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"Since ETPL is not engaged in financial services, the company is required to fully divest its investment in ETPL. Accordingly, the board of directors in its meeting held on January 7, 2022, approved sale of its entire shareholding in the company's subsidiary, ETPL," Equitas Holdings said in a regulatory filing on Saturday.
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At all branches or offices, only 50 per cent staff should be physically present, and remaining staff should be allowed to work from home, it said, adding special status to bankers for availing public transport, including suburban railways under essential service category.
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"The board further decided to constitute a search committee comprising the chairperson of the Nomination and Remuneration Committee and two members of the board, to identify and evaluate candidates, from within or from outside, for the position of Managing Director & CEO," the bank said in the filing.
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Finance minister Nirmala Sitharaman on Friday reviewed state-run banks’ preparedness to deal with any pandemic-induced disruption in the wake of a spike in Covid cases over the past few days. At the same time, the banks have been asked to keep satiating the credit appetite of the economy.
The top executives who attended the virtual meeting told the minister that public-sector banks (PSBs) are “adequately capitalised and prepared for any stress scenarios in future”, the finance ministry said in a statement.
The meeting came days after the Reserve Bank of India, in its Financial Stability Report, projected that gross non-performing assets (NPAs) of commercial banks may jump to 9.5% by September 2022 in a severe stress scenario from 6.9% a year earlier. However, the central bank also noted that banks have sufficient capital, both at the aggregate and individual levels, even under stress conditions to cope with the shock.
Emerging signs of stress in the MSME and microfinance segments call for close monitoring of these portfolios going forward, the report suggested.
At Friday’s meeting, Sitharaman said business outlook is progressively improving in spite of the global headwinds and the Omicron spread and underlined that contact-intensive sectors may require more support from banks to help them fight against the pandemic.
Credit demand, the minister said, is expected to pick up on account of growth in retails segments, improvement in overall macroeconomic prospects and improving financial health of borrowers.
Non-food bank credit growth accelerated to 7.1% in November, against 5.9% a year before and 6.9% in the previous month. However, credit to industry grew only 3.8% in November, even on a favourable base.
The capital to risk-weighted assets ratio (CRAR) of commercial banks, dominated by PSBs, stood at an impressive 16.6% as of September 2021, well above the regulatory requirement. Similarly, their provisioning coverage ratio stood at a decent 68.1% by September.
PSBs, particularly, are adequately capitalised, too, as their CRAR hit 14.4% as of September 2021, against the requirement of 11.5% (including capital conservation buffer). Their CET1 capital also stood at 10.79% as on September 2021, against the regulatory requirement of 8%.
PSBs recorded net profit of Rs 31,820 crore in FY21, the highest in the last five years. Importantly, in the first half of this fiscal, they registered net profits of Rs 31,145 crore, almost equal to that of the whole of FY21. They also recovered as much as Rs 5,49,327 crore from bad assets in the last 7 years.
On Friday, Sitharaman also reviewed various steps initiated by state-run banks in implementing pandemic-related measures initiated by the government and the RBI.
The minister appreciated the success of the Rs 4.5 lakh crore credit guarantee scheme ECLGS and called for further concerted efforts to support all those sectors that face interruption due to continued onslaught of Covid-19 pandemic. She also asked bankers to continue supporting the agriculture, retail and MSME sectors.
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HDFC Bank’s integration with Central Board of Indirect Taxes and Customs (CBIC) ICEGATE platform has gone live, allowing customers to pay for their customs duty directly via the bank.
With this, the bank will offer customers the convenience of directly paying customs duty by selecting HDFC Bank, the lender said on Friday.
This follows authorisation by the Principal Chief Controller of Accounts of CBIC to collect IGST on import and export of goods and services.
HDFC Bank said it has facilitated both retail and wholesale payments of customs duty.
With HDFC Bank on board, clients would no longer need to route payments through other bank accounts. This integration also offers the bank the opportunity to acquire current accounts of customers who bank with others that do not offer this facility, it said in a release.
RBI regulations permit opening of current accounts for specific purposes like statutory payments.
