Month: February 2021

State Bank of India joins JPMorgan’s blockchain-based payment network, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


State Bank of India has tied up with JPMorgan to use the US bank’s blockchain technology to speed up overseas transactions.

The tie up is expected to reduce SBI customers’ transaction costs and time taken for payments, sources said. Time taken to resolve cross-border payments-related inquiries can be reduced to a few hours from up to a fortnight, they said. This will help cross-border payments reach beneficiaries faster and using limited steps.

“We have undergone significant digital transformation in recent years and continue to add new technologies to create real value to daily operations,” said Venkat Nageswar, deputy MD – international banking group, SBI.

“We are excited to be the first bank in India to go live on the network and look forward to closer partnership with JP Morgan on implementation and exploring application as part of the network to better serve our clients,” he told ET.

A spokesperson said JPMorgan said it will expand its blockchain presence in India.

“We continue to actively explore how emerging technologies can enhance our clients’ experience,” said P D Singh, managing director and head – corporates and FI, JPMorgan Chase Bank, India.

The global bank’s blockchain technology — Liink — is meant for a peer-to-peer network, with financial institutions, corporates and fintech companies subscribing to it internationally. This enables users to make secure as well as peer-to-peer data transfers with greater speed and control. It also mitigates risks involved in cross-border transactions.

SBI has integrated Liink into its operations to exchange payments-related information with other financial institutions.

Globally, about 100 banks are now live on the network. Many other large local lenders, both government and private, are said to be in talks with JPMorgan on the same.

According to blockchain experts, banks around the world – including lenders from China and Africa – are taking to blockchain-based clearance systems for cross-border transactions. This is to get a first-movers’ advantage and to make such payments faster and cheaper.

“The World Bank confirmed that bank-led remittances cost an average of 10% globally, which is really high. Projects like Ripple or various bank consortia have argued that a distributed ledger (or a new blockchain) shared between banks directly removes the need for correspondent banking and can thus reinvent cross-border remittances or trade cash flows for the new age.” said Nitin Sharma, partner at Antler Global and previously the founder of Incrypt Blockchain.

“At least two Mumbai-headquartered private sector lenders and a large state-owned bank are in talks with JPMorgan,” said a banking source.

Going forward, Liink will also be able to allow participating banks to pre-validate an account even before making payments, and check message formatting for adherence to regulatory norms at beneficiary location. This process helps mitigate transaction rejection/frauds, a move that will garner more customer satisfaction.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Ahead of new ARC formation, Punjab National Bank to sell Arcil stake

Personal Finance

[ad_1]

Read More/Less


A detailed framework for the ARC is in the works, financial services secretary Debasish Panda said earlier this month, adding that the government will not be putting in any money.

As the process to set up a new national asset reconstruction company (ARC) gathers steam, Punjab National Bank (PNB) has begun the process to exit Asset Reconstruction Company (India), also known as Arcil. The bank’s investment arm on Monday sought expressions of interest from potential buyers in a public notice.

“PNB has initiated a sale process to offer its holding of 3,25,06,486 equity shares i.e. 10.01% of the paid-up equity share capital of ARCIL (“proposed transaction”). PNB Investment Services Limited is the advisor to PNB (referred to as “PNBISL”/ “advisor”) for the proposed transaction,” PNBISL said in the notice.

Arcil’s other sponsors are: Avenue India Resurgence, State Bank of India, IDBI Bank and ICICI Bank. Arcil is an associate member of the Indian Bankers’ Association. In November 2018, US-based Avenue Capital bought a 27% stake in the company for an unspecified amount as investors IDFC Bank, Ashmore Capital, FirstRand Bank, Barclays, Singapore’s GIC and Karur Vysya Bank exited it.

There has been little clarity so far on how the new ARC, proposed in the Budget, will be funded. While some government officials have said that it will be up to banks to put in seed money, it is not yet clear which banks will actually invest. A detailed framework for the ARC is in the works, financial services secretary Debasish Panda said earlier this month, adding that the government will not be putting in any money.

