WEEKLY FINANCIAL SNIPPETS- 31/03/2018

  1. BUSINESSES WITH “NIL” TAX LIABILITY MAY GET TO FILE GST RETURNS BI-ANNUALLY: Business entities having zero tax liability for 6 consecutive months under GST may get relief of filing “NIL” GST returns twice a year. The said proposal is being sanctioned by GST council and the same will be implemented soon. According to a recent data, nearly 40% of GST return files have “NIL” tax liability and henceforth these entities need not file monthly tax returns.

 

  1. GUARANTEES OFFERED BY BANKS OUTSIDE INDIA TOUCH 1.95 LAKH CRORE: The Non-Fund exposure (Guarantees, LOUs, and Foreign Exchange Contracts) of banks which fall under the category of Contingent liability has drawn ample attention after the Nirav Modi LOU Scam in PNB. As per the RBI data, out of the total contingent liabilities, Guarantees outside India by all scheduled commercial banks have grown at an annual growth rate of 21% since 2004-05. The total guarantees outside India stood at 1.95 lakh crore in 2016-17.

 

  1. IBC PANEL EASES INSOLVENCY RULES FOR MSMEs: The Insolvency & Bankruptcy Code (IBC) review panel has called for sweeping changes in the law aimed at easing insolvency rules for Micro Small and Medium Enterprises (MSMEs). The committee has proposed that the promoters of MSMEs who are not termed as wilful defaulters should be allowed to bid for the assets of their companies during insolvency process.

 

  1. WORRIED BY IDBI BANK’S POOR HEALTH, RBI WRITES TO FINANCE MINISTRY: The Reserve Bank of India has written to the Finance Ministry expressing concerns over the poor financial position of IDBI Bank and has called on the government to take remedial steps. The letter points out several shortcomings, including the recognition of non-performing assets. RBI says that it has found out during their inspection that the bank’s mechanism for identifying bad loans is also deficient. And having said that, RBI also adds that the Bank’s Non-performing assets could be higher than what has been reported so far.

 

  1. PNB APPROVES PAYMENT TO 7 BANKS OVER FRAUDULENT LOUs: Punjab National bank has announced that it will make payments of around Rs. 6,500 crore to 7 banks against the Letter of Undertaking (LOUs), and Foreign Letters of Credit (FLCs) it issued in the fraud allegedly committed by jewellers Nirav Modi and Mehul Choksi and their companies. Around 350 such LOUs and FLCs are maturing on 31ST March 2018.

 

  1. ARUNDHATI BHATTACHARYA AMONG THE NAMES WHO COULD LEAD BBB: The government has initiated the process of selecting the next Chairman for the Banks Board Bureau (BBB). State Bank of India’s former Chairperson Mrs. Arundhati Bhattacharya, is considered to be one of the frontrunners for the post. But the government officials said they are open to get someone from the private sector also to head the advisory body. The government is not inclined to expand the role of the BBB and is of the opinion that the advisory body should continue to make holistic recommendations.

 

  1. IDBI BANK DISCLOSES Rs. 770 CRORE FRAUD: IDBI Bank has said that it has identified fraudulent loans of Rs.770 crore disbursed from 5 of its branches in Andhra Pradesh and Telangana. The loans were sanctioned and disbursed during fiscal years 2009-2013 for fish farming businesses. These loans were obtained against non-existent fish ponds and by inflating the value of collaterals. It has found major lapses in processing and disbursing the loans by two of its officials. The case has been handed over to CBI.
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WEEKLY FINANCIAL SNIPPETS- 24/03/2018

  1. SBI CLOSES 41.16 LAKH SAVINGS BANK ACCOUNTS: State Bank of India has closed as many as 41.16 lakh savings bank accounts from April 2017 to January 2018 for not maintaining the average monthly balance. In April’17 SBI had re-introduced penal charges on non-maintenance of average monthly balance. Later on in October’17 it had revised down the charges to some extent. SBI has 41 crore savings bank accounts of which 16 crores are under Pradhan Mantri Jan-Dhan Yojana, pensioners, minors and social security benefit holders which are exempted from the penalty for not maintaining minimum balance.

 

  1. NO DEADLINE FOR LINKING AADHAAR CARD TO SERVICES : Supreme court has extended the March 31ST  deadline for mandatory linking of Aadhaar to avail various services and welfare schemes run by the government till its constitution bench delivers its verdict on the validity of the 12 digit biometric number.

