WEEKLY FINANCIAL SNIPPETS- 17/02/2018

  1. 17 PUBLIC SECTOR BANKS MAKE LOSSES IN DECEMBER’2017 QUARTER: Out of the 22 Public Sector Banks, 17 Public Sector Banks have made losses during the December’ 2017 quarter. Provisions for bad loans have taken the toll on their profit margins. Provisions of these 17 banks almost doubled over the same quarter last year to Rs. 60,742 crore. These 17 banks put together have a total loss of Rs. 18,943 crore for December 2017 quarter. Whereas the remaining 5 banks have a cumulative total profit of Rs. 850 crore.  Compared to this, 6 major private sector banks have made a cumulative total profit of Rs. 10,082.61 crores for the same period with HDFC Bank alone making a profit of Rs 4,642.60 crore.

 

  1. PNB INCIDENT SHOWS VULNERABILITY OF INDIAN BANKING SYSTEM: The Associated Chamber of Commerce & Industry of India ( ASSOCHAM) has criticised the functioning of Public Sector Banks in a first reaction to the $ 1.8 billion fraud that took place in Punjab National Bank. The detailed statement says “Alleged fraudulent transactions worth Rs. 11,300 crore from a single branch of Punjab National Bank with connivance of the junior officials shows the vulnerability of public sector banks”. ASSOCHAM further states “ the said fraud shows how the risk management is lacking in these entities and how a chain of command system was not there or was not followed”

 

  1. RBI’S NEW NPA RESOLUTION: The Apex bank in a dramatic move has discontinued the existing programmes for banks to restructure their defaulted large loans, such as Corporate Debt Restructuring (CDR), Sustainable Structuring of Stressed Assets(S4A), and Strategic Debt Restructuring (SDR) and made the Insolvency & Bankruptcy Code as the main tool to deal with defaulters. Now the Banks have been asked to report credit information, including classification of an account as Special Mention Account (SMA) to Central  Repository of Information on Large Credits(CRILC) on all borrowers having an aggregate exposure of Rs. 5 crore and above on a weekly basis.
  2. PNB FRAUD CASE: ICAI TO LOOK INTO AUDITORS’ ROLE: Chartered Accountants’ apex body ICAI will review the $ 1.80 billion fraud at Punjab National Bank to look at whether there have been any lapses on the part of auditors and has sought information from SEBI and from the investigation agencies.

 

  1. NO LTCG TAX IF U SELL SHARES OR MUTUAL FUND UNITS BEFORE 31ST MARCH 2018: The proposed Long-Term Capital Gains ( LTCG) tax  on equity in the union budget 2018 came as a blow to investors.  However any LTCG earned till March 31, 2018 will not be taxed, as the provision of 2018 Budget are effective from 01/04/2018 .

 

  1. PUBLIC SECTOR BANKS NEED Rs. 2.06 TRILLION CAPITAL FOR 8—9% CREDIT GROWTH IN FY 19: Public Sector Banks may need capital of Rs 2.06 trillion ( or Rs 2.06 lakh Crore) for a credit growth of  around 8 to 9% for the financial year 2019. This is as per a report released by India Ratings and Research.

 

  1. 6 BILLION HIDDEN $ BAD LOANS SPOTLIGHT INDIAN BANKING STRESS: Reserve Bank of India in its audit has unearthed about 3.6 billion $ (Rs. 232 billion) of bad loans in the books of State Bank of India. This shows the under reporting of bad loans in the financial sector.

 

  1. ATMS CAN NOW VERIFY TRANSACTIONS VIA AADHAAR: The ATMs are set to become smart. Banks are replacing the existing ATMs with new digital machines which are compact and come with a 15 inch tablet like multi touch screen and these can perform Aadhaar based biometric authentication and all other transactions via net banking also.
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WEEKLY FINANCIAL SNIPPETS- 10/02/2018

  1. RBI TO INITIATE CUSTOMER GRIEVANCE MECHANISM FOR NBFCs: The Reserve bank of India has said it will soon roll out a customer grievance redressal mechanism for Non-Banking Finance Companies (NBFCs). With a view to providing customers of NBFCs a cost free and speedy grievance redress mechanism, RBI will introduce an Ombudsman Scheme for NBFCs.