FE had reported in January that bankers plan to seek two exemptions for the new ARC. First, relaxation of the September 1, 2016 circular which effectively requires banks to provide for an asset assigned to ARCs as if it were still on the bank’s books. The other would be to exempt the new ARC from making future provisions for assets it buys.

In a recent report, SBI’s economic research wing said public sector banks (PSBs) now have a provision coverage ratio of around 86% (up from 62% in FY18). “This implies that the PSBs would have provided for most of the bad assets and a wholesale transfer of the bad assets to the bad bank is just a technical issue and the process of recovery and resolution could be carried out much better,” the report said.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Banks’ retail stress may rise in FY22 driven by unsecured loans: Ind-Ra

Banking & Finance

[ad_1]

Read More/Less


So, therefore, the expectation is that qualitatively they would be somewhat better than private sector banks,” Haria said.

The level of stress – bad loans and restructured assets – could rise 1.7 times for the banking system in FY22, with private banks seeing a greater increase in stressed loans than public sector banks (PSBs), India Ratings and Research said on Monday.

The agency has revised its outlook on the overall banking sector to stable for FY22 from negative because substantial systemic measures have reduced the system-wide Covid-linked stress below the expected levels. Banks have also strengthened their financials by raising capital and building provision buffers.

Jindal Haria, director, India Ratings and Research, said there could be a 170% increase in retail stress in the banking system. “Of course, this is on a low base as retail did not see a lot of NPAs (non-performing assets),” he said, adding that gross NPAs at the system level could climb to 4.7% in FY22 from 1.6% now. For PSBs, the increase is likely to be 150%, or 1.5 times, and for private banks, it may be 270%, or 2.7 times.

Much of this stress is set to come from unsecured advances. The share of unsecured exposures in private banks’ gross advances is roughly 15%, while for PSBs, it is roughly 5%. “It is logical here to assume that the retail stress would be seen more in private sector banks than PSBs. PSBs also have clients on the advances side where they would be salaried or from public sector entities or the government. So, therefore, the expectation is that qualitatively they would be somewhat better than private sector banks,” Haria said.

Even as private banks do relatively robust credit underwriting, they do look for high yields in the unsecured segment, and that may not necessarily play out well for them, analysts at India Ratings said. For traditional services employees, who are the mainstay of some of these unsecured products, income growth is declining in terms of wage growth rate. Also, the growth in employment is much lower as compared to what was seen between 2011 and 2016. These two factors are somewhat contradictory to a growth bounce-back being seen in the retail unsecured segment, Haria said.

While stress in the retail segment may not necessarily be manifested this year or the next, India Ratings believes that the trends in individuals’ income growth and the quality of banks’ unsecured assets cannot be divergent for long. “Somewhere, the retail unsecured asset quality and the growth in retail income should converge. When they will converge, we can’t say,” Haria said.

India Ratings has upgraded its FY21 credit growth estimates to 6.9% from 1.8%, and 8.9% in FY22, with the improvement in the economic environment in 2HFY21 and the government’s focus on higher spending, especially on infrastructure. The agency estimates gross NPA at 8.8% in FY21 (FY22: 10.1%) and stressed assets at 10.9% (11.7%). Provisioning cost has fallen from its earlier estimate of 2.3% for FY21 to 2.1% and is estimated at 1.5% for FY22.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

As bond yields harden further, all eyes on RBI

Banking & Finance

[ad_1]

Read More/Less


With the yield on the two liquid 10-year Government Securities (G-Secs) hardening further by 5-7 basis points on Monday, all eyes are now on the next move of the Reserve Bank of India.

Overall, yields on the new 10-year benchmark (5.85 per cent GS 2030) and the earlier benchmark (5.77 per cent GS 2030) have risen about 30 and 28 basis points, respectively, since January-end.

In price terms, the new 10-year benchmark and the earlier benchmark declined about ₹2.14 and ₹1.93, respectively, since January-end in the secondary market. (Bond yields and prices move in opposite direction.)

The rise in yields comes in the backdrop of the government announcing in the Budget that it will borrow an additional ₹80,000 crore in February-March and the borrowing for FY22 would be ₹12-lakh crore.

