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☕ 18.07.2020: Today's Banking / Financial News at a Glance
🍒 IBA working on ease of banking on lending side: CEO Sunil Mehta : The Indian Banks' Association (IBA) is working on bringing ease of banking on the lending side and is also focussing on swift decision making amid the COVID-19 crisis, its CEO Sunil Mehta said on Friday. Member banks are working on digitisation of loan products so that the human intervention is minimised in the process of loan, he said."Ease of banking is one of the key agenda of IBA and bankers are thinking through this. Bankers have to think about swifter delivery. Banks are converting this pandemic in opportunity for digitisation of their loan products...6 months from now you will find more digital lending products and help in ease of banking," he said.Citing 'psbloansin59minutes' portal, he said, this kind of algorithm based decision making platform can be extended towards the entire loan life cycle with the objective of reducing physical interface.He further said ease of transaction has already taken place as one can do it with a click of button. "Banking has transformed during the last 10 years and it is going to transform further and these improvements are really needed. Bankers are working on it," he said at a webinar organised by Assocham. - Live Mint
🍒 PSBs lend Rs 19,668 cr to 71 MSME hubs under credit guarantee scheme : The Finance Ministry on Friday said public sector banks have sanctioned Rs 19,668.87 crore to 71 MSME hubs across the country under the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS). Disbursement in these clusters stood at Rs 12,871.50 crore as of July 15 to entities belonging to micro, small and medium enterprise (MSME) sector, hit hard by the Covid-19 crisis.The scheme is the biggest fiscal component of the Rs 20-trillion Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman last month."As of July 15, #PSBs have sanctioned loans worth Rs 19,668.87 crore for 71 #MSME hubs in 27 States/UTs under the 100 per cent Emergency Credit Line Guarantee Scheme, of which Rs 12,871.50 crore has already been disbursed," Sitharaman said in a tweet. Ahemdabad cluster has the highest sanction of Rs 1,983 crore, followed by Surat Rs 1,715 crore as on July 15. "The July 15 update of the 100 per cent ECLGS loans to #MSME hubs marks a substantial increase over the July 8 update in terms of the amounts sanctioned and disbursed, and the number of accounts benefiting from the Scheme," she said.- Business Standard
🍒 State banks sanction Rs 19,668 crore loans to 71 MSME hubs under credit guarantee scheme : The Finance Ministry on Friday said public sector banks have sanctioned Rs 19,668.87 crore to 71 MSME hubs across the country under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS). Disbursement in these clusters stood at Rs 12,871.50 crore as of July 15 to entities belonging to micro, small and medium enterprise (MSME) sector, hit hard by the COVID-19 crisis. The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman last month."As of July 15, #PSBs have sanctioned loans worth Rs 19,668.87 crore for 71 #MSME hubs in 27 States/UTs under the 100 per cent Emergency Credit Line Guarantee Scheme, of which Rs 12,871.50 crore has already been disbursed," Sitharaman said in a tweet.Ahmedabad cluster has the highest sanction of Rs 1,983 crore, followed by Surat Rs 1,715 crore as on July 15."The July 15 update of the 100 per cent ECLGS loans to #MSME hubs marks a substantial increase over the July 8 update in terms of the amounts sanctioned and disbursed, and the number of accounts benefiting from the Scheme," she said. - economic times
🍒 Bank of Baroda raises Rs 764 crore by issuing Basel III compliant bond : Bank of Baroda on Friday said it has raised Rs 764 crore by issuing Basel III compliant bonds on private placement basis. The bank has issued and allotted unsecured rated listed subordinated non-convertible fully paid-up Basel III additional tier 1 perpetual bonds, it said in a regulatory filing. The bond carries coupon rate of 8.25 per cent. Perpetual bonds carry no maturity date and hence may be treated as equity, not as debt. The public sector bank said the issue of the bond opened on July 15 and closed on the same day, while the allotment was done to a total of 18 allottees on July 17, 2020. To comply with Basel-III Capital Regulations, banks need to improve and strengthen their capital planning processes. - Financial Express