 

  1. SAVINGS FROM DIRECT BENEFIT TRANSFER PEGGED AT Rs. 83,000 CRORE: The government has estimated that the Direct Benefit Transfer (DBT) has helped it to save around Rs. 82,985 crore overall. The scheme, which entails transfer of subsidies directly to the beneficiary’s account, has helped to save around Rs. 25,956 Crore in the 10 months up to January 2018 in this fiscal. The DBT scheme initially launched by UPA government in 2013 has been significantly extended by the present government, with the number of beneficiaries rising to 118.3 crore. The 45% jump in the savings is the result of pruning of fake or duplicate beneficiaries and plugging leakages which the present government has achieved by linking Aadhaar to the bank accounts.

 

  1. FRAUDS TO COST PNB NEARLY Rs. 14,500 CRORE THIS YEAR: The Punjab National bank (PNB) expects Rs. 14,500 crore loss this year on account of frauds (including contingent liabilities) following the scam by diamond traders. PNB has appraised that the total loss reported by it due to frauds was Rs. 341.03 crore in FY 2015-6, Rs. 2,633.39 crore in FY 2016-17 and Rs. 14,506.39 in FY 2017-18 (including contingent liability).

 

  1. 11,300 CRORE LYING UNCLAIMED WITH 64 BANKS: As per RBI’s latest report, an amount of Rs. 11,302 crore belonging to over 3 crore account holders is lying unclaimed with 64 Indian Banks. The largest amount – Rs. 1,262 crore is lying with SBI, Rs. 1,250 crore with PNB, while the remaining Rs. 7,040 crore with all other nationalised banks. However all this unclaimed money is just a fraction of the total deposits of over Rs. 100 lakh crore handled by these banks. Most of the unclaimed deposits would be cases of deceased account holders or people with multiple bank accounts.

 

  1. 25% OVERSEAS BRANCHES OF PUBLIC SECTOR BANKS REPORTED LOSSES IN FY 17: The Union government has said that 25% (one fourth of all foreign branches of PSBs) have reported losses last financial year. As per the data available out of the 159 branches of PSBs operating overseas, 41 branches have incurred losses.

 

  1. HOME BUYERS TO GET FINANCIAL CREDITOR TAG: A 14 member panel set up to review the Insolvency & Bankruptcy Code (IBC) is likely to recommend an amendment by which all home buyers will get a status of “Creditor”. This means that the home buyer will get the status of a financial creditor like banks and accorded similar benefits, in case their builder goes through insolvency proceedings before giving rightful possession of the flats. Here Home buyers will be third in the preference of order to get the proceeds—after the clearance of the cost of resolution and workers’ dues.

WEEKLY FINANCIAL SNIPPETS-17/03/2018

  1. EFFECT OF PNB SCAM – IMF CALLS FOR REFORMS AT PSBs: With the recent Punjab National Bank LOUs fraud the International Monetary Fund (IMF) has commented on the status of Indian Banks. It said the Indian banking reforms like the insolvency code and recapitalization will be ineffective unless the governance standards are improved. IMFs Deputy Managing Director Mr. Tao Zhang has said that mere reforms are not enough and should be accompanied by governance reforms which improve the internal controls which in turn will be crucial for financial stability.

 

  1. PSU BANKS NEED GOVERNMENT APPROVAL FOR ISSUING AT1 BONDS: The government  has instructed Public Sector Banks to take its permission before floating Additional Tier-1 bonds (AT1 Bonds), which have turned out to be loss making for bankers and the government. AT1 bonds are perpetual bonds without fixed maturity. The decision was taken after the government had to step in for a troubled PSU bank that could not repay its AT1 bond investors because of a regulatory restriction. AT1 Bond has a clause that if a bank is loss making, it cannot pay AT1 coupon and then the bank would default on interest payments purely on regulatory reasons.

 

  1. PSBs PLAN TIGHTER LENDING NORMS FOR CORPORATE LOANS ABOVE Rs 250 CRORE: Public Sector Banks (PSBs) will discourage multiple banking arrangements for companies with exposure of more than 250 crore in the banking system and will move all such loans under the consortium of banks for better monitoring. Under consortium arrangement there will be more discipline and effective monitoring.

