Bank credit to industry shrunk by 3.9%, or Rs 1.13 lakh crore, during the first eight months of the current financial year, according to data released by the RBI. Despite this, overall bank credit continues to be up 1% largely due to home loans and other personal loans.
As the economy adjusts to the new reality like technology-driven financial services, a robust bankruptcy law, vanishing ‘phone banking’ and plethora of competition from unknown quarters, the Goliaths of Indian finance face the formidable task of remaining relevant — and surviving momentous change.
Banks are willing to make the additional 20% provision that breaching the deadline entails but want the window of resolution open until the March 31 financial year end to avoid the value destruction that they say would follow by taking the NCLT route as prescribed by the Insolvency and Bankruptcy Code (IBC).
Banks undertake purchase of retail pools under the securitization mode to meet their priority sector and retail lending requirements. As per central bank rules, the risk and rewards of the securitization pool is to be borne by the buyer without any recourse of credit loss to the seller.
RBI had previously capped lending to a single borrower & raised priority sector lending requirements for UCBs
Addressing the 32nd AGM of the group, Kotak said the absence of requisite legal framework for group resolution under Insolvency and Bankruptcy Code (IBC) required the new board to propose the 'first-of-its-kind" resolution framework that balanced interest of stakeholders across classes and levels, while keeping broad principles of corporate finance in mind.
In its order against Hero Insurance Broking India Ltd (HIBIL), Irdai said it received complaints from some general insurance agents association of the apparent conflict of interest in the role of MISPs in selling insurance policies and servicing and repairing motor vehicles under the insurance policies sold by it.
Naveen Tahilyani has been appointed as Group Executive -- Head Banking Operations and Transformation -- with effective from January 6. Cyril Anand, the incumbent CRO will retire from the services of the bank, with effect from close of business hours of December 31, 2019.
The transaction, in preliminary stages, is part of the group’s thinking to unlock cash to fund its aggressive growth plans.
With the moratorium period of some facilities gradually coming to an end, it is expected that the asset quality may come under pressure. There has also been an increase in softer delinquencies for nonbanks in the current fiscal reflecting the build-up of stress.
Finance Minister Nirmala Sitharaman on Saturday said that the zero MDR regime would kick in once the Department of Revenue issued a gazette notification on January 1. Top industry players say Centre’s decision on not levying merchant discount rates will make the business model unviable.
On December 4, the administrator in a public announcement had asked all its creditors including fixed depositors to file their claims by December 17. As per the latest available data, the company received Rs 86,892.30 crore from financial creditors including lenders, bondholders and Nabard among others.
Lending rates for tenors of one year would be revised to 8.30 per cent from the current 8.35 per cent, the bank said.
The government unveiled measures over the past few months aimed at improving liquidity in the system.
Little is known about the digital yuan except that it’s been in the works for five years.
As a percentage of claims, banks recovered on average 42.5% of the amount filed through the IBC in the financial year 2018-19, against 14.5% through the Sarfaesi resolution mechanism, 3.5% through Debt Recovery Tribunals and 5.3% through Lok Adalats. Against Rs 1.66 lakh crore claims involved under IBC, the recovery was Rs 70,819 crore.
Move after review of asset quality and performance of investments in real estate, loans and other assets. The country’s biggest life insurer has exposure to stressed entities such as Dewan Housing Finance Corp Ltd, Infrastructure Leasing and Financial Services and the Anil Ambani-led Reliance Group among others.
Housing finance companies (HFCs) have doubled their share in builder loans to 23.81 per cent by June this year, compared with 12.17 per cent in June 2016. Meanwhile, the share of private sector banks rose to 30.41 per cent from 23.62 per cent, while the exposure of PSBs nearly halved to 24.34 per cent as of June 2019, shows the FSR.
Replying to an RTI query, RBI said preliminary findings indicated large-scale irregularities, warranting supersession of its board of directors and imposition of all inclusive directions of the Banking Regulation Act, 1949. "The report is yet to be finalised as inspection with respect to PMC Bank's financial position as on March 31, 2019, is under progress," RBI said.
The third-largest pure play mortgage player is the first non-banking financial company or housing finance company to face the corporate insolvency resolution process. The Mumbai bench of NCLT had admitted the company for insolvency resolution on December 2 and appointed IOB's former MD and CEO R Subramaniakumar as the company's administrator.
With Nordic countries swiftly advancing to cashless modes, Asian countries like China, Singapore and now India are on the way to make digital payments popular. In India, the demonetisation of 86% of the currency notes in circulation in 2016 accelerated the shift to digital payment modes. Yet, cash continues to account for over 90% of transactions.
Sitharaman, in a meeting with top executives of public and private sector lenders attended for the first time by the CBI director, Rishi Kumar Shukla, assured the bankers that a distinction would be made between genuine commercial failures and culpability. She further added that there had been concerns and worries among bankers about investigative agencies.
All companies with a turnover of Rs 50 crore or more will be mandated by DoR to provide the facility of payment through RuPay Debit card and UPI QR code to their customers. MDR is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. The merchant discount rate is expressed in percentage of the transaction amount.
Sitharaman said the Centre was doing everything to instill a sense of protection among bankers.
The country's largest public sector lender, the State Bank of India (SBI), via a tweet on December 26, said that it will introduce a one-time password (OTP)-based cash withdrawal system for its ATMs.