🍒 RBI draft governance code undermines bank chief executive officers: IBA : The Indian Banks’ Association (IBA) has told the Reserve Bank of India (RBI) that its draft code on governance will dilute the position of the corner-room occupant under Section 10B of the Banking Regulation (BR) Act, 1949. The BR Act states the incumbent will be entrusted with the management of the whole bank. The stage is set for prolonged talks between the banking lobby group and the central bank as the draft is categorical that chief executive officers (CEOs) are not to have a seat on key committees of the board — remuneration and nomination, audit committee, and risk management. Key officials are to report to board-level committees, not to CEOs.A major area of anxiety is that capital-raising after the pandemic may be affected. The draft limits the ability of the board to induct nominee directors who among themselves are entitled to exercise more than 20 per cent of the total voting rights in a bank. A few large institutional investors are now in talks with their legal advisors on the implications of the draft governance code. - Business Standard
🍒 Lockdown impact: Support needed to borrowers until cash flows improve, says bankers : Bankers on Friday said that lockdown halted economic activities in the country for over two months and now the borrowers need support till cash flows return to normalcy. Speaking at a webinar organised by BCCI, State Bank of India (SBI) Deputy Managing Director Arijit Basu said that economic activity had stopped in the first quarter for which the borrowers are facing problems of cash flows. Repayment of loans is done from cash flows. This problem might creep into the second quarter as well. So there is need for forbearance and support," Basu said.Despite the RBI announcing regulatory forbearance measures like moratorium on repayment of loans, the borrowers are acting cautiously due to the cost involved.However, more such support might also lead to an increase in the NPAs in the system, Basu said adding that sectors like tourism, airlines and hospitality will certainly take time to revive.MD&CEO of Bandhan Bank Chandrasekhar Ghosh said that the banking system has seen two shocks in recent times -- demonetisation in 2016 and COVID-19 in 2020.. - economic times
🍒 UCO Bank to focus on agri, MSME lending : Public sector lender UCO Bank has redesigned its strategies to align with the government’s ‘Aatmanirbhar Bharat’ initiative, with enhanced focus on lending to retail, agri and MSME sectors amid Covid-19 crisis, according to its annual report. In its 2019-20 annual report, the bank said it is expecting the various technological initiatives for customer convenience to yield “good results” in coming months.Underlining the fact that the Covid-19 outbreak and the effect of lockdown from late March to June caused severe adverse impact on all sectors of the Indian economy, including banking, UCO Bank said “it has redesigned its strategies” to implement Aatmanirbhar Bharat package announced by the central government, to fall in line with the current situation.The report said the thrust area of the bank is to improve lending to retail, agriculture and micro, small and medium enterprises (MSMEs). In these tough times, the bank will extend emergency credit lines, on merits, to the borrowers who were affected by the Covid 19 economic crisis, it added. “Bank has taken up several technological initiatives like migrating to Finacle 10, improving software of mobile, internet and phone banking. These initiatives in customer convenience will give good results in coming months,” UCO Bank said in its annual report. - Business Line
🍒 Bank of Maharashtra launches OD facility against fixed deposits : Bank of Maharashtra (BoM) has launched an overdraft facility (OD) against fixed deposits (FDs) for its individual customers holding a savings bank account. Under this facility, up to 90 per cent of the FD value can be availed as OD. The interest rate on this facility will be 2 percentage points over and above the FD rate.BoM, in a statement, said it has launched the OD against FD facility to support customers amid the pandemic.Customers can avail this facility without having to liquidate the FD Receipt, it added. The public sector bank underscored that customers will continue to earn applicable rates of interest on their FDs. Customers can make the payment for the OD facility in lump sum. Hence, they will not be burdened with Equated Monthly Instalment payments.The bank has also decided not to charge any processing fee. Additional documentation is not required to avail this facility. “The OD facility can be availed from the comfort of home in three simple steps using Bank of Maharashtra’s Mahamobile App,” the bank said. - Business Line