 

  1. IDBI BANK WITHDRAWS SANCTIONED LIMITS TO SEVERAL INDIAN COMPANIES: IDBI Bank has suddenly withdrawn and reduced the sanctioned credit limits to several of its corporate customers without stating any valid reasons. Since the bank has cut credit facilities like Cash credit, vendor financing etc., the affected companies are facing lot of problems in their working capital cycle. Corporates affected by this sudden and unexpected move have come together and approached the Finance Ministry seeking reprieve.

 

  1. RBI BARS BANKS FROM ISSUING LOUs: The Reserve Bank of India has discontinued issuance of Letters of Undertaking (LOUs) and Letters of Comfort (LOCs) with immediate effect. This is an attempt to prevent further fraudulent transactions. The immediate effect of this would be it will increase the import cost and the profitable business avenue of foreign Branches of Indian Banks would close down. And since the importers will now have to buy dollars from market, the rupee could come under pressure.

 

  1. PSBs TO LINK SWIFT WITH CORE BANKING SOULTION BY APRIL 30TH : As directed by Reserve Bank of India, all Public Sector banks (PSBs) will link their SWIFT Systems with their respective Core Banking Systems (CBS) by April 30Th as a measure to prevent  frauds like the recent one that happened in Punjab National Bank. Along with this, the State run banks also decided to speed up the process of taking out “Cyber Insurance” at the earliest.

 

  1. GOVERNMENT ASKS ALL BANKS TO “NAME & SHAME” WILFUL DEFAULTERS: Tightening the noose around “WILFUL DEFAULTERS”, the government has asked all banks to “name & shame” such borrowers by publishing their photographs and other details in newspapers. The number of wilful defaulters rose to 9,063 at the end of December 2017. Now Banks will formulate a policy with the approval of their Board of Directors which clearly sets out the criteria for publication of photographs of wilful defaulters.

WEEKLY FINANCIAL SNIPPETS- 10/03/2018

  1. GOVERNMENT TO REVIEW BAN ON SALE OF GUARANTOR’S PERSONAL ASSETS UNDER INSOLVENCY LAW: National Company Law Tribunal (NCLT) had recently ruled that the personal assets of guarantors cannot be seized during moratorium on the disposal of assets that is in place, while the insolvency process is underway in case of corporate debts. Now the government will review the issue of the bar on liquidating the assets of directors who have given their personal guarantees for corporate loans.

 

  1. GOVERNMENT INSTRUCTS PSB EMPLOYEES TO LEARN RISK MANAGEMENT: The Department of Financial Services (DFS) at the Finance Ministry has directed Public Sector Bank executives to attend a 3 day workshop at the SBI training Academy Gurgaon, to train and learn the latest topics on technology and risk management. The Ministry believes that it is important to have a session on the systems, controls and processes that are not being followed in banks.

 

  1. RBI SLAPS Rs. 5 CRORE PENALTY ON AIRTEL PAYMENTS BANK FOR VIOLATION OF NORMS: The Reserve Bank of India has imposed a penalty of Rs. 5 crore on Airtel Payments Bank for violating operating guidelines and Know Your Customer (KYC) norms. The fine was imposed by RBI after scrutinising bank’s documents relating to opening of bank accounts without any specific or clear consent from the customers.

 

  1. PUNJAB NATIONAL BANK SEEKS PROVISIONING RELIEF FROM RBI FOR Rs. 13,000 CRORE LOSSES: Punjab National Bank has requested RBI to allow it to provide for losses in the Rs. 13,000 crore Nirav Modi- Gitanjali Gems scam over four quarters instead of at one go as it expects to recover 40% of the defaulted loan amount. Further, bearing full provisioning loss of over Rs. 13,000 crore in March 2018 quarter alone could wipe out more than 25% of PNB’s net worth of Rs. 48,000 crore.

 

  1. RBI ASKS BANKS FOR DETAILS OF LOUs AS FAR BACK AS 2011: The Reserve Bank of India has asked all banks to provide details of LOUs (Letter of Undertaking) issued by them as far back from 2011 onwards including outstanding as on date and whether the banks had pre-approved credit limits or kept enough cash margins before issuing the LOUs. RBI has given a deadline of one week to respond.

 

  1. PSBs MAY BE TOLD TO TAKE PASSPORT DETAILS FOR LOANS ABOVE Rs. 50 CRORE: The Finance Ministry may ask Public Sector Banks to seek certified passport details of the borrowers with an exposure of Rs. 50 crore and above to help prevent them fleeing the country in case of default or wrong doing. The idea is under consideration and will be taken up for discussions.

