IDBI Bank PAT jumps 53% YoY on higher NII growth

IDBI Bank on Friday reported a 53% year-on-year (y-o-y) rise in its net profit to Rs 578 crore during the October-December quarter, mainly on the back of healthy net interest income (NII). On a sequential basis, the lender’s bottomline grew 2%.

For the quarter ended December, IDBI Bank’s NII or the difference between interest earned and expended, grew 31% on year to Rs 2,383 crore. The lender’s net interest margin (NIM) improved by 101 basis points (bps) on a yearly basis to 3.88% during the reporting quarter.

As on December-end, IDBI Bank’s gross advances stood at Rs 1.67 lakh crore, up 6.2% on quarter and 4.8% on year. Retail loans accounted for 63% of the lender’s loan portfolio while corporate loans formed the remaining 37%. Overseas advances had a 4% share in overall gross advances. Further, the lender’s yield on advances stood at 9.67% in the quarter ended December, lower 30 bps on a sequential basis but higher than 9.53% a year ago.

In a post earnings media call, IDBI Bank managing director and chief executive officer (MD & CEO) Rakesh Sharma said partially the cause for muted growth of advances is because borrower companies are shifting to the non-convertible debenture route to raise funds. “I had indicated that we will be targeting growth (credit growth) of 8-10%, so we do not face any problem of slippages or stress in the sector because looking at the situation of Covid-19, we have to be quite calibrated in our approach and we have to take the calculated risk that is why growth is less. But I fully agree that going forward, next year (FY23) we will have to show growth of more than 10%, then we will be able to show much better results and we are aware of that.”

On liabilities side, the bank’s total deposits stood at Rs 2.22 lakh crore as on December 31, down 0.8% YoY and 0.3% on a sequential basis. The reason for contraction in the bank’s deposit base is lower credit demand and the bank’s strategy to lower share of bulk deposits, Sharma said. Its low-cost current account and savings account (CASA) ratio improved to 54.69% as on December 31 from 48.97% a year ago. Further, the cost of deposits fell more to 3.61% as on December-end from 3.66% a quarter ago and 4.41% a year ago.

IDBI Bank’s asset quality improved in the reporting quarter with gross non-performing asset ratio (GNPA) falling to 20.56% as on December-end from 21.85% as on September-end and 23.52% a year ago. The bank’s net NPA ratio improved 24 bps on a yearly basis and stood at 1.70% as on December 31. Going ahead, Sharma said gross NPAs will likely fall further to below 17% by March-end, and below 12% by the end of the next financial year. Sharma said IDBI Bank has identified bad loans amounting to Rs 11,000 – 12,000 crore for sale to the National Asset Reconstruction Company (NARCL) and the bank’s GNPA ratio will come down by 4% once these accounts are transferred. Lastly, the bank’s capital adequacy ratio stood at 16.75% as on December-end, of which tier-I capital consisted of 14.13%.

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Bandhan Bank net rises 36% riding on growth of non-interest income

Bandhan Bank on Friday reported a 35.79% year-on-year jump in net profit to Rs 858.97 crore for the third quarter this fiscal year from Rs 632.59 crore in the same period last financial year as the lender’s non-interest income grew and provisions fell.

The private sector lender had posted a whopping net loss of Rs 3008.59 crore for the second quarter in the current financial year on the back of Rs 5613.48-crore provisions as it had seen a huge surge in bad loans.

Its non-performing assets (NPAs), in absolute terms, rose 7.74% quarter on quarter to `9441.57 crore in Q3FY22 as against Rs 8773.60 crore in Q2FY22. On a year-on-year basis, its NPAs soared tenfold from Rs 859.22 crore in the third quarter last fiscal. During the quarter under review, the bank’s gross NPAs, as a percentage of total loans, stood at 10.81% compared to 10.82% in the second quarter.

Commenting on the results, Chandra Shekhar Ghosh, managing director and CEO, said, “Third quarter of this fiscal has been a very good one for the bank where we have witnessed growth across all parameters. After the challenging first half, we have seen growth bounced back strongly and things stabilise on the asset quality front with collection efficiency improving very strongly.”

For the EEB segment (erstwhile microbanking segment), collection efficiency for December 2021 stood at 92% (including NPAs) against 86% in September 2021. And, it was 97% (excluding NPAs) for December versus 93% in September.

“We have seen all round recovery during the quarter with improved collection and increase in disbursement. Q4 historically has been the best quarter for the bank and we are positive of our business going forward. With group loan share in total advances reduced to 52%, bank is on track to achieve the diversification strategy which it had laid down for FY25,” Ghosh said.

Net interest income (NII) for the quarter stood at Rs 2124.70 crore as against Rs 2071.74 crore in the corresponding quarter of the previous year. The bank’s non-interest income grew 26.67% year on year to Rs 712.29 crore. Provisions during the quarter under review fell 25.25% YoY to Rs 805.71 crore from Rs 1077.83 crore in the year ago.

The bank said share of full paying customers stood at 89% in December, up from 79% in September. Around 66% of NPA customers continued to make payments in a bid to regularise their overdue loan accounts at the earliest. Around 2/3rd of the bank’s restructured customers also continued to pay despite moratorium.

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Interview| A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC – ‘FPIs to find India relatively more attractive versus other EMs in 2022’

Inflows by Foreign Portfolio Investors (FPIs) in India are expected to be higher amid higher visibility of economic and earnings growth that India provides, compared to other emerging markets (EMs), says A Balasubramanian, managing director and chief executive officer, Aditya Birla Sun Life AMC, in an interview with Manish M Suvarna and Ruchit Purohit. Edited excerpts:

Do you see RBI increasing repo rate or reverse repo rate, or a change in stance in this calendar year after normalisation of liquidity in last two policies? What is bond market’s view on RBI’s stance?

RBI has been at the forefront in policy response to pandemic and they have done a remarkable job in supporting economy through the pandemic. We are witnessing that the worst impact of pandemic on economy is behind, and steady improvement in growth. Hence RBI has started the normalisation process and is absorbing excess liquidity via Variable Reverse Repo Rate auctions. Going ahead, we expect the process of monetary policy normalisation to continue in a calibrated manner without impacting the market sentiment. In our assessment, one could witness two repo rate hikes of 25bp each in this calendar year and normalisation of LAF corridor back to 25bps.

Your take on the overall earnings growth and also on valuations of the markets — compared to the other markets?

