mahindra Bank, ITC and ICICI Bank..
All the Best… Have a Good day..
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