WEEKLY FINANCIAL SNIPPETS- 19/08/2017

1. 9,000 WILFUL DEFAULTERS OWE Rs 92,000 CRORE TO PSBs’: Public Sector banks have reported 20% jump in the outstanding loans by wilful defaults. Nearly 9,000 wilful defaulters collectively owe an amount of Rs 92,000 crore to these banks as on 31/03/2017. There has been an increase of 10% in the number of loan defaulters over the year.

2. BAD LOAN RECOVERIES BY BANKS: It was a mixed bag for bad loan recoveries by public sector banks in the June quarter of the present financial year. While SBI has reported higher recovery, banks like Punjab National Bank, Canara Bank and Union Bank of India have shown a dip in recoveries. Whereas most of the Private sector banks have shown healthy growth in recoveries of bad loans. Axis Bank’s recoveries and up gradation has doubled in quarter one of the present financial year.

3.KARUR VAISYA BANK IS THE FIRST PRIVATE SECTOR BANK TO START AADHAAR ENROLMENT CENTRE:Following the directives given by UIDAIlast MONTH, Karur Vaisya Bank  has unveiled its first Aadhaar enrolment centre in one of its branch, thus becoming the first private sector bank to start a Aadhaar enrolment centre. The bank official said that once the required documents are submitted, the enrolment or any updation can be completed within 15 minutes.

4. UNUSUAL DEPOSITS WORTH Rs 1.7 LAKH CRORE DURING DEMONETIZATION: Unusual cash deposits totalling to Rs 1.6 to 1.7 lakh crore were made during the demonetization period says a research paper posted by RBI. This will be dealt firmly by the tax department.

5. DIGITAL WALLET COMPANIES WAIT FOR RBI NORMS: The Digital wallet industry is eagerly waiting for the latest release of fresh guidelines by RBI for the Prepaid Payment Instruments (PPIs). While the Central Bank is expected to open up fresh applications for PPI licences, the industry is also keeping an eye open for Know-Your-Customer (KYC) norms and cyber insurance for wallets. The top executives of the wallet industry have met the regulator and have voiced their suggestions and are now waiting for the final move from RBI.

6. RBI PLANS TO EXTEND CYBER AUDIT TO ALL THE BANKS: The Reserve Bank of India is planning to conduct cyber-audit of all the banks in the country instead of just a few bigger banks as it did in the past, a policy shift in the wake of an increase in cyber-attacks. RBI had created a cyber-cell under the department of banking supervision and used to conduct a separate IT audit for three banks, which was increased to 30 banks last year and this year RBI is covering all the banks for separate cyber-security and IT audit.

7. RBI ASKS BANKS TO ENABLE ACCOUNT NUMBER PORTABILIYTY AT THE EARLIEST: RBI Deputy Governor Mr. S SMundra has asked banks to enable account number portability among banks at the earliest which will be a far reaching step towards enhancing competition and improving customer service. By enabling number portability a scenario will emerge wherein the unsatisfied customers would be able to walk out of the bank silently and thus banks will be compelled to provide better customer services.

WEEKLY FINANCIAL SNIPPETS- 12/08/2017

1. AADHAAR MAY BECOME MANDATORY FOR FINANCIAL MARKET: Aadhaar number may soon become mandatory for buying shares and mutual funds. The government and SEBI are planning to link Aadhaar to financial market transactions which will help the government to plug taxes and curb black money. The government has already mandated that Aadhaar be linked to PAN, Bank Account and Mobile phone numbers.

2. GOVERNMENT TO INITIATE BANK MERGERS AFTER QUARTER-1 RESULTS: The Finance Ministry is expected to initiate the process of consolidation of public sector banks once the first quarter financial results of the current fiscal have been announced. There are factors like regional balance, geographical reach, financial burden and smooth human resource transition that are to be considered before taking the final decision.This is going to be a complex exercise for the Finance Ministry.