 

Oversupply of govt paper

There are concerns that oversupply of government paper will have a crowding-out effect on private sector investments and increase the overall cost of borrowing in the economy.

State Bank of India’s Chief Economic Adviser, Soumya Kanti Ghosh, has cautioned that any further upward movement in G-Sec yields, even by 10 bps from the current levels, could lead to mark-to-market (MTM) losses for banks. An MTM loss will require banks to make provisions for depreciation in investments.

Short-selling

In a report on G-Secs, Ghosh said that one of the reasons for the recent surge in yields might be short-selling by market players.

The report said the central bank will have to resort to unconventional tools, including speaking to market players/off-market interventions, open market operation in illiquid securities, and penalising short-sellers, to control the surge in bond market yields.

Madan Sabnavis, Chief Economist, CARE Ratings, said ever since the government announcement of additional borrowing, the markets have been spooked, with the 10-year G-Sec yield on the rise.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Auditor reports fresh ₹6,182-cr fraud in DHFL

Banking & Finance

[ad_1]

Read More/Less


A new fraudulent transaction of ₹6,182.11 crore has been unearthed in Dewan Housing Finance Corporation Ltd, which is set to be acquired by the Piramal Group. The disclosure was made in a report by the non-banking finance company’s transaction auditor Grant Thornton.

Based on the report, the DHFL management has filed an application with NCLT, Mumbai, against 33, including Kapil Wadhawan, Dheeraj Wadhawan, Creatoz Builders, Ikshudip Fincap, Rite Developers and other entities. DHFL has been under an RBI administrator since 2019. The central bank had superseded the DHFL board, citing governance issues and payment defaults.

The latest disclosure will, however, have no impact on the ongoing debt resolution process. Last month, Piramal Capital and Housing Finance Ltd had emerged the successful bidder for the debt-laden DHFL and the RBI has also given its approval to the plan. The lenders are now set to seek approval from the NCLT.

DHFL owes ₹81,000 crore to state-run institutions, mutual funds and retail bond holders. The debt resolution process will help lenders recover about ₹35,000 crore.

Series of fraud deals

Since 2019, a number of fraudulent transactions have been discovered. Earlier this month, on February 4, DHFL had reported fraudulent deals of ₹5,559.05 crore that were unearthed by its transaction adviser.

In December 2020, a fraud of ₹1,058.32 crore was uncovered based on an additional report filed by Grant Thornton. Similarly, in September 2020, a forensic audit by the same auditor had unearthed fraudulent transactions of over ₹17,000 crore.

Fake accounts

A whopping 2.6 lakh fake accounts were created in a Mumbai branch that itself did not exist. The ‘branch’ created fake accounts using names of account holders who had already repaid loans in full to siphon off ₹11,750 crore. Coding was done with the help of three software platforms to camouflage these transactions, according to probe documents seen by BusinessLine.

The DHFL scrip closed 4.75 per cent lower at ₹18.05 apiece on the BSE on Monday.

[ad_2]

CLICK HERE TO APPLY

Leave a comment ,

‘Accommodative monetary policy stance needed to strengthen economic recovery

Banking & Finance

[ad_1]

Read More/Less


All six members of the monetary policy committee (MPC) were on the same page with regard to strengthening the ongoing economic recovery even as a majority of them flagged the persistence in core inflation, according to the minutes of the MPC.

At its meeting held on February 5, the MPC decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4 per cent.

It also decided to continue with the accommodative stance as long as necessary – at least during the current financial year and into the next financial year. The Reserve Bank of India (RBI) released the minutes of MPC meeting on Monday.

Economic recovery

According to Shashanka Bhide, Senior Advisor, National Council of Applied Economic Research, Delhi, accommodative monetary policy stance is needed to strengthen ongoing economic recovery, enabling expansion of both output and demand.

“Easing of the pressures in the non-food sector will require easing of some of the key input costs such as transportation services and energy, both by improved supply conditions and productivity.