We believe the uptick in GDP growth around 6.50% to 7% to come back this year. This, in fact, will be driven by certain segments in the economy viz. consumption, investment and exports growing better than normal. As a result of this, we see significant turnaround in corporate profitability and, therefore, keeping the overall momentum in the market alive. Having said that, overall valuation is in fact at a premium of 15% to its long-term average. India is also trading at a premium to rest of the global market, however, China factor on one side and continuous reforms in India are driving the premium valuation.

What is the strategy of mutual funds for IPOs given that some have tanked badly, will Aditya Birla MF look at launching an IPO Fund?

The year 2021 was the best year for the Indian IPO market as it enabled many companies to raise capital. Many IPOs generated significant gains for investors, including mutual funds, in the form of listing gains. Most of the new-age businesses such as e-commerce oriented start-up companies, that have got long-term potential, managed to raise funds in a big way that India and the regulator can take pride in for enabling. The growing risk appetite from domestic investors is a good sign for building healthy long-term capital market. Listing gain or loss can be a function of various factors, hence, one must look at an overall basis on how companies are doing from the point of view of business objective and action. We, as a fund house, do not have any plans for launching an IPO fund at this stage.

Considering the expected three rate hikes by the Fed in CY22, inflation on cards, and the third wave across the globe — how do you see the inflows of FPIs in debt and equity market in India in the near term?

US policy tightening can lead to a reversal in flows to EM in 2022. And with the dollar expected to strengthen till mid-2022, FPI flows to EMs may remain under pressure. In contrast to most EMs, India has got strong FPI flows in equity over the past three years. Given the higher visibility to economic and earnings growth that India provides, FPIs are likely to find India to be relatively more attractive versus other EMs. Hence, while FPI flows in equity to EMs are expected to be muted in 2022, India is likely to do relatively better in the EM pack.

Inflation is no longer being called transitory by other central banks, what are your views on that? And how you see inflation and growth in near term given the third wave of pandemic?

We need to differentiate between inflation in advanced economies, particularly the US and to some extent Europe, from India. Inflation in advanced economies was a result of a very large stimulus creating excess demand, which was not satisfied by pandemic constrained global supply chains. The result has been multi-decade high inflation. While there are linkages via import channel and especially due to high commodity prices, but inflation in India, has largely stayed within the RBI’s inflation target zone. Omicron wave will likely affect both inflation and growth to some degree, but the impact is expected to be for a couple of months and much milder than what we saw in earlier waves given that restrictions have been far less, and economy is adapting to living with the virus.

In January, crude oil prices have risen sharply, which could put pressure on inflation. Considering this, how you see movement of yield on government securities in near term or before monetary policy and budget? Yes, rising crude price can put pressure on inflation but the actual impact will depend on the final pass through of prices and the sustainability of the increase. Government had recently cut taxes on fuel prices, which had provided some cushion to the recent rise in prices. Yields on benchmark 10-year government securities have already increased by about 15bps since the beginning of the year in response to higher crude prices and US yields and also because of lower RBI support to government borrowing. While there are some upside risks to government bond yields, particularly from the upcoming FOMC meeting, we draw comfort from RBI’s commitment to see that bond yields do not go far away from the macro-fundamentals and, hence, we do not expect a sharp rise from current levels in the near term.

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Bankers await RBI nod on revised bad bank structure

Banks are waiting to hear from the Reserve Bank of India (RBI) on the revised structure for the bad bank proposed by the Indian Banks’ Association (IBA). According to three bankers in the know, the industry has offered to structure a principal-agent relationship between the National Asset Reconstruction Company (NARCL) and the India Debt Resolution Company (IDRCL) and the central bank’s nod is expected any day now.

The reason for planning a new structure is the RBI’s objection to approving the dual-entity structure of the bad bank. The original plan put forward by the government involved the setting up of an ARC, which would aggregate non-performing assets (NPAs) worth Rs 500 crore or more and an asset management company (AMC), which would work to resolve the bad assets for a fee. 

While the RBI issued a licence to the ARC — NARCL in this case — it expressed its reservations about the plan to transfer assets to the AMC, a banker said. ARCs are a category of non-banking financial companies (NBFCs) regulated by the RBI, but AMCs are regulated by the Securities and Exchange Board of India (Sebi).

A principal-agent relationship is an arrangement under which an entity legally appoints another entity to act on its behalf. If such a structure is implemented with the NARCL as the principal and the IDRCL as an agent, it will give the RBI control over the latter.

“What has been proposed now is a principal-agent relationship where the asset resolution will be outsourced to the IDRCL. So far we haven’t heard from the RBI,” a senior executive with a mid-sized private bank said.

Another banker said a solution on the matter could be reached by the end of this month. “We are working on this project on a regular basis and every day there is some development. We are hoping that by month-end there will be a final resolution of the matter,” he said.

The original plan of a bad bank, comprising an ARC and an AMC, was announced as part of the Union Budget for FY22 on February 1, 2021.

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Banks seek ECLGS extension, payments companies want zero-MDR gone

Banking industry lobby Indian Banks’ Association (IBA) has requested the government to extend the Emergency Credit Line Guarantee Scheme (ECLGS) by another year to March 31, 2023. The Covid-era credit guarantee scheme is targeted at smoothening financing for small enterprises and an extension will support micro, small and medium enterprises (MSMEs), who still need help, bankers said.

According to the latest notification issued by the National Credit Guarantee Trustee Company (NCGTC) on October 4, 2021, the ECLGS will be in force till March 31, 2022, or till guarantees for loans worth Rs 4.5 lakh crore have been issued. In its first iteration, issued in May 2020, the scheme offered a 100% government guarantee for 20% additional funding to eligible MSMEs. In 2021, the outlay under the scheme was enhanced to Rs 4.5 lakh crore, with an incremental support of 10% being guaranteed over and above the initial 20% support amount.

“The measures banks have requested are mostly pertaining to support for MSMEs, who are yet to fully recover from the blows of the pandemic. We are specifically asking for an extension for the ECLGS,” a senior banker said. A recent report by the State Bank of India’s (SBI’s) economic research division said of the extended limit of Rs 4.5 lakh crore, 64.4%, or Rs 2.9 lakh crore, had been sanctioned by November 21, 2021.

In a separate representation to the government, payments industry body Payments Council of India (PCI) has requested a rollback of the zero-MDR (merchant discount rate) regime for Unified Payments Interface (UPI) and RuPay debit cards or to incentivise the industry with a Rs 4,000-crore allocation to compensate for the revenue lost thereof. The zero-MDR regime, under which merchants have to pay no fee to payment infrastructure providers for UPI and RuPay debit card transactions, has been in place since December 2019.