 

  1. RBI TO SCRAP SUBSIDIES FOR INSTALLATION OF ATM AND CASH RECYCLER MACHINES: The Reserve Bank of India has announced the scrapping of subsidies given to banks for installation of ATM and cash recycler machines. Currently RBI used to disburse subsidy amount at 50% of the actual cost of machine or Rs 2 lakh whichever is lower in urban areas and Rs 2.50 lakhs or 60% of the actual cost of the machine whichever is lower in Semi Urban and rural areas.  RBI said this would lead to a further push to digital transactions.

 

  1. CABINET APPROVES CHANGES IN CLASSIFICATION CRITERIA FOR MSMEs: Cabinet has approved the changes in the basis of classifying Micro, Small & Medium Enterprises                 (MSMEs) from investment in Plant & Machinery requirement to ANNUAL TURNOVER. Now as per the new changes the classification will be as follows: A) Micro Enterprise- Annual turnover of less or equal to Rs.  5 crore. B) Small enterprise- Turnover more than Rs. 5 crore but does not exceed Rs. 75 crore. C) Medium Enterprise—Turnover more than Rs. 75 Crore but does not exceed Rs. 250 Crore. This will now encourage ease of doing business, will make norms of classification growth oriented and will align to the new regime revolving around GST.

 

  1. RBI RELAXES PRIORITY SECTOR LENDING RULE FOR BANKS: Reserve Bank of India has made priority sector norms more lenient. Henceforth all loans to Micro, Small & Medium Enterprises (MSMEs) will qualify as priority sector lending. Till date loans up to Rs 10 crore per MSME borrower was considered as priority sector lending.

 

  1. MSME LOANS UP TO Rs. 25 CRORE GET MORE REPAYMENT TIME: In a major relief to the Micro, Small & Medium Enterprises (MSMEs) sector, the RBI has said GST registered MSME borrowers, whose aggregate exposure does not exceed Rs. 25 crore will get a further 180 day window to pay their dues if their accounts were standard as on August 31, 2017. This move allowed to Banks and NBFCs will be applicable for dues between September 2017 and January 2018 and Banks need not be required to downgrade asset classification of these MSMEs.

 

  1. RBI MONETARY POLICY—BANKS’ BASE RATE AND MCLR TO BE LINKED: Reserve Bank of India in its latest Monetary policy has said it is working on a framework to link the calculation of banks’ base rates with their Marginal Cost of Lending rates( MCLR). This will come into effect from April 1St

 

  1. INDIAN BANKS MAY LOSE MORE ON NEW ACCOUNTING RULE: Indian Banks already struggling with $210 billion of stressed assets , may have to prepare for another hit in the coming financial year if new accounting norms are affected from April 1st The IndAS—based on IFRS9 standards, would require banks to make provisions for expected bad loans instead of the current system where presently they only cover actual losses incurred on bad loans.

WEEKLY FINANCIAL SNIPPETS- 03/02/2018

  1. AFFORDABLE HOMES GET FURTHER BOOST AS GOVERNMENT REDUCES GST: Affordable housing got further boost from the government as the Goods & Services Tax (GST) council has recommended reduction of GST from 12% to 8% for houses under the Pradhan Mantri Awas Yojana (PMAY) that provides credit linked subsidy scheme ( CLSS) .

 

  1. GST E-WAY BILL INTRODUCED: As a 15 day trial, the nationwide E-way bill came in to effect from 1ST February 2018. Under this bill every transporter will have to carry a system generated bill to move goods from one place to the other. This bill can be generated from the GSTN portal. This system has been introduced for bringing in a seamless inter-state movement of goods.

 

  1. BANK OF INDIA RECOVERS Rs. 3,000 CRORE BAD LOANS IN ONE MONTH: Bank of India has recovered Rs. 3,000 crore of bad loans in the last one month. The said recovery was done by invoking standby letter of credit (SBLC) and guarantees of the respective defaulters. The Bank’s official statement said that they will recover hefty amounts in this month also by invoking the remaining SBLC and guarantees.

