Today's Banking / Financial News at a Glance | 21.07.2020 Today Banking informatios

Good Morning ☕ 21.07.2020: Today's Banking / Financial News at a Glance 🍒 Privatisation drive: India plans to reduce number of state-owned banks to just five, say sources : India is looking to privatise more than half of its state-owned banks to reduce the number of government-owned lenders to just five as part of an overhaul of the banking industry, government and banking sources said. The first part of the plan would be to sell majority stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank, leading to an effective privatisation of these state-owned lenders, a government official said."The idea is to have 4-5 government owned banks," said one senior government official. At present, India has 12 state-owned banks.The government official said that such a plan would be laid out in a new privatisation proposal the government is currently formulating, and this would be put before the cabinet for approval.India's Finance ministry declined to comment on the matter.The government is working on a privatisation plan to help to raise money by selling assets in non-core companies and sectors when the country is strapped for funds due to lack of economic growth caused by the coronavirus pandemic.Several government committees and the Reserve Bank of India have recommended that India should have not more than five state-owned banks."The government has already said that there will be no more mergers (between state-owned banks) so the only option for them is to divest stakes," a senior official at a state-owned bank said.Last year, the government had merged ten state-owned banks into four, creating a handful of larger banks in the process."Now we are thinking of selling the unmerged banks to private players," the government official said. - economic times 🍒 Banks are about governance, not just ownership and control : The Reserve Bank of India (RBI) recently formed an internal working group to review the ownership and corporate structure for private banks in India. The committee now has been tasked with suggesting appropriate norms, keeping in mind the issue of excessive concentration of ownership and control, and having regard to international practices as well as domestic requirements The group will also examine and review the eligibility criteria for individuals or entities to apply for a banking licence, and review the promoter shareholding norms at the initial licensing stage.The move becomes a significant one in the backdrop of a sustained legal battle between itself and Uday Kotak wherein it allowed Kotak, the promoter of Kotak Mahindra Bank, to bring his stake down to 26 percent by August 2020 while capping his voting rights at 15 percent. RBI licensing guidelines for private sector banks calls for promoters holding to be brought down in phases, first to 40 percent at the end of three years from the date of commencement of the business operations. Subsequently, it needs to be brought down to 20 percent at the end of 10 years and 15 percent at the end of 15 years. - moneycontrol.com 🍒 HC directs Centre, RBI to file counter to pleas challenging ordinance on cooperative banks : The Madras High Court on Monday directed the Centre and RBI to file their counter affidavits to the petitions by two cooperative banks in Tamil Nadu challenging the constitutional validity of some sections of the Banking Regulation (Amendment) Ordinance of 2020, within four weeks. The First Bench of Chief Justice AP Sahi and Justice Senthil Kumar Ramamoorthy refused to grant any interim relief to the Big Kanchipuram Cooperative Town Bank Ltd and the Velur Cooperative Urban Bank Ltd which challenged provisions of the ordinance promulgated on June 26. "...unless there is an imminent tangible cause or evidence indicating actual invasion of the rights of the petitioner banks in running the affairs of the Society, it would not be appropriate to consider the issue of interim relief at this stage...," the bench said. The cooperative banks had sought stay on operations of the provisions of the ordinance which empowers the Reserve Bank of India to deal with incorporation, regulation and winding up of cooperative banks too. - economic times 🍒 HDFC Bank may have bundled GPS devices with vehicle loans : Car loan customers of