RBI OUTLINES ITS VISION DOCUMENT ON PAYMENTS & SETTLEMENT SYSTEMS FOR 2019-21: The Reserve bank of Indiahas outlined a three year vision for payments & settlements system which will offer huge business opportunities for technology-enabled Fintech players. It will enable merchant acquisitions of non-banks, participation of private entities in retail payments which will open fresh business avenues. This vision document is a pursuit towards less cash society accompanied by a less-card India.The endeavour is to serve segments of society which is untouched by the payments system as RBI is trying to smoothen the digital payments in rural areas by pushing its feature – phone-based digital payments where the transaction can take place without internet connection. It is also a customer-centric approach to ensure prevention of frauds through digital channels.
INSOLVENCY PROFESSIONAL MAY REQUIRE A CERTIFICATE OF PRACTICE TO BE ABLE TO WORK: Insolvency Professionals (IPs) may soon require to obtain a Certificate of practice (CoP) to be able to work as resolution professionals or liquidators. Insolvency regulator IBBI proposes to amend the existing IP regulations so as to introduce the concept of CoP for Insolvency Professionals. This CoP needs to be renewed every year for the IPs to remain in practice.
BANKS SET ASIDE Rs. 50,000 CRORE PROVISIONS DUE TO JET AIRWAYS AND IL&FS COLLAPSE: Stung by the collapse of Jet airways and IL&FS as many as 13 banks have made a provision of Rs 50,000 crore in the fourth quarter of FY 2019. How much of this would be written off and how much would be recovered is very difficult to predict for the banks. Loan loss provisions across 13 Public Sector Banks stood at Rs 52,739 crore for the fourth quarter of FY 2019 which is sharply higher that the figure (29,626 crore) in the corresponding period of previous year. Most of the banks have reported huge losses for March’19 quarter.
NBFCs TIEUP WITH BANKS UNDER RBI’S LOAN CO-ORIGINATION SCHEME: An increasing number of Non-Banking Finance Companies (NBFCs) are partnering with banks under the RBI’s loan co-origination scheme. Due to liquidity crunch prevailing in the market, the NBFCs are forced to look for cheaper routes to raise funds. It is envisaged that loans worth between Rs. 5,000 to Rs. 10,000 crore may have been sanctioned under the scheme since its inception in August last year.
RBI TELLS BIGGER NBFCs TO APPOINT CHIEF RISK OFFICER:The Reserve Bank of India has instructed Non-Banking Finance Companies (NBFCs) with an asset size of over Rs. 5,000 crore to appoint a Chief Risk Officer to improve standards of their risk management. RBI said that with increasing role of NBFCs in credit intermediation, there is a need for these NBFCs to augment risk management practices. RBI directive comes ata time when most of these NBFCs are facing liquidity crisis as some of the firms are burdened with over-leveraging and mismatch between assets and liabilities. And if theNBFC is listed then it has to report the appointment and incumbency of any Credit Risk Officer to the stock exchanges.
ICICI BANK MOVES TO ROLE-BASED DESIGNATIONS OF ITS TOP EXECUTIVES: In a major HR shift, ICICI Bank has shocked its top management by getting rid of all grades of Deputy General Manager(DGM) and above. These top management executives will be now known by their role and there will be no grade-based benefits. The bank has also got rid of hierarchy as no longer can anyone guess an executive’s seniority based on the size of his car or access to executive dining room. So much so that earlier even the internet bandwidth was depending on the seniority. This move will affect 400 executives. ICICI Bank has moved from grade-based designations to role-based designations.
PUNJAB NATIONAL BANK TERMINATES AGREEMENT TO SELL ITS STAKE IN HOUSING FINANCE ARM: Punjab National Bank has terminated the agreement to sell its stake in PNB Housing Finance with General Atlantic Group and Varde Partners. The bank said it strongly believes in the growth story of housing finance and hence it will continue to support the housing finance arm in its growth plans.
OPTIONS AVAILABLE FOR FILING DELAYED INCOME TAX RETURNS: The deadline for filing Income Tax Returns is July 31ST for every assessment year. If you miss the deadline, you can file the delayed returns by up to 31ST March of the following year. If one has missed the deadline for filing returns for the year 2016-17 and 2017-18, he/she cannot file delayed returns now. They can file a delayed return only on the direction of income tax officer, that is if they get notice for not filing the return. In the same manner one can file a condonation of the delay to the Assessing Officer and if he is satisfied with the reason for the delay, he can allow to file the delayed returns.
HOME BUYERS CANNOT CHOOSE BETWEEN OLD AND NEW GST RATES: The GST council has allowed the real estate developers to shift to 5% GST rates for residential units and 1% for affordable housing without the benefit of input tax credit(ITC) from April 1ST For the on-going projects, the builders have been given the option to either continue in the 12% GST with ITC or opt for the new rate without ITC. But homebuyers will not have the option of choosing between old and new rates. It also says that the project started before April 1ST but had not received any bookings would be classified as New Project and will be subjected to revised GST rates.