 

  1. SBI TO OFFER CREDIT CARDS TO FARMERS: State Bank of India is planning to sell Credit Cards to farmers on easier terms. It has tied up with its credit card issuing subsidy- SBI Card to make it happen. This is perhaps the first time that a bank is offering credit card product to farmers. Till now small farmers have access to bank credit by way of Kisan Credit Card (KCC), which are linked with bank accounts and offer cash credit facility to KCC card holders. Initially these credit cards will be offered to Farmers in Gujarat, Rajasthan and Madhya Pradesh.

 

  1. BANKS RELUCTANT TO LEND TO REALTY SECTOR ON RISING NPA: The share of bank credit to real estate sector has fallen sharply to 17% from over 68% in 2013. Banks are reluctant to provide credit to this sector due to rising NPAs and lower profit in property business. This is according to the economic survey.

 

  1. USHA ANANTHASUBRAMANIAN BECOMES FIRST WOMAN CHAIRPERSON OF IBA: Usha Ananthsubramanian, Managing Director of Allahabad Bank has become the first woman Chairperson of Indian Banks’ Association (IBA). She will be the Chairperson till August 31St 2018 as she will be superannuating on August 31ST. Earlier to this she was the Deputy Chairperson.

 

  1. FINANCE MINISTRY NUDGES PSU BANKS TO SWAP ASSETS, OPTIMISE OPERATIONS: The Finance Ministry has asked the PSU Banks to consider asset swaps, including exchange of their corporate portfolios and branches to optimise nation-wide operations and to further strengthen its move on consolidation/merger of banks. Banks may also swap same rated loans- both corporate and retail to attain cohesive portfolio.

 

  1. RBI DECLINES GOVERNMENT’S DEMAND FOR ADDITIONAL DIVIDEND: Reserve Bank of India has reportedly declined government’s demand for additional dividend. The government had asked an additional dividend of Rs. 13,000 crore. Reserve Bank of India has already transferred dividend of Rs. 30,659 crore to the government for the financial year 2016-17.

 

  1. PSU BANKS IDENTIFY 41 OVERSEAS UNITS FOR RATIONALISATION: Public Sector Banks have started reviewing their overseas operations by identifying 41 units for rationalisation. This move could mean consolidation of operations, trimming of staff strength, exiting some non-core and non-profit activities or closing down some unviable overseas offices.

WEEKLY FINANCIAL SNIPPETS- 27/01/2018

  1. GROSS NPA MAY RISE TO Rs. 9.5 LAKH CRORE BY MARCH 2018: Gross Non-Performing Assets (NPAs) in Indian banks are expected to rise to Rs. 9.5 lakh crore by March 2018, from Rs. 8.00 lakh crore last year. This is as per ASSOCHM-Crisil joint study. High level of stressed assets in the banking industry provides enormous opportunity for Asset Reconstruction Companies (ARCs) which play an important role in NPA resolution process. But owing to capital constrains, growth of ARCs is expected to come down significantly.

 

  1. PHYSICAL BANKS WILL BE IRRELEVANT IN NEXT 3 YEARS IN INDIA: Niti Aayog CEO Mr. Amitabh Kant opines that physical banks will be irrelevant in the next three years as data consumption growth and data analytics are likely to further boost financial inclusion. According to Mr. Kant, India will have more than a billion biometrics and smart phones due to which new bank model will come out, which will phase out physical banking.

 

  1. GOVERNMENT MULLS THE IDEA OF 100% FDI IN BANKING SECTOR: The Central government is mulling to allow 100% Foreign Direct Investment in banking sector. The Finance Ministry and IBA are presently discussing and assessing the hike in FDI cap in banking sector from 74% to 100%. The government may also hike FDI in Public Sector Banks ( PSBs) to 49%.

 

  1. AGRICULTURE BAD LOANS JUMP BY 23%: Banks have witnessed a spike in agriculture bad loans of Rs. 11,400 crore to cross Rs. 60,000 crore. Demonetization and farm loan waivers have added to the woes of the banks. NPAs rose over 23% from Rs. 48,000 crore in 2016 to Rs. 60,000 crore in 2017. Bad Loans in agriculture sector have jumped 142.74% from Rs. 24,800 crore in fiscal 2012, indicating distress in this sector in the last 5 years.

