The Reserve Bank of India (RBI) has extended the restrictions on Karnataka-based Millath Co-operative Bank by three months, till August 8, 2021.
As per RBI's directions, the co-operative bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise.
The bank would also not enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets.
Further, the central also imposed a withdrawal limit of Rs 1,000 from every savings or current account or any other deposit account.
The restrictions were first imposed in May, 2019 and have been extended thereafter. It was last extended till May 7, 2021.
The Rs 50,000 crore liquidity window offered by the Reserve Bank of India (RBI) to banks under priority-sector lending to augment Covid-19 healthcare infrastructure will help raise treatment capacity, and availability of medicines and medical equipment, in India, Crisil said on Friday.
Hospitals could be among the biggest beneficiaries as the incremental funding can potentially increase bed capacity in the country by 15-20 per cent, the ratings agency said.
Loans under the scheme, for tenures up to 3 years, are available to banks at the repo rate till March 31, 2022. Such loans would also be classified under priority sector. Consequently, banks are expected to extend these loans below current interest rates for companies engaged in health care activities. These include makers and suppliers of vaccines and drugs; hospitals; pathology labs; suppliers of oxygen; makers of emergency medical equipment; logistics firms; and Covid-19 patients.
As many as 354 CRISIL-rated companies with aggregate bank exposure of Rs 40,000 crore will be eligible for such loans. Though pharmaceutical firms account for 68 per cent of rated bank exposure, hospitals (24 per cent of rated exposure) are likely to avail majority of the funding available.
The borrowing cost of hospitals rated by CRISIL are 10.5-11 per cent, and the new loans taken for expansion under this RBI scheme could be 300-350 basis points cheaper, leading to substantial interest savings.
Says Subodh Rai, Chief Ratings Officer, CRISIL Ratings, "Increased availability of funds at low cost will incentivise hospitals to augment beds, oxygen storage, ICUs and critical medical equipment. Even if half of the funding available is used to add hospital beds through brownfield expansion, it will mean 5 lakh incremental beds, or 15-20 per cent of India's current capacity."
In comparison, for entities in other health care related sectors such as pharmaceuticals, the capital requirements for enhancing production capacity of critical Covid-19 related drugs is not very high. Further pharmaceutical companies, owing to their strong credit profiles and availability of export credit facilities, have a relatively lower average cost of borrowing (8.0-8.5 per cent). Thus, majority of pharmaceutical companies may not be keen to take on substantial debt under the RBI window to fund expansion.
Also, only a few companies are manufacturing Covid-19 vaccines and these have availed of government advances/grants for funding their requirement of Rs 5,000 crore.
While incentives under the liquidity window are attractive, hospital firms would carefully evaluate decisions considering sustainability of demand and availability of critical resources such as manpower and equipment.
Says Anuj Sethi, Senior Director, CRISIL Ratings: "Augmenting healthcare infrastructure has challenges beyond capital requirements. Higher lead times for equipment and availability of qualified manpower are critical factors that can create bottlenecks. This is especially true in the case of enhancing production of critical drugs such as Remdesivir, where the outlay to increase the production capacity of 7 crore doses is only Rs 200-250 crore, but lead times for ordering and installation of machines exceed a year."
All said, it is still early for healthcare players to evaluate their expansion plans. There will be more clarity once banks and lending institutions announce their policies for loans, and eligible firms decide on capital spends.
Independent think-tank Imagindia Institute has called upon the Reserve Bank to delay the ban on Amex, Diners Club.
Recently, the RBI ruled to impose a ban on American Express Co and Diners Club International from issuing new cards in India.
The order will take effect on May 1.
Accordingly, both the companies have been found non-compliant with India's data-storage rules, announced in 2018, which order payment systems providers to store all data generated by them on servers in India, and will be restricted from adding new customers to their card networks from May 1.
"Unprecedented times call for agile and blue-sky thinking. The U.S. administration has just days ago stepped forth with a massive humanitarian support for India's Covid-19 crisis, and so has corporate America as we are seeing from reports coming in," said Robinder Sachdev, President, The Imagindia Institute, in a statement.
"In such times as these, it makes eminent sense for India to delay or give more time for negotiations and compliances, on any contentious issues in US-India relations which may not be of urgent or deep-national interest, nature."
According to Sachdev, the mosaic and opto-politics of US-India relationship is very complex, and so is the relationship of corporate America with the US administration.
"Without distracting from the Herculean task of Covid-19 relief in India, a goodwill gesture of strategic and diplomatic signalling by India to delay any adverse rulings on US companies, unless very urgent, will therefore be helpful for all parties concerned."
"We would like to also inform that Imagindia has no past, present relation or interest in any of the companies mentioned."
As per the statement, Amex and Diners Club are being penalised under India's data-storage rules that require all digital payment networks to store their Indian payments data locally so that the regulator can have "unfettered supervisory access".