3. OVER 11.44 LAKH PAN CARDS DEACTIVATED: As per the rules it is “ One Person One PAN” which is the guiding principle for allotment of PAN. More than 11.44 lakh Permanent Account Numbers (PAN) have been deleted or de-activated in cases where multiple PANs were allotted to one person.

4. RBI INSTRUCTS BANKS TO ENSURE SAFETY OF CUSTOMERS’ LOCKERS: The Reserve Bank of India has asked banks to ensure customers’ lockers remain safe and there is no negligence that could render banks liable to claims by locker holders. The banks have been advised by RBI that it would be the responsibility of the banks to ensure safety of lockers and there is no negligence in the matter of safeguarding the lockers.

5. MERGER OF SMALL BANKS MAY HURT MSME SECTOR: Merger of smaller banks into big will hurt credit sourcing for MSMEs (Micro,Small& Medium Enterprises). The large banks will be reluctant to lend to these MSMEs as they are less keen on small sized loans. Their services will be less personalised and there will be more fees attached. This is as per the report from financial services firm- Resurgent India.   MSME sector, which provides bulk of employment, accounts for 45% of India’s manufacturing, and nearly 8% of the country’s GDP.

6. RBI TELLS BANKS TO GO FOR PERIODIC VULNERABILITY TEST FOR CYBER SECURITY: Cyber security preparedness is a continuous process and the RBI has asked banks to periodically conduct vulnerability test. This is the result of the recent cyber-attacks and as India is gearing up for cashless economy, the cyber security plays an important role.

7. MONEY FLOW INTO FINANCIAL MARKETS INCREASED, POST DEMONETIZATION: Post demonetization, there has been visible channelizing of money towards financial assets like mutual funds, capital market and insurance. This was observed and stated by Mr.Viral Acharya, Deputy Governor of RBI. Mr. Acharya in his observations said that something has changed as black money transactions are not easy now and the money is flowing towards financial market, which is a positive sign.

8. AHEAD OF FESTIVE SEASON, ICICI BANK INTRODUCES INSTANT CREDIT CARD: Considering the demand due to the forthcoming festive season, ICICI Bank has introduced an instant credit card which can be availed online by its customers and start shopping on e-commerce sites even before the card is delivered to him/her.

WEEKLY FINANCIAL SNIPPETS- 29/07/2107

1. CORPORATE VENDORS UNDER I-T LENS: The Income Tax department has asked large corporate entities, including multinational firms to furnish details of employees not on the payrolls of the company who are being paid separately. This is to check whether they are filing tax returns after tax deductions at source (TDS). Many lawyers, chartered Accountants, Doctors, consultants and designers etc who are not on the payrolls of the company have not filed their I-T returns fearing they will have to disclose their full income.

2. BAD LOAN CRISIS—CRACKDOWN BY BANKS SENDS DEFAULTERSSCRAMBLING TO OFFER ONE TIME SETTLEMENT: The tough stance taken by the government and RBI to end the bad loan menace in the banking industry by instructing bankers to take extreme steps towards defaulters has caught many borrowers by surprise and they are scrambling to put together resolution plans to avoid harsher penalties including insolvency proceedings. This is a welcome change as seen by bankers as customers whose accounts are classified as Non-performing Assets are approaching bankers with proposals to resolve the issue in a time bound manner.

3. DIGITAL PAYMENTS—ONLY 7% INCREASE IN TRANSACTIONSTHROUGH DEBIT/CREDIT CARDS: Transactions through debit/credit cards rose merely by 7% post demonetization, as against a surge of  over 23% in overall cashless transactions. Bankers say that there is lot of scope for further improvement in such transactions.

4. NO GST ON HOUSING SOCIETY RWA WITH Rs 5,000/- MONTHLY SUBSCRIPTION: Services provided by housing societies resident welfare associations ( RWA) will be required to pay GST on monthly subscription/contribution charged from its members if such payment is more than Rs.5,000 per member and the annual turnover of RWA is more than Rs. 20 lakh. However, the contribution of Rs. 5,000 is exclusive of any municipal taxes.

