BANKS BOARD BUREAU IDENTIFIES 75 SENIOR OFFICERS FOR LEADERSHIP ROLES IN PSBs: The Banks Board Bureau (BBB), the apex body for selection of whole-time Directors of Public Sector banks has identified 75 senior officers from the Senior Management Level to take over leadership role in the future. The current list of 75 officers have been selected from a pool of 450 such eligible officers to take on the current and emerging challenges as well as help create a leadership pipeline. Shortly a globally ranked Indian Institution will be identified where every year the identified personnel would undergo intensive leadership development training.
ICICI BANK LAUCNHES INSTANT LOAN SCHEME: ICICI bank has launched an Instant Loan for its salaried customers wanting to buy cars and two wheelers. Pre-approved ICICI Bank customers can get a sanction letter for a car or two wheeler loan instantly which can be used to get a vehicle loan for the full on road price within 15 days. ICICI Bank is already offering instant personal loans, home loans and credit cards and now it has added vehicle loans in this list.
IDBI BANK BRINGS PAPERLESS ACCOUNT FACILITY FOR NRIs:IDBI Bank has launched “NRI-Insta-Online” account opening for Non Resident Indians (NRIs). This online account opening process is available to NRIs residing in Financial Action Task Force (FATF) member countries. Hence NRIs living in nearly 40 countries will now be able to open account in IDBI Bank without submitting paper documents as they will not be required to furnish any physical documents such as KYC proofs. This user friendly initiative will help NRIs to open the account without any need to visit the branch or submit any physical documents and they can choose the branch in which the account needs to be opened.
EASIER FINANCING FOR LOW-COST HOMES LIKELY: The government is planning to ease funding and construction norms for its “Housing for All” programme to speed up construction of affordable house.Some of the changes under consideration are allowing greater access to institutional finance to the poor, relaxation in eligibility criteria for bank loans and switching to a life cycle cost approach to construction of such houses to bring down costs and ensure quality of construction. Besides this, fiscal support is being considered for companies that use recycled products made from waste.
CHANGES IN INCOME TAX RETURN FORM FOR AY-19-20: The Central Board of Direct Taxes (CBDT) has introduced new Income Tax Return (ITR) forms for the assessment year 2019-20. The new ITR form comes with a set of changes. The tax payer will be required to feed more detailed disclosure. The idea is to check evasion and eliminate many loopholes. With the last date for filing the returns being 31ST July, the tax payer needs to start the process in advance to fill in the required details.
CBDT AMENDS FORM-16 AND FORM-24Q FOR DETAILED REPORTING ON TDS: The Central Board for Direct Taxes (CBDT) has affected amendments in Form-16 (Certificate for Tax Deducted at Source-TDS) and Form-24Q, a quarterly TDS statement for salaries. As per the new form it is required to provide more details related to bifurcation of exemptions under Section 10 of the Income Tax Act, disclosure of standard deduction amount and other income.
BRITAIN ORDERS FOR SEPERATION OF AUDIT AND CONSULTANCY BUSINESS FOR THE “BIG FOUR” AUDIT FIRMS: Britain’s “Big-Four”accounting firms have to now separate their consultancy business and audit business as per the country’s competition watchdog. This means the auditors should focus exclusively on producing the most challenging and objective audits rather than being influenced by their much larger consultancy businesses.
BUILDERS FACING TOUGH CHOICE IN GST RATES FOR ONGOING PROJECTS: Builders and home buyers are finding it difficult to understand the best deal for them under the new GST rates for on-going projects. Real Estate Developers have time till May 10th to decide on whether to stick to the old rate with input tax credit or to opt for new GST rate (5%) with no input tax credit.
SBI CARD PLANNING FOR A CARD-LESS BUSINESS MODULE : SBI Card, the credit card arm of State Bank of India (SBI), is changing its business model. It is planning and is preparing for a card-less world. In the last 18 months it has set up its own infrastructure and brought back its core platform to India without losing sight of growth. Now they are using Chatbot, Artificial Intelligence and robots to do their respective jobs. The card company is backed by private equity fund Carlyle and is also diversifying its funding from banks beyond SBI to tap local bond market as it seeks diversification after the exit of GE Capital a year ago.
BANKS CLOSE THE FY19 WITH ROBUST CREDIT GROWTH: According to RBI data released this week, bank credit rose by 13.24% while deposit grew by 10.03% in Financial Year 2018-19. This is the second consecutive double-digits credit growth after the same had declined to 4.5% in Financial Year 2016-17. On a Year-on-Year basis, non-food credit increased by 13.2%, Loans to Services sector by 23.7%, Credit to Industry by 5.6%, credit to Personal loan segment by 16.7% and advances to Agriculture & Allied Activities increased by 7.5%.
