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☕ 10.09.2020: Today's Banking / Financial News at a Glance
🍒 PSB performance on EASE Index improves by 37% over March 2019-20 ; Financial services will be a part of the doorstep banking services available to public sector bank (PSB) customers from October onwards, according to finance minister Nirmala Sitharaman. The minister announced the decision during the release of the EASE 2.0 Index rankings on PSB performance from March 2018-2020, an official statement said on Wednesday.The move is expected to particularly benefit senior citizens and divyangs, it said. Currently only non-financial services such as pick up of cheques and demand draft was available through doorstep banking agents.The EASE Index ranks PSBs based on their performance in various themes like responsible banking, governance and HR, credit offtake, customer responsiveness and Udyamimitra for micro, small and medium enterprises.The overall EASE Index improved 37% over March 2019-20 from 49.2 to 67.4 out of 100, the statement said. The sharpest improvement was made under the responsible banking theme.The top three PSBs in the rankings included Bank of Baroda, State Bank of India and the erstwhile Oriental Bank of Commerce, which is now a part of Punjab National Bank (PNB). The top three in terms of improvements were Bank of Maharashtra, Central Bank and the erstwhile Corporation Bank, now merged with Union Bank of India.- economic times
🍒 PSBs join hands to launch Doorstep Banking Services : The 12 public sector banks (PSBs) in the country have forged an alliance to launch Doorstep Banking Services (DBS) at 100 top deposit centres across the country. This move is part of the EASE (Enhanced Access & Service Excellence) Reforms for PSBs.Initially, non-financial services will be available to all customers, especially senior citizens, persons with disabilities and defence forces, among others.The non-financial services include pick up of cheque / demand draft / pay order; new cheque book requisition slip, 15G / 15H forms, IT / GST challan; issue of request for standing instructions; and request for account statement. The services will also include delivery of non-personalised cheque book; term deposit receipt; acknowledgement; TDS / Form 16 certificate issuance; and pre-paid instrument / gift card. - Business Line
🍒 Banks are catalysts of economic revival: FM Nirmala Sitharaman : Finance Minister Nirmala Sitharaman on Wednesday said banks are going to be the catalysts for economic revival. "At this stage, the catalysts for economic revival, the catalysts who have the pulse of every one of their customers, are banks," the finance minister said. She was speaking after launching PSB Alliance-Doorstep Banking Services. The minister further said banks have to introspect on their core business and also focus on welfare. "You don't forget your core activity, which is lending and making money out of it and that is a legitimate activity. You will do that and also being public sector, do some things which are welfare related as announced by the government," she said. She emphasised that even private sector banks will have to contribute towards implementation of government schemes. She said all bank staffers should know the details of government schemes which are to be implemented through the lenders. "It is your duty to know about the schemes that the government passes to customers through you. I would want to be sure that your staff at every level has at least some idea of what are the government schemes being passed through you to citizens," Sitharaman said.- economic times
🍒 SBI raises ₹4,000 crore via Basel III-compliant AT-1 bonds : State Bank of India (SBI) on Wednesday said it has raised ₹4,000 crore via Basel III-compliant Additional Tier 1 (AT-1) bonds at a coupon of 7.74 per cent. India’s largest bank, in a statement, said 7.74 per cent is the lowest pricing ever offered on such debt issued by any bank since the country started implementing the stringent Basel III capital rules in 2013. “As the aggregate bids were in excess of ₹6,000 crore, the bank exercised the full greenshoe option of ₹3,000 crore over and above the base issue size of ₹1,000 crore,” it said.- Business Line
🍒 YONO biggest start-up by a legacy bank, worth over USD 40 bn: SBI chairman Kumar : Within three years of its launch, YONO, the digital banking platform of the country’s largest lender SBI, has a valuation of over USD 40 billion, the bank’s chairman Rajnish Kumar said on Wednesday. The bank is also working on creating a business-to-business (B2B) platform for bill receivables, called ‘Bharat Draft’, which will have all the MSMEs registered, he said. SBI had launched the YONO platform in November 2017 to help its customers’ banking, investment and shopping needs. Speaking at an event organized by ETBFSI.com, Kumar said YONO, which is an acronym for You Only Need One, is a profitable platform and rued that no one gets to know its valuation because it sits within the bank.“Only thing is that because it is sitting in the bank, it does not get reflected in the valuations. If it was sitting outside banks, my valuation would be may be USD 40-50 billion for YONO given the valuations which the start-ups get,” he said. Kumar, whose three-year term as the chairman comes to an end next month, asserted that YONO is the biggest start-up by a legacy bank. - financial express