🍒 SBI closely watching MSME loan accounts, says MD Khara : State Bank of India (SBI) is closely monitoring micro, small and medium enterprise (MSME) loan accounts which opted for repayment moratorium, according to Dinesh Kumar Khara, Managing Director. This close monitoring is aimed at assessing the possibility of these accounts slipping once the six-month moratorium ends on August 31, 2020. As MSMEs are facing cash-flow issues, banks could also consider restructuring their accounts in due course based on the Reserve Bank of India’s (RBI) evaluation of the system-wide situation, said Khara at a seminar organised by industry body ASSOCHAM. To mitigate the burden of debt servicing brought about by disruptions on account of the fall-out of the Covid-19 pandemic, the RBI has allowed a six-month moratorium, beginning March 1, 2020, on term loans, easing of working capital financing, and deferment of interest on working capital facilities. Per its FY20 annual report, SBI extended moratorium/deferment in the case of borrowers with an aggregate exposure of ₹5,63,896.15 crore. As at March-end 2020, SBI’s SME portfolio accounted for about 13 per cent of its domestic advances of ₹20,65,484 crore.Khara observed that in the case of personal (segment) loans there was not much of a challenge vis-a-vis the moratorium. The SBI MD said while huge liquidity is available with the banking system, credit off-take is very limited. - Business Line
🍒 Rural India, large corporates can help turbo charge economy: SBI Managing Director : State Bank of India (SBI), the country’s largest commercial bank, sees rural India and large corporates as growth drivers that could be leveraged to turbo charge the economy, said a top official. “Rural economy is most promising area as of now. They don’t have high density of population and Covid impact on rural population is minimum,” said Dinesh Khara, Managing Director, SBI, at an Assocham webinar on the Indian economy on Friday. Khara admitted that a major part of the economic activity was being generated from urban India and this was worst affected in April and May. However, things started improving in June in terms of demand, especially after the economy was opened up for activities such as e-commerce.- Business Line
🍒 Federal Bank gets Reserve Bank of India's nod to reappoint Shyam Srinivasan as MD, CEO : Federal Bank on Friday said it has received the Reserve Bank of India's approval for the reappointment of Shyam Srinivasan as Managing Director and Chief Executive Officer till September 22, 2021. Srinivasan took charge as MD and CEO of the bank on September 23, 2010. In a regulatory filing, Federal Bank informed stock exchanges that it received RBI's nod on "July 16, 2020, for the reappointment of Shyam Srinivasan as the MD and CEO of the bank, with effect from September 23, 2020, (the completion of the present term of office) till September 22, 2021 along with remuneration as proposed by the bank". - economic times
🍒 RBI sees robust investor interest in G-Sec auction to raise ₹30,000 crore : The auction of four Government Securities (G-Secs) on Friday to raise ₹30,000 crore saw robust investor interest, with the 5.09 per cent G-Sec maturing in 2022 receiving the highest quantum of competitive bids of about 5.8 times the notified amount of ₹3,000 crore. The weighted average price (WAP) and weighted average yield (WAY) at the auction of the two-year G-Sec was at ₹101.88 and 3.9516 per cent, respectively, as per the results of the auction conducted by the Reserve Bank of India. The government exercised the greenshoe option of ₹2,000 crore, implying that it raised ₹5,000 crore through the auction of this G-Sec. - Business Line
🍒 YES Bank FPO sails through with 95% subscription : YES Bank’s ₹15,000 crore follow-on public offer managed to sail through on the third day with extended timing for bidding by retail investors and employees. Data available with exchanges showed it was subscribed 0.95 times with the qualified institutional buyer portion oversubscribed.On its final day, the QIB portion was subscribed 1.90 times, non-institutional investor portion was subscribed 0.63 times, retail portion was subscribed 0.47 times and employee portion was subscribed 0.33 times.“The issue has achieved its minimum required subscription of 90 per cent of its total size to sail through and saw strong demand from domestic and international institutions,” said a statement from the bank. - Business Line