 

  1. E-WAY BILL MAY NOT BE COMPULSORY FOR SMALL ORDERS: Small orders that are part of a large consignment out for multiple deliveries within the state may not require an electronic- way bill (E-way bill) in the Goods &Services Tax (GST) regime. The E-way bill requirement will be limited to items priced over Rs. 50,000 within the state.

 

  1. NBFCs’ SHARE IN CREDIT MARKET TO TOUCH 20% BY 2020: Non Banking Financial Companies (NBFCs) have been steadily growing their share in the credit market and will consolidate their position further in a couple of years. As per a report from CRISIL, the NBFC share in credit market will touch to 20% by the year 2020.

WEEKLY FINANCIAL SNIPPETS-03/03/2018

  1. 70,000 HOUSING SOCIETIES IN MAHARASHTRA TO FALL IN GST NET: Around 70,000 Co-operative Housing Societies (CHS) in Maharashtra will have to register under Goods & Services Tax (GST) regime as their annual collections are likely to exceed the Rs 20 lakh mark. Out of the 70,000 of such societies, around 50,000 are in Mumbai Metropolitan Region (MMR).

 

  1. CABINET LIKELY TO DISCUSS TIGHTER NORMS: Perturbed over the recent spate of banking frauds, the Union Cabinet is likely to consider measures to strengthen the regulatory regime for auditors to prevent such fraudulent incidents in future. Cabinet may consider setting up of National Financial Reporting Authority (NFRA). Last week, Finance Minister expressed his displeasure over laxity by auditors in the backdrop of the scam at Punjab National Bank.

 

  1. GOVERNMENT SHUTS DOWN 35 OVERSEAS BRANCHES OF PSU BANKS: The government has ordered shutting down 35 overseas branches of Indian Public Sector banks (PSBs) over viability and profitability. 69 more such international branches are being considered for closure. The Government is looking to consolidate PSBs overseas operations as it is planning to close all non-viable overseas operations for cost efficiency and synergy.

 

  1. FINANCE MINISTRY ORDERS PUBLIC SECTOR BANKS TO SCAN NPAs OVER Rs. 50 CRORE FOR FRAUD: Stung by the recent Punjab National Bank fraud, the Finance Ministry on 27th February has directed all Public Sector Banks (PSBs) to scan their Non-Performing Asset (NPA) accounts worth more than Rs. 50 crore for possible fraud and refer any such fraud cases to Central Bureau of Investigation (CBI). The ministry has given 15 days deadline to take “pre-emptive action” to identify the gaps and brace up for increasing operational and technical risks.

 

  1. PEER-2-PEEAR (P2P) LENDING PLATFORMS ARE GAINING POPULARITY IN SMALL CITIES: According to a social impact report by Faircent, the tech driven approach of P2P lending has been empowering Indian Businesses in Tier-2 and Tier-3 cities. In October last year RBI published guidelines to regularise P2P lending platforms as Non-Banking Financial Companies (NBFC). These P2P firms either operate as NBFC, intermediaries for banks/NBFCs or operate as P2P direct lenders to small businesses and these are becoming more popular in Tier-2 and Tier-3 cities as they use a wide variety of non-traditional data to evaluate credit risk.

 

  1. BANKS TOLD TO LINK CBS WITH SWIFT SYSTEM: Considering the recent PNB fraud case where the SWIFT mode was mis-used, the Reserve Bank of India has set an April 30th deadline for all banks to link the Society for Worldwide Interbank Financial Telecommunications (SWIFT) with their respective Core banking Solutions (CBS). The Indian Banks Association (IBA) Chairperson Mrs. Usha Ananthsubramanian said there is urgency to fast track SWIFT-CBS linkage.

 

  1. LOW-COST HOUSING LOANS FACE HIGHER RISK OF DEFAULTS: Recent report on low-cost Housing loans has revealed that there are elevated risks in the low-cost housing loan segment because of the higher propensity among the borrowers to default. As against the overall 1.96 % of home loans which have become NPA, the contribution of loans under Rs. 25 lakhs was 2.33% and in case of home loans under Rs. 10 lakhs it is 4%.