🍒 Punjab National Bank launches festival offer, waives processing charges on some loans: State-owned Punjab National Bank (PNB) on Wednesday launched 'Festival Bonanza Offer' for its customers to give a push to subdued loan demand due to the COVID-19 crisis. Despite interest rates being the lowest in recent months, there is a moderation in credit growth. Under the 'Festival Bonanza Offer', the bank will waive all upfront or processing fees and documentation charges on some of its major retail products like housing loans and car loans. "Customers can avail of the exciting offer – available till December 31, 2020 - through any of the PNB's 10,897 branches around the country or via digital channels," the bank said in a statement.To enhance the availability and affordability of credit to customers, PNB has also slashed the processing fees on fresh as well as takeover loans. "On home loans, customers are now exempted from paying the processing fees i.e. 0.35 per cent of the loan amount, maximum Rs 15,000, besides the documentation charges. On car loans, customers can now save up to 0.25 per cent of the total loan amount, while on myProperty loans (loan against property), it could be up to Rs 1 lakh depending on the loan amount," it said. - economic times
🍒 Focusing only on retail segment may not be prudent for banks in current scenario: SBI MD : Mumbai At a time when the economy is facing challenges, banks should not solely focus on the retail segment as sluggish growth can impact this category of loans, a top banker said. The country's gross domestic product declined 23.9 per cent in the April-June 2020 quarter, and analysts expect the economy to contract in double digit during the current financial year. "A complete shift to retail may not be in the best interests because if your economy doesn't grow, even your retail at some point of time would get impacted," State Bank of India Managing Director Arijit Basu said at a virtual event organised by ET BFSI. Basu said that going forward, there could be some changes in approach adopted by banks towards offering loans to various categories of borrowers. "In MSMEs (micro, small and medium enterprises), for example, cash flow budgeting will be one of the things that will take forefront. There are banks that have used this model effectively in the past," he said.- economic times
🍒 Extend credit in sachets to help overcome recapitalisation challenge: Viral Acharya to PSBs : Former Reserve Bank of India (RBI) deputy governor Viral Acharya has said weaker public sector banks should shift to cashflow-based lending, from the current asset-based one, and focus on small-ticket loans. Delivering the keynote address at the ET BFSI converge summit, Acharya said the weaker public sector banks should focus on ‘sachetisation' of lending and their business model should become similar to micro credit, microfinance or small finance banks. “They should develop expertise in underwriting, monitoring and recovery of small-ticket loans provided to the last-mile borrowers. They should do cashflow-based lending for financial inclusion rather than asset-based lending, which has become part of their universal banking model and led to large legacy losses.” The weaker PSBs can use technology, employ public credit registry and shift to another model of business that has been shown by small finance banks to generate healthy intermediation margins . - economic times
🍒 Credit card EMIs at all-time high: HDFC Bank : Number of customers preferring to buy high-value products through instalments stood at an "all-time high" during the coronavirus pandemic, the country's largest private sector lender HDFC Bank said on Tuesday. Even as concerns get raised about asset quality given the high job losses and salary cuts, the bank said it is "bullish" on the credit card equated monthly instalment (EMI) products, said Angshuman Chatterjee, head (consumer credit cards and digital acquisitions) at HDFC Bank. According to some think-tanks, job losses are high in the organised segment, which has been a traditional favourite for the banks. As part of the EMI product, HDFC Bank ties up with merchants or product manufacturers to help a customer get a cheaper deal along with the ability to spread repayments over a period of time. There are reports of demand having been hit severely in the economy, which has been driven by the consumption in the past few years. "Credit card EMIs are at an all-time high. So, customers are choosing to do larger spend by breaking them up into simple EMIs. That is helping the consumption," Chatterjee said in a video message for bank employees..- economic times
🍒 Disbursements in the housing finance sector at 60–70% of YoY levels: Report : Disbursement in the housing finance sector is expected to reach 85–100% of last year levels in the second half of HFY21, according to a report by report by Motilal Oswal Financial Services Limited (MOFSL). The report said that sales have picked up to 50% of pre-COVID levels and is driven by affordable and mass hosuing, while the luxury segment remains a concern. “Disbursements in the housing finance sector are at 60–70% of YoY levels. This was basis an analysis done by MOFSL on the NBFC sector at large. The sector has witnessed a meaningful number of equity capital raises in the past two months,” the company said in the report.- economic times