🍒 ICICI Lombard General Insurance Q1 net profit up 28% : Private sector ICICI Lombard General Insurance posted a robust 28.5 per cent growth in net profit in the first quarter of the fiscal despite sales of life insurance products being impacted across the industry due to the national lockdown. For the quarter ended June 30, 2020, it registered a net profit of ₹398.1 crore against ₹309.81 crore a year ago.The net premium earned was also higher by 3.5 per cent at ₹2,323.84 crore in the April to June quarter versus ₹2,244.89 crore a year ago. However, gross written premium was down 4.67 per cent in the first quarter of the fiscal at ₹3,394.21 crore when compared to ₹3,560.66 crore in the same period a year ago. - Business Line
🍒 Aditya Birla Capital records two-fold rise in online interface amid pandemic : Aditya Birla Capital Limited recorded over four million customer interactions on digital service platforms amid the pandemic, witnessing an almost 2X jump when compared to the same period last year. These interactions were recorded on the WhatsApp, Chatbots, Websites and Apps in the past three months during the Covid-19 lockdown. “Digital enablement to create a superior customer experience throughout the customer journey has been a key part of our agenda,” said Ajay Srinivasan, Chief Executive, Aditya Birla Capital. “This enabled us to proactively transform our customer journeys to being 100 per cent digital during the period of lockdown.”- economic times
🍒 NPS adds 1.03 lakh individual subscribers from private sector in Q1 : The National Pension System (NPS) has added 1.03 lakh individual subscribers from the private sector during the April-June 2020 period. As many as 206 corporates were enrolled during the first quarter, resulting in a total of 10.13 lakh corporate subscribers in the age group of 18 to 65 years. Among the 1,02,975 individual subscribers registered, 43,000 have routed their subscription through their employer/corporate, while the rest have voluntarily enrolled in the scheme, an official release said.- Business Line
🍒 I-T refunds worth Rs 71,229 crore issued to 21.24 lakh taxpayers during April 8-July 11 : The Central Board of Direct Taxes (CBDT) has issued refunds worth Rs 71,229 crore in more than 21.24 lakh cases by July 11, 2020 to help taxpayers with liquidity in Covid-19 pandemic days. The refunds have been issued since April 8, 2020 when the government took the decision to issue pending income tax refunds at the earliest.Income tax refunds amounting to Rs 24,603 crore have been issued in 19.79 lakh cases to individual taxpayers and corporate tax refunds amounting to Rs 46,626 crore in 1.45 lakh cases have been issued. “All the refund related cleaning up of the tax demands are being taken up on priority and would be completed optimistically by August 31, 2020,” CBDT said in a statement Friday.- economic times
🍒 RBI directs HDFC Bank to return ₹210 crore to Mashreq Bank in Altico Capital case : The Reserve Bank of India (RBI) has asked HDFC Bank to return ₹210 crore to Dubai-based Mashreq Bank, which was debited from non-bank lender Altico Capital’s account last year to net off its loans, said two people aware of the development. In September 2019, the Indian private sector lender had debited a part of the money raised by Altico through an external commercial borrowing (ECB) from Mashreq Bank. These ECB funds were parked by Altico in HDFC Bank. - Live Mint
🍒 Indian banks boost holdings of corporate notes to record high : Indian banks boosted their holdings of rupee notes from companies to an all-time high recently, in a sign that policy measures aimed at boosting funding to companies during the pandemic are working. Total holdings of corporate bonds and commercial paper held by local banks surged to a record of almost 7 trillion rupees ($93 billion) in late May, data from the Reserve Bank of India this week show. The central bank extended a $50 billion emergency credit line to lenders in March to spur them to boost financing to companies squeezed by the pandemic and an economic contraction caused by steps to contain it.- Live Mint
🍒 Yes Bank fraud: Case against Rana Kapoor sent to lower court for trial : The special CBI court here on Friday sent the Yes Bank fraud case to a Metropolitan Magistrate, as the CBI has not obtained sanction to prosecute main accused Rana Kapoor under the Prevention of Corruption (PC) Act. Last month the Central Bureau of Investigation filed a charge sheet against Yes Bank’s co-founder Kapoor under the Prevention of Corruption Act and Indian Penal Code. But the agency has not yet initiated the process to obtain the sanction needed to prosecute under the PC Act, the court was informed. Upon the judge’s query, the CBI said that investigation against the accused was still going on and it needed some time to deal with the issue of sanction. It also argued that there was no need for sanction for prosecution under IPC sections 420 (cheating), 409 (criminal breach of trust by public person). - Financial Express