“Easing the price pressures in the non-food sector will be required to achieve revival of consumer demand as well,” said Bhide.

Ashima Goyal, Professor, Indira Gandhi Institute of Development Research, Mumbai, observed that although growth has turned positive, output levels remain below 2019 levels.

“Excess capacity continues, supply chains have room to normalise much further, and unemployment rates have increased despite a recovery in employment, because of the rise in labour participation rates as willingness to work rose with the waning of Covid-19 fears,” said Goyal.

Data waited

She observed that while corporate India has done well, and consumer confidence is reviving, reliable data is still awaited on the resilience of the informal sector.

“The current macroeconomic configuration and its expected future evolution…implies there is space for the MPC to continue to support the revival of the economy with inflation remaining in the target band,” Goyal said

Jayanth R. Varma, Professor, Indian Institute of Management, Ahmedabad, noted that with both inflation and growth outcomes being well within the range of expectations of the MPC, and short term interest rates being within the corridor defined by the repo and reverse repo rate, “there is nothing to be done and there is nothing to be said as of now”.

Mridul K Saggar, Executive Director, RBI, said as growth is still fragile, support to it must be extended into Q1 (April-June):2021-22 and longer if necessary, though with risk of a re-calibration in some scenarios such as one in which core inflation momentum picks up further.

Michael Debabrata Patra, Deputy Governor, RBI, felt that consumer and business confidence is either cautiously returning to expansion or already in it. These developments vindicate the stance of monetary policy.

“Overall, the near-term outlook for inflation appears less risky than the near-term challenges for growth which warrant continuing policy support, at least until the elusive engine of investment fires, and consumption, the mainstay of aggregate demand in India, stabilises.

“Tradeoffs facing the conduct of monetary policy may become sharper in the near-term, however,” said Patra.

Shaktikanta Das, Governor, RBI, said growth, although uneven, is recovering and gathering momentum, and outlook has improved significantly with the rollout of the vaccine programme in the country.

The growth momentum, however, needs to strengthen further for a sustained revival of the economy and for a quick return of the level of output to the pre-Covid trajectory, he added.

“The sharp correction in food inflation has improved the near-term headline inflation outlook, although core inflation pressures persist.

“Given the sharp moderation in inflation along with a stable near-term outlook, monetary policy needs to continue with the accommodative stance to ensure that the recovery gains greater traction and becomes broad-based,” said Das.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Reserve Bank of India – Press Releases

Press Releases

[ad_1]

Read More/Less


Government of India (GOI) has announced the sale (re-issue) of four dated securities for a notified amount of ₹24,000 crore as per the following details:

Sr No Security Date of repayment Notified Amount
(₹ crore)		 GoI specific Notification Auction Date Settlement date
1 4.48% GS 2023 November 02, 2023 4,000 F.No.4(5)- B(W&M)/2020 dated
February 22, 2021		 February 26, 2021
(Friday)		 March 01, 2021
(Monday)
2 GOI FRB 2033* September 22, 2033 4,000
3 6.22% GS 2035 March 16, 2035 11,000
4 6.67% GS 2050 December 17, 2050 5,000
  Total   24,000      
*The base rate for the coupon payment for the period ending March 21, 2021 shall be 3.48 per cent per annum.

2. GOI will have the option to retain additional subscription up to ₹2000 crore against each security mentioned above.

3. The securities will be sold through Reserve Bank of India Mumbai Office, Fort, Mumbai – 400001, The sale will be subject to the terms and conditions spelt out in the ‘Specific Notification’ mentioned above and the General Notification F.No.4(2)–W&M/2018, dated March 27, 2018.

4. The auction will be conducted using uniform price method for 6.22% GS 2035 and multiple price method for 4.48% GS 2023, GoI FRB 2033 and 6.67% GS 2050. Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on February 26, 2021. The non-competitive bids should be submitted between 10.30 a.m. and 11.00 a.m. and the competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. The result will be announced on the same day and payment by successful bidders will have to be made on March 01, 2021 (Monday).

