WEEKLY FINANCIAL SNIPPETS – 14/07/2018

  1. RBI’S NEW CASH MANAGEMENT NORMS HIKE BANKS’ COSTS: With Reserve Bank of India’s new standards for cash logistics companies starting from July 6th 2018, some banks are raising the issue of higher costs and demanding higher inter-bank payments for use of ATMs. As per the new norms, banks must ensure that service providers and their sub-contractors they engage, must have a net worth of at least Rs. 100 crore. In case of existing contracts the bank must ensure that the net worth criteria is met by March 2019. The cash logistic companies must have a fleet size of minimum 300 specifically fabricated cash vans and these vans should be equipped with GPS, tubeless tyres, emergency hooters and CCTV covering.

 

  1. IMPS FUND TRANSFER DOUBLES IN THE FIRST QUARTER OF FY’ 19: IMPS (Immediate Money Transfer) offers instant round-the-clock interbank electronic funds transfer service that can be accessed through multiple channels like mobile, internet, SMS.  Transfer of funds through IMPS crossed a whopping Rs. 3.23 lakh crore in April-June quarter of 2018-19 financial year. The figure stood at 1.17 lakh crore during the same period in the last fiscal. The number of transactions through IMPS crossed 10 crore mark in March 2018 and touched a high of 12.04 crore in June 2018.

 

  1. PUBLIC SECTOR BANKS MAY NEED Rs. 1.3 LAKH CRORE FOR LOAN RECAST PLAN: The committee on Stressed Assets has estimated that public sector banks will need around Rs. 1.30 lakh Crore over a period of two years to deal with resolution of stressed loans , including funding of the proposed Asset Management Company  and the stressed asset fund. The capital requirement may be over and above the additional funds that banks would need to set aside for potential losses from loans that are classified as Non-Performing Assets during the two year period. While the government is set to provide Rs. 65,000 crore, the remaining amount will come through the sale of non-core assets, internal accruals and planned equity raising.

 

  1. PUNJAB NATIONAL BANK MAY POST NATION’S BIGGEST BANK PROFIT IN QUARTER 2 OF FY 2018-19: Punjab National Bank that saw its earnings wiped out by an unprecedented fraud, aims to report the nation’s biggest bank profit in the second quarter ending September 2018. This may materialise through sale of assets and recovery of bad loans. Much of its earnings will come from a planned sale of PNB’s stake in its housing finance unit.

 

  1. FITCH WARNS AGAINST AUTO-LOAN DELINQUENCIES: Rating agency Fitch has warned against fresh auto-loan delinquencies if fuel prices continue to rise. It said that high petrol and diesel prices could strain India’s commercial vehicle operators and lead to a rise in auto-loan delinquencies. Freight rates have so far not kept pace with the fuel price increase and this would bleed the commercial vehicle operators.

 

  1. RBI MAKES IT MANDATORY TO MENTION BUYER’S NAME ON DEMAND DRAFT: Reserve Bank of India has decided to make it mandatory to mention the buyer’s name in the demand draft at a bank branch. This is one of the measures taken by RBI to make banking instruments safe and stronger.

 

  1. GROSS NPAs OF PSBs STOOD AT 14.5% AT THE END OF FY 18: The Gross Non-Performing Assets (GNPAs) have continued to rise. The bad loans have surged to a staggering 11.6% of the total advances at the end of FY 2018, up from 9.6% in FY 2017. Public Sector Banks are badly hit by this bad loan scenario with 14.5% of their loans turning bad at the end of FY 2018.
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