🍒 Bad loan write-offs by state-run banks accelerated in past 6 years to hit nearly Rs 5.5 lakh crore, show data : The penchant of Indian banks to write off a pile of bad debt due to an alacrity to lower stressed assets on their books has accelerated in recent years, according to new data reviewed by Moneycontrol. Public sector banks wrote off bad loans worth Rs 5,48,734 crore in the six years to 2019 — six times more than what they did in the six years prior to that, according to data compiled by All India Bank Employee’s Association (AIBEA). Between 2008 and 2013, these banks wrote off Rs 86,528 crore, the data showed. The write-offs illustrate the recurring — and unbridled — problem of the mountain of bad loans, or non-performing assets (NPAS), that banks are saddled with as borrowers struggle to pay off debt in a slowing economy. “We have collected these figures from the official documents of all member banks and from the Reserve Bank of India (RBI). The outcome is shocking. Banks have been writing off huge amounts, mostly corporate loans,” said CH Venkatachalam, general secretary of AIBEA. “Ultimately, the burden to compensate for these losses falls on taxpayers and also on customers by way of high service charges and reduced return on deposits,” he said. - Moneycontrol.com
🍒 India's forex reserves climb $3.1 billion to record $516.362 billion : The country's foreign exchange reserves swelled by $3.108 billion to a record high of $516.362 billion in the week to July 10, RBI data showed. In the previous week ended July 3, the reserves had increased by $6.416 billion to $513.54 billion. The reserves had crossed the half-a-trillion mark for the first time in the week ended June 5, after it had risen by $8.223 billion to reach $501.703 billion.In the week ended July 10, the forex kitty increased mainly due to a jump in foreign currency assets (FCA), which is a major component of the overall reserves. FCA was up by $2.372 billion to $475.635 billion in the reporting week, the Reserve Bank data showed. - Moneycontrol.com
🍒 Gold prices slip marginally to Rs 49,145 per 10 gram on rupee appreciation : Gold prices declined by Rs 122 to hit Rs 49,145 per 10 gram in the Mumbai bullion market on rupee appreciation. The prices fell as hopes for a potential coronavirus vaccine from Moderna and Oxford University dented safe-haven sentiment. The yellow metal has lost Rs 175, or 0.35 percent, for the week. The rate of 10 gram 22-carat gold in Mumbai was Rs 45,017 plus 3 percent GST, while 24-carat 10 gram was Rs 49,145 plus GST. The 18-carat gold quoted at Rs 36,859 plus GST in the retail market. Silver prices fell Rs 345 to Rs 51,740 per kg from its closing on July 16.
🍒 Rupee settles 16 paise higher at 75.02 against US dollar : The rupee appreciated 16 paise to close at 75.02 (provisional) against the US dollar on Friday tracking positive domestic equities and weakening American currency. At the interbank forex market, the domestic unit had opened on a weak note but soon recouped the losses amid high volatility and finally settled for the day at 75.02 against the US dollar, gaining 16 paise over its previous close. It had settled at 75.18 against the US dollar on Thursday.
🍒 Sensex ends above 37K level climbing 548 points : Equity benchmark Sensex rallied 548 points higher breaching the key psychological 37,000 mark on Friday tracking gains in index-heavyweights ONGC, Reliance Industries, HDFC Bank, Titan, Bajaj Finance and ICICI Bank. According to traders, positive earnings reports from key index components led to stock-specific buying, lifting benchmarks toward the closing session.The 30-share BSE Sensex ended higher by 548.46 points, or 1.50 per cent, at 37,020.14.Similarly, the NSE Nifty rose 161.75 points, or 1.51 per cent, to 10,901.70.ONGC was the top gainer in the Sensex pack, rallying around 6 per cent, followed by Reliance, Bajaj Finance, Titan HUL, HDFC Bank and ICICI Bank.On the other hand, Infosys, TCS, HCL Tech, Nestle and Axis Bank were among the laggards.
🍒 Shares of Central Bank of India in Stock Market : 71% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, Shares closed at Rs.16.70 against Prev Close Rs.16.25. In NSE, shares closed at Rs.16.65 against Prev Close Rs.16.20..
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