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Thursday, July 13, 2017

Vijaya Bank MD gets Skoch award

Kishore Sansi, Managing Director and CEO of Vijaya Bank, has been conferred the ‘Personality of the Year’ award by Skoch Consultancy Services. The award is part of the ‘Skoch Banking and Financial Leadership’ series. Past recipients of the award include C Rangarajan, Dilip Parekh and Nandan Nilekani.

Source : Thehindubusinessline
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Fee on IMPS transactions under Rs 1000 removed by SBI

State Bank of India (SBI) on Wednesday waived charges on all money transfers of less than Rs 1,000 made through the Immediate Payment System (IMPS) channel, in a bid “to promote small ticket size transactions”. Earlier, any IMPS transfer of up to Rs 1 lakh out of an SBI bank account would attract a charge of Rs 5, in addition to service tax. Those remitting amounts between Rs 1,000 and Rs 1 lakh will continue to shell out the charge of Rs 5. The charge on transactions of over Rs 1 lakh and less than Rs 2 lakh will also remain unchanged at Rs 15. The applicable Goods and Services Tax (GST) rate will apply to all IMPS transactions of over Rs 1,000.

The reset in IMPS charges puts SBI at a disadvantage to its private sector peers. HDFC Bank, SBI’s closest rival in terms of asset-book size, earns a fee on all outgoing IMPS transactions. Account holders at the bank have to pay Rs 5 for all transfers of up to Rs 1 lakh and Rs 15 for transfers of between Rs 1 lakh and Rs 2 lakh. The charges are the same at ICICI Bank. Among other large state-owned lenders, Bank of Baroda (BoB) does not levy any charge on IMPS transactions, while Punjab National Bank (PNB) charges Rs 5 for all IMPS transactions, according to the banks’ websites.

Sources in the know said that SBI’s decision to waive charges on some IMPS transactions may have been the result of more than a nudge from the government. “We have almost been arm-twisted into doing this,” said a senior banker on condition on anonymity.

The waiver is likely to impact a sizeable chunk of IMPS users. While bank-wise data for IMPS transactions is unavailable, SBI is widely accepted to be the market leader in terms of digital transactions in general and internet banking in particular. It has a 52% market share in mobile banking, deputy managing director Manju Agarwal had told FE in March.

Like most other modes of digital payments, IMPS had seen a surge in transaction volumes amid the cash crunch arising from the government’s November 8 decision to withdraw high-value currency notes from circulation.

IMPS volumes in June added up to 65.8 million, 82% higher than the November figure of 36.2 million transactions. Transaction values for IMPS aggregated Rs 59,650 crore in June, 83.6% higher than Rs 32,480 crore in November. This puts the average IMPS transaction value at around Rs 9,065.

Source : Financial Express
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Gross NPA divergence at Rs 6,816 crore by Mar 2016: IDBI Bank

Public lender IDBI Bank’s gross NPAs by the end of March 2016 were lower than the Reserve Bank’s estimate, with a divergence of Rs 6,816.60 crore, its annual report shows. As of March 31, 2016, the bank had reported gross non- performing assets (NPAs) or bad loans to the tune of Rs 24,875.07 crore, according to the bank’s annual report for 2016-17. The Reserve Bank (RBI) had put gross bad loans on the bank’s balancesheet at Rs 31,691.67 crore by 2016 March-end, which works out to a difference of Rs 6,816.60 crore.

In case of net NPAs by this period, the divergence is of Rs 4,755.60 crore. The lender had reported net NPAs worth Rs 14,643.39 crore as against RBI’s estimate of Rs 19,398.99 crore. During 2015-16, the bank had reported a net loss of Rs 3,664.80 crore because of a surge in bad loans on its books. This led to an overall divergence in the bank’s provisioning at Rs 2,061 crore.

The annual report data further showed that the bank’s total exposure of 20 largest borrowers and customers by the end of March 2016 stood at Rs 62,329.21 crore (14.55 per cent of total advances), which further increased to Rs 63,967.81 crore (15.53 per cent) as of March 31, 2017. The total exposure to top four NPA accounts was Rs 11,576.97 crore at the end of the fiscal ended March 2016 and Rs 13,172.74 crore by March 31, 2017.

In his message to shareholders, MD and CEO Mahesh Kumar Jain said that good performance during 2016-17 was overshadowed because of deterioration in asset quality. As a consequence of higher NPAs and stressed assets, the provisioning rose, which in turn negatively impacted the bottom line of the bank and raised concerns on the capital adequacy front, he said. “These developments have led to implementation of prompt corrective action (PCA) framework on your bank by RBI. We are ensuring the RBI guidelines relating to distribution of dividend, branch expansion, capital expenditure, investment in subsidiaries are followed,” he said.