Vishwas Patel, chairman, PCI, and director, Infibeam Avenues, said, “We request the government to consider a rollback of zero-MDR, with a view to broaden and significantly grow the merchant acceptance base particularly in the MSME space and also to facilitate the deployment of payments infrastructure by non-bank players, who have been the biggest deployers of capital in this area for the past few years.”

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Interview| A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC – ‘FPIs to find India relatively more attractive versus other EMs in 2022’

Inflows by Foreign Portfolio Investors (FPIs) in India are expected to be higher amid higher visibility of economic and earnings growth that India provides, compared to other emerging markets (EMs), says A Balasubramanian, managing director and chief executive officer, Aditya Birla Sun Life AMC, in an interview with Manish M Suvarna and Ruchit Purohit. Edited excerpts:

Do you see RBI increasing repo rate or reverse repo rate, or a change in stance in this calendar year after normalisation of liquidity in last two policies? What is bond market’s view on RBI’s stance?

RBI has been at the forefront in policy response to pandemic and they have done a remarkable job in supporting economy through the pandemic. We are witnessing that the worst impact of pandemic on economy is behind, and steady improvement in growth. Hence RBI has started the normalisation process and is absorbing excess liquidity via Variable Reverse Repo Rate auctions. Going ahead, we expect the process of monetary policy normalisation to continue in a calibrated manner without impacting the market sentiment. In our assessment, one could witness two repo rate hikes of 25bp each in this calendar year and normalisation of LAF corridor back to 25bps.

Your take on the overall earnings growth and also on valuations of the markets — compared to the other markets?

We believe the uptick in GDP growth around 6.50% to 7% to come back this year. This, in fact, will be driven by certain segments in the economy viz. consumption, investment and exports growing better than normal. As a result of this, we see significant turnaround in corporate profitability and, therefore, keeping the overall momentum in the market alive. Having said that, overall valuation is in fact at a premium of 15% to its long-term average. India is also trading at a premium to rest of the global market, however, China factor on one side and continuous reforms in India are driving the premium valuation.

What is the strategy of mutual funds for IPOs given that some have tanked badly, will Aditya Birla MF look at launching an IPO Fund?

The year 2021 was the best year for the Indian IPO market as it enabled many companies to raise capital. Many IPOs generated significant gains for investors, including mutual funds, in the form of listing gains. Most of the new-age businesses such as e-commerce oriented start-up companies, that have got long-term potential, managed to raise funds in a big way that India and the regulator can take pride in for enabling. The growing risk appetite from domestic investors is a good sign for building healthy long-term capital market. Listing gain or loss can be a function of various factors, hence, one must look at an overall basis on how companies are doing from the point of view of business objective and action. We, as a fund house, do not have any plans for launching an IPO fund at this stage.

Considering the expected three rate hikes by the Fed in CY22, inflation on cards, and the third wave across the globe — how do you see the inflows of FPIs in debt and equity market in India in the near term?

US policy tightening can lead to a reversal in flows to EM in 2022. And with the dollar expected to strengthen till mid-2022, FPI flows to EMs may remain under pressure. In contrast to most EMs, India has got strong FPI flows in equity over the past three years. Given the higher visibility to economic and earnings growth that India provides, FPIs are likely to find India to be relatively more attractive versus other EMs. Hence, while FPI flows in equity to EMs are expected to be muted in 2022, India is likely to do relatively better in the EM pack.

Inflation is no longer being called transitory by other central banks, what are your views on that? And how you see inflation and growth in near term given the third wave of pandemic?

We need to differentiate between inflation in advanced economies, particularly the US and to some extent Europe, from India. Inflation in advanced economies was a result of a very large stimulus creating excess demand, which was not satisfied by pandemic constrained global supply chains. The result has been multi-decade high inflation. While there are linkages via import channel and especially due to high commodity prices, but inflation in India, has largely stayed within the RBI’s inflation target zone. Omicron wave will likely affect both inflation and growth to some degree, but the impact is expected to be for a couple of months and much milder than what we saw in earlier waves given that restrictions have been far less, and economy is adapting to living with the virus.

In January, crude oil prices have risen sharply, which could put pressure on inflation. Considering this, how you see movement of yield on government securities in near term or before monetary policy and budget? Yes, rising crude price can put pressure on inflation but the actual impact will depend on the final pass through of prices and the sustainability of the increase. Government had recently cut taxes on fuel prices, which had provided some cushion to the recent rise in prices. Yields on benchmark 10-year government securities have already increased by about 15bps since the beginning of the year in response to higher crude prices and US yields and also because of lower RBI support to government borrowing. While there are some upside risks to government bond yields, particularly from the upcoming FOMC meeting, we draw comfort from RBI’s commitment to see that bond yields do not go far away from the macro-fundamentals and, hence, we do not expect a sharp rise from current levels in the near term.

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Bankers await RBI nod on revised bad bank structure

Banks are waiting to hear from the Reserve Bank of India (RBI) on the revised structure for the bad bank proposed by the Indian Banks’ Association (IBA). According to three bankers in the know, the industry has offered to structure a principal-agent relationship between the National Asset Reconstruction Company (NARCL) and the India Debt Resolution Company (IDRCL) and the central bank’s nod is expected any day now.

The reason for planning a new structure is the RBI’s objection to approving the dual-entity structure of the bad bank. The original plan put forward by the government involved the setting up of an ARC, which would aggregate non-performing assets (NPAs) worth Rs 500 crore or more and an asset management company (AMC), which would work to resolve the bad assets for a fee. 

While the RBI issued a licence to the ARC — NARCL in this case — it expressed its reservations about the plan to transfer assets to the AMC, a banker said. ARCs are a category of non-banking financial companies (NBFCs) regulated by the RBI, but AMCs are regulated by the Securities and Exchange Board of India (Sebi).

A principal-agent relationship is an arrangement under which an entity legally appoints another entity to act on its behalf. If such a structure is implemented with the NARCL as the principal and the IDRCL as an agent, it will give the RBI control over the latter.

“What has been proposed now is a principal-agent relationship where the asset resolution will be outsourced to the IDRCL. So far we haven’t heard from the RBI,” a senior executive with a mid-sized private bank said.

Another banker said a solution on the matter could be reached by the end of this month. “We are working on this project on a regular basis and every day there is some development. We are hoping that by month-end there will be a final resolution of the matter,” he said.

The original plan of a bad bank, comprising an ARC and an AMC, was announced as part of the Union Budget for FY22 on February 1, 2021.

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Banks seek ECLGS extension, payments companies want zero-MDR gone

Banking industry lobby Indian Banks’ Association (IBA) has requested the government to extend the Emergency Credit Line Guarantee Scheme (ECLGS) by another year to March 31, 2023. The Covid-era credit guarantee scheme is targeted at smoothening financing for small enterprises and an extension will support micro, small and medium enterprises (MSMEs), who still need help, bankers said.

