WEEKLY FINANCIAL SNIPPETS – 01/09/2018

1. ICICI BANK REPORTS FIRST QUARTER LOSS: ICICI Bank reported a historic loss in the first quarter ended June 2018 due to the rise in its provisions. The bank reported a loss of Rs.120 crore as against a profit of Rs 2,049 crore during the same period last year. The provisions were more than doubled to 5,971 crore from 2,609 crore last year.

2. BANKS SERVING SUMMONS TO DEFAULTERS THROUGH WhatsApp AND EMAILS: Banks are using WhatsApp and Email to pin down those defaulters who slip through the banks grip when more traditional mode of correspondence is used. Banks are issuing court summons through WhatsApp and Email. This digital means of correspondence is being followed after a judgement earlier this year. A letter through post can get unduly delayed and addresses keep on changing but phone numbers and Email addresses can remain constant, making these digital modes of correspondence handier to the lenders. HDFC Bank has already issued 214 court summonses through WhatsApp and Email.

3. BANKS WILL HAVE TO STOP LENDING TO INFRA PROJECTS: State Bank of India has said that banks will have to stop lending to infrastructure projects, especially to Power sector because of the bad experiences of the past as most of the loans given in the last decade have turned bad. Due to the changes in Non-Performing Assets recognition after February 12, 2018 RBI circular, wherein RBI had given August 27TH as the deadline, as many as 30 power projects with accumulative exposure of Rs. 1.7 trillion ( Rs 1.7 lakh crore) are now facing bankruptcy proceedings. If the banks fail to resolve the issues within the next 15 days, then they will have to be sent to National Company Law Tribunal (NCLT).

4. UIDAI CRACKS DOWN ON BANKS MISSING TO MEET AADHAAR UPDATE DATA TARGET: The Unique Identification Authority of India (UIDAI) has withdrawn electronic Know-Your-Customer (KYC) facilities for 13 Indian Banks and many authentication agencies for failing to meet targets on enrolment and updating citizen information for its Aadhaar biometric database. For these banks, the suspension of electronic KYC facility means they will not be able to offer several financial services linked to the authentication facility.

5. IBA ASKS BANKS TO GET CYBER SECURITY INSURANCE: The Indian Banks Association (IBA) has asked member banks to buy Cyber Insurance covers in the wake of several incidents of digital attacks on banks. Such a policy has turned into a basic need for the banks now. While large banks have cyber insurance covers ranging from Rs. 350 to Rs. 500 crore, many of the smaller banks have not yet opted for the same. Usually these smaller banks have only the Banker’s Blanket Policy which does not cover cyber heists.

6. RBI MAY SOON DO AWAY WITH MCLR: The Reserve Bank of India, in its annual report of 2017-18 has indicated that it would review the Marginal Cost of Lending Rate (MCLR) guidelines. The review is imminent because MCLR system has not reflected the changes in interest rates. And moreover, World-wide the bank rates have moved to an external benchmark which leads to uniform pricing. From April 2018 onwards RBI has asked all banks to link all old loan interest rates to MCLR, which most of the banks are yet to implement.

7. INCOME TAX SCRUTINY TO GO ELECTRONIC: The Central Board of Direct Taxes (CBDT) has mandated “e-proceedings” for all income-tax scrutiny in 2018-19. E-proceeding refers to the communication of date and documents between the Income-Tax department and the assessees through electronic mode and where the assessments are done electronically. It has also specified situations where e-proceeding will not be mandatory.

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