BANK BOARD BUREAU TALKS OF AUTONOMY TO PSU BANKS TO DECIDE ORGANISATIONAL STRUCTURE : The Banks Board Bureau (BBB), the apex body for selection of whole-time Directors of State-owned Banks, has made a case for giving a complete autonomy to banks to decide organisational structure for better efficiency. The board has suggested revamping credit governance architecture in these banks to reinforce efforts to minimise credit costs and enhance efficiency of credit allocation. It has also recommended incentivisation scheme linked to performance.
I-T DEPARTMENT TO GO AFTER 65,000 NON-FILERS FOR 2016-17 : The Income Tax Department will initiate recovery of tax along with penalty from approximately 65,000 assessees who had deposited Rs 10 lakh and more in their bank account during demonetisation period but did not file returns for the assessment year 2017-18.
RESERVE BANK OF INDIA ISSUES NEW NORMS FOR BANKS TO SET UP CURRENCY CHESTS: The Reserve Bank of India (RBI) has come out with new set of guidelines for setting up of new Currency Chests by banks. As per the new guideline the strong room/vault size must be of minimum 1,500 sq ft. For those situated in hilly area the area should be 600 sq ft. Besides this, the new currency chests should have the capacity to process 6.6 lakh pieces of bank notes per day.
LIC GETS 12 YEARS TO CUT ITS STAKE IN IDBI BANK: The Reserve Bank of India has given Life Insurance Corporation of India (LIC) 12 years to reduce its stake by 10% in IDBI Bank. Presently LIC has 51% controlling stake in IDBI bank making it the bank’s majority shareholder. This has to be brought down to 40% in the next 12 years.
CERTAIN NBFCs TO GET LICENCE FOR FOREX DEALERSHIP: Reserve Bank of India has announced that certain Non-Banking Financial Companies (NBFCs) will be able to get licence as authorised foreign exchange dealer. This move will make it easy to purchase foreign exchange for overseas travel. Accordingly Non-deposit taking systematically important NBFCs (NBFCs-NDSI) will be made eligible to apply for grant of Authorised Dealer Category-II licence.
BANK OF INDIA TO SELL 25.05% STAKE OF ITS INSURANCE JV : Bank of India has announced that it will sell 25.05% stake in its insurance Joint Venture (JV) Star-Union Dai-ichi Life Insurance Co. The proposed sale of over 6.48 crore equity shares will fetch the bank at least Rs 1,106 crore. The floor price for the stake sale has been fixed at Rs 170.50 per share.
RBI TO ISSUE NEW DIRECTIVE AFTER SC VERDICT ON FEBRUARY 2018 CIRCULAR: In February 2018 RBI had issued a circular which had stipulated that banks had 180 days to arrive at debt resolution plan for loan accounts above 2,000 crore and more, failing which the company would have to be sent to bankruptcy Court under Insolvency & Bankruptcy Code (IBC). Now the Supreme Court has quashed this circular. RBI will soon issue a revised directive on stressed asset resolution that will comply with Supreme Court order. RBI Governor Mr. Shaktikanta Das said RBI stands committed to maintain and enhance the momentum of resolution of stressed assets and adherence to credit discipline.
NEW CUSTOMER-PROTECTION MEASURES ON CARDS FOR ELECTRONIC PEYMENTS: The Reserve Bank of India would soon come up with new set of customer-protection measures aimed at improving user confidence in electronic payment channels. The main objective is to reduce the use of cash in business transactions. The proposed regulations will include a common timeframe for all authorised electronic payment systems to respond to customer complaints and setting up a compensation framework for failed transactions.
AXIS BANK ASKS MORE THAN 50 OF ITS MID-LEVEL MANAGERS TO LEAVE: Axis Bank, headed by its new CEO has reviewed the business and has decided to terminate more than 50 mid-level Managers in view of restructuring its business and cut costs. These affected officials held important posts and had led various supervisory functions in corporate and retail banking. This decision has rattled many old timers in the bank. The bank said that changes are afoot at the bank to raise productivity and efficiency.
BANKS AND OTHER OPERATIONAL CREDITORS SET TO LOSE OVER Rs 90,000 CRORE AS VIDEOCON GROUP SINKS: The two main Videocon group companies, Videocon Industries Ltd (VIL) and Videocon Telecommunication Ltd (VTL) owe Rs 59,451 crore and Rs 26,673 crore respectively to Indian Banks, led by Consortium leader SBI. Besides this, 731 other Operational Creditors have made separate claims. The total amounting to over Rs 90,000 crore makes it the biggest corporate bankruptcy case in Indian banking industry. Interestingly the group promoters-Venugopal Dhoot, Pradipkumar Dhoot and Rajkumar Dhoot have also claimed Rs 57,823 crore on the basis of personal guarantees provided by them for various facilities availed by the VIL.