HDFC Bank Ltd were forced to purchase a vehicle tracking device for about four years ended December 2019 in a possible breach of guidelines prohibiting banks from non-financial businesses, two people aware of the matter said. The bank on Saturday said it has taken action against employees in the vehicle finance unit after an investigation, without giving details. HDFC Bank executives pushed auto loan customers to buy GPS devices costing ₹18,000-19,500 from 2015 to December 2019, according to the two people cited above, who spoke on condition of anonymity. The cost of the device was added to the loan amount. “These devices were bundled along with the loan, where reluctant applicants were told that unless they agreed to take this product, their loan would not be sanctioned," the first of the two people said, adding senior executives at the auto loan unit were under extreme pressure to meet sales targets for these devices. - Live Mint 🍒 Lockdown effect: Canara Bank sees sharp increase in digital transactions : The digital channels of Canara Bank were fully and effectively utilised during the lockdown. “Greater leveraging of digital channels led to a sharp increase in e-transactions by 24 crore,” said TN Manoharan, Chairman, Canara Bank. In a note to shareholders, he said: “The bank also effectively discharged its duties with all branches and ATMs being fully operational during the lockdown to avoid any financial exigency.”The bank’s Business Correspondents (BC) services were enhanced, thus leading to 1.2 crore BC transactions during the shutdown days.“Digital initiatives and alternative delivery channels of the bank have significantly stepped up alternate delivery channels, as a result of which the e-transaction ratio stood at 73.92 per cent as of March 2020,” said Manoharan.The number of registered users under mobile banking rose 93.21per cent year-on-year (yoy) to 42.24 lakh and net banking users increased by 76.76 per cent yoy to 109.35 lakh as of March 2020. LV Prabhakar, MD and CEO, said: “From the operation perspective, the bank has taken all precautionary initiatives to ensure continuity in operations. The bank has a disaster recovery site, which is capable of handling the CBS and other functions.Further to safeguard the health of its employees, the bank has given Work from Home options and implemented staggered working hours.” - Business Line 🍒 SBI Cards posts 1% drop in Q1 PBT at Rs 528 cr, net profit rises 13.8% : BI Cards and Payment Services Ltd posted a 1 per cent drop in its profit before tax (PBT) at Rs 528 crore in the quarter ended June 2020 (Q1FY21). The PBT was Rs 533 crore in quarter ended June 2019 (Q1FY20). The net profit for the period under review rose 13.8 per cent to Rs 393 crore from Rs 346 crore in Q1FY20. The company's stock closed almost flat at Rs 751.8 per share on BSE. The interest income rose 34.6 per cent to Rs 1,412 crore for Q1FY21 from Rs 1,049 crore for Q1 FY20. However, the income from fees and services declined by 27 per cent to Rs 668 crore for Q1FY21 from Rs 916 crore in Q1FY20. The Impairment losses & bad debts expenses rose by 18.14 per cent to Rs 485 crore from Rs 397 crore for Q1FY20. The gross advances (credit card receivables) rose 9.9 per cent Rs 23,330 crore in June 2020 from Rs 21,231 crore in June 2019. - Business Standard 🍒 Misconduct did not hit bank’s loan book: HDFC Bank MD AdityaPuri : An internal probe by HDFC Bank Ltd into its vehicle lending business has revealed issues of personal misconduct and appropriate disciplinary action has been taken against a section of employees, managing director Aditya Puri said on Saturday. Puri, whose tenure ends in October, was speaking to analysts to discuss the June quarter results of India’s largest private lender. Prior to the analyst call, Puri addressed the bank’s shareholders at its FY20 annual general meeting (AGM) where he made similar comments about the probe.