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The Finance Ministry has withdrawn its order of a massive cut in interest rates on schemes like PPF and NSC.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.
IndusInd Bank has raised Rs 2,021 crore of common equity capital through conversion of preferential warrants issued to the promoter entities.
Accordingly, IndusInd International Holdings Limited (IIHL) and IndusInd Limited (IL) were issued the preferential warrants.
The warrants were issued as an integral part of the merger with Bharat Financial Inclusion Limited in July 2019.
At the time of subscription to the warrants, the promoter entities had paid Rs 673 crore and the balance amount of Rs 2,021 crore was paid on Thursday.
Consequently, the finance committee of the bank approved allotment of 1,57,70,985 shares to the promoter entities.
The warrants are converted at a price of Rs 1,709 per share reflecting a premium of 65 per cent over the closing price on February 17, 2021.
Earlier in September 2020, the bank completed preferential issues of equity capital of Rs 3,288 crore and this was subscribed by the promoters as well.
Together with the current warrants conversion, the bank has raised Rs 5,309 crore of equity capital during the financial year 2020-21.
"The conversion of warrants at a significant premium reflects strong commitment of the promoter entities to the bank," said Sumant Kathpalia, Managing Director and CEO of IndusInd Bank.
"With this capital raise and continued economic recovery, the Bank is well positioned to execute our strategy of 'Scale with Sustainability'."
The Reserve Bank of India (RBI) has constituted an expert committee under the chairmanship of it's former Deputy Governor N.S. Vishwanathan on Primary (Urban) Co-operative Banks.
The eight-member panel will take stock of the regulatory measures taken by the Reserve Bank and other authorities in respect of urban co-operative banks (UCB) and assess their impact over the last five years to identify key constraints and enablers, if any, in fulfilment of their socio-economic objective.
It will also "review the current Regulatory/Supervisory approach and recommend suitable measures/changes to strengthen the sector, taking into account recent amendments to the Banking Regulation Act, 1949," said the RBI statement.
Along with suggesting effective measures for faster rehabilitation and resolution of UCBs and assess potential for consolidation in the sector, the committee will also consider the need for differential regulations and examine prospects to allow more leeway in permissible activities for UCBs with a view to enhance their resilience.
The other members of the committee include former NABARD Chairman Harsh Kumar Bhanwala, Mukund M. Chitale, who is a Chartered Accountant, M.S. Sriram, of IIM Bangalore among others.
The panel will also draw up a vision document for a vibrant and resilient urban co-operative banking sector having regards to the principles of cooperation as well as depositors' interest and systemic issues.
The committee will submit its report within three months from the date of its first meeting, the statement said.
The Reserve Bank of India (RBI) has appointed an external professional IT firm to carry out a special audit of the entire IT infrastructure of HDFC Bank.
The development follows recent outage in the bank's internet banking and payment system on November 21, 2020 due to a power failure in the primary data centre.
"RBI has appointed an external professional IT firm for carrying out a special audit of the entire IT infrastructure of the Bank under Section 30 (1-B) of the Banking Regulation Act, 1949 (the Act), at the cost of the Bank under Section 30 (1-C) of the Act," HDFC Bank said in a regulatory filing.
It said that the bank will accordingly extend its cooperation to the external professional IT firm so appointed by RBI for conducting the special IT audit.
Last December, the RBI asked HDFC Bank to temporarily stop all launches of the digital business generating activities and sourcing of new credit card customers, after outages in the bank's online facilities or payment utilities occurred over the past 2 years, including the incident in the internet banking and payment system on November 21, due to a power failure in the primary data centre.
Private sector banks witnessed a rise in non-performing assets (NPA) in respect of large borrowal accounts with exposure of Rs five crore or above.
A recent report by the Reserve Bank of India (RBI), cited that gross NPA ratio, as well as the ratio of restructured standard assets to total funded amounts emanating from larger borrowal accounts in the public sector banks, have gone down.
At the end of September 2020, large borrowal accounts constituted 79.8 per cent of NPAs and 53.7 per cent of total loans, it said.
"During 2019-20, PSBs' GNPA ratio, as well as the ratio of restructured standard assets to total funded amounts emanating from larger borrowal accounts, trended downwards. On the contrary, PVBs experienced an increasing share of NPAs in respect of such accounts," it said.