5. AADHAAR ENROLMENT FACILITY IN BANKS TO START SOON:The Unique Identification Authority of India ( UIDAI)  has asked private as well as public sector banks to set Aadhaar enrolment facility in at least one out of 10 branches in  the coming weeks.  Suitable changes have been made recently in Aadhaar regulations to facilitate this.  There are around 1,20,000 bank branches spread across the country  and by this move 12,000 Aadhaar enrolment and updation centres will be set up.

6. 10 PUBLIC SECTOR BANKS HAVE SUBMITTED TURNAROUND PLANS: As many as 10 public sector banks have submitted their turnaround plans to the government. It is decided by the government that any future capital infusion to the banks shall be subject to achievement of select agreed upon milestones as per the turnaround plans submitted. Banks that will not be able to deliver on the agreed upon turnaround plan for a period of two years will be identified as banks eligible for alternative recourse.

7. AS COST OF EDUCATION RISES , UNPAID STUDENT LOAN SURGE: The cost of education in recent times has escalated but at the same time Non-performing assets (NPAs) within education loan book of the system as a whole has ballooned 21 % in the reporting year. Despite this increasing NPAs, banks continue to lend for higher education

WEEKLY FINANCIAL SNIPPETS- 22/07/2017

1. FOR THE 12 BANKRUPTCY CASES BANKS WILL HAVE TO TAKE A HIT OF 18,000 CRORE: According to India Ratings Research report, Banks need to provide an additional Rs. 18,000 crore in Financial Year 2017-18 towards the 12 accounts identified by Reserve Bank of India for reference to the National Company law Tribunal ( NCLT) under the Insolvency & Bankruptcy code. Banks have been given 6 more months to finalise the resolution plans for other NPA accounts   (around 500 more accounts). If no resolution plans emerge then banks will have to begin insolvency proceedings on these accounts as well, which in turn would mean huge provisions in Financial year 2018-19, which will impact badly on the profitability of banks.

2. BANKS TO FACE Rs. 2 LAKH CRORE HIT FROM TOP 50 STRESSED ACCOUNTS:As per CRISIL Ratings Agency estimation Banks may have to write off 60% of the value of bad loans from their 50 large stressed asset accounts or take a hit of Rs. 2.4 lakh crore. The 50 top stressed companies, which account for Rs. 4 lakh crore in stressed loans and account for nearly half of the total NPAs in the banking industry.

3. RBI NOT REVIEWING 90 DAY BAD LOANS CLASSIFICATION NORMS: The Finance Ministry has said the Reserve Bank of India is not examining any proposal to extend the 90-day period for classification of Non-Performing Assets. The prudential norms are one of the building blocks for financial soundness of Indian Banks and any deviation would render the banking system weaker.Further, any delay in recognition of deterioration in asset quality removes the pressure on banks to deal promptly with the problem.

4. RBI ALLOWS NBFCs TO OFFER NEW PENSION SCHEME: The Reserve Bank of India has allowed Non-Banking Finance Companies (NBFCs) to sell and market the new pension scheme(NPS). NBFCs with an asset size of Rs. 500 crore and above that have made a net profit in the preceding financial year will be permitted to sell NPS to their clients after registration with pension regulator.

5. RBI TO SET UP PUBLIC CREDIT REGISTRY TO IMPROVE CREDIT CULTURE: The Reserve Bank of India is planning to set up a high level Public Credit Registry (PCR) to help control loan defaults, improve credit culture and promote financial inclusion. RBI said such a registry is the need of the hour which will help the efficiency of financialmarket,  improve ease of doing business and help control delinquencies.

6. IDFC-SHRIRAM GROUP AGREE TO MERGE: IDFC Ltd, a domestic infrastructure lender and Primal group financial services major Shriram Group have agreed to merge and thus create the largest retail- focussed bank in the country. Aformal merger will take place in 12 months if all goes well as per the proposed plan. IDFC Ltd will be the holding company of the merged entity.