5. Underwriting will be conducted for 4.48% GS 2023, GOI FRB 2033 and 6.22% GS 2035. Bids for underwriting of the Additional Competitive Underwriting (ACU) portion can be submitted by ‘Primary Dealers’ from 9.00 a.m. up to 9.30 a.m. on February 26, 2021 (Friday) on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

6. The Stocks will be eligible for “When Issued” trading for a period commencing from February 23-26, 2021.

7. Operational guidelines for Government of India dated securities auction and other details are given in the Annex.

Ajit Prasad
Director   

Press Release: 2020-2021/1135

ANNEX

Type of Auction

1. For multiple price-based auction, successful bids will get accepted at the respective quoted price for the security. For uniform price-based auction, successful bids will get accepted at the cut off price accepted in the auction.

2. The auction will be yield based for new security and price based for securities which are re-issued.

3. In case of a Floating Rate Bonds (FRB), the auction will be spread-based for new security and price based for securities which are reissued. At the time of placing bids for new FRB, the spread should be quoted in percentage terms.

Minimum Bid Size

4. The Stocks will be issued for a minimum amount of ₹10,000/- (nominal) and in multiples of ₹10,000/- thereafter.

Non-Competitive Segment

5. In all the auctions, Government Stock up to 5% of the notified amount of sale will be allotted to the eligible individuals and institutions under the Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities.

6. Each bank or Primary Dealer (PD) on the basis of firm orders received from their constituents will submit a single consolidated non-competitive bid on behalf of all its constituents in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

7. Allotment under the non-competitive segment to the bank or PD will be at the weighted average rate of yield/price of the successful bids that will emerge in the auction on the basis of the competitive bidding.

Submission of Bids

8. Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

9. Bids in physical form will not be accepted except in extraordinary circumstances.

Business Continuity Plan (BCP)-IT failure

10. Only in the event of system failure, physical bids will be accepted. Such physical bids should be submitted to the Public Debt Office, Mumbai through (email; Phone no: 022-22632527, 022-22701299) in the prescribed form which can be obtained from RBI website (https://www.rbi.org.in/Scripts/BS_ViewForms.aspx) before the auction timing ends.

11. In case of technical difficulties, Core Banking Operations Team should be contacted (email; Phone no: 022-27595666, 022-27595415, 022-27523516).

12. For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).

Multiple Bids

13. An investor can submit more than one competitive bid in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

14. However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.

Decision Making Process

15. On the basis of bids received, the Reserve Bank will determine the minimum price up to which tenders for purchase of Government Stock will be accepted at the auctions.

16. Bids quoted at rates lower than the minimum price determined by the Reserve Bank of India will be rejected.

17. Reserve Bank of India will have the full discretion to accept or reject any or all bids either wholly or partially without assigning any reason.

Issue of Securities

18. Issue of securities to the successful bidders will be by credit to Subsidiary General Ledger Account (SGL) of parties maintaining such account with Reserve Bank of India or in the form of Stock Certificate.

Periodicity of Interest Payment

19. Interest on the Government Stock will generally be paid half-yearly other than in case of securities with non-standard maturities. The exact periodicity of coupon payment is invariably mentioned in the specific notification for the issue of security.

Underwriting of the Government Securities

20. The underwriting of the Government Securities under auctions by the ‘Primary Dealers’ will be as per the “Revised Scheme of Underwriting Commitment and Liquidity Support” announced by the Reserve Bank vide circular RBI/2007-08/186 dated November 14, 2007 as amended from time to time.

Eligibility for Repurchase Transactions (Repo)

21. The Stocks will eligible for Repurchase Transactions (Repo) as per the conditions mentioned in Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 (Reserve Bank) Directions, 2018 as amended from time to time.

Eligibility for ‘When Issued’ Trading

22. The Stocks will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018 as amended from time to time.

Investment by Non-Residents

23. Investments by Non-Residents are subject to the guidelines on ‘Fully Accessible Route’ for Investment by Non-residents in Government Securities and Investment by Foreign Portfolio Investors (FPI) in Government Securities: Medium Term Framework (MTF).

