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Thursday, July 6, 2017

Citi India profit rises 12% in FY17

Citi India on Tuesday reported a 12.2% rise in FY17 profit after tax (PAT) to Rs 3,626 crore. The bank said its pre-tax profit grew 7% to Rs 6,185 crore in the same period. Its net interest margin — a key measure of profitability — stood at 5.4% in FY17, up 30 basis points (bps) from the previous year. The bank reported no change in its net non-performing asset (NPA) ratio at 0.5% of its net advances in FY17 and its capital adequacy ratio improved 180 bps to 17.6%. For Citi India in aggregate, total assets, including credit extended to Indian corporate clients from offshore Citi entities, stood at Rs 2.02 lakh crore. 

During FY17, Citi India said it disbursed Rs 2.34 lakh crore of loans, including those booked in offshore locations, representing a 13.4% growth over the prior year. Citi India CFO Niraj Parekh said in the statement, “Our results are a consequence of our execution focus, judicious expense controls and sound risk management. Citi in India is well placed and committed to supporting our clients’ investments and growth.”

In FY17, it added 2,039 employees, bringing the total number of employees to 14,543 as on March 31, 2017. It added that of the total employee base, Citi Service Centers housed under Citicorp Services India (CSIPL), engages 8,748 professionals.

Source : Financial Express
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Axis Bank launches super bikes loans; to fund 95% of costs

As the higher engine displacement 'super bikes' catch fancy of the Indian consumer, Axis Bank on Wednesday introduced a special loan product, offering to fund up to 95 per cent of the costs.

The loans, which are for motorcycles with an engine displacement of over 500 cubic centimetres (cc), will come at a price tag of 10-11 per cent per annum.

The third largest private sector lender's executive director Rajiv Anand said many Indians are aspirational of owning iconic brands like Harley Davidson and Triumph which made the bank launch the offer.

In a statement, the bank said the leisure biking segment is expected to grow at 30 per cent per annum over the next three years on high consumer spending and increasing population of high net worth individuals.

While calculating the loan to value ratio which has been capped at 95 per cent, the bank will consider accessory funding along with the cost of the bike, it said.

There are over a dozen brands which are offering bikes in the segment with almost all of them having entered the country in the last decade. These bikes come with a price tag between Rs 5 to Rs 50 lakh. The segment had witnessed sale of over 3,000 units last year.

Axis Bank said the average age of customers buying such bikes has declined to the 30s from the 40s two years ago, and the sales are helped by riding clubs and other adventure activities.

Sales of these bikes are not limited to the metros alone, with tier-II and tier-III cities also witnessing some traction, the bank said.

It can be noted that the high percentage of stressed loans, coupled with waning demand, from the corporate side is making all the banks focus more on the resilient retail lending segment. Axis Bank is among the worst hit private sector lenders on NPAs.

Source : Economic Times
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PSB mergers should be between equals: SBI Chief Arundhati Bhattacharya

State Bank of India chairman Arundhati Bhattacharya said the merger of public sector banks should be between equals and added that things will start getting better on asset quality by the second half of the year. In an exclusive interview to ET, Bhattacharya said union of state-run banks is feasible but the lenders should be given time to ensure the mergers work.

There can’t be a one-size-fits-all approach, and the temptation to merge the weaker ones with the stronger ones should be resisted as it leads to the stronger one losing strength, she said.

“It (merger of banks) is feasible. It has been done in other countries. But you will have to give them time to do it and be able to show a turnaround. You cannot expect it to happen tomorrow and (hope that) day after things will be fine.

It won’t work like that. They will need 3-4 quarters to put it all together and come out on top,” Bhattacharya said.

The clamour to merge 21 PSU banks is getting louder with the government nearly shutting the capital tap. While investors are likely to provide capital to strong ones like SBI, which raised Rs 15,000 crore in a share sale, many others are likely to be shut out from the market. Some will have to be merged so that the capital requirement comes down and resources are better utilised.

“The smaller SOE (state-owned banks) are short of capital and it will be a struggle for them to raise funds unlike the larger banks, which may be able to access equity markets,” said Sumeet Kariwala, analyst at Morgan Stanley.

“Hence, the government may look at merging smaller, weaker banks with larger and relatively stronger lenders.”

Bhattacharya, however, said that may not be the right thing to do. The chief of SBI, which recently completed the merger of six banks with itself, said there should be a merger of equals so that synergies can be derived.

