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Paytm founder Vijay Shekhar Sharma has been re-appointed as the Managing Director & Chief Executive Officer of the fintech company, the company informed the exchanges on Saturday.
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There have been multiple factors driving down the RBI’s surplus this year. A major cost for RBI was the interest that is paid to banks on money that they parked with it under the liquidity adjustment facility.
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The latest surge was led by sensex heavyweight Reliance Industries that closed over 6% higher. Other top contributors to the index’s gain were HDFC Bank, ICICI Bank and HDFC, BSE data showed.
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Since early this month, there have been rumours about improper behaviour of at least two Axis MF fund managers that included sudden changes in their lifestyle in recent months.
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The Reserve Bank of India (RBI) on Friday decided to transfer its FY22 surplus of Rs 30,307 crore to the government, the lowest dividend in ten years, which will reflect in the Centre’s budgetary calculations in FY23. Its board decided to maintain the contingency risk buffer at 5.5%.
The dividend is less than a third of the central bank’s generous transfer of Rs 99,122 crore for FY21, which was, in fact, based on the RBI’s surplus over a nine-month period through March 2021, as it had decided to align its fiscal year with that of the government.
Low payout by the central bank, partly due to its heavy investments in reverse repo operations, will drag down the government’s budgeted receipts of Rs 73,948 crore on account of dividends from the RBI, state-run banks and other financial institutions in FY23, unless surplus transfers from other entities rise sharply.
In fact, the RBI’s transfer would make up just 41% of the government’s budgeted receipts for FY23, against almost 98% of the revised estimate for FY22.
The drop in the RBI dividend comes at an inopportune time when the Ukraine conflict has raised the subsidy payout by the government and threatened its bid to contain fiscal deficit at the targeted level of 6.4% in FY23, against 6.9% in FY22.
Of course, there are still some bright spots. State-run banks recorded a net profit of Rs 48,874 crore in the first three quarters of FY22, greater than that of Rs 31,820 crore in the entire FY21, which was the highest in five years. Given that their capital adequacy remains sound and provision coverage has improved, the government has a greater scope to nudge them to cough up much higher dividend this fiscal.
However, since the government may have to spend an estimated Rs 1.8 trillion over and above the FY23 Budget Estimate on fertiliser and food subsidies, this isn’t a good time for a revenue slippage on any account. Of course, as finance secretary TV Somanathan said, the additional outgo could be offset by a steep jump in net tax receipts and higher disinvestment revenues.
Elevated dividend transfer by the RBI, especially since 2018-19, had offered some cushion to the government, as it battled an economic slowdown even before the pandemic spread its tentacles.
Thanks to the Bimal Jalan committee, which reviewed the RBI’s economic capital framework (ECF), the central bank transferred an all-time high amount of Rs 1.76 trillion to the government in 2018-19 (July-June).
The RBI typically pays the dividend from the surplus income it earns on investments and valuation changes on its dollar holdings, and the fees it gets from printing currency, among others. The rupee depreciation against the dollar in recent months may also have weighed on the surplus transfer.
Madan Sabnavis, chief economist at Bank of Baroda, said the RBI would have incurred a decent cost due to heavy investment in reverse repo auctions in FY22. Reverse repo auction of Rs 6-7 trillion (at an average cost of even 3.5%) would mean a cost of Rs 21,000-24,500 crore, he said.
The lower payout by the RBI would mean “a large part of profit of PSBs and financial institutions will now have to be transferred to make good this budgetted number (Rs 73,948 crore), or else there will be a slippage”, Sabnavis said.
According to Saugata Bhattacharya, chief economist at Axis Bank, lower dividend is likely to exert some pressure on government finances. The Centre will now need to generate additional resources to fund the requirement of higher government expenditure, including for subsidies, he added.
Icra chief economist Aditi Nayar said: “The amount of surplus to be transferred by the RBI to the government appears to be modestly lower than the budgeted amount. However, the tax receipts are expected to substantially surpass the budgeted level, absorbing the impact of the former.”
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Account holders can soon withdraw money from ATMs without any card by using their mobile phones and scanning a QR code. The Reserve Bank of India (RBI) has asked banks and ATM operators to provide an option of interoperable cardless withdrawal at ATMs.