“Digital payments of customs duty will help improve ease of doing business in India,” said Smita Bhagat, Group Head of Government and Institutional Business, Partnership and Inclusive Banking Group Startup Banking, HDFC Bank.
Online customs duty collection will bring in transparency and efficiency at scale. There is a massive surge in online payments due the pandemic-imposed restrictions and government initiatives like demonetisation, GST, Digital India, and mandatory e-invoicing, Bhagat said.
The bank was appointed as the first agency bank by the RBI in 2001 to digitise tax collections.
“Based on this experience two other banks were inducted in 2003. Today, as the largest private sector agency bank in India for tax collection, we strongly believe that a partnership between the government and private players has the power to transform lives,” Sunali Rohra, Executive Vice President, Government and Institutional Business & Gig Banking, HDFC Bank, said.
HDFC Bank is the second largest agency bank to the government for collections of direct taxes, and for GST payments.
The lender said various state governments have also authorised the bank for different types of collections such as, stamp duty, registration fees.
The bank is also integrated with government’s GeM portal for accepting Caution Money Deposit for procurement through the portal.
The bank said it processes about 10 per cent of total DBT payments to the beneficiaries of various government schemes like MGNREGA, PMAY, and PMSKY.
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With HDFC Bank on board, clients would no longer need to route payments through other bank accounts. This integration also offers the bank the opportunity to acquire current accounts of customers who bank with others that do not offer this facility, it said in a release.
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Finance Minister Nirmala Sitharaman on Friday chaired a meeting with chiefs of public sector banks and assessed their readiness to tackle any possible disruptions due to the Omicron variant. In a tweet, the Finance Ministry said during the meeting with CMDs/MDs, held through virtual mode, the minister also reviewed various steps taken by PSBs in implementing pandemic-related measures initiated by the government and RBI.
“During the review meeting, FM Smt. @nsitharaman assessed various steps taken by PSBs in implementing pandemic-related measures initiated by GoI and RBI and readiness to tackle possible future disruptions that may occur due to the ongoing variants of the #COVID19 pandemic,” it tweeted.
The ongoing third wave to the highly infectious Omicron variant of coronavirus has led to various domestic rating agencies lowering India’s growth forecast for the current fiscal. India Ratings and Research cut its forecast to 9.3 per cent, from 9.4 per cent earlier, while Brickwork Ratings has revised its estimates to 8.5-9 per cent from 10 per cent.
India on Friday reported 1,17,100 new single day COVID-19 infections and 302 fatalities. 3,007 cases of Omicron variant of coronavirus detected across 27 states, UTs so far.
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Sixteen vans are given by the National Bank for Agriculture and Rural Development (Nabard) to spread awareness among people, which will display schemes of the government and facilities of banks. Out of these 16, four were inaugurated in Aurangabad by Union Minister of State for Finance Bhagwat Karad.
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The regulator Irdai on Thursday decided to set up two hubs on motor insurance and property insurance and also an advisory committee with the overall objective to promote loss prevention measures in the general insurance industry
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Airtel Payments Bank is among the top five issuers of FASTag in the country, the statement said adding that customers can purchase a FASTag in a matter of a few clicks from the banking section of the Airtel `Thanks App'.
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A third wave poses a high risk to the performance of the borrowers that were impacted by the previous waves and hence poses a risk to the improving trend of asset quality, profitability and solvency, said ICRA Vice-President (Financial Sector Ratings) Anil Gupta.
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"His resignation would be effective from April 04, 2022 (close of business hours) after serving the applicable notice period. Consequently, he shall also cease to be a Key Managerial Personnel of the Bank in terms of Section 203 of the Companies Act, 2013 and other Applicable Laws," the filing said.
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Analysts expect non-state banks to report 9% growth in pre-provision operating profit and a 21% expansion in net profit. A recovery in business growth, higher fee income and a gradual reduction in credit costs are seen as the factors that drove profit growth.
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Daga, one of the senior most officials at Edelweiss, is understood to have setting up his-won asset management firm. Daga earlier headed Proprietary Trading business for Edelweiss as well as managed a multi asset multi strategy desk. He moved to Edelweiss from ICICI Bank.