“It should be strong to strong and weak to weak, because if you do a strong and weak it doesn’t really make much sense since it unnecessarily pulls down the strong bank also to some extent,” she said. “And, of course, they need to look at other synergies… there might be synergies of systems, synergies of reach, synergies of different portfolios of business, synergies of cultural fit.

So it cannot be one size fits all.” Banks’ journey to becoming stronger entities may be full of surprises and painful events, but that is inevitable in the process of growing up, she said. “The alternatives are very few, so to that extent this seems to be the best way out,” said Bhattacharya.

“And, probably, this will be painful. But a maturing process and growth is always painful. You ask any teenager they will tell you, and it’s just like that for the country. We need to grow, we need to evolve.”

Source : Economic Times
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Monday, July 3, 2017

ATMs to turn costly under GST, small banks to be hit

Deploying automatic teller machines (ATMs) is set to get more expensive as ATMs have been put under the highest tax slab of 28% under the new Goods and Services Tax regime.

With the machines becoming more expensive, smaller banks and newly-licensed small finance banks could slow down deployment of teller machines, causing further problems for the industry. Industry insiders say point-of-sale devices and other digital payments hardware were put under the 18% slab –– a slab in which ATMs should have been included.

Confederation for ATM Industry (CATMI), the industry association of companies which deploy and manage ATMs, is planning to reach out to the GST Council, the revenue secretary and the finance ministry to take up the issue and request them to revise the tax rate on teller machines.

"As an industry, we are planning to reach out to the government to bring ATMs on par with other payment terminals as otherwise there will be a general 7-8% increase on the cost of terminals," said Ravi Goyal, managing director of AGS Transact Technologies, which deploys and manages ATMs in the country.

Not only have prices of these machines gone up, even service cost for ATMs will go up as tax rates have been revised to 18% from 15% previously. This would be applicable for servicing charges, annual maintenance contracts which will have to be borne by the banks eventually.

"The biggest advantage for banks is that now they will be able to claim input tax credit on GST which will improve their cash flows and help in their business," said Goyal.

After demonetisation, ATM deployment has slowed down as banks were preoccupied with adopting the latest digital payment instruments. Also, banks prefer asset light payment solutions for financial inclusion, like micro ATMs and Aadhaar Pay rather than deploying expensive ATMs.

In an earlier interaction with ET, Navroze Dastur, MD for India and South Asiaat NCR Corporation, said that they were replacing old machines for banks and not deploying new ones. "We were growing at 15-16% before demonetisation which has come down to 8-10%."

Source : Economic Times
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BBB recommends 15 names for appointment of EDs in PSU banks

Banks Board Bureau (BBB) has recommended to the government names of 15 general managers of various public sector banks for appointment as executive directors.

Sources said the recommendations were made by BBB Chairman Vinod Rai and other members of the bureau.

The list would be sent to the Department of Financial Services to get Appointments Committee of Cabinet (ACC) clearance, sources said. The ACC is headed by Prime Minister Narendra Modi.

The interview for appointment to the post of EDs was held on June 30.

Besides former CAG Rai as chairman, the other members of BBB include Anil Khandelwal, former chairman and managing director of Bank of Baroda; H N Sinor, former joint managing director of ICICI Bank; and Roopa Kudva, managing director of Omidyar Network India Advisors.

RBI deputy governor, Financial Services Secretary and Department of Public Enterprises Secretary, are ex-officio members.

Recently, the government expanded the BBB by inducting two more members with the objective of strengthening the panel responsible for selection of MDs and directors of public sector banks and financial institutions.

Former Allahabad Bank chairperson and managing director Shubhalaxmi Panse and private equity player Pradip Shah have been inducted into the board as independent members.

The BBB, set up in April 2016, was originally tasked to recommend names for chiefs of public sector banks and financial institutions and help state-owned lenders in developing strategies and capital-raising plans.

The Bureau was authorised to suggest to banks on developing a robust leadership succession plan through appropriate HR processes, including performance management systems.

Source : Economic Times
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PNB to block all Maestro debit cards from July 31

Punjab National Bank (PNB) Maestro debit cards holders will face a card blockage if they fail to replace it with a more secure EMV chip based card by the end of this month.

The bank will not charge anything for the replacement and it will be provided free of cost.

"If you are having Maestro debit card, get it replaced free of cost with a new EMV chip based debit card from any PNB branch. All Maestro cards issued by PNB will be blocked or hotlisted on July 31, 2017 for security based reasons," the bank said in a communication to its customers.

The replacement is as per RBI advisory issued in 2015, asking all the banks to migrate to a much secured EMV chip based cards, an official of the bank said.

