WEEKLY FINANCIAL SNIPPETS- 6/01/2018

1. SEBI PLANNING A “RISKOMETER” FOR STOCK MARKET INVESTMENTS: Securities & Exchange Board of India (SEBI) is planning to introduce an early-warning system to caution about the risks of investing in stocks of overvalued companies, those with unsuitable business models and ones that may go bankrupt. The proposed system would rate a stock on a numeric scale or a colour coded system which will allow investors to easily identify the investment risks associated with a particular stock. Mutual funds already have a similar system called “Riskometer”.

2. BANKS REQUEST RBI TO ALLOW THEM TO SPREAD LOSSES OVER TWO QUARTERS: A group of state owned banks (including SBI) has approached Reserve Bank of India seeking exemption from recognising mark-to-market losses on their government bond portfolios in December quarter. They have requested RBI to allow them to spread these losses over two quarters (ending December and March). The sudden surge in yields has resulted in mark-to- market losses for many public sector banks.

3. GENERAL INSURANCE COMPANIES SEE A HUGE DEMAND IN TITLE INSURANCE: From April 2018 onwards real estate developers can buy title insurance cover- an indemnity policy which insures against financial loss arising out of claims in title to land or property. General Insurance companies are eying this product. This will be a long term policy ranging from 5 to 12 years.

4. DEPOSIT INSURANCE COVER MAY NEED TO RISE UP TO Rs 15 LAKH TO COVER ATLEAST 90% OF DEPOSITS: In the year 1993 when the government raised the limit of the deposit insurance cover on fixed deposit to Rs 1 lakh, as much as 90% of the accounts were covered with this enhancement. Now the government may have to raise the deposit insurance cover to around Rs 15 lakh to ensure a safety net for at least 90% of the present depositors.

5. RBI PUTS ALLAHABAD BANK UNDER PROMPT CORRECTIVE ACTION: Allahabad Bank has been brought under Prompt Corrective Action (PCA) by Reserve Bank of India. PCA on Allahabad Bank was imposed because of high net NPAs and negative Return on Assets (ROA) for two consecutive years. This is the 11th Public Sector Bank to be covered under PCA.

6. INDIAN OVERSEAS BANK PLANS TO WRITE OFF ITS LOSSES FROM RESERVES: Indian Overseas Bank (IOB) has said that it has planned to write off its losses from reserves. The bank said its board has approved to utilise the balance available in the share premium account amounting to Rs 76.5 billion as on March 31, 2017 to write off the accumulated losses to the tune of Rs 69.8 billion as on March 31, 2017 to present a true and fair view of the financial position of the bank.

7. FACING MERGERS AND PAYCUTS, UCO BANK STAFF LAUNCH A PLATFORM FOR TURNAROUND: In the face of the accumulated losses, merger threats and salary cuts, UCO Bank employees (both clerical and officers) have joined hands and launched a platform- United Forum of UCO Bank Unions. This is aimed at a speedier turnaround of the Bank. The mandate of the newly formed organisation is to motivate employees to work beyond normal working hours and on holidays, holding credit camps to garner fresh loans, speaking to agitated customers and intensifying the recovery of Non-Performing Assets through door-to-door campaigns. In our opinion this is a historic step taken by the bank union which will strengthen the management arm in the bank’s turnaround plans and an eye-opener for other bank unions as this is the need of the hour in almost all PSU banks.

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