🍒 Loan restructuring: Companies in worst-hit sectors may face increased scrutiny : Lenders will likely put loan-restructuring requests from companies in the traditionally capital-intensive and Covid-battered sectors, such as power, property, hotels, tourism and aviation, through greater scrutiny after the KV Kamath committee set stiff future financial milestones for the affected businesses being given the facility. So, bankers are likely to assess the ability of their borrowers to meet the future capital-structure milestones while taking a call on restructuring requests. Theoretically, the scrutiny will be rather intensive for overleveraged firms. But bankers and brokerages believe that the prescribed limits are largely reasonable. Simultaneously, the safeguards should help prevent ever-greening of loans. “The committee has also asked banks to split restructured loans into mild, moderate, and severe stress — we believe that this split will also be useful to investors to assess the nature of restructuring... Our estimates on credit costs should be able to absorb this surge,” Jefferies said in a report. - economic times
🍒 Life insurers record new premium growth for second straight month in August : India’s life insurance industry continued to see growth in new business premiums (NBP) in August for the second straight month. These companies had suffered four consecutive months of business contraction since the lockdown began late March. NBP is the premium acquired from new policies for a particular year. The industry recorded a consolidated NBP growth of 15% in August to Rs 27,040 crore, data from Insurance Regulatory and Development Authority (IRDAI) showed. Growth in August was led by the strong performance of the IPO-bound Life Insurance Corp of India (LIC). The public sector insurer recorded a 15.19% jump in NBP to Rs 19,714.21 crore, the data showed. Meanwhile, private insurers posted an NBP growth of 13.4% to Rs 7325.6 crore. - economic times
🍒 NCLT orders liquidation for HDIL's subsidiary Guruashish Constructions : A bankruptcy court has ordered the liquidation of a unit of Housing Development & Infrastructure (HDIL) after the successful bidder for the debt-laden HDIL subsidiary, Guruashish Constructions, withdrew its takeover offer. On September 4, the Mumbai-bench of the National Company Law Tribunal (NCLT) appointed Rajendra Bhuta, the company’s resolution professional (RP), as its liquidator. “All powers of the board, key managerial personnel and partners of the corporate debtor shall cease to have an effect and shall be vested in the liquidator,” said the 10-page division bench order. Its judicial member is Mohammed Ajmal, and the technical member is V Nallasenapathy.- economic times
🍒 Blockchain players beat gold, Bitcoin during pandemic : Gold and its digital counterpart, Bitcoin, have had a pretty good run among investors seeking a haven or those willing to take a punt on cryptocurrency. But they’ve been pipped in the past year by another investment thesis that’s perhaps a little more tangible, highlighting the old adage that its smartest to be selling shovels in a gold rush. Instead of buying into either asset, those who threw their money behind a basket of companies with exposure to blockchain technologies would have returned 54 per cent over the past year, even after the recent rout that’s hit global tech stocks the hardest. Gold is up just 27 per cent over that time, despite a boom since March, while Bitcoin is down 1.8 per cent. Elwood Asset Management LLP’s Blockchain Global Equity Index ticker: BLOCK is a collection of 45 companies involved in the blockchain ecosystem, a technology that deploys cryptography to store information in distributed ledgers and is resistant to modification or manipulation. Its top-three holdings are Taiwan Semiconductor Manufacturing Co., Kakao Corp. and Monex Group Inc. - Business Line
🍒 Covid delays education loans as banks insist on final-year certificate : The Covid-19 pandemic has hit the disbursal of education loans and students are being forced to pay fees from their own pockets. “After submitting all other documents for education loan for PG course, I have been asked to provide the final-year degree certificate, which has not come yet,” said G Divya, who has just joined a Pune-based institute for a PG course in communication. Though final year exams are yet to be conducted by many educational institutes and universities in the wake the Supreme Court judgment, which made final-year examinations mandatory, many private higher educational institutes have already started the admission process. “I wish to go in for an education loan for my daughter’s PG course, but had to pay ₹75,000 as first instalment from my own pocket as the processing of my loan application has been put on hold,” said S Suresh, who applied for study loans from Punjab National Bank (PNB).- Business Line
🍒 FIS sees traction for contactless payments rising in 8-12 months : Our Bureau FIS, a provider of technology solutions for merchants, banks and capital markets firms globally, sees a 30-40 per cent shift towards ‘contactless’ payments in the Indian payments landscape over the next 8-12 months largely due to Covid-19. “You are going to see a marked increase in contactless payments in the aftermath of Covid-19 given the increased concern on hygiene. The shift will also happen due to the convenience of contactless,” Mahesh Ramamoorthy, Managing Director, APMEA — Banking and Payments, FIS, said at a virtual conference to discuss the findings of the PACE PULSE 2020 survey. - Business Line
