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HDFC Ltd on Friday sold around 49.6 million shares or around a 3% stake in private sector lender Bandhan Bank in a bulk deal to bring its shareholding to just below 5% to comply with regulatory guidelines. Bandhan Bank, in a stock exchange filing on the BSE, informed that HDFC sold 49.6 million shares at Rs 306.61 apiece. At the end of the third quarter of the previous fiscal, HDFC’s stake in the lender stood at 9.89%.
According to market sources, HDFC had sold around 1.5% stake sometime back, and after Friday’s bulk deal, its shareholding in the bank comes down to just below 5%. “This share sale is basically to comply with RBI’s guidelines,” sources said.
HDFC had to pare its stake in Bandhan Bank to below 5% due to the proposed merger with HDFC Bank.
On April 4, HDFC Bank and HDFC announced that they had entered into a definitive agreement whereby the business of HDFC will be merged into HDFC Bank in an all-stock transaction.
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Governor Das said it is for the NBFCs to make their own choice and the central bank after having created a broad framework does not have a role in it.
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Cholamandalam Investment and Finance Company (Chola), part of Murugappa Group, on Thursday said it has recorded a 36% jump in its disbursements for FY22 to Rs 35,489 crore, against
Rs 26, 043 crore in the previous fiscal. Disbursements for Q4FY 22 stood at Rs 12,718 crore, compared with Rs 8, 071 crore in the year-ago period, logging a growth of 58%. The vehicle finance disbursements grew by 43% to Rs 8,785 crore in Q4 of FY22 and by 26% to Rs 25,439 crore in the entire financial year. Loan against property disbursements grew by 57% to Rs 1,870 crore in Q4 of FY22 and by 53% to Rs 5,536 crore in FY 22, Chola said in a disclosure to the stock exchanges.
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Reserve Bank of India ( RBI) deputy governor T Rabi Sankar has said that stablecoins — cryptocurrencies pegged to stable assets like dollar or gold — are a bigger threat than crypto as it increases the risk of dollarisation. Until two years ago the RBI, like most central banks, was in a wait-and-watch mode with respect to central bank digital currency (CBDC), but things changed with the advent of stablecoins.
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The government will ask the Reserve Bank of India (RBI) to consider giving the potential buyer of IDBI Bank some leeway on complying with the regulatory norms for private banks, including a time-bound reduction in promoter holdings.
An official source said the government may also urge the Securities and Exchange Board of India (Sebi) to give some flexibility to the strategic investor in IDBI Bank on the minimum public float norm for listed companies.
In the pre-expression of interest (EoI) roadshows currently under way for the disinvestment, the department of investment and public asset management (DIPAM) is seeking feedback from investors on the level of initial shareholding they would be comfortable with in the bank.
Currently, Life Insurance Corporation (49.24%) and the government (45.48%) together hold 94.78% stake in the lender.
Though both have been keen to sell the maximum stakes they could, it is being felt that if a buyer takes over the entire stake held by the two or a stake closer to that, it will be a challenging task for it to meet the regulatory requirements. So, the potential buyer may be given the option to buy a stake of around 60% in IDBI Bank instead of the entire stake held by LIC and the Centre, so that it would be easier for the acquirer to bring down the stake to the stipulated level of 40% over five years.
According to the RBI norms last revised in November 2021, the promoter of a private sector bank has to maintain a minimum of 40% of the paid-up voting equity share capital of the bank for the first five years after start of operations. The RBI also has the discretion to ask the promoter to pare the holding to the lock-in level over these five years or even earlier.
In an earlier instance in 2015, the RBI had asked Bandhan Bank promoter BFHL to pare its stake in the bank to 40% in three years. In 2018, the RBI had frozen the remuneration of Bandhan Bank CEO and barred the new bank to open branches without its approval as the promoter failed to bring down stake as stipulated and finally, in August 2020, the BFHL met the promoter holding norm by selling 20.95% stake in the bank to seven investors, including Singapore’s state-run investors GIC and Temasek.
Similarly, a strategic investor in IDBI Bank may not like to disinvest stake in the initial 2-3 years, a period when it will likely be setting up a new management team, restructure business and attempting a rebranding of the banking company.
As being practically a government-run bank, IDBI Bank has been enjoying a leeway on compliance with this Sebi norm too, but once it becomes a private bank, it might lose such privilege.