7. GST IMPACT—DISMANTLING OF CHECK POSTS SAVE 24-36 HOURS OF TRUCKING TIME: The Goods and Service Tax (GST) is saving fleet owners between 24 to 36 trucking hours  after dismantling of check posts of VAT, Octroi and other local taxes. Besides this it also ended huge amount of corruption which was taking place at each of the check posts.

WEEKLY FINANCIAL SNIPPETS- 15/07/2017

1. NEW ACCOUNTING STANDARDS MAY HIT BANKS’ LENDING TO INFRA/REALTY FIRMS: The adoption of new Indian Accounting Standards (IndAS) might compel banks to cut down on the quantum of loans they normally sanction to firms involved in Real estate and Infra Sectors. IndAS will result in a change in Debt-to Equity ratios of such firms as capital structures and financial instruments get reclassified. This will in turn increase the debts of the companies thus compelling banks’ to reassess the way they lend to these companies.

2. SBI URGES THE GOVERNMENT TO EASE PROVISIONING NORMS: State Bank of India has written to the finance Ministry raising concerns over stringent provisioning norms for companies under the Bankruptcy code, which will eat into its profit margins. Banks are reluctant to meet these norms and hence SBI has sought the ministry’s intervention on the matter.

3. AXIS BANK LAUNCHES “SUPER BIKE LOANS” : As the Higher Engine Displacement- High End models in bikes is catching the fancy of Indian consumer, AXIS Bank has introduced a special loan product – “ Super Bike Loan” which offers  funding of 95% of the bike cost. This includes the cost of the bike and the accessories also. The rate of interest will be between 10 to 11% per annum. These bikes come with a price tag of Rs. 5 to Rs 50 Lakh. The segment had witnessed a sale of over 3,000 units last year.

4. SBI HAS STARTED TO OFFER GST-READY SOLUTIONS TO ITS CUSTOMERS:State Bank of India has announced its Goods &Services Tax ready solutions, including the introduction of online payment through internet banking and debit cards. SBI customers can deposit GST upto Rs.10,000/- in cash, cheque or draft from  any of the SBI branches across the country.

5. GOOGLE COMPLETES UPI TESTING, AWAITS RBI NOD TO LAUNCH SERVICE: Technology giant Google has completed the testing of its Unified Payments Interface (UPI) payment service and is awaiting RBI’s approval. The National Payments Corporation of India ( NPCI), the umbrella organization for all retail payments system in India also said that Facebook and Whatsapp too were in discussion with it regarding rolling out their own UPI  payment services. Very soon these three big technology giants will start their UPI operations.

6. DIRECT SELLING AGENTS UNDER WATCH IN HOME LOAN TRANSFER CASES: To check possible instances of mis-selling, the housing finance regulator- NHB is examining data on home loan transfers from one bank to the other and may issue guidelines for direct selling agents ( DSAs) in the interest of the borrowers. NHB wants to check whether the balance transfers are genuine transactions or the agents are playing a game on it. The ultimate goal of NHB is to bring in a very well trained set of Agents in the interest of the borrowers.

7. CURRENCY BAN IS NOT A GROUND FOR BANKING OMBURDSMAN TO HANDLE COMPLAINTS: The Reserve Bank of India has clarified that customer complaints regarding the problems like cash withdrawal and exchange of notes faced during demonetization period cannot be entertained under the Banking Ombudsman scheme. Banking Ombudsman Scheme 2006 specifies 27 grounds of complaints under which complaints can be lodged and complaints related to demonetization is not a ground of complaint specified under the scheme.