RBI ALLOWS BANKS TO TREAT IL&FS EXPOSURE AS NPA: The Reserve Bank of India (RBI) has allowed banks to treat exposure of IL&FS and its group companies as Non-Performing Assets (NPAs) following the National Company Law Appellate Tribunal’s (NCLAT) order. Earlier RBI had asked banks not to treattheir exposure as NPAs without the prior permission of Appellate Tribunal. But an order by NCALT on May 2nd has allowed the banks to declare the accounts of IL&FS and its group companies as NPAs.
RBI PLANS INCENTIVES FOR BANKS TO MOVE IBC: RBI is understood to be planning “Incentive” to those banks which take the errant borrowers to bankruptcy court. RBI is considering a proposal to assign a “lower risk weight” on such loans to companies against which action has been initiated under the Insolvency & Bankruptcy Code (IBC) of 2016. A lower risk weight would act as an incentive to banks as it would help them in conserving capital. Lower risk weights on loans would make it easier for banks to achieve and maintain Capital Adequacy Ratio.
IBA SEEKS APPLICATIONS TO MAKE FORENSIC AUDITORS’ LIST: The Indian Banks’ Association (IBA) has invited applications for the empanelment of firms to conduct forensic audit of frauds in the banking industry. IBA plans to rope in firms for two separate categories of frauds—up to Rs 50 crore and above Rs 50 crore. At present there are 72 firms on IBA’s panel and their term is ending in August 2019. These firms will have to re-apply to be empaneled again. As on March 2018, the number of frauds in banks involving amounts of Rs 1 lakh and above stood at 5,917 which is 17% up from March 2017 figures.
SBI TO SEEK CONSULTATNT’S HELP TO DRAW UP LONG TERM GROWTH PLAN: State Bank of India (SBI) is seeking to engage the services of a consultant to suggest strategies to improve its Return on Assets (RoA) and Pre-Provisions Operating Profit (PPOP) by increasing income from different sources, reducing cost and optimising the balance sheet. The consultant is expected to draw a road map by planning portfolio strategy and long term growth opportunities. He will strategize for current account acquisition and increasing its balances and optimising Asset Liability Management (ALM).
RBI MAY OFFER MORE TIME FOR BANK-LED RESOLUTION OF NPAs:RBI is planning a liberal approach towards resolution of stressed assets when it issues a revised circular, replacing its controversial February 12 circular. As per the new circular the banks will be given 30 days from the first default to identify and qualify the account as a bad debt (Special Mention account-SMA) and initiate resolution action. The RBI as per the suggestion given by IBA, may allow individual banks to grant additional 60 days’ time for approval and implementation for a resolution plan. So, instead of having 180 days’ time (as earlier) for a bank-led resolution, now the banks could get up to 270 days to resolve an asset without taking it to NCLT.
LENDERS TAKE 57% HAIRCUT IN 94 CASES WORTH Rs 1.75 LAKH CRORE: Banks have taken a huge 57% haircut in 94 large accounts worth Rs 1.5 lakh crore which were resolved in Financial Year 2019, recovering just Rs 75,000 crore, which amounts to 43% of total value of the admitted claims, as per a report. The average resolution time for these 94 cases resolved was 324 days as against the stipulated timeline of 270 days. As of March 2019 there were 1,143 cases pending at various bankruptcy tribunals, and 32% of them are pending beyond 270 days. The report further says that had these 94 cases were liquidated, the recovery would have been just 22%.
ROUND 2 OF PSB MERGERS, BIG BANKS MAY GET A CALL: The government is soon likely to invite select big banks for discussion on a second round of merger in Public Sector Banks, according to a Finance Ministry Official. The lenders to be called for discussion may include Punjab National Bank and Union Bank of India. The merger activity may start anytime during the second or third quarter of the current fiscal year. But in our opinion the time is not ripe for further mergers as most of the banks are in a recovery mode and first they need to strengthen and consolidate their balance sheets. Moreover the government should see how the earlier merger of Dena Bank and Vijaya Bank with Bank of Baroda shapes up.
RBI MOVES TO TIGHTEN CURRENT ACCOUNT OPERTAING NORMS TO CHECKFUND DIVERSION:In a move to tackle fund diversion, Reserve bank of India has proposed sterner rules on opening and running of current accounts of corporate borrowers. As per the proposed rule, current accounts can only be opened with the lead bank in a lending consortium while other banks having collection accounts will have to transfer funds at the end of the day to the current account with the consortium leader. RBI has said the rule would apply to corporate accounts which have borrowed and availed a credit limit of Rs 50 crore or more from the banking system.