🍒 5-8% of overall loans will get restructured under new framework: Icra : Banks and non-bank lenders will restructure up to Rs 10 lakh crore in debt or 8 per cent of outstanding loans under the one-time restructuring scheme announced by the Reserve Bank, domestic rating agency Icra said on Wednesday. The RBI has operationalised guidelines based on K V Kamath-led panel's recommendations, which give relief to 26 listed sectors affected by the pandemic and stress on banks factoring-inleverage, liquidity and debt serviceabilitybefore admitting a case. "We feel the overall restructured portfolio will come at 5-8 per cent of the overall loans," the agency's head of credit policy Jitin Makkar told reporters on Wednesday. - Business Standard
🍒 RBI constructing e-payment index to assess extent of digitisation: Official : The Reserve Bank of India (RBI) is in the process of constructing a digital payment index to assess the extent of digitisation in the country and innovation in existing modes and channels to bridge digital divide, a senior official of the apex bank said on Wednesday. Observing that digital payments in India have been growing rapidly, RBI Executive Director T Rabi Sankar said there is still a lot of catching up to do as per-capita penetration is still quite low. "RBI is in the process of...constructing and periodically publishing a composite digital payment index (DPI) to capture the extent of digitisation. The DPI could be the key to accurately measure the deepening and penetration of digital payments across the country," he said while addressing a webinar organised by the US-India Business Council.- Business Standard
🍒 Banks do not want uniform process for each category of debt recast : Even as the Reserve Bank of India (RBI) has permitted lenders to classify Covid-affected borrowers into three categories — mild, moderate and severe — for restructuring, banks are not in favour of a uniform process for all the categories. State Bank of India (SBI) MD CS Setty said the process of restructuring for the three categories of borrowers preferably should be different. “If someone needs mild restructuring, like extension of moratorium for another six months, it may be exempted from detailed viability study, rating agency approval etc.,” he said, adding that it would help expediting the resolution process. Banks also are concerned about hurdles in the signing of inter-creditor agreements (ICAs) for resolution of accounts. A senior bank official told FE that it would be a challenge to build consensus among lenders in a short span. Banks need to invoke the resolution plan by December, and an inter-creditor pact needs to be signed for all accounts, where there is more than one lender. Any lender who does not sign ICA will have to make 20% extra capital provisioning. - financial express
🍒 Gold prices steady at Rs 51,051/10 gm, silver down Rs 278 per kg : Gold prices were steady at Rs 51,051 per 10 gram in the Mumbai market on strength in US dollar and weak global cues. The yellow metal has been consolidating in a broad range with a negative bias in the last couple of sessions. The rate of 10 gram 22-carat gold in Mumbai was Rs 46,762 plus 3 percent GST, while 24-carat 10 gram was Rs 51,051 plus GST. The 18-carat gold quoted at Rs 38,288 plus GST in the retail market. Silver prices fell Rs 278 to Rs 64,547 per kg from its closing on September 8.
🍒 Equity MFs see ₹4,000 crore outflow in August : Buckling under heavy redemption pressure, equity schemes of mutual funds logged a net outflow for the second month in a row in August on the back of profit-booking. Investors redeemed ₹18,558 crore from various equity schemes, while fresh inflow was at ₹14,558 crore, leading to a net outflow of ₹4,000 crore in August, as per data released by the Association of Mutual Funds in India. Equity schemes of mutual funds registered an outflow of ₹2,489 crore in July for the first time in over four years. Assets under equity fund management were up 4 per cent last month at ₹7.69 lakh crore (₹7.39-lakh crore).
🍒 Rupee drops 13 paise to 73.73 against US dollar in early trade : he rupee depreciated 13 paise to 73.73 against the US dollar in opening trade on Wednesday tracking muted domestic equities and a strengthening American currency. At the interbank forex market, the rupee opened on a weak note at 73.67, then fell further to 73.73, registering a fall of 13 paise over its last close. The rupee had settled at 73.60 against the US dollar on Tuesday.
🍒 After The Bell: Market ends with losses : Sensex ended 171 points, or 0.45 percent, lower at 38,193.92 while Nifty settled 39 points, or 0.35 percent, lower at 11,278. The BSE Midp and Smallcap indices closed 0.28 percent and 0.94 percent down, respectively."On a day when the bulls had nothing going for them, with GDP forecast, geopolitical issues and the underperformance of PSU stocks playing against them, we witnessed a spirited comeback in late afternoon trade," said S Ranganathan, Head of Research at LKP Securities. "Select pivotals led by Reliance took the lead, ably supported by several stocks across sectors, despite the hiccups seen in several cash market stocks," he added.
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