WEEKLY FINANCIAL SNIPPETS – 18/05/2018

  1. PNB POSTS BIGGEST EVER QUARTERLY LOSS: Punjab National Bank (PNB) reported Rs 13,416 crore loss in the fourth quarter of 2017-18 as against a profit of Rs 262 crore in the same period last year. As a result of this, PNB posted a consolidated net loss of Rs 12,282.82 crores against a profit of Rs 1.324 crores last year. The significant reason for this huge loss was the rise in provisions to Rs. 20,353.51 crore in quarter ended March 2018. PNB’s Non-Performing Assets grew to a whopping 86,620 crore in the quarter and the gross NPA ratio rose to 18.38%.

 

  1. RBI ISSUES FINAL NORMS ON NET STABLE FUNDING RATIO (NSFR): RBI has issued final guidelines on Net Stable Funding Ratio (NSFR). The concept of NSFR emerged in the aftermath of global financial crisis proposed by Basel Committee on Banking Supervision to make banks more resilient. NSFR ensures banks have sufficient stable sources of funding to finance their activities over long run. The ratio can be defined as the amount of available stable funding (ASF) in relation to the amount of required stable funding (RSF). ASF is the portion of capital and liabilities expected to be realisable over a year.

 

  1. SBI CARD BASE GROWS 20% IN 6 MONTHS: SBI card has been increasing its card numbers at a compounded annual growth rate of 40%. Small cities are driving the growth rate for SBI Card. It took SBI cards one year to increase the card base from 4 million in September 2016 to 5 million in September 2017. But since then, the card base has grown to 6.3 million in March 2018, an increase of 1.3 million cards in 6 months. The market share of SBI cards in number of cards is now 16%.

 

  1. COMBINED FOURTH QUARTER LOSS OF 4 PSU BANKS IS $1.74 BILLION: Four Public Sector Banks reported huge losses in the fourth quarter of FY 2017-18 which amounts to  a combined net loss of       $ 1.74 billion ( Rupees 117.29 billion). This is due to a jump in bad loan provisioning following tightening of the RBI rules in respect of NPAs. Out of the four banks, Canara Bank posted a net loss of Rs.48.6 billion, Allahabad Bank reported a net loss of Rs. 35.10 billion, UCO Bank Rs. 21.34 billion and Dena Bank Rs.  25 billion Net loss.

 

  1. NO GST FOR FREE BANKING SERVICES, INCLUDING ATM WITHDRAWAL: Free banking services like cheque book issuance, ATM withdrawals are likely to remain out of the ambit of GST. The revenue department is likely to instruct the financial services department that GST will not be levied on free banking services. The Indian Banks Association (IBA) on behalf of the management of all banks too had made representation to tax authorities.

 

  1. ALLAHABAD BANK BOARD DIVESTS ITS CEO FROM FUNCTIONAL POWERS: After the government initiated removal of Allahabad Bank Chief Executive Officer (CEO) Ms Usha Ananthasubramaninan following a CBI charge sheet in Nirav Modi scam, the bank’s board divested her of all her functional responsibilities. After similar government action against 2 Executives of PNB, K V Brahmaji Rao and Sanjiv Sharan, the PNB board too has divested them of their financial and executive powers.

 

  1. RBI PUTS FRESH LENDING RESTRICTIONS ON ALLAHABAD BANK: Reserve bank of India has placed additional restrictions on Allahabad Bank, which is already under Prompt Corrective Action (PCA) since January this year. RBI has debarred the bank from high risk lending and raising high cost deposits. The RBI has also restricted the bank from creation of non-banking assets and has advised it to restrict from accessing or renewing wholesale or costly deposits. The bank’s board has already taken note of the same.

 

  1. CENTRE MAY ASK RBI TO EASE PCA FRAMEWORK: The government may ask RBI to ease the Prompt Corrective Action (PCA) framework so that a complete restriction on fresh lending does not affect credit flow to business, particularly to Small and Medium Enterprises. This was decided after the Ministry held a review meeting with 11 PSU banks which are under PCA.
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