According to the latest notification issued by the National Credit Guarantee Trustee Company (NCGTC) on October 4, 2021, the ECLGS will be in force till March 31, 2022, or till guarantees for loans worth Rs 4.5 lakh crore have been issued. In its first iteration, issued in May 2020, the scheme offered a 100% government guarantee for 20% additional funding to eligible MSMEs. In 2021, the outlay under the scheme was enhanced to Rs 4.5 lakh crore, with an incremental support of 10% being guaranteed over and above the initial 20% support amount.

“The measures banks have requested are mostly pertaining to support for MSMEs, who are yet to fully recover from the blows of the pandemic. We are specifically asking for an extension for the ECLGS,” a senior banker said. A recent report by the State Bank of India’s (SBI’s) economic research division said of the extended limit of Rs 4.5 lakh crore, 64.4%, or Rs 2.9 lakh crore, had been sanctioned by November 21, 2021.

In a separate representation to the government, payments industry body Payments Council of India (PCI) has requested a rollback of the zero-MDR (merchant discount rate) regime for Unified Payments Interface (UPI) and RuPay debit cards or to incentivise the industry with a Rs 4,000-crore allocation to compensate for the revenue lost thereof. The zero-MDR regime, under which merchants have to pay no fee to payment infrastructure providers for UPI and RuPay debit card transactions, has been in place since December 2019.

Vishwas Patel, chairman, PCI, and director, Infibeam Avenues, said, “We request the government to consider a rollback of zero-MDR, with a view to broaden and significantly grow the merchant acceptance base particularly in the MSME space and also to facilitate the deployment of payments infrastructure by non-bank players, who have been the biggest deployers of capital in this area for the past few years.”

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'Include EVs in RBI’s priority sector lending guidelines'

Including electric vehicles in the Reserve Bank of India’s (RBI) priority sector lending (PSL) guidelines can complement the $300 million facility and encourage the financial sector to mobilise necessary capital, a Niti Aayog report has recommended.

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South Indian Bank registers Rs 50-crore loss in Q3

South Indian Bank on Thursday announced a net loss of Rs 50.31 crore in its third quarter results largely due to higher provisions.

The Thrissur-based lender had reported a net loss of Rs 91.62 crore during the third quarter of FY21 and a net loss of Rs 187.06 crore in the preceding second quarter.

Murali Ramakrishnan, MD & CEO of the bank, said that the bank could reduce the net loss due to good recovery and collections. But for the additional provision of Rs 43 crore in Q3,the net loss of the Bank would have been Rs 18.05 crore only, he added.

“The bank managed to contain fresh slippages for the quarter to Rs 380 crore, much below the anticipated Rs 400-450 crore. During the nine-month period ended December 31, 2021, the bank could make a robust recovery and upgradation in NPA accounts amounting to Rs 896 crore compared to Rs 218 crore during the corresponding period of previous year and the same had helped the bank in containing the GNPA level,” he added.

Gross non-performing assets (NPA) as a percentage of gross advances is reported at 6.56 % for Q3FY22, from 6.65% in the preceding quarter and 4.90% in the year -ago period. Net NPA as a percentage of gross advances stands at 3.52 %, against 3.85% in the preceding quarter and 2.12 % in the year-ago quarter. Meanwhile, during this quarter Bank increased the provision coverage ratio from 65.02% to 68.08% on quarter-on-quarter basis with the help of additional provision of Rs 43 crore and capital adequacy ratio improved from 14.47% to 15.68% on year-on-year basis.

Ramakrishnan said that the bank could register growth in the desired segments of liabilities like CASA & retail deposits and assets like gold loan, agri, auto loan portfolio and the share of highly rated accounts in corporate segment during the period.

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FACE applies to RBI to become self-regulatory organisation for digital lending

Industry body Fintech Association for Consumer Empowerment (FACE) on Thursday said that it has applied to the Reserve Bank of India (RBI) to take on the role of a self-regulatory organisation (SRO) in the digital lending industry.

The report of the RBI working group on digital lending, released on November 18, recommended, among other things, the constitution of an SRO covering the participants in the digital lending ecosystem.

Member companies of FACE cater to more than half of the consumer lending market volumes in India and serve a cumulative consumer base of over 90 lakh consumers across 19,000 pin codes, the association said. Another industry body, Digital Lenders’ Association of India, which has over 80 members with $5-6 billion in annual disbursements, is also active in the space.

FACE said that its application comes on the back of the RBI seeking suggestions from industry groups to enforce regulations for digital lending platforms in the country, in an effort to curb illegal lending apps. Ram Rastogi, governance council member, Face, said that the organisation intends to work with the RBI and all official stakeholders to promote responsible lending, which will uphold ethical lending practices, data security, cyber security, consumer privacy and to weed out predatory lenders. “With our expertise and collective addressable market, we believe FACE is well prepared to take on the task of a formal self-regulatory body, that can promote and refine practices and streamline the sector, with guidance from the RBI,” Rastogi said.

The working group report distinguished balance sheet lenders in the digital ecosystem from loan service providers (LSPs) who facilitate the delivery of loans for balance sheet lenders. It recommended that the appointed SRO will have to lay down a uniform model on the basis of which the LSP agreement for balance sheet lenders will be framed. The SRO will be responsible for laying down a code of conduct on the basis of which lending apps will have to base their advertising and marketing strategy, as also the loan agreement format to be used by lending apps.

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Aditya Birla Sun Life AMC gets IFSCA nod to carry out portfolio management services in GIFT City

The company's move to set up new unit at the Gujarat International Finance Tec-City (GIFT City) is a strategic step towards growth of its international business to expand its reach and service global clients, including NRIs for investing in India, the asset management firm said in a statement.

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PNB Housing Finance’s Q3 PAT down 19% as NPAs rise

PNB Housing Finance on Thursday reported a 19% year-on-year (YoY) fall in its net profit to Rs 188 crore during the October-December quarter, mainly due to a rise in gross non-performing assets (GNPA) post Reserve Bank of India’s (RBI) November 12 circular on upgradation of bad loans.

During the quarter ended December, PNB Housing’s assets under management (AUM) de-grew 5% on a sequential basis and 14% on a year-on-year basis to Rs 66,539 crore. The degrowth in AUM is primarily on account of loan sell down, accelerated payments and no new sanctions in the corporate book, the company said, adding that retail book contributed 88% of the total AUM.