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Yes Bank invited bids for its distressed loans portfolio, amounting to ₹51,000 crore, soon after the Reserve Bank of India in March 2021 rejected its plan to set up an ARC as its subsidiary.
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Punjab & Sind Bank doubled its net profit for the quarter ended March 31, 2022, to Rs 346 crore. The lender had net profit of Rs 161 crore in the year-ago period. Its profit before provisions too rose 72% on year to Rs 317 crore during the quarter.
The lender’s net interest margin (NIM), however, declined by 27 basis points sequentially to 2.90% in Q4FY22. On a year-on-year basis, NIM improved by 71 basis points.
The bank reported a near 4% on year increase in gross advances to Rs 70,387 crore in Q4FY22 from Rs 67,811 crore in the year-ago period. Advances in the retail, agriculture and MSME sector grew 10.5% on year.
Retail loans grew 15.3% on year to Rs 11,737 crore while MSME advances grew 13.3 % to Rs 13,021 crore. Loans to corporate fell 2.3% on year to Rs 34,695 crore in March 2022 quarter. Corporate loans consist of 49.29% of the total gross advances. The bank’s priority sector advance and agriculture advance stood at Rs 31,178 crore and Rs 12,551 crore, respectively.
“…The bank continued its special focus on retail business as a result of which RAM (retail, agriculture and MSME) composition has improved from 48% to 51% while corporate advance has declined from 52% to 49% on Y-o-Y basis…the bank has also surpassed the regulatory targets of 40% and 18% in priority sector and agriculture credit, respectively,” S Krishnan, MD & CEO of the Punjab & Sind Bank, said.
On asset quality front, gross NPA ratio declined by 227 basis points sequentially to 12.17% in Q4FY22 from 14.44% Q3FY22 and 159 basis points on year from 13.76% in Q4FY21. Net NPA ratio, too, fell to 2.74% in Q4FY22, down from 3.01% in Q3FY22. The bank’s provision coverage ratio (PCR) stood at 87.89% in March 2022 against 82.89% as in March 2021.
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The Reserve Bank of India on Thursday directed banks and ATM operators to make the card-less cash withdrawal facility, or the ICCW (interoperable card-less cash withdrawal), available at all the ATMs across banks.
The central bank also said Unified Payments Interface (UPI) will be used for customer authorisation while withdrawing cash from an ATM in a card-less transaction. Moreover, it also asked the National Payments Council of India (NPCI) to facilitate UPI integration with all banks and ATM networks.
All banks, ATM networks and WLAOs may provide the option of ICCW at their ATMs. NPCI has been advised to facilitate UPI integration with all banks and ATM networks. While UPI would be used for customer authorisation in such transactions, settlement would be through the National Financial Switch (NFS)/ATM networks,” the central bank said in a statement.
There will be interoperability between issuing banks and other bank ATMs for card-less cash withdrawal facility. However, existing cash withdrawal limits from ATMs will remain in force.
The RBI in April said it would give instructions to NPCI, ATM networks and banks on the card-less cash withdrawal facility. The central bank had noted that some banks were allowing card-less cash withdrawal for their customers at their own ATMs. The card-less cash withdrawal facility will help curb frauds such as money skimming, card cloning and device tampering, the central bank said.
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Bank advances rose by 10.07 per cent to Rs 119.54 lakh crore and deposits by 9.84 per cent to Rs 166.24 lakh crore in the previous fortnight ended April 22, 2022.
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IRDAI said it is noticed that the service agreements in addition to claim services, extend certain assistance services not related to insurance claims such as free pick up and drop of vehicle, body wash, interior cleaning, inspection of vehicle etc.
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"I request the board to look for a successor to my current position. I would be happy to be of help in identifying my successor, who, I am confident, would steer the bank in its next phase of growth." Vasudevan said in a letter to chairman of the board Arun Ramanthan.
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The lenders had filed a praecipe, a request for pre-emptive action. RCFL owes creditors led by Bank of Baroda more than Rs 9,000 crore.
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The Bengaluru-based lender, which began its operation as a micro-financier in 2005, converted itself into a small finance bank in 2017. It returned to black in the March 2022 quarter with a net income of Rs 127 crore, but closed FY22 with a net loss of Rs 415 crore, mauled by the impact of the pandemic.