LENDERS TO ANIL AMBANI’S RCom FACE STEEP HAIRCUT: Lenders to Anil Ambani’s Reliance Communication (RCom), Reliance Telecom and Reliance Infratel are finalising plans to recover their loans of Rs 45,000 crore. Banks have decided to shortlist a Resolution Professional from a field of 15 players. But the bankers feel it will be a tough task given that the value has been significantly eroded with the impaired assets, leaving little on the table for the potential buyer. So even if the lenders find a buyer, they will have to take huge haircut.
NBFCs AIM TO TAP OVERSEAS LOAN MARKET TO RAISE FUNDS: Non-Banking Finance Companies which includes some prominent players like Piramal Capital Housing, Bajaj Finance, Hero Fincorp, L&T Finance, Tata Financial Services are now going beyond bonds to seek loans from overseas banks in the form of External Commercial Borrowing (ECB). While they are willing to be exposed to currency risks, they want to diversify their funding pattern. Each company aims to raise about $ 200-400 million in the next few weeks. Maturities of such loans are likely to be in the range of 3 to 5 years.
RBI GETS SUPREME COURT ULTIMATUM ON RTI ACT DISCLOSURES: The Supreme Court has ordered the Reserve Bank of India to disclose its annual inspection reports of banks along with the list of defaulters and information related to them under the Right to Information Act. The Supreme Court further said that the RBI is duty bound under the law to disclose information sought under RTI Act.
CBDT AND GSTN SIGN A PACT TO NAB TAX EVADERS TO REDUCE BLACK MONEY GENERATION: The Central Board of Direct Taxes (CBDT) and Goods & Services Tax Network (GSTN) have signed an agreement to facilitate exchange of data between the two. The I-T Department will share key financial information including the status of I-T Return filings, turnover of business, gross total income and turnover ratio with GSTN. This is done to nab the evaders and thus reduce generation of black money.
DEUTSCHE BANK LOOKS TO GROW ITS RETAIL BUSINESS IN INDIA: Deutche Bank is looking to grow its retail business in India. It is planning to roll out a new digital platform for processing loans. The first part of the digital platform will be completed in June this year while the process will be completed by the end of this year.
DEPOSITS IN JAN-DHAN ACCOUNTS INCHING TOWARDS Rs 1 LAKH CRORE MARK: As on March 2019, the number of accounts in Jan-Dhan Yojana crossed 35.39 crore. The Jan-Dhan accounts scheme which was launched five years ago is set to cross Rs 1 lakh crore mark soon. The total deposit in the said accounts touched to Rs 96,107 crore as on March 2019. As per the latest data available, the figure has touched an all-time high of Rs 97,665 crore as on April 3rd
IRREGULARITEIS OF MORE THAN Rs 1 LAKH CROREFOUND IN COMPANIES UNDER INSOLVENCY & BANKRUPTCY CODE: Forensic audit of over 200 companies facing corporate insolvency resolution action under the Insolvency & Bankruptcy Code (IBC) has revealed irregularities of more than Rs 1 lakh crore. This also includes diversion of funds. The Ministry of Corporate Affairs, which is responsible for implementation of IBC is expected to initiate action against promoters, directors and even the auditors involved in such cases.
BANKS IN SEARCH OF INFORMATION TECHNOLOGY TALENT: All banks are going more and more digital nowadays and due to this lenders (Private Banks, NBFCs and Fintech Companies) are trying to attract best of the Information Technology (IT) talent with fat pay packets with ESOPs (Employee Stock Options). A top class techie with a flair for analytics is in lot of demand. Many smaller Fintech companies are offering a partnership in the business with an equity stake if the candidate is top class.
28 to 30% CONSUMER COMPLAINTS TO RBI ARE ABOUT DIGITAL OR CARD PAYMENTS: About 28% to 30% of the complaints filed by consumers with RBI are in the space of digital transactions and card payments. As per the annual report by RBI on Banking Ombudsman Scheme 2017-18, 22% of the complaints pertained to banks not adhering to the “Fair Practice Code”, while ATM and debit card related issues made up the second largest category of complaints with more than 15%. Together with the credit-card related complaints and online banking issues, the total share of complaints on digital channels almost touched 30%.
STATE BANK OF INDIA APPOINTS 8 NEW DEPUTY MANAGING DIRECTORS: The country’s largest bank, SBI with more than 25% share of country’s loan market, has elevated eight of its executives to the post of Deputy Managing Directors (DMD) in one of the biggest HR revamps. SBI is also in the process of identifying about 15 executives who would fill the positions as Chief General Managers.
MICROFINANCE SECTOR TO GROW AT 22% IN FINANCIAL YEAR 2020: As per a report by rating agency Icra, the Microfinance industry is likely to grow at 20-22% in the current fiscal. The industry will require external capital of almost Rs 3,500 to 4,700 crore over the next 3 years to sustain the growth potential. There is a need for the Microfinance Industry to do a more thorough credit analysis/assessment of actual debt repayment capacity of the borrower.
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.