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The move should encourage them to participate in the first ever platform for individuals, who are willing to invest in sovereign bonds directly without mutual fund plans. This in turn, will help in the market making as primary dealers are billed as key players to support retail investments.
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“HDFC Bank’s provisional business data is encouraging given the strong momentum in relatively higher yielding retail, commercial segment and CASA,” said Darpin Shah, VP, Haitong Securities. “We believe the improvement in these parameters is expected to drive net interest margins.”
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Yes Bank’s net advances grew by nearly 4 per cent to Rs 1,76,422 crore on a provisional basis as of December 31, 2021, the bank said on Tuesday.
Net advances amounted to Rs 1,69,721 crore as of December 31, 2020.
According to the provisional data released by the bank, the gross retail disbursements during the December quarter was Rs 9,233 crore, up from Rs 7,470 crore in year ago quarter.
The deposits rose by 26 per cent year-on-year to Rs 1,84,289 crore at end of December 2021, as against Rs 146,233 crore, Yes Bank said in a regulatory filing.
Bank’s credit to deposit ratio was 95.7 per cent at December 31, 2021 as compared with 116.1 per cent from the same period a year ago.
Stock of Yes Bank traded at Rs 14.38 apiece on the BSE, up by 2.20 per cent from previous close.
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Banned apps simply move to third-party platforms such as Aptoide, he said, or advertise through text messages. Consumers sometimes take out loans with no intention of paying them back. The apps, in turn, use mafia-like collection tactics.
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After struggling with credit growth for over two years, the Thrissur-headquartered Dhanlaxmi Bank has turned the tide. The bank has also ended an impasse with key shareholders over the appointment of an auditor.
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By Piyush Shukla
The recovering asset quality of banks may get impacted if the Omicron variant of Covid-19 causes a third wave of infections, triggering localised lockdowns, analysts said. Banks could see an impairment in advances to self-employed segment, microfinance, unsecured consumer retail, commercial vehicle, and small and medium enterprises (SME), according to analysts. According to domestic rating agency ICRA, total standard restructured loans of banks are estimated at 2.9% of standard advances, and these largely include borrowers that were impacted by the first and second waves of the pandemic.
The threat of a third wave poses high risk to the performance of the restructured loan book and remains a key monitorable for near term.“The third wave could again have a similar impact on the asset quality of lenders with borrowers in self-employed segments getting relatively more impacted. However, this will depend on the severity of mobility restrictions put across by various states.
Further, restructured loans of lenders, a sizable portion of which is accounted for by borrowers impacted under first and second wave of Covid, will remain highly vulnerable as the end of the moratorium period offered as part of restructuring could coincide with third wave of Covid. This could impact the servicing of the restructured loans amid the third wave,” Anil Gupta, vice president of financial sector ratings at ICRA, told FE.Banks’ asset quality improved in the quarter ended September, with the gross non-performing asset (GNPA) ratio decreasing to 6.9% and net NPA at 2.3%, according to Reserve Bank of India’s (RBI) December Financial Stability Report (FSR).
As per the stress test conducted by the central bank, banks’ gross non-performing asset ratio may rise to 8.1% by September 2022 under the baseline scenario and to 9.5% under severe stress if the economy is hit by an Omicron wave.Within bank groups, GNPAs of PSBs may deteriorate to 10.5% by September 2022, from 8.8% in September 2021, under the baseline scenario. For private banks, the gross bad loan ratio may rise to 5.2% from 4.6%.
Brokerage Emkay Global Financial Services said banks are well-placed to withstand the asset quality impact of mild or partial lockdowns, if any, due to the fresh Covid wave. However, a severe wave similar to second wave could pose a meaningful risk to otherwise fragile growth and asset quality. SME loans and micro finance segments remain the most vulnerable, and thus banks with relatively higher exposure to these segments, including PSBs, Bandhan Bank, Ujjivan SFB, Axis Bank, IndusInd Bank, RBL Bank, City Union Bank and DCB Bank, could be at relatively higher asset quality risk, the brokerage said.“We believe full lockdown could derail the growth/asset quality normalisation story, both for banks and NBFCs.