The bank has identified that there are about one lakh customers with old Maestro debit cards and has started sending them SMSes as well, an official of the bank said.

Presently, PNB's card base stands at around 5.65 crore.

"However, we have excluded those customers who are not using these Maestro debit cards at all with not even a single transaction in a year as making of cards involves cost as well as time," the official said.

As per RBI advisory, existing magnetic stripe only cards need to be replaced with EMV chip and pin based cards by December 31, 2018, irrespective of the validity period of the cards.

And from January 31, 2016 onwards, banks are directed to issue only EMV based debit and credit cards.

Card replacement is important, keeping in mind digital drive of the government that has led to a drastic rise in debit card usage.

"Now, people are taking interest in using debit cards. Young generation definitely use it, but people over 40 years of age are also using it and taking help from children to learn card usage," the official said.

Source : Economic Times
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Sunday, July 2, 2017

New chiefs of 2 PSU banks take charge

Union Bank of India said Rajkiran Rai G has assumed charge as Managing Director & CEO.

Prior to his elevation as MD & CEO of Union Bank of India, Rai was Executive Director of Oriental Bank of Commerce. He started his career in 1986 as an Agricultural Finance Officer in Central Bank of India.

Rai has been appointed by the government to head Union Bank of India for a period of three years from the date of his taking over charge of the post or until further orders, whichever is earlier, according to a finance ministry notification.

New chief assumes charge at Syndicate Bank

Syndicate Bank
, in a statement, said Melwyn Rego has assumed charge as Managing Director & CEO.

Prior to joining Syndicate Bank, Rego was MD & CEO of Bank of India. He started his career with IDBI Bank Ltd in 1984 and rose to the position of Deputy Managing Director.

Rego will be at the helm of the bank till the remainder of the term up to August 13, 2018, according to a finance ministry notification.

Source : Thehindubusinessline
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SBI to offer GST-ready solutions starting today

The largest lender State Bank of India (SBI) on Saturday announced its Goods and Services Tax (GST) ready solutions, including the introduction of online payment through internet banking and debit card. Starting today, the SBI account holders can deposit GST of upto Rs. 10,000, in cash, cheque or draft form at any of the SBI branches across the country. Ending more than 11 years of hectic argument among the Centre and the states, the GST will implement from July 1 to completely transform the indirect taxation landscape in the country involving both the Central and State levies. In a departure from the normal practice, GST will be administered together by the Centre and States. The biggest tax reform since independence – GST – will pave the way for

The biggest tax reform since independence – GST – will pave the way for realisation of the goal of One Nation – One Tax – One Market. It will benefit all the stakeholders namely industry, government and consumer as it will lower the cost of goods and services give a boost to the economy and make the products and services globally competitive, giving a major boost to ‘Make in India’ initiative. Under the GST regime, exports will be zero-rated in entirety unlike the present system where refund of some of the taxes does not take place due to fragmented nature of indirect taxes between the Centre and the States.

However, GST will make India a common market with common tax rates and procedures and remove economic barriers. GST is largely technology driven and will reduce the human interface to a great extent. GST is expected to improve ease of doing business in India.

Source : Financial Express
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Frauds going up in number, banks need to tighten cyber security norms: RBI

The Reserve Bank of India flagged the rapid proliferation of frauds in the banking space over the last five years marking out a 19% increase in the number of fraudulent incidents and 72% increase in the value of the amount lost in the attacks. Around 86% of the frauds reported in 2016-17 was in the space of various credit accounts, said RBI.

The number of frauds went up to 5064 from 4235 and the value shot up to Rs 16770 crore from Rs 9750 crore over the last five years, said the central bank in the Financial Stability Report of 2017, released on Friday.

Holding the banks squarely responsible for such frauds, the regulator said that unlike macro economic risks on lending business of banks, frauds happen due to gaps in credit underwriting standards of banks.

“Some of the gaps are liberal cash flow projection at the proposal stage, lack of monitoring of cash flows, overvaluation, diversion of funds…,” said the RBI.

While highlighting the fact that digital payments have shown promising growth post demonetisation, the two biggest risks that the RBI found to the digitisation process emanates from a lot of people using digital payments without being aware of the risks involved and the risk banks face from third party technology vendors.

RBI has highlighted three major effects of a cyber attack, disruption of operations of a financial firm, fall of confidence in markets and damage the integrity of key data.

On the finance minister’s statement around creation of a CERT-Fin (Computer Emergency Response Team for financial services), the RBI said in the report that the working group that was created in March of this year has submitted its report and the regulator is considering it.

Source : Economic Times
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