There could even be a conflict between the two regulatory dispensations. As IDBI Bank will come under a private promoter after the strategic sale, these privileges would end and so, these issues would need to be resolved with the regulators before the bidding process starts, the government reckons.
To illustrate, if the government and LIC sell a total of, say, 55% equity in the lender to the private investor, it will have to make an open offer to acquire the stake from minority shareholders, which may take its holding to around 60%. This means, to comply with the Sebi norm of minimum 25% public float, the promoter will have to bring down its stake to around 35% in three years, a clear dampener for the potential bidders.
The combined stake of 94.78% that the Centre and LIC hold in IDBI Bank is worth about `48,611 crore at current market prices.
The DIPAM is also ascertaining whether the two regulators can arrive at a common timeline of over five years for the strategic investor in IDBI Bank to dilute its stake to comply with the listing norms as well as the RBI rules on promoter holdings in private sector banks.
At the time of approving the IDBI Bank deal, the new promoter might have to commit to a stake-dilution schedule and abide by that to avoid penal consequences, the sources added.
After LIC acquired 51% in IDBI Bank in January 2019, the insurance regulator allowed it to dilute its stake from the regulatory requirement of 15% in due course under a special dispensation. The RBI has given LIC leeway on meeting the requirement of reducing its stake to 40%.
After a gap of five years, IDBI Bank was back in the black with a net profit of 1,359 crore for FY21. It reported a 53% jump in standalone net profit at578 crore for the third quarter ended December 2021.
Success in IDBI Bank sale, though not a public sector bank (PSB), may be indicative of a broader investor appetite for public sector banks with adequate loan-loss reserves.
PSBs are part of the “strategic sectors” wherein the government, under a new policy, will reduce the number of state-run lenders to a bare minimum from a dozen now.
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The Bandhan Financial Holdings (BFHL)-led consortium, which will acquire IDFC Asset Management Co, will be looking to scale up the mutual fund business by strengthening its product portfolio by introducing more equity-oriented funds and enhancing distribution networks to attract retail investors.
The boards of IDFC Ltd and IDFC Financial Holding Company on Wednesday approved the sale of IDFC Asset Management Co Ltd to a consortium, led by BFHL, the holding company of Bandhan Bank, for Rs 4,500 crore. The AMC currently manages mutual fund assets worth Rs 1.25 trillion. Assets under management under equity funds stand at around 25%.
BFHL managing director Karni S Arha said the acquisition is expected to be completed in the next 9-12 months after getting all the regulatory approvals. “The completion of the acquisition will take time as all the consortium members will have to get these approvals individually,” Arha told FE.
The BFHL consortium includes Lathe Investment Pte, an affiliate of Singapore’s GIC, and Tangerine Investments and Infinity Partners, affiliates of ChrysCapital. While BFHL will hold 60% in the AMC, GIC and ChrysCapital will hold 20% each.
According to sources, after acquiring IDFC Asset Management Co, the consortium will be looking to strengthen its product portfolio by introducing more equity-oriented funds. Notably, IDFC MF has been largely debt-oriented with around 75% of its assets under management being under debt funds.
The consortium will also be looking to enhance the distribution networks for the mutual fund business by tying up with universal banks and small finance banks (SFBs).
IDFC AMC, which was established in 2000, is India’s ninth largest asset manager by AUM.
According to Arha, BFHL is looking at entering the insurance space within the next two years. “We will be looking at both organic and inorganic routes to enter the insurance space. Inorganic route would be comparatively easier to commence a new business,” he added.
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The pandemic has made HDFC Bank adopt a more digital-driven, science-based approach to lending, Srinivasan Vaidyanathan, chief financial officer and group head — finance, tells Shritama Bose, adding that sound execution should keep the company ahead of the competition. Excerpts:
Has the pandemic in any way changed your perception of who your customer is?
I wouldn’t say that it has changed that aspect. But, due to the accelerated digital thinking, we’ll get more customers as digital enables the customer acquisition funnel to increase and the turnaround time to consummate the relationship is faster. We want to ensure that we capture the customer for simply a transaction, which is what digitalisation is doing, and we want to replicate that in relationship management. We are trying to make that analytics-based. The system through analytics is now telling the relationship manager what conversations to have, where the customer needs some service in terms of nominations or address change, what is the propensity of a customer from a product and depth of relationship point of view so that he can make the right need-based sale or provide the right service to the customer. So we are driving it through science rather than purely through art. Covid has taught us to have a more science-based and digital-based approach. The market to acquire the customer has now become much bigger. Policies such as video KYC have also allowed us to do this better. But we are still adding branches because that’s important to some customers.
