WEEKLY FINANCIAL SNIPPETS- 27/05/2017

1. HDFC LTD, AMONG THE WORLD’S TOP 10 CONSUMER FINANCIAL SERVICES FIRM: Mortgage lender HDFC Ltd has been ranked 7th among the world’s top ten biggest and powerful companies in consumer financial services sector on Forbes list. American Express tops the list. In the regional banks category State Bank of India is ranked 20th.

2. RBI ALLOWS CO-OPERATIVE BANKS TO ISSUE MOBILE WALLETS: In a notification issued this week, the Reserve Bank of India has allowed co-operative banks to issue prepaid payment instruments like mobile wallets. Besides this, co-operative banks can also install ATMs and issue debit cards.

3. NOW BANKS FEAR LOAN DEFAULT BY COMMODITY COMPANIES: After infrastructure firms, now it may be commodity firms that may default on repayments of loans. Bankers estimate that at least a dozen companies in commodity sector that have got their debt restructured will fail to service their loans after being hit by sharp price movements.

4. IDBI BANK UNVEILS TURNAROUND PLAN: IDBI Bank has formulated a turnaround plan that includes raising of additional capital and selling non-core assets.The plan also includes curbing its rising corporate loan book and cutting costs. The bank is looking at all the avenues to improve its capital position and bring the bank on the recovery track.

5. RESERVE BANK OF INDIA CREATES POST OF “CFO”: The Reserve Bank of India is creating a post of a Chief Financial Officer ( CFO) and has sought applications for the said post. The CFO, who will be of the rank of Executive Director, will be responsible for accurate and timely presentation and reporting of financial information of the Central Bank and establish accounting policies and procedures and ensure compliance with regulations.

6. SMALL BUSINESSES SUFFER AS BRUISED BANKS RELUCTANT TO GRANT LOANS: Banks’ worsening asset quality has made them reluctant to grant new loans, especially to smaller businesses that are perceived as riskier. With the mountain of bad loans in Indian Banking system, the banks are reluctant to lend and this has badly affected the small and medium sized enterprises ( SMEs’). India has 45 million such small enterprises, accounting for 40% of gross domestic product. Smaller businesses also account bulk job creation.

7. INDIA’S MEGA REFORM –GST SET FOR JULY 1 ROLLOUT: The GST ( Goods and Service Tax) , set to be launched by the government from July 1 onwards will have tax rates of 5,12, 18 and 28% for various goods and services as announced by the government. Some tax experts feel that it could complicate compliance and leave businesses  and services at the mercy of an intrusive tax bureaucracy.

8. YOU WILL HAVE TO SHELL OUT MORE FOR BANKING TRANSACTIONS FROM JULY: Transaction Fees in financial services are likely to become expensive after the implementation of GST. The government has put these services under the 18% tax bracket. These services were so far taxed at 15%, this means all the transaction fees will be costlier by additional 3%.

Advertisements

WEEKLY FINANCIAL SNIPPETS- 20/05/2017

1. Rs 2.6 TRILLION OF BANK CREDIT MAY TURN BAD IN NEXT 12-18 MONTHS: Domestic rating agency India Ratings & Research has said that around 2.6 trillion (Rs 2.6 lakh Crores) of corporate and SME loans in the banking system may turn bad in the next 12 to 18 months. The report says that Indian banks are sitting on unrecognised stressed loans worth 7.7 trillion, out of which a potentially Rs 2.6 trillion of corporate and SME loans will be recognised as bad loans by fiscal 2019. If this happens, then banks are in for a tough time which will affect their bottom line very badly.

2. RBI EASES NORMS TO SET UP BANK BRANCHES: The Reserve Bank of India has eased the norms of setting up bank branches. Any bank outlets manned by either their staff or its business correspondents where services are provided for a minimum of 4 hours per day for at least 5 days a week will be called a bank outlet. And any branch opened in any tier III, tier IV centre of North-Eastern States, Sikkim and Left wing Extremism ( LWE) affected districts, then it will be considered as equivalent to opening a branch in unbanked rural centre( URC).