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Chennai-based Indian Overseas Bank (IOB) reported a 58% jump in profit after tax (PAT) to Rs 552 crore in the quarter ended March 2022. The operating profit stood at Rs 1,614 crore in Q4FY22 against Rs 1,724 crore in the year-ago period. The net interest margin for Q4FY22 was 2.41% compared with 2.39% in the December 2021 quarter.
The bank posted 12% year-on-year growth in gross advances, which stood at Rs 1,55,801crore as against Rs 1,39,597 crore a year ago.
The bank is expected to continue on its growth trajectory even as the interest rate cycle has reversed aided by a well-diversified loan portfolio, Partha Pratim Sengupta, MD & CEO of Indian Overseas Bank, said in a press meeting.
The demand for retail loans is likely to continue going ahead as there is enough liquidity in the banking system as of now after the lender disclosed its results, Sengupta said. The liquidity situation is subject to future actions taken by the Reserve Bank of India, he cautioned. Additionally, salary hikes in some sectors of the economy may also lead to higher demand for retail and home loans, he said.
The lender expects 25 % growth in its bottomline going ahead aided by strong loan growth and improving asset quality. In the post-Covid period, there is good revival in the MSME sector, Sengupta said, which will help the bank maintain its 12 % loan growth.
Although the lender is not saying no to corporate loans, it has diversified its portfolio and is maintaining a cautious approach towards corporate loans.
On asset quality front, Indian Overseas Bank’s gross non-performance asset ratio improved to 9.82% in March 2022 from 10.40% sequentially and 11.69% a year ago. Its net NPA ratio increased marginally to 2.65% in March 2022 from 2.63 % sequentially and 3.58% a year ago. Provision Coverage Ratio (PCR) improved from 90.34% as on March 21 to 91.66% as on March 22.
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"IDBI Bank has sold its entire holding of 6,23,23,800 fully paid-up equity shares constituting 19.18 per cent of the total equity share capital of Asset Reconstruction Company (India) Ltd. (ARCIL) on May 18, 2022 to Avenue India Resurgence Pte. Ltd," IDBI Bank said in a regulatory filing.
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The Reserve Bank of India (RBI) has rejected the banking licence application from Flipkart co-founder Sachin Bansal’s Chaitanya India Fin Credit along with five others because they were not found to be suitable.
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The Reserve Bank of India has rejected the applications of six entities aspiring to get licences for on-tap universal banks and Small Finance Banks (SFBs). These include applications of the Sachin Bansal-promoted Chaitanya India Fin Credit and UAE Exchange and Financial Services, both for setting up universal banks.
The applications of The Repatriates Cooperative Finance and Development Bank (REPCO Bank) and Pankaj Vaish for universal banks, and applications by VSoft Technologies and Calicut City Service Co-operative Bank for SFBs, have all been turned down.
Navi Technologies, which owns and operates Chaitanya India Fin Credit, said on Tuesday it would engage with the RBI to understand the reasons for rejection. Sachin Bansal, promoter of Navi Technologies, said at a press conference that the company would also consider whether it needs to appeal the decision.
RBI said on Tuesday it has received 11 applications for on-tap licence for universal banks and SFBs. “The examination of six applications has now been completed as per the procedure laid down under these guidelines. The remaining applications are under examination,” the central bank said in a statement.
The guidelines for ‘on-tap’ licensing of Universal Banks and SFBs in the private sector, were issued on August 1, 2016, and December 5, 2019, respectively.
As per the guidelines, the applications are referred to a Standing External Advisory Committee (SEAC) set up by the RBI.
The SEAC submits its recommendations to the Reserve Bank for consideration. The Internal Screening Committee (ISC), which consists of the Governor and the Deputy Governors, examines applications and then submits its recommendations to the Committee of the Central Board of the Reserve Bank for the final decision to issue in-principle approval.
Entities can file an appeal against the decision of the Committee of the Central Board in one month from the order, as per the guidelines.