Further, the share of special mention accounts (SMA-0) witnessed a sharp rise in September 2020, which, according to the report, may be an initial sign of stress after lifting of moratorium on August 31, 2020.
However, the share of other categories of SMAs i.e., SMA-1 and SMA-2 remained at a relatively lower level, it said.
The RBI report also showed that the decline in NPAs in the last financial year was achieved largely on the back of write-offs.
As per the data, that both public and private sector banks wrote off NPAs worth over Rs 2.37 lakh crore.
The banks' net NPA stood over Rs 2.89 lakh crore in 2019-20 as against Rs 3.55 lakh crore in 2018-19.
In terms of lenders, out of the total write-off of Rs 2.37 lakh crore loans, NPAs worth over Rs 1.78 lakh crore were written off by public sector banks, while private sector banks wrote off loans worth Rs 53,949 crore.
Mumbai. Dec 20 (IANS) In a dubious distinction of sorts, the Bharatiya Janata Party-led NDA rule achieved the highest loans write-off between 2015 and 2019, which is more than three times compared to the figures of bad loans written off during the previous Congress-led UPA regime from 2004-2014, as per an RTI revelation. During the UPA's 10-year rule, around Rs 2,20,328 crore was written off by various banks, and this figure shot up to Rs 7,94,354 crore during the NDA regime from 2015-2019, resulting in a corresponding reduction in the banks' NPAs.
The data was provided under an RTI query by Pune-based businessman Prafful Sarda, giving some shocking insights into the state of affairs of not only public sector banks, but also those in the private sector and foreign banks. The RTI reply figures around two-dozen public sector banks, some three-dozen in private sector, nine Scheduled Commercial Banks, and a whopping four-dozen foreign banks, and includes several in each category which have not written off any loans. Of the loan write-offs in the Congress' decade (2004-2014), the PSBs accounted for approximately Rs 1,58,994 crore, while the amounts written off by the private banks was Rs 41,391 crore and for foreign banks it was Rs 19,945 crore, with no write-offs by Scheduled Banks.
Later, in the NDA regime (2015-2019), the figures provided show a phenomenal increase with the PSBs accounting for a stupendous Rs 6,24,370 crore loan write-off, with the private banks writing off Rs 1,51,989 crore and the foreign banks shared the remaining 17,995 crore, (Total -- Rs 7,94,354 crore), besides an additional write-off by Scheduled Banks totalling Rs 1,295 crore (Total - Rs 7,95,649 crore).
In a silver lining, however, during the BJP rule, there was some recovery from the write-offs between 2015 and 2019 -- a paltry Rs 82,571 crore or roughly 12 per cent of the total Rs 7,94,354 crore written off, according to the RTI reply. "The official data is not only revealing but very distressing. During the 10 years of UPA government (2004-2014), the total loans written off was Rs 2,20,330 crore, but during less than five years of the NDA (2015-2019), the figures zoomed up by almost 350 per cent to Rs 7,94,354 crore," Sarda told IANS.
The surprising aspect is the huge increase in the write-offs by foreign banks -- from 2004-2014, it was Rs 19,945 crore in the UPA's 10-year tenure (Rs 1,995 crore each year on an average), but shot up to Rs 17,995 in the NDA's four years between 2015-2019 (Rs 4,499 crore annual average). Several global giants like HSBC, Barclays, CitiBank and Standard Chartered Bank apparently gained due to the write-offs, among many others, in the past 15 years of the UPA-NDA governments.
Sarda questioned why the government should permit such write-offs by the financially sound foreign banks instead of concentrating on the financial health of the Indian PSBs, private, scheduled and cooperative banks which directly concern a majority of the countrymen. "In 2020, it seems we still follow the 1995 policies for loan recoveries or write-offs rather than innovating to ensure relief to the common masses instead of select corporate houses and bankrupt businessmen like Vijay Mallya, Mehul Choksi, Nirav Modi etc.," Sarda said.
Worse -- many of these bank defaulters are absconding since years and the government has also admitted that it has caught only two of the 72 fugitives in the past five years.
(Quaid Najmi can be contacted at: email@example.com)