WEEKLY FINANCIAL SNIPPETS-24/02/2018

  1. IDEA PAYMENTS BANK BEGINS OPERATIONS: Aditya Birla Idea Payments Bank became the fourth such entity to begin its operations since issuance of licenses to 11 firms by Reserve Bank of India to form payment banks. Telecom major Airtel was the first to begin payments bank operations in November 2016 followed by Paytm. Department of Posts has started the payments bank operations on a pilot basis and has plans to start operations pan India by April 2018.

 

  1. NIRAV MODI FRAUD CASE MAY TRIGGER PCA ON PUNJAB NATIONAL BANK: The Rs. 11,400 crore Nirav Modi scam detected by Punjab National Bank may trigger Prompt Corrective Action (PCA) by RBI, which may lead to stoppage of lending by it for some time. The bank may consider selling some stake in some of its subsidiaries and joint ventures to raise money but since they are contractual agreements it may take some time.

 

  • CAs (AUDITORS) CANNOT GET AWAY JUST BY CITING RED FLAGS: Auditors may not be able to get away by citing “Red Flags” raised by them in fraud hit companies as the government is set to crack down on errant entities. Report says that Companies Act puts enough responsibility on auditors to ensure that corporate accounts are in order, while the auditors have full option not to sign the accounts if the management does not address their concern.

 

  1. PUBLIC SECTOR BANKS TO TRANSFER OFFICERS COMPLETING 3 YEARS: In the wake of Punjab National Bank fraud case, the Central Vigilance Commission has issued an advisory to all the public sector banks ordering them to transfer all officers who have completed 3 years term in their present respective posts as on December 31 2017. The advisory also says that all the clerical staff who have completed 5 years term as on December 31 2017 also should be transferred immediately. However, as per the Bank’s transfer policy for officers, this rule (no officer shall be retained in the same post for 3 years and in the same station {same municipal limits} for a period in excess of 5 years) is already prevailing in banks but not strictly followed in all cases.

 

  1. DEADLINE FOR FILING REVISED OR BELATED INCOME TAX RETURNS FOR THE PAST TWO YEARS IS MARCH 31st: The last date for filing revised and belated Income Tax returns (ITR) for assessment years 2016-17 and 2017-18 is March 31, 2018. And there will be interest on late filing. The dead line for filing ITR for the current year (AY 2018-19) is July 31, 2018.

 

  1. KYC MANDATE WILL SHAVE OFF A BIG CHUNK OF MOBILE WALLET USERS BY MARCH 2018: As per the directions issued by RBI under the master direction on issuance and operation of Prepaid Payment Instruments (PPI), all the wallet users must submit their KYC (Know Your Customer) documents. Since less than half of wallet users have opted for KYC process, the mobile wallet issuers (service providers) may lose over half of their customer base once the February 28, 2018 deadline for completing KYC norms for all wallet users expires.

 

  1. PNB APPOINTS PwC TO PROBE Rs. 11,400 CRORE FRAUD: Punjab National Bank has appointed Price waterhouse Coopers (PwC), one of the big 4 accounting firms to conduct an investigation into the alleged Rs. 11,400 crore fraud case involving jewellers Nirav Modi and Mehul Choksi and their companies. PwC has been asked by PNB to identify how the mechanism was misused and track down the money and its end use so that it can be used as evidence in the court of law.

WEEKLY FINANCIAL SNIPPETS- 17/02/2018

  1. 17 PUBLIC SECTOR BANKS MAKE LOSSES IN DECEMBER’2017 QUARTER: Out of the 22 Public Sector Banks, 17 Public Sector Banks have made losses during the December’ 2017 quarter. Provisions for bad loans have taken the toll on their profit margins. Provisions of these 17 banks almost doubled over the same quarter last year to Rs. 60,742 crore. These 17 banks put together have a total loss of Rs. 18,943 crore for December 2017 quarter. Whereas the remaining 5 banks have a cumulative total profit of Rs. 850 crore.  Compared to this, 6 major private sector banks have made a cumulative total profit of Rs. 10,082.61 crores for the same period with HDFC Bank alone making a profit of Rs 4,642.60 crore.

