Bank of India’s accounting change saves over Rs 1,000 crore

At a time when most public sector banks (PSBs) have taken a huge hit on their books, mainly because of provisioning for bad loans, Bank of India (BoI) appears to have escaped with a lesser knock in the December quarter. A close look at the bank's financials shows that a small change in the accounting practice — which is within the rules — helped it save over Rs 1,100 crore in the third quarter.

The government-owned bank posted a loss of Rs 1,505 crore in the third quarter of this fiscal as its provisions to cover bad loans more than doubled to Rs 3,603 crore. However, the bank would have run up another Rs 1,170 crore losses had it followed the conservative practice of setting aside 60 per cent as provisions for doubtful loans — loans that are overdue for over one year to three years, also known as D2 category.

In the third quarter, the bank reverted to RBI's prescribed formula of 40 per cent provisioning, which reduced the provisioning by Rs 1,789 crore, and helped it trim losses by up to Rs 1,170.25 crore, BoI said in a filing with the BSE.

Speaking to ET, Melwyn Rego, MD of Bank of India, said that the bank thought it appropriate to follow the RBI's prescribed norms on provisioning since banks have to anyway make proactive provisioning as per the Asset Quality Review undertaken by the regulator.

"The bank is working on a three-pronged strategy — focus on reducing NPAs, increasing low-cost deposits, and rebalancing the loan in favour of retail loans," he said.

This is the second time BoI has changed its accounting procedure without violating RBI norms.



Source : Economic Times

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SBI gets shareholders nod to raise Rs 15,000 cr

Country’s largest lender SBI on Friday said it has got shareholders’ approval to raise up to Rs 15,000 crore by public issue or overseas issuance of shares.

The bank had convened a general meeting today to obtain shareholders’ approval to raise the said amount.

Earlier in January, SBI had informed about its plans to raise this sum of Rs 15,000 crore by March 2017.

“The General Meeting was convened to obtain the shareholders’ approval, to create, offer, issue and allot such number of equity shares of Re 1 each, not exceeding Rs 15,000 crore or such amount as may be approved by the Government and the RBI”, it said in a BSE filing.

State Bank of India said the issue will be subject to the condition that the Government shareholding in the bank’s equity share capital does not fall below 52 per cent at any point of time.

The money can be raised by either of the ways including public issue, rights issue or private placement, such as qualified institutional placement (QIP) or Global Depository Receipt or American Depository Receipt or any another mode or a combination, as may be decided by the Board, it said.

The fund to be raised will help the bank to meet global risk norms under Basel III, which the banks needs to be fully compliant with by March 2019.


Source : Thehindubusinessline

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Bharatiya Mahila Bank opens branch in Vizag

The Bharatiya Mahila Bank (BMB) is making all efforts for the economic empowerment of women, especially those from the economically disadvantaged sections of the society, and that is the specific mandate given to the bank, according to Executive Director S MSwathi.

She was speaking here on Thursday morning after inaugurating a BMB branch, the first in the city and the fourth in Andhra Pradesh. She said the bank was in expansion mode and it would aim to cross the hundred-mark soon in the country.

Swathi said the bank, established in 2013 with a capital base of Rs. 1,000 crore, was offering loans to women upto Rs. 1 crore at the base rate and the processing fees was also being waived up to Rs. 75 lakh for women.

"We are supporting all income-generating activities and encouraging women to become entrepreneurs. We are encouraging women to set up small and cottage units, and we are also tying up with NGOs and other organisations to extend loans to women and support their economic activities," she said.

She said, "We have given loans to women to run electronic-rickshaws in some cities. Women need not confine themselves to setting up beauty parlours, as so many other avenues are opening up in a growing economy. However, there is a need for promoting financial literacy among women and we are taking up those programmes as well."

She clarified that the bank was not only for women and men could also deposit their monies in the bank and avail themselves of the banking services. But when it comes to loaning, "women would be given preference. After all that is our basic objective. If a woman prospers, the whole family prospers. Men are also benefited indirectly."

She said the bank had made considerable progress in three years and it would strive to make its presence felt, especially in semi-urban and rural areas.

sarma.rs@thehindu.co.in


Source : Thehindubusinessline

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