NEARLY ALL ASSETS OWNED BY IL&FS LENDING ARM HAVE TURNED BAD: According to the government appointed board of the lender, 90% of the Rs 18,800 crore assets of I-Fin, the firm’s lending arm, have turned bad. The situation is so bad that it was impossible for the board to give a timeline to the creditors of the group firms on when they could expect a court-imposed moratorium to be lifted.
GST REVENUE COLLECTION TOUCHES NEW HIGH: The GST collections touched a record high of Rs 1.06 trillion in March 2019, up from Rs 97,247 crore in February 2019. This is the result of improved compliance and increased number of returns filed. The collection in March 2019 has been highest since introduction of GST and also reflects a 15.6% growth over March 2018.
RBI NORMS ON BANK EXPOSURE COME INTO EFFECT FROM APRIL 1st: New guidelines on bank exposure on large borrowers take effect from April 1 The new guidelines cap a bank’s exposure to a group of companies at 25% of its core capital and to an individual company at 15%. It is three years since RBI came out with these guidelines but many banks are still struggling to comply with this because of capital constraints. These banks may look at cancelling the existing sanctioned limit of borrowers to meet the cut-off date.
MUMBAI TOPS IN TAX COLLECTION FOR FINANCIAL YEAR 2019: Mumbai has emerged as top contributor to the exchequer and accounted for 32% of overall tax collection in financial year ending March 2019.
GOOGLE TO ISSUE CREDIT CARDS : Google is about to start issuing credit cards to its select users of its own AdWords advertising program. This card will help small and medium sized businesses that are cash-strapped as this card will give them ample credit on affordable terms. The Google card is actually a store card which can be used for payment at specific merchant establishments. The card comes with no annual fee and a very low 8.99% annual percentage rate.
SBI PLANS TO BRING MORE HIGH NET WORTH CUSTOMERS INTO ITS FOLD: State Bank of India is opening 55 Wealth Management Centres across the country by 2020 to attract High Networth Customers. So far SBI has opened 44 such centres with a network of 121 wealth hubs which has about 52,000 customers and is managing their assets worth 30,000 crore. SBI is offering wealth management service to existing customers with minimum of Rs 30 lakh manageable assets. For new customers the entry threshold is Rs 10 lakh.
FIVE PSU BANKS GET CAPITAL INFUSION OF Rs. 21,428 CRORE FROM GOVERNMENT: Five state owned banks, including Punjab National Bank, Bank of Baroda and Union Bank received capital infusion to the tune of Rs. 21,438 crore from the government. The capital infusion is for the current fiscal ending March 31, 2019. The capital infusion will be by way of preferential allotment of equity shares of the bank during 2018-19 as government’s investment.
BANKS’ CONSUMER DURABLE LOAN BUSINESS SHRINKS BY 75%: The volume of banking sector’s consumer durable loan share has shrunk by 75% year-on-year. According to RBI data, banks outstanding consumer durable loans stood at Rs. 4,600 crore at the end of January 2019, as against Rs. 19,700 crore a year back. This is in spite of HDFC bank’s recent thrust in this segment. Zero-cost Financing schemes and cash-backs offered by many NBFCs has taken away this business from the banks.
SBI MAY ASK SENIOR RETIRED BANKER TO HEAD JET AIRWAYS: As lenders moved in to take charge of the cash-strapped Jet Airways, State bank of India, the lead banker may ask one of its senior retired bankers to head the airline and guide it out of the present financial mess. As per the plan, approved by the government, the lenders are set to take over the airline and run it for a few months before selling it.
BANKS MAY INCREASE DEPOIST RATES: With credit growth outstripping the deposit growth so far in the present financial year, banks may be forced to increase their deposit rates to attract more deposits. In the present financial year banks have so far witnessed credit growth of 14.33% while the deposit growth has seen only 9.97 % increase.
CHARTERED ACCOUNTANTS COMPLAIN AGAINST INCOME TAX OFFICERS TO THE GOVERNMENT: Various Chartered Accountant bodies across the country have written to the Finance Ministry asking them to hold back tax officials instructed to take all possible measures to recover tax. The instructions given by the Central Board of Direct Taxes (CBDT) to all principal Chief Income Tax Commissioners to take all possible measures to achieve the shortfall of 14.9% in the targeted tax collection has created fear in the minds of the tax payers. The complaint also mentions that the government must follow the process of law if at all the recovery measures are to be adopted.
GOVERNMENT TO PUSH PSBs TO TAP MARKET FOR FRESH CAPITAL IN NEXT FISCAL: The government will push large Public Sector Banks (PSBs) to tap the market for fresh capital in the next fiscal year as it is not inclined to give them more capital infusion as it has already infused sufficient funds in this fiscal. It is also seeking details from these banks on action taken in cases of bad loans above Rs 50 crore. The government also expects the remaining 5 banks to come out of PCA by the end of next year.