 

  1. PNB INCIDENT SHOWS VULNERABILITY OF INDIAN BANKING SYSTEM: The Associated Chamber of Commerce & Industry of India ( ASSOCHAM) has criticised the functioning of Public Sector Banks in a first reaction to the $ 1.8 billion fraud that took place in Punjab National Bank. The detailed statement says “Alleged fraudulent transactions worth Rs. 11,300 crore from a single branch of Punjab National Bank with connivance of the junior officials shows the vulnerability of public sector banks”. ASSOCHAM further states “ the said fraud shows how the risk management is lacking in these entities and how a chain of command system was not there or was not followed”

 

  1. RBI’S NEW NPA RESOLUTION: The Apex bank in a dramatic move has discontinued the existing programmes for banks to restructure their defaulted large loans, such as Corporate Debt Restructuring (CDR), Sustainable Structuring of Stressed Assets(S4A), and Strategic Debt Restructuring (SDR) and made the Insolvency & Bankruptcy Code as the main tool to deal with defaulters. Now the Banks have been asked to report credit information, including classification of an account as Special Mention Account (SMA) to Central  Repository of Information on Large Credits(CRILC) on all borrowers having an aggregate exposure of Rs. 5 crore and above on a weekly basis.
  2. PNB FRAUD CASE: ICAI TO LOOK INTO AUDITORS’ ROLE: Chartered Accountants’ apex body ICAI will review the $ 1.80 billion fraud at Punjab National Bank to look at whether there have been any lapses on the part of auditors and has sought information from SEBI and from the investigation agencies.

 

  1. NO LTCG TAX IF U SELL SHARES OR MUTUAL FUND UNITS BEFORE 31ST MARCH 2018: The proposed Long-Term Capital Gains ( LTCG) tax  on equity in the union budget 2018 came as a blow to investors.  However any LTCG earned till March 31, 2018 will not be taxed, as the provision of 2018 Budget are effective from 01/04/2018 .

 

  1. PUBLIC SECTOR BANKS NEED Rs. 2.06 TRILLION CAPITAL FOR 8—9% CREDIT GROWTH IN FY 19: Public Sector Banks may need capital of Rs 2.06 trillion ( or Rs 2.06 lakh Crore) for a credit growth of  around 8 to 9% for the financial year 2019. This is as per a report released by India Ratings and Research.

 

  1. 6 BILLION HIDDEN $ BAD LOANS SPOTLIGHT INDIAN BANKING STRESS: Reserve Bank of India in its audit has unearthed about 3.6 billion $ (Rs. 232 billion) of bad loans in the books of State Bank of India. This shows the under reporting of bad loans in the financial sector.

 

  1. ATMS CAN NOW VERIFY TRANSACTIONS VIA AADHAAR: The ATMs are set to become smart. Banks are replacing the existing ATMs with new digital machines which are compact and come with a 15 inch tablet like multi touch screen and these can perform Aadhaar based biometric authentication and all other transactions via net banking also.

WEEKLY FINANCIAL SNIPPETS- 10/02/2018

  1. RBI TO INITIATE CUSTOMER GRIEVANCE MECHANISM FOR NBFCs: The Reserve bank of India has said it will soon roll out a customer grievance redressal mechanism for Non-Banking Finance Companies (NBFCs). With a view to providing customers of NBFCs a cost free and speedy grievance redress mechanism, RBI will introduce an Ombudsman Scheme for NBFCs.

 

  1. RBI TO SCRAP SUBSIDIES FOR INSTALLATION OF ATM AND CASH RECYCLER MACHINES: The Reserve Bank of India has announced the scrapping of subsidies given to banks for installation of ATM and cash recycler machines. Currently RBI used to disburse subsidy amount at 50% of the actual cost of machine or Rs 2 lakh whichever is lower in urban areas and Rs 2.50 lakhs or 60% of the actual cost of the machine whichever is lower in Semi Urban and rural areas.  RBI said this would lead to a further push to digital transactions.

 

  1. CABINET APPROVES CHANGES IN CLASSIFICATION CRITERIA FOR MSMEs: Cabinet has approved the changes in the basis of classifying Micro, Small & Medium Enterprises                 (MSMEs) from investment in Plant & Machinery requirement to ANNUAL TURNOVER. Now as per the new changes the classification will be as follows: A) Micro Enterprise- Annual turnover of less or equal to Rs.  5 crore. B) Small enterprise- Turnover more than Rs. 5 crore but does not exceed Rs. 75 crore. C) Medium Enterprise—Turnover more than Rs. 75 Crore but does not exceed Rs. 250 Crore. This will now encourage ease of doing business, will make norms of classification growth oriented and will align to the new regime revolving around GST.