HDFC Bank has been a market favourite for its consistency, but others are catching up. Do you feel investors want something more from you now?
We are known for consistency of performance and best-in-class execution across parameters. Between 2017 and 2021, our advances have grown 2.3 times, between 2016 and 2020 – pre-Covid – it was still 2.3-2.4 times and between 2011 and 2016 it was 2.5 times. We have seen the other banks in the system either in consolidation or growth mode. If you look at market share, during the 21-month Covid period, our share in incremental growth was about 25%, even though our loan market share is 10-11% and deposit market share is 9-10%. When investors look at execution, in addition to consistent returns they also look at productivity and efficiency metrics like deposits per branch, revenue per branch, etc. On that count we continue to be best-in-class amongst our competitors. Similarly, there’s return on assets (RoA) which investors closely look at. We have been consistent at 2% RoA over a period of time and competitors are now catching up. For many banks, investors have seen the return on equity going below the cost of capital and only now is it meeting that. Our price to book ratio has been in the range of 3x-4x five years ago and continues to be around that level. It shows that the multiple you pay for the bank is constant but as the bank grows in the high teens, you get a compounding return. The other key differentiator is our asset quality which continues to be best-in-class and stable across cycles.
The share of revolving customers in the credit card market is falling. How do you deal with that?
This is a cyclical rather than structural change in customer behaviour which is induced partly by where we are in the economic recovery and partly due to conditions specific to HDFC Bank. Rational customers would typically gravitate towards secured funding first because it is the lowest-cost, which is where they moved after Covid. The second port of call would be a lower-cost unsecured product, such as a personal loan. Only then will they come to a card-based borrowing, which is higher-cost. Customer behaviour through the pandemic has been pretty tight. Initially there were fewer avenues to spend, when things opened up the second wave came, after that we started to tighten things. In terms of credit policy we wanted people to be stable before they took more exposure. Things are slowly coming back. Spends grew 24% last quarter, but card loans grew only 10%. Customers now have more liquidity and they are spending. There’s another type of customer — the ‘revolver’ who will exhaust all other avenues before coming to a higher-cost borrowing. We have been risk-off mode given the uncertainties. The cycle is now gradually coming back and it will be a few quarters before the top line starts to return. Also, for about nine months we didn’t book any new customers. We have now accelerated customer acquisition and brought in about 1.3 million customers between August and December. It will be a few quarters before they are activated and start revolving.
Have you identified any governance lapses in the case of mis-selling of GPS devices?
The bank has zero tolerance for mis-selling. Individual aberrations have been fully dealt with and that has been done through training and closer supervision. We internally looked at the issue and dealt with the people who were individuals not following processes and procedures. We have further strengthened our compliance framework and reinforced focus on the 3Cs — culture, conscience and customers — across the organisation.
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At present, RBI has prescribed an enhanced target of 75% of adjusted net bank credit (ANBC) of an RRB for lending to the priority sector, against the target of 40% applicable to a commercial bank. RRBs sell their priority loan portfolio through priority sector lending certificates (PSLC) to commercial banks. They can sell these only after reaching the mandated 75% limit.
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Hyderabad-born Watsa is the founder and chairman of the $53-billion Toronto-based investment giant Fairfax Financial Holdings. He was responding to questions about the government's plan for the privatisation of IDBI Bank and two other lenders and also one insurance company, during an exclusive interaction with ET.
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The stress and travails of institutions, market intermediaries and custodians have now been spelt out with six top multinational banks writing a joint letter on April 6 to NSE Clearing Limited - the institution responsible for clearing and settlement of all trades on the NSE.
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A consortium, led by Bandhan Financial Holdings (BFHL), the holding company of Bandhan Bank, will acquire IDFC Asset Management Co Ltd, for Rs 4,500 crore. The AMC manages mutual fund assets worth Rs 1.25 trillion.
The BFHL consortium includes Lathe Investment Pte, an affiliate of Singapore’s GIC, and Tangerine Investments and Infinity Partners, affiliates of ChrysCapital.
While BFHL will hold 60% in the AMC, GIC and ChrysCapital will hold 20% each.
The boards of IDFC Ltd and IDFC Financial Holding Company approved the sale on Wednesday. The proposed transaction is subject to requisite regulatory and other approvals.
