1. BANKS’ BAD LOANS CROSS Rs. 10 LAKH CRORE: Indian Banks’ Gross Non-Performing Assets
(NPAs) stood at Rs. 10.25 lakh Crore as on 31/03/2018. As on 31/12/2017 the bad loans were
Rs. 8.86 lakh Crore. That means in the last quarter of FY 2018 the pile has grown by Rs. 1.39
Lakh crore or 16% jump from December quarter which is really alarming. A break-up of NPAs
shows that 21 Public Sector Banks (PSBs) have a Gross NPA of Rs 8.97 lakh crore and that of 18
private sector banks stood at Rs 1.28 lakh crore as on 31/03/2018.
2. AFFORDABLE HOME LOANS A WORRY FOR RBI: Reserve Bank of India has said that it is closely
monitoring the small Housing loan segment of up to Rs. 2.00 lakh and after careful analysis of
the said data, it has been observed that the level of NPAs (Bad loans) for ticket size of up to Rs.
2.00 lakh is very high and has been rising briskly. Reserve Bank has warned all banks that it will
be constrained to make small ticket housing loans more expensive under the affordable housing
scheme and force borrowers to pay up more money if banks don’t tighten the standards and
address the rising bad loan scenario in this segment.
3. CO-OPERATIVE BANKS COULD BECOME SMALL FIANANCE BANKS: Reserve Bank of India has
opened the doors for Urban Co-operative Banks (UCBs) to convert into Small Finance Banks
giving them more freedom and access to open branches pan India and thus opening up a larger
market for these lenders which at present are of local nature. The details of the scheme will be
4. CAPITAL FIRST’S MERGER WITH IDFC BANK GETS RBI NOD: Reserve Bank of India has issued a
No Objection Certificate for the merger of IDFC Bank and Capital First. Now IDFC Bank has to
approach the shareholders and creditors of the merged companies. A clearance from NCLT is
also required to clear the way for both the entities to merge. Capital First Home Finance and
Capital First Securities will also merge with IDFC bank.
5. TROUBLED MSMEs GET A BREATHER FROM RBI: In a relief to Micro, Small & Medium
Enterprises (MSMEs) affected by the rollout of GST, RBI has given them a temporary breather
by allowing them to delay their loan repayments by 180 days without being classified as NPA.
This facility will be available to all MSMEs with aggregate credit limits of up to Rs. 25 crore,
irrespective of whether they are registered under GST or not. Accordingly, eligible MSME
accounts, which were standard as on 31/08/2017 shall continue to be standard asset if
payments due as on 01/09/2017, and falling due thereafter up to 31/12/2017 were paid not
later than 180 days from their original due date.
6. PSBs’ FY18 LOSSES HAVE WIPED OUT GOVERNMENT’S $ 13 BILLION INFUSIONS: Losses by
state run banks have entirely wiped out $ 13 billion ( Rs 87,100 Crores) capital infusion by the
government and the situation is not likely to improve in the current fiscal as well. Rating agency
Fitch has said that the big losses will pressure the banks viability rating.
7. BANKS PLAN TO SELL Rs. 28,000 CRORE NPAs: Seven banks including the big brothers like SBI
and ICICI Bank are in the process of selling their bad loan portfolio totalling to Rs. 28,000 crore
to asset reconstruction companies in the coming weeks without waiting for the resolutions. SBI
and ICICI bank have already disclosed their list of assets that would be put on sale and other
banks are in final stages. The largest share is that of IDBI bank which has identified 30 accounts
with Rs. 21,399 crore. SBI has identified 12 accounts worth Rs. 1,325 crore while ICICI bank has
identified 16 accounts amounting to Rs. 2,330 crore.
8. AXIS BANK LAUNCHES NEW CHAT BOT SERVICE: Axis bank has launched a virtual assistant for
its customers armed with artificial intelligence and machine learning algorithms and named it
“AXIS AHA” The chatbot is designed to provide relevant contextual responses to customer
queries and even help them make transactions on the chat window itself.
1. GOVERNMENT BEGINS WORK ON MERGERS OF INSURANCE COMPANIES: The Finance Ministry has started the process for appointing a consultant to take forward the merger of three general insurance companies – National Insurance Company, United India Insurance Company and Oriental India Insurance. The consultants thus appointed will prepare a road map and then the government will invite bids. But merger and listing would not be possible in this fiscal as mergers of such huge scales take a long time.
2. INDIA NOW IS THE SIXTH WEALTHIEST COUNTRY IN THE WORLD: According to a report by Afr-Asia Bank Global wealth Migration Review, India is the sixth wealthiest country in the World with a total wealth of $ 8,230 billion. United States of America is the wealthiest country in the world with a total wealth of $ 62,584 billion. China stood second with $ 24,803 billion and Japan was at the third position with $ 19,522 billion. Other countries in the top 10 wealthiest list include United Kingdom, Germany, Australia, Canada France and Italy.
3. FINANCE MINISTRY TIES UP WITH 40 ENTITIES TO EXTEND MUDRA FUNDING: The Finance Ministry has announced that it has tied up with 40 entities including Flipkart, Swiggy, Patanjali, Make My trip, Zomato Meru cab, Muthoot, Edelweiss, Amazon, Ola, Big Basket and Amul etc, for extending loans to small entrepreneurs under Mudra Scheme. Under the scheme these companies will identify small entrepreneurs who need loans and underwrite them and will extend loans to them under the Mudra Scheme.
4. OVER 2,100 COMPANIES SETTLE Rs 83,000 CRORE BANK DUES: The fear of losing control over their companies and assets has prompted promoters, who have defaulted on repayment of loans to banks, to settle their dues of around Rs. 83,000 crores involving around 2,100 companies before action was initiated under the newly enacted Insolvency &Bankruptcy Code ( IBC).
5. HDFC BANK ACHIEVES Rs. 1,000 CRORE THROUGH DIGITAL LENDING: HDFC Bank has clocked Rs. 1,000 crore per month through digital platforms across products and expects it to go up further with its launch of an online platform for loan against mutual funds. The bank has launched this new product offering loan against mutual funds in association with CAMS, which controls 65% of market share. The bank has an approved credit limit of Rs. 10,000 crore on loans against mutual funds and insurance policies. The digital alternative will reduce the time taken to pass the loan to just three minutes as against the current the current time of up to 6 days.
6. DIRECT TAX COLLECTION FOR FY 2017-18 SEES 19.3% GROWTH: The government’s direct tax collection has gone up by 19.3% to 6.95 lakh crore. Net Direct tax collected so far represents 69.2% of the total revised direct taxes. Gross collections (before adjusting for refunds) have increased by 13.3% to Rs 8.21 lakh crore during April 2017 to January 2018.
7. SBI REPORTS RECORD LOSS OF Rs. 7,718 CRORE IN MARCH QUARTER: State Bank of India reported a loss of Rs. 7,718 crore ($ 1.1 billion) in January-March quarter of FY 2017-18. This is because of the provisions made for bad loans after a change in banking regulations. SBI had posted a loss of Rs. 2,416 in December quarter.
8. INTEREST ON PROVIDENT FUND FIXED AT 8.55% FOR 2017-18: The government has fixed 8.55% as the rate of interest for PF accounts for 017-18, the lowest rate since 2012-13 fiscal. Around 5 crore PF account holders will be affected by this. The Employees’ Provident Fund Organisation (EPFO) had provided 8.65% interest for 2016-17, 8.8% in 2015-16 and 8.75% each in 2013-14 and 2014-15. In 2012-13 it was 8.5% , thus at 8.55% for 2017-18, it is the lowest since FY 2012-13.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.