WEEKLY FINANCIAL SNIPPETS- 02/06/2018

  1. INDIA’S STRESSED AND DEBT-LADEN BANKS GET CHEAP OVERSEAS LOANS: Indian Banks are getting syndicated loans at a very low interest rate from international lenders. Indian banks will have cleaner balance sheets and stronger credit portfolios in the long run as a result of RBI’s multi-year push to recognise bad assets (Non-Performing assets) more accurately in Indian banking system. Axis Bank, State Bank of India and IndusInd Bank Ltd are some of the banks which are getting cheaper funds in international market as confidence in World’s fastest growing economy increases.

 

  1. GOVERNMENT LOOKS AT WAYS TO APPOINT TOP OFFICIALS AT ALLAHABAD BANK AND PNB: The government is exploring ways to appoint top executives in Allahabad Bank and Punjab National Bank (PNB) after existing executives were divested of their official charge, pending investigations in to Nirav Modi fraud case. The managing Director of Allahabad Bank along with two Executive Directors of PNB was divested of all powers recently. Since these executives have not been removed from the service but have been just divested from their official powers, it is technically not possible for the government to appoint fresh MD and ED for the said posts. The government is looking at all options including the removal under the Banking Regulation Act.

 

  1. UIDAI GIVES BREATHER TO BANKS: Unique Identification Authority of India (UIDAI) had instructed each of the Indian Banks to ensure that 10% of their branches to have Aadhaar enrolment centres and these centres had to meet the target of 16 daily enrolments or updation. As per the new circular, the stipulated bank branches with Aadhaar facility will have to ensure at least 8 enrolments or updation each day from July 1, 2018. These targets will then be raised to 12 per day from October 1, 2018 and to 16 per day from January 1, 2019 onwards.

 

  1. NPA LADEN UNITED BANK OF INDIA TO CAP LOANS TO A SINGLE BORROWER: Kolkata based United Bank of India (UBI), which has a gross Non-Performing assets (NPA) ratio of 24.1% will cap corporate loans to a single borrower at Rs. 150 crore. Because of the deteriorating asset quality, the bank has allowed its corporate loan book to shrink by around to 6,000 crore during FY 2017-18. The share of corporate loans in the bank’s total assets is at 28% now. It will be brought down to 25% in this fiscal.

 

  1. GOVERNMENT MAY ASK LARGE BANKS TO BUY SMALL BANKS’ RISKIER LOANS: The government may ask loss-making public sector banks to sell their riskier loans to their larger peers, such as SBI so as to reduce the capital requirement of public sector banks that have been hit hard by the latest norms of RBI on provisioning for bad debts. Riskier loans are those loans given to companies with weak finance. This is because the government has ruled out further fund infusion beyond Rs. 65,000 crore that was announced as part of the Rs. 2.1 lakh crore re-capitalisation plans. Further, these lenders are being pursued to aggressively sell non-core holdings including stake in mutual funds and insurance arms.

 

  1. 37 BANKS SEE Rs. 1.3 TRILLION JUMP IN GROSS NPA IN QUARTER 4: Weighed down by RBI’s new rules on restructured assets, domestic banks ( both public and private) have added over 1.3 trillion in gross Non-Performing Assets (NPAs) in the fourth quarter ended March 2018. Provisions and contingencies set aside for these NPAs also rose to Rs. 1.4 trillion in the same period.

 

  1. MHA LAUNCHES ONLINE ANALYTICAL TOOL TO MONITOR FOREIGN FUNDING OF NGOs:Ministry of Home Affairs (MHA) has launched a new online analytical tool tofacilitate closer monitoring of the flow and utilisation of foreign contributions received by NGOs and other organisations registered under Foreign Contribution (Regulation) Act 2010 (FCRA).There are hundreds and thousands of transactions annually which can be monitored effectively through this tool. This will help the government to regulate the acceptance and utilisation of foreign contributions by these NGOs.
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