IDFC said the agreement envisages continuity of the current management team and investment processes at IDFC AMC, helping unitholders benefit from consistency in the investment approach IDFC AMC is reputed for. “This will be supplemented well by Bandhan’s brand as well as GIC’s and CC’s international network and experience which will aid IDFC AMC in further cementing its position in the asset management industry and propel further growth,” the statement said.
Anil Singhvi, chairman of IDFC Ltd, said the transaction is a significant milestone in the plan of unlocking value. “We have achieved signing of the deal within six months of the board’s decision to divest, which further demonstrates IDFC Board’s commitment to consummate the merger of IDFC Limited and IDFC Financial Holding Company with IDFC First Bank”, he said.
Karni S Arha, managing director, Bandhan Financial Holdings, said, “We believe the asset management industry will be one of the fastest growing segments in the Indian financial services industry and hence has been identified as a key vertical in our future growth plans. The acquisition of IDFC AMC provides us with a scaled-asset management platform, with a stellar management team and a pan India distribution network.”
Arha told reporters that the asset management industry has been growing at around 16-17%. “The acquisition fits with Bandhan group’s plan to explore other financial services and we will continue this journey.”
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The estimated requirement was more than ₹80,000 crore and the bank, India's most valued, already has some excess bonds in its portfolio, dealers said.
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The National Asset Reconstruction Company (NARCL) has missed its March 31, 2022 deadline for acquiring the first tranche of large stressed assets from banks, according to two bankers. The Rs 50,000-crore pool of 15 assets is now likely to be transferred to the bad bank only by the end of April.
Rajkiran Rai G, MD & CEO, Union Bank of India, said the process of setting up the bad bank with all requisite approvals and funding commitments in place took some time. Banks are working with such a structure for the first time and a number of rules and procedures had to be followed. “For capital infusion, private banks needed some approvals. That capital has come in and (the entity) is capitalised as per the plan. The appointment of CEO is also likely to happen anytime soon. Hopefully, we will be completing the first tranche by April end,” Rai said.
One of the reasons for the delay in the process was reservations the Reserve Bank of India (RBI) had expressed late last year with respect to the dual structure of the bad bank. Eventually, the regulator’s objections were taken into account by establishing a principal-agent relationship between NARCL and its partner India Debt Resolution Company (IDRCL).
Other bankers that FE spoke to said officials at NARCL are still in the process of carrying out due diligence of the assets that have been identified for sale. Once that process is completed, NARCL will send in its bids for the assets. Thereafter, banks will have to obtain internal clearances from their board and carry out Swiss challenge auctions. An additional layer of process might be added if the Swiss challenge attracts bids from other ARCs. In that case, NARCL will be given time to re-evaluate their bid to see if it would like to match the new bid from the other ARCs. All of this may take more than a month, said a senior banker.
The repeated delays in asset transfer may even result in the set of identified assets changing. “It’s a fluid situation because an asset that was eligible was six months ago may not be best resolved via the bad bank anymore. So, we may need to repeat the process for some new assets that get identified,” the second banker quoted above said.
The interviews for the position of the NARCL MD & CEO have been completed and a decision on the new chief is awaiting the approval of the board. At present, State Bank of India (SBI) chief general manager Padmakumar Nair is on secondment as NARCL’s chief executive. His term ends in May.
Last month, a number of banks, including HDFC Bank, ICICI Bank and Punjab & Sind Bank, infused capital into NARCL.
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Even though Kanoria had moved the court challenging the report, he has appealed to Reserve Bank of India (RBI) governor Shaktikanta Das to advise regulatory officials and banks “not to give effect or any precedence and/or take any action in respect of the said report…” According to banking circles, if the court, which is expected to give its ruling soon, rejects Kanoria’s plea, the banks may label Srei firms as ‘fraud’ accounts — a possible move that could put Kanoria and the erstwhile management under the lens.
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Bandhan Financial Holding-led consortium has entered into a definitive agreement to acquire IDFC Asset Management Company and IDFC AMC Trustee Company for Rs 4,500 crore, subject to receipt of necessary regulatory approvals, an official said on Wednesday.
Bandhan Financial Holding is the holding company of private sector lender Bandhan Bank.
The consortium led by it also includes private equity firm ChrysCapital and Singapore’s sovereign fund GIC.
In the consortium, the equity pattern is 60 per cent for Bandhan Financial Holding and 20 per cent each for the other two partners.
The Bandhan-led consortium was selected through a “highly competitive divestment process which witnessed strong participation from strategic players and financial investors”.