 

  1. ONGC TIES UP WITH 3 BANKS FOR Rs. 18,000 CRORE LOAN FOR HPCL TAKEOVER: Oil & Natural Gas Corporation (ONGC) has tied up with three banks to avail loan up to Rs. 18,000 crore to part finance its Rs. 36,915 crore acquisition of Hindustan Petroleum Corp Ltd. (HPCL). It has entered into loan agreements with Punjab National Bank, Bank of India and Axis Bank Ltd for loans of Rs.18,060 crore for this acquisition.

 

  1. SBI SEES BAD LOAN PROVISIONS AS BIGGEST CHALLENGE: State Bank of India sees provisioning for bad (NPAs) loans as the biggest challenge for Indian Banking system even as credit growth is reviving. Mr. Rajnish Kumar, the present Chairman of SBI says that whatever process they resort to for the resolution of NPAs, there will always be a gap in the provisioning and that is precisely where the support from the government is required.

 

  1. AFFORDABLE HOUSING NOW A MAJOR THEME AMONG PEs: Driven by the demand and government incentives, majority of residential launches in 2017 were in the affordable and mid-range housing projects. Because of this, Private Equity Firms’ interest has tilted more towards affordable housing and is expected to increase in future also. Affordable housing has emerged as a significant theme among PE-RE (Private Equity-Real Estate) investors, especially in the second half of 2017.

 

  1. INDIA 5TH MOST ATTRACTIVE MARKET FOR INVESTMENTS: India has become the 5th most attractive market for investments and business optimism is at record high levels globally. But cyber security and climate change have become areas of concern for CEOs. This is as per the annual global CEO survey done by consultancy giant; PwC. Previously India was in the 6th

WEEKLY FINANCIAL SNIPPETS – 20/01/2018

1. SOON YOU CAN MAKE PAYMENTS USING YOUR WHATSAPP: WhatsApp could go live with much-awaited payments feature as early as next month, providing a big boost to the digital payments movement in the country. The most widely used messaging App in India is at an advanced stage in integrating its Unified Payments Interface (UPI) based payments platform with many banks like SBI, ICICI Bank, HDFC Bank and Axis Bank.

2. IDFC BANK, CAPITAL FIRST MAY ANNOUNCE MERGER: IDFC Bank and Non-Banking Financial Company (NBFC) Capital First are likely to announce a merger, creating a larger institution with about Rs. 1.4 lakh crore assets and nearly 64 lakh customer base. This merger could also act as a springboard for IDFC Bank which is looking to grow its assets in this competitive market.

3. UNCLAIMED BANK DEPOSITS CROSS Rs. 8,000 CRORE: Unclaimed deposits of bank account holders have crossed a record Rs. 8,000 crores, with stricter KYC norms making withdrawal of the funds difficult specially in cases of death claims unless the next of kin of the deceased can establish the legitimacy of their claims. According to the latest report released by RBI, Rs. 8,864 Crore is lying unclaimed in 2.63 lakh accounts with all banks.

4. AFFORDABLE HOUSING LOANS UP TO Rs. 2 LAKH SEE HIGHEST NPAs: With a sharp rise in loan disbursements and number of beneficiaries in the affordable housing segment, loans up to Rs. 2 lakh have ended up with the highest level of Non-Performing Assets in home loans. Public Sector banks reported higher NPAs in sub Rs.2 lakh housing loans as compared to finance companies.

5. TO FIGHT E-CRIME GOVERNMENT TO HIRE EXPERTS FROM IITS, PVT INSTITUTES: The government has decided to hire IT experts from premier public and private institutions including IITs, to fight new age crimes like online fraud, hacking, identity theft, child pornography, and cyber terrorism. It wants to prepare a road map for Indian Cyber Crime Coordination centre.

6. HDFC BANK IS 3 RD INDIAN COMPANY TO CROSS Rs. 5 LAKH CRORE M-CAP: HDFC Bank became the third Indian company and first Indian bank to cross a new milestone of Rs 5 lakh crore in market capitalisation. TCS and Reliance Industries are the other two Indian companies which have crossed market capitalisation of Rs 5 lakh crore. HDFC bank now has a market cap of Rs 5.57 lakh crore. It surpassed ING Group to become 22 nd most valuable bank in terms of market cap.

