WEEKLY FINANCIAL SNIPPETS – 12/05/2018

  1. HDFC BANK POSTS RECORD PROFIT OF Rs 4,799 CRORE FOR Q4: HDFC Bank Ltd posted a record 4Th quarter net profit of Rs. 4,799 .28 crores, a 20.27% year-on-year growth. This is also driven by stable asset quality. Net Interest Income (NII) increased to 17.70% and Asset Quality remained stable, as percentage of gross Non-Performing assets (NPAs) were at 1.30% against 1.29% as compared to last year. The consolidated net profit for the year ended March 2018 was Rs. 18,510 crores, up by 21.4% as compared to last year. When most of the banks (both public and private sector) are reeling under the bad loans scenario, HDFC Bank has come out successfully in these difficult times as well because of its business mantra of “Retail Banking” all along.

 

  1. BANKS UNDER TAXMAN SCANNER FOR GST REFUND ON ATM TRANSACTIONS: The Indirect Tax Department is scrutinising the 100% input GST credit availed by most of the banks on taxes paid by their ATM vendors. The scrutiny started when banks started claiming 100% input tax credit on the amount paid to ATM vendors who are responsible for maintenance and cash supply to the machines. These vendors charge per transaction and add GST to the bills. The tax officials believe that since banks don’t charge on many ATM transactions which are free to customers, 100% input credit cannot be claimed by them.

 

  1. LENDERS FIND RESCUE PLAN FOR STRESSED POWER ASSETS: Lenders to the power sector led by SBI have decided to float a fund to take over 14 stressed power plants. The decision is aimed to prevent power generation plants from going in to liquidation, receiving better valuations and securing speedy resolution. It was decided that lenders will have to make investments according to their share of exposure in each power plant.

 

  1. GOVERNMENT LIKELY TO WITHDRAW TAX NOTICE ON FREE BANKING SERVICES: The tax department is likely to withdraw the show-cause notice issued to several banks asking them to pay service tax on “free services” provided to the customer. Following the Finance Ministry’s instructions, the Department of Financial Services (DFS) has presented its views and is likely to withdraw the notice.

 

  1. GST DIGITAL DISCOUNTS MAY COST Rs. 15,000 CRORES TO THE GOVERNMENT: The government has estimated that the centre and states may lose up to Rs. 15,000 crores by offering discounts of up to Rs.100 on GST for every digital transaction, including those done using credit and debit cards or mobile wallets. This figure is arrived at, based on the average ticket size of each transaction being Rs. 1,400 and a 2% discount being proposed on it.

 

  1. PNB BANKS ON ARTIFICIAL INTELLIGENCE TO CHECK FRAUDS: Punjab National Bank has said it plans to rely on Artificial Intelligence (AI) for reconciliation of accounts and incorporate analytics for improving audit systems as it seeks to clean up the process. The bank has also discussed its road map with a target of reaching a total business of Rs. 12,000 lakh crore.

 

  1. MONTHLY GST RETURN SYSTEM TO BE IMPLEMENTED: The GST council has finally approved the single monthly return with an aim to boost collections and compliance. The new system is scheduled to be implemented in next six months. Though the council has approved the new system but the software will take six months to get fully operationalized. However the new system will be implemented in 3 phases.

        8. NBFCs HIRE TALENT FROM BANKING INDUSTRY AMID RISING GROWTH:                     Non- Banking Financial Companies (NBFCs) are recruiting candidates from                           banking industry. According to industry estimates, 60 to 70-% of the NBFCs hiring               pertains to the candidates from banking industry. While banks are struggling to                 come out of bad loan mess, NBFCs are in a comfortable position. By hiring these                 candidates from banking industry they tend to get experienced hands.

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