“We had received some whistle-blowing complaints. Internal enquiries carried out in the matter on the complaints received have not brought out any conflict of interest issue nor does it have any bearing on our loan portfolio," said Puri. The enquiry brought out other aspects related to personal misconduct by a set of employees, for which appropriate disciplinary actions have been initiated, he said. - Live Mint 🍒 IL&FS lays out road map to address over Rs 57,000 cr of debt : Cash-strapped Infrastructure Leasing and Financial Services (IL&FS) Group on Monday said it expects to address over Rs 57,000 crore of debt, which is above 50 per cent of its overall debt of Rs 99,000 crore. Of this, the group estimates to address close to Rs 50,500 crore of its debt by March 2021 and an additional debt of Rs 6,600 crore beyond FY21. However, it did not give any timeline for addressing the additional debt of Rs 6,600 crore. Speaking about the new plan to address the debt, the group’s non-executive chairman Uday Kotak said, “We are putting out transparently things that we see today and our reasonable estimate of how things look as we go forward. We are committed to this road map and we will go all out as IL&FS board and management to make it happen.” Till June 30, 2020, the debt-laden company has addressed debt of Rs 17,640 crore from a combination of completed asset sales, debt repayment to green entities, debt discharged in non-green entities and available cash balance across the group. The new board shared a quarterly plan that estimates addressing additional debt of Rs 8,800 crore by second quarter of FY21; Rs 18,000 crore by the third quarter of FY21 and over Rs 6,000 crore by the end of fourth quarter of FY21 -aggregating to Rs 50,500 crore by end-FY21. - financial express 🍒 Muthoot Finance expects gold loan portfolio to grow 15-20 per cent in 2020-21: MD : Muthoot Finance expects its gold loan business to grow 15-20 per cent during the current financial year, and hopes the gold portfolio to remain largely unaffected by the coronavirus pandemic, its Managing Director George Alexander Muthoot said. As gold prices are currently ruling high, the collateral is becoming more valuable, he said adding that now, people can borrow more money out of the same holding and as a lot of publicity is going around gold and gold prices, more and more people are inclined to take gold loan. Muthoot Finance witnessed a 22 per cent growth in its gold loan portfolio in the last financial year ended March 2020.”The number of people who would like to avail gold loan is also going up. All the publicity around gold loan is also helping drive the gold loan demand. In the last two years, we have been growing between 15 per cent and 20 per cent (gold loan portfolio). “Last year, we grew by 22 per cent in (terms of) gold loan (asset under management). This year also, we have given a guidance that we will grow our gold loan business AUM by 15-20 per cent in 2020-21,” Muthoot told PTI in an interview. - financial express 🍒 EPFO records 3.18 lakh new enrolments in May : Net new enrolments with retirement fund body EPFO rose to 3.18 lakh in May from 1 lakh during April 2020, according to its latest payroll data, providing a perspective on employment in the formal sector amid the COVID-19 crisis. Provisional payroll data released by the EPFO last month had showed that net new enrolments stood at 1.33 lakh in April this year. The figure has now been revised to 1,00,825.The net new enrolments with the Employees' Provident Fund Organisation (EPFO) had dropped to 5.72 lakh in March 2020 from 10.21 lakh in February, as per the payroll data released in May. The net new enrolments with the EPFO hover around 7 lakh every month on an average. - Moneycontrol.com 🍒 Royal Bank of Scotland says 'vast majority' of staff can work from home until 2021 : Royal Bank of Scotland (RBS) has told staff that the "vast majority" can continue to work from home until 2021, despite the British government's decision last week to scrap guidance encouraging people to work from home from next month. In a memo to staff on Monday seen by Reuters, RBS said it would extend the option to work from home for more than 50,000 employees until 2021, extended from September previously.Prime Minister Boris Johnson said on Friday he hoped Britain could return to normality by Christmas and gave employers "more discretion" on returning staff to offices providing it was safe to do so from August 1."Like we've done throughout the pandemic the decision has been made carefully, including considering the latest guidance from the UK Government on Friday and our own health and safety standards and procedures. It's a cautious approach but we feel the right one to take