The EOW charged the former management of PMC Bank with failing to report an account of Rakesh Wadhawan with an outstanding amount of Rs 1,671.88 crore as the top borrower from the HDIL Group and filing false statements with the Reserve Bank of India to avoid regulatory scrutiny.
The slowdown could cause the gross non-performing ratio of local lenders to increase to 9.9% in September 2020 from 9.3% in September 2019, the Reserve Bank of India’s (RBI) Financial Stability Report showed.
Non-bank lenders and home financiers are not relying on commercial papers to raise funds after IL&FS defaulted last autumn. The wreck in the financial system prompted mutual funds and asset management companies to restrict their exposure to these categories of financiers. Asset managers increased their share of Certificates of Deposit to 15.6% from 11.9%.
The central bank may also soon introduce new payment umbrella organizations to compete with NPCI.
97.3% of the frauds reported in the first half of FY20 by value occurred in previous financial years.
The extent of devolvement on DICGC in the event of all the banks ‘under direction’ or weak banks going into liquidation/ordered to be wound up, would be Rs 14098 crore as of end September, 2019, RBI said. The break-up would be Rs 3,414 crore in the case of state cooperative banks, district central cooperative banks and ₹10,684 crore in the case of UCBs including PMC Bank.
"The RBI-appointed administrator to PMC Bank intends to monetise a yacht and two aircraft through a transparent process. For the purpose, the administrator plans to appoint a valuer/consultant and invites proposals from interested parties," the administrator said in a public notice.
In a bid to bring unbanked areas under the institutional credit network, the Bengal state government will provide space inside panchayat offices so that banks can set up branches in remote areas.
Motilal Oswal will be infusing fresh capital into VVDN and will pick up a significant minority stake. With its main offshore delivery centre based in San Jose, California, VVDN is a product design and original design manufacturing services provider. In addition, it has eight centres across India.
The whistleblower, who was a senior bank official, was angry about RBI being systematically kept in the dark.
Similarly, Bajaj Finance has lowered deposit rates by 15-40 basis points and the maximum it pays is 8.35%. PNB Housing Finance and Shriram Transport Finance are likely to reduce rates by 20-25 basis points, beginning early January.
Airtel Payments Bank customers will now be able to use the National Electronic Funds Transfer (NEFT) facility at any time of the day. The facility will be available to customers on a 24x7 basis even on holidays enabling then to receive or send funds to any bank from anywhere, anytime, the Bank said.
Many termed the immediate aftermath of IL&FS as India's Lehman moment. No doubt India's NBFCs had in 2019 their worst year in a decade amid a severe and protracted struggle for funds. But when there were just two failures which the industry took in its stride without needing any bailout, what does it indicate? Was it really a Lehman-like moment?
As banks and insurance companies promote machine learning- (ML-) and artificial intelligence- (AI-) driven products and services, one cannot overlook the growing demand for sales and marketing as financial institutions plan aggressive expansion in the tier-3 and -4 market, said Robin Bhowmik, chief business officer, Manipal Global Academy of BFSI.
More than 78 global banking and financial services companies, including Goldman Sachs, Deutsche Bank, JP Morgan and Standard Chartered, have set up captive units here that employ a combined 250,000 people, according to industry consultancy Zinnov.
The state-run bank filed a complaint that Jagdish Khattar cheated the bank of Rs 110 crores.
Resumption of normal business operations, albeit on a smaller scale, is aimed at strengthening DHFL’s credentials as a ‘going concern’ and eventually helping secure better valuations at the closure of the ongoing resolution process. Central bank- appointed administrators at DHFL have decided to lend about Rs 500 crore every month beginning the next few weeks.
The banking regulator called for a granular lending strategy to offset risk concentration in its annual publication on trends and progress of banking in India.
Banking services hit, including movement of cash & branch ops; UPI & AEPS payments, eKYC also affected. Violent protests against the Citizenship Amendment Act (CAA) have led to statewide imposition of prohibitory orders under Section 144, heavy deployment of forces and shutdown of internet in several areas of UP.
RBI noted that the recognition of past bad loans has “neared completion” in the reported fiscal year on the back of the asset quality review exercise undertaken by it in 2015 and the subsequent implementation of the framework for resolution of stressed assets. “Going ahead, this framework is expected to induce timely recognition of stressed assets,” RBI said.
Household leverage and indebtedness need to be kept in focus in the context of overall financial stability, it further said.
The newly introduced payment instrument can be issued by banks and existing non bank PPI players. These companies would be able to verify credentials of customers seeking to open their PPI accounts using an OTP sent to user's verified mobile number and a digital identification document recognized by the Department of Revenue, the banking regulator said.
The Umbrella Organisation could be in the form of apex entities, as is the practice in many countries that provide access to resources/capital to financial co-operatives at the base level through their ability of tapping into the capital market, while maintaining the cooperative character, RBI said.
September saw one of the biggest cooperatives, the city-based PMC, going belly up after a massive scam.
"Public sector banks accounted for a bulk of frauds reported in 2018-19 -- 55.4 per cent of the number of cases reported and 90.2 per cent of the amount involved -- mainly reflecting the lack of adequate internal processes, people and systems to tackle operational risks," the RBI's report on 'Trends and Progress of Banking 2018-19' showed.