SBI UNLIKELY TO MEET FULL YEAR TARGET OF NBFC LOAN PURCHASE: State Bank of India is unlikely to meet its full year target of NBFC loan purchase as it is selectively buying portfolios in the Housing, Agriculture and MSME categories. It feels there are not many good and quality assets worth buying. This fiscal, SBI has so far bought loans worth only Rs.17,000 crore from Non-Banking Finance Companies as against the set target of Rs. 45,000 crore.
INDIA’S BAD LOANS RATIO IS THE WORST IN THE WORLD: India holds the dubious distinction of having the worst Non-Performing (Bad loans) loan ratio among the world’s major economies. Reserve Bank of India in its latest report states that the bad loans ratio of banks fell for the first time since the year 2015. It has surpassed Italy’s bad loan ratio. Italy has successfully managed to reduce its bad loan ratio.
REALTY COMPANIES CAN OPT FOR OLD OR NEW RATES OF GST FOR THEIR ONGOING RESIDENTIAL PROJECTS: Real Estate Firms will have the option of adopting a lower rate of Goods & Services Tax (GST) without Input Tax Credit (ITC) or go for the existing rate with ITC. This applies only to the on-going projects where the construction and actual bookings have started before 1ST April 2019 but are yet to be completed. Projects beginning on or after 1ST April 2019 will invariably fall into lower GST rate regime. In our opinion if the developer opts for GST with ITC benefit then he has to offer the flats at higher GST rates and customers may not be willing to purchase at higher GST rate.
RBI SAYS NO TO IDBI BANK NAME CHANGE PROPOSAL: The Reserve Bank of India has turned down IDBI Bank’s proposal to change its name from IDBI Bank to LIC IDBI Bank or LIC Bank following acquisition of its major stake by LIC. Earlier this month, RBI changed the categorisation of IDBI Bank to a private Sector lender.
SBI CUSTOMERS CAN NOW WITHDRAW CASH FROM ATM WITHOUT THE USE OF DEBIT CARD: Customers of State Bank of India will no longer require debit cards to withdraw money from ATM. State Bank of India has announced that the customer can generate a One-Time-Pin (OTP) through their mobile application and use the PIN to draw money from the ATM. The service is currently made available at 16,500 ATMs. And very soon it will be available in more than 60,000 ATMs across the country.
BANK OF BARODA LAUNCHES CRECHE/DAYCARE FACILTY FOR CHILDREN OF EMPLOYEES: Bank of Baroda has become one of the first Public Sector Banks to launch a crèche/child day care facility for children of its employees. It has launched the facility at its Mumbai Corporate Office which houses more than 1,500 employees. The bank intends to launch more of such day care centres in the near future. This initiative is designed to help its employees to save time and reduce stress of finding right day care centres for their children. The bank will bear 60% of the cost with the 40% to be borne by the respective employee.
DEUTSCHE BANK IS PLANNING TO SET UP A BAD LOAN BUYING UNIT IN INDIA: Deutsche Bank is planning to set up a unit in India to buy and reorganise bad loans in India. It seeks to make profit from an unprecedented bad-loan clean-up in India with one of the worst Non-Performing loan ratios. The Bank felt the need to have its own Asset Reconstruction Company (ARC) to buy and reorganise Non-Performing Loans as current Indian rules restrict overseas investors from buying soured loans directly from investors in India.
PRIVATE BANKS MAINTAIN CREDIT GROWTH OF 20%: The credit growth of private banks in the third quarter of the present financial year touched 22% year-on year. This is for the fifth consecutive quarter that the private banks have maintained the growth rate at 20% or more. On the other hand the growth rate of Public sector banks remained subdued at 8.4%.
RBI CATEGORISES IDBI BANK AS PRIVATE SECTOR LENDER: Subsequent to the of the majority stake in IDBI Bank by LIC of India, Reserve Bank of India has categorised IDBI Bank as a private sector lender. LIC of India completed the process of picking up a controlling 51% stake in IDBI Bank. IDBI Bank has been categorised as Private Sector bank for regulatory purposes with effect from 1ST February 2019. For December 2018 quarter IDBI Bank reported a loss of Rs. 4,185.48. The Bank’s Non-Performing Assets (NPAs) as on December 2018 were 29.67% of the gross advances.