Karni S Arha, managing director of Bandhan Financial Holdings, said, “We are going into asset management as we want to have a complete bouquet of banking and financial services and not just banking.” Officials said the MF may be renamed Bandhan MF after being finally and formally taken over.
Bandhan Bank itself sells products from some 8-10 mutual funds. However, the group did not clarify how it will market the products of IDFC MF once it takes over after regulatory permission from Sebi and RBI.
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The acquisition, if completed, will expand Bandhan Group's presence in the financial services sector. It will be the second big purchase by the group.
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Bank of America said on Tuesday it has mobilised and deployed approximately $250 billion in sustainable finance activity for 2021, an all-time high and a significant increase over 2020 levels.
The lender had announced a sustainable finance goal of $1.5 trillion by 2030 last April. It has made significant progress towards mobilising and scaling capital deployment to drive environmental and social change in line with the 17 United Nations Sustainable Development Goals, it said.
The lender aims to achieve net zero greenhouse gas emissions in financing activities, operations and supply chain before 2050. It underwrote $47.1 billion in ESG-themed bonds on behalf of more than 182 clients in 2021 and was a top renewable energy tax equity investor since 2015 with a portfolio of approximately $12 billion, as of year-end 2021.
“Our sustainable finance strategy permeates every aspect of how we deliver for our clients, employees and communities, and we are committed to a more inclusive, net zero society for all. Our sustainable finance focus is longstanding and continues to play a catalytic role in scaling our environmental transition and inclusive social development goals across the globe,” said Paul Donofrio, vice chair of Bank of America.
“As a financial institution, we are leveraging the power of our size, expertise and the capital markets to mobilise more investments and financings to address these global challenges and opportunities.”
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Banks may see credit growth improve to 8.9-10.2% in FY23, accompanied by a decline in provisions, rating agency Icra said in a note on Tuesday. Icra expects banking credit growth to continue to be driven by the retail and MSME segments, and partially by co-lending arrangements with non-banking financial companies (NBFCs).
The growth drivers for banks will be a strong corporate credit ratio, tightened underwriting in the retail and MSME segments and reducing bounce rates and improving collections, Icra said. Credit growth for FY22 is seen at 8.3%.
Along with growth in the small loans segment, the wholesale credit segment may also see growth amid a shift in demand from the debt capital market to bank credit, in a scenario of rising yields, as was seen in FY19. Treasury income will decline materially during FY23 as yields rise. Nonetheless, return on assets (RoA) is estimated to improve, supported by improved credit growth and decline in credit provisioning as legacy stressed assets continue to decline.
Anil Gupta, vice president, Icra, said that in terms of asset quality, the gross non-performing assets (NPAs) are expected to decline to 5.6-5.7% by March 2023 from an estimated 6.2-6.3% in March 2022 and net NPAs will fall to 1.7-1.8% as against an estimated 2% in March 2022. Icra estimates that credit and other provisions will decline to 1.3-1.4% of advances in FY23 as against an estimated 1.7-1.8% in FY22. Deposit growth is expected to slow down to 7.3-7.9% in FY23 from about 8.3% in FY22, Gupta said.
According to Gupta, challenges for the sector emanate from the performance of the restructured loan book, which could create uncertainty on the asset quality front as restructured loans exit the moratorium phase. “Also, Russia-Ukraine conflict poses macro-economic challenges related to cost inflation, higher interest rates and exchange rate volatility. This could pressurise asset quality,” Gupta said, adding that elevated levels of overdue loans in the retail and MSME segments post-Covid also remain a concern.
The RoA and return on equity (RoE) for public sector banks (PSBs) will remain steady at 0.5-0.6% and 8.6-9.6% respectively for FY23. For private banks the RoA could work out to 1.3% and the RoE to 10.8-11.1% despite moderation in treasury income.
In terms of regulatory and growth capital requirements, PSBs will be self-sufficient in FY23 while the incremental capital requirement for private banks is estimated at less than Rs 10,000 crore. Credit growth will reduce the liquidity surplus in the banking system to Rs 1.5-2.5 trillion. In addition, the Reserve Bank of India (RBI) may also suck out surplus liquidity, Icra said.
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IndusInd Bank expects its deposit growth to continue to outperform the market in this fiscal. Managing Director and CEO Sumant Kathpalia tells Mithun Dasgupta the bank’s balance sheet growth would be led by its areas of domain expertise like vehicle finance and microfinance, as these segments are expected to bounce back after cyclical lows.