The mortgage financier’s disbursements stood at Rs 2,828 crore during October-December, down 12% on year. Collection efficiency during the reporting quarter improved to 98.53% from 95.42% a year ago and 98.28% as on September end. Owing to a lower growth in AUM, the company’s net interest income — the difference between interest earned and expended — contracted 25.6% year-on-year to `439 crore. Net interest margin was also lower at 2.67% in October-December.

On asset quality front, PNB Housing Finance’s GNPA ratio deteriorated sharply to 7.64% as on December end from 5.92% a quarter ago and 4.47% a year ago. The net NPA ratio rose to 4.87% at the end of Q3 from 2.69% a year ago. “NPA of Rs 4,340 Crore includes Rs 829 crore, which is less than 90 DPD (days past due) but included due to asset classification norms as per RBI notification dated 12-Nov-2021,” the lender said.

On November 12, the central bank said loan accounts classified as NPAs may be upgraded to ‘standard’ assets only if the entire arrears of interest and principal are paid by the borrower. The rule will apply to both banks and NBFCs.

Further, the lender’s capital adequacy ratio stood at 21.59%, higher than 18.73% as on March end. In a separate notice to exchanges, the company informed its Chief Financial Officer (CFO) Kapish Jain had tendered resignation and current serving notice period till April 7. The management is continuously being strengthened and as part of succession plan, senior leadership roles are being filled through internal talent directly, as per PNB Housing Finance investor presentation. 

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Bank of Maharashtra’s net profit jumps 110.70% to Rs 325 crore

Bank of Maharashtra on Thursday reported a 110.70% y-o-y rise in its net profit at Rs 325 crore during the October-December quarter.

A S Rajeev, managing director and CEO, BoM attributed this growth in profit to higher net interest income, growth in all business segments including retail, agriculture and MSME loans and an improvement in the asset quality.

BoM’s net interest margin during Q3FY22 was at 3.11 per against 3.06% a year ago. Net interest income increased by 16.90% to Rs 1,527 crore.

Gross NPA declined to 4.83% as on December 31, 2020, compared to 7.69% on December 31, 2020. Net NPA fell to 1.24% from 2.59% in the comparable period last year. The bank’s provision coverage ratio has gone up to 93.77% from 89.55% in December 2020.

The December quarter operating profit rose by 28.12% to Rs 1,162 crore. The aim was to reach `1,500-crore quarterly profit next year, Rajeev said.

The bank is planning to raise funds for its expansion plans, Rajeev said. The bank would raise between Rs 500 and Rs 750 crore Tier I capital through the QIP route by February 15, 2022 , Rajeev said.

They would also look at raising another Rs 1,000 crore in the first quarter of FY23, he said. BoM had raised Rs 1,000 crore in October 2021 through a Tier II bond issue to Life Insurance Corporation. In July 2021, the bank has raised Rs 403 crore capital through QIP at Rs 23.70 per share.

For the first time, BoM’s total business had crossed Rs 3 lakh crore mark to reach Rs 3,15,620 crore making its entry into the mid-size bank segment, Rajeev said.

Deposits grew by 15.21% y-o-y to Rs 1,86,614 crore while advances during the quarter, while advances grew by 22.98% y-o-y to Rs 1,29,006 crore. The bank’s CRAR stands at 14.85% and does not include the profits for this year and the Rs 1,073-crore Covid provisions.

The bank was also making Rs 250-crore profit from sale of priority sector lending certificates (PSLC certificates).

Earlier the bank was investing in Rural Infrastructure Development Fund but instead of that the bank was investing in PSLC which was adding to profitability.

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Overnight call rate surges to 21-month high prompting RBI to act

The shortfall prompted the Reserve Bank of India to announce an immediate borrowing window for Rs50,000 crore. The central bank’s move has underscored its commitment to ensuring liquidity needs even as it unwinds excess cash through Variable Reverse Repo Rate (VRRR) auctions amid the diminishing threat of coronavirus infections.

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ICRA revises AUM growth outlook for FY22 for retail NBFCs to 5-7 per cent

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Y Combinator-backed Invoid joins Credenc, a Capital India company to build Neobank for students

Founded by Sarthak Goel and Kunwar Raj Sethi, Invoid simplifies customer onboarding and digital KYC through its technology product. The company has secured user onboarding journeys for over 50 financial companies so far.

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Karnataka Bank launches online KYC updation portal

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Insurance industry seeks cut in GST, increase in 80C investment limit in Budget 2022

The surge in claims and the attendant payouts that both life and medical insurance companies faced this fiscal has led to a steep 30% rise in premiums as reinsurers look to recover their losses. Though insurance premiums in India are still lower compared to many markets, the hefty premiums could impact demand at a time when awareness for life and health insurance is high.

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Y Combinator-backed Invoid in pact with Credenc to build neobank for students

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pi Ventures announces first close of its second fund at ₹300 cr

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Lenders to be reimbursed ₹974 cr for Pandemic loan moratorium

On March 27, 2020, the Reserve Bank of India (RBI) had announced a loan moratorium on payment of instalments of term loans falling due between March 1 and May 31, 2020, due to the pandemic, which was extended to August 31.

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Kotak case: BharatPe’s Ashneer Grover goes on leave till March-end

BharatPe co-founder and MD Ashneer Grover, who was recently embroiled in a controversy over the use of alleged abusive language against an employee of Kotak Mahindra Bank, has taken voluntary leave till March-end, a statement from the company on Wednesday said. BharatPe will continue to be led by its existing CEO Suhail Sameer and the rest of the management team will remain intact.

“Ashneer has co-built BharatPe from scratch and his decision is consistent with his passionate commitment to the future success of the company. For now, the Board has accepted Ashneer’s decision which we agree is in the best interests of the company, our employees and investors, and the millions of merchants we support each day,” the statement added.

Grover’s decision comes weeks after an alleged audio recording surfaced on Twitter, in which he can be heard hurling verbal abuses at an employee of Kotak Wealth Management for missing out on financing for the IPO of FSN E-Commerce Ventures, which operates online fashion and wellness company Nykaa.

A day after the audio clipping surfaced on social media, Grover issued a statement claiming that the viral clip was “fake” and that he was a victim of a “scamster” who allegedly released the audio on social media. 

Later, media reports confirmed that he and his wife Madhuri had sent a legal notice to Kotak Wealth Management through the law firm, RegStreet Law Advisors.

In the legal notice, RegStreet Law Advisors’ partner Sumit Agarwal said his clients (Ashneer Grover and Madhuri Grover) had proposed to apply for subscription to the shares of FSN (Nykaa) for shares worth `250 crore each. The bank allegedly didn’t keep up with the promises, the legal suit added.