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Navi Technologies, which owns and operates Chaitanya India Fin Credit, said on Tuesday that it would engage with the RBI to understand the reasons behind the rejection of its application for an on-tap universal banking licence. The management of the fintech will also consider if an appeal route needs to be pursued, Sachin Bansal, promoter of Navi Technologies, said at a press conference. Entities can file an appeal against the decision of the Central Board of Directors within a month, according to the guidelines.
Chaitanya India is a microfinance subsidiary of Navi Technologies. Chaitanya India is a non-banking finance company (NBFC) which issues loans to low-income women in rural and semi-rural areas. As of December 2021, the company’s microfinance business assets under management stood at Rs 1,800 crore.
Meanwhile, Navi Finserv (NFS), a wholly owned subsidiary of Navi Technologies, announced raising up to Rs 600 crore via public issue of non-convertible debentures (NCDs) for expanding its personal and home loans portfolios. The issue has a base size of Rs 300 crore and an option to retain over-subscription of another Rs 300 crore. The issue will open on May 23 and close on June 10. The secured NCDs will have two tenures – 18 months and 27 months – and will bear a coupon rate in the range of 9.20% to 9.75% per annum.
Navi Finserv offers personal loans and home loans. While personal loans have higher share in Navi Finserv’s disbursals, the company is also focusing on increasing its home loan portfolio. The IPO-bound Navi Technologies plans to infuse funds from the public listing into Navi Finserv. Navi Technologies plans to raise Rs 3,350 crore via fresh issue of shares. Of that, Rs 2,370 crore is to be infused in Navi Finserv.
Navi Finserv has total borrowings of Rs 2,506 crore and total assets under management of Rs 1,648 crore. The company claims that it has a lower non-performing asset ratio of 0.08% as it issues loans to borrowers with higher credit rating.
gThe upcoming NCD issue aims to raise funds for onward lending and financing purposes. This will further diversify our borrowing profile and add more retail investors to our portfolio to complement our wide base of institutional partners,” Ankit Agarwal, managing director of NFS, said.
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HDFC Ltd on Tuesday launched a ‘Spot Offer’ on WhatsApp, to provide an in-principle home loan approval to home buyers within two minutes. This is a platform that will enable prospective borrowers to get an in-principle home loan approval instantly. The platform, built by HDFC and Cogno AI, will offer a conditional home loan approval in a couple of minutes.
Today over 91% of new loan applications received by the mortgage lender are through digital channels up from less than 20% before Covid-19 pandemic.
All that the users have to do is initiate a conversation on HDFC’s WhatsApp number (+91 9867000000) and provide some basic information in a few clicks through a guided conversational flow. On basis of the information keyed in by the customer, a provisional/conditional home loan offer letter is generated instantaneously.
The home loan spot offer facility can be availed 24×7. In addition to convenience, there is no ‘waiting time’ for the home loan approval letter. This facility is available to salaried resident Indians.
Speaking on the occasion, Renu Sud Karnad, managing director, HDFC Ltd, said, “We are happy to launch this innovative platform integrated with WhatsApp. This will facilitate prospective homebuyers in availing a loan to buy their dream home. We at HDFC have been focusing and investing on digital transformation for better customer experience and engagement. Demand for housing in India continues to remain extremely robust. Today, there is a strong desire to be a homeowner and demand for housing continues to be from both first-time homeowners as well as those moving up the property ladder – generally into larger homes. Affordability today is also better than ever and in India as income levels rise, we will see younger people being able to afford housing sooner in life.”
HDFC has launched a host of digitally-enabled services to help the customer conveniently manage their home loan account. HDFC is focused on an online digital platform for loans and retail deposits, and initiated ‘HDFC Customer Connect’ for all customer requests.
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"The working capital drawdowns are increasing on the corporate book because their input costs have gone up," said Samuel Joseph, deputy MD, IDBI Bank. "A 30-40% utilisation in highly rated large corporates was a big challenge earlier, today they are pushed up to 60-70%."
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This comes after the selection of executives by BBB for various other institutions was challenged before the courts.
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UCIC, incubated by Unitus Capital, is an impact focussed non-banking financial company registered with Reserve Bank of India, while Oxyzo is the lending arm of OfBusiness and is backed by Softbank. Karbon said it would use the funds to empower and enable startups and SMBs with corporate credit cards that they can use as flexible growth capital.