Initially, the institute said the US companies had strongly opposed the directive, but now say that they have been demonstrating progress towards complying with the rules.
"If so be the case, then some more time can be given to them to upgrade their compliances, and in the process India will also convey to the U.S. that our two countries have mutual empathy, and a mature partnership," Sachdev added.
Commercial banks will have to take prior approval of the Reserve Bank of India (RBI) for appointment of Statutory Central Auditors (SCA) and Statutory Auditors (SAs).
The RBI on Tuesday issued of guidelines for appointment of statutory central auditors (SCAs) and statutory auditors (SAs) of commercial banks, excluding regional rural banks, UCBs and NBFCs, including Housing Finance Companies.
Banks should apply to Department of Supervision, RBI before July 31, of the reference year and the Public Sector Banks (PSBs) shall approach RBI within one month of receipt of list of eligible audit firms from RBI.
While NBFCs do not have to take prior approval of RBI for appointment of statutory auditors, all NBFCs need to inform RBI about the appointment of the statutory auditors for each year by way of a certificate in 'Form A' within one month of such appointment.
For entities with asset size of Rs 15,000 crore and above as at the end of previous year, the statutory audit should be conducted under joint audit of a minimum of two audit firms. All other entities should appoint a minimum of one audit firm for conducting statutory audit.
Further, it shall be ensured that joint auditors of the entity do not have any common partners and they are not under the same network of audit firms.
The Reserve Bank of India (RBI) has directed the banks to restrict dividend payouts to 50 per cent in a bid to conserve capital and stay resilient.
In a notification to all the commercial and co-operative banks, RBI said that in view of the continuing uncertainty caused by the ongoing second wave of Covid-19 in the country, it is crucial that banks remain resilient and proactively raise and conserve capital as a bulwark against unexpected losses.
"Therefore, while allowing banks to pay dividend on equity shares, it has been decided to review the dividend declaration norms for the year ended March 31, 2021," it said.
Banks may pay dividend on equity shares from the profits for the financial year ended March 31, 2021, subject to the quantum of dividend being not more than fifty percent of the amount determined as per the dividend payout ratio.
"Cooperative banks shall be permitted to pay dividend on equity shares from the profits of the financial year ended March 31, 2021 as per the extant instructions," it said.
RBI added that all banks shall continue to meet the applicable minimum regulatory capital requirements after dividend payment.
While declaring dividend on equity shares, it shall be the responsibility of the Board of Directors to inter-alia consider the current and projected capital position of the bank vis-a-vis the applicable capital requirements and the adequacy of provisions, taking into account the economic environment and the outlook for profitability, it added.
To support a faster economic recovery amid the surge in Covid-19 cases, the Reserve Bank retained its key short-term lending rates along with the growth-oriented accommodative stance during the first monetary policy review of FY22.
Accordingly, the Monetary Policy Committee (MPC) of the central bank voted to maintain the repo rate, or short-term lending rate, for commercial banks, at 4 per cent.
Likewise, the reverse repo rate was kept unchanged at 3.35 per cent, and the marginal standing facility (MSF) rate and the 'Bank Rate' at 4.25 per cent.
It was widely expected that MPC would hold rates and the accommodative stance.
Reliance Infrastructure Limited and YES Bank Limited announced a sale transaction of Reliance Centre, Santacruz, Mumbai to YES Bank.
The transaction value is Rs1,200 crore.
Entire proceeds from the sale of Reliance Centre, Santacruz is utilized only to repay the debt of YES Bank.
Reliance infrastructure limited has reduced its exposure by 50 per cent in the last 90 days.
Rinfra has closed three major transactions in the last 90 days namely sale of road assets -- Delhi Agra Toll Road, Transmission Asset-Parbati Koldam Transmission Company limited and sale of Reliance Centre, Santacruz.
Rinfra exposure of YES Bank has been reduced from Rs 4,000 crore to Rs 2,000 crore.
Rinfra is committed to be a debt free company in 2021.
YES Bank plans to use the building as its corporate headquarters.
Reliance Infrastructure Limited (RInfra) is one of the largest infrastructure companies, developing projects through various Special Purpose Vehicles (SPVs) in several high growth sectors such as Power, Roads and Metro Rail in the Infrastructure space and the Defence sector.
RInfra is a major player in providing Engineering and Construction (E&C) services for developing power, infrastructure, metro and road projects.
RInfra through its SPVs has executed a portfolio of infrastructure projects such as a metro rail project in Mumbai on build, own, operate and transfer (BOOT) basis; nine road projects on build, operate and transfer (BOT) basis.
RInfra is also a leading utility company having presence across the value chain of power businesses, i.e. Generation and Distribution.
The Finance Ministry has withdrawn its order of a massive cut in interest rates on schemes like PPF and NSC.
"Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn", Finance Minister Nirmala Sitharaman announced.
Congress leader Digvijay Singh said the decision to roll back the step was taken due to fear of alienating the small saver and common man with the state elections currently on.
He sought a promise from the Finance Minister that it would not be implemented again once the elections are over.
Singh also said that how did "oversight" cause this decision-making and who is responsible.
A big cut in small savings schemes would have delivered a blow to savers who depend on these schemes for income and social security.
Conversely, this will reduce interest rates, bring down the cost of capital and spur capex and stock markets.
The government had revised the interest rates on small savings with effect from April 1, which has now been rolled back.
The interest on savings deposits was to be cut from 4 per cent to 3.5 per cent annually, while Public Provident Fund (PPF) is down from 7.1 per cent to 6.4 per cent.
Similarly, one-year-time deposit was cut from 5.5 per cent to 4.4 per cent quarterly. The senior citizen savings schemes rate cut from 7.4 per cent to 6.5 per cent.
The interest rate on National Savings Certificates was cut from 6.8 per cent to 5.9 per cent, Sukanya Samridhi Yojana from 7.6 per cent to 6.9 per cent and Kisan Vikas Patra from 6.9 per cent to 6.2 per cent.
The two day nationwide banker's strike in protest against privatisation of government banks was a total success, said the top leader of a major union.
The two day strike began on Monday.
As per reports received by us from our unions in various states, the strike has been successful. Overwhelming majority of the bank branches remain closed and shutters are down, said C.H. Venkatachalam, General Secretary, All India Employees' Association (AIBEA).
He said some branches headed by senior officers were open but no banking transaction could be carried out as other staff were on strike.
The central government has decided to privatise two public sector banks in addition to the IDBI Bank, and the United Forum of Bank Unions (UFBU) had given the strike call in protest.
The UFBU, an umbrella body of nine unions in the banking sector, had given the strike call.
Banking services are likely to be affected across the country as lakhs of bank employees went on a two-day strike from Monday protesting the privatisation of two public sector banks and 'retrograde' banking reforms.
About 10 lakh bank employees and officers are to participate in the strike called by the United Forum of Bank Unions, an umbrella body of nine associations and groups.
The strike had been called after the conciliation meeting held between the bank unions and the Union Finance Ministry on March 4, 9 and 10 failed. Bank unions have been asking government to reconsider its decision of privatise the government banks, which may also lead to job losses.
In the Union Budget presented last month, Finance Minister Nirmala Sitharaman announced the privatisation of two public sector banks (PSBs) as part of its disinvestment plan.
The government has already privatised IDBI Bank by selling its majority stake in the lender to LIC in 2019 and merged 14 public sector banks in the last four years.
In the early hours of the strike call, banking operations in several branches of public sectors banks seemed completely affected. The services impacted include deposits and withdrawals at branches, loan approvals and cheque clearance. However, several ATMs continue to function normally.
Most of the banks, including the State Bank of India (SBI), have informed their customers that its normal services may be impacted at offices and branches but they were taking steps to ensure smooth functioning of certain other services.
While functioning of PSBs are affected, services at private banks like ICICI Bank, HDFC Bank, Kotak Mahindra Bank and IndusInd Bank remain unaffected by the strike. An HDFC bank official said no major impact of the strike on their operations. Private banks fear that their operations may also be impacted of striking unions push for closure at some of their branches.
PNB Housing Finance and Yes Bank on Friday said that they have entered into a strategic co-lending agreement to offer retail loans to home-buyers at competitive interest rates.
A PNB Housing statement said that both the financial institutions will synergise their capabilities to provide an efficient and seamless experience to existing and new retail home loan customers.
PNB Housing and Yes Bank will jointly do due diligence and co-originate the loan at an agreed ratio. PNB Housing will service the customers through the entire loan lifecycle, including sourcing, documentation and collection with an appropriate information sharing arrangement with Yes Bank.
In 2020, RBI allowed the co-origination of HFCs with banks to enable non-banking finance companies and other banking institutions to provide mutually beneficial risk assessment services.
The revised co-lending model, introduced in November 2020, gives lenders greater flexibility in terms of offering higher credit for the unserved and underserved segments of the population.
Rajan Suri, Business Head for Retail at PNB Housing Finance said: "The digital transformation has opened up untapped opportunities in the retail home loan space. We have seen a steady demand among the working class, especially millennials, who are keen to realise their dreams of owning a home early in their careers."
"I am confident that our strategic co-lending partnership with Yes Bank will enable us to accelerate our business growth and add significant value to customer relationship and experience," Suri said.
Rajan Pental, Global Head of Retail Banking at Yes Bank said that the partnership provides ease of loan sanctions at borrower's convenience through digital lending platforms, thereby enabling home-buyers to fulfil their dreams and aspirations.