3. NBFCs’ CASH IN ON INDIAN BANKS’ BAD LOAN PAIN: With Indian Banks struggling with bad loans for the past two years, Non-Banking Financial Companies (NBFCs) have started lending rigorously as they are not as strictly regulated as banks. With this their share of total lending is rising year on year. With the stressed loans scenario, Indian Banks have become extremely cautiousin extending new credit. The process of approving loans has become lengthier and requires lots of paperwork. NBFCs’ SME loans though a bit costlier than those offered by banks, are processed more quickly and require less paperwork. The share of NBFC in overall loans will rise by 3% to nearly 18% over the next two years.

4. INDIA NOW WORLD’S MOST EXPENSIVE STOCK MARKET: With the markets soaring to record highs, India now is the world’s most expensive market. At a lifetime high of 30,658.77, the benchmark Sensex trades at a price-earnings multiple of nearly 18 times estimated one year forward earnings. India’s market capitalization hit $2 trillion for the first time ever.

5. SBI TO ALLOW ATM WITHDRAWALS VIA e-WALLET: State Bank of India will introduce new facility that would enable withdrawal of cash through ATMs using the bank’s mobile wallet. However, the bank will charge Rs 25 for each cash withdrawal from mobile wallet via ATM.

6. BANKING SCENARIO CHANGING RAPIDLY, THEY SHOULD HAVE “CFOs,” AND “CTOs”: With rapid changes in banking sector, the RBI has urged banks to appoint qualified chiefs to head critical finance and technology functions. The RBI has urged the banks to appoint Chief Financial Officers ( CFOs) and Chief Technology Officers ( CTOs) and has come out with  minimum qualifications for these posts. It said a CTO should be an engineering graduate or hold Masters in Computer Applications, and the CFO should be a chartered accountant with an experience of 15 years in both the cases. It says a CFO and CTO in banks’ management structure would play a crucial role in strengthening and sustaining the banks’ risk governance framework.

7. LIC BOOKS 72% PROFIT AT Rs.19,000CRORES IN FY’17:Life Insurance Corporation of India has booked a whopping 72% more profit at Rs 19,000 crores in FY’17. LIC’s market share in terms of number of policies stood at 76.09%, nearly 2% increase compared to last year. It has increased its market share to 71.07% from 70.61%.

WEEKLY FINANCIAL SNIPPETS-13/05/2017

1. BANK UNIONS URGE THE GOVDERNMENT AND RBI TO REVEAL NAMES OF TOP CORPORATE WILFUL DEFAULTERS: All major Bank Unions have urged RBI and the government to reveal the names of top corporates who are “wilful-defaulters”. According to the Union,the position of non-performing assets ( NPAs) of public sector banks will worsen if names of top corporate wilful defaulters is not revealed. It said that the RBI and government should act fast in this aspect and along with naming them, they should be treated as criminal offenders. The large corporate NPAs account for more than 60% of public sector banks’ NPAs.

2. MINISTRY OF FINANCE SHOULD BE ABLE TO INFUSE $27 BILLION INTO PUBLIC SECTOR BANNKS BY 2019: As per a report by Bank of America Merril Lynch ( BOfMAL), a global financial services, the Ministry of Finance should be able to infuse $27 billion of capital into PSU banksby 2019. According to the report the PSU banks capital risks are  overdone and the government is ready to address their asset quality to support recovery.

3. RBI GETS GOVERNMENT’S NOD TO PROCEED AHEAD ON INDIA’S BIGGEST BANKING CLEAN-UP: The Reserve Bank of India will begin the course of action on its biggest banking clean-up exercise as President ShriPranab Mukherjee promulgated an ordinance, authorising RBI to issue directions to banks to initiate insolvency resolution processin the cases of loan defaults.This will help the banks in a big way to tackle toxic loans.