7. SBI TO RAISE Rs. 20,000 CRORE VIA BONDS FOR AFFORDABLE HOUSING SEGMENT: At a time when the report shows lot of NPAs in the low cost housing segment and also when the rating agencies have flagged concerns over the rising delinquencies in the affordable housing segment, State Bank of India has said that its board has given approval to raise Rs. 20,000 crore for financing affordable housing, and infrastructure projects through long-term bonds.

8. DEFAULTERS USE MINOR KIN TO EVADE SCRUTINY AND RECOVERY BY LENDERS: Some defaulting borrowers with no intension of paying back their loans are using their children to conceal their assets from banks during insolvency proceedings. It is found that several promoters have diverted borrowings from banks to invest in real estate in the name of children. Since minors are not required to file tax returns, tracing assets that belong to them becomes tougher.

WEEKLY FINANCIAL SNIPPETS – 13/01/2018

1. RBI INSTRUCTS BANKS TO RECALIBRE ATMs FOR DISPENSING Rs.200 NOTES: As per the directions from RBI, all banks have started recalibrating the ATMs to dispense the new Rs. 200 bank notes which were introduced in August 2017.There are nearly 2.4 lakh ATMs across the country and according to industry experts, the overall recalibration process may cost banks Rs 100 to Rs 125 Crores.

2. GOVERNMENT TO ROLL OUT 650 BRANCHES OF INDIA POST PAYMENTS BANK: The India Post Payments Bank (IPPB) which was incorporated on August 17, 2016 had launched two pilot branches in January 2017 at Ranchi and Raipur but after that it was unable to launch any further branches. Now Government has announced that it will rollout around 650 branches by April 2018. IPPB has now entered into an MOU with Punjab National Bank and PNB MetLife India Insurance Co Ltd.

3. INDIA’S FOREX RESERVES AT FRESH RECORD HIGH: India’s Foreign Exchange reserves scaled to new high of $ 409.36 billion compared to the previous week. Foreign currency assets form a key component of reserves of the country.

4. WILFUL DEFAULTERS FORM 14% OF PSBs TOTAL BAD LOANS: The total Gross Non-Performing Assets (NPAs) of 21 Public Sector Banks stood at Rs. 7.33 lakh crore as on September 30, 2017. Out of this, Rs. 1.01 lakh crore of loans, roughly around 14% have been identified as wilful defaults. Wilful Default broadly means that the borrower has failed on the agreement for usage of funds or has not paid despite having resources to pay.

5. GOVERNMENT OPENS FDI GATES WIDE OPEN: The cabinet has eased Foreign Direct Investment (FDI) in some critical areas like single brand retail, pharmaceuticals, power exchange and broking services in construction. It has now permitted for 100% FDI in single brand retail through the direct route. The cabinet has also decided to allow foreign airlines to invest up to 49% in ailing Air India.

6. SBI REVIEWING MINIMUM BALANCE CHARGES FOR SAVINGS ACCOUNTS: In April 2017, the State Bank of India had introduced charge on non-maintenance of monthly average balance in SB accounts after a gap of 5 years. Now SBI has said that it is reviewing these charges after receiving feedback/complaints from its customers. Meantime the United Forum of Bank Unions (UFBU), an umbrella organisation of all the bank unions, has sought Finance Minister’s intervention to roll back the hike in charges imposed on customers.

7. AADHAAR –“A SITTING DUCK” FOR CYBER CRIMES: A recent newspaper report claimed breach of Aadhaar database and access to crucial Aadhaar information for a paltry sum. A study by a group affiliated to Reserve Bank of India has also raised serious safety issues regarding the breach of Aadhaar database. The report says cyber vulnerability of Aadhaar is a bigger concern than the possible commercial misuse. In an era where cyber threats are frequent, the major challenge for UIDAI is to protect the Aadhaar data under its control since the biometrics is now an important national asset which has huge ramifications for various government programmes and the banking system.

8. SBI GARNERED Rs 1,771 CRORE AS FINE FOR VIOLATION OF MINIMUM BALANCE REQUIREMENT RULES: State Bank of India has collected a staggering Rs 1,771 crores as fine from customers who failed to maintain minimum balance requirements in their savings bank account from April to December 2017.