 

  1. RBI RELAXES PRIORITY SECTOR LENDING RULE FOR BANKS: Reserve Bank of India has made priority sector norms more lenient. Henceforth all loans to Micro, Small & Medium Enterprises (MSMEs) will qualify as priority sector lending. Till date loans up to Rs 10 crore per MSME borrower was considered as priority sector lending.

 

  1. MSME LOANS UP TO Rs. 25 CRORE GET MORE REPAYMENT TIME: In a major relief to the Micro, Small & Medium Enterprises (MSMEs) sector, the RBI has said GST registered MSME borrowers, whose aggregate exposure does not exceed Rs. 25 crore will get a further 180 day window to pay their dues if their accounts were standard as on August 31, 2017. This move allowed to Banks and NBFCs will be applicable for dues between September 2017 and January 2018 and Banks need not be required to downgrade asset classification of these MSMEs.

 

  1. RBI MONETARY POLICY—BANKS’ BASE RATE AND MCLR TO BE LINKED: Reserve Bank of India in its latest Monetary policy has said it is working on a framework to link the calculation of banks’ base rates with their Marginal Cost of Lending rates( MCLR). This will come into effect from April 1St

 

  1. INDIAN BANKS MAY LOSE MORE ON NEW ACCOUNTING RULE: Indian Banks already struggling with $210 billion of stressed assets , may have to prepare for another hit in the coming financial year if new accounting norms are affected from April 1st The IndAS—based on IFRS9 standards, would require banks to make provisions for expected bad loans instead of the current system where presently they only cover actual losses incurred on bad loans.

WEEKLY FINANCIAL SNIPPETS- 03/02/2018

  1. AFFORDABLE HOMES GET FURTHER BOOST AS GOVERNMENT REDUCES GST: Affordable housing got further boost from the government as the Goods & Services Tax (GST) council has recommended reduction of GST from 12% to 8% for houses under the Pradhan Mantri Awas Yojana (PMAY) that provides credit linked subsidy scheme ( CLSS) .

 

  1. GST E-WAY BILL INTRODUCED: As a 15 day trial, the nationwide E-way bill came in to effect from 1ST February 2018. Under this bill every transporter will have to carry a system generated bill to move goods from one place to the other. This bill can be generated from the GSTN portal. This system has been introduced for bringing in a seamless inter-state movement of goods.

 

  1. BANK OF INDIA RECOVERS Rs. 3,000 CRORE BAD LOANS IN ONE MONTH: Bank of India has recovered Rs. 3,000 crore of bad loans in the last one month. The said recovery was done by invoking standby letter of credit (SBLC) and guarantees of the respective defaulters. The Bank’s official statement said that they will recover hefty amounts in this month also by invoking the remaining SBLC and guarantees.

 

  1. SBI TO OFFER CREDIT CARDS TO FARMERS: State Bank of India is planning to sell Credit Cards to farmers on easier terms. It has tied up with its credit card issuing subsidy- SBI Card to make it happen. This is perhaps the first time that a bank is offering credit card product to farmers. Till now small farmers have access to bank credit by way of Kisan Credit Card (KCC), which are linked with bank accounts and offer cash credit facility to KCC card holders. Initially these credit cards will be offered to Farmers in Gujarat, Rajasthan and Madhya Pradesh.

 

  1. BANKS RELUCTANT TO LEND TO REALTY SECTOR ON RISING NPA: The share of bank credit to real estate sector has fallen sharply to 17% from over 68% in 2013. Banks are reluctant to provide credit to this sector due to rising NPAs and lower profit in property business. This is according to the economic survey.

 

  1. USHA ANANTHASUBRAMANIAN BECOMES FIRST WOMAN CHAIRPERSON OF IBA: Usha Ananthsubramanian, Managing Director of Allahabad Bank has become the first woman Chairperson of Indian Banks’ Association (IBA). She will be the Chairperson till August 31St 2018 as she will be superannuating on August 31ST. Earlier to this she was the Deputy Chairperson.

 

  1. FINANCE MINISTRY NUDGES PSU BANKS TO SWAP ASSETS, OPTIMISE OPERATIONS: The Finance Ministry has asked the PSU Banks to consider asset swaps, including exchange of their corporate portfolios and branches to optimise nation-wide operations and to further strengthen its move on consolidation/merger of banks. Banks may also swap same rated loans- both corporate and retail to attain cohesive portfolio.

