WEEKLY FINANCIAL SNIPPETS- 25/03/2017

 

 

  1. SBI CHIEF AMONG FORTUNE’S 50 GREATEST LEADETRS OF THE WORLD: Ms Arundhati Bhattacharya, Chairperson of State Bank of India has been named by Fortune magazine among the world’s 50 greatest leaders who are transforming the world and inspiring others to do the same. She is ranked 26th on the list of Fortune’s Greatest leaders. Ms  Bhattacharya is the first woman to be ranked  among the fortune’s top 50 leaders.

 

  1. RBI PUTS 4 PSU BANKS UNDER WATCH ON ASSET QUALITY CONCERNS: The Reserve Bank of India has put 4 public sector banks under watch and advised them to stay off risky assets so that their financial health is not stressed further. IDBI Bank, Indian Overseas Bank and UCO Bank are in the list while the fourth bank’s name could not be  immediately ascertained. These four banks have been advised both by RBI and Finance Ministry to improve their financials, look for avenues for capital infusion and create self-sustaining model by selling assets.

 

  1. NPA RESOLUTION MECHANISM NEED MORE TEETH: RBI Deputy Governor Mr. S. S. Mundra has said that there is need to further strengthen existing stressed asset resolutions mechanisms like oversight committees and joint lenders forums. However no timeline has been finalised as to when RBI will come out with modifications.

 

  1. RBI SAYS FARM LOAN WAIVER AFFECTS CREDIT DISCIPLINE: Reserve Bank of India has expressed concern over farm loan waiver affecting credit discipline. Earlier SBI Chief Ms Arundhati Bhattacharya had expressed the same feelings as she said that it will disturb credit discipline among borrowers, since they will keep expecting more such loan waivers in future and then those future loans will remain unpaid.

 

  1. SBI TO SHUT DOWN 47% OF ASSOCIATE BANKS’ OFFICES AFTER MERGER: State Bank of India which will see 5 associate banks merge into it on April 1st, has decided to shut down almost 47% of the offices of these banks, including the head offices of three banks. The process will start from April 24th.

 

  1. ASSOCIATE BANK BRANCHES TO BECOME SBI BANK BRANCHES FROM APRIL 1st : With the merger of all the five associate banks, SBI is expected to become a lender of global proportions with an asset base of Rs 37 lakh crores ( $ 555 billion) with 22,500 branches and 58,000 ATMs. The branches of all these 5 associate bank branches will begin to function as SBI branches from April 1st.

 

  1. GOVERNMENT APPROVES SECOND TRANCHE OF CAPITAL INFUSION IN PSU BANKS: The government has approved the second instalment of capital infusion in public sector banks to enhance their capital base. The second round of funding entailing about Rs 8,000 crore is based on strict parameters. The first tranche was announced in July 2016 with the objective of enhancing their lending operations and enabling them to raise more money from the market.
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WEEKLY FINANCIAL SNIPPETS – 18/03/2017

  1. PSU BANKS RUSH TO SELL STRESSED ASSETS: Public Sector Banks have started rushing to sell Non-Performing assets (NPAs) in the last quarter of the fiscal ending March 2017. As strict norms on sale of stressed assets come into effect from April 1, 2017, all banks have lined up more than Rs.20,000 crore of NPAs to be sold to Asset Reconstruction Companies ( ARC). However banks putting these stressed assets on blocks do not mean they will be sold, as most of the time these loans end up not being sold as there is a big difference in the price banks demand and what the ARCs are willing to pay.

 

  1. SBI ANNOUNCES Rs.6,000 CRORE TRACTOR LOAN SETTLEMENT SCHEME: State Bank of India has announced a one-time settlement scheme for tractor and farm mechanism loans, which are in the doubtful or loss asset category as on 30th September 2016. This scheme will remain open till March 31st. Loans worth Rs.6,000 crore would be eligible under the said settlement scheme. The bank is willing to write off up to 40 % of the outstanding principal amount of the loan under the scheme.

 

  1. NO LIMIT ON CASH WITHDRAWALS FROM MARCH 13th: The Reserve Bank of India has ended all the curbs on withdrawals from savings bank account from March 13th  Earlier the weekly withdrawal limit per savings bank account had been raised to Rs. 50,000/- from Rs. 24,000/- with effect from February 20th and all limits on cash withdrawal have now been withdrawn.

 

  1. SBI CREATES WHOLLY-OWNED SUBSIDIARY TO MANAGE REAL ESTATE: State Bank of India has incorporated a specialised firm- SBI Infra Management Solutions Pvt Ltd (SBIIMS) , which  will manage its premises and real estate property across the country. The primary role of the new entity will be to handle transaction management, advisory services, project management etc. The move is seen as public sector bank’s efforts to exit non-core activities to improve balance sheet as per government guidelines.