currently," the RBS memo said. - moneycontrol.com 🍒 MFIs in India should be allowed to accept deposits from public: Yunus : Nobel laureate Muhammad Yunus said that micro-finance institutions (MFIs) in India should be allowed to accept deposits from the public. Speaking at the 'PanIIT Global eConclave', the social entrepreneur said that at present MFIs have to go to the banks for money. "My plea to the Indian government is that MFIs should be allowed to accept deposits from the public. Now, they go to the banks for money," Yunus, the founder of Bangladesh-based Grameen Bank, said on Sunday evening. He said that the Reserve Bank of India (RBI) has allowed the opening of small finance banks who are able to accept deposits. Many MFIs such as Ujjivan and Jana have converted into small finance banks after getting licenses from the RBI. "Finance is the economic oxygen of people. The banking system is not keen to lend money to the poor for which an alternative banking channel has to be developed for them," he noted. - Business Standard 🍒 Special situation funds, NBFCs eye investment opportunities in stressed real estate : The combination of sluggish sales, absence of customer advances and liquidity squeeze are creating stress for real estate developers and investment opportunities for special situations and distress funds. Apart from the government-sponsored and SBICAP Ventures-managed last-mile fund for stuck projects, several large institutional investors are also getting active through their own distress or special opportunities funds.According to industry experts, along with SBICAP Venture’s Rs 25,000 crore fund; there are several large domestic and foreign funds with funds of more than Rs 35,000 crore looking at such investment opportunities. “The current environment will lead to more financial challenges for realty developers. Hence there will be a need for patient capital and the market will see more last mile funding transactions along with partial liquidity solutions to existing lenders,” said Vikas Chimakurthy, CEO, Kotak Realty Fund. “We are receiving investment proposals and continue to evaluate them.” - economic times 🍒 InCred raises 500 cr in debt funding : InCred, a financial services platform that provides consumer and Micro, Small & Medium Enterprises (MSME) loans, has raised Rs 500 crore in debt funding from various public sector banks and public financial institutions. This round of debt financing will boost InCred’s lending expansion across select segments in the consumer, education and MSME markets. “InCred is strengthening its funding base to support its growth vision. The recently concluded debt issuance is an endorsement of our business model, risk and analytics philosophy and our prudent ALM policies,” Vivek Bansal, Group CFO of InCred, said. - Businesss Line 🍒 IIFCL cuts base rate by 20 bps to 9% : India Infrastructure Finance Company Ltd ( IIFCL) has reduced its base rate by 20 basis points to 9 per cent. Currently, IIFCL, which is wholly-owned by the Central Government, has a loan book of about ₹35,000 crore. The latest move to reduce the base rate is unlikely to impact the profitability of this infrastructure lender, sources said. It may be recalled that the Government had, on March 30, infused ₹5,297.60 crore capital into IIFCL. With this enhanced capital, IIFCL now had increased exposure limits for individual projects and developer groups. It would also help the company comfortably maintain its Capital to Risk Adjusted Ratio as per RBI regulations. - Business Line 🍒 TN Grama Bank posts net of ₹150 crore in first year : Tamil Nadu Grama Bank (TNGB) has clocked a net profit of ₹150 crore in its first year of operation. The Salem-headquartered bank is an amalgamated entity of Pallava Grama Bank and Pandiyan Grama Bank and is sponsored by Indian Bank.TNGB has a network of 632 branches across the State, except in Chennai.TNGB Chairman S Selvaraj said in a statement that the bank’s turnover touched ₹25,000 crore, and the gross profit stood at ₹438 crore.Net NPA is less than one per cent at 0.87 per cent of the total outstanding loans. Besides offering banking services to the people in rural pockets, the bank is also sensitising them about the various government schemes, the Chairman said. - Business Line 🍒 Capri Global Capital expects to grow loan