NBFCs are anyways facing asset quality headwinds given recent RBI norms and fresh Covid wave could add to the woes. We believe unsecured consumer retail, commercial vehicle, microfinance and SME could be hit the most in case of a fresh wave,” said Anand Dama, BFSI head, Emkay Global Financial Services.
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Small Finance Banks (SFB), which witnessed a decline in collections and subsequent weakening of the asset quality during second wave of Covid-19, will continue seeing elevated credit costs in the current fiscal (2021-22), leading to subdued profitability, domestic rating agency ICRA said in a report on Monday.ICRA said the overall risk profile of SFBs’ portfolio remains high due to higher proportion of unsecured loans despite such lenders entering retail asset classes such as vehicle loans, business loans, loan against property and housing finance over the last few years.
According to ICRA’s estimate, SFBs’ asset quality deteriorated, with reported gross non-performing assets (GNPAs) being 6.4% at the end of September, higher than 5% at the end of March.The gradual ramp-up in the collection efficiency of SFBs provides comfort, however, performance of the restructured portfolio remains monitorable, the rating agency said. On an overall basis, ICRA expects some reduction in GNPAs in H2FY22 (October-March). However, the reported GNPA as on March end is expected to be higher by 70-80 basis points compared to the level as on March 31, 2021.
On the growth rate, ICRA said SFBs’ assets under management (AUM) are expected to register a marginal improvement to around 20% in the current financial year, compared to the growth rate of 18% witnessed in previous one. The rating agency maintains its cautious stance as the recent surge in Covid-19 infections could play a spoilsport and impact the recovery in growth.“With the second wave of the pandemic impacting disbursements in Q1FY2022 (April-June), the AUM growth rate declined in H1FY2022.
The industry is estimated to have reported an annualised growth rate of 7-8% in H1FY22. Nevertheless, since disbursements have started picking up, we expect the pace of growth to improve in H2FY22, pushing the full-year AUM growth to around 20%, though the same would be subject to no major impact from the recent rise in Covid-19 infections,” said Sachin Sachdeva, vice president and sector head of financial sector ratings at ICRA.
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The customer segment of Fino Bank at the middle of the pyramid is targeted to families of many of the people working in foreign countries, Fino Bank said. The money remitted by family members abroad can now be directly withdrawn at the nearest micro-ATM or Aadhaar-enabled payment services (AEPS)-enabled Fino Bank's neighbourhood merchant point.
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Non-banking financial companies (NBFCs) showed resilience in 2021 despite the coronavirus pandemic woes and are expected to witness continued momentum in growth this year.
This year, the growth will be driven by the uptick in the economy, stronger balance sheet, higher provisions and improved capital positions of NBFCs.
On the other hand, gross non-performing assets (NPAs) of NBFCs are likely to rise, following the Reserve Bank of India’s (RBI) move to tighten the NPA norms in November 2021.
“Our baseline assumption is that the worst is behind them (NBFCs) and things will start improving here on. We expect NBFCs to show higher growth and they will benefit from the economy moving up,” Crisil Ratings Ltd Senior Director and Deputy Chief Ratings Officer Krishnan Sitaraman said.
The asset under management (AUM) of shadow banking players is expected to grow at 6-8 per cent in the current financial year and 8-10 per cent in the next financial year, Sitaraman said.
Recently, the Trends and Progress of Banking of India in 2020-21 report released by the RBI said, “With increased pace of vaccinations and the broadening revival of the economy, the NBFC sector is expected to remain buoyant.”
ICRA Ltd Vice-President and Sector Head A M Karthik said the NBFC sector, including housing finance companies (HFCs) but excluding infra-focussed and government-owned entities, experienced a roller-coaster trend in the past 12-18 months.
The rebound in the second-half of FY2021 on the back of the pent-up demand and after relaxation of the COVID-19 lockdown supported growth and earnings performance, he said.