GOVERNMENT’S “MUDRA YOJANA” SPELLS TROUBLE FOR BANKS: Government’s small loans scheme- Micro Units Development & Refinance Agency (MUDRA) has seen bad loans soaring in its entire three segments—Shishu, Kishore & Tarun. NPAs under MUDRA scheme in the first nine months of the current fiscal have increased by 53% to Rs. 14,930 crore from Rs. 9,769 crore last year. The total disbursement this year from April to February is Rs. 2.12 lakh crore as compared to Rs. 2.46 Lakh crore for the full fiscal year 2017-18. This is according to the data received by Indian Express through RTI (Right To Information).
SBI LINKS INTEREST RATE ON MOST SAVINGS ACCOUNT DEPOSITS TO REPO RATE: State Bank of India became the first domestic bank to link the interest rate it offers on savings account to the Reserve Bank of India’s Repo rate. Savings accounts with deposits above 1 lakh would be now priced at 2.75% below the Repo rate of 6.25%, which at present works out to be 3.25%. Accordingly all Cash Credit and Overdraft facilities over Rs 1 lakh would be priced at 2.25% over the Repo rate, this would mean at the present Repo rate of 6.25% the floor price would be 8.5%. The bank would be charging “risk premium” over the floor rate, depending on the credit rating of the respective borrower. This method of linking interest rate to Repo rate is an attempt to speed up the transmission of any changes in the benchmark monetary policy rate to depositors and borrowers.
NOW YOU CAN DEPOSIT CASH, PAY UTILITY BILLS THROUGH NON BRANDED WHITE LABEL ATMs: White label ATMs (WLAs) are those ATMs which are owned and operated by Non-Bank entities. A customer from any bank will be able to withdraw money from these WLAs but needs to pay a fee for the services. After review of the existing norms for these WLAs, RBI has decided to allow them to offer services like cash deposit and payment of utility bills. These WLAs can now buy wholesale cash above Rs 1 lakh directly from RBI, currency chests and from any scheduled bank including Regional Rural Banks.
TIGHTER HOUSING FINANCE NORMS ON THE CARDS: National Housing Bank (NHB) is considering tightening the Asset-Liability Management (ALM) norms for Housing Finance Companies (HFCs) to help detect their solvency concerns early. This will be the latest in a series of steps, including tougher capital and borrowing norms. These tough steps are being taken by NHB after defaults by IL&FS entities and concerns about DHFL’s repayment ability.
MANAPPURAM FINANCE KICK-STARTS ITS DOORSTEP GOLD LOAN DELIVERY IN DELHI, MUMBAI: Manappuram Finance has decided to offer doorstep delivery of gold loan to customers in Delhi and Mumbai. The Company will initially offer doorstep gold loan facility across 50 branches each in Delhi and Mumbai. It has successfully launched this facility in Chennai and Bangaluru. With this launch the company intends to address the convenience and security factors in one go as the customers don’t have to commute with gold or cash as the money would get transferred directly to their accounts.
BANKS COMING OUT OF PCA FRAMEWORK MAY NOT SEE SUDDEN GROWTH IN CREDIT: Recently 6 banks are out of Prompt Corrective action (PCA) framework of RBI. But these banks may not be able to show a robust growth in their credit portfolio immediately. If these banks become very much aggressive in loan disbursements which are still not strong enough, may exert pressure on asset quality, thereby raising a risk of slipping back in to PCA.
SMALL FINANCE BANKS NEED ADDITIONAL CAPITAL TO GROW: Small Finance Banks (SFBs) are likely to grow at 25-30% on yearly basis if they can arrange additional capital of Rs 4,000 to 6,000 crore till financial year 2023. In the nine months in the present fiscal these banks have reported an annualised growth of 33%. These banks have witnessed growth under asset, deposit and better return on their equities.
SBI TO JOIN SWIFT’S GLOBAL PAYMENT SYSTEM: State Bank of India (SBI) will soon join the Society for Worldwide Interbank Financial Transactions (SWIFT). Eleven Indian Banks have already subscribed to SWIFT’s new payment interface- Global Payment Interface (GPI) which is set to make cross-border transactions much more secure and transparent. The GPI enabled banks can also opt for an additional feature called Payment Control Service (PCS) where if any irregularities are found in the payment transaction such as higher than usual fund size or uncommon transaction timeframe, the channel can block the transaction and notify the bank.
PRIVATE BANKS CONTINUE TO TAKE AWAY PSB MARKET SHARE: As per a report by Kotak Institutional Equities based on RBI data, private banks have continued to wrest away both deposit and credit market share from Public Sector Banks. Private Sector Banks have increased their Deposit market share by 24% year-on year. Their growth rate is more in urban areas as compared to semi urban and rural areas. In credit also they have continued to grow at a rate of 40% in rural areas and 20% in urban areas year-on-year.