WEEKLY FINANCIAL SNIPPETS- 08/07/2017

1. CUSTOMERS SHOULD REPORT FRAUDULANT TRANSACTIONS WITHIN 3 DAYS TO AVOID LOSSES: The Reserve Bank of India had earlier capped the customer liability at Rs.25,000 if they reported the unauthorised transactions within 7 working days. Now further modifying this clause, RBI said that customers can’t be made liable at all if they notify the unauthorised transactions within 3 working days. These rules will be applicable for third party breach, where deficiency lies neither with the bank nor with the customer but lies elsewhere in the system.

2. RBI MAKES MOBILE PHONE MANDATORY FOR DOING ELECTRONIS BANKING TRANSACTIONS: The Reserve Bank of India has said that owning a mobile phone is mandatory for customers wishing to do electronic banking transactions and has instructed banks to make SMS alerts mandatory in such cases. It has instructed banks not to offer electronic banking facility to customers who do not provide mobile numbers to the bank.

3. OVER 90% INDIAN CUSTOMERS STILL PREFER BRANCH BANKING OVER ONLINE BANKING:While the government has been pushing for cashless transactions and asking the public to go online when it comes to banking, a new study has revealed that 94% of retail banking customers have visited the bank branches at least once in the past 12 months. Most banking relations still begin and continue at the branch. However, there is great potential for banks to move more into digital space.

4. IT IS NOT MANDATORY TO LINK YOUR BANK ACCOUNT WITH AADHAAR CARD: There is no notification from RBI to link a bank account with Aadhaar number. By collecting Aadhaar details from their customers the banks are trying to pre-empt the possibility of it becoming compulsory in future. Another reason why banks are linking Aadhaar with the bank accounts is to promote Aadhaar enabled transactions without the use of debit or credit cards.

5. CREDIT CARD BILL PAYMENT EXEMPT FROM CASH DEALING LIMIT: The Finance Act 2017 has banned cash transaction of Rs. 2 lakh or above with effect from April 1, 2017. However restrictions on cash dealings of Rs. 2 lakh or more will not apply to credit card bill payments, business correspondents appointed by banks and issuers of prepaid instruments. This has been clarified by the revenue department.

6. HOW “BHIM APP” IS TRYING TO CATCH UP WITH OTHER MOBILE WALLETS: The Bharat Interface for Money ( BHIM) has seen a great many downloads of around 19.16 million since its launch but only 5.1 million users are able to link their bank accounts with the App. In contrast other payment apps like Oxigen wallet currently has 30 million active users and Mobikwik has 55 million active users. Recently BHIM has come up with additional features like Aadhaar Pay, Referral bonus and cash back offers to make it more popular.

7. BANKING STAFF THREATENS STRIKE ON AUGUST 22 OVER MERGERS AND NPA ISSUES:Employees of PSU banks are going on one day strike on August 22^nd against the governmentproposal to merge state-owned banks. Besides, they want the government and RBI to declare wilful default as a criminal offence and desist from writing off the corporate Non-Performing Assets (NPAs) or bad loans. They also have urged the government to look into the GST rates on bank service charges because of which the service charges have increased, which in turn has burdened the customers.

WEEKLY FINANCIAL SNIPPETS- 01/07/2017

1. RBI STARTS THE PROCESS OF PRINTING Rs. 200 CURRENCY NOTES: Reserve Bank of India has started the process of printing new Rs.200 currency notes. This appears to be the last exercise under the re-monetization steps taken by the government and this step is taken to help ease consumer transactions. For day-to-day transaction purposes, the introduction of Rs.200 notes will add to the comfort of the public at large.

2. RBI SAYS- BANKS NOT RESPONSIBLE FOR THEFT FROM BANK LOCKERS:Banks are not liable to compensate its customers in case of theft or burglary in safe deposit lockers. This is revealed in an RTI response by RBI and 19 PSU banks. Some banks, in their locker hiring agreements, have made it clear that any item stored in the locker is at the customer’s own risk and he/she may insure the same in his/her own interest.