WEEKLY FINANCIAL SNIPPETS- 6/01/2018

1. SEBI PLANNING A “RISKOMETER” FOR STOCK MARKET INVESTMENTS: Securities & Exchange Board of India (SEBI) is planning to introduce an early-warning system to caution about the risks of investing in stocks of overvalued companies, those with unsuitable business models and ones that may go bankrupt. The proposed system would rate a stock on a numeric scale or a colour coded system which will allow investors to easily identify the investment risks associated with a particular stock. Mutual funds already have a similar system called “Riskometer”.

2. BANKS REQUEST RBI TO ALLOW THEM TO SPREAD LOSSES OVER TWO QUARTERS: A group of state owned banks (including SBI) has approached Reserve Bank of India seeking exemption from recognising mark-to-market losses on their government bond portfolios in December quarter. They have requested RBI to allow them to spread these losses over two quarters (ending December and March). The sudden surge in yields has resulted in mark-to- market losses for many public sector banks.

3. GENERAL INSURANCE COMPANIES SEE A HUGE DEMAND IN TITLE INSURANCE: From April 2018 onwards real estate developers can buy title insurance cover- an indemnity policy which insures against financial loss arising out of claims in title to land or property. General Insurance companies are eying this product. This will be a long term policy ranging from 5 to 12 years.

4. DEPOSIT INSURANCE COVER MAY NEED TO RISE UP TO Rs 15 LAKH TO COVER ATLEAST 90% OF DEPOSITS: In the year 1993 when the government raised the limit of the deposit insurance cover on fixed deposit to Rs 1 lakh, as much as 90% of the accounts were covered with this enhancement. Now the government may have to raise the deposit insurance cover to around Rs 15 lakh to ensure a safety net for at least 90% of the present depositors.

5. RBI PUTS ALLAHABAD BANK UNDER PROMPT CORRECTIVE ACTION: Allahabad Bank has been brought under Prompt Corrective Action (PCA) by Reserve Bank of India. PCA on Allahabad Bank was imposed because of high net NPAs and negative Return on Assets (ROA) for two consecutive years. This is the 11th Public Sector Bank to be covered under PCA.

6. INDIAN OVERSEAS BANK PLANS TO WRITE OFF ITS LOSSES FROM RESERVES: Indian Overseas Bank (IOB) has said that it has planned to write off its losses from reserves. The bank said its board has approved to utilise the balance available in the share premium account amounting to Rs 76.5 billion as on March 31, 2017 to write off the accumulated losses to the tune of Rs 69.8 billion as on March 31, 2017 to present a true and fair view of the financial position of the bank.

7. FACING MERGERS AND PAYCUTS, UCO BANK STAFF LAUNCH A PLATFORM FOR TURNAROUND: In the face of the accumulated losses, merger threats and salary cuts, UCO Bank employees (both clerical and officers) have joined hands and launched a platform- United Forum of UCO Bank Unions. This is aimed at a speedier turnaround of the Bank. The mandate of the newly formed organisation is to motivate employees to work beyond normal working hours and on holidays, holding credit camps to garner fresh loans, speaking to agitated customers and intensifying the recovery of Non-Performing Assets through door-to-door campaigns. In our opinion this is a historic step taken by the bank union which will strengthen the management arm in the bank’s turnaround plans and an eye-opener for other bank unions as this is the need of the hour in almost all PSU banks.

WEEKLY FINANCIAL SNIPPETS- 30/12/2017

1. RBI WILL NOT EXTEND DEADLINE FOR 2nd LIST OF DEFAULTERS: In the month of August 2017 Reserve Bank of India had announced a list of 28 large defaulting companies and had instructed the banks to find a resolution plan before 31st December 2017 in accordance with a formula prescribed by it. If the banks failed to do so, the companies had to be referred to the National Company Law Tribunal (NCLT). Now the RBI has turned down the request from banks to extend the deadline for restructuring these defaulting company accounts. This means the companies like Videocon, Jaiprakash Industries, Uttam Galva Steel, Essar Projects etc will have to be referred to NCLT.

2. COMPLAINTS AGAINST PRIVATE BANKS GROWING AT A FASTER PACE THAN PSBs: The Office of the Banking Ombudsman (OBO) has received 35,080 complaints against private banks, registering a 30.2% increase over last year. In contrast, complaints against Public Sector banks grew at about 28% over the last year.