4. NEW FACILITY LAUNCHED TO LINK AADHAAR WITH PAN : The Income Tax Departmenthas launched a new e-facility to link a person’s Aadhaar with PAN. This is a mandatory procedure for filing income tax returns. For this the department’s e-filing website ( incometaxindiaefiling.gov.in) has created a new link on its home page making it easy to link the two unique identities of individuals. The link requires  a person to punch in his/her PAN no , Aadhaar No and the exact name as given in the Aadhaar card. After verification from UIDAI, the linking will be done and if here is any mismatch then Aadhaar OTP will be required.

5. RBI DECLINES TO PROVIDE DETAILS OF NOTE BAN PROCESS: Six months after the demonetization, the Reserve Bank of India has declined to share details of the note ban process, saying it would be detrimental to the country’s economic interest. The Central Bank said that disclosing such details may impede future economic or fiscal policiesof Government of India.

6. IDBI BANK PUT UNDER WATCH BY RESERVE BANK: Reserve Bank of India has initiated “prompt Corrective action” (PCA) on state owned IDBI Bank in view of its high non-performing assets (NPA) and negative return on assets. According to IDBI Bank officials this will not have any material impact on the performance of the bank and will contribute to improving internal controls of the bank and improvement in its activity.

WEEKLY FINANCIAL SNIPPETS-06/05/2017

1. ACCOUNTS WITHOUT “FATCA“CERTIFICATION TO BE BLOCKED FROM MAY 1st ONWARDS: Bank accounts of individuals and entities who have not submitted self-certification in order to comply with the provisions of the Foreign Account Tax Compliance Act ( FATCA), by April 30th will be blocked  as per the directions of CBDT( Central Board of Direct taxes). This means those who have not complied with the said self-certification will not be allowed to transact any business in his/her account.

2.RBI, COMMERCIAL BANKS SPEND Rs. 21,000 CRORE ON CURRENCY MANAGEMENT: NITI AayogCEO has said that the Reserve Bank of India and other commercial banks spend Rs. 21,000 crore every year on currency management operations. This roughly works out to 1.7% of GDP. But since India is moving towards cashless society, as the digital transactions rise in volumes, this cost will come down due to less printing, storing, transporting, verifying and replacing of currency.

3. RBI DEPUTY GOVERNOR Mr.VIRAL ACHARYA CALLS FOR “ALL-OUT” SALE OF SOME WEAK PUBLIC SECTOR BANKS: Reserve Bank Deputy Governor Mr.Viral Acharya has said that the time may have come to “Re-privatise” some of the weak public sector banks, as the government is taking steps to arrange funds to capitalise bad banks. According to Mr.Acharya, this would reduce the overall burdenof  the government to inject the capital and will help the government to preserve its hard earned fiscal discipline. This remark has raised a storm in the banking industry as most of the Bank Unions have strongly condemned the statement.

4. INCOME TAX NET WIDENS, NUMBER OF TAX PAYERS INCREASE BY NEARLY A CRORE:As the government turns the heat on black money, the number of people who filed tax returns increased by around 95 lakhs. The government has been looking to widen the tax net as barely a little over 3 % of the population is said to pay income tax. But this time around, as the government tightened the noose through demonetization and other measures, as many as 5.28 crore returns were e-filed in FY 16’, a rise of 22% over the preceding year.

5. FINALLY GOVDERNMENT PROPOSES ORDINANCE TO HELP BANKS DRIVE OUT OF NPA NET: Finally the cabinet has cleared the non-performing asset (NPA) resolution package that includes proposing an ordinance to empower the Reserve Bank of India to more effectively deal with bad loans. This move will pave the way for a long awaited initiative aimed at cleaning up the balance sheets of banks burdened with bad loans. This resolution has been sent to the Presidentfor approval and once this is approved the details of the resolution will be shared. Changes will be affected in Section 35A of Banking regulation Act and these changes will empower RBI to give directions to banks to effectively resolve NPA issues.

6. GOVERNMENT KEEN TO MOVE AHEAD WITH MORE PSB CONSOLIDATION: With the recent success of the merger of associate banks with SBI, the government is keen on further consolidation of some of the public sector banks with an aim to create only a few banks of global size and scale. The government will soon undertake the study on further consolidation of Indian Banks and look at various options for merger among the remaining 21 public sector banks.