3. BANKS FACE 60% “HAIRCUT” ON TOP 12 BAD LOANS: Dragging defaulters to the National Company Law Tribunal ( NCLT) and initiating insolvency proceedings will take heavy toll on bank finances. According to CRISIL, banks will have to sacrifice nearly 60% of the value of the loans extended to 12 indebted companies which the banks have referred to the NCLT at the instance of RBI.

4. RBI PROVISIONING “DIKTAT” SHOCKS THE BANKS: The Reserve Bank of India shocked the banks this week by demanding a steep hike in provisioning requirements for loans being referred to the bankruptcy courts, a move likely to take a Rs. 50,000 crore toll on their earnings this fiscal. RBI has instructed banks to set aside 50% of the loan amount as likely losses for all cases referred to the insolvency process. RBI also said that provisioning should be 100% in those cases that do not get resolved in the initial mandatory period for restructuring and instead are forced into liquidation. But banks have been given time of three quarters to spread the provisioning requirements from June 2017 till March 2018.

5. RBI ASKS BANKS TO RESOLVE 55 DEFAULT CASES IN 6 MONTHS OR FACE IBC: The Reserve Bank of India has asked banks to resolve 55 high value cases of bad loans within 6 months or face the prospect of being directed to go in for the new insolvency resolution mechanism as a part of the strategy to tackle the bad loans scenario on a war footing basis.

6. FINANCIAL YEAR LIKELY TO BE CHANGED FROM 2018: The financial year in India could commence from January instead of April from the year 2018. The government appears set to make the historic transition to end the 150 year old tradition. Accordingly, the next budget could be presented by the centre in November this year.

7. AADHAAR-PAN LINKING MANDATORY FROM JULY 1^st: Finance Ministry has made itmandatory to link Aadhaar with PAN Number. Individuals having PAN No. will have to link it to their existing Aadhaar Number from July 1^st Every person who has been allotted PAN shall intimate his Aadhaar number to the tax department.

WEEKLY FINANCIAL SNIPPETS- 24/06/2017

1. PASS ON THE GST BENEFITS TO CONSUMERS OR GET LICENSE SCRAPPED: Any business entity that fails to pass on the benefit it derives from lower taxes under GST regime to its consumers, faces penalties and cancellation of  license under the new antiprofiteering rules. The new National Antiprofiteering Authority would be empowered to force reduction in the prices to the extent of lowering of taxes, and impose penalty or even cancel the registration under the Central GST Act in case the benefit is not passed on to the consumers.

2. SUPREME COURT RULING ON AADHAAR-PAN LINKING AND CBDT CLARIFICATION: Further to the ruling by Supreme Court ruling on the constitutional validity of Aadhaar-PAN linking provision, the Central Board of Direct Taxes (CBDT) has clarified that every tax payer has to quote his Aadhaar number /Aadhaar enrolment ID while applying for obtaining PAN card number and also while filing his/her tax returns from July 1^st

3. RBI INSTRUCTS BANK TO PROVIDE ADEQUATE TRANSACTION DETAILS IN PASSBOOKS: The Reserve Bank of India has instructed all banks to provide “adequate details” in the passbooks and account statements so that the customers can cross check the entries easily. RBI has advised banks to avoid inscrutable entries in the passbooks /statement of accounts and ensure that brief and intelligible particulars are entered with a view to avoid inconvenience to the customers.

4. SEBI RELAXES NORMS FOR LENDERS BUYING STAKE IN DISTRESSED COMPANIES: Securities & Exchange Board of India (SEBI) has relaxed the norms for lenders to purchase stakes in distressed companies, exempting them from making open offers for shareholders. The relaxation would be subject to certain conditions, including shareholders’ approval of the stake acquisition by way of special resolution. SEBI said this is aimed at facilitating “turnaround” of listed companies which are in distress which will benefit the shareholders and the lenders.

5. NO TIMELINE ON IDENTIFYING ADDITIONAL LOAN DEFAULETERS: The RBI Deputy Governor has said that there is no specific timeline set for banks to identify additional defaulters on which bankers would need to start bankruptcy proceedings. Earlier this week the RBI had identified 12 largest loan defaulters to pursue bankruptcy proceedings against them.