IndusInd Bank’s deposits growth rates were almost the highest among private sector peers in the first three quarters of the fiscal. What were the reasons for this? And what is the mid-term outlook for the segment?
IndusInd Bank has been focused on broadening the deposit franchise, with the objective of doubling its retail deposits in two years closing March, 2022. We are proud to say that despite the extended impact of the pandemic, we are well on course to achieve this huge milestone we set for ourselves. The bank has focused on growing its retail customer base across target segments — NRIs and domestic HNIs through specialised relationship teams, branch catchment-led household and business owners, and bottom-of-the-pyramid sections through our microfinance arm.
We expect our deposit growth to continue to outperform the market comfortably in the next financial year, with a host of new, digital-led offerings for retail and business customers due for launch. Our higher-than-market deposit growth correlates with the higher year-on-year growth in card & UPI based spends, which is backed by round-the-year persona-based and analytics-led offers to get our customers to give us a higher share of their spends wallet, which in turn leads to healthier balances. This, together with some very strong partnerships with fin-techs and other payment industry players, has helped the bank top the charts in the government of India’s MeitY comprehensive scorecard of banks in digital payments.
How does the bank plan to raise its CASA ratio further to lower the cost of funds? What are your customer acquisition strategies across segments?
The bank is looking to scale up its key retail segments to drive retailisation and low-cost deposits mobilisation. We recently launched a proposition for merchants and are in the midst of developing a mobile-first proposition for digital natives and adaptive (millennial proposition). These unique and innovative offerings will improve the CASA ratio even as we pursue new-age acquisition strategies (e.g. referral, influencer, content and universal app campaigns), focussing on high-quality sourcing with lower costs of acquisition.
The NRI business is one of the most profitable across banks and continues to be a key focus area for ramping up low-cost savings balances. The bank has 203 NR-focussed branches, especially in the metros and markets like Kerala, Punjab and Gujarat, and these are key drivers of NR client acquisition. It has also set up a 24/7 virtual digital centre for NRIs which ensures both non face-to-face client acquisition and remote servicing of NRI clients using video branch, state-of-the-art net and mobile banking, and WhatsApp banking.
We continue to expand our branch network at the pace achieved in the past. We are expanding our branches largely in 17 strategic home market cities and developed markets where we aim to gain CASA and retail-client market share. Our strategy in the affluent client segment is to offer best-in-class product propositions and customer experience and scale up the business in an efficient manner by growing our current account and NRI customer base. The PIONEER Banking programme for HNIs and business owners stands out in the industry for its curated and unique nature. This year, the affluent segment business will add over 20,000 premium clients, helping improve the bank’s CASA ratio and reduce the cost of funds.
Your disbursements gathered momentum in the second quarter of FY22 amid pandemic curbs, growing 10% year-on-year in the subsequent quarter. What is the disbursements growth that you are looking at in this financial year? Which customer segments are driving this growth?
With gradual restoration of economic activity, disbursements have picked up since the second quarter, and saw strong traction in the third quarter. These are now ahead of the pre-Covid levels for most segments. We saw loan growth of 10% y-o-y in Q3, driven by segments like NBFCs and SMEs on the corporate side, while LCVs, construction equipment and cards contributed to growth on the retail side. As the momentum has been maintained in Q4, we expect loan growth to accelerate going forward.
What has been the plan for expanding the branch network in 2022-23? Are you increasing your presence in rural areas?
We have the fourth largest branch network amongst private banks, and remain committed to growing the same, particularly in our focus ‘home’ markets which we have identified as growth accelerators. With a presence in over one lakh villages via our MFI subsidiary, we now boast of one of the largest distribution networks amongst private banks, boosting our deposits base. Over the last few years, we have complemented this physical reach with our digital DIY on-boarding capability for new-to-bank current, savings and fixed deposits, being amongst the first few banks to go live with video KYC as well as account aggregation facility for new and existing customers. Backed by one of the best product propositions in the market – with innovative product features, best-in- class partner offers and competitive pricing — we have been able to leverage our digital marketing campaigns very effectively to mobilise deposits from both the open market as well as our asset customers.
What will be the overall growth strategy of the bank in the next two-three years?