NBFCs WITH Rs 1,000 CRORE ASSETS WANT PUBLIC DEPOSIT ACCESS: Non-Banking Finance Companies (NBFCs) with assets exceeding Rs. 1,000 crore want the RBI to allow them to accept deposits from the public. For large NBFCs the industry wants a separate classification. The sector leaders want “Systemically Large” NBFCs to be treated differently than the other 10,000 NBFCs that are there in the sector.
RBI FINES 19 BANKS FOR NON-COMPIANCE ON SWIFT SYSTEM USE: The Reserve Bank of India (RBI) has fined as many as 19 banks, including ICICI Bank and State Bank of India for failing to comply with its guidelines on the use of global payments network SWIFT. Most notable among those guidelines was requirement for banks to connect the SWIFT interbank messaging system with their core banking software. The penalties totalled to more than Rs. 40 crore and ranged from Rs 1 crore to Rs 4 crore for each bank. The series of fines imposed is a stern warning from RBI to banks to strengthen their internal systems and minimise frauds after the PNB fraud case last year.
PAN NUMBER TO BE LINKED TO BANK ACCOUNT FOR GETTING INCOME TAX REFUNDS: From March 1, 2019 the Income Tax Department has started issuing refunds via e-mode in to the bank accounts of the tax payers. For this, linking PAN number to the bank account is mandatory to get the tax refund directly to the bank account.
BANKS SEEK EXTENSION FOR THE ROLL-OUT OF INDIAN ACCOUNTING STANDARDS: Banks are seeking extension for the roll-out of the Indian Accounting Standards (IndAS) which will come in to effect from April 1st Banks are citing higher capital for bad-loans provisioning, pending legislative amendments and delay in finalising rules as some of the reasons for deferring the implementation of IndAS. Banks are in great pressure to improve their financials but implementation of IndAS will further add to banks’ compliance burden.
BANKS RECOVER ALMOST HALF OF 1.43 LAKH DEFAULTING ADVANCES THROUGH IBC: Banks have so far recovered almost half of 1.44 lakh crore defaulting advances stuck in 82 cases that have been resolved in the past two years through Insolvency & Bankruptcy Code (IBC). IBC has become increasingly effective in recovering bad loans as it has injected an element of fear in to the minds of defaulting promoters. IBC is yielding definite results but there is still vast scope for further evolving and improvement.
GOVERNMENT TO ROLL OUT Rs.20 COIN FOR THE FIRST TIME: The Finance Ministry has announced in a gazette notification about the roll-out of Rs. 20 coin for the first time in the country. The new Rs 20 coin will be shaped like a “dodecagon” (12 edged polygon) just to differentiate it from the Rs 10 coin which is in circulation.
RBI EXTENDS KYC DEADLINE FOR e-WALLETS BY 6 MONTHS: Reserve Bank of India has extended the deadline of Know Your Customer (KYC) compliance for e-Wallet companies by 6 months. Earlier the deadline was supposed to end on 28TH The extension comes after intense follow-up and requests by mobile wallet companies and domestic internet groups over the past few months. This comes as a big relief to consumers as well as mobile wallet companies.
PSU BANKS STEP UP TAKEOVER OF MORTGAGE LOANS FROM NBFCs: Public sector banks are launching new schemes to takeover housing loans from Non-Banking Finance Companies (NBFCs) and home finance companies that are facing liquidity crunch. State Bank of India and Bank of Baroda have already initiated these special schemes to attract takeover of loans. Bank of Baroda has initiated a special scheme “ Switch Karo, Save Karo” which allows customers to switch their home loans without any income proof provided a minimum of 12 monthly instalments have been paid regularly and their credit score is at or above 725. The rate of interest offered by Bank of Baroda for such takeover loans is 9% which is much lower than the rates offered by NBFCs and Home Finance Companies. In our opinion more PSU banks should come out with such schemes to garner more business.
CANARA BANK TO GIVE LOAN TO BANK OF INDIA AND UNION BANK EMPLOYEES: Bank of India and Union Bank of India have made arrangements with Canara Bank to provide Collateral-free loans to their respective employees to fund purchase of shares of their respective banks under Employee Stock Purchase Scheme ( ESPS). Canara Bank loan is priced at 8.7% and the size of the loan will be 10 months gross salary of respective employee subject to a maximum of Rs 5 lakh. Regulations do not allow banks to offer loans to their own employees for purchasing shares under ESPS. Bank of India is looking to raise up to Rs 800 crore while Union Bank looks to raise Rs. 600 crore.
BANK LOCKER PROTECTION POLICY LAUNCHED: IFFCO Tokio General Insurance Company has announced the launch of Bank Locker Protection policy to protect the contents of a Bank locker. The policy offers a cover against various risks including fire, earthquake, burglary, holdup, infidelity by bank staff or act of terrorism. Apart from jewellery and valuables one can insure important documents as an add-on cover. The bank locker hire agreement does not cover compensation in case of such untoward incidents.
