WEEKLY FINANCIAL SNIPPETS- 30/12/2017

1. RBI WILL NOT EXTEND DEADLINE FOR 2nd LIST OF DEFAULTERS: In the month of August 2017 Reserve Bank of India had announced a list of 28 large defaulting companies and had instructed the banks to find a resolution plan before 31st December 2017 in accordance with a formula prescribed by it. If the banks failed to do so, the companies had to be referred to the National Company Law Tribunal (NCLT). Now the RBI has turned down the request from banks to extend the deadline for restructuring these defaulting company accounts. This means the companies like Videocon, Jaiprakash Industries, Uttam Galva Steel, Essar Projects etc will have to be referred to NCLT.

2. COMPLAINTS AGAINST PRIVATE BANKS GROWING AT A FASTER PACE THAN PSBs: The Office of the Banking Ombudsman (OBO) has received 35,080 complaints against private banks, registering a 30.2% increase over last year. In contrast, complaints against Public Sector banks grew at about 28% over the last year.

3. RISING NPAs IN EDUCATION LOAN ADD TO BANKS’ STRESS: Education loans have started becoming NPA in large numbers with defaults in repayments rising to 7.67% of the total outstanding education loans. As per the IBA data, the total outstanding education loan in the banking sector in 2016-17 was Rs. 67,678 Crore, of which Rs. 5,191 crore was NPA. This is despite certain changes made in the education loan scheme such as extension of the repayment period to 15 years and the launch of Credit Guarantee Fund Scheme for education loans. In our opinion this means that there is very low growth as far as the employment opportunities are concerned.

4. RBI’S MANDATE FOR PROVIDING DOORSTEP BANKING SPURS BANK HIRING: with the recent mandate issued by RBI for providing doorstep banking service to the senior citizen above the age of 70 years and the differently –abled, many banks are reviving their hiring plans to meet the new norms.

5. BANKS LOST NEARLY Rs.17,000 CRORE TO FRAUDS LAST FISCAL: The Reserve Bank of India has informed that as per the fraud monitoring reports submitted by scheduled commercial banks, the amount lost on account of frauds during 2016-17 was Rs. 16,789 crore. Now RBI has formed an inter-disciplinary standing committee on cyber security comprising of Information Security Audit, forensic and cyber security experts.

6. INDIA ONE AMONGST THE MAJOR NATIONS TO HAVE HIGHER BAD LOANS RATIO: The 9.85% ratio of bad loans or NPAs in banks has put India in the group of those nations that have very high Non-Performing Assets. The only major countries with similar ratios are the troubled EU nations namely Portugal, Italy, Ireland Greece and Spain. According to a research survey done by rating agency CARE, India’s NPA ratio (Excluding Restructured assets) is one of the highest in the group of “ High-NPA” nations.

7. SIX STRESSED BANKS TO GET Rs 7,500 CRORE CAPITAL INFUSION: Bank of India, IDBI Bank, UCO bank, Bank of Maharashtra, Dena bank and Central Bank of India are the 6 most stressed banks who will get fresh equity infusion of over Rs 7,500 crore from the government. This is provided immediately to meet the prescribed regulatory capital requirement. But the government officials said that it will monitor their functioning to ensure that they undertake clean, responsible and prudent business to enhance stakeholder value.

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