 

  1. RBI DECLINES GOVERNMENT’S DEMAND FOR ADDITIONAL DIVIDEND: Reserve Bank of India has reportedly declined government’s demand for additional dividend. The government had asked an additional dividend of Rs. 13,000 crore. Reserve Bank of India has already transferred dividend of Rs. 30,659 crore to the government for the financial year 2016-17.

 

  1. PSU BANKS IDENTIFY 41 OVERSEAS UNITS FOR RATIONALISATION: Public Sector Banks have started reviewing their overseas operations by identifying 41 units for rationalisation. This move could mean consolidation of operations, trimming of staff strength, exiting some non-core and non-profit activities or closing down some unviable overseas offices.

WEEKLY FINANCIAL SNIPPETS- 27/01/2018

  1. GROSS NPA MAY RISE TO Rs. 9.5 LAKH CRORE BY MARCH 2018: Gross Non-Performing Assets (NPAs) in Indian banks are expected to rise to Rs. 9.5 lakh crore by March 2018, from Rs. 8.00 lakh crore last year. This is as per ASSOCHM-Crisil joint study. High level of stressed assets in the banking industry provides enormous opportunity for Asset Reconstruction Companies (ARCs) which play an important role in NPA resolution process. But owing to capital constrains, growth of ARCs is expected to come down significantly.

 

  1. PHYSICAL BANKS WILL BE IRRELEVANT IN NEXT 3 YEARS IN INDIA: Niti Aayog CEO Mr. Amitabh Kant opines that physical banks will be irrelevant in the next three years as data consumption growth and data analytics are likely to further boost financial inclusion. According to Mr. Kant, India will have more than a billion biometrics and smart phones due to which new bank model will come out, which will phase out physical banking.

 

  1. GOVERNMENT MULLS THE IDEA OF 100% FDI IN BANKING SECTOR: The Central government is mulling to allow 100% Foreign Direct Investment in banking sector. The Finance Ministry and IBA are presently discussing and assessing the hike in FDI cap in banking sector from 74% to 100%. The government may also hike FDI in Public Sector Banks ( PSBs) to 49%.

 

  1. AGRICULTURE BAD LOANS JUMP BY 23%: Banks have witnessed a spike in agriculture bad loans of Rs. 11,400 crore to cross Rs. 60,000 crore. Demonetization and farm loan waivers have added to the woes of the banks. NPAs rose over 23% from Rs. 48,000 crore in 2016 to Rs. 60,000 crore in 2017. Bad Loans in agriculture sector have jumped 142.74% from Rs. 24,800 crore in fiscal 2012, indicating distress in this sector in the last 5 years.

 

  1. ONGC TIES UP WITH 3 BANKS FOR Rs. 18,000 CRORE LOAN FOR HPCL TAKEOVER: Oil & Natural Gas Corporation (ONGC) has tied up with three banks to avail loan up to Rs. 18,000 crore to part finance its Rs. 36,915 crore acquisition of Hindustan Petroleum Corp Ltd. (HPCL). It has entered into loan agreements with Punjab National Bank, Bank of India and Axis Bank Ltd for loans of Rs.18,060 crore for this acquisition.

 

  1. SBI SEES BAD LOAN PROVISIONS AS BIGGEST CHALLENGE: State Bank of India sees provisioning for bad (NPAs) loans as the biggest challenge for Indian Banking system even as credit growth is reviving. Mr. Rajnish Kumar, the present Chairman of SBI says that whatever process they resort to for the resolution of NPAs, there will always be a gap in the provisioning and that is precisely where the support from the government is required.

 

  1. AFFORDABLE HOUSING NOW A MAJOR THEME AMONG PEs: Driven by the demand and government incentives, majority of residential launches in 2017 were in the affordable and mid-range housing projects. Because of this, Private Equity Firms’ interest has tilted more towards affordable housing and is expected to increase in future also. Affordable housing has emerged as a significant theme among PE-RE (Private Equity-Real Estate) investors, especially in the second half of 2017.

 

  1. INDIA 5TH MOST ATTRACTIVE MARKET FOR INVESTMENTS: India has become the 5th most attractive market for investments and business optimism is at record high levels globally. But cyber security and climate change have become areas of concern for CEOs. This is as per the annual global CEO survey done by consultancy giant; PwC. Previously India was in the 6th