Jain said the bank has devised a comprehensive turnaround strategy that seeks to leverage its strengths and entail identification of areas for containing cost and revenue maximisation that would ensure sustainable growth and profitability. Earlier in May, IDBI Bank came under RBI’s PCA watch because of high level of bad loans on its balancesheet.

In April this year, RBI had issued a set of enabling provisions under the revised PCA framework with a clause that if the bank does not improve, it could either be merged or taken over by another bank. Under PCA, RBI has powers to curb a bank’s capacity of giving fresh loans, besides putting restrictions on dividend distribution, among others. Banks are now required to state their bad loan divergence in their financial statements if it exceeds 15 per cent. The sock of IDBI Bank traded at Rs 56.85 on the BSE, up 0.89 per cent from its previous close.

Source : Financial Express
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Initiative for merger should come from banks: Former RBI Governor C Rangarajan

Former RBI Governor C Rangarajan today said bank merger should be need-based and the initiative should come from the lenders themselves.

"Initiative for merger should come from banks themselves and there must be felt a need for it. Therefore, the world over, the larger banks are coming into cooperation," he said.

Recently, the State Bank Of India merged five associates with itself and the government is looking to consolidate few more with the objective of creating five global-sized lenders.

Five associates and the Bharatiya Mahila Bank became part of the State Bank of India (SBI) beginning April 1 this year, catapulting the country's largest lender to among the top 50 banks in the world.

On NPA resolution, he said, the clean-up exercise has to be done and some 'haircut' is inevitable.

Rangarajan was speaking to reporters here today on the sidelines of a NABARD event.

"With the haircut, loans should become performing. Some adjustment is needed. After all, we have always done one-time adjust in the past. The size of NPAs has become big so this step is required. Without finding solution to NPA, we will not be able to move forward in terms of stimulating economy and investment," he said.

Rangarajan said the NPA resolution process would take at least a year to complete.

Last month, the RBI identified 12 accounts for insolvency proceedings with each of them having over Rs 5,000 crore of outstanding loans, accounting to 25 per cent of the total NPAs of banks.

These 12 accounts would qualify for immediate reference under the Insolvency and Bankruptcy Code (IBC), the RBI said.

The banking sector is saddled with non-performing assets (NPAs) of over Rs 8 lakh crore, of which Rs 6 lakh crore is with public sector banks (PSBs).

The Reserve Bank had set up an Internal Advisory Committee (IAC), comprising a majority of its independent board members, to advise it with regard to the cases that may be considered for reference for resolution.

Source : Economic Times
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Sunday, July 9, 2017

SBI launches INTOUCH, digital village initiatives in Nepal

The State Bank of India (SBI) has launched its flagship service INTOUCH in Nepal, an official spokesperson said here on Saturday. The sbiINTOUCH, inaugurated by SBI Chairperson Arundhati Bhattacharya, will offer customers products like Savings Bank, Saral Bachat Account and Combo Savings Account and the branch will have facilities like kiosks for account opening, debit card printing, and ATM. Bhattacharya, along with its subsidiary, Nepal State Bank Ltd (NSBL) also inaugurated the NSBL Digital Village, Jaharsing Pauwa, which would be the first of its kind digital initiative in Nepal banking industry along with INTOUCH, on Friday.

Under the Digital Village Initiative, the NSBL has adopted Jaharsing Pauwa village to provide financial literacy centres and other banking facilities to the 2,200 villagers. The services to the 443 households would include an internet banking kiosk, free WiFi, POS utility at four merchant outlets, cash recycle machines.

In the non-banking services, the villagers will get solar street lights, medicines and medical equipments to the local health centres, books and stationery to the village government school and other facilities under the NSBL’s CSR activities. Both the initiatives are unique to the Nepalese banking industry and first time taken by an foreign offices of the SBI.

The SBI has experience of making 21 Indian villages digital with a target of 101 in the next few months, and it has 250 outlets under sbiINTOUCH. The NSBL is among the fastest growing commercial banks in Nepal and enjoys a lead position in terms of penetration of technology products. NSBL is a JV between SBI and the Employees Provident Fund, Nepal, the spokesperson said.

Source : Financial Express
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UCO Bank officers to strike work on July 15

The All India UCO Bank Officers’ Federation has called for a one-day all-India strike on July 15 to express its resentment on the unrest prevailing in the bank.

Voicing his resentment to the unilateral and arbitrary actions resorted to by the UCO Bank management, the general secretary of the All India Bank Officers’ Confederation (AIBOC) D Thomas Franco urged the management of the bank to intervene and resolve the issue.