“Kotak’s refusal to provide IPO financing to our clients for the Nykaa IPO constitutes a blatant violation of its legal obligations owed to our clients as their wealth managers,” the legal notice said.

This coincided with the Kotak group coming out in support of the employee who was allegedly verbally abused by Grover over phone. Kotak said in a media statement on January 10 that it intends to take legal action against the BharatPe co-founder over abusive language and death threats.

Kotak Wealth Management, which was represented by law firm Khaitan and Co, said in response to Grover’s legal notice that it “reserves the right to pursue legal action for the threats to the lives of its employees”. “Our client denies that there has been any breach on its part with regard to any financial assistance that has been alleged by you or otherwise. Your clients are well aware that financial assistance is at the sole discretion of the lender and that there is neither any concluded contract nor any sanction letter executed in favour of your clients,” Kotak said in its legal response to the lawsuit.

BharatPe is funded by inventors such as BEENEXT, Sequoia Capital, Insight Partners, Steadview Capital Management, Ribbit Capital, and Coatue Management, among others, and has already raised close to $700 million in equity and debt financing.

Currently, BharatPe operates a UPI-based QR code payment system for consumers and merchants. It also sells BharatSwipe, a point of sale (PoS) device and buy-now-pay-later (BNPL) product named PostPe.

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Credit card utilisation stays lower than pre-Covid levels

The level of utilisation of credit card limits by consumers remains below pre-Covid levels as worries around successive waves keep them on the edge. According to a report by Kotak Institutional Equities (KIE), utilisation stood at 21% in FY21, down from 24% before the outbreak of Covid.

Part of the problem was the decision of banks to lower credit limits for their card customers in the immediate aftermath of the outbreak in 2020. While for some banks, lower limits were a short-lived phenomenon, lasting through the first eight-nine months of the pandemic, others were more conservative and retained lower limits in 2021. The tightening of credit limits may have made customers accustomed to spending less using cards.

“We had cut limits, but that was a temporary thing and we went back to normal in a matter of months. But yes, consumption is still low and utilisation may be low for that reason,” said a senior executive with a large private bank.

In a call with investors after its Q3FY22 results, credit cards market leader HDFC Bank admitted that even as spends have been trending up, utilisation of limits remains a problem. Srinivasan Vaidyanathan, chief financial officer, said until recently, the bank was tight on the credit limits. “The credit line utilisation is at a low. So, while the spend levels are up 24% and the interchange is quite robust and good with a good yield that we get on that, the credit line utilisation has got much more to do to get back to the pre-pandemic level.”

As a result of poor utilisation and a tighter policy on credit limits, HDFC Bank’s fee income from payments products and credit cards declined on a year-on-year basis in the December quarter. In addition, the tendency to revolve card balances also waned, with HDFC Bank still at about 70-80% of the pre-Covid levels in terms of revolving balances on cards.

In a recent report, analysts at KIE wrote utilisation rates have dropped in nearly all the segments of credit cards across limit ticket sizes. Growth has been slow in all the top states where credit cards have been issued and was stronger outside of metropolitan markets. “The sharp drop in spending as well as repayment by card holders could explain the drop in utilisation rate,” the report said, adding, “While the urban markets were less impacted by Covid, it does appear that bankers were cautious, especially as the high credit penetrated market saw the slowest growth in cards issued, growth in limits and outstanding.”

Worsening consumer confidence is also taking a toll on spending preferences. A recent report by the Reserve Bank of India (RBI) said the pandemic severely dented consumer confidence which reached historic lows as the repercussions of Covid-19 unfolded. A majority of the respondents in all rounds of the RBI’s consumer confidence survey reported higher prices and inflation compared with a year ago. “A general perception of high prices and rising inflation further aggravated the situation for consumers already worried by the employment scenario and general economy,” the report said, adding that consumers aggressively cut down on non-essential spending after the pandemic broke out.

KIE expects credit card spends to pick up as conditions normalise and lenders on-board customers at a quicker pace. “As more spend categories come back on track like international travel or foreign exchange, we should see this book contributing quite well to all leading credit card players,” it said.

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ICICI Pru Life posts improvement in PAT

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Technology, bank stocks drag Wall Street to new low for 2022

The S&P 500 fell 1.8%, with about 90% of the stocks in the benchmark index closing in the red. The Nasdaq, which is heavily weighted with technology stocks, slid 2.6%. The Dow Jones Industrial Average fell 1.5%.

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Axis Finance sends legal notice to ZEE, seeks ₹146-crore in dues

Denying all the contentions of Axis Finance, ZEE has said in its response that neither the company nor its MD and CEO Punit Goenka are party to any of the loan documents.

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IBA seeks extension of Rs 4.5L cr loan guarantee scheme by 1 year

The Indian Banks’ Association (IBA) has suggested that the government extend the validity of its Rs 4.5-lakh-crore guaranteed loan scheme for companies and individuals preferably by one year through March 2023.It has also pitched for providing an additional dose of 10% of the eligible finance for all eligible borrowers, who continue to be affected by the Covid-induced extended disruptions, under the existing Emergency Credit Line Guarantee Scheme (ECLGS).

In September 2021, the government had extended the validity of the scheme by six months through March 2022, or until the limit is used up, whichever is earlier.In a letter to the department of financial services secretary Debasish Panda on January 15, IBA chief executive Sunil Mehta said, given the spread of the latest Covid variant, MSMEs are yet to recover from stress. 

So, government support through the ECLGS needs to continue “till the economy regains its strength”.“This will help banks continue their support to the sectors affected severely by the pandemic and ensure availability of life saving liquidity support to the affected MSMEs,” Mehta wrote.

“With the current variant of the virus being less life threatening, we hope that it will gradually wane away and the economic revival, which has begun already, will establish firmly resulting in copious cash flows to sustain the operations of MSMEs and to take care of their repayment obligations,” he added.

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SIDBI sanctions Rs 650 cr financial assistance to AU SFB and Jana SFB

Small Industries Development Bank of India (SIDBI), the principal financial institution engaged in the promotion, financing and development of Micro, Small and Medium Enterprises (MSMEs), has sanctioned financial assistance of Rs 650 crore to two small finance banks (SFBs), AU Small Finance Bank and Jana Small Finance Bank.SIDBI, in a release on Tuesday, said it has sanctioned the financial assistance to the two small finance banks so as to reach out, through the SFBs, to small-sized Non-Banking Financial Companies(NBFCs)/Micro Finance Institutions (MFIs), who in turn provide financial assistance to the small businesses and micro entrepreneurs.