Karthik also said this fragile recovery was hindered by the second wave of the pandemic in the first quarter of FY2022.
The impact was relatively limited vis-a-vis the past fiscal, with the sector bouncing back in the second quarter of FY2022 in terms of disbursements and AUM (asset under management) growth, he added.
Mortgage financier Indiabulls Housing Finance’s Deputy Managing Director Ashwini Kumar Hooda said, “I think 2022 will be a very good year. Already, we have seen that real estate (sales) has picked up and volumes are almost 30-50 per cent higher than the previous year.”
With lower interest rates, rising income and stable property prices, there will be demand for home and home loans.
“So, the growth in home loans will be at least 15-20 per cent during the year 2022,” he said.
In the current cycle, all home sales are backed by end-user demand and there are no investors in the market, he added.
To strengthen supervision over NBFCs, the Reserve Bank of India (RBI) introduced scale-based regulation and revised NPA recognition and upgradation norms during 2021.
The revised norms included the classification of special mention account (SMA) and NPA on a day-end position basis and upgrade from an NPA to standard category only after clearance of all outstanding overdues.
CARE Ratings Senior Director Sanjay Agarwal said that with the new RBI’s asset classification norms, NPAs of NBFCs are likely to be elevated compared to FY21 levels.
In a report released in November 2021, CARE Ratings said there would be an increase of up to 300 basis points (bps) in gross NPAs with a limited impact for shorter-tenure loans due to the revised NPA norms.
The average increase is expected to be around 150 basis points (bps) in gross NPAs, being a proportion of assets moving from SMA2 buckets, the report had said.
Sitaraman expects reported NPAs for NBFCs to rise between 25-300 basis points, depending on which segment they are operating in.
While for home loan and gold loans, NPAs will be in the lower end of the range; and for MSMEs or unsecured loan NBFCs, it will be at the higher end of the range, he said.
“However, this will not impact the fundamental asset quality material because it is more of an accounting metrics,” Sitaraman said.
According to the Financial Stability Report (FSR) released by the RBI in December, the gross NPA ratio of NBFCs, which had declined in September 2020 reflecting the standstill on asset classification prevalent then, rose to reach 6.5 per cent as at the end of September 2021.
In December, the RBI brought in the prompt corrective action (PCA) framework, which was aimed at increasing market discipline among non-bank players and to align their regulations at par with those of banks.
The norms brought in a risk threshold monitoring for NBFCs based on the total capital, tier-1 capital and net NPAs. The framework will come into effect from October 1, 2022, based on the financial position of NBFCs on or after March 31, 2022.
PCA framework, which prescribes a certain level of NPA number, means NBFCs will focus more on collection and will not allow an account to fall into NPA category, said Pankaj Naik, associate director (financial institutions) of India Ratings and Research.
In 2021, the RBI superseded the boards of Reliance Capital Ltd, Srei Infrastructure Ltd and Srei Equipment Finance. The central bank also initiated the corporate insolvency resolution process (CIRP) against the three defaulting NBFCs.
Dewan Housing Finance Ltd (DHFL), which was facing insolvency proceedings, was acquired by Piramal Enterprises in 2021. The defaulting company was the first NBFC to be sent to National Company Law Tribunal (NCLT) in 2019 by the RBI.
In terms of funding, NBFCs are seeing improvement in their access to capital.
“The funding condition of NBFCs is stabilising because banks are lending to them. Mutual funds, that had become very cautious to lend to NBFCS, have now also started lending. NBFCs are also diversifying their funding base by looking at retail borrowing,” Crisil’s Sitaraman said.
The financial system is maturing from a bank-dominated space to a hybrid system wherein non-bank intermediaries are gaining prominence, the Trends and Progress on Banking in India 2020-21 said.
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The asset under management of shadow banking players is expected to grow at 6-8 per cent in the current financial year and 8-10 per cent in the next financial year, Sitaraman said.
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It is going to be more than seven months since the Insurance Regulatory and Development Authority of India (IRDAI) is without a Chairman. There are many old regulations that need to be reviewed, senior industry officials told IANS not wanting to be quoted.
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