3. RISING NPAs IN EDUCATION LOAN ADD TO BANKS’ STRESS: Education loans have started becoming NPA in large numbers with defaults in repayments rising to 7.67% of the total outstanding education loans. As per the IBA data, the total outstanding education loan in the banking sector in 2016-17 was Rs. 67,678 Crore, of which Rs. 5,191 crore was NPA. This is despite certain changes made in the education loan scheme such as extension of the repayment period to 15 years and the launch of Credit Guarantee Fund Scheme for education loans. In our opinion this means that there is very low growth as far as the employment opportunities are concerned.

4. RBI’S MANDATE FOR PROVIDING DOORSTEP BANKING SPURS BANK HIRING: with the recent mandate issued by RBI for providing doorstep banking service to the senior citizen above the age of 70 years and the differently –abled, many banks are reviving their hiring plans to meet the new norms.

5. BANKS LOST NEARLY Rs.17,000 CRORE TO FRAUDS LAST FISCAL: The Reserve Bank of India has informed that as per the fraud monitoring reports submitted by scheduled commercial banks, the amount lost on account of frauds during 2016-17 was Rs. 16,789 crore. Now RBI has formed an inter-disciplinary standing committee on cyber security comprising of Information Security Audit, forensic and cyber security experts.

6. INDIA ONE AMONGST THE MAJOR NATIONS TO HAVE HIGHER BAD LOANS RATIO: The 9.85% ratio of bad loans or NPAs in banks has put India in the group of those nations that have very high Non-Performing Assets. The only major countries with similar ratios are the troubled EU nations namely Portugal, Italy, Ireland Greece and Spain. According to a research survey done by rating agency CARE, India’s NPA ratio (Excluding Restructured assets) is one of the highest in the group of “ High-NPA” nations.

7. SIX STRESSED BANKS TO GET Rs 7,500 CRORE CAPITAL INFUSION: Bank of India, IDBI Bank, UCO bank, Bank of Maharashtra, Dena bank and Central Bank of India are the 6 most stressed banks who will get fresh equity infusion of over Rs 7,500 crore from the government. This is provided immediately to meet the prescribed regulatory capital requirement. But the government officials said that it will monitor their functioning to ensure that they undertake clean, responsible and prudent business to enhance stakeholder value.

WEEKLY FINANCIAL SNIPPETS- 23/12/2017

  1. FINANCE MINISTER SAYS STRENGTHENING PUBLIC SECTOR BANKS IS TOP PRIORITY: Finance Minister Arun Jaitley has said that strengthening the Public sector banks is the top most agenda of the government. The government has already announced the detailed recapitalisation move and this will ensure to some extent that banks are able to support their lending capacity. Mr. Jaitley gave more emphasis on MSME sector lending as he said that MSME sector has been on receiving end in last few years particularly with lending capacity of banks being depleted as a result of NPAs.

 

  1. RBI PLACES RESTRICTIONS ON BANK OF INDIA: Reserve Bank of India has triggered Prompt corrective Action (PCA) on Bank of India in view of high Non-Performing Assets and negative return on assets for two consecutive years. This makes Bank of India 9th bank to face PCA in a span of 10 months.

 

  1. CONSUMER CONSENT MUST FOR CHANGING SUBSIDY- RECEIVING BANK ACCOUNT: The government has issued notification directing banks and National payment Corporation of India (NPCI) to change the process of mapping Aadhaar linked bank accounts for receiving government subsidies. Further the government has also temporarily halted the existing provision of overwriting existing subsidy-linked bank accounts with freshly opened /mapped Aadhaar accounts. NPCI will now allow override of account request only if it is accompanied by name of his current bank on Aadhaar Payment Bridge (APB) mapper and a confirmation from the requesting bank that it has obtained the requisite consent of the account holder for switching to the requesting bank.

 

  1. GOVERNMENT TO BEAR MDR CHARGES ON DIGITAL PAYMENT TRANSACTIONS UPTO Rs. 2,000: The government will bear the Merchant discount Rate (MDR) on digital transactions up to Rs. 2,000. Such MDR will be borne by the government for two years with effect from January 1, 2018 by reimbursing the same to the banks.