6. GOVERNMENT IN TALKS WITH RBI TO DEFER BASEL-III NORMS FOR BANKS: The RBI has laid down norms for implementation of international capital norms or “BASEL-III” norms for Indian Banks by March 2019. According to these norms the banks have to maintain a minimum common equity ratio of 8.5% and total capital ratio of 11.5% by March 2019. However banks are struggling to maintain these ratios as they are saddled with huge bad loans scenario. Considering the current bad loan scenario, the government is in discussion with RBI to explore the possibility to defer the full implementation of “BASEL-III” norms.

7. RECORD INCOME TAX COLLECTIONS THIS YEAR: Net Income Tax collection till June 15^th 2017 grew at a healthy 26.2% to Rs. 1,01,024crore from across the country. Last year up to June 2016 the tax collection was Rs. 80,075 crore.

WEEKLY FINANCIAL SNIPPETS- 17/06/2017

1. FARM LOAN WAIVERS DISRUPT CREDIT DISCIPLINE: Farm loan waivers are the populist actions and lead to disruption of credit discipline among borrowers. Frequent farm loan waiver schemes will have a negative impact as farmers expect future loan waivers from time to time and thus delay or stop repaying the loans. Frequent occurrence of such populist actions (loan waivers) may lead to impaired credit repayments and thus reduced credit availability to farmers.

2. RBI TO DIRECT BANKS TO START BANKRUPTCY PROCEEDINGS AGAINST 12 BIG DEFAULTERS: The Reserve Bank of India has identified 12 of the largest loan defaulters and has instructed the bankers to initiate bankruptcy proceedings against them. The move comes about amonth after the government gave RBI greater power to deal with bad loans, including banks to initiate an insolvency resolution process in case  of a default. These 12 accounts constituted about 25% of the overall gross Non-Performing Assets (NPAs), and have been identified, as the committee focussed on those accounts owing more than Rs.5,000 crores, out of which more than 60 % of the loan had been classified as NPA.

3. ONLINE BANKING TO KILL PHYSICAL BANKING IN 5-6 YEARS: As per NITI Aayog CEO Mr Amitabh Kant, low cost internet based banking transactions and business efficiency due to technology advancements are expected to kill the physical banking trend in 5-6 years. In 5-6 years it will be very difficult for physical banks to survive because the cost of physical banks will be enormous. This cost will be very huge to bear for the banks compared to the cost of an online fintech company and their ability to do data analysis and providing credit.

4. NPCI TO LAUNCH RUPAY CREDIT CARD BY JULY: The National Payments Corporation of India (NPCI) has said it will launch a RuPay credit card by July this year. As many as 56 different banks have shareholding in NPCI despite it being a non-listed entity with no dividend declarations. Presently there are 241 million RuPay debit cards in circulation in India comprising 35% of the card base in India.

5. RBI EXAMINING RELAXING BAD LOAN CLASSIFICATION LIMIT OF BEYOND 90 DAYS FOR SMEs: Currently an account turns into a Non-Performing Asset (NPA) or bad loan if it is not serviced for 90 days. In case of Small Businesses and SMEs, their receivables usually come late(absence of vibrant factoring or trade receivable market) and once this cycle is delayed, they miss the 90 day period of repayment, they fall into NPA category and coming out of NPA category is very difficult for these SMEs. Some people have made a true representation in this matter to the Ministry of Finance and hence RBI is looking into it, to extend the classification norm of 90 days period for Non-Performing Assets to help Small and Medium Enterprises ( SMEs).

6. BHARAT FINANCIAL TO ROLL OUT 2 LAKH “KIRANA POINTS” IN 16 STATES: Bharat Financial Inclusion(Earlier known as SKS Microfinance) is planning to launch 2 lakh “Kirana Points” across its networkin 16 states in partnership with leading banks. With introduction of Kirana Points, the company’s borrowers can walk into the nearest kirana point store and make basic financial transactions like repaying loan, deposits and withdrawals from savings account and make bill payments. For this the company will appoint agents to set up kirana points.