LOANS TO NBFCs BECOME COSTLIER AS RBI TIGHTENS NORMS: Reserve Bank of India has stepped in to slow down the flow of credit to Non-Banking Finance Companies (NBFCs) by making it more expensive for banks to lend to these NBFCs. A loan to an NBFC which owes banks Rs 200 crore or more and is un-rated, will now attract a risk weight of 150%. Any NBFC to which banks have an exposure of 100 crore and more which was rated earlier but subsequently un-rated then it will attract 150% risk weight.
MERGER OF REGIONAL RURAL BANKS WITHIN THE SAME STATE LIKELY: The government is looking at the possibility of merging Regional Rural Banks (RRBs) operating within the same state and has urged the Public Sector Banks to explore such options, as it wants further consolidation among RRBs. At present the central government holds 50% stake in RRBs while the Sponsor Bank holds 35% and rest 15% is held by respective state governments. The government eventually wants to bring them down to a more manageable number of 10 to 15 RRBs. Presently there are 56 RRBs functioning in the country.
GOVERNMENT TO CREATE GLOBALLY COMPETITIVE LARGE BANKS VIA MERGERS: Finance Minister Mr Arun Jaitley has said that the situation of bad loan scenario in Public Sector Banks has improved in the last three quarters and now the government will amalgamate banks to create healthy large lenders that are globally competitive. In order to make the banks sound and globally competitive, the government is gradually following the policy of amalgamation. Mr Jaitley further said that the government has lived up to its promise by funding the troubled banks in terms of capital.
SBI HAS FOUND FRAUD WORTH Rs 7,951 CRORE DURING APRIL-DECEMBER 2018 PERIOD: In an RTI reply, State Bank of India has revealed that there were frauds amounting to Rs 7,951 crore during the first nine months of the current fiscal. The first quarter reported 669 cases of fraudulent activities amounting to Rs 723.06 crore, the second quarter saw 660 cases involving an amount of Rs 4,832.42 crore and the third quarter reported 556 cases amounting to Rs 2,395.81 crore.
SBI TO WAIVE LOANS TAKEN BY MARTYRED CRPF PERSONNEL, ALSO TO RELEASE INSURANCE PAYMENTS: State Bank of India has said that it would waive all outstanding loans availed by the 23 CRPF personnel who were killed in the Pulwama terror attack. All the 44 CRPF personnel were customers of State Bank of India under Defence Salary Package where the bank provides insurance of Rs. 30 lakh to each of the defence personnel. Bank is taking steps to expedite release of insurance amount to the next of kin of the martyred soldiers.
RBI SEEKS INFORMATION FROM NBFCs ON MORATORIUM GIVEN TO BORROWERS: Amid the recent controversy on loans against shares, Reserve Bank of India has asked Non-Banking Finance Companies (NBFCs) to disclose the moratorium (grace period for repayment) given to borrowers. Besides Mutual Funds, NBFCs are large lenders against pledge of shares. If the borrowers pledging the shares to raise money fail to bring in additional collateral when the stocks fall, lenders should sell the stock to protect their exposure. And if the shares are not sold then the credit rating agencies should downgrade the instruments issued by the borrower to raise funds. RBI may look in to the rules on loans against shares for NBFCs and banks and this would include raising the risk weightage on loans against stocks.
GOVERNMENT TO INFUSE Rs. 48,239 CRORE IN 12 PSU BANKS: The Finance Ministry on Wednesday announced that it would pump in Rs. 48,239 Crore in 12 Public Sector banks (PSBs) in this fiscal to help them maintain regulatory capital requirements and finance growth plans. The biggest gainers in this are Corporation Bank (Rs. 9,086 crore) and Allahabad Bank (Rs. 6,896 Crore). With this funding, the total amount of capital infusion to all the PSBs would increase to Rs. 1,00,958 crore out of the planned recapitalisation of Rs. 1.06 lakh crore in the current fiscal.
ONLY 6 BANKS CROSS DESIRABLE LEVEL OF 70% PROVISION COVERAGE RATIO: Provision Coverage Ratio (PCR) is the ratio of provisioning to gross Non-Performing Asset which indicates the extent of funds a bank has earmarked or kept aside to cover loan losses. The Public Sector Banks (PSBs) have substantially increased their Loan-loss provision and have strengthened their respective balance sheets in the first 9 months of the current fiscal but only 6 out of 21 PSBs have crossed the desirable level of 70% of PCR.