The arbitrary action of the management is causing large-scale discrimination against majority of the officers. The confederation will not be a witness to these attacks, rather the AIBOC would be compelled to express its total solidarity with UCO Bank officers by resorting to agitation in all banks, Franco said in a statement. He further pointed out that AIBOC has been continuously working out strategies, holding workshops to see that the bank turns around.

Source : Thehindubusinessline
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Axis Bank emerges the frontrunner to acquire FreeCharge

Axis Bank, India’s third-largest private sector lender, has emerged the frontrunner to acquire FreeCharge, the digital payments platform owned by troubled ecommerce marketplace Snapdeal, according to three people aware of the development.

The payments unit has been seeking a buyer for several months now, even as its parent negotiates the terms for its own sale.

Mumbai-headquartered Axis Bank is currently conducting due diligence on FreeCharge, according to the three sources cited above, who estimate that a potential deal could deliver a payout of up to $100 million to cash-starved Snapdeal.

This, however, could not be independently verified by ET. Axis Bank and Snapdeal did not reply to emailed queries.

In May, ET had reported that two domestic banks and a couple of private equity firms had expressed interest in Bengaluru-based Free-Charge, once described as Snapdeal’s crown jewel by its chief executive Kunal Bahl.

FreeCharge was acquired by Jasper in 2015 in a cash-and-stock deal estimated at $400-450 million in what was then the largest acquisition in the Indian startup landscape.

Last month, market leader and rival Paytm had signed a non-exclusive term sheet while making a bid of $10-15 million for FreeCharge, according to two sources familiar with the matter.

The surprise emergence of Axis Bank as a potential buyer indicates that Jasper Infotech — the holding company of Snapdeal — had been hawking FreeCharge to others as well, sources said.

Shares of Axis Bank closed down 1.25% at Rs 503.30 on the BSE on Friday. The sale of FreeCharge and logistics unit Vulcan Express would provide much-needed relief to Jasper’s balance sheet. The embattled Gurgaon-based company is separately negotiating the sale of Snapdeal to rival Flipkart.

At one point, Jasper was eyeing a valuation of close to $1 billion for Free-Charge, as it tried to raise cash for the unit, a process that began in late 2015. The reversal in the fortunes of Snapdeal had a drastic effect on Free-Charge, which saw the volume and value of transactions fall sharply.

The company is estimated to have recorded Rs 300 crore in transaction revenue on about 12 million transactions in April.

In its heyday, the payments company had forecast 7 million daily transactions and gross merchandise transactions of Rs 20,000 crore by the end of fiscal 2017.

Over the past six months, Jasper has pumped more than Rs 440 crore into FreeCharge, according to documents filed with the registrar of companies. The latest development comes days after the Jasper board rejected an initial offer of $800-$900 million for Snapdeal from Flipkart.

Source : Economic Times
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IDFC-Shriram Group agree to finalise merger in 90 days

IDFC and the Shriram Group have agreed to finalise a merger of their financial services business in an attempt to create a financial supermarket with offerings from motorcycle credit to lending for multibillion-dollar power projects.

IDFC Bank CEO Rajiv Lall called the proposed merger a "marriage made in heaven" while founder chairman Deepak Parekh said that IDFC gets "readymade branches" and "hope the marriage happens" and the deal goes through amid likely regulatory obstacles. The two have agreed to hold exclusive talks and finalise the merger in 90 days.

All operating businesses of the two groups will come together under IDFC Ltd. The retail consumer centric business of Shriram Capital — Shriram City Union Finance — will be merged into IDFC Bank. The transport finance business will remain a standalone non-banking finance company that would become a subsidiary of IDFC Ltd. The share swap ratio and other details of the merger would be worked out in the next 90 says.

"In the long run, if ever there is a black swan event, you do need a fallback and that’s where a bank will help," said Ajay Piramal, the single largest individual shareholder in the Shriram Group.

The proposed merger will create a financial giant with a market value of at least Rs 72,000 crore that will have businesses like mutual funds and insurance. "It is a chance to create a financial conglomerate that could become India’s largest mass retail platform, to deliver full range of financial products," said Piramal.

The merger of the two group businesses may be the first of its kind in India with different businesses located in different companies. These companies straddle various regulators, from the RBI to SEBI.

An approval from RBI may be the trickiest one, with the central bank having expressed reservations in the past about the holding structure when it comes to banks. It had insisted all the lending businesses be brought under the bank umbrella for a universal bank licence.

"This is a complex transaction," said Lall. "Our expectation is that the whole transaction that is perceived as single scheme of amalgamation, will be approved only once by our boards, but it will take 12 months." "Shriram needs wholesale assets and IDFC needs retail assets," said Parekh. "There’s a lot of work ahead."

Source : Economic Times
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