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India requires a much larger number of banks to take banking to every corner, new CII president Sanjiv Bajaj said on Monday, highlighting the need for allowing large non-banking financial companies (NBFCs) to offer full banking services.
Large and strong NBFCs need to be given “more teeth”, so that “they don’t just provide last-mile banking but provide what banking can provide”, of course, after putting in place an adequate amount of risk-mitigation measures prescribed by the Reserve Bank of India (RBI), said Bajaj, who is also the chairman and MD of Bajaj Finserv.
While India has only about 500-600 banks, including the regional rural ones, the US has a network of some 26,000 banks even while having a fourth of India’s population, former chief economic advisor KV Subramanian had said earlier.
Addressing his maiden press conference after taking over as the CII chief, Bajaj said the prospect of a normal monsoon season and the central bank’s move to hike the benchmark lending rate will help curb retail inflation, which “should put us in a better place” by the second half of this fiscal.
Bajaj said an immediate step to moderate inflation could be to cut taxes on fuel products, which constitute a large share of the retail prices of petrol and diesel. “CII would encourage the Centre and state governments to collaborate in reducing these duties,” he added. Retail inflation hit a 95-month high of 7.73% in April on a broad-based rise across food, fuel and core segments.
Endorsing privatisation in the financial services sector as well as asset monetisation, Bajaj said: “Our understanding is that the government continues to be committed to do this (privatise two state-run banks and an insurer, as announced in the Budget for FY22). It could be an important signal once they go ahead with this, because it will put to action their intent that the government shouldn’t be in the business.”
The CII, Bajaj said, expects FY23 GDP growth to remain in the range of 7.4% to 8.2%, depending on the level of crude oil prices. An average crude oil price of $90 per barrel in FY23 will drive up growth to 8.2%, while that of $110 will drag it down to 7.4%, he added.
Despite the rising interest rate scenario, Bajaj said private capex will witness a broad-based revival in FY23. Some sectors like metals, chemicals and mining have already seen this revival, which will only widen this fiscal, he added. He expected the RBI, which started the cycle of raising the repo rate in May, to present “a clear direction as to how they are going to address interest rates” in the next monetary policy review in June.
Global headwinds and inflation will have to be countered with robust policy reforms, both internal and external, to unlock the growth potential of the economy. The tailwinds that are supportive of growth in the short-term include government capex, private sector investment (which is showing an uptick aided by strong demand in some sectors) and the production-linked incentive (PLI) schemes, Bajaj said. On top of these, a robust performance of the agriculture sector on the back of a good monsoon will augur well for the economy, he added.
Sharing the CII’s vision for the economy, Bajaj said that India has the potential to emerge as a $40-trillion economy by the time it turns 100 in 2047. The milestones of becoming the $5-trillion economy can be realised by FY27 and $9 trillion by FY31.
He expected the share of manufacturing in GDP to go up to 27% by 2047 from about 16-17% now, while the share of services will rise from 53% to 55%.
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India requires a much larger number of banks to take banking to every corner, new CII president Sanjiv Bajaj said on Monday, highlighting the need for allowing large non-banking financial companies (NBFCs) to offer full banking services.
Large and strong NBFCs need to be given “more teeth”, so that “they don’t just provide last-mile banking but provide what banking can provide”, of course, after putting in place an adequate amount of risk-mitigation measures prescribed by the Reserve Bank of India (RBI), said Bajaj, who is also the chairman and MD of Bajaj Finserv.
While India has only about 500-600 banks, including the regional rural ones, the US has a network of some 26,000 banks even while having a fourth of India’s population, former chief economic advisor KV Subramanian had said earlier.
Addressing his maiden press conference after taking over as the CII chief, Bajaj said the prospect of a normal monsoon season and the central bank’s move to hike the benchmark lending rate will help curb retail inflation, which “should put us in a better place” by the second half of this fiscal.
Bajaj said an immediate step to moderate inflation could be to cut taxes on fuel products, which constitute a large share of the retail prices of petrol and diesel. “CII would encourage the Centre and state governments to collaborate in reducing these duties,” he added. Retail inflation hit a 95-month high of 7.73% in April on a broad-based rise across food, fuel and core segments.