portfolio to ₹20,000 crore in five years : Capri Global Capital Ltd (CGCL) expects to grow its loan portfolio about five fold to around ₹20,000 crore in the next five years, according to a top official. While continuing its focus on lending to the micro, small and medium enterprises (MSMEs), housing, and construction finance segments, the non-banking finance company (NBFC) is keeping its options open to grow via the inorganic route, said Rajesh Sharma, Managing Director, founder and promoter, told BusinessLine. Referring to the economic distress caused by the pandemic, Sharma observed that CGCL plans to disburse up to ₹150 crore to MSMEs under the government-guaranteed emergency credit line by October-end 2020. - Business Line 🍒 Policybazaar plans IPO in 2021, may be valued over $3.5 billion : Online insurance platform Policybazaar aims to go public in 2021 at a valuation north of $3.5 billion, potentially becoming the first of India’s mega start-ups to debut as its digital economy booms. The start-up plans to secure about $250 million in a round of financing at a $2 billion-plus valuation before a September 2021 initial public offering, co-founder Yashish Dahiya told Bloomberg News. Policybazaar is now selecting two to three IPO lead underwriters from a roster that includes several Wall Street banks, said Dahiya, chief executive officer of Policybazaar parent ETech Aces Marketing and Consulting Pvt. “We have global interest and will raise in the coming weeks,” Dahiya said from London, where he is currently based. - Business Line 🍒 Federal Bank share price rises 4% as Rakesh Jhunhjunwala buys additional stake : Federal Bank share price rose 4 percent intraday on July 20 after veteran investor Rakesh Jhunhjunwala bought an additional 20 lakh shares in the April-June quarter. Jhunhjunwala's total holding in the bank stood at 3.18 percent in the quarter ended June 2020 against 3.08 percent in March 2020.Also, HDFC Life Insurance Company limited -Shareholders Solvency Margin Account also increased its holding in the company by 49,10,384 shares. Tts holding in June 2020 stood at 3.14 percent against 2.89 percent in the March quarter. At 1433 hrs Federal Bank was quoting at Rs 53.60, up Rs 1.50, or 2.88 percen on the BSE. - Business Line 🍒 Gold prices firm at Rs 49,217 per 10 gram on dollar weakness; silver rises by Rs 605 : Gold prices rose by Rs 72 to Rs 49,217 per 10 gram in the Mumbai bullion market on weakness in the US dollar. The prices gained on rising coronavirus cases across the globe boosting safe-haven demand. The rate of 10 gram 22-carat gold in Mumbai was Rs 45,083 plus 3 percent GST, while 24-carat 10 gram was Rs 49,217 plus GST. The 18-carat gold quoted at Rs 36,913 plus GST in the retail market. Silver prices jumped Rs 605 to Rs 52,345 per kg from its closing on July 17. 🍒 Rupee settles 11 paise higher at 74.91 against US dollar : The rupee appreciated by 11 paise to settle at 74.91 (provisional) against the US dollar on Monday, tracking positive domestic equities and weak American currency. At the interbank forex market, the rupee opened at 74.92 against the greenback, and touched a high of 74.89 and low of 75.03 during the session. It finally closed for the day at 74.91 against the American currency, up 11 paise over its previous close. 🍒 IT, financial stocks drive Sensex, Nifty higher by 1 per cent : enchmark indices held on to its early gains today with Nifty closing above 11,000 mark and the Sensex making 1 per cent gain. Earlier, equity benchmarks Sensex and Nifty began on a positive note on Monday, driven by gains in financial and IT shares.The BSE Sensex jumped 398.85 points or 1.08 per cent to close at 37,418.99. Similarly, the NSE Nifty rose 120.50 points or 1.11 per cent to 11,022.20.Banking, Financial, IT and Consumer Goods stocks primarily rallied on indices today.On the Sensex, the prominent gainers were Bajaj Finance, HCL Tech, Tech Mahindra, Infosys, HDFC Bank, ICICI Bank, Asian Paints IndusInd Bank and SBI. Major losers were Sun Pharma, NTPC, Kotak Bank, Maruti and ITC. 🍒 Shares of Central Bank of India in Stock Market : 50% of moneycontrol users recommend buying Central Bank of India shares. In BSE, shares were closed at Rs.16.85 against Prev Close Rs.16.70. In NSE, shares closed at Rs.16.85 against Prev Close Rs.16.65.. Have a Good day..