SBI TAKES WORK-LIFE BALANCE TO A NEW HEIGHT: State Bank of India has taken a new initiative to ensure Work-Life balance of its massive employee workforce. The programme called “Nayi Disha”, focuses on work-life balance and also involves the staffs’ immediate family members, also gives them the ability to inform the bank if an employee is not able to leave work on time. The programme is evolved in such a way that its 2.6 lakh strong work force does not work mechanically and is sufficiently motivated to take on newer challenges that the future will throw up. The programme will also boost the morale of its staff which will have a positive impact on customer service. The bank has hired external hand to design the programme.
SOON BANKS WILL TAKE BACK HEFTY PAYOUTS FROM ERRANTS CEOs: The Reserve bank of India is tightening the CEO compensation norms in the wake of instances of large Non-Performing Assets and sharp practices adopted by the top executives to dodge the regulators. RBI is working on a set of rules that would link remuneration of banks CEOs to parameters like balance sheet size of the bank, loan delinquencies, profit and governance. The proposed framework is expected to provide a broad template to the Board of Directors while approving increase in salary, performance bonus and stock options.
GOVERNMENT PASSES UNREGULATED DEPOSIT SCHEME ORDINANCE: The President Mr Ram Nath Kovind promulgated the Banning of Unregulated Deposit Scheme Ordinance. This will help to put a check on illicit deposit-taking activities that dupe the poor and financially illiterate of their hard-earned savings. The Ordinance makes it mandatory for everyone to register before taking a deposit. This ordinance will also help create a central repository of all the registered entities that can take deposits.
FINANCE MINISTRY ASKS 6 PSU BANKS TO PERFORM BETTER TO COME OUT OF PCA: The Finance Ministry has asked six banks who are under Prompt Corrective Action (PCA) to improve on seven parameters to get the government’s support for coming out of PCA framework. These six banks have been told to improve upon Net Interest Margins (NIMs), CASA (Current & Savings Accounts) Risk Weighted Assets (RWAs), NPA Recognition, Divergence (disparity in loan recognition), Operating Profit and Non-Core asset selling to be able to come out of PCA framework.
FINNACE MINISTRY IS WITHIN REACH OF ACHIEVING NPA RECOVERY TARGET: The Finance Ministry is on course to meet the NPA recovery target of Rs 1.80 Lakh crore by March 31, 2019 with the recoveries already touching Rs. 1.08 lakh crore. The bigger ticket loan recoveries are due and will be recovered by March end from Essar Steel and Bhushan Power Steel which together may fetch Rs. 60,000/- crore.
INDIVIDUAL INSOLVENCY CODE MAY SOON COME IN TO FORCE: The Chairman of The Insolvency & Bankruptcy Board of India Mr. M S Sahoo has said that individual insolvency code will be introduced soon. Three sets of individuals will fall under the Individual Insolvency Code. They would include personal guarantor to corporate debtors, proprietary firms and individual borrowers. The government is in the process of putting in place a broad framework on individual insolvency code and once this is introduced, failure to repay home loans might drag future defaulters to dedicated bankruptcy courts in future.
GOVERNMENT RAISES LIMIT FOR DISCLOSURE OF STOCK/MUTUAL FUND INVESTMENTS FOR EMPLOYEES: Group A and B government officers were to disclose such details if the total investments in shares and mutual funds etc exceeded Rs. 50,000/- during a calendar year. This limit has been increased to six months of their basic pay. This is in accordance with an order issued by Personnel Ministry.
REAL ESTATE SECTOR IS LIKELY TO GET MUCH AWAITED GST RELIEF: A group of State Finance Ministers have decided to recommend a GST rate cut for under-construction projects to 5% from the current 12% and slashing of GST rate to 3% from the present 8% for affordable Housing Projects. However the proposed change in GST rates structure would be accompanied by denial of Input Tax Credit (ITC) to the builders.
IICA LAUNCHES GRADUATE PROGRAMME FOR INSOLVENCY PROFESSIONALS: The Indian Institute of Corporate Affairs (IICA) has launched the Graduate Insolvency Programme (GIP) for individuals aspiring to join the insolvency profession in India and abroad. This is among the first of its courses in the world for professionals dealing with insolvent companies and helping them achieve debt resolution. This programme is approved by the Insolvency Bankruptcy Board of India. It is a two year programme comprising of one year of residential classroom and another year of internship. An individual is eligible to do the programme if he has 10 years of post-membership experience as a Chartered Accountant, Company Secretary, Cost Accountant, Advocate or 15 years of management experience after completion of his graduation.
PUNJAB NATIONAL BANK TO e-AUCTION 4,000 PROPERTIES TO RECOVER BAD LOANS: Punjab National Bank said that it has decided to place more than 4,000 properties all over India on e-auction as part of its loan recovery effort. According to the bank, the e-auction under the Securitisation and Reconstruction of Financial Assets & Enforcement of Securities Interest Act (SARFAESI) will help achieving the recovery of Rs 26,000 crore during the current Financial Year.