Endorsing privatisation in the financial services sector as well as asset monetisation, Bajaj said: “Our understanding is that the government continues to be committed to do this (privatise two state-run banks and an insurer, as announced in the Budget for FY22). It could be an important signal once they go ahead with this, because it will put to action their intent that the government shouldn’t be in the business.”
The CII, Bajaj said, expects FY23 GDP growth to remain in the range of 7.4% to 8.2%, depending on the level of crude oil prices. An average crude oil price of $90 per barrel in FY23 will drive up growth to 8.2%, while that of $110 will drag it down to 7.4%, he added.
Despite the rising interest rate scenario, Bajaj said private capex will witness a broad-based revival in FY23. Some sectors like metals, chemicals and mining have already seen this revival, which will only widen this fiscal, he added. He expected the RBI, which started the cycle of raising the repo rate in May, to present “a clear direction as to how they are going to address interest rates” in the next monetary policy review in June.
Global headwinds and inflation will have to be countered with robust policy reforms, both internal and external, to unlock the growth potential of the economy. The tailwinds that are supportive of growth in the short-term include government capex, private sector investment (which is showing an uptick aided by strong demand in some sectors) and the production-linked incentive (PLI) schemes, Bajaj said. On top of these, a robust performance of the agriculture sector on the back of a good monsoon will augur well for the economy, he added.
Sharing the CII’s vision for the economy, Bajaj said that India has the potential to emerge as a $40-trillion economy by the time it turns 100 in 2047. The milestones of becoming the $5-trillion economy can be realised by FY27 and $9 trillion by FY31.
He expected the share of manufacturing in GDP to go up to 27% by 2047 from about 16-17% now, while the share of services will rise from 53% to 55%.
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While net profits for lenders may have seen a big jump in FY22, the growth in operating profits or pre-provisioning profits (PPP) was modest. The bottom line was driven up by a big drop in provisions, data collated from Capitaline show. Total advances went up smartly over the previous year – the increase was 16.7% for private lenders and 10.7% for public sector banks.
State Bank of India chairman Dinesh Kumar Khara believes his bank should be able to maintain the loan growth momentum in FY23, both on the retail and corporate fronts. Khara said the bank is seeing a faster growth in loans than in deposits in the current year, adding that activity in April was better compared with the year-ago period.
Sanjay Chadha, MD & CEO, Bank of Baroda, feels the loan growth in the current year will outpace the growth last year at 10-12%. Profits for a set of 11 private sector banks grew 43% in FY22 while for a clutch of nine state-owned lenders, the reported profit growth was a whopping 91%.
However, the operating profits for the PSU universe increased by just 2.4%, while for private players the increase was 7%.
The subdued increase in PPP resulted from a muted growth in the top line. For state-owned lenders, total revenues stayed virtually flat, growing at just 0.5%, while for private sector banks, they increased by 6%.
The net interest income at SBI, for instance, increased by 9% in FY22, but the total income went up by 5% because investment income fell sharply. Consequently, the reported operating profits increased by 5.22%. However, the steep drop in loan loss provisions of 48% resulted in a 55% jump in the bottom line.
While the numbers for Bank of Baroda are not strictly comparable, the lender posted a healthy profit after tax as provisions fell 14%. The increase in the operating profits was 9%. The lender fared well in Q4FY22 as the net interest income grew a good 20% year-on-year.
In the private sector pack, ICICI Bank delivered a stellar set of numbers for the year with a 44% rise in net profit on the back of a 14% increase in total income, driven up by a 22% rise in net interest income. Pre-provisioning profits were up around 8% as provisions dipped 47%.
Analysts observe that the healthy loan growth of 17% y-o-y in Q4 augurs well for business in the current year. The strong asset quality and stable margins, they point out, put the lender in a good position to grow the balance sheet.
Although HDFC Bank’s net profits grew well, revenues and operating profits showed a modest growth in Q4, prompting analysts to be cautious. Although the earnings outlook is promising, the overhang of the merger, they said, is weighing heavily on the stock.
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The bank is also looking to aggressively grow its co-lending book. It has already onboarded four NBFCs for co-lending to MSMEs which include UGro Capital, Adani Capital and Electronica.
