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Friday, August 4, 2017

Punjab National Bank’s exposure to Videocon, Aban Offshore slips in June quarter

Punjab National Bank (PNB)’s exposure to Videocon Industries and Aban Offshore slipped in the June quarter, the country’s second-largest state-owned lender has told analysts and investors. According to two people aware of the development, PNB said in an analyst conference call that its Rs 770-crore exposure to Videocon and Rs 307-crore exposure to Aban have turned bad. On Wednesday, PNB reported a 12% year-on-year (y-o-y) rise in its net profit to Rs 343 crore for the quarter ended June. Its gross non-performing asset (NPA) ratio rose 113 basis points (bps) sequentially to 13.66%, while the net NPA ratio rose 86 bps to 8.67%. The bank has total exposure of Rs 11,000 crore to nine of the 12 accounts referred by the Reserve Bank of India (RBI) for resolution under the Insolvency and Bankruptcy Code (IBC), according to an analyst, and the lender will have to make additional provisions of Rs 1,000 crore towards them over the next three quarters. PNB is the first large lender to recognise Videocon as an NPA. On May 9, Videocon was declared an NPA by mid-sized lender Dena Bank. Its gross debt stood at Rs 47,554 crore in December 2015.

In FY16, the company’s consolidated net profit stood at Rs 1,368 crore on the back of Rs 10,311 crore in revenues. Earlier, bankers told FE Videocon had been trying to repay debt by selling some of its businesses such as Kenstar, merge its direct-to-home division with Dish TV and lobby for the troubled Petrobras project in the Sergipe Basin, where the company is in a joint venture with Bharat Petroleum (BPCL). Aban Offshore owes Rs 12,030 crore to lenders as on March 31.

Both companies are likely to be on a second list of defaulters that the regulator is believed to be preparing for resolution under the Insolvency and Bankruptcy Code. On June 13, RBI had asked banks to refer a dozen stressed companies — with a combined debt of close to Rs 2.4 lakh crore — to the NCLT. Bankers were given a fortnight from the date of issue of the notification to move the tribunal.

Source : Financial Express
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SBI plans to raise Rs 2,000 cr via Basel-III bonds

State Bank of India plans to raise Rs 2,000 crore by allotting Basel-III compliant bonds to various investors.

“The committee of directors for capital raising accorded its approval today to allot 20,000 AT1 Basel-III compliant non-convertible, perpetual, subordinated bonds in the nature of debentures... aggregating Rs 2,000 crore to various investors,” SBI said in a regulatory filing on thursday.

The country's largest lender said the bonds will carry a coupon rate of 8.15 per cent per annum with a call option after 5 years or the anniversary date thereafter.

SBI shares were trading 1.67 per cent lower at Rs 302.50 on the the BSE

Source : Thehindubusinessline
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Kotak Mahindra Bank retains SB a/c rates at 5-6%

“Borrowers matter, so do savers,” tweeted Uday Kotak, Executive Vice-Chairman and Managing Director, Kotak Mahindra Bank, on Thursday even as his bank decided to keep its savings bank rate steady at 5-6 per cent.

This decision comes despite the RBI paring the repo rate (the interest rate at which banks borrow funds from the central bank to overcome short-term liquidity mismatches) from 6.25 per cent to 6 per cent and State Bank of India reducing its savings bank (SB) rate to 3.50 per cent from 4 per cent on deposits up to Rs.1 crore.

Kotak Mahindra Bank offers 5 per cent interest on SB deposits up to Rs.1 lakh; 6 per cent on deposits above Rs.1 lakh and up to Rs.5 crore; and 5.5 per cent on deposits above Rs.5 crore.

Among other private sector banks that offer higher interest rates on SB are YES Bank (6 per cent on deposits up to Rs.1 crore); IndusInd Bank (4 per cent on daily balance up to Rs.5 lakh; 5 per cent on daily balance above Rs.5 lakh and up to Rs.10 lakh; 6 per cent on daily balance above Rs.10 lakh); Lakshmi Vilas Bank (4 per cent on deposits up to Rs.1 lakh; 5 per cent on deposits above Rs.1 lakh and up to Rs.5 lakh; 6 per cent on deposits above Rs.5 lakh; 6.50 per cent on balances above Rs.10 crore).