“The role of relatively smaller NBFCs and MFIs, which usually operate in remote geographies (including credit deficient, backward and aspirational districts), in the socio-economic development of the country is well established. They normally cater to the informal MSME sector, especially new to credit businesses, small retail trade, micro credit and other small household businesses etc. in the hinterland due to their unique advantage of ‘next-door’ presence and accumulated knowledge about their clientele over a period of time (as compared to banks and larger NBFCs),” it said in a release.

The Covid-19 pandemic has adversely impacted the businesses of MSMEs, leading to slow-down in income generation activities of these small businesses and micro enterprises. This has further adversely affected the collections and liquidity position of the NBFCs and MFIs. The smaller NBFCs/MFIs, in particular, have always faced challenges in accessing adequate institutional funding and generally source their funds support from other larger and well-established non-banking companies/SFBs.

Talking about the assistance being extended by way of this double intermediation measure, Sivasubramanian Ramann, chairman & managing director, SIDBI said, “The move is expected to benefit more than 40 small-sized NBFCs/MFIs which will help in mitigating the hardships being faced by such NBFCs/MFIs in garnering resources for their businesses.”Ramann informed an amount of Rs 530 crore has already been released to these SFBs. “The financial assistance has been extended out of the Special Liquidity Facility of Rs 16,000 crore sanctioned by the Reserve Bank of India (SBI) to SIDBI to meet the challenges being faced by the MSMEs due to the prevailing Covid-19 pandemic situation,” he added.

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Best Crypto Exchange 2022 - 5 Lowest Fee Bitcoin Exchanges

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3rd Covid wave could slash 200 basis points off estimated AUM growth for HFCs: Crisil

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5 Best Cryptocurrency Apps for Beginners 2022

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Recovery encountering headwinds in 3rd wave: RBI article

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Union Budget 2022: Startups pitch for further booster dose via fiscal incentives

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As credit growth picks up, banks hike deposit rates

Some large banks have raised their retail deposit rates by 10-25 basis points (bps) over the last two weeks in an environment where the pace of credit growth has quickened. Bankers said the rate adjustments are also somewhat technical in nature, as lenders need to adjust their asset liability management (ALM) positions in keeping with regulatory norms.

State Bank of India (SBI) has raised its interest rate on one-year deposits of under Rs 2 crore by 10 basis points to 5.1% per annum, effective January 15. HDFC Bank will pay 5-10 basis points more than earlier on retail deposits with maturities of over two years. Yes Bank has raised rates by up to 75 bps in some buckets. One-year deposits of under Rs 2 crore with Yes Bank now yield 5.75%, up from 5.5% in December.

“The rate hikes have been made only in specific maturity buckets and they are relatively small. These are technical adjustments being made by banks to meet their ALM requirements and not really a sign of an uptrend in rates,” a senior executive with a mid-sized private bank said.

The rise in deposit rates is partly attributable to an improvement in demand for credit. According to data released by the Reserve Bank of India (RBI), non-food credit grew 9.28% year-on-year (y-o-y) during the fortnight ended December 31, picking up sharply from the 7.51% growth seen in the previous fortnight.

In a recent note, analysts at SBI’s economic research department said the incremental credit deposit ratio (CD) ratio beginning Q3FY22 was at 133 against an incremental CD ratio of only 2 during H1FY22. At the same time, banks remain flush with liquidity. The surplus liquidity in the system stood at Rs 7.47 lakh crore as on January 14.

Soumyajit Niyogi, associate director, India Ratings & Research, said besides credit growth improving, competition from other asset classes is also responsible for the rising deposit rates. “There is competition from mutual funds and once a bank loses a customer to other asset classes, it is very difficult to bring them back. Deposit rates were anyway at multi-decade lows and now market yields are rising. Credit growth is also showing initial signs of improvement,” he said.

These deposit rate hikes should not be taken to be an indicator of faster normalisation of liquidity in the system, Niyogi added, because on an incremental basis, credit growth is yet to take off in a meaningful way.

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Banks want tax sops for 3-year FDs

Ahead of the Budget, the Indian Banks' Association (IBA) has made a fresh pitch for reducing the lock-in period for fixed deposits (FDs) to be eligible for tax breaks from the current five years to three so that they are able to compete more favourably with other products.

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Banks’ e-biz ambitions set to face talent crunch

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UPL Corporation raises $700-m loan from global banks

The proceeds of the loans will be used to repay part of the debt it had raised to fund the $4.2-billion acquisition of Arysta Life Sciences in 2019.

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Banks want tax sops for 3-year FDs

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Covid blues: Banks fear credit slowdown as cases surge

Sustaining a pick-up in credit growth is turning into a challenge for banks not merely because of the disruptions to businesses and households but also because of fears of asset quality worsening. That top corporates continue to de-leverage and that banks remain risk averse are also reasons why loan growth could slow in the coming months.

The fourth quarter, which is when banks book 35-40% of their business for the full year, may be hurt in FY22 amidst dampening sentiment and fresh curbs on movement, bankers told FE.

According to data released by the Reserve Bank of India (RBI), non-food credit grew 9.28% year-on-year (y-o-y) during the fortnight ended December 31, picking up sharply from the 7.51% growth seen in the previous fortnight. The value of corporate bond issuances stood at Rs 73,145 crore in December 2021, down 17% on a y-o-y basis, as per data from the Securities and Exchange Board of India (Sebi). Loan growth had perked up during the festival months of October and November, but the renewed jump in Covid cases, which many are already referring to as a third wave, may set back the growth figures.

Senior bank executives FE spoke to said that they are having to cut down on staff presence at branches and offices in some parts of the country due to the increased incidence of infections. “We saw cases increasing in our Delhi and Kolkata offices and therefore we had to reduce our staff strength to 50% in those offices. Credit growth will take a hit as a result of this because Q4 is when we get almost 40% of the full-year business,” said a senior executive with a mid-sized private bank.

While there has been no visible impact on repayments so far, if the caseload does not peak off soon, there could be a hit to asset quality as well. “As always, the self-employed segment will be the one that gets hit the worst,” the banker quoted above said.

Many states have imposed mobility restrictions to slow down the spread of infections and some of these cover footfalls at bank branches as well. To be sure, the increased use of digital channels for sanction and disbursement of loans is helping to cushion the impact of lower staff strength. However, the hit to business sentiment is real, bankers said.

Ashutosh Khajuria, executive director, Federal Bank, said that the bank is not facing any operational challenges, but credit utilisation has slowed down. “We have strong operational capabilities in terms of digital delivery of credit, including for gold loans, and there are no challenges on that front. But the sentiment today is not as upbeat as it was on January 1 as we are seeing drawdowns get affected. People are in a wait-and-watch mode and want to hold out for another three-four weeks before drawing down the money due to the Omicron wave,” he said.