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A rigid regulation requires all banks to label a borrowing company and all its accounts as 'fraud account (s)' when one lender puts a fraud tag. It sets off a process where lenders have to file police complaints and take a knock- which is often disproportionately higher than the size of the fraud -on their bottom lines.
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Days after the Reserve Bank of India (RBI) hiked the repo rate for the first time in almost four years, governor Shaktikanta Das will meet chiefs of public sector banks (PSBs) on May 17 to review credit flow and assess the outlook on asset quality, sources told FE. Das may also take stock of state-run banks’ strategy to deal with the rising interest rate scenario without upsetting growth dynamics, they added.
The meeting comes amid apprehensions that the central bank may be forced to go for another round of aggressive rate increase and liquidity-tightening measures to contain runaway retail inflation, which hit a 95-month high in April. On May 4, the Monetary Policy Committee (RBI) resorted to an out-of-cycle repo rate hike by 40 basis points, the sharpest increase in nearly 11 years, to 4.4%.
The governor will also review the state-run banks’ collection efficiencies, consumer grievance redress mechanism, digital banking units, lending to government entities, IT infrastructure and cyber security framework and any other issue that the lenders may like to present, said the sources.
“PSBs are preparing presentations on various aspects of their operations. The governor would probably like to have bankers’ feedback as to how they are planning to cope with the new reality of elevated interest rates and tight liquidity conditions, and what could be the impact on banks’ lending, asset quality and the broader operating environment,” a banking source said.
Another source said digital banking units is likely to feature prominently in the discussion and the RBI may review the banks’ preparedness to roll them out ahead of the Independence Day.
Moreover, discussion on asset quality assumes significance, as certain special dispensations extended by the regulator in the wake of the pandemic have expired. The RBI had in December warned of increased stress in banks’ books upon the expiry of the special schemes. However, given their sound capital adequacy, banks would be able to absorb the shock, it had added.
Late last month, financial services secretary Sanjay Malhotra, too, met PSB chiefs and nudged them to satiate the growing credit appetite of a fast-recuperating economy that is also facing considerable external headwinds in the wake of the Russia-Ukraine conflict.
Non-food bank credit grew 9.7% in March, compared with 8% in the previous month and 4.5% a year before. However, loans to industry grew at a slower pace of 7.1% even on a marginally-contracted base.
While credit flow has improved in recent months, the government believes there is considerable scope for further bolstering lending. There is a growing requirement of working capital requirement of India Inc in light of soaring global commodity prices. Moreover, companies in select sectors like steel and chemicals have started expansion, kicking off the private investment cycle.
The official source said that the improved financials of PSBs have substantially improved their ability to lend. No state-run bank suffered losses in the first three quarters of FY22; in fact, together, they recorded a net profit of `48,874 crore during this period. This is higher than the profit of `31,820 crore in the entire FY21, which was the highest in five years. According to the RBI data on domestic operations, state-run banks’ gross bad loans dropped to 8.18% of gross advances by December 2021 from 9.36% as of March 2021.
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Both the bank and HDFC Ltd have very high foreign shareholding. So, some shake-up from FIIs was expected. Some of the active funds were rebalancing their portfolios and moving toward bonds. But they were not buying because we were not in the index. Add to that the murmurs of regulatory roadblocks. Over the next few days since the announcement, we have explained to each and every institutional investor.
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In a regulatory filing, Paytm reiterated its intention to make inroads in the general insurance sector, as it is extremely bullish about its potential.
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With interest rates rising, a good credit score can help buyers get a loan at the best rates
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According to the RBI data on frauds reported by PSBs in all categories during FY22, the highest amount of Rs 9,528.95 crore was reported by the city-based Punjab National Bank (PNB), involving 431 such incidents. The country's largest lender State Bank of India reported frauds worth Rs 6,932.37 crore in as many as 4,192 cases -- reflecting incidents of a large number of small value frauds.
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Public sector banks reported over 51 per cent dip in the amount involved in frauds to Rs 40,295.25 crore during the financial year ended March 2022, the Reserve Bank of India has said.