The operating environment has been challenging since I took over in March, 2020. The bank has nevertheless used this period to strengthen its strategic position. If we look at the parameters indicating our financial health, they are at their best levels in the last several years, if not in a decade. With the balance sheet poised for growth and the operating environment improving, we have seen a steady pick-up in growth in the last couple of quarters. This growth would be led by areas in which we enjoy domain expertise, viz. vehicle finance and microfinance. These segments have been at cyclical lows, and are expected to bounce back. The corporate loan book too has started contributing to growth since the realignment in FY21 and we expect the momentum to be maintained, with a focus on higher rated and granular exposures. A significant portion of our growth will be underpinned by digitisation as we continue to invest in tech and digital initiatives. We will also continue to identify and invest in new growth boosters, like merchant acquisition/affordable housing on the asset side and affluent/NRI on the liabilities side.
Our merchant acquisition business conducted through Bharat Financial Inclusion focuses on small merchants across tier-2 & -3 cities. Started during the Covid period, the active merchant base is three lakh spread across 300+ cities, with a loan book worth Rs 1,600 crore and 99% paying customers. We currently add 40,000-50,000 new merchants every month and are targeting a merchant base of 15 lakh in the next 2-3 years with a loan book of Rs 10,000 crore.
While we have also been offering home loans to our customers through HDFC, we are evaluating if the time has come for the bank to add the home loan segment to its portfolio. We will decide on that in the coming financial year.
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Wholesale credit growth would be supported by demand shift from debt capital market to bank credit, in a rising yield scenario as was seen in FY'2019 Icra said and it expects outlook for banks to be ‘Stable’ in FY2023, based on continued improvement in earnings driven by improved credit growth.
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For 77-year-old Parekh, who joined HDFC as a 33-year-old in 1978 and built it as India's largest private-sector housing finance company, the merger marks the culmination of a journey that began by democratising access to formal credit at a time it was considered a rare privilege.
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Federal Bank’s total deposits grew 5.3% year-on-year to Rs 1,81,712 crore as of March 31, the bank said in a regulatory filing on Monday. Its gross advances grew by 9.5% to Rs 1,47,644 crore from Rs 1,34,877 crore on March 31, 2021.
The Kerala-based lender said at the end of the March 2022 quarter, CASA deposits aggregated to Rs 67,132 crore, a growth of 15 % over Rs 58,370 crore in the year-ago period. The CASA ratio reached 36.94% (FY22) from 33.81% (FY21).
The bank’s retail deposits as per internal classification aggregated to Rs 1,71,569 crore, a growth of 10% over Rs 1,55,977 crore as of March 31, 2021. Retail deposits share improved to 94% from 90% as of March 31, 2021.
The bank said as per internal classification, its retail credit book grew by 10.4% and wholesale credit book grew by 8.3%. Retail to wholesale ratio improved to 55:45 (FY22) from 54:46 in FY21.
Federal Bank reported a 29% year-on-year increase in standalone net profits for Q3 of FY22 to Rs 521.73 crore, largely due to a reduction in provisions.
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"Respondent No 1 (RattanIndia Finance) shall issue an appropriate order appointing Bipin Kabra as CFO of the company," said the bench presided by judicial member BV Balram Das in its order of March 29. "Bipin Kabra, after being appointed as CFO, shall disclose all particulars about his concern and interests in any other company or companies."
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Ireda Chairman & Managing Director Pradip Kumar Das in his interaction with employees highlighted that Ireda has achieved major milestones in 2021-22 even though the year saw the second and third waves of the COVID-19 Pandemic along with the ongoing globally tense situations.
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Senior advocate and court-appointed receiver R. Venkataramani, in a note, said: "In compliance with the order dated March 28, on March 31 the banks disbursed a sum of Rs 150 crore, though the actual requirement/request by NBCC was for Rs 540 crore. The disbursal of loan was subject to certain pre-condition compliances, as set out in the sanction letter(s) of each bank."
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The convergence between the government, the regulator and lending institutions has helped address problems upfront rather than postponing them. Today, we do not need physical monitoring because we have data points like GST and tax returns.
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L&T Fin sells loan portfolio for Rs 1120 crore under the conventional 15:85 structure. Warasgaon Power, Warasgaon Assets Maintenance, MEP Infrastructure, Supreme Panvel Indapur Tollways, SEW Infrastructure, Supertech Infrastructure, Brassco Engineering Ltd and EMTA Coal are among the 36 accounts sold to Phoenix ARC.