Fintech lenders who rely to a lesser extent on a physical network of branches and staff say they are yet to see a major impact on lending. Aditya Harkauli, chief business officer, Indifi Technologies, said, “Our initial reading from all the available data and the commentary from government and medical experts suggests that this could be an intense but short-lived wave. We don’t expect it to disrupt the overall demand for credit from the SME segment beyond 30-35 days.”

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PMC Bank merger with Unity Small Finance Bank awaits govt approval

The proposed merger of debt-ridden Punjab and Maharashtra Cooperative Bank with Unity Small Finance Bank (USFB) is being examined and the process of amalgamation will start after the government approval, sources said.

Various aspects of the scheme of amalgamation have been examined and the government would soon send its suggestions, if any, to the RBI, sources said.

The RBI in December extended the restrictions on Punjab and Maharashtra Cooperative (PMC) Bank for another three months till the end of March, 2022 as all necessary process on the draft scheme for the takeover was not complete.

As per the Banking Regulation Act, the draft scheme of amalgamation is required to be placed before the government for its sanction and the Centre may sanction the scheme without any modifications or with such modifications as it may consider necessary.

The scheme as sanctioned by the government would come into force on such date as the they may specify, as per the Act.

The Reserve Bank of India (RBI) had prepared a draft scheme of amalgamation and the same was placed in the public domain on November 22 as part of seeking suggestions and objections, if any, from members, depositors and other creditors of PMC Bank and Delhi-based USFB. The deadline for submitting the comments was till December 10.

In September 2019, the RBI had superseded the board of PMC Bank and placed it under regulatory restrictions, including putting a cap on withdrawals by its customers, after detection of certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL.

The restrictions have been extended several times since then. The directions were last extended in June this year and are in place till December 31.

The draft scheme of amalgamation envisages a takeover of the assets and liabilities of PMC Bank, including deposits, by USFB, thus giving a greater degree of protection for the depositors, the RBI had said in November last year.

It may be seen that USFB has been set up with capital of about Rs 1,100 crore as against regulatory requirement of Rs 200 crore for setting up of a small finance bank.

Further, the scheme notes that equity warrants of Rs 1,900 crore, to be exercised anytime within a total period of eight years, have been issued by USFB on November 1, 2021 to the promoters to bring further capital.

Under the scheme of arrangement, the depositors will get their full amount back over a period of 10 years. In the initial phase, the bank will pay amount insured under Deposit Insurance and Credit Guarantee Corporation (DICGC) of up to Rs 5 lakh to depositors.

It is to be noted that USFB, a joint venture between Centrum Group and Bharatpe, has commenced operations as a small finance bank with effect from November 1, 2021.

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PMC Bank merger with Unity Small Finance Bank awaits govt approval

As per the Banking Regulation Act, the draft scheme of amalgamation is required to be placed before the government for its sanction and the Centre may sanction the scheme without any modifications or with such modifications as it may consider necessary.

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NARCL Chairman to be External Expert for Search panel to identify candidates for RBL Bank Chief’s position

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IPO-bound India1 Payments aims to deploy 20,000 ATMs in next 4-5 yrs

"The hike in interchange fees by RBI coupled with various structural growth drivers, including expected increase in cash withdrawal transactions, will accelerate White Label ATMs deployments in the country," he said.

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Punjab & Sind Bank cuts MCLR by 5-10 bps

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HDFC Bank net profit rises 18% to Rs 10,342 crore in Q3

The country's largest private sector lender HDFC Bank on Saturday reported an 18.1 per cent rise in its standalone net profit at Rs 10,342.20 crore for the third quarter ended December 2021. The bank had registered a net profit of Rs 8,758.29 crore in the corresponding quarter of the previous fiscal year.

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Q3 performance: HDFC Bank net jumps 18% on higher income

HDFC Bank on Saturday reported an 18% year-on-year (y-o-y) growth in net profit for the quarter ended December to Rs 10,342 crore on the back of a 13% y-o-y rise in net interest income (NII) to Rs 18,443.5 crore, with non-interest income growing 10% y-o-y. 

The core net interest margin (NIM) in Q3 remained unchanged from the previous quarter at 4.1%. Total advances as on December 31, 2021, stood at Rs 12.61 lakh crore, up 16.5% over December 31, 2020. Retail loans grew by 13.3%, commercial and rural banking loans grew by 29.4% and corporate and other wholesale loans grew by 7.5%. Overseas advances constituted 3.4% of total advances. 

Total deposits as on December 31 were Rs 14.46 lakh crore, an increase of 13.8% over December 31, 2020. Current account savings account (CASA) deposits grew 24.6% y-o-y, with SA deposits at Rs 4.71 lakh crore and CA deposits at Rs 2.1 lakh crore. Time deposits stood at Rs 7.65 lakh crore, an increase of 5.6% over the previous year. The CASA ratio stood at 47.1%, up from 43% for the corresponding quarter a year ago. 

HDFC Bank’s provisions fell 12.3% y-o-y to Rs 2,994 crore. In a statement, the bank said total provisions for the current quarter includes specific loan loss provisions of Rs 1,820.6 crore and general and other provisions of Rs 1,173.4 crore. They also include contingent provisions of approximately Rs 900 crore. The gross non-performing asset (NPA) ratio fell nine basis points (bps) sequentially to 1.26% as on December 31, 2021, while the net NPA ratio fell three bps to 0.37%.

The bank’s total capital adequacy ratio (CAR) as per Basel III guidelines was at 19.5% as on December 31, 2021 (18.9% as on December 31, 2020) as against a regulatory requirement of 11.7% which includes capital conservation buffer of 2.5%, and an additional requirement of 0.20% on account of the bank being identified as a domestic systemically important bank (D-SIB). 

Tier 1 CAR was at 18.4% as of December 31, 2021 compared to 17.6% as of December 31, 2020. Common equity tier 1 capital ratio was at 17.1% as of December 31, 2021. Risk weighted assets were at Rs 12.67 lakh crore, as against Rs 10.92 lakh crore as at December 31, 2020.

The bank’s NBFC subsidiary HDB Financial Services posted a net profit of Rs 304 crore in Q3FY22, as against a net loss of Rs 146 crore in Q3FY21.  The total loan book grew by 0.68% y-o-y to Rs 60,478 crore as on December 31, 2021 as against Rs 60,068 crore as of December 31, 2020. Stage 3 loans, denoting the ratio of bad assets, were at 6.05% of gross loans, down from 6.1% in the September quarter.

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