 

  1. CABINET CLEARS AMENDMENT TO LAW FOR PAYMENT OF INTERIM COMPENSATION IN CHEQUE BOUNCE CASES: The Cabinet has approved an amendment to the Negotiable Instrument Act to allow for payment of an interim compensation in cheque dishonour cases with a view not to allow unscrupulous elements by holding payments and pending long trials.

 

  1. RBI BLAMES I-BANKERS FOR RISE IN NPAs: RBI has blamed conflicts of interest among merchant bankers as one of the prime reasons for faulty project appraisals of big corporate/consortium advances that has led to piling up of huge non-performing assets in the system which has crossed a whopping 10 trillion mark as on September 2017. RBI in its Financial Stability Report (FSR) has pointed out certain basic deficiencies with regard to the appraisal of long-term projects with a significant gestation time.

 

  1. AIRTEL PAYMENT BANK PENALISED FOR OPENING PAYMENT BANK ACCOUNTS WITHOUT THE USER CONSENT: Airtel Payments Bank has been penalised with Rs 2.5 crores as an interim penalty by Aadhaar-issuing body UIDAI for allegedly opening payments bank accounts of its mobile subscribers without their informed consent.

WEEKLY FINANCIAL SNIPPETS-16/12/2017

  1. ATMs NOT TO BE REPLENISHED WITH CASH AFTER 9 PM: The government has proposed some changes for replenishment of cash in ATMs. Cash Transportation agencies must collect cash from the bank in the first half of the day and NO cash loading of the ATMs or any cash movement should be done after 9 pm. These Standard Operating Procedures (SOPs) have been prepared after a spurt in attacks, hijacking and looting of cash vans.

 

  1. RBI INVOKES PROMPT CORRECTIVE ACTION ON CORPORATION BANK: Reserve Bank of India has invoked Prompt Corrective Action (PCA) on Corporation Bank as the Bank’s bad loans have increased sharply. This makes Corporation bank 8th bank to face restriction in a span of 10 months. A statement issued by Corporation Bank said, this action will not have any material impact on the performance of the bank and will contribute to the improvement in internal control of the bank in its activities.

 

  1. INSOLVENCY AND BANKRUPTCY BOARD TO DECIDE ON THE FATE OF THE LOAN GUARANTORS: The governing body of Insolvency & Bankruptcy Board of India (IBBI) is expected to finalise broad guidelines for dealing with personal guarantors & third party guarantors of defaulting loan accounts. This is seen as an additional tool to punish truant promoters and a strong recovery mode.

 

  1. YOUR SOCIAL MEDIA POSTS MAY DECIDE WHETHER YOU WILL GET A LOAN OR NOT: Many Private Sector Banks are spending more time in reading your ( the prospective customer’s) Facebook posts, SMS’s and payment data available on Mobile phone to decide whether to sanction a loan , rather than relying solely on credit ratings. As banks sharpen their internal assessment of risk before lending, they are investing in Data Analytics ( which is gathering data of social media) which captures the borrowing behaviour of a customer.

 

  1. BANKS HIRE EX-RBI MEN TO AVOID SLIP-UPS: Tighter regulations, closer scrutiny and higher possibility of fines by RBI has increased the importance of compliance for banks in recent years. As a result, former officials from RBI’s Banking Supervision Department are being hired by banks and are in charge of this key functioning department. Many Private banks, small banks and recently launched Paytm Payments Bank have former RBI officials heading their compliance department.

 

  1. CENTRE EXTENDS DEADLINE FOR LINKING OF AADHAAR TO BANK ACCOUNTS: The government has extended the deadline for mandatory quoting of Aadhaar number for certain financial transactions (like bank accounts, mutual funds) and linking of Aadhaar to Mobile numbers. Earlier the deadline was December 31st 2017, but now as per the gazette notification the extended date is till 31st march 2018.

 

  1. ICICI BANK LAUNCHES “SMART VAULT”: ICICI bank has launched its technology driven “Smart Vault”, most advanced and first-of-its-kind locker service in India. The Smart Vault is powered by revolutionary robotic technology which minimises human intervention while operating the bank locker. The advanced Radio Frequency Identification (RFID) enabled mechanism scans your request and retrieves your locker using robotic arm and your locker is made available to you conveniently at a kiosk. After your work with locker is over, the robotic arm retracts your locker back to the locker room. Smart Vault is equipped with the most evolved and intelligent security system.