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Reserve Bank of India – Press Releases

Press Releases

[ad_1]

Read More/Less




April 14, 2015





Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.





With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


Next

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Nabard retired staff hold protests across country

Banking & Finance

[ad_1]

Read More/Less


 

Even after 40 years after its inception, the employees of the National Agricultural Bank for Rural Development (Nabard) complain of a pension anomaly that puts them in a disadvantageous position when compared to their peers in the Reserve Bank of India.

They compare their salaries, benefits and pension with that of the peers in the RBI because a large portion of its employees (3,000) were hired from the apex bank when the Nabard was conceived in 1981.

The pensions are not being revised on the implementation of new pay scale for the regular employees, keeping the pension slabs very low.

The staff argue that increasing pensions would not cause any additional burden to the exchequer as the Nabard had a pension corpus of about ₹4,500 crore.

“While encouraging some of us to join the Nabard, we were given the assurance that we will be given salaries, perks and superannuation benefits on par with the RBI staff. But our hopes are dashed as we are saddled with a lower pension slab,” P Mohanaiah, who worked as a General Manager of Nabard (Andhra Pradesh), told BusinessLine.

On Monday, hundreds of serving and retired employees of the Nabard organised dharnas in different parts of the country, demanding revision of their pension on par with their peers in the RBI.

The Nabard was carved out of the RBI by an Act of Parliament, by replacing three of its departments – Agricultural Credit Department (ACD), Rural Planning and Credit Department (RPCD) and Agricultural Refinance and Development Department (ARDC) – to give a focussed approach to promote agriculture and rural development.

The protesting employees claimed that there was a huge disparity between the retired employees of Nabard and that of the RBI.

“The promises have not been kept and the provisions in Nabard Act have not been respected,” Mohanaiah said.

The Lucknow bench of Allahabad High Court had directed the Union Government in November 2019 to take a decision in four months.

“The government is yet to take a call. We are contemplating to move a contempt petition,” a senior functionary of the United Forum of Officers, Employees and Retirees of Nabard, said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

India Ratings revises outlook on overall banking sector to ‘stable’ for FY22

Banking & Finance

[ad_1]

Read More/Less


Our Bureau

India Ratings and Research, on Monday, said it has revised its outlook on the overall banking sector to ‘stable’ for 2021-22 from ‘negative’.

“This is because substantial systemic measures have reduced the system-wide Covid-19-linked stress below the expected levels. Banks have also strengthened their financials by raising capital and building provision buffers,” it said in a statement.

“The regulatory changes led to an improvement in public sector banks’ ability to raise AT-1 capital, a high provision cover on legacy non performing assets, overall systemic support resulting in lower-than-expected Covid-19 stress, and minimal surprises arising out of amalgamation of PSBs,” it said.

For private sector banks it maintained the stable outlook, noting that they would continue to gain market share, both in assets and liabilities, while competing intensely with state-run lenders.

“Most have strengthened their capital buffers and proactively managed their portfolio,” it said.

India Ratings also expects that overall stressed assets (GNPA and restructured) could increase 30 per cent for the banking system – the increase is almost 1.7 times in the retail segment in the second half this fiscal. The stock of stressed retail assets for PSBs could increase to 2.9 per cent in 2021-22 from 2.1 per cent this fiscal, while it could increase from 1.2 per cent to 4.3 per cent for private banks.

It estimates GNPAs at 8.8 per cent in the current fiscal and 10.1 per cent next fiscal, and stressed assets at 10.9 per cent.

Provisioning cost has fallen from its earlier estimate of 2.3 per cent for 2020-21 to 2.1 per cent (including Covid-19-linked provisions) and is estimated at 1.5 per cent for next fiscal, it further said.

The agency has upgraded its credit growth estimates for the current fiscal to 6.9 per cent from 1.8 per cent and 8.9 per cent in the next fiscal. This is due to the improvement in the economic environment in the second half of the fiscal year and the Centre’s focus on higher spending especially on infrastructure.

[ad_2]

CLICK HERE TO APPLY

Leave a comment
1 … 21 22 23 24 25 … 92