7. PE FIRMS, NBFCs FIND INVESTMENT OPPORTUNITY IN AFFORDABLE HOUSING: Private Equity and Non-Banking Financial Companies (NBFCs) are looking at affordable housing projects.  A few Institutions have already invested money in affordable housing projects, bringing in the much needed liquidity. This is the result of the government’s thrust on the segment and recently accorded infrastructure status.

WEEKLY FINANCIAL SNIPPETS- 10/06/2017

1. RBI DIRECTS BANK BRANCHES TO COMPLY WITH PPO ORDER: The Reserve Bank of India has directed all the bank branches to record Pension Payment Order number (PPO) in the passbooks of pensioners to avoid any hassle in case the PPO is lost. This is affected to nullify the difficulties reported by pensioners or their family pensioners to get duplicate PPO.

2. SBI SNAPS “LINE OF CREDIT” TO STRESSED TELECOM COMPANIES: State Bank of India has cancelled existing but unused credit lines to some financially weak telecom companies, following the banking regulator’s direction to make immediate provisions against the credit given to telecom sector including their standard assets. As per the line of credit, a borrower can draw from the credit as per his requirements. By scrapping the facility, bank will be able to bring down its requirement of capital that otherwise needs to be set aside as provisions. SBI is also waiving the commitment charges.

3. BANKS NEED Rs.95,000 CRORE ADDITIONAL CAPITAL OVER NEXT TWO YEARS: As per Moody’s Investors Service report, new stressed assets of Indian Banks will increase through 2019 and capitalisation will remain a key credit weakness for state owned banks. The asset quality outlook for banking sector will remain weak as Gross Non Performing Assets (NPAs) or bad loans will increase to around Rs. 8.5 lakh crores by the end of financial year 2017-18. Since Public Sector Banks (PSBs) have limited ability to raise external capital, infusion by the government remains the only viable source for shoring up capital base. Asper the plan, the PSBs need to raise Rs.1.10 lakh crores from markets to meet Basel III capital adequacy norms.

4. IDBI BANK TO SET UP SEPARATE DEPARTMENT TO MANAGE BAD LOANS: IDBI Bank has created a special department for managing bad loans and monitoring credit after taking a serious hit as RBI has put the bank under PCA (Prompt Corrective Action) and ICRA has downgraded the bank’s credit rating. This department will have experienced officials who will give focussed attention to each case. Besides this, the bank also aims to raisearound Rs. 5,000 crores by selling its non-core assets in the current fiscal.

5. EQUITY MUTUAL FUNDS INVESTMENTS ACHIEVE 2 YEAR HIGH: Equity Mutual Funds saw an inflow of Rs.10,790 crore in May 2017, making it the highest  in nearly two years. This is the 14^th straight month of inflows into equity schemes. The strong inflows have pushed the asset base of equity mutual funds by 2.6 % in May 2017 from the preceding month.

6. BANK NPAs ARE ROADBLOCKS TO GROWTH: As per the trade body ASSOCHEM, Non-Performing Assets of Indian Banking sector are one of the biggest roadblocks for the growth of the economy. It has urged the RBI to make NPA norms more flexible and take pragmatic approach while resolving the complex issue of NPAs of banks so that the banks can be nursed back to health.

7. SBI OFFERS FREE CREDIT CARDS TO THOSE WITH NO CREDIT HISTORY: If you don’t have a credit history, banks are generally reluctant to offer you a credit card. But to help such customers and increase the card penetration in India, SBI has come out with a credit card    “ UNNATI”  which will be available to its customers even if they do not have a credit history provided they have a minimum deposit of Rs 25,000 with the bank. Any SBI customer with or without a credit history can apply for the card. The card will be available free of cost for the first four years.