10:02 PM
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The special counter was inaugurated by the banks' managing director and chief executive officer, Baldev Prakash, and chief executive officer the Shri Mata Vaishno Devi Shrine Board, Ramesh Kumar, at Katra, the base camp for pilgrims visiting the shrine, the spokesman said.
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7:02 PM
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As far as the retail segment is concerned, Rajeev said, the housing sector is growing very well, but there are some issues with vehicle loans due to chip shortage.
4:11 PM
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The Reserve Bank is likely to maintain status quo on interest rates in its forthcoming monetary policy review but may change the stance in view of retail inflation piercing its upper tolerance limit, global uncertainties created by the ongoing Russia-Ukraine war, and the urgency to protect and boost growth, feel experts.
The RBI Governor-headed rate setting panel — Monetary Policy Committee (MPC) — will be holding its first meeting of the 2022-23 fiscal from April 6 to 8. The outcome will be announced on April 8.
Aditi Nayar, Chief Economist of ICRA Limited, said in the April 2022 policy review, the MPC is expected to revise up its Consumer Price Index-based inflation forecast, whereas the growth projections for 2022-23 would be pared.
“Nevertheless, the MPC is unlikely to sacrifice growth to control imported inflation. With the upper threshold of the medium-term inflation target range being as high as 6 per cent, the MPC is likely to remain growth supportive for longer than other central banks. Overall, we expect a status quo policy in April 2022,” she said.
Given the current uncertainties, Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, opined that RBI “has limited scope to tighten monetary policy”.
Amidst the deleterious impact of the war, the RBI will be walking a tightrope on its monetary policy decisions, striving to control inflation within the tolerance band while at the same time supporting nascent growth impulses, he said.
“Going forward, we expect the RBI to restore the width of the LAF corridor to its pre-pandemic levels by hiking the reverse repo rate by 40 bps over Jun-Aug 2022 policy review, followed by a cumulative 50 bps hike in the repo rate in the rest of 2022-23,” Chowdhury said.
On the other hand, Dhruv Agarwala, Group CEO, Housing.com, Makaan.com & PropTiger.com, opined that given the increase in inflationary pressure due to the war in Ukraine, it will be difficult for the RBI to continue maintaining a status quo on key policy rates in its upcoming monetary policy.
“While this would hurt the recovery process in India post the disruptions caused by the various waves of the coronavirus pandemic, the RBI may not have the flexibility to avoid a rate hike,” he said.
Agarwala further said any upward tweak at this stage might have an impact on real estate as well, but the numbers for the March quarter, show that the real estate sector is on a strong footing and may continue to cover the lost ground due to the pandemic on the back of strong pent-up demand.
Japanese brokerage Nomura in a research report said the RBI is likely to re-evaluate its projection for both GDP growth and CPI inflation in the upcoming policy meeting.
However, the RBI is likely to suggest that inflationary pressures are temporary, that inflation will remain below its 6 per cent upper-bound, and that monetary policy should remain supportive of growth.
Hence, even as there is a reasonable likelihood that the RBI will take its first reluctant step towards policy rate normalisation in the April 8 meeting by changing stance from ‘accommodative’ to ‘neutral’, it is likely to balance it with a dovish guidance, it said.
“We believe the RBI is overly optimistic on inflation, and that a course correction in monetary policy is warranted. We expect a policy pivot in June and hence are building in 100bp in cumulative repo rate hikes in 2022,” the report said.
The government has mandated the central bank to keep the inflation at 4 per cent (+,- 2 per cent). After the February MPC meeting, the RBI had decided to hold its key lending rates steady at record low levels for the 10th straight meeting to support a durable recovery of the economy from the COVID-19 pandemic.
12:10 PM
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The top 10 valued domestic firms added a whopping Rs 2,61,767.61 crore to their total market valuation last week in tandem with a buoyant trend in equities, with HDFC Bank and Reliance Industries emerging as the biggest gainers.
3:02 AM
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Credit growth to industry rose 6.5 percent year-on-year (y-o-y) in February 2022 from 1.0 percent in February 2021. But a distinct trend is that loan growth to large corporates turned positive, recording a marginal growth of 0.5 percent against a contraction of 0.6 percent during the same period, according to the data on sectoral deployment of bank credit released by the Reserve Bank of India.
3:02 AM
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Announcing the Rs 12,325-crore deal to acquire Citigroup's India consumer banking business, Axis Bank managing director Amitabh Chaudhry said Citibank's customers will continue to avail all the rewards, privileges and offers to which they were previously entitled.
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