Source : Thehindubusinessline
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Cost of credit, NPA positioning restricting banks to cut MCLR: SBI

The SBI on Thursday said that though the Marginal Cost of Funds-based Lending Rate (MCLR) is expected to be in tandem with the policy rates, banks are hesitant to reduce it due to cost of credit and deposits and NPAs positioning.

The Reserve Bank of India (RBI) on Wednesday cut the key lending rates by 25 basis points (bps).

"As far as the MCLR is concerned, it is a function of multiple components. It is intended that the MCLR is in tandem with policy rates," State Bank of India (SBI) Managing Director and Chief Executive Officer Dinesh Khara told BTVi in an interview.

"But other factors like the cost of deposit and cost of credit -- which are a critical determinant of MCLR -- and also non-performing assets (NPAs) positioning, are restricting banks from cutting the MCLR... the policy rates are a critical component but not the only component affecting the MCLR," he said.

The banking system is rolling into a lot of liquidity and they would like to deploy that liquidity into the right kind of investments and projects coming up for consuming this kind of liquidity, Khara said.

The advances growth in general is 6 per cent in the current fiscal while the retail advances are doing well at 10-12 per cent.

Retail advances are still linked to base rate while the corporate advances are getting aligned to the MCLR.

"Banks are willing to lend at the right kind of price. But when it comes to investment demand from corporates, that is yet to be seen. My sense is that economic activity through private investment gets revived," he said.

Source : Economic Times
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'SIP' peaks on Google search, attracts investors from small cities

As stocks scale new highs and return from bank deposits dip, even regions that are not typically known as investor hubs are becoming more and more curious about 'Systematic Investment Plan' or SIP.

The search for the keyword, 'Systematic Investment Plan' (SIP), using the Google search engine has peaked. Contrary to general perception, an overwhelming number of people in states like Jharkhand, Sikkim, and Haryana - where Assets Under Management (AUM) as a percentage of respective state domestic products (SDP) is low - are trying to find out more about SIPs.

According to Google data compiled by ETIG, the search for `SIP' has touched a peak score of 100 - a 5-year high. Google score of 100 indicates peak popularity of a term in a defined time frame.

For instance, the search interest for `SIP' is the highest in Jharkhand among all states, an interest score of 100. The eastern state with per capita investment of Rs 3,830 in mutual funds and Rs 12,600 crore of AUM accounts for 0.6 per cent of the total AUM in the country.

Sikkim -with interest score of 89 for Rs SIP' -has per capital investment of Rs 15,010 in MFs -accounts for 0.1 per cent of the total AUM. Surprisingly, no fund house runs a branch in the state.

The total number of SIP accounts in India has grown at a pace that has shadowed the surge in interest on the product. In the past three years, the number of SIP accounts increased from 68 lakh to 1.45 crore in June 2017.

In the past few months, about 7-7.75 lakh SIP accounts have been added with an average investment size of Rs 3,000 per account, according to the Association of Mutual fund of India (AMFI). The average ticket size of SIPs for the same period last year was around Rs 2,200.

The nature of search on the Internet also reflects the entry of otherwise risk averse new investors who are keen to ride the equity boom. For instance, the interest score of 'top mutual funds' has a high positive correlation with the interest score of Rs SIP.'

Globally, the interest score for the term 'best mutual funds' is the highest in India, followed by unrelated terms such as Rs US' and Rs Canada'.

The total SIP book of local MFs was $736 million in June 2017. During FY 16-17, Rs 43,921 crore was collected through SIPs, which is equivalent to 72 per cent of the total inflow into MFs.

What's driving the growth in SIP investments? Most retail investors have found SIPs to a convenient and relatively safer way to participate in equities without timing the market. Also, the ticket size can be as low as Rs 500 a month.

Source : Economic Times
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