The 12 PSBs (Public Sector Banks) had reported frauds worth Rs 81,921.54 crore in preceding fiscal 2020-21, the Reserve Bank has said in response to an application under the Right to Information (RTI) Act.
However, the number of fraud cases didn’t fall at the same pace as a total of 7,940 frauds reported by the PSBs in 2021-22, against 9,933 incidents reported in FY21, said the RBI’s reply to Madhya Pradesh-based RTI activist Chandrashekhar Gaur.
According to the RBI data on frauds reported by PSBs in all categories during FY22, the highest amount of Rs 9,528.95 crore was reported by the city-based Punjab National Bank (PNB), involving 431 such incidents.
The country’s largest lender State Bank of India reported frauds worth Rs 6,932.37 crore in as many as 4,192 cases — reflecting incidents of a large number of small value frauds.
Bank of India reported frauds worth Rs 5,923.99 crore (209 incidents), followed by Bank of Baroda at Rs 3,989.36 crore (280); Union Bank of India Rs 3,939 crore (627), while Canara Bank reported frauds worth Rs 3,230.18 crore in just 90 cases — showing that the transactions were of high value frauds.
Among others, Indian Bank customers faced frauds amounting to Rs 2,038.28 crore in 211 cases; Indian Overseas Bank Rs 1,733.80 crore (312); Bank of Maharashtra Rs 1,139.36 crore (72 cases); Central Bank of India Rs 773.37 crore; UCO Bank Rs 611.54 crore (114 crore) and Punjab & Sind Bank reported frauds of Rs 455.04 crore in as many as 159 incidents.
RBI said that the data may change subject to rectification/update made subsequent to first reporting of banks (in respect of individual frauds). As per the RBI reply, the amount of frauds worth less than Rs 1 lakh has been recorded from April 1, 2017.
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Bullish on growth prospects, Abu-Dhabi headquartered Lulu Financial Holdings is expanding its NBFC business in India by initially focusing on organic growth and is targeting to have a loan book size of Rs 100 crore by the end of March next year, according to a top company official.
Lulu Financial Holdings, which is mainly into financial services, has investments in the Indian sub-continent, GCC (Gulf Cooperation Council) and APAC (Asia Pacific) regions.
In India, the company owns the NBFC — Lulu Financial Services (India) Private Ltd — and Lulu Forex Private Ltd, India.
The NBFC (Non-Banking Financial Company) started operations last year and is in the process of expanding its business starting from the South, Lulu Financial Holdings Managing Director Adeeb Ahamed said.
“We have got into the NBFC space and it is very big in India…. It is a growth sector and we are targeting that as an area that we will be investing more… We have started expanding in Kerala and we will be taking it to other states as well,” he told PTI in a recent interview. Currently, the NBFC business is focusing on the SME (Small and Medium Enterprises) sector. “We are hoping to have a book size of Rs 100 crore by March 2023. It is the lending side,” Ahamed said
In a report released in March, rating agency Icra Ratings said the asset under management of NBFCs (retail) in India is expected to grow by 5-7 per cent in fiscal 2022 and by 8-10 per cent in fiscal 2023. According to Ahamed, initially, the company will look at organic growth for the NBFC vertical as it will provide an opportunity to be more grounded and hear out the consumers more closely.
“If it is inorganic, then it will be taking too much on the plate at this point of time. With such volatility in the market, we would rather like to grow organically. First two years of expansion will be fully organic,” he said.
About the regulatory framework in India, Ahamed said the country is a strong and growing market, and there have been a lot of changes.
“India is a very strong market but it is a growing market. One should not see it in comparison to other matured markets and start making strategies that have worked in other markets. We would always want to see India as a market of its own, which has its own character… a lot of things have changed in the last few decades,” he pointed out.
Emphasising that his group is not here for a valuation purpose but for the long-term, Ahamed said it had set up the forex division in 2012 and at that time, it did not have the interest to go to any other space.
“Today, a lot of regulations have been eased and it is more comfortable for international people like us to come. It encourages us to come and start deploying our own funds in the market,” he said. Lulu Financial Holdings has a presence in the hospitality space also but the core focus is the financial sector.
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Stablecoins are cryptocurrencies designed to be protected from the wild volatility that makes it difficult to use digital assets for payments or as a store of value.
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