 

  1. HDFC BANK DIGITISES OVER 1,200 DAIRY CO-OPERATIVES ACROSS INDIA: In line with government’s initiative for a cash-less society, HDFC Bank under the aegis of its “ Milk to Money” (M2M) programme has digitised payments at over 1,200 diary co-operatives in the country. M2M programme will benefit about 3.2 lakhs dairy farmers across 16 states, bringing these farmers into the organised banking system.

 

  1. BANKS MAY GET INCENTIVES FOR DIGITAL PUSH: Government may give banks an incentive of up to Rs 10/- for each transaction to encourage merchants to adopt digital modes of payment. This is aimed at achieving the objective of cash-less economy. The incentive is aimed at encouraging banks to bring more merchants into the new payments ecosystem and build the requisite infrastructure.

 

  1. RBI TO OPEN UP UPI FOR DIGITAL WALLETS: Reserve Bank of India prepares to open up the Unified Payment Interface (UPI) platform for digital wallets such as Paytm and Mobikwik. Once this is done, the wallet companies will become inter-operable. RBI is set to issue guidelines shortly on inter-operability and Know your Customer (KYC) norms for digital wallet companies.

WEEKLY FINANCIAL SNIPPETS- 11/03/2017

1. NBFC CASH LOAN AGAINST GOLD RESTRICTED TO Rs.25,000/-: As per the latest guidelines from RBI, Non Banking Finance Companies( NBFC) cannot lend more than Rs 25,000/- in cash against gold. The earlier provision for NBFC was of Rs 1 Lakh. Now RBI has reduced the limit to Rs.25,000/-, in line with the provisions of Income Tax Act. This is an important guideline considering the government’s focus on cash less economy.

2. SBI JUSTIFIES PENALTYFOR NON-MAINTENANCE OF MINIMUM BALANCE IN ACCOUNTS: Last week the country’s largest bank SBI decided to re-introduce penalty on non-maintenance of minimum balance in SB accounts and also revised charges on other banking services, which come into effect from April 1. The move has faced lot of criticism from all corners. But SBI has justified its move saying the bank needs to impose some charges to balance the burden of managing a large number of no-frills Jan Dhan Accounts. It further clarified that the penalty would not apply to Jan Dhan accounts.

3. NPAs AT RECORD HIGH, ITS TIME TO ANNOUNCE THE NAMES OF DEFAULTERS: A key parliamentary panel- Public Accounts Committee ( PAC) has now favoured naming and shaming Corporate houses which default on repayment of bank loans. The PAC feels that such a move may help financial institutions get back their money. Out of the 6.8 lakh crore of Non-Performing Assets ( NPA) of public sector banks, a whopping 70%  are those big corporate houses. In case of farmers and retail loans banks act strong and they go to borrowers homes to recover money and even their name and photograph is published in the newspapers. But when it comes to big corporates they don’t reveal the names.

4. FINANCE MINISTRY GIVES IN-PRINCIPLE NOD FOR ESOPs BY PSU BANKS: The Finance Ministry has given its approval to allow public sector banks to offer Employee Stock Option plans (ESOPs) to their employees from next fiscal. This is a move to retain experienced hands by way ofproviding better incentives.

5. STATE BANK OF INDIA LAUNCHES “WORK FROM HOME” FACILITY FOR EMPLOYEES: Country’s largest lender State Bank of India has launched a new facility to enable its employees to work from home. This enables its employees to work while at home using mobile devices to address urgent requirement. The bank will use mobile computing technologies and shall have continuous control over all the enabled devices centrally to manage and secure data and applications. The use of technology and services shall be monitored through carefully designed MIS and dashboard to enable improvements.

6. HDFC BANK LAUNCHES ARTIFICIAL INTELLIGENCE – DRIVEN CHATBOT EVA: HDFC bank has announced the launch of an electronic virtual assistant ( EVA), an artificial intelligence- driven chatbot for customer service. EVA is India’s first such chatbot and can answer millions of queries across multiple channels instantly.

7. FINANCE MINISTRY INSTRUCTS STATE-OWNED BANKS TO EXIT NON-CORE BUSINESSES: As a part of capital raising exercise, the Finance Ministry has advised state-run banks to prepare a list of their non-core businesses and look at disposing them at an appropriate time. Most of the banks have insurance ventures or capital advisory firms, besides holding stake in financial institutions such as stock exchanges.